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True cost of labor


A strong argument can be made that, like the true cost of oil, the true cost of labor is not accounted for in the American economy. By that line of reasoning, every gallon of gas you buy at the pump should, more realistically, include some part of the cost of the Iraq war and some increment of the escalating price tag of climate change. And every Big Mac you buy, served by a minimum-wage earner, should include a fraction of the cost of the public benefits used to subsidize that server’s survival.

According to U.S. Census data, more than 10 million American workers are living below the poverty line, meaning they are employed but struggling to pay for their own housing, health and nutrition. One result of unsustainable low pay: low wage employees in the fast food industry, like the people who serve your Big Mac, are receiving $243 billion a year in federal aid, according to a study by the UC Berkeley Labor Center.

Some people still argue that’s because so many are still teenagers, or that it’s the fault of lazy, coddled, welfare parasites who should lift themselves up by their own bootstraps.

The problem with that argument is that most minimum-wage workers are adults, not teens, and many of them don’t have boots. And here’s one of the great economic ironies of our time: Today, corporate profits, as a share of the overall economy, are at an all-time high, while wages, when adjusting for inflation, are near an all-time low. For the first time in history, working-age people now constitute the majority in U.S. households dependent on food stamps, and about 28 percent of food stamp households are headed by someone with some degree of college education. That’s up from 8 percent in 1980. According to University of Kentucky economists, the SNAP (Supplemental Nutrition Assistance) program is now covering one in seven Americans.

Contrast those figures with the growth in compensation for corporate CEOs, which averaged 20 to 30 times the pay of average workers in 1979, but has ballooned to 273 times average worker pay today.

All of which leads, of course, back to the perennial issue of raising the national minimum wage, last increased in 1979.

In January, California adopted a minimum wage hike to take effect in two steps – going to $9 an hour on July 1, and to $10 an hour in Jan. 2016.

A Congressional bill to raise the national minimum to $10.10 – and from there forward to be indexed to inflation – is being spearheaded by East Bay Congressman George Miller, D-Martinez, and has attracted some unusual support, including conservative activist Phyllis Schlafly and Ron Unz, the Silicon Valley multi-millionaire and former gubernatorial candidate.

Schlafly wrote in a column for her Eagle Forum, that the wage raise might be wise if it lowers to cost of welfare programs.

“... most people think ‘welfare’ goes all or mostly to the unemployed, whereas the truth is that most of it goes to working families whose income is below a government-designated poverty line,” she wrote.

And Unz is now arguing publically for a $12 wage, telling the San Francisco Chronicle that business interests are “privatizing the benefits of their workers and socializing the costs.”

We agree with Unz. It’s time to start closing the gap between rich and poor.