THE BLOG
08/07/2013 01:15 pm ET Updated Oct 07, 2013

Wage Raises for American Workers - Possible?

This week fast food workers in New York City are demanding a raise to their minimum wage of $7.50 an hour. Why are American workers' wages so low, and why aren't American companies paying higher wages?

Bill Clinton opened up the "third world" to American investment and trade. This brought in new customers abroad for American goods. It also created a pool of foreign workers for US multi-national companies. Foreign consumers and workers are making Amercian corporations wealthy, so wealthy they don't know what to do with all that "junk in their trunk".

George Bush Jr. took up the challenge offered by Bill Clinton. Bush clumsily attempted to open up the Middle East to American economic expansion. Barack Obama and his former Secretary of State, Hillary Clinton followed more delicately in Bush's footsteps. Sooner or later, the "democratization" of the Middle East will make US corporations even richer.

But what about US, the American people?

A new survey says "Eighty Percent of U.S. Adults Face Near-Poverty..." We hear constantly how wages in the US have steadily declined over the past three decades. Headlines also show that US corporations increasingly use bankruptcy as a means to shrug off their contractual pledge to provide employee pensions. Now cities are doing the same, and some states in the US are on a similar path.

Working Americans face a crisis. We can accept the inevitability of the new cheap-global-world-labor force or get creative. I suggest we get more creative.

Media outcries over low wages

Media pressure may push some companies to respond. For example, wage-raise crusader, Henry Blodget, just threw down the gauntlet to Walmart, McDonalds and Starbucks to raise their worker's wages. Blodget points out that Walmart pays $12.00 an hour, a rate just pennies above that offered by Apple to its retail store workers last summer.

Whole Foods responded by touting its employee wage of $15 an hour. This is the result of Whole Foods' belief in "conscious capitalism," i.e., that corporations should balance the needs of shareholders, consumers, and workers. But as Blodget points out, even this wage level doesn't offer workers a way out of poverty in many areas of this country.

The taxpayer's hidden burden

As many critics of Walmart's "big box" stores point out, its current low wage creates externalities taxpayers wind up paying for - these externalities include health care costs, supplementary income payments, and loss of tax revenues from the poorest American workers. Even in the case of Whole Foods there are externalities costing taxpayers mucho bucks.

Whole Foods locations in expensive urban areas mean that its employees can't live in the same counties where they work. In the Western states there are car-commute costs to the taxpayer. These costs include cleaning up the air and repairing streets and highways - along with the costs to car owners driving on roads needing repair.

The real issue for conscious capitalism is still - who decides what companies will pay employees? One thing we know - it clearly isn't their workers, workers these companies will not allow to join unions.

Why we're stuck on low wages

Even if we rebuilt our labor movement and got livable wage levels for Americans we would still face fierce competition from cheap labor abroad. The fact is US corporations don't need to pay us more to prosper.

As for government aid in the form of a raise in the minimum wage or a corporate tax increase, you're dreaming. It isn't just the current political situation that would make them impossible; it's that corporations will voluntarily raise their wages, as some have done already, just as far as needed to stop any public outcry over the US minimum wage.

Still, the biggest sticking point to minimum wage increases is the fact that making fast food more expensive, even by as little as 66 cents or a dollar fifty more for a burger hurts the lower 80 percent - the folks who most need wages to be increased.

How to get unstuck

Start with this premise: wages don't necessarily have to be raised for our standard of living to improve.

Large US corporations can and do prosper from foreign demand for their products and services. However, if large corporations could make more money using their foreign earnings abroad they surely would. Right now, for a number of factors, that isn't the case.

This means we have a window of opportunity while the foreign market lags. We too could prosper if we'd just let these corporations bring the trillions they've earned abroad back into this country tax free - provided these US corporations agreed to use part of their tax-free foreign earnings in support of public/private partnerships to rebuild our country's infrastructure.

Private/public partnerships provide a way for more Americans to go back to work. Newly-hired employees in turn would have more disposable income. This increased demand will enable fast food stores and other retail services to pay their employees more.

With the creation of new jobs could come a painless rise in American wages, one that could cut the cost of corporate externalities to taxpayers and bring us all higher earnings.