The Paradoxical Meanness of the Minimum Wage

Over at dotcommonweal, Paul Moses links to this Bloomberg piece on the pay gap between McDonald’s CEO and a Counterman, and I urge you to read both the article and Moses’ blogpost.

The issue of pay disparities between the CEO of any company and it’s “front end” employees is one of those fights I leave to others, like Moses; I am never sure if people are seriously suggesting there should be no difference, salary-wise, between them, or if they’re just trying to make a point. Morevoer that whole “at some point you’ve made enough money” argument is one I truly would be much more sympathetic to, if it were more broadly (and fairly) applied — meaning if it were a standard applied to athletes and artists and media-elites and not just to corporate “fat cats.” Because that sentiment is apparently not meant to be uniformly applied throughout the monied classes, I tend to doubt the sincerity of those who promulgate it.

All of that said, however, I don’t know how anyone can accept an idea that a man who has worked faithfully and industriously for 20 years, at any job, should still be making minimum wage.

(Tyree Johnson of Chicago, 20 years at McDonalds, earning $8.25 an hour/source)

When I got my first job, as a department store cashier, I made $2.10 an hour. After 30 days, I got a “raise” to $2.30 and a year later I was making either $3.40 or $3.50 an hour. Had I remained with the store, it is unlikely I would ever have gotten rich (or made “enough” money; I am still waiting for that day) but certainly had I remained there for 20 years I would have — like most of the Department Managers, who were promoted from within — seen my responsibilities rise and my wage, as well. Such managers may not have been rich, but they managed to own homes and raise families on what they made.

To keep a loyal, well-trained and dependable employee at minimum wage — the same wage paid to unskilled workers newly hired — is pretty unconscionable. The job itself might not be “worth” $15 or $18 an hour, but the intangibles that such an employee brings to the job (dependability; knowledge of policy/procedure; demonstrated sense of responsibility; did I mention dependability) should be worth $12.50 an hour or so, shouldn’t it?

Last April, the HHS Mandate-rejecting Hobby Lobby store chain — citing its Christian sensibilities — voluntarily bumped up their minimum wage scale for their employees — $13 per hour for full-timers, and $9 for part-time. They’ve done that for the past four years.

In so doing, Hobby Lobby exhibits a tendency to broad-mindedness that goes missing within our minimum wage policies, and exposes a paradox inherent therein: by dictating what the minimum wage must be, we have trained business owners to a somewhat narrow, reactionary way of thinking. Prior to minimum wage laws, a smart employer knew that he could not keep good employees without paying them their worth. Once employers were told what they “must” pay, however, it created a baseline that mentally (and perhaps emotionally) narrowed, rather than broadened an employers sense of what wage was fair or deserved. In fact “fair” and “deserved” went out the window. If all a businessman (or woman) had to do was make sure a minimum wage was being paid, what did fairness or merit have to do with anything?

And that sort of thinking, born of the good-intentions of our own government — is how we get to the reality of a 20-year employee making $8.25 an hour, and having to live a pretty hardscrabble life.

This is unjust and dehumanizing; our minimum wage laws have helped corporations see employees less as skilled humans who might have more to bring to the table, but instead as units whose predictable, mandated wages sure make it easy to budget and finagle where they can.

Leo Rosten’s (sadly out-of-print) People I Have Loved, Known or Admired contains an essay entitled “An Infuriating Man” — his friend “Fenwick”, about an “exceedingly loveable little man” whom people could not stand, because he had the temerity to go around being logical. Fenwick, musing on minimum wage, manages to upset an entire cocktail party of elites:

Fenwick stunned Shmidlapp, whom I had forgotten to brief in advance, by mournfully remarking that the minimum-wage laws would wreak havoc precisely among those unskilled workers [minorities, teenagers] they were supposed to help.

“To begin with,” said Fenwick, “the American wage earner today gets twice $1.40 and hour, so the bill is not going to affect him –”

“The bill is designed to help the unskilled and the undereducated,” retorted Shmidlapp.

“An admirable intention,” beamed Fenwick, “because a tragic proportion of that group is unemployed. But if employers aren’t hiring them at $1.25 an hour, is there any reason on earth why they will hire them at $1.40?…Surely the unemployed will have less chance of finding a job under the new, higher minimum-wage laws than they had under the old.”

“What?” cried Shmidlapp. “Can you prove that?”

“Yes,” said Fenwick. “Every time minimum wages have been raised, the ratio of unemployed teenagers has risen — and mostly among [minorities]. . .Don’t you agree that every time you raise the minimum, you must push more unskilled or inexperienced workers onto the unemployment rolls?”

Shmidlapp attacked on the flanks. “What about the greedy employers,” he demanded, “who cruelly exploit their workers by not paying them enough to live on?”

A twinge of pain crossed Fenwick’s boyish features, “Oh, very, very few employers can hold on to their workmen if they pay them less than the workers can get elsewhere.”

. . .”Some men just can’t live on that! Or feed and clothe their children! Or pay their medical bills!” This was Shmidlapp at his best.

“We certainly ought to remedy that,” said Fenwick. “No American who wants to work should go hungry because of the objective (and thus efficient) forces of supply and demand. Let us by all means give and guarantee the poor a minimum income; that does far less economic and political damage than a minimum wage. A minimum income does not discriminate against minorities, the illiterate, the inept — ”

“Do you mean to stand there and tell me…that no workers are actually helped with Congress raises the minimum wage?”

“Oh, some workers will have their wages raised from $1.25 to $1.40 an hour,” said Fenwick, “but far more will not get a job they might have gotten at $1.25. It is just too costly to train them at $1.40, much less $1.60 an hour, especially for skills that take long training periods. This makes a raise in minimum wages absolutely heartless,” mourned Fenwick. “It prices decent, innocent, willing workmen right out of the labor market.”

“Then why does Congress pass such laws?” shouted Shmidlapp.

Fenwick blnked. “Are you suggesting that Congress never passes foolish or short-sighted — “

Well, let’s leave it there, and ponder how it comes to be that, with the best of intentions, our government has created a situation wherein a man may work for 20 years at a job, play by all the rules, and only make a lousy $8.25 an hour, because that’s all an employer needs to pay him to satisfy the law.

That essay is too long for me to excerpt, but if you can find it, read it all — or better yet, buy a used copy of Rosten’s wonderful book while a few are still floating around. Fenwick, btw, appears to have been modeled on Milton Friedman and before he’s through with old Shmedlapp he brings in the geographical effects of the minimum wage law; When Shmedlapp, argues that “conservatives and Republicans favor minimum wage laws!” Fenwick/Friedman responds: “Of course they do. . .many of them are manufacturing products in the North [and] northern manufacturers are delighted to force up their competitors’ costs in the South; in that way, businessmen in the North won’t have to face the desirable effects of that free-enterprise system conservatives and Republicans love to extol…increased minimum wages lead to increased costs, which lead to higher prices…Then many honest, low-wage earners in the South (where the cost of living is lower) will become disemployed…”

I don’t pretend to have all (or any) answers, but it seems to me we are at a point where every status quo must be re-assessed, including our wage policy. What are you thoughts? Do you think a minimum income may do less damage, both to the economy, our political climate and — most importantly to the dignity of the human person — than a minimum wage?

RELATED:
The USCCB is currently running a series of pieces about poverty in America, and its underlying issues. No one, of course, has all of the answers, and we cannot always foresee the results of our best-intentions in trying to eradicate poverty, but do check out the series and go here to read what US Bishops have to say about Domestic Poverty.