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Jeffrey Sommers and Michael Rosen: Make America great again by raising the minimum wage

Jeffrey Sommers and Michael Rosen: Make America great again by raising the minimum wage

Fight for $15 in Madison (copy) (copy)

In this file photo from 2015, supporters of a $15 minimum wage in Wisconsin protested outside a McDonald's restaurant on Park Street. PHOTO BY MICHELLE STOCKER

Could you live on $7.25 an hour or $1,160 a month (pre-tax, full-time minimum-wage pay)?

Could you pay your mortgage on this? Afford a studio apartment? Utilities? Child care? Car? Gas? Food? Medical bills? Of course not. Millions in America, however, have no choice but to try (and fail), given our ultra-low minimum wage.

Yet some still have reservations about raising it, asking, "But aren’t ‘low-skill’ workers like burger-flippers and dishwashers supposed to make less as an incentive to acquire skills?”

The authors have worked for minimum wage. These jobs are not pleasant. Imagine working over a grill all day — and we don’t mean on your deck with a beer — but instead in a hot kitchen working nonstop. Or cleaning other people’s homes. Nobody likes these jobs. Yet they need to be done. If one can figure out a way to do something else, one will. It doesn’t take nonliving wages to encourage people to pursue additional skills for better employment.

But, detractors say, “The minimum wage was never intended to provide a living wage.” Actually, it was intended to do precisely this. Franklin Delano Roosevelt introduced the minimum wage. He was emphatic in asserting all work should pay a decent wage and that any business that could or would not didn’t belong in business.

But, “Won’t many small businesses relying on cheap labor expire without it?” No, because their competition will have to pay the same wage they are paying when the minimum wage is raised. Take wages out of competition and firms will be forced to compete on quality, innovation and service. Of course, some workers may be exempted, as some are now with the minimum wage.

But, “Hey, I currently make $15 an hour, so why should burger-flippers make more than me?” First, no one should work full time and live in poverty. Second, these folks work really hard. And, finally, the minimum wage is a floor that lifts up all low-wage workers’ pay. If the minimum wage were eventually raised (in steps) to $15, your pay would almost certainly rise above $15 an hour. Your self-respect should not be dependent on making a few dollars more than someone cleaning an office building or emptying bed pans (honorable, needed, and hard jobs). Remember, you are going to get a raise too!

But, “Didn’t America become rich on low wages in the 19th century?” No. We had slavery (as in zero wages) in the South, which made a few very rich, but kept the South poor and backward, which is a major reason the high-wage industrial North won the Civil War. And wages in the North were twice as high as in Europe. The U.S. was called “the poor man’s best country.” Indeed, economists after the Civil War argued that the U.S.’ high wages were an advantage because they forced our economy to be more efficient.

But, “How can America compete against other countries if its wages go up?” The United States used to have the world’s highest minimum wage for developed countries (some countries set this by law, others let unions set them). Know where we are now? Dead last for developed countries. Has this made the U.S. more competitive? No, it just means there are more people living in misery requiring public support. Inequality has soared to unprecedented levels. The U.S.’ minimum wage, currently at 1950-inflation-adjusted levels, forces people to go deeply into debt to buy the goods and services our economy makes. That makes the billionaires on Wall Street richer, but Main Street poorer. It also makes our economy more liable to financial busts.

But, “Won’t the price of my Big Mac go up?” Sure, prices will rise a few cents. But c’mon, don’t be a chiseler! Aren’t you willing to pay a little more so people who work hard and their children don’t live in poverty? We understand that even parts of the middle class are struggling. But remember, if the minimum wage increases, even many middle-class workers will see their wages rise (see paragraph 5).

But, “Don’t all employers want low wages?” No. Many employers want to pay more because when they do employees become more efficient at their jobs and quit less often. That saves companies money! Why don’t they pay more, then? There’s a limit to how much more you can pay than your competition. Costco, for example, is the biggest lobbyist in the United States for raising the minimum wage. They want to pay people even more, but are blocked by bottom-feeding businesses like Walmart that pay low wages and rely on government to cover part of their wage bill through social programs.

Lastly, there is a reason why minimum wage (inflation-adjusted) is stuck back where it was nearly 70 years ago: Unlike Social Security, there is no cost-of-living adjustment. This could be easily remedied once the minimum wage is raised to $15 an hour by indexing it to inflation thereafter, as even Mitt Romney once counseled.

So, come on. Let’s “MAGA” this thing. Border walls won’t do it, but raising the minimum wage will.

Jeffrey Sommers is professor at the University of Wisconsin-Milwaukee, and senior fellow at its Institute of World Affairs. He also is visiting professor at Stockholm School of Economics in Riga. His views are his own and do not represent UW-Milwaukee's.

Michael Rosen is a retired professor of economics at Milwaukee Area Technical College and retired head of their faculty union AFT Local 212.

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