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Published On: Tue, Aug 6th, 2013

The Minimum Wage: Necessary But Misunderstood

Was the minimum wage ever intended to guarantee a wage that would support a family? Or, is it a device to protect the least skilled of our citizens from being taken advantage of in the job market?

Following the “Great Depression” there was an urgent need for control of wages and hours. Most of the potential and existing problems were covered in the Fair Labor Standards Act of 1938. It introduced a maximum 44-hour seven-day workweek, established a national minimum wage, guaranteed “time-and-a-half” for overtime in certain jobs, and prohibited most employment of minors in “oppressive child labor.” This legislation came at a time when labor was in its worst negotiating position in decades.

Minimum wageAt that time, the set minimum wage of 40 cents per hour was considered high. The setting of that minimum wage had the same division of support and opposition as have all increases since. The wartime inflation of the 1940s lowered wage values to below that required by law. That resulted in an amendment to the law and raised the minimum wage to 75 cents per hour. In 1955, another amendment raised the minimum wage to one dollar per hour. The current federal minimum wage is $7.25 per hour effective July 24, 2009. Many states also have minimum wage laws. Some state laws provide greater employee protections; employers must comply with both.

From an editorial in the Miami Herald of June 28, 2013 by Jose Azel entitled “Minimum Wage: good intentions, bad policy:”

Voters believe that minimum wage laws are necessary to ensure that low-skilled workers, especially new entrants, teens and minorities, earn a living wage and are not exploited by greedy capitalists.

Enacting a higher than market minimum wage law does not result in a higher income for all workers, only for those who retain their jobs. And this increase will be at the expense of those who will become or will remain unemployed.

We know this, and yet minimum wage laws remain popular with public officials and with voters who want to express their compassion for the working poor. A more cynical reason is that advocating for an increase in the minimum wage is a way of making political points…

Therein lies the conflict.  If we can use McDonald’s as a familiar example of a minimum wage employer, I find that many, if not most, of the employees are young people with a diverse racial population that is often skewed toward African-American. There are also some mature workers who apparently have minimal skills and also join this work force. I have a suspicion, without having interviewed any of these employees, that their job is to contribute to a household, either living with parents or with others, some of whom are also employed. It is clearly not to earn a living wage.

Let’s skip to the current demonstrations growing outside of McDonald’s across the country to raise the minimum wage to $9, $12 or even $15 per hour. It is not clear who exactly is promoting these demonstrations, but unionization is often included in the demands. These nationwide demonstrations certainly suggest that they are not spontaneous at the local level.

Sadly, it is another in a series of divisive strategies employed to create a “them versus us” scenario, pitting the poor minorities against the greedy capitalists. The most familiar and unjust is the call to tax the wealthy, who have been inaccurately portrayed as not paying their fair share, particularly the highest one percent. The “living wage” argument is becoming central, and of course appeals to this voter bloc made up of minorities, the unskilled, the young entry level wage earners, and (to a certain extent) the unmotivated, all with some sense of entitlement. The minimum wage is important to protect those with minimal skills, but not to ensure that the lowest earners in our society are guaranteed a wage that can provide all the needs of a growing family.

The irony of all of this is that if any of those wage levels were acceded to, it would be counterproductive because it would lead to higher unemployment. That leaves the efforts at unionization the only area left to assess. And who really gains if unionization of this large block of workers was successful across the country? It would most likely be the union organizers. They would solidify another voting bloc, collect more dues, and in turn cause more unemployment among the workers they are purportedly helping.

The greedy capitalists are again the target.  They are portrayed as the enemy.  Where is the voice of moderation to stop this class warfare and bring us together again?

Also, I enjoy McDonald’s and feel confident that most of these workers, deep down, are indebted to their employer to have provided them with an introduction to the disciplines and rewards of the working ethos, or if nothing else, a paying job.

 

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About the Author

- Semi-retired business executive with background in engineering and high-tech materials manufacturing, marketing and applications. Well traveled to lots of interesting and exotic places, but not as resident. Interacted with the FTC as industry representative and FHWA to introduce new engineering material. Represented the U.S. in international trade organization dealing with Pre-Stressed and Post-Tensioned Concrete. Currently a Defense Contractor to Navy Air Warfare Laboratories. Now an activist and writer on items of national interest with an inbred concern about non-scientists making rash judgments on technical issues.

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Frederick Hunt

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Semi-retired business executive with background in engineering and high-tech materials manufacturing, marketing and applications. Well traveled to lots of interesting and exotic places, but not as resident. Interacted with the FTC as industry ... Read the full profile...