The Minimum Wage

Recent articles in the Trotskyist press and elsewhere have covered the Fight for $15, a serious effort to raise the minimum wage. Let's review.

An early report appeared in Socialist Viewpoint, in April 2013. That article covered the demonstration by fast food workers in Chicago demanding a near doubling in the minimum wage to $15/hour. The march set the tone for the fight as it spread nationwide. While the marchers included some fast food employees, the organizers and majority of attendees appeared to be members of already existing unions, notably the SEIU.

At the time I didn't think anything would come of it--the very idea of doubling the minimum wage seems outlandish. But I confess it's gotten more traction than I expected. Since then, Seattle, San Francisco, and most recently Los Angeles have agreed to raise wages to $15/hour. Chicago will raise its to $13, and other cities are making lesser pledges.

In addition, Walmart, McDonalds, and Target have all agreed to give their employees a raise, albeit not to $15. So something is going on. The Militant reported on this last March, which elicited my comments here. What gives?

The Militant revisits the issue again with a recent report by Alyson Kennedy and Dan Fein, two reporters for whom I have considerable respect. Entitled McDonald's Workers' Fight 'Getting Stronger', it's an account of the demonstrations in front of the company's headquarters in Oakbrook, IL.

“I make around 30 meals per hour and earn $7.25 per hour. I can’t even afford to buy one of the meals I make,” Amy Petite, 21, who works at Wendy’s in Knoxville, Tennessee, told the Militant. 

Demonstrators said that as the movement grows, gains are being made. “We won better hours and five days a week where I work,” said Connie Bennett, a Chicago McDonald’s worker. “Before we were getting three or four days a week.”

Socialist Action highlights the campaign of Kshama Sawant, the socialist Seattle City Councilwoman now running for re-election.

Since her election in 2013, Sawant fulfilled her campaign promise to make Seattle the first major city to pass a $15 an hour minimum wage. And she has taken on a number of other issues that are important to working people. In the city with the fastest rising rents in the country, she has championed the fight for rent control, a Tenant’s Bill of Rights, and the demand that the city build thousands of quality apartments to be rented at below-market rates.

The most substantive article comes from Socialist Viewpoint's contributer, Arun Gupta. He reveals Fight for $15 as astroturf, staged by the SEIU.

For example, one fast-food protest in 2013 was run like a military campaign. The staffing plan included the local organizing leadership, four different media workers, half-a-dozen “diffusers” to soothe any trouble, a photographer, videographer, police liaison, chant leader and energizer, a supply team, drivers, onsite legal, a criminal lawyer on standby, breakfast and lunch coordinators, and people designated to hand out signs, flags, t-shirts, and water. A spreadsheet mapped out protests by the minute, noting times and location for loading vans, picking up workers, talking points for press conferences, skits, prayers, dancing in the streets, and “walk backs” of workers the next day to minimize retaliation. Insiders say to maximize turnout, Fight for 15 will sometimes rent hotel rooms for workers the night before a protest, rent vans to drive them to the start point, and provide meals.

 Mr. Gupta, while a staunch supporter of the effort, is skeptical about its chances of success.

A fundamental goal of labor organizing is to take labor out of competition with itself. But that is nearly impossible when low-skilled, low-wage workers have few rights and number in the tens-of-millions. Fight for 15’s approach is unorthodox, but it is constrained by organized labor’s history. Class-struggle unionism has been abandoned by labor leaders who act as junior partners to corporations, like SEIU and Kaiser Permanente, the UAW and auto companies, the machinists union and Boeing, and the building trades and real-estate developers. Many union leaders are also in the pocket of the Democratic Party despite it being in the pocket of Wall Street.

As said, I share Mr. Gupta's skepticism, and that begs the question. Why has Fight for $15 been as successful as it has? I count several reasons.

1)  I am willing to give the SEIU some credit. Their well-organized public relations campaign has surely had some effect, albeit mostly as public relations. The victories in city councils are probably due mostly to this effort.

2)  $15 per hour has passed in cities that have lots of billionaires, and even more millionaires. These are places where the added costs can be passed on to consumers. That won't work in less fortunate towns, such as Fayetteville, NC or Kokomo, IN. So far from starting a trend, the SEIU has just picked the low-hanging fruit.

3) McDonald's and Walmart are both reevaluating their business models. They need a different kind of workforce to make that happen. So I think the pay raises they offer probably won't go to their current employees, but rather to future employees who will have different skills. The lowest-skilled, least educated people will be laid off.

4) McDonald's is shrinking--this year they are closing more stores than they are opening. Further, all the stores in San Francisco will be closing. While high real estate prices are probably the culprit, the fact is that $15/hour will have no effect on McDonald's there.

My socialist friends all make one important mistake. They implicitly assume that raising wages to $15/hour will have no effect anywhere else in the economy. Only the Wall Street Banksters will suffer negative consequences--their endless stash of cash will be slightly diminished because of higher salaries.

But of course that's not true. Mr. Gupta at least points out that profits are shrinking at McDonald's. There is no stash of cash, and the Banksters will not be the ones who pay the bill. So who's the patsy? There are only two choices: customers or other employees.

Except in billionaire cities, customers simply won't pay up. They don't have the money, and/or they have too many other choices.

That leaves the employees. For everybody that gets a pay raise, somebody else is going to be either unemployed or paid less. That's obviously what is happening at McDonald's and Walmart--both companies are looking to trim their workforces. They can afford to give the remaining people raises.

So I'll stick to my original prediction: The Fight for $15 will fail. It is impossible to nearly double the pay of low wage workers in a low-inflation world where everybody else's salaries are flat. It won't happen.

Further Reading:

• Paul Le Blanc and the Minimum Wage
• Robots of the World, Unite!
• Collapsing Pensions