Our Economy is Most Functional When All Americans Can Afford to Participate


Our Economy is Most Functional When All Americans Can Afford to Participate

The purpose of the American minimum wage is to ensure that all Americans are able to earn enough money to provide for the basic needs of themselves and their family. It is not an evil tool of the left to undermine the free market or to hamper business and profit margins nor is it intended to be a handout on the backs of hardworking corporations and taxpayers. It is also a critical part of keeping the American economy moving. 

Somehow the intent and indeed necessity of the minimum wage has been forgotten by many Americans who do not rely on it and by an even greater number of politicians who have been subsidized by lobbyists to forget how important it is.

But what so often gets forgotten is that our country is only at its best and our economy only at its most functional when all Americans can afford to participate in it.

The American economy is 70% consumer driven. This means that economic growth is entirely dependent on Americans having and spending money. What many people seem to forget is that money is exponentially more likely to be spent by people who have less of it. Someone who makes $15,000 a year is much more likely to spend rather than save a tax return of $1500 on goods and services than someone who makes $750,000 a year. And that’s important because that money does a lot more good to our economy in circulation and being spent than it does in a savings account or mutual fund. 

While raising the minimum wage may narrow the profit margins for some corporations and shareholders that money does our economy a lot more good in the hands of people who will actually spend it on essential goods and services and keep it in circulation.

The notion that treating workers fairly is inconsistent with a successful business is misguided. My own experience as a business owner is that treating your employees fairly makes a business stronger.

For 22 years, I was a partner in a profitable mid-size law firm in Manhattan where the partners had hands-on management responsibility for the running of the firm. We were proud to pay our staff employees well. In return, our employees were loyal and hardworking. We had little turnover, which meant less management time spent on hiring and training. Our clients commented positively on the performance and experience of our staff, which contributed positively to overall client satisfaction and the firm's revenue and profitability.

Business owners paying their employees a fair wage are actually penalized because companies like Walmart and the fast food chains paying the minimum wage receive huge government subsidies in the form of welfare benefits paid to their workers. Those workers are paid so little that their wages are in poverty territory.  In 2015, New York State paid out $700 million in public benefits just to employees of Burger King and McDonald's. Those complaining about welfare payments should focus on the true beneficiaries of those payments: corporations whose profitability is supported by government payments permitting them to pay unconscionably low wages. Corporations who cannot make a profit without this corporate welfare deserve to fail.

Part of treating workers fairly is ensuring that they are paid a fair wage that allows them to take care of themselves and their families without receiving degrading and uncertain welfare payments We cannot afford to keep funneling money up into the top income brackets and draining it from those who have the least. In doing that we create an environment where the lowest earners become increasingly dependent on government services and are less and less able to participate in our economy. Taxpayers and state and local governments need to be freed from the huge welfare payments they are paying to workers making substandard wages. And the government should not be sustaining bad business practices with corporate welfare. The current situation is damaging to our long-term economic growth and sustainability.

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