Wages Don’t Kill Jobs, Corporations Do

Shutterstock | garetsworkshop

  •  
  •  
  •  
  •  

Last week, the House of Representatives passed the Raise The Wage Act, which would increase the minimum wage to $15 an hour and tie it to inflation, with near-unanimous support from Democrats and near-unanimous opposition from Republicans. This is a momentous victory for workers, but self-proclaimed “grim reaper” Mitch McConnell casts a long shadow on any celebration.

Surprising no one, McConnell promptly vowed not to allow the Senate to vote on the legislation while peddling the usual sky-is-falling fear-mongering about a living wage killing jobs. But a living wage isn’t the real danger to workers — instead, it’s the giant corporations that refuse to pay their employees enough to survive on, all while raking in record profits year after year.

Republican politicians claim that employers simply can’t afford a $15 minimum wage, and would cut hours or jobs if it were enacted. For Republicans, the answer to stagnant wages and rising costs of living is, bafflingly, to cut taxes for the wealthy, despite decades of evidence that trickle-down economics does nothing but make the rich richer. 

In 2017, the GOP passed a sweeping rewrite of the American tax code, slashing corporate tax rates from 35% to 21% and introducing questionable breaks that mostly benefited the rich. They said the bill would unleash a flurry of economic growth and create jobs, predicting an especially bold average raise of $4,000.

But while corporations got their tax cut, working Americans didn’t see the benefits they were promised. In 2018 alone, corporations spent over $800 billion on buying back their own stocks. Meanwhile, wages barely budged, and some of the largest corporations have actually cut jobs. AT&T alone cut 23,000 jobs in the aftermath of the GOP tax bill, despite its assurances it would create jobs.

The reason is simple — in the minds of the executives and board members who make decisions, corporations don’t exist to employ people or pay fair wages, they exist to generate profit for their owners and shareholders. Sometimes, hiring people helps make that happen, but sometimes firing them does too. Large corporations employ a lot of people, but often at low wages, under strenuous conditions, and with little regard for the small businesses (and employees) they displace in the process. 

Walmart alone employs 1.5 million Americans, but that’s not so impressive when half of them are part-time workers (most of them unwillingly) with no benefits who are so underpaid that they collectively receive billions of dollars in public assistance every year. Corporate tax cuts are no silver bullet — they’re a handout on a silver platter.

So we know that tax cuts for corporations don’t lead to new jobs. But is there any truth to the claim that raising the minimum wage would kill jobs? Fortunately, we don’t have to guess. Many locales have implemented significant minimum wage increases, and they simply haven’t led to the job losses Republicans said they would. A recent, wide-ranging UC Berkeley study finds that minimum wage increases in areas with many minimum wage workers had no substantial impact on employment or hours, finding instead that the increases have driven down poverty rates.

This shouldn’t come as a surprise — poverty wages suffocate the consumer demand our economy is built on. If your business relies on your employees showing up to work fed, clothed, healthy, rested, and clean, and you pay them less than they need to afford food, clothes, healthcare, and a decent place to live, you are sucking the freedom out of the free market. On the other hand, paying workers enough to live on empowers them to spend money in their local economies and build them from the ground up, benefiting everyone.

With more and more Americans sliding into poverty, the answer isn’t tax cuts for the rich and their corporations — it’s a raise for working families to lift them out of it. If Mitch McConnell doesn’t put the Raise The Wage Act to a vote, he may very well be one of the first Americans to lose their job in 2021.

Related Posts