Part of the Point of Minimum Wage Increases is the Bump up from Wage Compression

Citizen Wealth Financial Justice National Politics

New Orleans    In the continued dumbing down of the Rupert Murdoch Wall Street Journal as it builds its platform for the far right, a new low was reached in the discussion of minimum wages as Richard Berman, now touting for the Center for Union Facts (sic).  In a piece entitled, “Why Unions Want a Higher Minimum Wage,” he tries to explain the “real reason” why unions support increases in the minimum wage, and why it is not “altruistic solidarity with lower-paid workers.”

The heart of his argument seems to be convincing the reader that he has discovered through some kind of fake research that some lower waged union workers actually benefit from an increase in the minimum wage, thereby explaining why unions would be so enthusiastic.   Duh?  For whom can this possibly be a surprise?

There really can’t be anyone anywhere who employs even one worker, much less tens or even thousands, who doesn’t have a gut understanding of what compensation experts call “wage compression.”  It’s simple to follow.  If other workers are getting raises, and you are trying to retain employees who were previously paid about the same rate, then you are well advised to deal with the impact of that wage compression, if you want to keep your folks from immediately heading for much greener pastures.  They know this on Wall Street as they defend their multi-million dollar packages, and they know this at McDonald’s (and even at Weight Watchers from reading Steven Greenhouse’s excellent piece on what happens with that for profit outfit in breeding disgruntled “leaders” with wages that seem unchanged over a decade!

When ACORN was winning minimum wage increases on the state level in Florida, Ohio, Arizona, and elsewhere in recent years, the elaborate studies done by experts both for and against, whether Berman’s various named outfits or the excellent work done by Dr. Robert Pollin from the University of Massachusetts, a significant number of the workers who would benefit from an increase where workers in service industries, sometimes as many as half of the total, were workers being paid within a dollar or two of the minimum wage who would benefit from increases from employers running away from the new impacts of the compression.  If the minimum wage is $7.25 per hour as it is now and has been, and as a boss, you are convincing your workers with 1, 2, or 3 years of experience that they should hang with you because they are making $8.00 or $8.50 or even $9.00, then whether you are Mr. Mom & Pop or Walmart, you know that when wages move to $8.00 you cannot keep telling workers that $8, $8.50 or even the $9.00 that they have been working is a good deal, so these workers get a bump.  Hello?!?

Berman’s case seems to be based on some UFCW contracts that have what Local 100 also called “minimum wage” clauses in our janitorial, food service, nursing home, and community home contracts.  Such clauses would either mandate a contract re-opener for any mandatory wage adjustment or would have language expressly stating that wages automatically had to be raised the same dollar amount over any such increase whether city, state, or federal to the wage base.  I’m pleased to see that the UFCW uses the same strategy.  And, once again I have to ask, why would anyone assume differently?  Certainly employers understand this completely, which is why they agree in collective bargaining to include such clauses, since they also want to retain the workers, just as we want to retain our members.  Somehow Berman wants to paint this conspiratorially, but in real workplaces for real workers and employers, this is just standard operating practices.   You would think business advocates would understand something about business, but when they put their ideological blindfolds on, Katie bar the door!

One of the things that Berman couldn’t talk about was the fact that when there were regular debates about making the minimum wage mean something, rather than just being the bottom run of the ladder, there were efforts to directly connect the minimum wage to a percentage of the industrial wage, which back 60 or 70 years ago would have also achieved not only a higher minimum wage but regular adjustments if and when average industrial wages increased.  Setting the minimum wage afloat by itself has led to this crazy world for low waged workers where now the wage has nothing to do with work or workers, but only politics, which unfortunately is really all that Berman and his ilk know or care about.  The rest is smokescreen and subterfuge.