Two Cents Worth, Two Cents More

“And when he had agreed with the laborers for a penny a day, he sent them into his vineyard.”
-Matthew 20:2

"The laborer is worthy of his hire."
-Timothy 5:18

“Penny wise is often pound foolish.”
- French proverb

A friend who writes a prominent conservative blog wrote a post today, bemoaning how the minimum wage and the economy had made it difficult for teenagers to get jobs.
 He has a teenage daughter and son.  It is true that minimum wage laws have made it more difficult for teenagers, and in particular the pattern has been that minimum wage laws typically disadvantage even more minority teenagers than white teens. While it has been the case that under lower minimum wage laws more blacks were employed than whites at the lowest possible pay, I'm not sure that this is a fact for which the significance is being properly interpreted by conservatives.

I appreciate that my friend is probably not happy, on a superficial level, with his kids hands effectively taking more money from his pockets when they cannot earn their own.  But I also know my friend to be a committed, loving and conscientious father who would never genuinely wish to see his children unhappy or deprived of things that were important to them.  This is not in any way an indictment of my friend for being stingy; far from it.

My friend bemoaned that employers were tending to hire older workers instead of teenagers; they needed less training to do the jobs.  Older workers would not, under more usual economic circumstances, be competing with teenagers.  Their experience and skills would ordinarily qualify them to hold better jobs.

But it is also true that when you undercut the wages paid to the labor force, depressing wages in the market place you lower rather than raise all boats.  My friend is a fanatic 'free market' laissez-faire' capitalist.  While I see my friend being willing to see the wages of the lower strata of workers cut, and cut and cut, in the name of competition, I don't believe he fully understands the implications of it. 

At the same time, my friend is never, ever, willing to see the upper echelons of compensation diminished.  He sees no possible situation where management, especially upper management, top executives, should receive so much as a dime less in compensation including bonuses.  His reasoning is that these bloated, over-paid upper level people must be doing something to deserve their pay, even in the face of clear evidence to the contrary.  It is not in his capacity to even consider that someone at the upper end of the scale could be overpaid, any more than he really ever considers someone could be underpaid under free market capitalism.  Both, however much my friend would avoid facing it, are true.  And as they are the people in power, overpayment of the upper end is likely to be entrenched, while the lower levels of labor are relatively powerless.  The market forces affect the upper levels disproportionately less than lower level compensation; and this represents a weakness, a flaw in market forces operating effectively and efficiently.

I had part time jobs as a teenager.  I worked at babysitting and other jobs I could do before I was legally able to hold a formal job.  On my fifteenth birthday, I applied for the part time job I wanted, and had been preparing in advance for some time to get, and got it.  That job was tremendously important to me.  It paid for my entertainment, it paid for those items of clothing beyond the clothing allowance my parents dedicated to my wardrobe every year.  It meant that when I gave a birthday or Christmas or other present, it was something I had worked for, saved for, and bought myself; that made it more from me than if someone had just handed me the money.  It made presents, even 'just' cards far more meaningful, both to give and to receive.  It made putting money in the collection plate at church on Sunday an exercise in character, weighing selfish desires against faith and a sense of duty and obligation - every Sunday.  We received our own offertory envelopes from the time we were confirmed as young teenagers; in my family we were expected to put our own money in it.  Having a part-time job was all about learning reliability, punctuality, good work habits, value, budgeting and saving, taking direction and criticism, cooperation with others.  It was about so much more than was encompassed by a minimum wage.

But in an economy like the present one, I believe whole-heartedly, that those adults who are being employed instead of teenagers are in greater need of these low-paying jobs more than teens, for their basic survival, not discretionary income.  As sympathetic as I am to the problems for teenage workers, I am more sympathetic to the plight of the older worker.  The answer to the problem of too many people seeking too few jobs is not to pay less so that more people are paid even less, just so that teenagers can find a bad paying job.  In this economy, I am not sure that the conventional wisdom that suggests this works would apply.  More than that, what we need is not more people who are underpaid, who are in poverty.  The finite amount of money to go around in wages will not change, only the distribution.  That distribution is not better with a lower minimum wage, it is worse.

My conservative friend seems against any 'redistribution of wealth' except that which distributes money upwards to a tiny percentage of those who are already wealthy, and away from those people who are below that strata.   Redistribution of wealth is a code word signifying all manner of horrors to conservatives.

I noted in one of my recent 'in history' posts the first minimum wage law in the United States; it called for a minimum wage of 40 cents an hour back in the early thirties.  In current dollars, that actually equates pretty well to the current minimum wage.  Our economy didn't end then, it won't end now; it went on to thrive, and will do so again - has begun to do so.

I suggested to my friend, in a tongue-in-cheek comment, that his kids should consider doing the kind of agricultural work that immigrants (both legal and illegal) do, the kind of job we hear Americans don't or won't do.  I realize that as an urban dweller, there are logistical problems on top of any other obstacle to this suggestion; it was not a serious one.  But I brought it up because I find my friend's understanding of how cheap labor affects production and our labor force, and wages to be lacking.  Immigrants - legal or illegal - depress wage competition, by providing too many people willing to undercut better pay.  Too many people are chasing too few jobs.  I pointed out that being legal citizens gives them an inherent competitive advantage.  But the comment was really more about a too-simplistic approach to labor and wages, and immigration too. And I must admit the biblical quote above about working in the vineyard for a penny prompted it in part. The immigration angle was my metaphorical two-cents-more on top of my minimum wage observations.

We are a consumer-based economy.  Both jobs and pay going to workers who will spend them, not invest them outside the country, or do something else other than consume with it, is what will bring growth - and more jobs again - back to this country.  Less than minimum wages for workers will not do that.

And I will hope, fingers crossed, a prayer in my heart, that my friends two teenagers WILL find jobs, and the kind of hours they need; for him AND for them.  At the same time, I will be hoping and praying just as hard that it means an experienced worker moved on to a better paying job better suited to their experience.