Progressive Minimum Wage Demands Are Too Damn Low!
The current federal minimum wage is $7.25 an hour – since 2012 there has been an organized movement calling for the minimum wage to be raised to $15 an hour – and of course many smaller groups have called for more earlier than that. During the 2020 presidential campaign, after beating out Bernie Sanders, Joe Biden promised to give into progressive demands and raise the minimum wage to $15 an hour, so far a broken promise. These demands are the cries of the great mass of people who are frustrated by seeing progress leave them behind as they work harder than their parents, for less pay, and this happens as the wealth per capita in this country grows. Those who are paying them too little are the same that are amassing more and more superfluous wealth that they amass only to keep score as more and more have amassed more wealth than they could possibly enjoy. It is not that they simply need to adjust to there being less to go around, but they are notably being shorted and their lives are consumed by economic struggles rather than sharing in the prosperity.
During the COVID-19 pandemic’s shutdown phase, low wage workers, considered essential at the time, took on risks to their health and lives to keep things running for everyone else. They caught COVID, saw family, friends, and coworkers die from it. They saw massive payouts to employers through the Payroll Protection Program, intended to keep employees paid during the shutdown, only to find that 75% of the funds were improperly spent on other expenses. They saw the paradox of being called essential to guilt them into showing up for work, but then treated as expendable while there. As a result, they eventually quit or, when they died, others did not apply to take their place, resulting in the Great Resignation, likely a misnomer, where employers found themselves forced to pay more and more to recruit workers into their ranks to be willing to work. A year later, we find ourselves plagued with inflation as corporations to try to take these gains back from workers amidst record profits. Companies claim that they need to pay for bigger expenses despite the fact that the increases account for much more than those raised expenses and one increase begets another in a frenzy of greed. Of course, the corporate media is out in force to blame these increases on what help workers did get, despite other countries which offered more help not seeing similar increases. Bloomberg recently published an article claiming that the demands of workers are unsustainable and they should stop being so uppity demanding a living wage.
This frenzy seems to many to be demanding a lot and the corporate world is pushing back hard as if it were an existential issue. Much of the discourse of worker activists is merely a reaction to their despair and isn’t fully thought out at all. It isn’t well reasoned at all. In fact, it shows a rather strong lack of understanding of economic forces overall, an infantile understanding, they are blindly demanding the same kind of life their parents could afford without looking at the broader scale. That is why they are asking for so little.
Normally, I would bring in a Marxist understanding of labor relations and stress the exploitation of labor that has always been present, but I am going to put that aside for the moment and discuss this on the basis of parity with the labor relations of the past when everyone could see that the wealthy were happy and doing great and workers were doing better. We will look at the conditions when capitalism seemed to many to work.
The simplest argument, and the one you will see most often, is an inflationary argument. Are wages keeping up with inflation so that the same labor receives the same pay? If my parents put in 40 hours a week and received $x a month, can I do the same amount of work and receive the amount of money that can buy the things that $x could buy in the past? Essentially, this is the simplest argument of whether or not the lives of workers are getting better or worse.
We can look at the minimum wage as it existed in the past and apply inflation to it so that we can see what that minimum wage would be worth today. A simple table can assist us. A list of the amounts can be found from the Department of Labor and we can use a simple tool to calculate inflation, even if it is only accurate to the year.
|Date Instituted||Amount||Inflated to 2022 dollars|
|October 24, 1938||$0.25||$5.18|
|October 24, 1939||$0.30||$6.31|
|October 24, 1945||$0.40||$6.50|
|January 25, 1950||$0.75||$9.10|
|March 1, 1956||$1.00||$10.75|
|September 3, 1961||$1.00||$9.78|
|[amended in 1961]|
|September 3, 1964||$1.15||$10.84|
|September 3, 1965||$1.25||$11.60|
|February 1, 1967||$1.00||$8.75|
|February 1, 1968||$1.15||$9.66|
|February 1, 1969||$1.30||$10.35|
|February 1, 1970||$1.00||$7.53|
|February 1, 1971||$1.60||$11.55|
|May 1, 1974||$1.90||$11.26|
|January 1, 1975||$2.00||$10.87|
|January 1, 1976||$2.20||$11.30|
|January 1, 1977||$2.30||$11.09|
|January 1, 1978||$2.65||$11.88|
|January 1, 1979||$2.90||$11.68|
|January 1, 1980||$3.10||$11.00|
|January 1, 1981||$3.35||$10.77|
|April 1, 1990||$3.80||$8.50|
|April 1, 1991||$4.25||$9.12|
|October 1, 1996||$4.75||$8.85|
|September 1, 1997||$5.15||$9.38|
|July 24, 2007||$5.85||$8.25|
|July 24, 2008||$6.55||$8.89|
|July 24, 2009||$7.25||$9.88|
We were more generous in the fifties, sixties, and seventies than we are now, but none of these numbers top $11.88. False numbers go around claiming it was worth more than $20 periodically, but it was never worth more than $11.88. Losses have been made in the neoliberal era (1981 – 2016; 2021 – present), but the losses are not as dramatic as put forward nor justify $15 an hour if we only look at the general rate of inflation.
While the general rate of inflation doesn’t justify such a thing, there is another factor that one needs to take into account: productivity. Doing an hour of labor in 1938 does not produce the same value as that same hour of work in 2020. With technological advances, some jobs that took hours now are automated and other jobs that took hours now take minutes. Workers are also worked harder than they were in many times in the past and just produce more through harsher working conditions – consider that even the toiling life of medieval serfs came with more time off than modern workers.
Federal Reserve Economic Data (FRED) tracks the productivity rate of workers back to the first quarter of 1947. The number it provides is already adjusted for inflation, making it a valuable tool in measuring productivity. You can see this with the term used: “real output.” To be absolutely certain, I also verified this with the Federal Reserve because of how striking these results become. With this information, we can figure out how much the minimum wage would be if workers also enjoyed an equal increase in the common advance of humanity. This aspect is often ignored despite economists and politicians often praising capitalism for how we all have better lives despite those inflation numbers saying otherwise. Workers did not generally get provided with a better life and have had setbacks despite moderate gains into the fifties. But what if they did?
I said that I was going to approach this as a capitalist would, not challenging the rate of profit compared to pay as it existed at these dates, and so I shall. If we assume these amounts were fair at the time they were enacted, then what would the minimum wage rise if workers shared equally in the technological advances and the harsher work conditions they endure so that their wages grew at the same rate as profits had. If they were paid one third of the value of their labor then, what would on third of the value of their labor be now? We can easily calculate this by multiplying the inflated minimum wage for years 1947 or later by the ratio of the first quarter 2022 productivity rate over the productivity rate that existed in that year and quarter. Let us see how that changes things.
|Date Instituted||Inflated to 2022 dollars||Adjusted for Productivity|
|January 25, 1950||$9.10||$38.91|
|March 1, 1956||$10.75||$40.02|
|September 3, 1961||$9.78||$32.85|
|September 3, 1964||$10.84||$31.49|
|September 3, 1965||$11.60||$32.73|
|February 1, 1967||$8.75||$23.69|
|February 1, 1968||$9.66||$25.28|
|February 1, 1969||$10.35||$26.67|
|February 1, 1970||$7.53||$19.58|
|February 1, 1971||$11.55||$28.55|
|May 1, 1974||$11.26||$26.35|
|January 1, 1975||$10.87||$25.26|
|January 1, 1976||$11.30||$25.14|
|January 1, 1977||$11.09||$24.16|
|January 1, 1978||$11.88||$25.83|
|January 1, 1979||$11.68||$24.95|
|January 1, 1980||$11.00||$23.49|
|January 1, 1981||$10.77||$22.56|
|April 1, 1990||$8.50||$15.41|
|April 1, 1991||$9.12||$16.34|
|October 1, 1996||$8.85||$14.49|
|September 1, 1997||$9.38||$15.04|
|July 24, 2007||$8.25||$10.01|
|July 24, 2008||$8.89||$10.63|
|July 24, 2009||$9.88||$11.38|
There is a clear pattern here of compensation to workers dropping over time but being slightly ramped in short periods of 2-3 years to create a bit of parity in more recent decades. Employers have been getting more and more of the pie over time, keeping workers on subsistence wages while working them harder. A $15 an hour minimum wage being called for would be pretty on parity with wages in the 1990s, once productivity is factored in. However, there is simple justification to call for a minimum wage of $40 an hour (the median wage in 2020 was only $16.36 an hour, which is $18.48 an hour after inflation). In 1956, workers had a minimum wage increase that gave them a share of productivity equivalent to a bit more than that. As we all know, American capitalism was thriving back then so companies sure could afford to pay that much. Sure, workers would be getting more compensation, after inflation, than they did then; but so too then do their employers, in equal measure. Even $25 an hour would be on par with the sixties and seventies.
A measly increase to $15 an hour, though it may seem excessive if we only factor in inflation, is paltry once we factor in increased productivity. If workers are producing 279% more than they were in 1956, why shouldn’t they be paid 279% more? Instead, employers pocketed that and more.
Workers have been losing ground steadily since 1956, receiving less and less of the value of what they produce. An demands for a minimum wage must not only demand that workers do not lose ground in absolute terms (adjusting for inflation), but must also demand that workers do not lose ground in relative terms so that they share in the advancement of human capabilities. As it stands now, it has been the employer making all those gains, feeding of the value of our labor like a parasite just careful enough not to kill its host – climate change aside.
When John Maynard Keynes (born 1883) suggested his grandchildren would work only 15 hours a week, he supposed that they would be sharing equally in the gains as human technology moved forward. Of course, many analysts suggest that people would instead opt to purchase more or better things, but they would have that option. The truth of the matter is that this option is not open to workers today and they toil for that base subsistence.
Featured image via billmoyers.com. Fair use.