Click amount to donate direct to CounterPunch
  • $25
  • $50
  • $100
  • $500
  • $other
  • use PayPal
HAVE YOUR DONATION DOUBLED!

If you are able to donate $100 or more for our Annual Fund Drive, your donation will be matched by another generous CounterPuncher! These are tough times. Regardless of the political rhetoric bantered about the airwaves, the recession hasn’t ended for most of us. We know that money is tight for many of you. But we also know that tens of thousands of daily readers of CounterPunch depend on us to slice through the smokescreen and tell it like is. Please, donate if you can!

FacebookTwitterGoogle+RedditEmail

We All Pay for Low Wages

by

When you are paid starvation wages, it’s up to public-assistance programs to make up the difference. That government assistance, costing treasuries billions of dollars per year, is part of the high cost of low wages.

Raising the federal minimum wage to $12 an hour would save an estimated $17 billion per year for U.S. taxpayers, according to a study by the Economic Policy Institute. The EPI’s study, “Balancing paychecks and public assistance,” found that, not surprisingly, low wages equal government help. A majority of United Statesians who earn less than $10 an hour receive public assistance, either directly or through a family member.

The study’s author, David Cooper, examined participation in eight federal and state means-tested programs for low-income families — the earned income tax credit; the refundable portion of the Child Tax Credit; the Supplemental Nutrition Assistance Program (what used to be known as food stamps); the Low Income Home Energy Assistance Program; the Supplemental Nutrition Program for Women, Infants and Children, commonly known as WIC; Section 8 housing vouchers; Medicaid; and the Temporary Assistance for Needy Families program and its state and local equivalents.

Working people with low wages use these programs heavily. One-third of Supplemental Nutrition Assistance Program recipients are full-time workers and one-half of WIC recipients are full-time workers.

Contrary to right-wing propaganda, most recipients of public assistance work, a large number of them full time. The EPI study reports:

*Among families or individuals receiving public assistance, two-thirds (67 percent) work or are members of working families (families in which at least one adult works). When focusing on non-elderly recipient families and individuals under age 65, this percentage is 72 percent.

*About 69 percent of all public-assistance benefits received by non-elderly families or individuals go to those who work.

*About 47 percent of all working recipients of public assistance work full time (at least 1,990 hours per year).

Nearly $53 billion of public-assistance money is paid annually to people who work full time, the EPI study reports. And, full- or part-time, money going to working people is concentrated in specific industries. More than half goes to workers in three sectors: educational, health and social services; arts, entertainment, recreation, accommodation and food services; and retail trade.

Screen Shot 2016-05-09 at 9.15.13 AM

Privatizing profits, socializing costs

Although not addressed in the EPI study, a big conclusion to be drawn from this data is that these billions of dollars of public-assistance money constitutes a massive subsidy of business. Often highly profitable businesses. Take War-Mart, for example. Wal-Mart reported net income of $14.7 billion for 2015 and nearly $80 billion for its last five fiscal years. Yet the company pays it employees so little that employees organize food drives for themselves while it dodges billions of dollars of taxes and receives further billions of dollars in government subsidies.

Currently, the federal minimum wage is $7.25 an hour. Adjusted for inflation, the U.S. minimum wage peaked in 1968 when the then $1.60 rate would be worth $10.95 in 2016 money. So although that peak total is itself low, the federal minimum wage has lost more than one-third of its value.

Or, to put this in another perspective, one of the demands of the March on Washington in 1963 was a minimum wage of $2 an hour. Adjusted for inflation, $2 an hour in 1963 would be worth $15.56 today. So today’s activists demanding a $15 minimum wage are simply asking for the same thing that was asked a half-century ago. Nothing outlandish.

It is no secret that wages have badly lagged productivity, nowhere more in the global North than in the United States. Wages for U.S. workers have fallen behind productivity gains since the 1970s, to the point that the average U.S. household receives$18,000 per year less than it would had wages kept pace. Canadian households are about $10,000 behind. Differentials between wages and productivity are also found, albeit in less drastic form, across Europe and in Japan.

We can’t order a return to Keynesianism

So what conclusion should we draw from all this? Unfortunately, the EPI study concludes with what can only be termed weak-tea liberalism. Wishing for a return to Keynesianism, the author writes:

“[W]e can raise wages by eliminating the lower subminimum wage for for tipped workers, updating overtime protections, strengthening workers’ ability to organize and negotiate with employers collectively, improving enforcement of labor laws, providing undocumented immigrant workers a path to citizenship, and ensuring monetary policy prioritizes full employment.”

There is nothing wrong with any of these prescriptions. Such reforms would be quite welcome. But these goals can not simply be conjured into existence. Nobody decreed we shall now have neoliberalism and nobody can decree we shall now go back to Keynesianism. We haven’t gotten to the disastrous state we are in by accident or simply because of the personal decisions of corporate executives and financiers.

Rather, the neoliberalism we experience today is the logical result of capitalist development; “logical” in the sense that the relentless scramble to survive competition eventually closed the brief window when rising wages were tolerated and government investment encouraged. The Keynesian policies of the mid-20th century were a product of a specific set of circumstances that no longer exist and can’t be replicated.

Intensified competition over private profits, and that “markets” should determine social outcomes, inexorably leads to a consolidation in which industries are dominated by a handful of giant corporations, and those corporations gain decisive power over governments and relentlessly reduce overhead (especially wages and benefits) in a scramble for survival.

Fighting back is surely what working people around the world need to do. But restoring a “golden age” of capitalism that never really existed (and definitely didn’t if you were a woman confined by limited options or an African-American facing officially sanctioned discrimination and/or state-endorsed terrorism) is a quixotic goal. Better to drive our energies into creating a better world, one in which the economy is geared toward human need rather than private profit.

More articles by:

Pete Dolack writes the Systemic Disorder blog and has been an activist with several groups. His book, It’s Not Over: Learning From the Socialist Experiment, is available from Zero Books.

October 19, 2017
Desiree Hellegers
“Unnatural Causes”: “Unnatural Causes”: Health Takes a Hit in Portland, Oregon
Binoy Kampmark
Vengeful in Defeat: Hillary Clinton Fantasizes About WikiLeaks
Robert Fisk
ISIS Has Lost Raqqa, Where Will It Go Next?
Pepe Escobar
Why Trump Has Gone Nuclear on Iran
Jenny Clegg
Will the US and China Go to War?
George Ochenski
Seduced by Greed: the Perils of Environmental Collaboration
Phyllis Bennis
Decertifying the Iran Deal: Trump’s Most Reckless Move?
Arnold Oliver
Bring Back Armistice Day and Honor the Real Heroes
John Eskow
Witch Hunt TV: You Can Trust MSNBC, Really….
Kim C. Domenico
In Search of Moral Energy in the Neoliberal Wasteland: a Preferential Option for the Poor Soul
October 18, 2017
Patrick Cockburn
Seizing Kirkuk
John Wight
Weinstein as Symptom: Notes From Hollywood
Matthew Hoh
Bowe Bergdahl: Traitor to American Exceptionalism and White Supremacy
Chris Ernesto
Funding for War vs. Natural Disasters
Aidan O'Brien
Where’s Duterte From and Where’s He Going To?
Jon Bailes
Mental Health and Neoliberalism: an Interview with William Davies
Ramzy Baroud
The Real Reason Behind Trump’s Angry Diplomacy in North Korea
Paul Craig Roberts
Washington, Not China, is the Biggest Threat to American Power
Mike Davis
El Diablo in Wine Country
Binoy Kampmark
Trump’s Iran Deal
Lara Merling
Remember Puerto Rico Needs Fair Medicaid Funding Too
Phil Rockstroh
2 or 3 Things I Know About Capitalism
Eoghan O’Suilleabhain
Rambo Wept: Our Commandos Good, Your Terrorists Bad
Dimitris Bellantis
On Catalonia: Debates in the Greek Left
Robert Koehler
The Calm Before the Storm
Mike Hastie
Napalm Sticks to Kids
October 17, 2017
Suzanne Gordon – Ian Hoffmann
Trumpcare for Veterans? VA Outsourcing Will Create Healthcare Industry Bonanza
Patrick Cockburn
The Real Destabilizer in the Middle East is Not Iran But Trump
Jonathan Cook
The Real Reasons Trump is Quitting UNESCO
Murtaza Shibli
My Friend From ISIS in Raqqa
Kathy Kelly
Wrongful Rhetoric and Trump’s Strategy on Iran
David Bonner
Beyond Taking a Knee: Duane Thomas, Where are You When We Need You?
Tom Gill
Austerity, Macron-Style
Liaquat Ali Khan
Pakistan Faces a Life-Threatening Military Coup
Jeff Mackler
Is Trump a ‘Moron?’
Amena Elashkar
If You Work for Justice in Palestine, Why Won’t You Let Palestinians Speak?
John Feffer
Trump’s Unprecedented Right-Turn on Foreign Policy
Ariel Dorfman
Trump’s War on the Mind
Dean Baker
The Republican Tax Plan to Slow Growth
Gerry Brown
The Return of One-Man Rule in China?
Binoy Kampmark
Climate Change Insurgent: Tony Abbott’s Crusade
Kent Paterson
Assassination in Guerrero: the Murder of Ranferi Hernandez Acevedo
Rob Okun
Men and Sexual Assault in the Age of Trump
October 16, 2017
Vijay Prashad
A Tale of Two Islands
Ben Dangl
Profiting from America’s Longest War: Trump Seeks to Exploit Mineral Wealth of Afghanistan
FacebookTwitterGoogle+RedditEmail