, ,

Guide to Awful Anti-Minimum Wage Arguments

By The All-Nite Images from NY, NY, USA (Fight for $15 on 4/15) [CC BY-SA 2.0 (https://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons

The minimum wage is a key issue in many states’ elections in 2018, as it has been the last few Novembers. But awful arguments continue to pollute the discourse. Lest anyone be fooled by them, here are refutations of some of the most popular conservative arguments against minimum wage increases.

  1. “If you raise the minimum wage, you will make it illegal for low-skilled workers to get a job.”

Milton Friedman has been a popularizer of this idea, actually arguing that a minimum wage provides zero benefit to low-wage workers. The argument goes like this: If you’re earning $7.50/hour today, the government can’t just magically make you worth $10/hour to your employer tomorrow. The market has decided that your labor is worth $7.50, and if your employer is forced to pay you more, he will cease profiting from your labor, which means you lose your job.

The wrongful assumption here is that all employers always earn minimal profits from their workers’ labor. In Friedman’s world, low-wage workers have so much bargaining power that they can constantly command maximally high wages by pitting employers against each other.

In Friedman’s world, if a Walmart worker is earning $11/hour today, but producing $15’s worth of wealth per hour, this reflects a soon-to-be-corrected error in the market. In a short time, the worker will be able to bargain his wage up to $14 per hour or so (leaving his employer with $1 in profits). Walmart will happily pay him this because its leaders know that it must desperately compete with Target and other retailers to retain productive workers.

According to Friedman’s fantasy, capitalism itself will raise a worker’s wages to maximally high levels. No minimum wages or unions are needed.

In fact, most low-wage workers produce far more than they earn. Consider that from 1968 to 2012, U.S. worker productivity skyrocketed while the inflation-adjusted minimum wage actually fell, from $10.68 to $7.25. If the minimum wage had kept up with productivity during this period, it would have reached $21.72 by 2012.

If Friedman were correct that capitalism always guarantees minimal profits and maximum wages, most low-wage workers would earn at least $21 per hour by now.

Although Friedman’s notion of minimal profits and maximal wages was always fantastical, and contrary to common sense, it exploited the popular belief that unregulated markets are perfect — and perforce still flourishes today.

  1. “Fast food and retail were never ‘meant’ to be living wage jobs.”

Many rightists argue that the “purpose” of fast food and retail jobs is to provide sub-living wage jobs to teens. Since teenagers can do these jobs, they do not merit living wages. This is not an economic argument, but a moral one.

If you tell conservatives that the average age of low-wage workers is “35,” they will further moralize and claim that older minimum wage earners are being properly sanctioned by the market because of their poor life choices.

Note the inconsistency. Half of the time, conservatives argue that the market will naturally boost fast-food wages to as high as employers are able to pay (see above). The other half, they suggest that although Wendy’s might be able to pay $15/hour, doing so would corrupt a teenager by providing him an adult’s wages, or perhaps provide unduly high wages to an older adult.

Is capitalism wonderful because it always provides workers with maximally high wages via competition among employers, as Milton Friedman and his followers claim to believe? Or, is capitalism sometimes allowed to pay lower wages for teenagers and older unskilled workers, because their earning more would be immoral?

Suffice it that conservatives are self-owning when they argue that high wages for low-wage sector jobs are immoral. They are admitting that no matter how profitable Walmart or McDonald’s is, they do not pay decent wages, thus contradicting trickle-down economics — which is the entire basis for their economic beliefs. And they are admitting their view that living wages are often undesirable because they are immoral. This contradicts that they even want wealth to trickle down, thus giving up the game entirely.

  1. “Only a small percentage of Americans actually earn the minimum wage.”

Conservatives will often adduce that only a tiny percent of Americans earn the minimum wage, to suggest that few Americans earn low wages.

That percentage, though, is meaningless, since no one who earns a penny or more above the legal minimum, is a “minimum wage worker.” And most low-wage jobs pay more than the minimum wage.

One reason they do is because “minimum wage jobs” are poor marketing — to job applicants and the public. Interviews work better when you can tell applicants that the position pays “above the minimum wage.” And the public, of course, feels somewhat happier about patronizing companies that pay more than the minimum wage, no matter how small that “more” is.

The more relevant question is how many workers earn low wages? Or, if a particular minimum wage hike is being proposed, how many workers would it affect?

Approximately a quarter of American workers earn less than $12 per hour, while almost half earn less than $15 per hour. That means that in almost every city and state, living wage laws would affect a giant percentage of workers.

Using a meaningless statistic to suggest that a problem that affects up to half of all Americans only affects 2–3% of them is, on one hand, the sort of anti-intellectual villainy that is commonplace in Forbes or Reason magazines.

But analyzing only minimum wage earners offers a second advantage. For whereas a disproportionately high number of minimum-wage workers are adolescents or college students, low-wage workers tend to be older.

Pretending, therefore, that the number and demographic makeup of minimum wage earners sheds any light on low-wage workers, offers rightists a twofer: 1) It vastly underestimates the problem of low wages and 2) it perpetuates the myth that most low-wage workers are students or teens.

In everyday parlance, when we speak of “minimum wage workers,” we are often referring to workers who earn wages that are near or at the legal minimum. Right-wingers exploit this by producing meaningless arguments about those who earn exactly the minimum wage.

  1. “Stores will just charge more to negate the higher wages. These increases cancel out the minimum wage hike.”

Conservatives often argue that equal-and-opposite price increases result from increased minimum wages. This should occur either because of generalized inflation or because business owners consciously charge higher prices to negate mandated wage hikes. In turn, low-wage workers break even, and the benefit of the wage hike is illusory. (Admittedly, this argument is popular among less sophisticated conservatives, with few elites making it. I shall address it, however, because it is widely argued.)

On its face, this is a bizarre argument, because of its impossible specificity. If, for example, the minimum wage is raised to $12, all workers who were previously earning $7.25, $9.00, and $11.00, would need to benefit equally from the raised wage floor. They would have to, because increased prices at stores would be constant for all of them. And the equation needs to balance out to zero for everyone. This is demonstrably absurd.

The argument is also ironic because of the contempt that it shows for markets. Conservatives claim to believe that markets are great for consumers because competition keeps prices low. But many of them will abandon this belief the moment it serves them to do so. They will imply that markets are a myth, because businesses can charge whatever they want to negate higher minimum wages.

On its face, this, too, is ridiculous. For thoroughness, let’s indulge it anyway. Let us imagine, for example, a world in which all fast-food restaurants try (illegally) to price-fix, and raise prices on all of their menu items by exactly 10%, to compensate for increases in expenses of 10% due to a minimum wage hike. Even with such price-fixing guaranteed, consumers do not need to eat fast food. They can actually purchase hamburgers at the grocery store, and cook them at home. And the moment that possibility becomes apparent, competition is at work, and fast-food restaurants realize that their price-fixing scheme won’t work. They lose business, and lower their prices.

So much for the notion that equal-and-opposite price increases will precisely negate minimum wage hikes. The more substantive question is whether minimum wage hikes can cause enough inflation to significantly harm low-wage workers.

The answer is “almost never.” Assume, for example, that a minimum wage hike is so impactful that it, alone, leads to 3% inflation over a few years. Those who gain the biggest net benefit from the hike, despite this inflation, will be the workers who were paid the least in the first place. Thus, if a minimum wage increase from $10 to $12 per hour was what caused the 3% inflation, the lowest paid workers still enjoy a 17% increase in real wages (a 20% increase in wages minus a 3% effective decrease due to inflation). And so, even if a minimum wage hike does cause inflation, minimum wage workers will still greatly benefit, in almost all cases.

At the heart of the “price hikes negate wage hikes” fallacy is a refusal to see the obvious. The basic trade off of minimum wage hikes is between profits and wages, not wages and inflation. When an employer is forced to pay higher wages, his profits fall. Inflation could result, too, if a mandated wage hike generates enough economic activity. But this would be a second-order and much less significant effect, if it occurs at all. The notion of an essential, one-to-one relationship between wages and/or inflation is fantasy.

  1. “This new minimum wage will lead to more automation and fewer jobs.”

With more self-checkout lines appearing at grocery stores, right wingers have seized on the argument that higher minimum wages will lead to automation displacing workers — with zero benefit to workers.

Jeb Bush articulated this fallacy during his 2016 campaign, arguing that higher federal minimum wages always lead to new technologies or business innovations that kill low-wage jobs. (Statewide minimum wage hikes do not have this effect, according to Bush, apparently because states’ rights are awesome.)

It is, of course, theoretically possible for higher wage floors to lead to more automation. Let’s say an employer is currently paying grocery clerks $9 per hour, and a robot can do the job for $13/hour. If the minimum wage rises to $15/hour, the grocery clerk may be fired and a new robot will be added for less than it would have taken to pay the new minimum wage.

But the obvious question is, how many jobs will a minimum wage hike kill, due to automation? Given that a recent study of 137 minimum wage hikes since 1979 found zero net jobs lost, the answer is likely far closer to 0% than 100%, Bush’s confidence notwithstanding.

Bush’s argument, like much conservative speech, consists merely of regurgitating well-rehearsed slogans. And so, unless they provide specific data on wages, profits, revenues, or the cost of automation, Bush and anyone else who argue that minimum wage hikes will always give rise to much more automation are just hand-waving.

  1. “If $15 is good, why not try for $30, libtard?”

Spend five minutes searching the comments section of any article on the minimum wage, and you will find a right-winger arguing, with self-conscious irony, that if wage x is good, wage 2 times x should be better yet. He is cleverly implying that minimum wage advocates simply like the idea of higher wages, but know nothing of economics. They would push for any wage floor hike, no matter how high.

This is a self-defeating argument, though. If the minimum wage advocate actually believes “the higher the better,” with no qualifications, he would already be arguing for “2 times x” instead of “x,” or better yet “10 times x” or “100 times x.” You wouldn’t have to point out to the “libtard” that $100 per hour would be better, because he would already be advocating for such a wage.

More to the point, states and cities almost always implement large wage hikes gradually. In all three $15 minimum wage states, New York, California, and Massachusetts, the wages rise quite slowly. In New York, a board of technocrats will determine how fast $15 will be achieved across the state. California won’t see $15 until 2022; Massachusetts, not until 2023. Oregon’s system, which uses three different wages, including a standard minimum wage and separate ones for the Portland metropolitan area and non-urban areas, could hardly be more technocratic and complex.

Contrary to right-wing smears, minimum wage laws are often ultra-wonky and implemented gradually. And indeed, note the contrast. From the most celebrated right-wing U.S. economist ever (Friedman), to the most reasonable and moderate Republican candidate in the 2016 election (Jeb Bush), to millions of ditto-heads, a giant body of conservatives not only oppose minimum wages, but insist that they can only hurt low-wage workers — and with arguments that are easily disproved.

Written by Erik Mears

Teacher and veteran who lives in Queens, New York. His work has appeared in truth-out.org, socialistworker.org, and popfront.us.

Erik is a Guest Contributor to Progressive Army.

One Comment

Leave a Reply
  1. It’s really painful to see people try to make sense of the world without any principles or empiricism. This author has clearly never read an economics textbook. Otherwise he would realize that “Milton Friedman’s fantasy” is one of the most widely accepted economic principles.

    Give this a listen and tell me: “Where is the lie?”


Leave a Reply

Your email address will not be published. Required fields are marked *

Alex Jones Where Art Thou?

Guide to Awful Anti-Minimum Wage Arguments