In John Cunningham’s “Law in the Marketplace” column in the Jan. 24 Sunday Monitor, he lists five arguments in support of maintaining a $7.25 per hour minimum wage that, in his belief, are “reasonable.”
These arguments include a claim that a $15 federal minimum wage would cause the cost of goods to increase. It would put companies out of business. It would cause a loss of jobs. Cunningham claims that “[h]ealthy capitalism cannot survive so radical a federal intervention.” He provides no support or evidence for these claims.
However, when he presents arguments in favor of an increased minimum wage, Cunningham notes that several states in fact have a minimum wage that is at, or close to, the proposed federal rate of $15 per hour. In those states, higher minimum wage laws “have had no significant negative effect on business survival, business income, or business employment.” He goes on to state that “[i]ndeed, the majority opinion among economists is that $15 minimum wage laws benefit the states that have them, since individuals increasing their wages because of these laws will spend the entire increase in their states.”
According to Cunningham’s own column, when one looks at facts (i.e. what has actually happened in places where a $15 minimum wage law has been instituted) it is uncontroverted that a higher minimum wage does not have a negative impact. There apparently is no evidence whatsoever that capitalism has been destroyed in states with higher minimum wages. This makes me wonder why Cunningham nonetheless believes that the argument that a $15 minimum wage will destroy capitalism is a reasonable one.
Cunningham’s hypothetical worker making minimum wage in New Hampshire falls nearly $3,000 short of what she needs to survive on an annual basis. What is the practical effect of this? This worker will likely need aid of some type from the government. Studies have shown that the majority of people making minimum wage receive some type of government assistance.
I, like many, have been fortunate enough to earn more than the minimum wage for my entire adult life. So what has been happening to me is this. The government collects taxes from me. Then the government takes a portion of that my tax money and gives it to people like our hypothetical worker. This enables the worker’s employer to continue to pay her at below-subsistence levels.
Who are the major benefactors of this scheme? I might save a bit of money on a consumer good or two. Our hypothetical worker might avoid hunger and homelessness (if she is lucky). But the true winners are businesses. Thanks to government handouts to workers, American companies can collectively pay their employees billions of dollars less than what is necessary to spare millions of workers from homelessness, sickness, and hunger, thereby keeping them in the labor pool and ensuring businesses an adequate labor force for an artificially discounted price. And if we pull back the curtain of the legal fiction that is a company, we find it is the wealthiest amongst us – the CEOs, the upper-level management, the business owners, and the company stockholders – who are seeing by far the greatest benefit from government programs for the poor that spare businesses from having to pay a living wage.
A $15 per hour minimum wage will not destroy “healthy capitalism” in America. There is no healthy capitalism to destroy. What we will do by requiring employers to pay a living wage is chip away at an insidious form of indirect corporate socialism that is becoming ever more pervasive in our country – a socialism that operates to ensure that the income and wealth gap between the people who do the work and the people who control the work grows ever wider. A higher minimum wage might cause a few businesses some pain, but it will do far more good than harm and, above all, it is fair.
(Bill Pribis lives in Concord.)