America needs a pay raise. Now.
How we treat the least in society reflects our values. As a nation, we need to ask ourselves what it really means to be a citizen in America? In fact, we should go further and ask what it means to be a human. As a nation that was built with slave labor and immigrant bond labor, we have certainly made progress toward the ideals stated in our constitution, that all men (and women) are created equal and have inalienable rights to a dignified and happy existence. But after almost 250 years of existence and unbelievable advances in productivity and prosperity, the minimum standard of living for working adults is still far below a level where happiness is abundant.
Something is terribly wrong with a society that achieves so much and yet leaves so many unable to share in its benefits.
The US implemented a minimum wage in 1938 as part of the Fair Labor Standards Act. Currently, the federal minimum wage is stuck at $7.25 an hour, where it has been since 2009. According to a 2012 study by the Center for Economic and Policy Research, if the minimum wage had kept up with increases in worker productivity it would be well over $21.72 an hour.
Even more alarming? If the minimum wage had kept pace with inflation, it would show that it has actually declined in value, from a peak in 1968 of $10.90 an hour in today’s dollars.
There’s a growing movement to see the minimum wage increased to $15/hour. Legislation just introduced by a group of Senators seeks to raise it to $9.25 immediately and to $15 by 2024. Yes, 2024 – that’s another 7 years away. $15 isn’t even keeping pace today with the national average living wage as calculated by MIT. For an employee working a standard 40 hour-week, 52 weeks a year, with no days off, that comes to just $15,080 before taxes, before housing, and before food. At the end of the month, there is less than nothing left.
America’s workers, especially those at the bottom of the income spectrum, deserve a wage that enables them to live in today’s America – to raise their families and pursue their dreams. In addition, not that we should need such arguments to take action, the growth of wages at the low-income level of society is essential to boost aggregate sales in our economy and restore healthy economic growth. Our capitalist economy runs on people spending their incomes or borrowing to spend, neither of which can happen when wages are at poverty levels.
But let’s face a harsher reality – the real minimum wage is $0.
Yes, that’s the wage of the unemployed. Okay, if I am to be generous, I could say that the minimum wage is actually whatever combination of food stamps, disability, and unemployment payments that those who have been left out of private and public sector employment can find to live on. But as long as we tolerate an economy that maintains systemic unemployment, it is a zero-dollar wage that sets the low bar for our nation’s living standards.
I am talking here about those who are able to work, who want to work, and who have attempted to find work. We have designed our economy such that it continues to leave millions of able-bodied citizens without jobs and without the means to be able to provide for their own needs and the needs of their families. And the longer we leave them without a job, the more likely they are to become less employable.
Those who a ready, willing and able to work – the involuntary unemployed – set the real base-wage in our economy. Unemployment sets a floor of zero dollar wages that creates fear of greater poverty for those working in meager minimum wage jobs. We absolutely need to raise the minimum wage, but we should also be ending the cliff of no income by providing paid work for those in-between jobs. Again, this happens to also make eminent sense to our economy. More workers with better incomes means more sales and more profits. This isn’t rocket science, although the logic seems to be lost on too many business lobby interest groups.
It is bad enough that we say to millions of service workers that they must live in poverty so that we can eat cheaper food or have a clean hotel room. With the decline of manufacturing, why can’t service industries be the new middle class of America? But it is even worse that we say to millions more that our economy has no place for you, and that we need you to remain without work to protect us from the evil of inflation. Really?
It is inexcusable to leave those who desire to work without a job. Everyone who desires to use what God-given talents they possess to produce something of value to others - to serve their local community - should have the opportunity to do so.
Capitalism, by definition, does not employ everyone. As business owners, our job is to only employ the number of people needed to produce the output we believe we will sell, as economist Randall Wray from the Levy Institute likes to describe it. It is generally unheard of that a monetized and capitalistic society sustains full employment. This fundamental truth should be a key guide to public policy, both in ensuring decent work and living standards for workers, and to ensure there is always a local job for those not needed at any given time by the needs of private capital.
There is an alternative. A job guarantee would provide the local, skill-appropriate, wage-earning work for those not currently needed by the private sector or our various public sector institutions. A job guarantee would set a floor under our economy and set a new bar for our society. No worker will be left behind. No person will be denied the dignity of being able to contribute and provide for their needs and their family when they are between jobs. No Veteran will return to his or her home and find no willing employers. No displaced factory staffer, shuttered coal mine laborer, or laid off construction worker will ever be left wondering where their next paycheck will come from, and whether they are one more layoff away from living on the streets themselves.
America needs a pay raise, and many Americans need a job. We can achieve both with a living-wage job guarantee, and we’ll be amazed at how this simple policy will revitalize our nation’s economy and relieve a host of social ills related to poverty and unemployment.
Geoff Coventry is a founding member and owner of Tradewind Energy, Inc. Prior to this position, Geoff was a co-founder and vice president of NetSales, Inc. Additional postings by Geoff can be found on his blog "It's The People's Money."