Today, we’ll discuss how the Living Wage movement came to be and what the laws of economics tell us about attempting to conjure out of thin air, ever higher wages decoupled from productivity. We will also talk about how socialism and communism are closely tied to this subject. Let’s begin with a definition of what a Living Wage is:
“A Living Wage is a socially acceptable level of income that is meant to provide adequate coverage for basic necessities such as food, shelter, child services, and healthcare”
Investopedia states that a Living Wage for a family of four was $68,808 as of 2019. That is more than this country’s Average Median Income of $67,521 in 2020. ‘Socially Acceptable?’ Now, that describes my problem. Socially Acceptable to whom?
Read our Blog Differential Diagnosis
Consider this: The idea for a Living Wage began with the Soviet Union. Or, as Marx liked to say: “From each according to his ability, to each according to his needs”. The Living Wage movement is Marxist to its core granting a higher wage than justified by his/her productivity, to someone who has a need and then capping wages for those with superior abilities. In a Marxist Utopia, one does not work for gain, you work for the common good. We all know how well that worked out! The US national minimum wage was created by Congress under the Fair Labor Standards Act (FLSA) in 1938 under the Roosevelt administration. I am not a fan of minimum wages for exactly the reasons we see at present. Politics, rather than economics is overriding the natural market.
Allow me to share with you an economic truth:
People almost always want more “stuff” than they can afford. Seeking a way to get more “stuff” without labor by simply commanding it became the most expedient mechanism to accomplish that. It’s a twofer for liberal government. We make people in the bottom half happier because they won’t have to work harder (or work at all) while the people at the top will see their incomes reduced through government- enforced redistribution. Win, win if you are on the left side. We are now on a grand adventure to a world of economic fantasy. Not only are we back into the business of redistribution of wealth, but we are also considering ever more egalitarian ideas like guaranteed income. Why work when you can get paid to be “creative?” This experiment is currently being tried here and elsewhere. Early results are in. Recipients of a guaranteed monthly income love it! However, they think it should be more generous as they hear there are still billionaires on the loose that have not paid their fair share! At its foundation, Guaranteed Income is the confiscation of other people’s wealth.
Today’s middle class is more comparable to what our lower upper class of 60 years looked like. In 1960, solidly middle-class families lived in 1200 to 1500 square-foot homes with only a single carport or garage at that. No a/c, one TV, one car, and many kept close to home rarely eating out. Most dried their clothes on clotheslines. And, people were generally happier than today. Lifestyle choice translates into what it costs to live. Compare (that too) today, where the minimum standard requires two incomes for families to support that “Socially Acceptable” level of income necessary to acquire all that “stuff.”
Read Our Blog Talking Heads, Sound Bites, and American Pie
Once again, who’s going to pay to satisfy everyone’s craving for more stuff? The belief of government and the left-of-center think you can command those wages to be paid to meet their definition of a Living Wage and that’s unsustainable.
Are they right? Sure, you can; for a while. Eventually, the immutable laws of economics exert their inherent gravity. Milton Friedman, a Nobel Laureate in Economics understood that capitalism has its own hierarchy of needs much like Maslow’s. Milton wrote, “an entity’s greatest responsibility lies in the satisfaction of the shareholders.” Eventually, this was called the “Friedman Doctrine.” Contrast this statement with how leftists rank a corporation’s responsibilities in the following order of importance:
- Environmental Stewardship
- Community Impact
- Employee Wellbeing
- Diversity, Equity, and Inclusion
- Socially Redeeming Products and Services
See something missing? Stockholders. Stockholders are those investors who take risks and then expect rewards for those risks (which are not even mentioned within). Finally, it’s now easy to understand what’s going on. Take your pick, socialist or communist, companies in their minds are only good, true citizens of the world when the profit motive is expunged in favor of “feel good” actions that fail without exception, given enough time. Still not convinced? Let’s come at this another way.
The most common manifestation of a Living Wage today is the starter $15 an hour wage being pushed as our minimum national standard. Let’s examine the issue a little deeper.
First, there is the issue of starting wages. Many of us started out working at McDonald’s or someplace similar. These are starter jobs. We were typically paid minimum wage and never thought we were underpaid, especially so, since many of us were transitioning to the next stage of our lives, i.e., college- bound, technical school, military service, or even going to work for real. That’s how our system is supposed to work, up and out. We’d probably not have a problem if things were still that transitional today, but something happened. Millions of entry-level workers are stuck and not moving on. There’s the conundrum. What happened?
The primary factor that changed is the now static nature of many traditionally entry-level jobs, influenced by the commonality of certain personality and social traits such as:
A. Ambition—we have developed an underclass of drones, i.e., people who only want menial and/or repetitive work. Some are stuck, but many don’t desire to do anything more than make a few bucks without headaches.
B. Education—their technical skills, traditional reading, writing, and arithmetic are abysmal. We rank 113th in the world for literacy at 86%! Oh my God! And, we spend more than any other nation per child on that “education”.
C. Language—every day, there are more and more individuals flooding into our country. Traditionally, they took the bottom jobs until they learned our language and then moved on. Today, many simply never learn to speak English.
D. Government Support and Disincentives to Work—SSI (disability) is up over 30% in the last ten years. There are now over 5 million people receiving Social Security Disability; all under 65. And, SSI is just one of many social safety net programs that exist. In 2013, it was estimated you would have to earn $38,000 in the private sector to equal the benefits available through government support. That number is likely higher today.
People will almost always do what makes economic sense for them. And, without moralizing, people can live comfortably without working too hard. That’s the problem. With no fear of going hungry and with the ability to have basic housing and utilities without much hassle; we’ve created the problem. Enter the liberal do-gooders. Instead of recognizing the problems we enumerate above, they conclude that all we have to do is pay them more money for little or no work. Why? Because a good life is an entitlement, not a privilege as far as they are concerned. One more thing to keep in mind about all those “Alinskyites” seeking to overwhelm our social services. From their perch, overwhelming the social services net in America will see our country fall all the faster! How preposterous that we can provide a middle-class life for entry-level efforts. Read about Alinsky and understand his motives and objectives. Believe what he says, as outlandish as it may sound. There are many highly-placed “Alinskyites” out there, many in government and on the left. As you can see, the concept and promise of a Living Wage is a false promise that has nefarious intent as is the idea of a Living Wage.
Read Our Blog There be Monsters
We can tie inflation and our labor participation rate issues to the decoupling of value for value. It remains to be seen how quickly we learn our lesson and return to a truer version of Capitalism than exists at the moment. A “Living Wage” is ultimately anti-capitalist with no foundation to build upon. Without adjusting our course, Capitalism is doomed.
God Bless America!
Allan J. Feifer Author,
Businessman, Thinker. Read more about Allan, his background, and his ideas to create a better tomorrow. Subscribe at www.1plus1equals2.com