Pearls of Wisdom: Lower Wages or Higher Wages?


Pearls of Wisdom: Lower Wages or Higher Wages?

Our friends at The Economic Policy Institute (EPI) sent out a new report that you can read here.  

The report says that as unions decline, wages decline - but I think it skips over a key step in the argument about wages that the progressive side needs to make.

The fact that unions raise the wages of workers is pretty non-controversial. Unions were at the forefront of fights for the five day week, eight hour day, no child labor, sick leave, Medicare, and Social Security. Now the argument that unions are making is the argument for the higher minimum wage - most are affiliated with the broad Fight for $15 movement.

But is that the whole argument that we want to be pushing?

There are really (at least) two different worldviews about the United States economy; two very different goals for where our country will be in the future.

  • Some people take the position that the goal for America is a society in which anyone who wants to work hard can get a job and have an income to support a middle class family. Kind of like the Honeymooners. It was 1955 - Ralph and Ed were a bus driver and a garbage collector. They each had an apartment where they lived with their wives. Ralph was a member of the Transit Workers Union (local 100) and Ed used GI bill money for vocational training and then was a member of Teamsters local 831. They each made about $62 per week. They were typical working class people, getting by, spending every penny they made, but planning to retire someday on a combination of their pensions and social security. Today’s progressives see the country being populated by people like them, except with more people of color and women working at those jobs.
  • The other view is that American workers are paid more than workers in China, Pakistan, and other places for working equally as hard. American businesses now have to compete with businesses from all over the world, and the decline in certain industries (textiles, and televisions both used to be made mostly in the United States, and are now almost exclusively imported) is because the costs of doing business are higher in the United States. The only solution is for America to be “more competitive” and “more business friendly.” Those are both code words for lowering the pay of American workers to make the cost of manufacturing stuff here in the United States the same as it is in other places.

The progressives must move beyond the argument: A policy lowers wages and increases inequality, therefore it is bad; and move to: A policy lowers the amount of income for everyone, rich and poor, and therefore it is bad.

We need to explain why we believe that raising the income of working Americans is good, not just assert that it is.

We must focus the debate on what the bigger picture is for our nation. The best thing that can happen to a small business is more money in the hands of the people who will spend it. Once business owners see revenues go up, they can see the business grow (more hires, expansion, etc.,), which in turn helps the economy grow. The widening divide in income inequality in this country is unacceptable, but the bigger picture is that lower wages hurts everyone’s income. Progressives could advance this idea much farther with this argument.

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