Debating the minimum wage
Published December 29, 2013
published December 27, 2013 in The Charlotte Observer.
On Dec. 18, the Observer opinion pages published a guest op-ed from Charlotte resident and author Chuck Kelly. He argued for a higher minimum wage. Opponents, Kelly said, “fail to appreciate the fact that, throughout our history, a rising minimum wage has always led to better wages for those higher on the economic ladder as well.”
Kelly’s piece caught the eye of Wilton E. Carter Jr., an attentive Observer reader who worked in the textile industry for 35 years. Carter disagreed with Kelly, and emailed him to tell him so. Kelly then responded and a dialogue was under way. Carter and Kelly shared the conversation with the Observer opinion page editors. We thought it was unusually civil, that the debate captured the two sides of the issue well, and that other readers would be interested in their discussion. Here are excerpts:
Wednesday, Dec. 18, 11:38 a.m.:
Dear Chuck,
I do not know why the subject of minimum wages has come up lately. This subject has been “beaten up” many times over past years as the amount never seems to be enough.
Your piece in the Observer this morning seems to fit that new-old rhetoric about wages in the US. I do not know what level you think the wages should be. Is it $7.50, $10.50, $15.50 $25.50 and does it ever end? Who defines what is a fair wage? It basically should be between the one hiring and the one wanting a job. If one does not like the pay offered, look for a better offer.
In looking at your bio, don’t know if you ever had a small business, made a payroll, hired and fired associates or had any other experience rather than being a liberal pundit. It is easy to be critical when you actually never had to deal head on with what your associates should be paid and still make a profit for your business.
WE Carter
Charlotte
Wednesday, Dec. 18, 5:06 p.m.:
Dear Wilton,
Thanks for your thoughtful comments, and congratulations for not calling me a communist or socialist.
One of the best graduate courses I had at Purdue was labor economics, which is a study of the history of labor laws, labor movements, wages and their impact on the economy. The verdict of our own history is clear.
Investors and business owners – as a class, not necessarily individuals – always do everything they can to reduce labor costs, no matter what the effect on workers, their communities, and in the case of globalization, the effect on our nation. If they can abandon American workers and their communities and take advantage of low wage workers with no workplace protections – they’ll do it in a heartbeat. And become incredibly rich in the process.
The only way capitalism works as intended – an economic system that benefits all classes of citizens – is when government sets minimum standards for wages and worker safety, and enacts policies that make up for the deficiencies and vulnerabilities of any economic system you can design.
I suspect we’ll never agree, but I can only write about the history of our country as I understand it.
Chuck Kelly
Wednesday, Dec. 18, 9:11 p.m.:
Chuck,
Thanks for your reply as you did not have to answer my drivel.
I was influenced by people like Duke Kimbrell of Parkdale Mills in Gastonia, Roger Milliken of Milliken & Co, Dalton McMichael of Burlington-Madison, Macfield/Unifi, Mayo Yarns, and Gene Gwaltney of Russell Corporation in Alabama. These four men created a lot of wealth during their careers for their stockholders as well as associates who helped them in the business. Thousands of jobs created by these men and they are just one group of people who had the freedom of choice in our country to make decisions for their business.
People like this are now demonized in this country as being rich and not caring about the associates and other workers who were involved. In their cases, it is best for government to get out of the way and let these people create value and a way of life for all who worked for them.
If the minimum wage is increased, no jobs will be created if McDonalds or Wendy’s have to increase their labor costs. Like in my former textile industry, the survivors had to become capital intensive and automate the process to be competitive. Same could happen to the fast food industry.
Chuck, let the market decide what works. If a person does not like being paid $7.50 per hour, then that person has the freedom to choose something else if he or she has the skills.
That is the real problem we have – no skills, poor education and certainly poor personal choices.
Have a nice Christmas,
Carter
Thursday, Dec. 19, 6:31 p.m.:
Wilton,
Textile industry leaders did indeed create thousands of jobs, and good profits for investors, even after the 1937 Fair Labor Standards Act forced them to discontinue using children under 16 in full time jobs, pay a minimum wage of 29 cents an hour, and time-and-a-half for overtime. Combination of private enterprise and government imposed standards like these created our middle class.
Friday, Dec. 20, 9:24 a.m.:
Chuck,
During the 1930s the country was in a severe “depression” and Roosevelt with approval from Congress was able the get the “New Deal.” A minimum wage was established.
There is no argument on this issue. Times are certainly different now. The unemployment rate since beginning of 2009 is higher than prior years. The participation work force level has reached levels not seen for 30 years. The folks need jobs. Raising the minimum wage will not at this time help to reduce this unemployment rate.
Good day,
Carter
December 29, 2013 at 12:26 pm
Norm Kelly says:
Wilton wonders if Chuck has any real world experience with meeting a budget, running a business, or if he is simply a liberal pundit. Chuck responds that indeed he is only a liberal pundit. His experience is a course at Purdue. Not the same as having real world experience.
Chuck: 'If they can abandon American workers and their communities and take advantage of low wage workers with no workplace protections ...'. This is mostly true. Take Apple as an example. Libs love Apple for some reason. They take advantage of cheap overseas labor & lax environmental standards, yet they are beloved by libs. Why is this? However, it's quite untrue for local businesses. It's hard for me to hire workers to drive to a customer location, do some work, report tasks to me, have me invoice the customer and pay the worker for the job they have done, while at the same time shipping my job tasks overseas. It's hard for UPS and Fedex to hire overseas workers, without protections and minimum wages to sort & deliver packages here in the US. Where does GE, another lib favorite, do much of it's manufacturing?
Chuck: 'The only way capitalism works as intended ... is when government sets minimum standards for wages'. Let's see how the real world works for just a sec. China has cheap labor. China has virtually no environmental standards. The federal government, more correctly referred to as the 'central planners', decide that the minimum wage in the US should be raised to $10.50. How does this benefit the average citizen? First, if it's written into the union contract that they automatically get a pay adjustment when the minimum wage is adjusted, then union workers get an automatic raise, outside of the rest of the contract. Perhaps this could explain why so many Demoncrats are supporters of minimum wage increases - because it positively affects their most ardent supporters, allowing the unions to funnel even more money to the DemocRAT party. But what it really does is encourage more businesses to move as much of their business overseas as possible. The FACTS show that paying $10 per day in China for labor, versus $10.50 per HOUR here in the US means that it's even MORE advantageous for business to move. This does NOT result in less incentive to move more of your business off-shore. It results in MORE incentive to off-shore. But, typical of libs, real-world experience, like in the Obama White House, is non-existent and not understood.
Not using children under 16 years of age for full-time labor certainly makes sense. So, you see, even a constitutionalist/hard-core conservative/small government person like myself can agree that SOME government regulation is important. The primary difference between myself and socialists is that I stop at SOME regulation, socialists don't stop when it comes to regulation. If SOME regulation proved good for business and citizens, the lib 'thought' process has proven itself to be that a LOT of regulation is even better. Is it possible to see what would have happened if only the child labor law was implemented and the minimum wage law was left out? Nope. So we can't see what affect any individual regulation had on the economy when they are implemented together. Lib policies, as enacted and proposed by the socialists in the Senate, and the socialist occupant of the White House, have not proven to be effective at this time. Our national debt is out of control; there is no reduction in sight, only continued growth. Labor participation rate is at a nearly-all-time low. More central planner control over the economy, more control by educated rather than experienced people, continued deficit spending, paying people to NOT work, increasing government subsidies to ever increasing groups of people, all are leading to depressing the economy, not encouraging the economy. Government regulation, take-over of the health care industry, minimum wage laws, and many other central planner ideas are driving business OUT of our country. How can this be looked at as good for anyone? Since the socialists have taken over the White House and the Senate, how has the middle class fared? The top 1% are wealthier now than when the socialists took over. Can this also be blamed on Bush? I expect the lib pundits and the White House have already come out with this claim, it's just that I haven't seen it or been to that source yet. I say it's the lib policies that they claim will help the middle class that are actually hurting the average American. How can Americans benefit when a company makes huge profits because they moved so much of their business overseas? How does it benefit the US economy and the middle class worker when Government Motors (GM, remember) under the direction of the central planners, decides to build a new plant in China rather than in the US? Since it's take over by the central planners, the tax payers being on the hook for their survival, why would GM be moving manufacturing to China? Because it's more expensive and more regulated, obviously. Therefore, the natural conclusion is that if our central planners implement more regulation, force the companies to jump through more hoops, make doing business here more expensive, then naturally businesses will move their business back here. Isn't that what the libs bottom line really is?
Well, Chuck was right. These 2 may never agree. Probably because 1 is an inexperienced lib pundit. I don't have any idea about the experience of the other, but his words sure show that he has real world experience, as well as historical reference. I'd rather go with the experience, and the market forces, than some 'over intelligent' central planner.
