Occupy And Labor Argue That Higher Wages Can Solve Fiscal Cliff

With the fiscal cliff looming, the deficit ballooning and the economy far from booming, the ongoing debate over how best to address the nation’s economic woes remains unsettled. Now, labor leaders and Occupy networks are agitating for what may be the fix: higher wages.

This Black Friday, workers at Walmart and other big box stores in 47 states began unprecedented demonstrations calling for higher wages and benefits. Although widespread and formally organized strikes have yet to be seen, the growing movement is likely to drive a larger national conversation about the way tens of millions of American workers are compensated.

Take Walmart, the nation’s largest private employer. There, the average sales associate makes $8.81/hour. Working full time (Walmart defines that as 34 hours per week), that person takes home less than $16,000 ever year. To put that in perspective, the federal poverty level for a family of four is $22,000; hence the label “poverty wages.”

It’s not just the fault of private employers, who typically pursue the wage floor set by the federal and state governments. The federal minimum wage remains at the low low rate of $7.25, less than it was in 1968 (inflation adjusted). Even working a full 40 hour week, that rate still leaves many Americans below poverty level.

Following his election in 2008, President Obama proposed a gradual increase of the federal minimum wage, to $9.50 an hour by 2011. That never materialized, but the promise remains on the transitional website of the President-elect. Four years later, the minimum wage didn’t get a single mention from President Obama or Governor Romney during the debates.

In the short term, it will likely take a combination spending cuts and tax increases to reach a compromise and avert steep automatic cuts set up during last year’s debt ceiling debacle. But labor advocates and some economists insist that a permanent fix must include higher wages.

One report cited often by the Walmart strikers found that Walmart could raise its minimum wage to $12/hour, at a cost to consumers of less than 50 cents per visit. That extra earning would lead to increased consumer spending, a foundation of the American economy. With those extra earnings come with extra taxes, a boon to the government.

Companies like Walmart, bound to maximize shareholder profits, are very unlikely to raise wages without the federal or state government forcing them to do so; however, President Obama’s second term may bring some action on that front. With labor leaders more vital than ever to keep a Democrat in the White House past 2016, and Occupy-inspired, home-brewed labor movements popping up at retailers across the nation, a rise in wages may be soon to come.

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6 Comments

  • Mary Jane
    November 27, 2012

    High-quality and skilled workers that earn and deserve their high wages will solve the fiscal cliff.

  • Leslie Larson
    November 27, 2012

    Brett,

    Wait until you get out into the real world and find out how things really work, then you’ll see that you cannot magically raise wages by government edict
    without dire consequences. Various studies have shown that raising the minimum wage increases unemployment, especially among young workers.
    The black youth unemployment rate is in the 50% range right now, despite the
    re-election of a black president. Please explain that to us all.

  • Brett Chamberlin
    November 27, 2012

    “Mary Jane,” good luck getting those skills when you have to work a 120-hour week to pay for college.

    Leslie, you’re dead wrong. First, profit-maximizing firms will never voluntarily raise wages above the local wage floor. Removing that floor altogether sparks a wage race to the bottom [see: The Great Depression]. Unless you’re prepared to overturn the Fair Labor Standards Act, which Roosevelt called one of the most important pieces of New Deal Legislation since Social Security, you have to accept that the government has a right to set and adjust the minimum wage.

    You’re wrong again on unemployment. The most comprehensive study “examines every minimum wage increase in the United States over the past two decades—including increases that took place during protracted periods of high unemployment—and finds that raising the wage floor boosted incomes without reducing employment or slowing job creation. The research demonstrates how a body of previous research—one frequently relied on by business lobbyists who oppose minimum wage increases—inaccurately attributes declines in employment to increases in the minimum wage by failing to sufficiently account for critical economic factors.” That study: http://jsexhu.gs/wages

    Take your unsourced, agist, vaguely racist crap elsewhere — you’re in my house, and we cite here.

  • Andrew Tavin
    November 27, 2012

    Seconded Brett, and great article! Just wanted to add some why to the study you mentioned- labor is an inelastic good, like gas. Companies always need labor, so even if they pay more for it, they have to hire just as many people. Even if wages were lower, they would still only hire the number of people they need to run their store. However, as Brett said in the article, if wages are raised, there will be greater demand and more people will have to be hired to match it.

  • Mary Jane
    November 28, 2012

    Brett, if you have to work a minimum wage job for 120 hours a week to pay for tuition, you shouldn’t be in college.

    There are so many options to consider! Learning skills at vocational school, working internships during high school, attending a college that you know you can pay for.

    My father paid for his own education as a poor international student, and luckily for me, he taught me to be financially responsible. I’ve been working for pay since middle school, I chose to attend a school that gave me great financial aid, and there is no way in hell I will let my parents pay what school loans I do have.

    There are millions of people in America making smart money decisions everyday, and it is sad that these people will be the ones bailing out those who are irresponsible with money.

    Bottom line, you deserve what you’re being paid for, and if you’re not happy about that, it’s your own responsibility to change that, not someone else’s.

  • Elizabeth Preza
    November 29, 2012

    MJ, it’s pretty archaic to assume that anyone who takes out a loan to pay for college is being irresponsible with money. It’s also archaic to assume that “you deserve what you’re being paid for,” as I am certain that often times I shouldn’t get a penny for showing up to work late and hungover.

    Or conversely, I’m positive people who “deserve” more are not always receiving a reflective paycheck.

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