When talking about the minimum wage throughout history it is something which has raised much contention in political conversation. Minimum wage began as a monetary baseline, or floor, of sorts for full time and part time workers in order to prevent exploitation from occuring in the workplace. Over time it has evolved into what it is now, a valuable tool which can be used by governments to ensure a sufficient quality of life for all workers and their family's. However, many believe that this does not go far enough in the modern era and has to adapt and evolve in order to keep up with our rapidly changing economy.
The minimum wage as a concept emerged in western countries in the 19th century when efforts were made in order to end sweated labour in a post-industrial revolution era which Britain, America and many other rapidly developing wealthy nations were moving towards. The push to not allow workers to sell their labour for far lower than the market price continued throughout the world and by the end of the 20th century most countries had implemented some form of minimum wage, some better than others, in order to secure dignity and labour rights for workers at a federal level.
However, by as early as the end of the 19th century some more forward thinking governments began to see the minimum wage as a way to support low income households and began to see the full potential of it. In 1890, Australia and New Zealand began to enforce mandatory unions which represented workers which ensured a sufficient wage floor in order to support workers and their families.
America is a very good case study for the topic of minimum wage due to the rampant, government backed, free market late stage-capitalist cronyism which occurs within its borders and the recent push by labour rights advocates to reach a 15 dollar minimum wage in all states by 2025. It has been an interesting exercise in looking at the criticism on both sides of the spectrum when it comes to the raising of the minimum wage in particular.
The opinion of the bourgeois right, obviously, is that this is a negative thing because it means lower profit surplus. The point that these capital owners and wealthy members of society generally look to in order to defend their argument is the 1.5 million who will be laid off due to the effective demand of unskilled labour dropping. From the working classes perspective this boost in salary is a positive and is something which they have been pushing for for a long time, as this increase will help support and give a living wage to over 7 million people.
While both these points are relevant the general consensus from many voices on the left is that the $15 minimum wage does not go far enough and if American wages were exponentially tied to inflation rates that the minimum wage would probably be much higher than the $7.25 an hour it is federally at the moment or even than the average national minimum wage workers salary (due to different state by state laws on the topic) which is $11.80. This is apparent when we look at how the purchasing power of the federal minimum wage peaked in 1968 when it was at $1.20 (roughly $12.78 in 2021), which is based on historical consumer price indexes in the US.
Influential author and left-wing intellectual Noam Chomsky has even argued and advocated to go so far as a $30 minimum wage due to the aforementioned inflation as well as the incremental growth of American corporations over the last half a century, which has been accumulated off the back of this cheap labour.
The socioeconomic oppression of this bottom tier of workers aids heavily into the rampant wealth inequality in the US. The top 10% of people in America hoard 70% of the national wealth and they have obtained this wealth through being the benefactors of this broken oppressive system in which a below standard of living minimum wage has been allowed and encouraged by corporation backed congressmen and women. We can see this fact solidified when we compare that to the 2% of the national wealth held by the bottom 50% of citizens.
A proposal for change;
While raising the minimum wage will definitely help in order to reduce income disparity and better distribute wealth, there have been many other proposals to go about doing this. One lesser known one which I would like to bring to your attention is the idea of a maximum wage, or a wealth ceiling, which certainly is an interesting approach. The concept of capping how much one can make an annum would seem to some as an anti-prosperity model which is bound to fail.
However, this model could help in order to prevent wealth hoarding, which leads to wealth inequality, and other negative symptoms of free market capitalism. This concept was first proposed in Switzerland, a country which has the highest average wage in the world currently. The 2013 proposal suggests a “12:1 initiative”, which basically says that the maximum wage can only be a maximum of twelve times the minimum wage.
This would be in stark contrast to the current 142:1 ratio, based on the average wage of a Swiss CEO versus the current average minimum wage (Switzerland do not have a state enforced minimum wage and all disputes are settled via voluntary collective bargaining agreements), which is the current reality for the Swiss people. If implemented in the US, an article by CNN from November of 2013 points out that it would have an even greater effect as a conservative estimate of their current ratio is not so surprisingly, based on the research on wealth inequality which we have seen, 273:1 as of 2013 and that number has only grown exponentially since then.
If this was introduced in Switzerland in 2013 the maximum wage would have been roughly 576,000 CHF (553,000 EUR) per annum. This is still an exorbitant amount of wealth which a person could live off very comfortably while still radically transforming how wealth is distributed throughout society.
By putting income on a fixed wage ratio it creates a mechanism in which you must raise the minimum wage in order to raise the maximum wage. I am sure you can see the benefits to this as tying the two will drastically decrease income inequality and thus wealth inequality and, inevitably, when the wealthy lobby to raise the maximum wage the minimum wage will also raise. Then if they do not decide to push for the raise the excess wealth will be of the benefit to the working people anyway so it is a win win for the average citizen who isn’t reaching this cap.
Obviously these floor to ceiling wages would be tied to natural inflation rates and be reassessed periodically to make sure it maintains equal purchasing power year on year. I do not think this will be a problem however as the wealthy would insure this to be the case.
Ok, but what happens to the excess wealth accumulated?
It goes to the government and is used to fund social entities such as the education system, the healthcare system, welfare and so on and so forth. And to all you Libertarians and An-Caps out there gritting your teeth in order not to burst out with your favourite phrase “BUT TAXATION IS THEFT!” here is your answer. Yes, yes it is, but it is justified theft as it benefits the whole of society and brings down the cost of living through publicly funded institutions and increases the standards of living for all through those same institutions. Theft can and has been justified in many circumstances and this is one of them.
What are the issues with this model?
In order to not appear as too much of a utopist I think it is time to talk about the issues with this model in its practical application. The main one which immediately comes to mind is how the mega wealthy CEOs can avoid this earnings cap. This of course being the same way they avoid income tax which is by accumulating proportionately none of their actual wealth through a salary like normal people. Amazon owner Jeff Bezos, the wealthiest man on the planet who just went to space, has an annual salary of the guts of $80,000 a year. On top of this he receives $1.6 million in “other types of compensations” which still brings him nowhere near his total valuation of $203 billion. That is because he receives the rest of his wealth through Amazon stocks and bonds.
This is a method which has been used by the wealthy for decades. They do not have to pay income tax on the money and if the company’s shareholder value goes up it appreciates. They will also have a broker which will diversify their portfolio for them so they can incrementally make more wealth. And you may be thinking, surely they have to take the money out at some point in order to get liquid cash to be able to buy things and they’ll get hit with huge capital gains tax right? You would be sorely wrong in this case because they then take out loans from big banks who just give them as much as they want because they have their stocks and other assets as collateral.
In 2018 Elon Musk, second richest man in the world at the time, payed a whopping $0 dollars in federal income tax. As this loophole is becoming more widely known many have called for the IRS to crack down on it including left wing politicians Bernie Sanders and Alexandria Ocasio-Cortez (AOC). If a system is created where the total realized gains is able to be taxed then I do not see why a maximum wage could not work but till that day this may be a slight bump in the road before the American government can, as Miss.Ocasio-Cortez’s merch would say, “tax the rich” on any of their federal income.
Examples of this in action:
While the idea of a direct earnings limit has been proposed many times, including the Swiss model mentioned above, this idea has never actually been implemented in any major economy. Many have adopted the more conservative, but still effective, alternative of the direct cut off which is a steep scaling taxation system for high income earners.
This is a method used by many progressive countries including, the obvious nordic countries such as Sweden and Finland, as well as some of their fellow EU countries such as Portugal, Slovenia and Belgium following suit. I think this is a great step in the right direction and is the type of global social democratic policy base leftism which we like to see.
In conclusion:
While I do believe that this could and would be a proposal which could help move the world towards our egalitarian utopia, if implemented properly with enough support, I do not see this happening in the likes of the States. AOC is proposing a 70% wealth tax and people think that is radical, even though many of the countries on the list which I mentioned above have already effectively implemented this. This world is so anti-progressive in so many ways but I think America is a not so micro microcosm of that idea.
One separate, yet pertinent, observation which I have found laughable about the US is how the valiant Muskateers (defenders of Elon Musk) will always come to the support of their tech overlords because one day, just maybe, they too can become a class traitor and they sure as hell don’t want anyone to steal their money when that happens (that is of course implying that Elon is a class traitor which he is not don't worry, his family was also wealthy). It is impossible to imagine a world were people aren't fed the old fabled meritocratic lie, which we consume on a daily basis, by these millionaires and billionaires who just "worked really hard" and that's why they have more of a sway on global "democracy" and are able to underpay and exploit you, your friends and your family's labour for the rest of your mortal and, inevitably, cyber existence. So just work harder and maybe one day you too can recreationally go to space or build a tunnel underground so you don't have to sit in traffic.
I will leave you on a rather droll quote, which is relevant to these closing sentiments, by one John Steinbeck (which I think he stole from someone else) “socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires”.
15 January, 2022