Wal Mart’s Subsidy Socialism Gaining Recognition – Minimum Wage Rise Ahead?

Occupy Wall Street’s “we are the 99%” catalyzed a broad realization/acceptance of income inequality.  I’m seeing signs we could be at another turning point in the US’s economic self-image.  This turns on the quasi-socialist slash crony-capitalist mess that underpins the wage regimes of large employers like Wal Mart and McDonalds.  Consider these recent memes.

  • The widely noted Wal Mart “collection bucket” for needy employees (of Wal Mart).
  • A NY Times article (http://tinyurl.com/pqyk7ra) on libertarian billionaire Ron Unz bankrolling a California proposition to raise the minimum wage.  “There are so many very low-wage workers, and we pay for huge social welfare programs for them,” he said in an interview. “This would save something on the order of tens of billions of dollars. Doesn’t it make more sense for employers to pay their workers than the government?”
  • A widely reported US Berkeley study showing the nation’s 7m Fast Food workers draw down about $1b in food stamp benefits each year.  This basically tops-up their wage earnings to get them enough to eat.
  • More general mentions of the plight of the food-stamp-dependent working poor across various blogs and media sources.

The big realization is “Why are America’s tax dollars going to subsidize food costs for people holding mainstream jobs?”  Once you really think this through, it is impossible to un-think it.

  • If we raise the minimum wage, prices will go up!  Yes, but my taxes (or the defecit) would go down.  Just shifting from one pocket to another.
  • It will mean higher unemployment (1)!  I don’t think so.  Most minimum wage empoloyers already do a pretty good job of minimizing their labor costs.  They can probably trim a few workers, but not a lot.
  • It will mean higher unemployment (2)!  Higher wages paid means more money in the pockets of people with a VERY high propensity to spend (ie. the poor).  That means more money circulating at a higher rate (velocity).  that means more jobs not fewer.
  • It will mean lower profits!  This is the real objection, but even this is debatable.  Higher wages would probably hit profits short-term, but much of that money will get re-circulated right back to Wal Mart and McDonalds.  Revenues go up with very little leakage and the overall economy ticks over a little faster.  Which we desperately need.
  • The minimum wage is Socialism!  And recycling tax dollars as worker’s food stamps isn’t Socialism?  Why not just go right ahead and issue them ration books to be used at a Soviet style central dining hall?  We could get ARA services or Halliburton to run the catering and really get the whole crony-capitalist/socialist nexus going…

What is most interesting is that all of the above seems to be penetrating the broader consciousness.  Surveys showing 60%-+ support for a minimum wage raise point to a broad understanding that there is something profoundly wrong out there.  It is a notion that offends conservatives and liberals alike.  The next step – moving to fix it – will take much longer.  But things do seem to be moving.

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