GOP Reasons on Wage Suppression Are Typical Lies

For more than 100 years, opponents to raising wages have used their apocalyptic visions of economic collapse to justify the suppression of wages,income, legal rights, and even medical care to inflict wage suppression on everyone for the benefit of white, privileged, wealthy or corporate interests. Economists and historians have time and again repudiated those gloomy predictions, and proven that the dire predictions of wage suppressionists have failed to come true….ever.

There is simply no historical data to suggest that even sizable wage increases have so much as a modest unemployment effect, let alone the “job-killing” impact the corporate lobbyists and their paid—stooge “economists” and politicians have always predicted.They just repeat it so loud and so often that it becomes acceptable to many of those it hurts the most—poor whites, who form a large segment of the Republican base.download If we allow one more Paul Ryan—the most insidious and premeditative “Republican Budget Wonk” since Phil Gramm to set budget policies, we can kiss productivity, demand for goods and services and economic growth goodbye for the next 20 years.

And Phil Gramm and his buddies did more to suppress average Americans’ economic well-being in order to enrich himself and his ilk more than than a thousand Bernie Madoffs combined. He and his wife Wendy were the primary crooks behind both Enron’s fraud and subsequent collapse, he co-authored the repeal of Glass-Steagall), and he even engineered the collapse of the Savings & Loan Industry in 1989, at the end of—guess who— Reagan’s disastrous and propagandized presidency.

The Labor Department reviewed 64 studies on minimum wage and found “no discernible effect on employment.” And, contrary to popular belief, relatively large wage hikes like those recently passed in Seattle, San Francisco, Massachusetts and Los Angeles, are not unprecedented. For example, the federal minimum wage jumped from 40 cents an hour in 1949 to 75 cents in 1950, an 88-percent increase over just one year. Yet, despite the usual warning from the corporate stooges and conservatives at the National Association of Manufacturing that the hike would prove “a reckless jolt to the economic system,” and cause massive job losses, unemployment plummeted, from 5.9 percent in 1949 to 2.9 percent in 1953.

The plain fact is that higher paid workers are more productive, loyal, and reliable — a lesson even notoriously wage-suppressing Wal-Mart is beginning to learn. Just one month after raising its own internal minimum wage to $9 an hour, Wal-Mart CEO Doug McMillon reports “our job applications are going up and we are seeing some big reductions in turnover.”

One would think that the misnamed, so-called pro-Capitalism conservatives like Lyin’ Paul Ryan would know that when workers have more money, businesses have more customers; and when businesses have more customers, they hire more workers. When you simply give businesses more money through tax cuts and subsidies they don’t immediately think, “Hey! I can hire more workers or give the loyal ones I already have more money for their hard work and loyalty!” No, they stick it in their pockets, ship it overseas, or give their trophy wives new baubles and beads…you and I know it.

And when fast-food restaurants pay workers enough so that even they can afford to eat the food they serve, that isn’t bad for the fast-food business; it is great for it—despite what McDonald’s and others in the fast-food industry will tell you. Living wages in the fast-food industry are simply good for business. Horrible tolls on our economy that stem from a whole class of people who can barely afford to eat bad food, because healthy food choices cost so much, result in higher costs to treat more and more sick people who cannot afford health insurance or who must rely on food stamps even though they are working for the current minimum wage—which currently puts them below the poverty-level.

Of course this expertly propagandized school of thought stems from the never-ending economic catastrophe that slow burns underneath the surface like a landfill fire until the entire mountain collapses under its own weight…Reaganomics, Voodoo Economics, Supply-side Economics…whatever name you want to apply to it, the tenets of the “theory” remains the same….it’s complete bullshit that’s been dropped on us like napalm since Dick Cheney, Donald Rumsfeld,  Alan Greenspan and Arthur Laffer convinced the clueless duo of Gerald Ford, and later, Ronald Reagan that this plan would be the saving grace of American culture.

It’s been the saving grace for the 1/10 of 1% of Americans, but has destroyed everyone else’s American Dream. And the economic inequality created by that “Trickle-down-my-back” theory is driven by policies that have been framed around these totally bogus ideas are simple to comprehend—so when they’re pounded at the public daily they take root. Just the fact that they are simple should be a red flag. If nothing else is true about how Republicans have convinced so many people to believe ideas that are contrary to their own good, this is their strategy and they exploit it every day:      

A simple answer that is clear and precise, even if pure bullshit, will always have more power to persuade than a complex answer that is true. The three major tenets of this bogus, cynical economic theory are:

  1. Tax cuts for the rich will spur growth
  2. Deregulation for the powerful will spur growth
  3. Wage suppression for everyone else will spur growth

Now to understand how wage suppression has worked so well for Republicans, it’s vital to understand the underlying misrepresentation that these conservative con artists have sold to the American people.

The big lie is: “if wages go up, people will lose their jobs because if businesses can’t afford         what they deserve to earn the businesses will have to lay people off or simply close”.

And this mantra, or some variation, has been repeated endlessly for decades. And there is simply no evidence for this tenet whatsoever…there never has been. But the question never asked nor answered is, do wage increases serve as a drag because it raises firms’ costs or do businesses experience higher sales as a result of the rise in their customers’ discretionary income? Obviously, if you consider only one side of that equation or the other–as most amateur analysts do–you reach a biased conclusion. The real question is, what is the net impact after all the relevant relationships are considered?

Fortunately, this has already been addressed in myriad professional, peer-reviewed studies using both mathematical modeling and statistical evidence. And there appears to be a clear consensus: changes in the minimum wage (and by extension all wages) have little to no impact on employment (see for example: Why Does the Minimum Wage Have No Discernible Effect on Employment?). The conclusion is always the same…the change in cost is largely offset by the increase in demand. But that conclusion needs a modicum of thought, logic, knowledge…so of course, it can be beaten down by the simpler premise, “hey, if I have to give you a raise I might as well close”. It’s emotional and psychological blackmail.

Comedian Chris Rock said once on Saturday Night Live, “You know what that means when someone pays you minimum wage? You know what your boss was trying to say? ‘Hey if I could pay you less, I would, but it’s against the law.’” And there’s the rub. That bad old government taking my stuff and giving it to someone less deserving!

McDonald’s tried to pull something similar on their workers recently— “Well, if we have to pay you more we might have to go to automated servers and you won’t be needed at all”. Well you know, if that were true, they’d have already done it. Because, newsflash, McDonald’ doesn’t give two damns about the welfare of its workers. The only thing that matters, is not IF they make a profit, but do they make ENOUGH profit to keep the shareholders, CEO, Board of Directors, etc., happy.

The reality is, and a major tenet of Capitalism is, when workers make more money, they have discretionary income to spend on something other than bare necessities, so businesses have more customers, so they hire more workers. Why would a business hire more workers unless their current staffing level simply could not keep up with the demand for the goods or services they provide? They wouldn’t.

Now remember the underlying misrepresentation to the wage suppression mantra stated a few paragraphs above…if wages go up, people will lose their jobs because if businesses can’t afford what they deserve to earn the businesses will have to lay people off or simply close. When in US economic history has a spike in wages been the reason for a rise in unemployment? Never. Not once. We are therefore unlikely to solve any economic woes by keeping minimum wages so low that the employees are still below the national poverty level.

Not only that, but the goal of the minimum wage law is not to raise or lower unemployment, nor should it be. Evidence suggests that it has a de minimis effect, if any. Its purpose is social. It is meant to protect those who might not have the power or resources to be able to protect themselves. And there’s little doubt who is the in need of protection in this context…and it’s not these huge corporations.

Keeping the minimum wage at historically low levels, (Adjusted for inflation, the federal minimum wage peaked in 1968 at $8.54 (in 2014 dollars). Since it was last raised in 2009, to the current $7.25 per hour, the federal minimum has lost about 8.1% of its purchasing power to inflation)).

Keeping minimum wages low is the most insidious of all the numerous corporate welfare practices. It subsidizes the profit of giant corporations and socializes all the costs onto the taxpayers because the people who work for minimum wage cannot even provide for themselves and end up on food stamps, Medicaid, emergency rooms, etc., all at the cost to taxpayers and other consumers. So we, the taxpayers, are subsidizing McDonald’s $25 billion a year in profit so they can keep their employees on welfare instead of increasing their payroll.

WalMart has 1.4 million employees existing in poverty and the U.S. taxpayers subsidize Walmart’s payroll to the tune of approximately $6.5 billion every year! Capitalism, when it’s well formed, properly regulated, and policies enforced, works quite well for everybody. I don’t see why giant, hugely profitable companies shouldn’t have to pay their employees well enough that they don’t need public assistance to survive.

What we have done is create two economies for our country. You have one economy where employers are willing to pay their employees enough to live without public assistance and participate in the economy as robust consumers.They buy other companies’ stuff and pay taxes into the system, the engine of growth under every Capitalism model.

Then you have these huge corporations making billions in profit that pay their employees so little money that they can’t afford to buy anything from anybody except the bare necessities WITH the assistance of programs we as a country provide.

There is simply no reason for such parasitic corporate behavior as an economic necessity. It is a choice, a preference made by these enormous companies. If we’re suckers enough to just give them money, who wouldn’t take that deal? But make no mistake; they are the real welfare queens. They are the ones scamming the system, not the employee making the minimum wage.

So if they won’t act as good corporate citizens of their own volition, it is up to the rest of us to say to them, if you’re going to take advantage of all this country provides that allows you to thrive, like highways, clean water, security, electricity, etc., then you have to pay your employees enough so that we don’t have to pay them for you.

Look at history. If you wave off the plight of starving people who cannot afford bread with a callous “Let them eat cake”, it usually doesn’t bode well for the longevity of the society or their leaders’ heads. Who can forget the wise words of Sir Mittus Romneyus the IV….”Corporations are people too, my friend”.

Harvey A. Gold