The Minimum Wage: From Barely Tolerable to Basically Criminal

In a capitalist system working people will always fall short of justice when it comes to wages, since the basic logic of the system dictates that a small group of owners appropriates the wealth generated by a company, which then reluctantly forks over a small portion of that wealth to the workers who created it. 

Despite this inherent limitation, however, there was a brief period in U.S. history after World War II when the average wages of U.S. worker rose at the same rate as their productivity, meaning, essentially, that workers were receiving wage increases that matched the wealth they were creating. Even the minimum wage, though too low to begin with, rose at the same rate as productivity until around 1970. This trend quickly reversed, however, and by 2012 the average real value of the minimum wage was less than it was in 1970, meaning that a minimum wage worker today can buy less with her income than a worker could over 40 years ago, despite the fact that the worker in 2012 is producing, on average, over 100% more wealth than the worker in 1970. Something's not right here, even by capitalist standards…

Why did this happen?

Despite this inherent limitation, however, there was a brief period in U.S. history after World War II when the average wages of U.S. worker rose at the same rate as their productivity, meaning, essentially, that workers were receiving wage increases that matched the wealth they were creating. Even the minimum wage, though too low to begin with, rose at the same rate as productivity until around 1970. This trend quickly reversed, however, and by 2012 the average real value of the minimum wage was less than it was in 1970, meaning that a minimum wage worker today can buy less with her income than a worker could over 40 years ago, despite the fact that the worker in 2012 is producing, on average, over 100% more wealth than the worker in 1970. Something's not right here, even by capitalist standards…

This disturbing increase in the gap between the wages and productivity of labor had many causes, such as the changing nature of the global economy, the increased mechanization of industrial work and the declining threat of the Soviet Union. Perhaps chief among them, however, was the precipitous fall of the power of the labor movement, which enjoyed the membership of around 30% of U.S. workers in the 1960s. By 2013 this figure had dropped to around 11%, and less than 7% in the private sector. Not surprisingly, given the vital importance of organized labor to push capitalist firms and the federal government in the direction of justice for working people, this dramatic decline in union density coincided exactly with a decline over 40 years in the real value of the minimum wage.

Where do we go from here?

Ultimately the minimum wage only works for those lucky enough to find a job - even a low paying one - and it doesn't really "work" for them, because it doesn't come with health benefits, adequate schools, or enough money to set aside for retirement. This is why a basic income for all Americans that is competitive with the labor market is a better long-term solution. Providing all Americans, regardless of current employment, with a living wage and adequate healthcare and education would not only ensure that Americans don't fall through the cracks of the capitalist system, but would also decrease the cost of losing a job (thereby increasing the flexibility of labor and in turn increasing economic efficiency), put upward pressure on the wages of American workers (who would no longer have to settle for poverty wages just to make ends meet), and ensure a high level of demand for the goods and services produced by U.S. workers (thereby helping to decrease the likelihood of economic recessions). Unfortunately, however, this strategy will remain a dream of those interested in a more just and humane society until we have rebuilt the power of the U.S. working class to such an extent that we can put real political and economic pressure on the 1% of Americans who currently dominate our political and economic lives.

In the meantime, we can Raise the Minimum Wage.  If the minimum wage had kept up with the increase in worker productivity since the 1960s, it would currently be at $21.72/hr, according to work done by the Center for Economic and Policy Research. This is clearly an unrealistic goal in our current political climate, given the power of the right at the federal level and in many state houses, and the fact that many highly-skilled folks in competitive industries such as education don’t even make that much an hour. However, even if we raised the minimum wage to one quarter of what it would be if it had kept up with productivity, the minimum wage would currently be at $12.25/hr. We think this is a realistic short-term goal and with your help and the help of thousands of working people around the country we can achieve it. At the very least, we need to raise the minimum wage to the level it would have been at if it had kept up which inflation, which would put the minimum wage at $10.52/hr. But we can only succeed if we are organized, and if we are militant. Get involved today!