The Value of the Working Poor

Just a few days ago the House of Representatives passed a bill increasing the federal minimum wage to $7.25 an hour over the next three years. The bill is rather controversial, including both the minimum wage increase and big reductions in the estate tax.

While I listened to the radio report on the bill, I was reminded of a discussion I had some time ago with “Jed.” We were discussing politics/economics, and I had mentioned the frustration I felt at the meager compensation so many in our communities receive for their work. Jed scoffed.

“It is what they are willing to accept,” Jed asserted. “If they don’t like it, they can get something different. They can go to school and get the training to increase their earning power.”

I was rather disturbed by Jed’s response. I am an enthusiastic advocate of higher education—not merely because of the potentially improved earning power, but for Jeffersonian reasons; higher education helps individuals learn to think critically, to communicate, and to understand the world around them. But Jed was not extolling the virtues of higher education. The implication was that low-income wage earners deserved nothing more based upon their choices. This attitude simply does not reflect the subtleties of the situation or the principles of a moral, “Christian” society.

It is worth noting that the more recent generations are finding it a greater and greater challenge to pay for college. The combination of the stagnation of wages (adjusted for inflation), skyrocketing cost of college, and reduction in grants in favor of loans have all created a more precarious situation for graduates than in years past. The average student graduates with an unprecedented $19,000 in student loan debt, takes longer than four years to complete their degree, and sees lower adjusted earnings than previous generations. A daunting prospect indeed for many student (See NPR’s On Point: “Can America Afford Going to College?”, Anya Kamenetz’s Generation Debt, and Tamara Draut’s Strapped: Why America’s 20- and 30-Something Can’t Get Ahead). Do we really want our upcoming workforce to be in such a precarious financial circumstances?

Nor is the degree which those students pursue guarantee employment or financial security. Jed was suggesting that by simply getting a degree in a high-compensation field (and assuming they are dutiful workers), they would be virtually assured financial security. This suggestion does not withstand basic scrutiny. Not all college programs can claim to lead to well-paying and highly secure careers. Many students are not inclined by talent or interest to enter those financially profitable programs. Nor are those programs equipped to accept everyone if all the students were so inclined. And a glut of trained candidates for a particular field would not mean high rewards for everyone; the demand would remain relatively fixed, leaving the bulk of candidates to find work in fields for which they may be poorly equipped and in which they are not so well rewarded. In fact, in according to the principles of supply and demand, the influx of applicants into a relatively fixed job market could drive down salaries, hurting even the “winners” in the competition for work.

But this isn’t really about the educational system. Nor is it about promoting the minimum wage. I’m aware of and willing to discuss the possible negative consequences and the demographic realities of the minimum wage—though studies by the Fiscal Policy Institute, Economic Policy Institute, and The Center on Budget and Policy Priorities all indicate that those consequences are far less grave than opponents suggest; and according to the Bureau of Labor Statistics, teenager (presumably dependents upon their families) are a minority within the minimum wage labor force—meaning a majority of minimum-wage earners most likely are working to provide for themselves and possibly families.

No, the real issue is the way we value the working class and working poor in our society.

No matter how advanced our society, economy, and technology becomes, there will always be a need for janitors, garbage collectors, groundskeepers, maids, agricultural workers, factory workers, fast-food workers, etc. And no matter how advanced our educational system, we will always have people who, due to circumstances such as disability, past history, or just plain inclination, are best suited for that sort of work, or unable to obtain anything “better.” Since they will always be here—and we will always need them, we should not devalue those people or the work which they do simply because those jobs may not require glamorous skills.

A bishop once told me that “There is dignity in all work.” I believe there is truth to this. I have found satisfaction in working in a warehouse, doing routine janitorial/cleaning work, or operating a factory machine, just as I have working at the library or doing design work. I have a friend who finds great personal fulfillment in his lawncare job. One of the maintenance staff at the Library has confided in me that she feels gratified to help make that important community resource clean and comfortable for the public.

If we truly believe that bishop’s precept, should it not follow that all work deserves a dignified wage, one on which these good people can live a dignified (if modest) life? In a moral, “Christian,” civilized society, shouldn’t we strive to ensure that all heads of households are able to support their families with some measure of security, regardless of their educational or skill level? Don’t we believe that these providers should be able to have the peace of mind which comes from knowing that they can cope financially with an emergency which might grip their families? Don’t we want them to be able to make enough that they can spend time raising their families and strengthening relationships instead of desperately working multiple jobs to keep food on the table and a roof over their heads? Don’t we want them to have the time to spend in the community, performing church service, and growing as people? Should we not value them as important and valuable human beings, irrespective of their career path?

I find it a sad commentary on our Christian compassion and our belief in the family values about which we talk ad nauseum that we would simply write off the working poor as deserving and justifiable losers in our economy and society.

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10 Responses to “The Value of the Working Poor”

  1. DaveB Says:

    I think we can all agree that is better to have people gainfully employed on a living wage than have to support them through our tax dollars via food stamps, welfare (both public and private), Medicaid, state CHIPs etc.

    I support raising the minimum wage, McDonald’s already pays about $7 most places now anyways, so what is the big deal?

  2. Brian Says:

    I agree that there is value in all honest work. I also see “Jed’s” point of view. There is work available for people who want to work. It may not be what they want to do but I think there are opportunities available. There are call centers along the Wasatch Front that pay a decent wage and are always looking for employees.

    As for raising the minimum wage I am sure that it will help some and hurt some. In reading the arguments for and against the arguments against feel more correct than those for.

    A larger problem is unscrupulous employers that are paying less than the current minimum wage. I think they should be punished. Of course that would raise the price of certain goods and services. I think it would be worth it though. It might also incourage more Americans to do work that they normally would not do. Just a thought.

  3. Derek Staffanson Says:

    Actually, Brian, that wasn’t “Jed’s” point of view at all. We never mentioned unemployment. That is a different discussion. The topic was the working poor, those with jobs that pay poverty level wages. Jed’s point of view was that their poor wages were fully justified and their own fault; that they were deserving losers in our society.

    What “feels” correct is often different than what rational observation and objective analysis proves, as those studies I cited indicates.

    As I said, I’m willing to discard the idea of a minimum wage if other ideas prove more viable. Strengthening of the Earned Income Credit, better support for organized labor, or anything else which can help workers make sure they can provide for their families is fine with me.

    Great point–better enforcement of minimum wage violations would be a good starting point.

  4. Jolard Says:

    Personally I feel that EVERY full time job should pay at least a living wage. If you are paying a man (or woman) to work for you full time, and you are paying them less than a living wage, you are exploiting them, plain and simple.

    The worker is worthy of his wage.

    Personally I would even go further. The wage for a 40 hour a week worker should not only be enough to provide a living wage, but should also be enough to support a family.

    How do we pay for this? Yes, our lifestyles as a whole might have to chaneg a little, but I see this as a valuable thing is some way. We live in such a disposable society, because goods and services are disposable. If we had to pay a little more for goods, it would be worth it to ensure all men and women working 40 hours were not in poverty.

    Anything less is immoral, unethical, and in my mind, sinful.

  5. JohnB Says:

    DaveB

    You hit the nail right on the head. What is the big deal? If you examine the BLS statistics provided in the link you will see that approx. 3% of people are at the min wage or below.

    When someone is hired, they are remunerated in pecuniary (wages) and non-pecuniary (experience) ways.

    If you hire someone, and they do a great job, you would be foolish to continue to pay them an intro-level wage, as they will take the experience, and move on.

    Economists would argue that min wages act as a deterrent to hiring people who do not bring $5.15/hour of value to the table. I think the empirical evidence on this is blurry.

    Brian

    It is not necessarily unscrupulous to hire at below minimum wage, as this is permitted in some industries. My son makes $2.15 per hour as an oyster shucker, but his overall wage is in excess of $7 once tips are included. The better he shucks, the more he makes.

    Derek

    I don’t think that Jed was blaming the poor, as much as highlighting that they have the ability to choose. Working for a living is, in effect, selling your leisure time. If you value your leisure highly, you won’t sell much of it. If you are unhappy with the trade-off of a low salary for each hour of leisure sold, then Jed is suggesting that you make changes to ensure that you are closer to equilibrium. I accept that not everyone will be a physician, but many people do things and appear to outsiders to “get in ruts” because this is an optimal, rational choice for them.

    I would no more force someone to work, than I would make them have mandatory healthcare. If they choose to work for min wage, it is because the cost, or at least the perceived cost, of acquiring skills and experience that will take them higher, is too great.

    There is minimal labor-market rigidity in the USA, and it is quite possible to advance, if this is the person’s desire. In some cases, it is not the desire, and a “one-size-fits-all” prescription may not be optimal.

    Jolard

    Your comments are a bit more difficult to address. What exactly is a “living wage?” In the course of my adult life, raising four children, I have made anywhere from $13,000 per year to well into six figures.

    In every case, I adjusted my spending habits and was able to “live” I was able to tough it out in the bad times, because I knew that things will likely get better, if I invest in myself and make my sale of “leisure time” more valuable to an employer

    I think it is impossible to exploit a worker. They always have the option of quitting. As an employer, it does not make sense to have high turnover, since hiring and training costs for min-wage earners can be a non-trivial component of their compensation package. If the worker thinks that they are being exploited (again, in a free labor market, where the worker has agreed to trading time for money without coercion, I cannot understand this concept) they should quit, and take their additional experience and leverage it into a better position. Nothing exploitive in that.

    The whole notion of poverty is also a blurry one. I didn’t feel poor at $13,000 per year. I just couldn’t buy everything I wanted. I don’t feel rich at making well into six figures. I still can’t buy everything I want. The stuff I want has just changed.

    If you double everybodies salary, the bottom 20% (or whatever the cutoff is) will still be technically “poor” It is in the definition.

    If you take from the ultra-rich (good luck in trying to define that) and give to the poor, they are still poor, on the distribution.

    Once you get beyond subsistance, additional income and wealth does not generate any noticeable degree of happiness.

    I started my life out very poor (I make more in a month now, than my single widowed mom raising five kids made in a year) and I went to school for a long time to avoid this trap. I did end up owing a lot in student loans, but it was worth it.

    If we want people to have increased earning power, it is NEVER going to happen by wealth redistribution, or min wage laws. It will ONLY happen if we can make the value of their labor worth more that it currently is.

    I haven’t the foggiest idea how paying people what they are worth is immoral, unethical, or even remotely close to sinful.

    Full, plain, and true disclosure dictates that I tell you I am a libertarian economist, who was raised in a socialist country.

    I choose the American way, any day.

  6. manuel Says:

    Funny to read this. I am in my Janitor job lunch break right now while I read this, making minimun wage to try to pay for college, and so far, I had only managed to get deeper and deeper into debt. My major is education, so I don’t see myself getting out of debt too soon after graduating.
    A problem with minimum wage is that it’s been stable for years, while inflation keeps going up. How do people that make minimun wage compensate for that?
    I’m glad to have found this blog. As a liberal Mormon myself, it’s conforting to find “kindred spirits”.

  7. rick Says:

    JohnB

    I wonder if the poor find the whole issue of poverty “blurry”?

    “I haven’t the foggiest idea how paying people what they are worth is immoral, unethical, or even remotely close to sinful.”

    I’ve heard this argument over and over again (mostly by my Libertarian friend) and it still sends a shiver down my spine. People are not worth a trivial amount of money per hour. The work they may be engaged in could arguably be quantified based on the demand for that work but to assume that everyone is free to choose jobs like they were ordering off a menu is a tad skewed. People are not all alike, nor do they have the same opportunities, situation, etc.

    The issue is keeping the minimum wage in pace with inflation. Some info that I find helps illuminate the problem: “The inflation-adjusted value of the minimum wage is 30% lower in 2006 than it was in 1979. In addition, comparing the wages of minimum wage workers to average hourly wages, we find that the wages of minimum wage workers have not kept up with the wages of other workers. The minimum wage is 31% of the average hourly wage of American workers, the lowest level since 1947.”

    The end.

  8. jennifer Says:

    I agree with Derek and Jolard on this one. One topic that hasn’t come up in this discussion is the portability of labor. If American companies hire illegal immigrants, those workers do not have the “freedom to leave, freedom to find other training/education” that some people assume always exists for low-wage workers. Therein comes the exploitation. If American companies continue opening up plants overseas and outsourcing operations as well, the same thing goes on (affecting many middle-class professions as well ). As long as corporations can find cheaper labor from other countries, legally or not, they will. Working families all get pay cuts as a result – – – and the CEOs and board members laugh all the way to the bank – – and the US tax revenue from corporations continues to fall.
    When businesses engage in these and similar practices, they skirt not only US labor laws (such a minimum wage, breaks, OSHA, age, overtime, etc) but they also avoid those pesky EPA regulations and (my personal favorite) health care. I could go on an on about this, but I’ll save it for later.
    Thank you Derek!

  9. Cstanford Says:

    One more way that we parallel the Zoramites.

    I’m with Jolard morally, I think. And in an impossibly ideal situation I would also see stay-at-home mothers compensated for the very hard work they put into childcare and house maintenance. I don’t know how *that* could ever be done without authoritarian socialism, which I don’t want, and a family wage paid to one working family member comes pretty close. But nowadays paying one worker a family wage would be seen as sexist. Barbara Ehrenreich’s _Fear of Falling_ and Gwendolyn Mink’s _Welfare’s End_ address this (Amazon has info on both books).

    The “people can always quit” argument doesn’t convince me in the slightest. People in power have repeatedly created situations where laborers have to sell themselves in a buyer’s market in order to survive. Oh sure, they can quit, but then not only will they likely starve, but most likely they’ll face the condemnation of the same people who said “they can always quit” for being lazy and ungrateful. Now if everyone had the option of living off their own land, they could indeed freely choose to work at whatever they wished without the threat of starvation or debt making a mockery of their choice. But if that were so, how would industrialists make their millions?

    It amazes me that there is not more admission given of the market saturation effect that comes from trying to get everybody trained for high-level jobs.

  10. Gnostic Says:

    Good article. very valuable and honest questions.

    The misfortune, though, is that our society although labeled as Christian, actually is not Christian at all. Our society is a capitalist society, with the love of money in its roots, with survival of the fittest in its core, a dog eat dog society. Therefore inherently capitalism is antagonistic to the ideology of Christianity with the commandment “love thy neighbor as thyself” in its core. If we were truly a Christian society we would keep the commandment and would not have rich and poor among us. Think about it, if we loved our neighbor as ourselves would we suffer them to have less than us? The answer is, NO.

    Again, our society is a capitalist society. It is not a Christian society at all. Christianity is only a convenient vail to cover the atrocities we commit every day, like underpaying those who are creating our wealth motivating it with “they have agreed on the amount of the compensation” forgetting that they could not negotiate a higher wage due to already underground standards, etc. In a fair society workers would be paid enough to take care of their essential needs. Although even then they would not be able to take care of their family’s essential needs. In a fair society workers would be paid via profit sharing. although even then their wages might not be enough to take care of their essential needs.

    The only truly fair society is Zion, where everybody are working according to their abilities and receive according to their needs, which actually is the principle of Marx’s Communistic society.

    So, any debates whether it is Christian or not in the boundaries of capitalistic society is futile, since capitalism itself is inherently not a Christian society, since capitalism inherently is antagonistic to Christianity. Additionally it is futile to try to find a fair approach on an unfair fabric, which capitalism is. Metaphorically speaking to put a new patch on a shabby cloth.

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