When the question of the minimum wage comes up, it prompts a cascade of further questions. In truth, there are more questions than answers on this one.
In nine days, New York will raise its minimum wage for 2014 for most workers from the current $7.25 to $8 an hour, with annual raises on each succeeding December 31 to $8.75 for 2015 and $9 for 2016 and beyond.
While it’s inadvisable to look any “gift horse” in the mouth, it has to be noted that this stepped increase is taking place simultaneously with a recently enacted $15 minimum wage in Seatac, Wash.; California is going to $10 in 2016; and an increase to $10 in the federal minimum wage is under discussion.
Can anyone actually live on $9 an hour? Is that what the minimum wage is intended to address — to provide every worker with a livable wage? Why do we even have a minimum wage? Is it a good idea?
The minimum wage law is just one of several tools used in pursuit of the worthy societal goal of guaranteeing every citizen at least the most basic quality of life at subsistence level. It is part of an intricate, multi-faceted, multi-level federal, state and local system that includes Medicaid, the Child Health Insurance Program, the Supplemental Nutrition Assistance Program, Temporary Assistance to Needy Families, child care subsidies, early childhood programs, and unemployment insurance. These constitute the social safety net.
New York’s role in and support of these programs is commendably high in comparison to that of most other states.
Furthermore, because New York is relatively wealthy, it receives less federal aid and foots more of these bills itself. That is as wise as it is good because New York also has the highest poverty rate among the 10 states with the highest safety net expenditures — 13.3 percent in 2008, according to National Center for Children in Poverty at Columbia University. Even in the aftermath of the recent fiscal crisis, New York has maintained its commitment to the principles embodied in these programs.
As correctly pointed out in a Gazette editorial Dec. 5, these programs are not just a subsidy to individuals in need. They also serve as a subsidy to business by supplementing the wages the latter pay and, thereby, diminishing the pressure on them to pay more.
Not a good fit
To the extent that the minimum wage is part of the safety net, it has to be said it is a wholly imperfect vehicle. Its one-size-fits-all approach cannot take into account a range of complexities such as the relative size and profitability of various businesses and business entities, the degree to which different employers provide nonwage benefits to their workers, the divergent costs of living and doing business in urban, suburban and rural areas, and other similarly valid factors.
As some business and ideological opponents to the minimum wage or any increase in it correctly point out, not all countries have minimum wage laws and several are considered progressive in outlook, with highly developed and successful market economies. Sweden, Norway, Denmark, Finland and Germany currently have no minimum wage laws.
Unsaid, however, is that in these and most other developed countries, wage minimums and a host of other compensation issues are set by collective bargaining agreements between employers and unions representing nearly all workers within different occupations. This process can take into account the unique circumstances that bear on each particular business, industry and employment situation.
It would seem that all here would be better served — and fairer treatment for all ensured — if it were possible to implement some form of that European method here.
Greed in the boardroom
Massive increases in worker productivity have translated into huge payoffs for those in or near the executive suite, with barely any reward for those most responsible for the enhanced productivity — the workforce itself. This is not free-market economics under any design Adam Smith would recognize.
Aren’t these companies shortchanging not only their own frontline workers, but the rest of us, as well, by in effect underpaying its workforce and indirectly using the subsidy to reward themselves even more handsomely?
Should those who own and manage businesses that claim a need to maintain both low wages and this public subsidy in order to survive be placed under some regulatory restrictions as to compensation for higher waged or salaried executives and managers to ensure that both workers and safety net programs are not abused?
Here’s a chance for New York to lead once again.
Defining the workplace for this century and setting the parameters of fair play for all is actually what New York did for the 20th century. This state’s progressive tradition is sorely needed again.
Our leaders should reclaim that tradition and start aggressively defining a new paradigm that once again guarantees fair treatment to frontline workers and, if anything, reduces the need for those workers to rely on safety net programs to get by.
The unsavory alternative is for the state to shrink into the background, as it has on too many occasions over the last 30 years, and cede this ground to less able and well-intentioned actors.
John Figliozzi lives in Halfmoon and is a regular contributor to the Sunday Gazette.