Aug. 2, 1997
Democrats and Republicans profess the desire to bring you out of poverty, to get you into a high-paying, high-skilled job. You'd need an umbrella for all the carrots and sticks thrown your way: earned income tax credit, workfare, education and health bills, support cutoffs, wars on poverty, and so on. Aside from a few mean-spirited folks ("Kill the poor"*, "Hunger doesn't exist") it seems most Americans would like you to be able to climb your way out.
Don't believe it. Our economy depends on you to stay poor. Maybe not you as an individual, but millions of others like you.
Unemployment in 1997 is around five percent. Many not-so-nice Americans attribute those five percent with some unspecified character flaw: with all the jobs out there, if you don't have one, it's your own damn fault. But the rate's not really five percent, since the official number undercounts the true number of the unemployed or underemployed. A good round number would be about 10 million people. The economy has been adding a few hundred thousand jobs a month, so theoretically all 10 million could be employed within two years. That doesn't happen, because other jobs are eliminated at the same time.
Suppose you and others snapped up a million net new jobs within a few months and sent the unemployment rate skittering down toward 4.5 percent. More people at work produce more and spend more, boosting the economy. Sounds great for everyone, right?
Wall Street would consider this a hostile attack on their interests, and the government would back them up. Without delving into an economics lesson, if unemployment drops below a certain rate, the economy is predicted to overheat. Tight labor means means a seller's market, driving wages up, and sparking inflation. The Fed tends to "put the brakes" on the economy by bumping interest rates a quarter point or so; this increases the cost of money and slows things down. To stay with the driving metaphor, an sharp drop in unemployment would cause inflation-spooked Alan Greenspan to jam the brake pedal with both feet as the economy flies through the windshield.
That's right: it is federal policy to keep a certain percentage of the U.S. population unemployed. A certain nonzero unemployment rate is considered "full employment." In the past, this was about 6 percent; now it's closer to five, as the economy has shown the 6-percent barrier to be imaginary.
If we can't keep you out of a job, we try the next best thing: keep your pay low.
Minimum wage reveals something about an employer: he's paying you as little as he possibly can. He would like to pay you even less, but is prohibited by law. Think about that when he asks if you can close on prom night, or the Raiders - Bengals game, or your anniversary.
Republicans and businessmen say that a higher minimum wage will force them to hire fewer people. (That's assuming there's extra productivity to be found; the alternative is cutting output or raising prices). I imagine most shopowners would prefer a Montana-style wage structure, where there's no fixed minimum, but a cop can cite you if your pay is unreasonably low. This again is a topic for another column.
Regardless of the minimum, we need your wages to be low; otherwise everything we buy will be too expensive. Here's an exercise: Get a job paying $100,000. Let your spouse stay at home. Move to Silicon Valley. Try to find a tolerable house you can afford.
You can't? Why? Because too many people make six figures. You can't be happy with a "lot of money;" that's meaningless unless you earn more than other people. For us to enjoy modern life at reasonable prices means many others have to earn much less than us. If the counter person at In 'n' Out is making $55,000 a year, our burgers will be $7.
I could go on, but won't. If you're part of the working poor, we need your wages low so our prices don't go up. If you're out of work, we'll tell you to get a job; however, as we need a certain number of people to be without jobs, I guess the underlying message is Go f--- yourself. Just picture Adam Smith's invisible hand giving you the finger.
Other notes
The Dead Kennedys song "Kill the Poor" does not actually endorse killing the poor; it's a facetious explanation of Jello Biafra's first guess at the purpose of a neutron bomb.
Reagan's Cadillac-driving welfare queen? Never existed. You could call it a lie, or be charitable and call it a parable.
