What Happens When We Raise The Minimum Wage?

Brave New Films has put together the video What Happens When We Raise The Minimum Wage?

People are stretched -working two or even three jobs, juggling family responsibilities, doing everything possible to keep their heads above water -just to fall short every month. Is that what the American Dream is all about?

But what if we raised the minimum wage? That hard work would pay off. People would be able to make ends meet, they could quit their second jobs, and spend more time with their families. When that happens, whole communities are improved.

Raising the minimum wage means millions of extra dollars in people’s pockets. Families spend their money at Main street businesses, strengthening our local economy.

We’ve already seen this happening. The 13 states that raised their minimum wage in January of this year have added more jobs and have lower unemployment than the 37 states that did not. Hard working families deserve to thrive, not barely survive. Raise the minimum wage. It’s good for families. It’s good for business. It’s good for our community.

There are millions unemployed because some people are working two or three jobs to get by. If those people could get by on the income from one job, there would be millions of jobs opened up to other people.

The 40 (actually 44) hour week was invented in 1938 to help spread the work that needed to be done to employ more people for that same amount of work. If some people are currently working 80 or 120 hour weeks, then other people are put out of work. It is not the fault of the people working long hours. It’s not that they want to work those hours, but they have to in order to survive.

See Fair Labor Standards Act of 1938: Maximum Struggle for a Minimum Wage

Against a history of judicial opposition, the depression-born FLSA had survived, not unscathed, more than a year of Congressional altercation. In its final form, the act applied to industries whose combined employment represented only about one-fifth of the labor force. In these industries, it banned oppressive child labor and set the minimum hourly wage at 25 cents, and the maximum workweek at 44 hours

Germany is currently using the idea of limiting the work week to keep unemployment down.

Lest you think I didn’t notice, the cause and effect relation noted in the video is not a foregone conclusion. See RichardH’s post Diversion–Highway Fatalities and Lemons. I’ll let you come up with your own ideas of how there could have been a correlation between raising a state’s minimum wage and lower unemployment in that state without the correlation being causal. What these facts do seem to indicate to me, though I haven’t thought it through completely, that at least there can be a raising of the minimum wage without causing high unemployment as my explanation above makes plausible.

How is it that the people in the 1930s could figure out that increasing the minimum wage and limiting the work week would actually reduce unemployment. Why is it that we have forgotten what they figured out, and cannot even refigure it out for ourselves?

I think there may be a very good reason for our current failure. The people who want to get rid of these labor laws do remember how and why it was figured out in the 1930s. Therefore, this time around they can deploy propaganda techniques to get us thinking in a direction that will not lead us to the revelation I have made in this blog. (Remember that Germany, among others, still remember the lesson of the 1930s and are still using what they learned. You might ponder why that might be true.)

There is another aspect to consider. There is a never ending competition between labor and management to adapt to new rules. This is like the competition between law enforcement and the criminal. Another example is the competition in war between defense and offense.

In this case, management has adapted to the labor policies put in place in the 1930s and carried forward to this day. With minimum wage, and maximum work week (before time-and-a-half pay kicks in), the new ploy is to cut hours to avoid benefits and overtime pay. Some employees today in some industries cannot get more work than 20 hours a week in any one job. That is another driving force for people to have multiple jobs. We may not be able to get the economy working again just by putting more teeth into the labor laws that we used to have. We may have to come up with new strategies for wage and hour laws in this never ending competition between labor and management.

Perhaps we need a new rule that if you have employees (or potential employees) who want to work up to the maximum work-week, and you have the work for them to do, then you may not split that job amongst multiple people.

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