Labor Day this year falls five days after the 50th anniversary of the March on Washington for Jobs and Freedom, which is remembered as a civil rights demonstration that included the Rev. Martin Luther King’s “I Have a Dream” speech.
But march organizers had another issue, as well. They wanted federal minimum wage rates, which in 1963 were $1 and $1.25 an hour, raised to $2. Anything less, they argued, would not provide a “decent standard of living.”
What kind of buying power would those minimum wages have today?
According to the U.S. Bureau of Labor Statistics’ inflation calculator, a 1963 dollar would now be worth $7.63. That is 38 cents more than the current minimum wage of $7.25, which was last increased in 2009.
An hourly wage of $1.25 in 1963 would now be worth $9.54. That is 54 cents more than the minimum-wage increase President Barack Obama is now seeking.
The $2 minimum wage sought by marchers a half-century ago would now be worth $15.27. That is 27 cents more than what fast-food and other low-wage workers have demanded recently in wildcat strikes across the country.
What’s the chance for any significant increase in the minimum wage? Slim to none, thanks to opposition from Republicans in Congress.
A national public opinion survey by the Pew Research Center and USA Today found that 71 percent of Americans support raising the minimum wage to $9, as the president has proposed. Only 26 percent oppose it.
But it doesn’t seem to be an important issue for Congress. Perhaps that is because the average senator is worth about $11 million, while the average House member’s wealth is about $7 million, according to the nonpartisan Center for Responsive Politics.
Many opponents of raising the minimum wage argue that few people actually earn that little. That is somewhat true. But minimum wage workers make up a large share of the 10 million Americans the BLS classifies as the “working poor.” About 4 percent of all full-time workers are officially classified as poor.
Minimum wage increases also tend to push up other workers’ wages, something that is sorely needed. Wage stagnation among all but the wealthiest Americans may be the biggest obstacle to real economic recovery.
Consumer spending accounts for between 40 percent and 70 percent of the economy, depending on how you calculate it. Most people have less to spend than they used to because the value of middle-class wages has been falling for more than three decades, despite huge gains in worker productivity. Meanwhile, corporate profits and shareholder returns have soared, compensation for top executives has risen into the stratosphere and corporate cash reserves are at historic highs.
Opponents of raising the minimum wage argue, as they always have, that higher pay means fewer jobs. But a recent report by the nonpartisan Economic Policy Institute cites research by prominent economists that disputes that argument.
Robert Reich, who was Labor secretary under former President Bill Clinton, wrote recently that many large employers of low-wage workers could well afford to give them raises. He cited two big examples.
Wal-Mart, the nation’s largest employer, has seen net income (profit) rise steadily in recent years while the company has maintained a gross profit margin of more than 24 percent. Wal-Mart’s net profit last year: $15.766 billion.
Reich noted that Wal-Mart CEO Michael Duke is paid $20.7 million a year — more than 1,000 times the earnings of a typical Wal-Mart worker.
McDonald’s Corp. net income last year was $5.465 billion, more than double its profit five years earlier. Reich said McDonald’s CEO Don Thompson’s compensation totals $13.8 million — about 800 times the earnings of a typical worker at one of its fast-food restaurants.
A major trend in American business for the past three decades has been to keep labor costs — the wages of average workers — as low as possible to boost profits, executive compensation and shareholder return.
The trend has been supported by the “business friendly” laws and policies of federal and state governments. You hear a lot of talk about the importance of job-creation. But, far too often, the jobs now being created pay much less than what is needed to support a middle-class family.
As Americans celebrate another Labor Day, many average laborers might conclude that the system is stacked against them. And they would be right.