• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
MENUMENU
MENUMENU
  • Home
  • About
    • Contact Us
    • FlaglerLive Board of Directors
    • Comment Policy
    • Mission Statement
    • Our Values
  • Live Calendar
  • Submit Obituary
  • Submit an Event
  • Support FlaglerLive
  • Advertise on FlaglerLive (386) 503-3808
  • Search Results

FlaglerLive

No Bull, no Fluff, No Smudges

MENUMENU
  • Flagler
    • Flagler County Commission
    • Beverly Beach
    • Economic Development Council
    • Flagler History
    • Mondex/Daytona North
    • The Hammock
    • Tourist Development Council
  • Palm Coast
    • Palm Coast City Council
    • Palm Coast Crime
  • Bunnell
    • Bunnell City Commission
    • Bunnell Crime
  • Flagler Beach
    • Flagler Beach City Commission
    • Flagler Beach Crime
  • Cops/Courts
    • Circuit & County Court
    • Florida Supreme Court
    • Federal Courts
    • Flagler 911
    • Fire House
    • Flagler County Sheriff
    • Flagler Jail Bookings
    • Traffic Accidents
  • Rights & Liberties
    • Fourth Amendment
    • First Amendment
    • Privacy
    • Second Amendment
    • Seventh Amendment
    • Sixth Amendment
    • Sunshine Law
    • Third Amendment
    • Religion & Beliefs
    • Human Rights
    • Immigration
    • Labor Rights
    • 14th Amendment
    • Civil Rights
  • Schools
    • Adult Education
    • Belle Terre Elementary
    • Buddy Taylor Middle
    • Bunnell Elementary
    • Charter Schools
    • Daytona State College
    • Flagler County School Board
    • Flagler Palm Coast High School
    • Higher Education
    • Imagine School
    • Indian Trails Middle
    • Matanzas High School
    • Old Kings Elementary
    • Rymfire Elementary
    • Stetson University
    • Wadsworth Elementary
    • University of Florida/Florida State
  • Economy
    • Jobs & Unemployment
    • Business & Economy
    • Development & Sprawl
    • Leisure & Tourism
    • Local Business
    • Local Media
    • Real Estate & Development
    • Taxes
  • Commentary
    • The Conversation
    • Pierre Tristam
    • Diane Roberts
    • Guest Columns
    • Byblos
    • Editor's Blog
  • Culture
    • African American Cultural Society
    • Arts in Palm Coast & Flagler
    • Books
    • City Repertory Theatre
    • Flagler Auditorium
    • Flagler Playhouse
    • Flagler Youth Orchestra
    • Jacksonville Symphony Orchestra
    • Palm Coast Arts Foundation
    • Special Events
  • Elections 2022
    • Amendments and Referendums
    • Presidential Election
    • Campaign Finance
    • City Elections
    • Congressional
    • Constitutionals
    • Courts
    • Governor
    • Polls
    • Voting Rights
  • Florida
    • Federal Politics
    • Florida History
    • Florida Legislature
    • Florida Legislature
    • Ron DeSantis
  • Health & Society
    • Flagler County Health Department
    • Ask the Doctor Column
    • Health Care
    • Health Care Business
    • Covid-19
    • Children and Families
    • Medicaid and Medicare
    • Mental Health
    • Poverty
    • Violence
  • All Else
    • Daily Briefing
    • Americana
    • Obituaries
    • News Briefs
    • Weather and Climate
    • Wildlife

Productivity Math: A $15 Minimum Wage Is Still $9 Short of Where It Should Be

March 1, 2021 | FlaglerLive | 12 Comments

Better wages are better than food stamps. (Fibonacci Blue/Flickr)
Better wages are better than food stamps. (Fibonacci Blue/Flickr)

By John Buell

Conservatives in both political parties want citizens to believe opposition to an increase in the minimum wage is a simple matter of supply and demand economics. If government regulators increase the price of hamburger, consumers will buy less hamburger. Increase the price (wages) of labor and businesses will hire fewer workers.




They hold that if you want to keep the economy at or near full employment, government should leave the market alone and let it set wage levels for skilled and unskilled workers. There is however, one big problem. Supply and demand don’t work in the smooth way the textbooks portray, and no market could endure without plenty of regulation and support.

In theory the market price of unskilled labor is a reflection of its productivity. Since wages of unskilled workers in inflation-adjusted terms are less than in the late sixties one would infer the counterfactual conclusion that there has been no increase in labor productivity for more than a generation. This statistic alone should make us suspicious about simplistic market models. James K. Galbraith of the University of Texas challenges “the proposition that with a higher average wage, fewer people necessarily will be employed. This is a textbook verity, often repeated, and beloved by business lobbies. But it is eminently doubtful in the real world. The real world is shot through with high unemployment in low-wage regions and fuller employment in high-wage regions.”

Why this is the case might be more clear if we consider the difference between a market for hamburgers and a market for hamburger flippers. Hamburgers do not alter their aspirations or actions in response to movements in their sale price. An increase in wages is a cost to business owners but also a possible if indeterminate source of future expenditures for their products. In the real world at the same time burger flippers’ wages go up, public health groups issue new reports about the health effects of beef, advertisers find new ways to glamorize their product, wholesale beef prices respond to an unexpected reduction in the herd of beef cattle.




In such a scenario multiple supply and demand factors operate in intersecting markets. Periodic patterns and regularities emerge, but these also are vulnerable to internal tensions and surprises. Long lasting and fully predictable equilibria are a myth. Prices are often imposed via tacit or explicit interaction of collaboration among economic oligarchs, legal requirements, tax policy, price leadership by the big players, contracts.

In the quarter century following World War II this combination was often challenged and partially checked by another combination, the large industrial unions. John Kenneth Galbraith’s countervailing powers helped assure steady increases in wage and benefits equal to gains in worker productivity. Periodically increased and inflation adjusted minimum wage standards were one essential part of the system of countervailing powers.

As it is, the weakening and undermining of unions, tax policy, urban and suburban planning and minimum wage standards no longer adjusted for inflation have left an obscene gap between worker productivity and poor and working class wages and benefits. Julie Hollar, Extra’s managing editor, cites Dean Baker’s finding that “ if the minimum wage had kept pace with gains in productivity—as it did from 1938 through 1968—it would today not be $15 an hour, but $24. ” For African Americans, the gap is even worse.

A more generous minimum wage is only one tool allowing us to work toward a more just society, but it is important. It is widely popular, even receiving support from a large minority of Republicans. With worker productivity in many sectors far in excess of current wages there is ample space for the infusion of purchasing power.

Furthermore lifting their wages helps overcome ugly stereotypes about the poor. Higher wages also press management to have more regard for the long- term development of their workers, whose own self-esteem is enhanced in the process. Most importantly, a livable wage enables workers more opportunity to participate in the political and economic issues of the day




In addition to deflating the simplistic claims of its opponents, progressives might well address the moral failings of market fundamentalism. Its advocates tout it as an absolute when the subject is regulations on behalf of social justice even as their businesses often quietly rely on government.

Here is one progressive entrepreneur’s reaction to the hypocrisy: “I may be old fashioned, but I believe that I should not be relying on government subsidies to stay in business. If I am paying my employees at a level where they are relying on food stamps to eat and Section 8 for housing, the government is picking up the tab on my substandard wages. That’s not an ethical business; that’s stealing from the taxpayers”.

In the post World War II era, wage growth was translated into consumerism, but this was a collective social choice, not merely a product of market forces. Political culture and climate catastrophe will demand other choices today if we are to fashion compelling visions of countervailing powers.

Worker productivity gains might occasion more interest in expanded leisure time and/or a larger voice in workplace decisions. If periodic or regional bouts of unemployment may be inevitable in dynamic market systems, maybe it is time to talk about a new safety net, the guarantee of a living wage job.

John Buell has a PhD in political science, taught for 10 years at College of the Atlantic, and was an Associate Editor of The Progressive for ten years. He lives in Southwest Harbor, Maine and writes on labor and environmental issues. His most recent book, published by Palgrave in August 2011, is “Politics, Religion, and Culture in an Anxious Age.” He may be reached at [email protected] This piece was originally published by Informed Comment.

Print Friendly, PDF & Email
You and your neighbors collectively read our articles about 25,000 times each day (that's not a typo) with up to 65,000 daily reads during emergencies like hurricanes. Flagler County residents rely on FlaglerLive for essential, bold and analytical journalism that cannot be found anywhere else. But we depend on your support. Please join our December fund drive! If you donate the cost of a scoop of ice cream, you will be helping us continue to provide comprehensive local news and honest, serious journalism for our community. If you can donate more or become a monthly donor, even better. Donations are tax deductible since FlaglerLive is a 501(c)(3) non-profit news organization. Donate by clicking anywhere in this box. Think of it as buying a scoop, in every sense of the term!  
All donors' identities are kept confidential and anonymous.
   

Reader Interactions

Comments

  1. Jimbo99 says

    March 1, 2021 at 8:00 pm

    I tend to agree with this. There’s a reason the Federal subsidy for Unaffordable Healthcare is over $ 50K for an individual, more for a family. If you need a Government subsidy for a healthcare premium, I can’t imagine that you wouldn’t need a federal subsidy for housing & food too ?

    Reply
  2. Motherworry says

    March 1, 2021 at 9:34 pm

    When you think about it, we, the taxpayer are subsidizing business that do not pay their employees an above poverty wage. Those employees utilize medicaid for their medical needs. The taxpayer pays. Most qualify for food assistance. Rent assistance, the taxpayer again pays. The list goes on and one. One large employee was and perhaps still is showing it’s employees how to file for state and federal benefits.
    I’d rather pay more to shop at a business of my choice rather subsidizing business’s that I don’t shop at.

    I know I’m going to hear from all these business that “can’t afford” to pay their employees. Well, Costco, Target and a few others are managing quite well paying an above poverty level wage.

    Reply
  3. Anonymous says

    March 1, 2021 at 10:04 pm

    Minimum wage goes up, everything goes up and people will still live in poverty. Ots the domino effect.

    Reply
  4. Veteran says

    March 1, 2021 at 10:38 pm

    Forget hamburgers. Think of all the small businesses that will close if they have to pay $24 an hour.

    Reply
    • Motherworry says

      March 3, 2021 at 8:43 am

      It begs to be asked, why is it that a bunch of states with a fairly high minimum wage are not having business close? Is it something in the water?
      Look at a map that shows minimum wages paid by state. Note the states with the lowest wages.

      Reply
      • palmcoaster says

        March 22, 2021 at 1:07 pm

        Mworry, I think those states that you memtion with low wages are the ones in the sunbelt that advertise: “Right to work estates?”

        Reply
  5. Zachary says

    March 3, 2021 at 4:42 pm

    They are called “entry level jobs” for a reason, 46K to flip a burger is absurd. At those numbers why bother getting a degree and taking on school loans? I make 60K with a degree, it will take years to payoff my student loans. A seasoned CNC operator in Florida makes that, and that’s with years of training at a difficult job. This will force business to charge so much that no-one will buy, thus closing down and now the workers are 100% reliant on the Nanny State. Do any “economists” study cause and effect in the >real business world< or are they really just book smart? E.g Paul Krugman

    ~ZS

    Reply
  6. Helly Barry says

    March 4, 2021 at 6:26 am

    Why stop at $24.00/hr……… Let’s make it $54.00/hr.
    Now I can buy a can of Beans n Franks for Christmas Dinner this year.

    Reply
  7. Jack says

    March 4, 2021 at 12:35 pm

    A minimum wage is designed to be racist. When the minimum wage was first introduce, it was a way for businesses to not hire minorities.

    Best thing we can do to fix black unemployment is to get rid of the minimum wage.

    Reply
    • Pierre Tristam says

      March 5, 2021 at 8:06 am

      Neo-Jim Crow syllogisms cribbed off a Trump caravan’s bumper snickers.

      Reply
  8. palmcoaster says

    March 22, 2021 at 9:27 am

    The ratio of executive versus employee pay is reported at 300 to 1. Then yes we still need the $15 minimum wage pay for our workers and reduce the CEO’s and other high executives pay and corporate revenue to a more realistic compensation and corporate income that is not driven by greed alone while deteriorating the middle and lower classes incomes that with their purchase power sustain our commerce.

    Reply
  9. palmcoaster says

    March 22, 2021 at 9:28 am

    Ratio 300 to 1: https://corpgov.law.harvard.edu/2016/10/25/ceo-pay-ratio-and-income-inequality-perspectives-for-compensation-committees/

    Reply
  • grand living realty
  • politis matovina attorneys for justice personal injury law auto truck accidents

Leave a Reply Cancel reply

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

Primary Sidebar

Advertisers

  • grand living realty
  • politis matovina attorneys for justice personal injury law auto truck accidents

Recent Comments

  • Cody Weston on Drag Queen Story Hour Is Not What You Think
  • Joshua Rosenbloom on The Daily Cartoon and Live Briefing: Sunday, June 4, 2023
  • FlaglerLive on Mistrial: Jury Deadlocks in Teron Trial On Rape Charges, Questioning Where Crime Took Place
  • Jaine on Mistrial: Jury Deadlocks in Teron Trial On Rape Charges, Questioning Where Crime Took Place
  • Steve Vanne on Drag Queen Story Hour Is Not What You Think
  • Greg on To Survive Poverty, Prayer Helped. But So Did Government.
  • Joshua Rosenbloom on To Survive Poverty, Prayer Helped. But So Did Government.
  • Steve on Drunk Driver Allegedly Goes Nuts on Deputy After Crashing Into Hydrant
  • Dennis C Rathsam on Behind the Divorce, a Bitter, Threat-Ridden Clash Between Waste Pro and Palm Coast Over Recycling Bins
  • Craig on To Survive Poverty, Prayer Helped. But So Did Government.
  • bob on Drunk Driver Allegedly Goes Nuts on Deputy After Crashing Into Hydrant
  • Atwp on Drunk Driver Allegedly Goes Nuts on Deputy After Crashing Into Hydrant
  • bob on Debt Deal a Rare Triumph for Political Center
  • Atwp on To Survive Poverty, Prayer Helped. But So Did Government.
  • FlaglerLocal on Drunk Driver Allegedly Goes Nuts on Deputy After Crashing Into Hydrant
  • TheTruth on At FPC, Misplaced ‘Man Cave’ Culture and Improprieties Cause Demise of Girls’ Basketball Coach

Log in