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In a TV debate with Democrat Jon Ossoff, Georgia Republican Karen Handel said: “This is an example of a fundamental difference between a liberal and a conservative. I do not support a livable wage.” Many people remarked on what was called a gaffe, but some took pains to make clear that it was just a matter of awkward phrasing. What she “could have and should have said,” counseled New York magazine’s Ed Kilgore, is “that a $15-per-hour minimum wage, the most commonly advanced Democratic proposal, was too high for a place like Atlanta, with its relatively low cost of living.” CNN pointed out that Handel’s remark went viral “despite her follow-up,” which was that she instead wants “an economy that is robust, with low taxes and regulation.”
Democrats are “jumping on” Handel for her words, CNN says, and they cite a tweet from Tom Perez saying those words prove she has no business being in Congress. But Perez’s tweet comes with the article, and it actually reads, “If Karen Handel doesn’t support a living wage for working Americans, she has no business being in Congress.” It seems many in corporate media have a hard time believing that anyone would be outraged that someone doesn’t support a living wage, however they say it, because the idea that raising the minimum wage is “controversial,” that it kills jobs and hurts business, is such a hardy media perennial.
We talked about the myths and misinformation surrounding the living wage over a year ago with economist Holly Sklar. She’s the author of Raise the Floor: Wages and Policies That Work for All of Us, and she’s CEO of a group called Business for a Fair Minimum Wage. Here again is our still relevant conversation with Holly Sklar.
Janine Jackson: Well, I don’t think anyone truly believes that Walmart would have to go out of business if they paid workers more. It seems like more an ideological argument that if they can make a squillion dollars, then they’re entitled to every penny. But the rhetoric often tells us that it’s the smaller businesses that would suffer, that wouldn’t be able to hire or wouldn’t be able to grow, and that seems to be what you’re countering fairly directly.
Holly Sklar: Yes. That in general, we know that it’s absolutely the case that you cannot build a strong economy on a falling wage floor, and the minimum-wage adjustment for the cost of living has fallen dramatically. At the federal level, $7.25 is actually lower, adjusted for inflation, than the minimum wage of 1950, and it’s a third lower than 1968. And so you cannot build a strong economy, and you cannot really build a strong business for the long haul, on falling real wages.
Most businesses in the country are small businesses, and so, by definition, most of our members are small businesses, but we have some very large businesses as well. And we have business alliances. For example, the Greater New York Chamber of Commerce, which represents about 30,000 businesses, supports raising the minimum wage.
Small businesses understand very well that workers are also consumers. If there’s not enough money in the wage base of the economy, of people that they are hoping will come in and buy their goods and services, they feel it every day. And they also feel very directly what it’s like to have a worker who, if they’re underpaid, if they’re not really earning enough to even keep a roof overhead, put food on the table, buy the winter jacket of a growing kid, they’re distracted by this financial stress that’s continual. And so they believe very strongly that the workers should earn enough so that they can focus on the business, on the customers, and not be constantly worried about just how are they going to make ends meet, how are they going to make the rent this month.
You’ve just talked about the history, and I think it’s interesting; Donald Trump and his ilk seem to connect holding down wages to this idea of “making America great again,” and that’s more than ironic, given the actual history.
Yeah, well, my point is that’s a big myth that has been sold. I mean, if cutting wages and cutting benefits and cutting — just this whole notion that the more you can squeeze out of the worker, at the same time as in the giant corporations, not the small businesses but in the bigger corporations, you’re going the exact opposite way, and you have more and more of the revenue of the company going to fewer and fewer hands at the top. You know, we’ve already tested that, that’s my point. But that model is delivering us worse economic growth, that model is giving us a shrinking middle class, and that model is what produced the greatest economic meltdown since the Great Depression.
There’s nothing theoretical about that. We have seen what this business model and this economic model produces, and it’s terrible. It’s terrible for workers and it’s also terrible for most businesses. The biggest thing businesses have complained about in recent years is that they’re just not seeing enough consumer demand, they’re not seeing enough consumer buying power, they need more. You know, you need people to buy what they’re making, in order to sustain the business and to grow the business.
And there’s obviously a direct connection — or I say obviously, but folks like Donald Trump, you know, ideologically they don’t want to see it as obvious — you need people to have enough wages to be able to buy what they need, and if you’re going to have a growing middle class, you need people to be able to buy more than just the bare necessities. Right? And that’s what we’ve lost sight of.
And yet, you can open any paper and find somebody saying, well, yes, you know, ideally workers might make more, but the tough reality is, if companies raise wages, that will lead to joblessness, that jobs will be destroyed, and they present studies and numbers and charts that seem to make that argument. Is it really something where the economics are debated, or highly contentious of how this would work?
At our website, BusinessForAFairMinimumWage.org, is actually a research summary, the most rigorous research on whether raising the minimum wage causes job loss. And it does not. In other words, if you look at all the actual minimum wage increases in recent decades, and not projecting forward and saying, “based on my particular, often ideologically driven economic assumptions going forward,” but if I’m looking back and looking at actual minimum wage increases, and not being simplistic and, like, saying, “I’ll just pretend that there wasn’t an economic meltdown in 2008 when I’m looking at what the consequence of the minimum wage,” but factoring things out.
Anyway, the point is that this rigorous research of actual minimum wage increases really does show that there is either no effect or a slightly positive effect or in some cases slightly negative, but when you look at it overall on balance, does not cause job loss. Just in the last year or two, the states that have raised their minimum wage are actually showing stronger job growth. Now, I’m saying that, that’s not one of these rigorous studies. But there’s a reason for this; there’s a direct connection between, you can’t expect people to buy what’s being produced by business, to continue to buy at that level or more, if you’re driving down wages. It doesn’t work.
And one of the ways that this was masked, for a while, was people were using their home equity, for example, going deeper into debt to try and get by, when wages were going down, to continue to maintain living standards. That masked it for a while, but as we know well, that doesn’t last forever, and we saw the consequences in the economic meltdown.
Just finally: Making the argument that a higher minimum wage is good for business doesn’t preclude the social justice argument, that people simply deserve to be able to survive on their paycheck, does it?
No. If you work a full-time job, you shouldn’t be earning a poverty wage. I mean, it’s as simple as that. You shouldn’t be earning a poverty wage in general, but of course, if you work full-time, at the end of the month, it should add up to what you need to pay rent and the other basics that you have.
And the other thing, if I could just add, because this is important as to why so many of our business people feel very strongly about this, is businesses that are using this better business model, as one that invests in their workers, they really see things like stronger productivity, stronger customer service; they see dramatic reductions, often, in worker turnover. So there are all these factors that are also internal to the business, that bring real improvements in just the way the business is operating, that really is important to your bottom line as well.
We’ve been speaking with Holly Sklar of Business for a Fair Minimum Wage. They’re online at BusinessForAFairMinimumWage.org. Holly Sklar, thank you so much for joining us this week on CounterSpin.