In The Ingenious Gentleman Don Quixote of La Mancha there’s a line where an innkeeper, who Don Quixote mistakes for a royal and implores him to grant him Knighthood so he might continue his quest as a true Knight-errant, suspects Don Quixote suffers from a “want of wits.”
Such a want of wits is at the heart of this trend to denigrating unions, ostracizing organized labor, and intentional mischaracterizations of the purpose of minimum wage. Highlighting only the sins of such organizations (what group of any sort is without their flaws?) and ignoring the benefit of organized labor is disingenuous.
Unions leveled the playing field, offered protection from indiscriminate loss of jobs, fought for fair wages and benefits, and improved the working conditions of most Americans, even those who may not be union members. Seeking to eliminate such labor groups is a danger to American workers.
The 40-hour week, health benefits, retirement benefits, sick time, workmen’s compensation, vacation times, eight-hour workday. The list goes on.
These benefits did not come simply by negotiating at a table. Many of these benefits were fought for under the baton of the police, the military, and private thugs used by a government controlled by the wealthy to subvert unionization.
But, through the perseverance of brave men and women, unions rose to a position of almost equal power with management.
This country has always favored the entrepreneur. Those who would risk it all for the opportunity to create their own business. We admire the self-made person who works hard to build a company from the ground up. But this success does not allow them to preserve it on the backs of those disinclined to such pursuits by maximizing profits and shareholder investments subsidized through the coffers of the American Taxpayer and by preventing unionization.
There need be a balance between the success of the widget designer and the labor that produces the widget. They are equal parts of the equation. The compensation needs reflect equity.
Over the past few decades, the American economy has shifted from manufacturing to service-based companies and technology. While many of these jobs are skilled labor, a significant number are not. Over time, these minimum wage positions have been mischaracterized as merely entry-level positions not intended to be careers or to support a family.
Yet, companies like McDonalds, Starbucks, Dunkin’ Donuts, Amazon, and Wal-Mart, reap huge profits based almost entirely on the backs of their lower-level employees (and even cheaper labor overseas). Employees they recruit with promises of a family-oriented working environment, even if the offered wage doesn’t support one.
In October 2020, the GAO published a study called Federal Social Safety Net Programs: Millions of Full-Time Workers Rely on Federal Health Care and Food Assistance Programs
Here’s is the opening paragraph:
What GAO Found
“The 12 million wage-earning adults (ages 19 to 64) enrolled in Medicaid—a joint federal-state program that finances health care for low-income individuals—and the 9 million wage-earning adults in households receiving food assistance from the federal Supplemental Nutrition Assistance Program (SNAP) shared a range of common labor characteristics. For example, approximately 70 percent of adult wage earners in both programs worked full-time hours (i.e., 35 hours or more) on a weekly basis and about one-half of them worked full-time hours annually (see figure). In addition, 90 percent of wage-earning adults participating in each program worked in the private sector (compared to 81 percent of nonparticipants) and 72 percent worked in one of five industries, according to GAO’s analysis of program participation data included in the Census Bureau’s 2019 Current Population Survey. When compared to adult wage earners not participating in the programs, wage-earning adult Medicaid enrollees and SNAP recipients in the private sector were more likely to work in the leisure and hospitality industry and in food service and food preparation occupations”https://www.gao.gov/assets/gao-21-45.pdf
These companies, who are letting the US taxpayer subsidize what would normally be labor costs in a union shop, profit on the lack of a fair minimum wage.
In 1965, CEO’s compensation was twenty times that of the average worker. In 2015, it had risen to two-hundred times.
Nigel Travis, CEO of Dunkin’ Brands, in 2015 took in $5.4 million in compensation. He called the proposed $15/hour minimum wage “absolutely outrageous.” While I am not suggesting we place any artificial cap on CEO compensation, there does need to be a balance between a company’s success and the compensation paid to its employees and the minimum wage is one tool.
Companies can pay their executives any salary and benefit they like and strive to maximize the return on investment by stockholders, but when they do this on the backs of the American taxpayer by using political influence and misinformation to prevent an increase in minimum wage, they are clearly twisting capitalism into a government subsidy.
The minimum wage was an element of the Fair Labor Standards Act of 1936, which set an eight-hour workday, forty-hour work week, overtime pay requirements, and a minimum wage. This law came about as a reaction to abuses of labor by industry and through the efforts of organized labor.
This minimum wage set a standard for a livable wage. That livable wage has eroded since it was last raised in 2009.
By way of illustration, in 1996 the federal minimum wage was $4.76. Since then, adjusting for inflation, the minimum wage has lost ground. In 1996, $4.76 was worth $4.76. In 1997, the minimum wage went to $5.15 but in constant 1996 dollars it was worth $5.03.
The minimum wage has continued to lose ground. In 2009, the last time it was increased to the current $7.25, the minimum wage in 1996 dollars was equal to $5.30. Today it is equal to $4.80. In 2021, the minimum wage required by the Federal Government, one that all those aforementioned companies must pay their employees, is worth five cents more than the minimum wage of 1996.
To do a simple comparison, in 1965 rates, a worker earned $1.25/hour the average CEO earned $25/hour. In 2015, a worker earns $7.25/hour the average CEO earns $1,450/hour.
This hardly seems fair.
Until Americans realize the American Dream has been co-opted by major corporations through the organized suppression of unions and misinformation about the cost of minimum wage to business, the dream will continue to fade.
An intriguing statistic correlates to the growing disparity between the average worker and CEO compensation. In 1965, almost 1/3 of workers belonged to a union. By 2015, when the ratio of CEO to Worker salaries had climbed from 20 times to 200 times, union membership fell to 1/10.
While correlation may not be causation, it makes one wonder.
One can make the argument that even if 2/3 of workers didn’t belong to a union, they benefited from the labor competition and wages union membership secured in negotiation. Perhaps the decline in union membership has created an earnings gap, the deficit in fair wages, and hindered the ability to live a happy, sustainable livelihood. This erosion of fair pay by companies is being sustained by the American taxpayers to the benefit of big business.
This “want of wits” suffered by Americans blinded by the misinformation, anti-union propaganda, and resistance to a fair minimum wage is a danger to the once possible but slowly eroding pursuit of the American Dream.
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