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February 26, 2021

Raise the wage

Opinion

February 26, 2021

Capitalism’s ‘conservative’ defenders yet again oppose raising the minimum wage. They fought raising it in the past much as they tried to prevent the Fair Labor Standards Act (1938) that first mandated a US minimum wage. The major argument opponents have used is this: setting or raising a minimum wage threatens small employers. They may collapse or else fire employees; either way, jobs are lost. What is conveniently assumed here is a necessary contradiction between minimum wages and small business jobs. That assumption enables opponents to claim that not setting a legal minimum wage, like not raising it, saves jobs. The system thus presents very poorly paid workers with this choice: low wages or no wages.

‘Liberals’ in the United States have mostly accepted the assumption of that contradiction, the necessity of that final choice. However, they try to demonstrate that the social gains from a higher minimum wage would exceed the social losses from the reduced employment they admit. Their idea, in effect, is that a higher minimum wage would increase demand for goods and services. Any workers fired because of the minimum wage would be rehired elsewhere to meet the rising demand. Countless empirical studies by conservatives and liberals yield, as usual, correspondingly conflicting conclusions.

In the actual history of US capitalism, the minimum wage has been undercut from the outset. In real terms (what the minimum wage can actually buy), its long-term decline began from a peak in 1968. It was last raised in 2009 (to $7.25 per hour) despite a rising consumer price index every year since then. US business interests plus the ‘conservative’ politicians, media, and academics they support have inundated the public with the idea that raising the minimum wage will hurt poorly paid workers (by losing mostly small business jobs) more than help them. This debate over the minimum wage, intensified whenever proposals to raise it gain public attention, has been ‘won’ chiefly by the conservative/business side.

Despite its political effectiveness for conservatives and big business till now, their argument – like the entire debate – is flawed logically. Its underlying, shared assumption is unnecessary and inaccurate. It serves chiefly to undercut the level, purpose, and social effects of the minimum wage in the United States.

Excerpted: ‘The Fake Debate Over a Minimum Wage’

Counterpunch.org