The Capitalist’s Case for a $15 Minimum Wage

[xchrom]

http://www.bloomberg.com/news/2013-06-19/the-capitalist-s-case-for-a-15-minimum-wage.html



The fundamental law of capitalism is that if workers have no money, businesses have no customers. That’s why the extreme, and widening, wealth gap in our economy presents not just a moral challenge, but an economic one, too. In a capitalist system, rising inequality creates a death spiral of falling demand that ultimately takes everyone down.

Low-wage jobs are fast replacing middle-class ones in the U.S. economy. Sixty percent of the jobs lost in the last recession were middle-income, while 59 percent of the new positions during the past two years of recovery were in low-wage industries that continue to expand such as retail, food services, cleaning and health-care support. By 2020, 48 percent of jobs will be in those service sectors.

Policy makers debate incremental changes for arresting this vicious cycle. But perhaps the most powerful and elegant antidote is sitting right before us: a spike in the federal minimum wage to $15 an hour.

True, that sounds like a lot. When President Barack Obama called in February for an increase to $9 an hour from $7.25, he was accused of being a dangerous redistributionist. Yet consider this: If the minimum wage had simply tracked U.S. productivity gains since 1968, it would be $21.72 an hour -- three times what it is now.

[CrispyQ]

1. Great article!

Maybe worthy of sharing on FB, even.

Cultivating Consumers

Traditionally, arguments for big minimum-wage increases come from labor unions and advocates for the poor. I make the case as a businessman and entrepreneur who sees our millions of low-paid workers as customers to be cultivated and not as costs to be cut.

Here’s a bottom-line example: My investment portfolio includes Pacific Coast Feather Co., one of the largest U.S. manufacturers of bed pillows. Like many other manufacturers, pillow-makers are struggling because of weak demand. The problem comes down to this: My annual earnings equal about 1,000 times the U.S. median wage, but I don’t consume 1,000 times more pillows than the average American. Even the richest among us only need one or two to rest their heads at night.

An economy such as ours that increasingly concentrates wealth in the top 1 percent, and where most workers must rely on stagnant or falling wages, isn’t a place to build much of a pillow business, or any other business for that matter.

A businessman who gets it.

[xchrom]

2. +1

[Hydra]

3. We have the same problem in my industry

I've watched as middle class people stopped taking trips to my area. They can't afford it, and they can't take out 2nd/3rd mortgages on their houses to do it.

We have a (very) few rich vacationers and a lot of bargain hunters. The losses have spiraled out of control- some places I worked saw reservations down by 20% or more, and people are staying less time and want bigger discounts.

I'm guessing it's across the board, and made even worse by rapidly rising food and energy costs. Extras are simply being cut out, adding to the spiral.

Wall St doesn't give a damn about this because they now have direct access to the treasury.

Unless something fundamental changes, we're going to stay where we are or get worse, despite the continual "green shoots" hopefulness.

[CrispyQ]

5. I'm a glass half empty type. I don't see it getting better.

I worry that by the time enough Americans are seriously affected & finally wake up, it will be too late. TPTB have been very busy since Reagan, but especially since W, building a huge security apparatus, that secures them from us. They also pretty much own our government, lock, stock & barrel. I don't think most Americans have a clue how close to the abyss we are.

Good to see you! Hope you're well.

[Hydra]

6. Yes, thank you :)

I had a headscratch worthy jurying from last night, but if you're not disturbing the comfortable you're doing it wrong

[Purplehazed]

4. All businesses should pay a living wage.....

Mr. Hanauer's article , I think is a little too simplistic. A sudden doubling of the minimum wage should indeed create a surge in demand of consumer goods and would be a positive spike in the economy. Prices however, would also increase to cover the increased cost of labor. That is inevitable. The losers in this equation will be those that already earn wages in the $15 -20 range. They will experience the price increase without a corresponding doubling of their wage. The top wage earners would be relatively unaffected.

Minimum wages should be raised over time to allow the economy to readjust. I don't think that a sudden spike in the minimum wage is a "elegant antidote", instead it transfers wealth from lower wage earners to the lowest wage earners.

[SoCalDem]

10. It's a painful solution for many true small businesses

A donut shop owner ( a TRUE small business) with 3 employees would have a hard time doubling salaries since their end product is a small-sale-price item. They cannot sell-more donuts to counter the cost because most have a pretty static clientele, and fixed expenses like rent, power, water etc. The additional labor cost would probably come directly from the owner's profit and eventually they would probably just close up.

The problem we have always had is the definition of what IS a small business, and to which businesses the federal income requirement should apply.

If fast food places were not franchises, but owned & operated by the companies whose logos are plastered on everything in sight, a dramatic wage increase requirement would be truly meaningful. The "art" of franchising created millions of "small businesses" that have suppressed wages for as long as they have existed. It was no biggie in good times because those jobs were made for teens who needed a first job. Those types of jobs have more recently morphed into jobs for non-teens, as a way of trying to sustain families.

True Mom & Pop businesses can NEVER compete with the deep pockets of corporate america. The secret to the problem is in redefining the strata and subsidizing ONLY the true small businesses (fewer than 10 employees), with a sliding scale as the employee population increases...and a total elimination of ANY subsidies for any company of over 100 employees. That is a big business.. If you write 100 paychecks a week, you are not running a small business. The mega-businesses should be willing and able to pony up more taxes, since they have pretty much corned the market.

[HughBeaumont]

7. K & S & R.

God, can their wealth-apologist commenters get any more dense? I swear, reading Reaganite bullshit makes my neck veins explode. Fucking IDIOTS.

[xchrom]

8. !

Indeed,

[WillyT]

9. K & R !!!

[MisterP]

11. "fifteen-dollar solar systems? what's the catch?!" K&R

[Tuesday Afternoon]

12. DU Rec

[Sirveri]

13. It won't help without an income cap via a progressive taxation system.

Without a method to stop the mass extraction of wealth from their corporations, the rich will simply raise their prices to compensate. Once we prevent that we can increase the minimum wage, or do both at the same time.