Living wage under attack

Progress Illinois: National Minimum Wage Day of Action

Progress Illinois: Chicago march during the National Minimum Wage Day of Action

By WAYNE DELUCA

A recent study by the University of Washington announced that the second phase of Seattle’s increase in the minimum wage, moving from $11 per hour to $13 per hour, had the net effect of lowering the real wages of low-wage workers by around $125 per week. This study was immediately seized upon by the bourgeois press to show the folly of a living wage. It also coincided with Missouri being the latest in a series of states to use preemption laws to stop cities and counties from setting up their own minimum wage above the state level.

The study, which focuses on workers making less than $19 an hour as “low-wage,” is inherently flawed. It removes from consideration anyone working at an enterprise with more than one location. This takes the fast-food workers who have been at the forefront of the living wage struggles out of the picture, and focuses on low-wage small business employment.

Further, it compares Seattle’s economy with small cities in Washington rather than cities with similar economic models, such as San Francisco. And it incorrectly attributes a decline in low-wage jobs to losses from the wage increases. In reality, the Seattle employment market has been paying more, and the number of jobs paying over $19 per hour—the threshold for “low-wage” work—has been increasing, as has their hours.

Seattle businesses and the bosses’ press has not let any of these nuances stop them from using the study to beat down demands for a living wage, wringing their hands over how the “left” (i.e., the Democratic Party) is now “stuck” with the $15 wage idea even though they claim it is bad policy. Of course, we should not forget that the Democrats had no interest in the fight for $15 as a specific living wage target, and have tried to push for lower targets that still do not give individuals the income needed to live in a modern American city without government assistance.

In a city like Seattle, where rents are rising out of control, even a $15 ordinance is insufficient. The average rent on an apartment in King County, Wash., has gone from $1066 in 2009 to $1617 in 2017. To keep rental costs below 40% of income would require an average wage of over $23 per hour. The city has led the nation in rental price increases in the last several years. The modest increases in wages have not outpaced the growing cost of housing, especially for workers outside of the high-tech sector, which distorts the wage picture with relatively high salaries.

The struggle for higher wages has had some gains in recent months. At the end of June, Minneapolis passed a $15 ordinance—although it will be implemented by phases that will take until 2022 in large businesses and 2024 in smaller ones. Most minimum wage laws have had similar multi-year offsets in their plans, and none are indexed to inflation. Seattle will not see $15 for every employee until 2021.

This is not a small matter. Minimum wage fights became a major issue in 2012. What cost $15 in that year is $16 in 2017, and will probably cost over $18 by the time Minneapolis workers see the $15 wage—leaving them $120 a week short of the targets that were used to calculate a $15/hour living wage. Wage laws that do not adjust for inflation are obsolete before they are fully implemented.

Unfortunately, there are also defeats. In May of this year, the Missouri state government passed a preemption bill stopping towns and counties from passing their own minimum wage laws. This forced wages in St. Louis, which had a $10 minimum, down to the state minimum wage of $7.70. This tactic originated in Iowa this past March, and will likely be deployed more and more frequently as living wage ordinances pass in more city councils.

Nationwide, job growth numbers have been strong, with a better than expected 222,000 jobs added in June. But wage growth has been sluggish, and the new jobs have not been offering substantially higher pay. Wages rose 2.5%, but after inflation is calculated, this is a real increase of only 1%. Despite the erosion of many retail outlets, the job growth has generally been in the low-paying service sector, and not the blue-collar manufacturing industries that President Trump has made the centerpiece of his nationalist economic vision.

A large portion of the workforce also remains in what is called “involuntary part-time work,” that is, workers who are forced into part-time schedules but who would work full-time if the option were available to them. About 5.3 million workers in the United States are in this status, which became widespread during the recent recession. Employers have not yet abandoned this tactic, which allows them to avoid paying for health insurance and other benefits such as sick time and vacation time.

Living wage battles are particularly important because low-wage jobs are less and less frequently a transitional step. Two-thirds of workers who made the minimum wage in 2013 were still making within 10% of the minimum a year later; this number was about 50% in the 1990s. The number of workers over 25 earning the minimum wage has increased significantly in the same time period, changing the typical minimum-wage worker from a teenager or college student to a working adult. However, social attitudes have not changed to fit the new reality, and the stereotype remains a teen flipping burgers for gas money.

Service industry jobs are increasingly precarious as the retail sector shrinks and changes in what is widely called the “retail apocalypse.” Consumer spending is down since the recession began in 2008, and while the official profits rebounded in 2010, spending did not follow quickly. With sluggish real wage growth and little confidence, the over-supplied retail market has been forced to shrink because there is simply too much real estate dedicated to stores. The net effect has helped restaurants but devastated shops.

In cities that do try to raise the minimum wage, the specter of automation has been held over workers. Campaigns have gone so far as to show an ordering tablet computer and say that it is the replacement for the minimum wage worker. The gains of automation in the service sector, where labor costs are much smaller than supply and real estate costs, are relatively small, and the strategy overall cannibalizes capitalism’s ability to profit by removing workers from the pool of potential consumers.

The living-wage campaigns led by the Service Employees International Union (SEIU)’s Fight for $15, and by Socialist Alternative’s $15 Now, have made significant real gains for workers. The increased minimum wage itself is an obvious benefit, but it has also brought fast-food workers (SEIU’s main target audience) to national attention, and put a clear class demand on the table as the major goal of a mass movement.

It should be no surprise that Democrats have tried many ways to kill $15. The initial response by Obama and others, including sections of the trade-union bureaucracy, was to take up a weak $10.10 national minimum wage. This undercuts the idea of a living wage—that is, that any person working full time should earn enough to support themselves. Increasingly they have taken up supporting $15, but in highly staged ways, modeled on Seattle, that would only rise to $15 in seven or eight years. The $15 number itself has become a symbol rather than the living wage idea that it represents.

While we fully support the $15 struggles, socialists know that it is merely a first step. Minimum wages must be indexed to cost of living increases, at least annually, or the gains will be ground away by inflation. And while the University of Washington study is deeply flawed, wage demands should be raised side by side with a program to employ any workers who lose their jobs as a result.

Ultimately, the minimum wage should be at least $20, with a “30 for 40” policy that allows workers to work 30 hours for the same wages they previously made in 40 as a road to full employment. And all workers should have the right to form a union by card check without harassment—a part of the “$15 and a union” demand that has been lost in the shuffle.

But the capitalist system will never offer a job at a living wage to everyone who wants one. That would be against its own internal logic, which requires an army of unemployed potential workers to keep pressure on the workforce. The U.S. economy is carefully calibrated so that the official unemployment number does not go below 4%—which would force wages up sharply and lead to inflation. And the official unemployment number is never more than a fraction of those underemployed or forced out of the workforce entirely.

We need a new economy that is dedicated to fulfilling human needs, not exploitation. The workers who are now engaged in the fight for a living wage are one of the groups that need to unite—with union workers, with unorganized workers, with women, people of color, immigrants, LGBTQIA+ people, and all oppressed people in the United States—to bring us there.