Monday, June 30, 2014

Wage War

You should care about the minimum wage, even if you haven't earned this rate since high school. You should care because the minimum wage forms the basis for most real wages in this country. Though people my age tend to think of it as something we've outgrown (see also: parachute pants, pretty hair, and $.79 gas), most workers' earnings are indirectly set by the magic number of $7.25. Like acne, bad driving, girl troubles, and homework, the minimum wage is not just for high school kids. Unfortunately, this is one of many things that people just tell themselves to make it through adolescence.

It may come as a surprise that I experience the minimum wage from the other side--that is, from the perspective of a job creator. Note: I mean that I actually hire people to do work, not some more vague concept that if I spend enough money, someone somewhere will be hired to do the work. In our lives as struggling part-time farmers, my wife and I sometimes hire additional help. We never pay these folks just minimum wage, but it's not altruism at work. We calculate a wage that is far enough above minimum that our employees don't mind too much that they're going to lift heavy things, get very dirty, and sweat a lot. To tell the truth, I also sometimes pay attention to the Sheetz signs at the gas pump that consistently advertise jobz that pay a wage well-above minimum, and pay a bit more than that. I base my calculation on the assumption that Sheetz employees have, on average, a much lower incidence of getting petrified pigeon crap in their hair at work.

Sheetz and I have something in common in that we don't pay the minimum wage, but we're not ignoring it either. The minimum wage is a floor--the basis upon which other wages are built. It's may not be immediately obvious to people who don't physically build houses, but the roof of the house is held up by the load-bearing walls, which are themselves held up by the first floor. The particular kind of stagnation that we've seen in our economy--one in which companies do well, but workers don't--is directly tied to the leveling out (and the 10-year freeze from 1997 to 2007) of the minimum wage. In, houses, as in the economy, the height of the ceiling is ultimately determined by the elevation of the first floor.

I concede that there are some wages that are beyond the influence of the minimum wage. Just as above our figurative roof, one will find airplanes, and satellites, and solar systems, and lots of stuff further out than that, there is a segment of the economy that seems to exist under entirely different laws of physics. At some point, CEOs' compensation escaped the trajectory of worker pay, and even that of the value of their companies (see also: here). These two economies exist in the same universe, but they operate by such different rules that it would take a real Einstein to bring it all into one unified theory.

While there are wages so far above the forces that govern what normal people get paid, there are also some wages that are far below. For example, wages for employees who are expected to get tips are stuck at $2.13 an hour, where they've been for over twenty years. This means that a tip is no longer a nice treat you give a server in recognition of excellent service--tips are officially part of these workers' wages. Without tips, the hourly rate pretty much zeros out after taxes. This also means that servers' earnings take a significant hit from slow nights, bad weather, and--to put it mildly--jerks.

Even at $2.13 an hour, tipped employees aren't the lowest earners out there, however. We are in a global economy, and so the World Minimum Wage also affects us all. It's theoretically possible--and by that, I mean that it has almost certainly been postulated in conservative think tanks, or at least brought up as a arguing point at someone's Thanksgiving table--that the market could make the minimum wage meaningless. In this theory, the value of an hour of work will always be automatically set as jobs remain unfilled until the compensation level reaches the full value of the work. If someone is willing to do the job, the wage must be appropriate for that job. 

However, as long as companies can and do chase cheap labor all around the globe, we will never reach the bottom. As soon as a country's citizens are pulled far enough out of poverty to protest how badly they've been screwed, the global market goes looking for the next cheapest labor. Depending on the product, the order goes something like: USA--> Mexico--> Japan--> China--> Hong Kong--> Vietnam--> Thailand--> Philippines--> Bangladesh-->??? Not every job can be sent around like this, but the ones that can put downward wage pressure on the jobs that are left behind. If there is no longer a factory, or even a call center, in town paying a living wage, those with a high school diploma and maybe some college may need to be willing to take a job at Wal*Mart. Actually, getting even a shelf-stocking job at Wal*Mart isn't so much a given anymore.

There are locations where the minimum wage is almost impossibly low, and in some of these locations local governments have done something about it. Vacation towns, New York City, and the International Space Station all need to pay workers well above minimum wage, due to the ridiculous cost of living in these places. New York sanitation workers make about $70 K, but modest apartments there rent for +-$2,000 a month. Real estate in beach towns is so expensive that workers often end up sleeping in some kind of kennel-style housing as part of their compensation. I'm sure the guy who cleans the glass on the Hubble Telescope makes more than any of these folks, but the commute is a real pain.

We have our own version of all of this in education. School custodians make something a bit more than minimum wage and secretaries earn a bit more than that. Secretaries and custodians have their own pay-scales--which I can't tell you anything about because it doesn't affect me directly, and therefore I'd have to go look it up somewhere. Teachers' aides make something in the neighborhood of the better-paid secretaries, depending on the school, and the starting salary for teachers is a bit above that. The highest salary for teachers is substantially more than that; however, each step along the way is fairly modest. The assistant principals make a bit more than teachers (though not always a whole lot if you calculate in pay-per-day, and probably less per hour). The other administrators make more than the highest paid teachers, and the superintendent makes the most in the district. The whole system may not always be completely fair, because it's entirely possible that the secretary to the superintendent may be smarter than he is, work harder, and earn +- 1/5 the wage. However, the system is mostly logical. The more people you supervise, and/or the more education and certifications required to do a job, the higher the pay.

Also observe that even though no one at my "company" makes minimum wage, if you follow it all the way up, the superintendent's pay is based loosely on what we pay the cafeteria workers. Each salary in the system is calculated up from the one below it. It's possible that the superintendent's pay is also calculated based on chief executives of similarly-sized operations, but I doubt it. The average CEO makes seven times what our superintendent makes. Our guy doesn't even make it onto the bell curve here.

In the many months I was working on this post--well, not working exactly, more letting it sit around in draft form while I furiously scribbled 14,000 words for my grad school project (hardcore Slackerguide readers may someday get to read all of it by being directed to a sister blog called Enormously Boring Choral Music Writings)--people stopped caring about the minimum wage. The thing about the powerless is that their interests are so easy to ignore.

The real problem with discussing wages is that at some fundamental level it is a discussion of the worth of a person. What is the value of the guy who talks you into supersizing your fries? What about the guy who fixes that pothole twelve times in the same summer? How about the thousands of people who spring into action when we have a snowstorm (or ice storm) to clear the roads and hook the electricity back up? Mike Rowe has engaged in a one-man campaign to get people to value real work, but what about the guy who sells microwave burritos to those doing real work? At the very bottom of the pay ladder are workers that we don't even think about, and what they make is a direct shot to what you make. I think. What I do know is that something has seriously hijacked the process of people being able to pull themselves out of poverty with work, and there is one very simple unfunded mandate that could make a big difference. An increase in the minimum wage wouldn't solve all of the problems identified in this post, but it could raise the floor, and that could help to raise all of the floors above.