Disclaimer: This article highlights an issue for Anti-Imperialism.com to which not all editors are in 100% agreement. The following is representative of one editor’s position.
Usually most of what I write involves some abstract criticism or perhaps a more intense elaboration on a concept ‘not-so-familiar’ to the everyday person. However, with all the news surrounding recent efforts (by governmental agencies and leftist groups) to raise the minimum wage it becomes important to flesh out a few very simple points in regard to this issue. Would raising the minimum wage hurt or help the working class? What about inflation? What about unemployment/underemployment? Is this a radical/revolutionary struggle? Where do socialists/communists have a role in this struggle?
Let’s begin very simply by addressing some of the myths and fears being propagated by the right-wing media machine.
1. Does raising the minimum wage cause inflation?
This seems to be the most ready response of opponents to raising the minimum wage in the United States. Everyone who has ever taken an Econ 101 course regurgitates the ‘fact’ that when purchasing power rises so does the price for any given commodity in demand. This, however, being incredibly simplistic and massively incorrect has still taken a hold in nearly every discussion about the minimum wage. You will find socialists claiming that any struggle towards wage hikes is futile considering the bourgeoisie will simply adjust their prices to maximize their margin. Right-wing individuals claim that the inflation from minimum wage would be enough to compensate for all the ‘temporary gains’ and still leave those most vulnerable in the low-wage fields in the worse conditions possible.
So is there any truth to this?
Not really. Not at all according to a recent study by Sara Lemos from the Journal of Economic Surveys. The study showed that a wage increase of 10% caused prices to rise anywhere from .3-2.16%, hardly the catastrophic Armageddon expected by nay-sayers . The obvious contention is that the study only surveyed a smaller group of firms, not the entire economy in question, and the current proposal would be far greater than a 10% hike. Yet, doubt in one direction is not significant enough ‘reason’ to think one way or another. In fact, why would this indicate a possible result any different or more dramatic (proportional to the raise incurred)?
First we need to consider why exactly firms in a capitalist economy cannot simply adjust their prices at a moments whim. Recall the importance Marx places on understanding socially necessary labor time within the Law of Value. The capitalist class does not act uniformly, nor does it behave in a formally organized fashion. What makes the ‘capitalist class’ the capitalist class is its concrete position in relation to capital accumulation. A social location which conditions and disciplines how it behaves in our social order and one that provides the cohesive ‘matter’ that holds the class together; namely, the position of exploiters and oppressors united in their exploiting and oppressing. However, even in monopoly capital, firms are still locked into competition with other firms. Not in the cut-throat sense of early industrial capital, but in the sense of a ‘cold war’ of attrition and price adjusting.
One would be hard-pressed to find a firm which can unilaterally raise its prices. In fact, raising your prices usually spells death for a firm. Especially when firms have such high profit margins they are willing to price dump just to undercut their competitors. Prices in capitalism are essentially held bondage to the law of value, a law which is arguably founded upon the disciplining power of capital circulation. Furthermore, if one firm is to raise its wages, this usually forces others too as well in a process of competing for labor-power. Economics in bourgeois society is a bit more nuanced than “more purchasing power = higher prices” because such an analytical approach forgets the whole network that a firm interacts in. We need a dialectical perspective to understand how and why prices behave in the way they do.
On top of all of this, we should keep in mind that inflation is continually an issue, not just at points of a wage hike. It would take the most intellectually dishonest appraisal to conclude that raising the minimum wage would damage working class purchasing power. Working class purchasing power has already and currently is being damaged in light of inflation; irrespective of any significant increase in the minimum wage. Any slight increase in inflation would be made negligible by the pre-existing condition of inflation prior to any increase in real wages.
Furthermore, because of this inflation today, mind this inflation being absent of any significant wage increase (for low wage workers), a significant portion of US workers are making less in real wages than the minimum wage in 1968. An estimated 40% of workers make around $20.000/year or less, which is actually less than the full-time annual earnings of someone making minimum wage in 1968 . How is this possible? Well, the minimum wage of $1.60 provided in 1968 actually has the purchasing power of $10.90 in today’s value (a full 80 cents higher than the federal proposal to raise the minimum wage to $10.10 over several years) .
No one is suggesting we should ‘return to the 60s’ if you will, or at least no one of relevance. But, we should note that real wages are not as potent as they were before, despite suggestions otherwise, and in fact its probable that purchasing power for low wage workers has actually relatively decreased. Therefore we can conclude that even if inflation became ‘problematic’ in the event of a wage hike, how more problematic could it possibly be in comparison to the current inflationary damage to purchasing power?
2. Aren’t only ‘X’ percent of workers making the federal minimum wage?
Another common quotable remains the fact that a very small amount of workers in the United States actually make minimum wage. Only 3.8 million Americans, or roughly 5.5% of hourly wage earners in the formal economy make at or below the federal minimum wage . Checkmate leftists? Not quite. This statistic is essentially useless because what really matters is how many workers make between the current minimum wage and the proposed minimum wage. Recent statistics indicate at least 25% of American workers in the private sector make at or below $10/hour (slightly below the newly proposed minimum wage) . This does not consider those workers making a few dollars above even that threshold either. A wage hike does not simply effect one group of workers it effects the entire ‘wage hierarchy’ in capitalism. If the lowest paid workers are suddenly making more relative to their higher paid perhaps ‘more technical’ workers there is a problem. The more technical strata becomes upset with this perceived loss of relative ‘significance’ and their wages rise as well. Including wages of related industries in the network of production. When everything is over usually everyone in the given ‘wage context’ is making more.
Therefore its incredibly one-sided to claim that minimum wage hikes only benefit a very narrow margin of workers.
Let us also remember that many workers are indeed ‘forced out’ of the formal economy by economic necessity. You cannot raise a family on $7.50/hour. You can barely survive as an individual. What this means is that low wages have the deepest effect on oppressed communities, ghettoized in particular, who are forcibly criminalized in part due to their inability to survive off wages afforded to them in the formal economy. The struggle for livable wages for the lowest paid workers in the United States is an economistic struggle of helping a ‘small insignificant group’, its a struggle to improve the material conditions of the most oppressed and preyed-upon in the settler-colonial state; a struggle that is often lead, on the ground, by members of nationally oppressed communities who we claim as communists to struggle with in solidarity.
3. Wouldn’t raising the minimum wage cause more unemployment/underemployment?
This is a very serious question, and perhaps one that carries the most weight in regard to ‘should we’ or ‘shouldn’t we’. If our objective is to help common worker in her material conditions then whether or not she can be employed under X circumstances should have at least command significant attention.
The answer is ‘mixed’ but in light of what we know currently, raising the minimum wage to the federally proposed amount of $10.10/hour should not cause alarm.
Ultimately, the capitalist class, within any given social formation, is trying to extract a profit from workers employed. Now, for the purpose of simplicity, we will assume that the way in which they do so is to employ each worker at a wage which is then ‘profitable’ to whatever extent. Certainly, there is an argument to be made that in many industries most profit is not necessarily derived or even significantly related to the wage-level at which every worker is employed but there is at least room to speculate that the wage accepted and money budgeted for labor-power at least moderately affects how many and to what degree labor is employed in the process.
So how can we know one way or another, whether a hike in the minimum wage would alter unemployment/underemployment? Let’s examine some data first.
A 2013 study by John Schmitt from the Center for Economic and Policy Research found that a “modest increase” in minimum wage had “no discernible effect on employment” . How is this possible? Intuitively, higher wages = higher labor costs = decreased employment capacity. However, once again we see the failure of this crude analytical economics which disregards the ‘lively’ nature of any given economy. Schmitt highlights, from a study of numerous other economic studies, that what is really disregarded is the possibility of certain “adjustment channels” by which firms react to an increased cost of labor. These channels include, besides of course simply firing workers, reducing hours, cutting benefits, increasing prices, but also limiting profit margins, cutting overhead costs, and in some cases very little reaction at all. As Schmitt illustrates, if all workers are being paid more, not simply an isolated firm, this increase in purchasing power might be beneficial in some cases in that more price inelastic commodities will see a higher return . Therefore, the claim that businesses would simply resort to reducing hours or employee is not exactly well-founded. And in the case of underemployment, which is somewhat pandemic in the case of low-wage jobs, the increase in real wages might make the decrease in hours negligible and still leave the worker with a ‘net gain’ in purchasing power.
Taken as a whole, there is not much ‘predictive power’ in regard to ‘would there be more unemployment’ (or anything in bourgeois economics, actually); however, there is at least modest empirical reason to believe that such a hike would not create a catastrophe of unemployment and reduced hours for the lowest paid workers.
States with relatively higher minimum wages (including major cities with separate wage policies of their own) such as Washington are actually experiencing relatively fast job growth (faster compared to other states). So, in reality, it would seem as though the constant fear of this massive unemployment apocalypse is a bit overstated at least and there is no significant reason to believe if firms were forced to pay their workers a more ‘livable wage’ that they would go around like headsman to cut down their employees. Let’s remember that not even the greatest capitalist monopolies can defeat the Law of Value (despite skepticism from even Marxian economists). Firms ultimately behave in accordance with how capital is circulated and are certainly socio-politically disciplined to some extent, even as though the capitalist class sits atop the state apparatus, the capitalist class is not a being-as-whole as some would suggest. It’s differentiated, complex, and riddled with its very own internal contradictions. Contradictions which indeed are mediated in the way that firms relate to one another, via the social totality of capitalism we understand economically through its ‘laws of motion’ in the Law of Value.
So, very long answer made ridiculously short: no. A minimum wage hike would not increase unemployment/underemployment in a way that is so incredibly negative that it would make any gains by the working class irrelevant. There is simply no reason to think this.
4. Is this a struggle we as communists/socialists want to be involved in?
Perhaps a silly question but one that is no doubt very significant in some circles. After all, wage struggles and the minimum wage struggles in particular have a serious trend of economism and they themselves contain inalienable compromises with economistic demands. However, “bread, peace, and land” was not exactly the most radical of all demands (still arguably more so than a wage hike) but still prevailed as a call to action. Obviously, social conditions are entirely different and I make that analogy only very tentatively with those differences in direct view.
Although, the question remains then how do we ‘insert ourselves’ into the struggle of ‘the masses’ and is this even a struggle worth being involved with?
Understanding this requires understanding the mass line and understanding the mass line is far more nuanced than ‘inserting ourselves’ like some catalysts in a chemical reaction. The mass line requires that we engage the masses according to the maxim of “from the masses, to the masses”. Vastly simple yet requiring a trained observer to detect the real particularities of the matter.
If being involved in the minimum wage struggle means holding signs at a protest or making Facebook posts then we should not be involved at all. Our job is not to simply “tail the masses” in regard to reflecting whatever view is widely held and popular and letting that be that. On the other hand, we should resist the commandist temptation to take nothing “from the masses” and make ourselves the arbiters of truth and practice unto the masses. Demanding they accept our ‘correct interpretation’ and follow ‘our practice’ as we have come to so expertly synthesize it. Both deviations are equally dangerous and seem to dominate how we approach the situation (one way or another).
I would suggest, rather, that we involve ourselves in a way that is genuinely revolutionary and in doing so hope to (and I use this word very gently) ‘educate’ the masses in regard to “what is to be done”. Educate is a very strong word and it carries serious implications of ‘who is the teacher’ and ‘who is being taught’. As a Maoist I would suggest that we replace the word ‘educate’ in these contexts with ‘refine’. There is more to be learned from the masses, the everyday worker, the exploited and oppressed, than we as would-be revolutionaries could ever teach. With this very well-known, we should suggest that we ‘refine’ those advanced and radical ideas of the masses and make them truly revolutionary. This requires us to get our hands dirty in struggles that are not always immediately revolutionary; struggles, in the case of the minimum wage debacle, which are nebulous, unrefined, and sloppy in many ways.
However, there is some argument to make that this wage hike “will happen” regardless of our efforts or any efforts from any organization. The idea being that this wage hike is a necessary prerequisite to the ‘smooth functioning’ of capitalist-imperialism; the masses and their needs must be met to some extent to prevent dangerous unrest.
Even if this claim is true, there is a rational kernel no doubt, this does not weaken our obligation to act in these circumstances. The real battle then becomes a war of ideological maneuvering within the masses. As I pointed out already, a significant portion of workers directly involved in this struggle are workers from oppressed communities and even internal colonies; a group of people who we as communists/socialists find to be a probable revolutionary subject in that sort of event. Regardless, these individuals are not being honed and refined as revolutionaries by a mass organization (granted, there are many ongoing and admirable initiatives) but instead made political drones by the Democratic Party and its labor allies (SEIU, AFL-CIO, etc.).
More dangerous than a GOP political victory (the defeat of a wage hike) would be a Democratic Party ideological victory; a victory that is no less capitalist, imperialist, and neoliberal than the most conservative of conservative victories.
We must, at the very least, contest these attempts by the Democratic Party and its allies to hold a discurssive monopoly on any income discussion, not simply limited to the minimum wage. If we concede this territory to them, we are only hurting our prospects in the future of acquiring potential allies, building cadre, raising consciousness, and simply winning middle forces.
Back to the question of ‘how we approach’ the issue and in the concrete sense, apply the mass line, we should be tentative in our approach. First, the minimum wage struggle is not the be-all end-all, even of surviveability debates. We should not compromise our revolutionary character simply to win the most marginal unaligned forces. It is, however, one that commands enough significance to participate in the discussion and in the struggle but very strategically and wisely. Let’s provide an example:
Do I support raising the minimum wage? Yes. Why yes? Because the working people of the world deserve to earn a comfortable existence. More than simply subsist, they deserve dignity and power which can only be given at the detriment of capitalism. Capitalism exploits; it oppresses; it is parasitic and a pandemic upon working class communities and individuals. More than simply ask for a higher wage, we must demand political power. More than a bigger slice of the pie, we must demand the whole bakery. So that the whole of production can serve the needs and desires of those workers who make the process even possible.
This is a better way to answer the question. Thrown together? Absolutely. However, when approached we cannot limit ourselves to ‘what is presented’ as questions often come with a certain limitation of answers (hence the possibility of correctness). We want to transcend the ‘normal discussion’ and eat at what is really behind all of this debacle. The systemic question of capitalism, how it works, and for whom does it work. We must focus the discussion in this light or we will end up echoing the feint demands of liberals and nominal ‘progressives’ until the end of time.
5. What about alternative issues related to survival?
Well, put quite simply there is no reason that an individual engaging in the minimum wage struggle cannot at the same time engage in other survival struggles for those low waged workers. Things like purchasing groups, urban gardens, food and housing cooperatives etc. can all still be promoted and operated while engaging in the fight for a higher real wage. The object of curiosity is whether or not there is a discernible ‘trade-off’ in these actions, financially and/or politically which would force us to choose one over the other. If this were the case then the suggestion would be to focus on those activities which are more direct in their action as the minimum wage battle is only a forum of political pressure. Regardless, there is no seemingly discernible ‘trade-off’ to be observed and therefore its rather useless to wax rhetorically about the ‘either/or’ scenarios when one does not exist or does not exist in a meaningful way.
6. What about reformism?
The real danger when engaging in such a struggle is not the possible ‘trade-off’ but rather falling into the pitfalls of reformism. There is a difference between demanding higher wages as part of a minimum program which at the heart seeks political power, and simply demanding a higher minimum wage because *insert liberal rhetoric* with no programmatic course of action employed. This difference can also become a very fine line so it becomes imperative that revolutionaries active in the struggle very clearly delineate themselves from other allied forces in the struggle and articulate their desires outside of the minimum program.
In highlighting the differences in our relative programs (between us and the reformists) we should make a few points especially clear. First, bourgeois society cannot ‘solve’ bourgeois society. There is no amount of legislation or bourgeois activism which could possibly overcome all of those social contradictions (poverty, unemployment, racism, ghettoization, etc. etc.) which compose our modern understanding of capitalism. These sort of contradictions and the way in which they are mediated is intrinsically ‘bound up’ in the bourgeois order of things. Only socialism and eventually communism can overcome these contradictions because only then can the social relations in question transform to the point of an effective resolution. Second, survival is survival. We join forces so tentatively with reformists to express our desire for the working class to be able to survive off of its wage. As far as ideological maneuvering goes, reformists remain our deep political opponents, for better or for worse. We do not lightly suggest that we should ‘take from the feeding hand’ like dogs below a table; if the capitalist class and its state allies will not hand over a wage increase then we will take it by force. This should be the sense of vigor which illuminates the pivotal characteristics between reformists and revolutionaries. Third, the struggle doesn’t end at the ballot box. In this case, there is no actual ballot box, but let’s be clear if the radical train ends after a few months of organizing and a pittance raise then we have a serious problem. Make it very clear that the only real change comes from protracted and consistent organizing towards radical transformations; not simply a small hike in the lowest wages. This is where real change happens which is outside the formal political arena.
7. What about internationalism?
This is perhaps the most pressing question for Leftists who claim to be internationalists or at least internationally focused with regard to the class struggle. How can we come to compromise with the narrow national demands of a segment of workers when we have an international focus?
In this specific case I believe there is a false dichotomy.
A couple weeks ago when fast food strikers hit the streets in 158 US cities they were accompanied with strikes from around the world by other fast food workers. Workers from the Phillipines, India, El Salvador, Indonesia and many other nations (peripheral even) took to the streets to protest for higher wages. Certainly, we should be skeptical as to what sort of organizations were ‘calling the shots’ in this regard but at the very least we should recognize that such a struggle transcends national borders; in addition, it would seem that the perceptual consciousness of international workers has the energy to make such a struggle revolutionary (given the proper practice and organization).
Therefore I think appealing to internationalism as a way to stifle support for a minimum wage hike is unfounded at best and simply bad practice at worst.
There is also the question of whether or not First World workers ‘should’ earn more. As some have suggested, do we really want workers to become more comfortable in their conditions? This is a loaded question of sorts. We don’t want to make our actions advertisements for the prosperity of capitalist-imperialism and further engender that neoliberal ideology of ‘shared success’. This is certainly a danger. However, there is this danger in literally every action we take within the scope of capitalism, not simply limited to minimum wage struggles. Furthermore, the question is not if the working class will become more embourgeoisfied by this wage hike. We are not talking about every worker suddenly making $20/hour. What we are dealing with is workers making a wage high enough to cover those basic “national standards” as understood by Marx; being that access to the social product which guarantees the worker can reproduce herself.
We could ask why does the working class, even the lowest paid workers in the US, need to make so much more on average than other nations low wage workers?
This is simply an irrelevant point when used to stifle the struggle but it can be utilized to strengthen the consciousness of the masses if we can articulate the question in a way which illuminates the failures of capitalist-imperialism and ultimately the neoliberal ideology of “shared success”. What we do not want to do is punish the masses for trying to achieve a more powerful position relative to the ruling class of any given social formation. This activity is not only counterproductive but comes across as reactionary and commandist at best. When major nationally oppressed organizations such as our comrades at the African People’s Socialist Party are standing with low wage workers (for very good reason) but we have other leftists who are not, what sort of message does this send? In addition, what exactly is being accomplished? This sort of ‘principled stance’ in regard to internationalism is really as depraved and empty a victory as it possibly gets. What we are dealing with is a mass struggle, granted one which is intermediate at best in development, but a struggle nonetheless. A struggle that while being infiltrated by reformist and even social chauvinist organizations, is still a struggle which disproportionately affects those nationally oppressed communities which we claim to uphold. That is why this is so important.
So in conclusion the question is not whether the minimum wage hurts or helps, the question is who is it hurting and/or helping? The clear answer would seem that a hike in the minimum wage can only hurt the bourgeoisie. Even if such a wage is slated to happen, regardless of any effort from anyone, taking advantage of such an effort means we establish ourselves as relevant forces in regard to class struggle and income discussions. This itself is a relative ideological victory and one worth fighting for. At the very least we should stand in solidarity with those workers who are only trying to see their most basic access to the social product of society improved. If we cannot stand in solidarity there, where in solidarity could we possibly stand?
 Ibid. p. 20 note: the author makes use of the Keynesian term of ‘stimulus’ and all the obvious sort and so on. Quite wrenching beyond the obvious implications.