NYC Fast Food Workers Strike, Showing the Cost of Neglecting Minimum Wage


If the recent spate of strikes at Hostess, Wal-Mart, and NYC fast food restaurants can show us anything, it’s that something crucial has fallen out of our conversations on inequality. The left’s heartened defense of the social safety net dominated the subject in the last election, but it was to the exclusion of another tool we use to balance the interests of the lower classes against concentrated economic power: the minimum wage.

If minimum wage had kept up with inflation over the past forty years, it would be at $10.55, a sizable margin over the current $7.25. But since Obama’s 2008 pledge to raise it to $9.50 by 2011, lawmakers have kept mum on the issue except for lackadaisical bills put forth by a few Hill Democrats that never made it to a vote.

That a person can work 40 hours a week and get paid below $15,000 should have congressional Democrats harrumphing — but it also shatters an important right wing premise. Surely the fact that the working poor number 47 million can dismantle the myth that poverty affects only the idle in the U.S.  It should offend Democrat and Republican senses of economic fairness.

But we live in an era in which Grover Norquist and other anti-tax, anti-regulation crusaders have harnessed financial panic and shaped it into a fear and reverence of those job creating demi-gods. They’ve created an atmosphere where the public can be forced to bear any additional tax on corporations: we can blame the firing of 150 coal employees on mandatory health insurance coverage rather than a boom in cheap natural gas, and it’s more believable that Hostess went out of business because of a strike and not because a menu of cream-filled snack cakes adjusted poorly to a 2012 diet. It seems that every business failure can be traced back to a couple of employees with a picket sign and the nerve to complain.

Just imagine if the minimum wage had been more central in Obama’s 2012 campaign.

But if the recovery is sluggishly puttering along, it's not because these job creators are squeezed. Companies have more than $1.7 trillion in cash to spare. It's because the recession has worked hand in hand with two other factors — job polarization and a low minimum wage — to weaken the spending power of the middle and lower classes.

The first, job polarization, is no new phenomenon. It's a natural step in technological advancement, in which automation steps in to take the place of middle-skill jobs like manufacturing and secretarial work. But a recession accelerates the process, ensuring the mark it leaves on the economy is deeper and more painful.

As secretaries and factory employees move to lower-paid industries like food service, they face the dismally low compensation prospects that an insufficient minimum wage generates not only for the lowest income level, but for the income levels immediately surrounding it. The market's displacement is doubly devastating. It's a steady migration of middle-income workers to low income jobs at a time those jobs’ wages are badly adjusted to inflation and the rising costs of food and gas.

As Robert Samuelson points out in the Washington Post, the recovery is so slow because consumers are still terrified into tightfistedness. He falls over himself to concentrate specifically on business owners and investors, whose fall from 'irrational exuberance' to chastened restraint led to a draught in investment and hiring. But it should go without saying that the lower and middle classes are going through an even steeper fall. Investors and business owners are clutching their cash in fear, and the lower and middle class’s race to the bottom of the income distribution has left them without anything to spare. Studies have shown that every dollar raise in minimum wage results in $2,800 in new consumer spending. The two engines that drive economic growth are out of order.

If any complaint is lodged in the political arena on behalf of workers or the poor, it’s decried by the right as divisive class warfare. But the balancing of employees’ interests with corporate power has been a common thread in American history. And if the recent employer-employee tensions at Papa John’s, Applebee’s, Wal-Mart, and Hostess are any indication, it's a cause that's far from obsolete.

More importantly, the stifling of these complaints have wider implications than an inconvenient strike or two. Excluding talk of fair compensation will stretch the recession and further weaken the recovery. The premise that considering employees’ needs is damaging in a recovering economy demands a critical re-evaluation.