Minimum Wage VI: Subsidizing
One common way to argue against not raising (or even just eliminating) the minimum wage is to build a case based on claims about those who work such jobs. For example, one approach is to argue that the people on minimum wage are mainly high school and college kids who are just earning spending money. As another example, it is often claimed that minimum wage jobs are temporary jobs for most workers—they will spend a little while at minimum wage and move up to better pay. While these claims are true in some cases, the reality is rather different in general. For example, the average age of fast food workers is almost thirty—they are not just school kids. Also, a significant number of people get stuck in minimum wage jobs because there is nothing else available.
As an aside, even if it were true that all those working such jobs were just earning spending money or were going to move on up, it would not follow that the minimum wage should be lower or eliminated. After all, the fairness of a wage is distinct from the motive of the person working for the job or what they might be doing next. For example, if I am selling my books to get money to buy running shoes rather than on survival necessities, it would seem odd to claim that I am thus obligated to lower my prices. Likewise, even if a kid is earning money to spend on video games rather than for putting food on the table, it would seem odd to say that she is thus entitled to less pay for the work she does.
Getting back to the main focus of this essay, the reality is that many of the folks who work minimum wage jobs are working the jobs primarily to pay for necessities and that many of them are stuck in such jobs (in large part to the current economic situation). The reality also is that a minimum wage job will typically not provide adequate income to pay for the necessities. Interestingly, some corporations recognize this. McDonald’s, for example, generated a brief bit of controversy with its helpful guide for employees: the corporation advised employees in minimum wage jobs to have another job.
Given the gap between the actual cost of living and the pay of a minimum wage job, it is not surprising that quite a few of the folks who work for minimum wage avail themselves of state support programs, such as food stamps (which now goes by other names) and Medicaid. After all, they cannot earn enough to pay for necessities and certainly prefer not to starve or end up on the streets (although some are malnourished and struggling with housing). While one narrative about such people is that they are living easy on federal support, the reality is rather different—most especially for the working poor who have families, for those who are endeavoring to attend college or who hope to start a business.
Obviously enough, one large source for the funds for these programs is the taxpayer. That is, those who pay taxes are helping to subsidize those who received state support while working minimum wage jobs. However, there seems to be another equally plausible way of looking at the matter: the taxpayers are subsidizing those who pay minimum wage to their employees. That is, these employers can pay their employees less than what they need to survive because other people pick up the tab for this, thus allowing the employers to increase profits. If this is correct, those of us who pay taxes are involved in corporate socialism.
It could be countered that the taxpayers are not subsidizing the employers, such as McDonald’s. After all, the money for Medicaid and such are not going to the corporation, but to the workers. The obvious counter is that while this is technically true, the taxpayers are still contributing to sustaining the work forces for these employers, thus subsidizing them and allowing them to page sub-survival wages.
It could also be contended that the employer has no obligation to pay workers enough to survive on without the addition of state support. After all, there are plenty of poor people and if some cannot survive on minimum wage, then economic selection will weed them out so that those who can survive on less will take their place in the economic ecosystem. This, of course, seems rather harsh and morally dubious, at best.
Another counter is that the poor are to blame for their wages. If they had better skills, more talent, better connections and so on, then they would not be receiving that minimum wage but a better salary. As such, while it might be unfortunate that the poor are so badly paid, it is their own fault and hence their employers owe them nothing more. If the state wishes to help them out, that is hardly subsidizing the companies—they would, or so they might say, pay more for a better class of worker.
This has, obviously enough, all the moral appeal of a robber saying that it is the fault of her victims that they were not able to resist her crimes.
Overall, it does appear to be clear that the taxpayers are helping to subsidize those on minimum wage. While we could decide to let the poor slip deeper into poverty that would seem to be a wicked thing to do. It does seem to be reasonable to shift more of the cost to the employers who benefit from the work of the employees. After all, many corporations that are based on minimum wage workers have been making excellent profits—at the expense of the workers and the tax-payers.