A Magazine about the Hudson Valley’s local economy, published by Hudson Valley Current.

Beneath the Minimum Wage – Meta-Discussion Centers Again on Equity

By Paul Smart

In the mid-1990s, following a headline-making war of words and legal maneuvers between New York City and several dozen Catskill area towns and counties over environmental regulations geared towards maintenance of the world’s largest unfiltered municipal water system, a side discussion emerged about how much to pay upstate workers. The city and environmentalists wanted a prevailing wage deal, which would allow the city, state and federal governments to pay laborers from Delaware, Greene, Sullivan, or Ulster counties the same as anyone shipped in, via union contracts, from downstate. Locals said no, such a move would skew the upstate local market and put small companies out of business. The locals prevailed.

It’s now nearly a quarter century later and the Catskills are growing crowded with new businesses freshly arrived, and written about, by refugees from New York City. The U.S. House of Representatives has just passed a bill to raise the national minimum wage to $15 an hour, setting off screams of “socialism” from the Senate Republicans, and another upcoming battle over whether it’s better to pay workers what they are worth, and can live on, or to support those who can pay others for their work.

What’s the minimum wage’s legacy? Turns out the concept’s been in play since the 14th century, when the English set a maximum wage in light of a labor shortage tied to plagues. Fortunately for workers, that shifted within a century towards the tying of wages to the price of food. But then the industrial revolution sprang into being and laissez faire, anything-goes-for-capitalism practices came into practice. Fair pay became the calling card of the labor movement.

Until the Great Depressions started to hit, and endure, resulting in national minimum wages getting set in New Zealand and Australia, then the United Kingdom, and finally as part of Franklin Delano Roosevelt’s New Deal raft of progressive legislation.

This being a never-so-united America, however, it turns out that while there is a suggested minimum wage of $7.25 on a national basis now, at least six states—all in the south—don’t recognize it. And a number of predictably Democratic East and West Coast states and cities have far exceeded the federal minimum.

More importantly, it seems that battles over the effectiveness of a minimum wage are as insolvable among economists as abortion and rights discussions are between ethicists and the devoutly religious. The big question: by allowing people a living wage do you ensure less will be hired at such wages? And underlying that, what about the schism between those who treasure human economy over the economy of pure money and investment returns?

The one silver lining in these eternal shifts: it seems that among economists, the numbers pooh-poohing minimum wages have shrunk, noticeably, from a solid majority in the early 1970s to just under half now. And many are noting how that has corresponded with a drop in union membership tied to relentless attacks on labor institutions by conservatives whenever they’ve controlled the levers of government.

More importantly, though, the underlying discussion of labor, wages, and equity as rights issues. Yes, many still decry anything that reeks of socialism, or European/intellectual influence. But at least the issues are on the table alongside other past bugaboos ranging from racism to empathy.

Do we yet strive to be better as a people? Or do we give in to cold economic laws? Is the economy we’re heading for truly new, or scarily ancient?

Only time, and our own ideals and actions, will tell.