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.

  • Phineas Worthington

    Automatization of low skilled jobs is a very serious issue affecting entry level workers. To raise the minimum wage will only put more negative pressure on job creation hurting the very people that policy intends to help even more. If you want to create more entry level jobs it is counterproductive to artificially raise the costs of production even more than it already is. A better solution would be fewer taxes and regulations on labor to reduce the costs of production, thereby creating real financial incentives for businesses to hire more low skilled, low wage workers that they might otherwise automatize.

    • Chris Scott

      In the first instance it should be automation not automatization. The second instance it should be automation not automatize. But don’t be too concerned because there’s nothing in between that’s correct either.

      • Phineas Worthington

        Thanks for the clarification. When I get paid to do this instead of work full time I’ll hire an editor or take more time to edit it myself. You’re the one who does not think self-ownership is an inalienable right, so while my grammar is poor, at least my morals, logic and principles are more sound than yours my friend. And I am the only one who can claim to be in accordance with our American founding values.

  • Randy Cook

    It’s unbelievable that after 35 years of the right touting fewer taxes on corporations and more deregulation are the answer to economic sustainability. Am I the only person who has observed that this reasoning has no basis in reality at any point in the history of humankind, and has been the largest contributing factor to the demise of the American economy?

    • Phineas Worthington

      Who pays corporation taxes? Answer: ultimately, consumers pay them built in to the prices of products.

      And why do companies/corporations exist? Answer: to make money, and there is nothing wrong with that.

      If you want growth and jobs, the wrong thing to do is attack business and profit.

      • The Village Idiot

        Growth — in case no one has noticed — is choking the planet.

        • Phineas Worthington

          You’re just not a serious person. Please do us all who actually care a favor and exercise your inalienable right to not vote from now on.

          • Chris Scott

            The vote is not inalienable or unalienable. It can be taken away or never achieved. period. In many places the concept of a vote or voting is either totally alien, unknown, inconceivable or all three. Seriously.

        • Chris Scott

          See reply to Mr Worthington beginning, “The vote is not inalienable…”

          • Phineas Worthington

            More accurately, voting is not a right per se. I’m just borrowing the language of the left.

  • Tom Sokolowski

    Interesting points made about fast food industries “privatizing the benefits of their workers and socializing the costs.” Raising the minimum wage to $12/hour would benefit us greatly from an economic point of view.
    A recent University of Kansas study found that if you doubled the salaries of McDonald’s employees from minimum wage workers to their CEO, it would raise the price of a Big Mac by 68 cents, and Dollar Menu items would go up by 17 cents. When you put that extra money in the pockets of low wage workers, they don’t squirrel it away in offshore tax free havens; they spend it, and they spend it here. Money spent locally benefits local business; more local business, more local hired workers, and so on. Raising the minimum wage makes economic sense.