Tuesday, June 25, 2013

Minimum wage anniversary

Tuesday, June 25, marks the 75th anniversary of the Fair Labor Standards Act, New Deal legislation mandating a federal minimum wage that now applies to most work, and most workers, in the United States. Originally set at 25 cents, the minimum wage has risen occasionally since 1938 to its current hourly level of $7.25, where it has been since 2009. The minimum wage for tipped workers has been frozen at $2.13 since 1991.

Today, a minimum wage worker lives on $3,000 less than the poverty line — and the minimum wage is worth only 37 percent of the average wage. In the 1960s the minimum wage was roughly half the average wage.

If the minimum wage had just kept pace with inflation since 1969, it would be around $10.70 today. If it had kept up with productivity growth, it would be $18.72. Meanwhile, if it matched the wage growth of the wealthiest 1 percent, it would be $28.34.

Wages grew and hours increased across the board between 1979 and 2007 — but hours increased the most and wages the least for the lowest income workers. The share of workers in “good jobs”– paying more than $37,000 a year and providing healthcare and retirement benefits — fell even though the average age and education level of workers rose.

 10.4 million individuals  were classified as the “working poor” in 2011. People who fall in the working poor category have been part of the labor force for at least 27 weeks, but their incomes are below the poverty level, according to the U.S. Bureau of Labor Statistics.

The wealthiest 1 percent are doing quite well, thank you. Their real earnings have skyrocketed 275 percent over the past 30 years.

In many US states, the minimum wage laws are but barely enforced, in part because there's little or no money budgeted for enforcement. But it's also because the government agencies charged with enforcing the laws are clearly not much interested in carrying out their mandate. Equally at fault are the governors and state legislators who've done virtually nothing to try to help their state's neediest workers earn a decent living. They have to be aware that no one can make a decent living at the current minimum wage rates. Alabama, Florida, Georgia, Louisiana and Mississippi – have no agency assigned to enforce the minimum wage laws and other laws designed to protect workers rights. Employers have little or no incentive to obey wage and hour laws if the only repercussion for violating them is to have to pay wages owed in the first place.

In Alberta, Canada Dan Meades, director of Vibrant Communities Calgary, said “The question I would ask today is how many people have been lifted out of poverty as a result of the minimum wage increase? And the answer is zero,”

The Socialist Party has nothing against workers struggling for and getting higher wages if they can. We favour this, even if we don’t like the term “living wage” any more than “fair wage" and even if we think that ideally this should be tied to struggling to abolish the wages system altogether. What we criticise is to increase the present legal minimum wage and call the result a “living wage”

Let’s assume for a moment that a law forcing employers to pay a higher minimum wage was passed. What would happen?

First, a few employers would go bankrupt but probably not all who presently plead “poverty” profits!!. Other employers however would withdraw their capital from producing certain goods or services, so their price would rise. Eventually this would stabilise at a new, higher level at which employers would be able to make a profit even when paying the increased minimum wage. So the cost of living would go up, including for workers on the minimum wage. Second, given the increased labour costs, the introduction of previously unused labour-saving machinery would become cheaper vis-à-vis employing living labour. It is generally accepted that higher wages does lead employers to introduce machinery. Employers would do this. So there’d be job losses and unemployment, particularly amongst the unskilled, would grow.

Nor did Marx think much of such demands as “fixing the minimum wage by law”, which was one of the reform demands of the French Workers Party he had a hand in helping to set up in 1880. He wrote, referring to the proposer of this: “I told him: ‘If the French proletariat is still so childish as to require such bait, it is not worth while drawing up any program whatever.' "

Like all reforms of capitalism the minimum wage legislation leaves intact the basic mechanism wherein a small handful live of the surplus value produced by the working class. Socialism is not about redistributing income and wealth from the rich to the poor, but about establishing a society that would not be divided into rich and poor. To adapt Marx, workers should replace the demand for a “Living Wage” by the revolutionary demand for the “Abolition of the Wages System” Within capitalism, the fight to improve wages is indispensible but workers should take the next step - campaign to abolish wages .


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