This is part 2 of a series I am writing on why minimum wage increases are bad economic policy for urban America. Click here for Part 1.
We NO Longer Live in a Wage Economy
A must-read book is Money and Class in America by Lewis Lapham. Lapham, himself, comes from a very rich and privileged background and understands a thing or two about the moneyed classes. One of the points he makes – that I haven’t heard anywhere else – is that in the year 1982, for the first time in American history, earnings from investments and dividends SURPASSED that of wages!
What does this say about the way money is generated in America? This was 1982, mind you! What about now in the new digital tech age? How valuable are the low-wage blue collar working classes at a time when physical labor is not as in demand as other service-sector tech-dominant skills? Are these folks really going to be at the forefront of most political decision-making when they do not represent the majority any longer?
My goodness, try being a package handler where you are given part time hours during slow times and even then your hours are cut if trucks don’t show up on time?! I’ve seen that world first-hand. Believe me, it’s not pretty. Imagine being a truck driver – one of the most common jobs in roughly 29 states – and being replaced by self-driving trucks. The net effect here: millions of men being displaced, to say nothing of the families and communities they belong to.
Will such wage earners easily migrate into the new tech age as programmers? Some may. But it’s a huge gamble to suggest we will all “find our passion” during such drastic economic changes.
NO WAGE Economy Means Wages Are Not Going Up Making Upward Mobility Harder
Not only is the wage economy increasingly becoming a thing of the past but wages themselves over the last forty years have not gone up. The rallying cry among the wage earning classes today is not so much that there are no jobs. Instead, its the harsh reality that wages are not going up.
Last year, The Pew Research Center, noting record low unemployment numbers, also observed a decades-long trend: Sluggish wage growth. I’ve quoted the article below:
“…Today’s real average wage (that is, the wage after accounting for inflation) has about the same purchasing power it did 40 years ago. And what wage gains there have been have mostly flowed to the highest-paid tier of workers…in real terms average hourly earnings peaked more than 45 years ago: The $4.03-an-hour rate recorded in January 1973 had the same purchasing power that $23.68 would today. “
If wage earners above the minimum wage are not seeing much increase in their pay what exactly will be the case for those earning the minimum wage or those currently below it? When you consider also that many minimum wage jobs are going to be lost to automation and technology in the not-so-distant future, should the focus remain on wages that are not going up and on jobs that simply won’t exist?
There is already talk of a “Retail Apocalypse,” where 75,000 stores are expected to close by 2026. A 2013 Oxford University study found that in the next couple of decades more than 40% of total U.S. employment will be a risk due to computerization.
Just how are wage earners expected to climb up the ladder in such a system? Might universal basic income equal things out? Nobody knows for sure. Minimum wage increases are certainly not a sustainable option. Tragically, the political, educational, and economic establishments seem to like the status quo.
Wealthy Privileged Folks Can Afford to Bypass the Minimum Wage
Privileged folks yawn at talk about increasing the minimum wage because they (and this includes many of the politicians pushing for them) they exist largely in social and economic bubbles insulated from the concerns of wage earners.
One thing I noticed about some of the most exclusive zip codes in my state was how virtually no fast-food restaurants and big-box retail stores existed.
I wondered: they must want the mom-n-pop economy. They must benefit from hiring local people; it keeps the local economy strong, everyone knows each other; local teens likely get jobs right in the town square; they preserve their sense of belonging, history, and culture; wages aren’t much of a problem because of the many social, cultural, and societal benefits…..
Most kids from wealthy backgrounds will get jobs because of who they know. Schooling is mostly a formality, a place they go to socialize and a learn a thing or two. In fact, they can easily forego working their first jobs for years for this very reason. It’s not uncommon for them to begin working well into their mid-twenties.
For many at the bottom, landing a first job–any job–makes the difference between life and death, literally and figuratively. I know of countless young men who I grew up with who, coming from a single mother home, living in poverty, and without the necessary connections, struggled greatly to “make it” in the real world. Perpetually unemployed or dead all-together because of bad association and choices, they never quite made it out.
Can we learn or thing two from hip, trendy, wealthy enclaves? Yes. The focus should be on mobilizing the community to create local economic pathways, helping young people to learn important social and professional skills, empowering local entrepreneurs to provide these very opportunities, incentivizing companies who create more training programs for disenfranchised communities, among other things.
Quick-Fix Economics that Go Unchallenged Conveniently Bypasses the Deeper Issues in Urban America
Politicians championing economic ideas that they will never themselves face is disingenuous. The political elites in America are still overwhelmingly from the upper classes. They will never know (and never have known) what it is like to work for a meager wage. Neither will their children, friends, colleagues, neighbors, those they vacation with, those they share first-class seats with. Never have class lines in America been more sharp, especially among the entrenched political classes.
The political shift and economic focus, as an article from the UK-based Guardian pointed out, has been on “Washington-based fundraisers, bundlers, analysts, and pollsters who have focused instead on raising campaign money from corporate and Wall Street executives and getting votes from upper middle-class households in “swing” suburbs.”
With a slowly dying working middle class populace stymied by declining wages, the off-shoring of many jobs and industries, record low union representation, among other things, the political priority appears centered on the rich and poor. Maintain most of the economic status quo for the top earners and promise fanciful upward mobility for those at the bottom seems to be the modus operandi.
Failing schools holding millions of kids back, outdated curriculums doing nothing to advance the skills and competencies of students, the economic status quo geared around protecting those on top and stifling competition, tax codes overwhelmingly in favor of dividend and investment-earning classes–let’s not touch that.
In closing, people help people. Impersonal across-the-board government interference does not.
I would love to hear your comments about the minimum wage. What have been your experiences? What do you think can be done so people get better work and career opportunities? Please share below and subscribe for my latest posts.