It was a pathetic bit of a pathetic State of the Union address: a call to American business to raise wages so that Americans would have more disposable income. But for once, President Obama was actually right.
When I entered the working world, my first jobs paid a little more than the minimum wage when I started. But after a few months’ experience, the pay went up. At least in the New York metropolitan area, even basic jobs paid more than the minimum wage. The notion that minimum-wage jobs were for teenagers just starting out in the work world was really true.
And if you earned twice the minimum wage, you could find a modest apartment that you wouldn’t have to share with roommates. With a little more than that, company-paid health insurance, and a like-minded spouse, you could even start a family. (OK, now you’re back to having a roommate, but it really isn’t the same thing.)
All of this was accessible to pretty much everyone, or at least it seemed that way at the time.
In the past weeks, the Daily News has reported on people working for large employers, receiving the minimum wage (or very close) and no benefits. One woman had worked for McDonald’s for 10 years and was still earning $8.25/hour. She must be a rotten employee, I thought at first: how do you work for the same place for 10 years without a raise or a promotion?
But she was hardly alone.
There are many other workers, hardly teenagers, toiling year after year for the minimum wage. Some of them work for contractors to the Port Authority at the airports, cleaning toilets or hauling baggage. Once upon a time, these jobs might have been unionized, with benefits and a living wage. But not anymore.
And the employers can do this because there are hordes of unemployed who’ll be happy to clean toilets if you won’t.
Beyond that, employees who aren’t paid a living wage are often eligible for food stamps. So part of an employee’s food bill is a cost that the business can now externalize onto the government.
If businesses paid their employees more, such that the employees would be able to pay their own food bills, it would indeed help the economy and break the cycle of government dependence. In this respect, the President, for once, is right.
Unfortunately, the business that does that will find that its competitors–who didn’t raise the wages they pay–are eating its lunch.