Americans are distinguished by, if nothing else, our approach to work.
Nobody is more work-obsessed than us. We work more hours for lower pay than almost anyone else in the industrialized world, and when that doesn’t pan out for us, we are more than happy to beat ourselves up about it. We’re so obsessed with our work that we forgo vacation days, time with our children, and even sick days—for our paycheck. We’re happy with our hours, even when we wouldn’t have been happy with the same hours years earlier, and when we think about what makes our country historically successful, our minds drift to one thing—work.
And yet, for all the praise and adulation that we have bestowed on hard work, hard work hasn’t reciprocated.
Americans are more depressed, more stressed, more medicated and more subject to despair than ever, and our relationship to work likely has something to do with that. The much-touted increase in the federal minimum wage from $7.25 an hour to $15 could be one way to kill (with one policy) the two primary sources of work dissatisfaction that are plaguing Americans, especially the working-class: low pay and long hours.
The first issue is the obvious one: low pay. Americans making the federal minimum wage, if they work 40 hours a week, every week, throughout the whole year, would make $15,000, just over the federal poverty threshold. Obviously, however, Americans don’t work 40 hours a week every week. If you’re a minimum wage worker, chances are you don’t get holidays, paid sick leave or vacation time. If you have to miss work because you’re sick, or you or your spouse delivers a child or you decide to take a much-needed vacation, you are out that money. That means the average minimum wage earner is likely at or below the federal poverty line. Talking about the minimum wage is all well and good, but those who actually make the minimum tend to be teenagers. When we expand the scope of concern to people making “just about” the minimum wage, we see a different picture. There isn’t a great substantive difference between making $7.25 and $8 an hour in a job that provides no benefits and no paid leave, but when we expand our area of concern out to people whose wages are between the minimum and $10.10, 88% of those workers are older than 20. As a young person who has lived in Tennessee all my life, I would probably light myself on fire for a chance to make $10 an hour, but in many parts of the country that’s just barely scraping by.
Does a 25-year-old service worker really deserve $15 an hour? I don’t know how one calculates such a thing, but I do know that the industries expected to grow the most in the next ten years are home-care nursing followed by fast-food workers and restaurant cooks. We’re looking at an economic paradigm where a huge proportion of workers will be in low-wage service and retail jobs. At that point, the only other option to raising wages would be having more people on the dole. It would become an unavoidable economic problem.
So low wages are one problem: too many Americans cannot afford to pay rent and cover basic necessities (let alone have health insurance, a car payment, a retirement fund, or anything else). This burden falls disproportionately on younger Americans, some of whom have basically failed to launch and remained living with their parents while others don’t have that luxury. The US employment market seems decidedly stacked against younger Americans, with recent numbers out from the St. Louis Fed claiming that 101% of all employment growth in the last 20 years has gone to workers 60 and older. Part of that equation is, no doubt, persistently low wages in entry-level positions that feed the “failure to launch” phenomenon.
While some people can’t find work at all, others are up to their eyeballs in it to make ends meet. Americans work longer hours than basically any of the other post-industrial economies of the Western world, enjoy far less vacation time and are subject to a work culture that makes going to work with the flu a sensible course of action.
There’s also the simple fact that nobody needs to work 40 hours a week. The 8-hour workday, and by extension the 40-hour week, were a mostly arbitrary set of constraints arrived at by socialist and pro-labor movements agitating against the brutally long hours of factory work during the Industrial Revolution. It wasn’t a matter of human survival that people worked 16-hour shifts in the canneries, it was just what capital could get away with. In pre-industrial times, work schedules were dictated by the demands of agriculture and were much more fluid, typically consisting of long periods of leisurely work punctuated by weeks of sun-up-to-sun-down labor to bring in the crops. Even still, in sum total, medieval peasants worked less hours a year than modern Americans.
Certain nations, like France, have realized that modern labor is so productive that the need for a 40-hour week no longer exists. When France moved to the 35-hour week, workers still retained productivity levels on par with the US or Germany despite enjoying fewer hours. The real threat to productivity in advanced economies, in fact, is not cutting hours, it’s the lack of well-qualified skilled labor to fill positions in those economies. It takes years, at best, for a new crop of skilled laborers to make their way from education and training to the workforce, and yet in that same time the jobs they have been training for could be obsolete.
A $15 minimum wage would have an unavoidable knock-on effect: some workers will have their hours cut (to say nothing of job losses). If the hikes in pay are enough to cover the loss of hours, however, workers could see a double-boon. They would be paid more for the time they are on-the-clock, and they would be on-the-clock a lot less. If the average $8 per hour worker makes $320 (before taxes) in a typical 40-hour week, at $15 per hour, the same worker would make $300 (again, before taxes) after working half that time. So even with deep cuts to hours, workers could still see a windfall from a higher minimum wage, and more time off might even save them more money in the long run. For example, a worker who can make the same part-time as they did full-time might not have to hire a babysitter, or put their young children in daycare, leading to better outcomes for children and more money in the bank.
But I would be remiss if I didn’t point out the dangers, and some potential solutions, of the minimum wage hike.
For starters, having your hours cut isn’t a big deal if your bigger paycheck recoups your losses, but losing your job entirely is. The Congressional Budget Office estimates that, at the $15 extreme benchmark, the economy could lose (as a median estimate) 1.3 million jobs. Not good, especially in the midst of a pandemic with no end in sight. The solution to this problem, which is baked into bill under consideration, would phase in the wage hikes until the $15 per hour minimum was reached at 2025. More modest wage hikes, like $10 per hour, are estimated by the CBO to have a less profound impact on jobs while still helping low-wage workers.
But employees are only one side of the equation. What about businesses? Small businesses are likely to be the worst-hit, although medium-sized to large companies aren’t safe either. Labor costs can be up to 70% of total operating costs, and while businesses that don’t provide benefits likely have lower costs for labor overall, it doesn’t mean that a wage hike wouldn’t lead to devastating increases in operational costs.
One solution would be to allow businesses to write-off the increased labor costs on their taxes. The government should have some compassion with business owners, especially small business owners, by not squeezing them from both ends. If they want them to pay their workers more, they need to help keep the business solvent by lowering their taxes in a corresponding way. This may not be the favored approach by Democrats, who are agitating for the wage hike, given their generally negative attitudes towards lowering business taxes, but asking employers to pay their workers more and then also pay higher taxes is a recipe for economic disaster. Large corporations might weather the storm, but the small businesses where 47.5% of Americans work would be decimated.
In sum, the quest for the $15 minimum wage is noble and could be a game-changing revelation for American workers, many of whom have seen real wages stagnate or even decline, year after year, after accounting for inflation. In order to address the roots of these problems, however, the American economy is going to need to be fundamentally restructured. Otherwise, these same patterns of severe inequality will creep up again and again, requiring more and more minimum wage hikes. For example, America’s trade policies have allowed for other nations to raid our economies through subsidizing their own industries to keep prices artificially low, and American colleges, often seen as the ticket to the middle class, keep increasing tuition while in many cases not offering the skills that employers need, loading students down with useless debt and no job prospects.
For now, though, a $15 minimum wage after 5 years is probably the best we can do. Maybe it will make the dream of a car in every garage and a chicken in every pot just a bit closer.
Photo Credit / Wikimedia Commons
