June 11, 2012
Is our Labor System Broken? A Jewish Call for Minimum Wage Increases!
Lessening the gap between the rich and the poor is one of the most crucial moral issues to address in America today. Much of the problem has to do with fair wages. Some progress has been made. At the beginning of 2012, eight states raised their minimum wage, yet the federal wage floor for most workers today remains at $7.25 an hour. The integrity of our labor system is broken and we must respond.
This is not a particularly new problem. The national minimum wage began during the Great Depression and Congress has adjusted the rate sporadically, but has not indexed it to price changes, often resulting in decreasing value in constant dollars.
The Fair Labor Standards Act, passed during the New Deal, established a minimum hourly wage of 25 cents in October 1938. Afterward, it was raised intermittently, reaching its highest value in constant dollars in 1968, at the peak of the “Great Society” of President Lyndon Johnson. Afterward, the minimum wage stagnated, although in 1989, during the Presidency of Republican George H. W. Bush, the minimum wage was raised with bipartisan support, passing the House by 382-37 and the Senate by 89-8. Today, politics has trumped justice.
The issue has become too muddied with partisanship. There was no increase from September 1997 until July 2007, at which point the minimum wage had fallen 22 percent in constant dollars while corporate profits had increased by 50 percent. (Time Magazine, July 24, 2009); Even then, the wage was only raised in three increments, rising from $5.85 in July 2007 to its current level of $7.25 by July 2009. Some have noted that the decline in value of the minimum wage has coincided with the decline of the American middle class, as previously the minimum wage offered some families the chance to climb into the middle class, but now the gap is too wide.
Some argue that raising the cost of labor will hurt workers, since employers can hire fewer workers. At times, this may be true, but many have shown why this is false. Speaking to this issue, Nobel Prize-winning economist Robert Solow stated that “…the evidence of job loss is weak. And the fact that the evidence is weak suggests that the impact on jobs is small.”
Indeed, minimum wage workers tend to work in industries that cannot be outsourced or eliminated (e.g., the fast food industry), so it is unlikely that a rise in minimum wage would reduce these jobs. One significant study looking at the food industry found that raising the minimum wage did not lower employment, and dozens of studies have confirmed these conclusions. For example, a study looking at airport employees found that not only did higher wages not lead to lower employment, but that it led to a reduced employee turnover.
We must consider not only the micro-economics but also the macro-economics. There is evidence to suggest that when low-wage workers have more spending-power, this will create jobs and create more demand for labor. For example, in 2006 the Economic Policy Institute estimated that raising the minimum wage from $6.55 to $7.25 would increase consumer spending by $5.5 billion, thereby supporting the economy.
Economists suggest that most often, higher labor costs are transferred to consumers in higher prices and to a smaller profit margin, but not to a reduced employee size, since a certain number of employees are needed to function properly.
At the end of the day, minimum wage reform is still not enough. Even if we raise the rates, it will not be enough to push low-wage earning families above the poverty line. We must embrace a living wage to achieve that, but we also need an accumulation of small wins to improve lives: raising the minimum wage is a moral imperative. The 2010 U.S. Census laid out the extent of poverty in graphic detail:
• Nearly 47 million people live in poverty (15 percent), the highest number recorded. Of these, more than 20 million lived in extreme poverty (i.e., an income less than half the poverty level)
• Among children, 22 percent live in poverty
• More than 17 million households (14.5 percent) are food insecure, the highest number ever recorded in the United States
• 50 million people lack medical insurance, which will become more critical if the Supreme Court declares the Affordable Care Act unconstitutional
There are many national attempts to raise the minimum wage in motion. For example, proposals that New York State’s current minimum wage of $7.25 an hour, which is lower than that of 18 states and the District of Columbia, be raised to $8.50. This increase, sponsored by the New York Assembly Speaker Sheldon Silver, would put higher wages into the pockets of more than 880,000 workers, and this would go right back into the economy. Mr. Silver said: “When you work full-time at the minimum wage, you are poor in New York. You’re not making enough to get by. We want to have people able to support their families, plain and simple.”
Raising the minimum wage helps poor families move out of poverty, spurs job creation, and stimulates economic growth and thus it is our Jewish obligation to lead this fight for justice. The Rema teaches that when one is involved in a communal issue of public monies one must engage (act and vote) “l’shem shamayim” (for the sake of heaven; i.e., for the right reasons not based on self interest) (Choshen Mishpat163:1). It is crucial that Jews fall out on the right side of this national debate as advocates for systemic change for the poor.
Raising the minimum wage is actually a mitzvah. The Rambam says that ensuring others have work that can sustain them is the highest rung of the hierarchy on how to give tzedakah (Mattanot Aniyim, 10:7). In Judaism, tzedaka does not mean charity but justice. We rectify social wrongs and fulfill our obligations through the giving of tzedakah. By raising the minimum wage, we are enabling others who work to move out of deeper poverty. The Rambam is dealing here with private voluntary giving; this value is all the more true when being applied to a system of legislation, as the mission of the Jewish people is to perpetuate our most precious values of the good and the just into broader society. Our messianic dream is the creation of a society where Torah values are actualized in the world to create a more just and holy civilization.
The rabbis already limited the wealth of owners selling essential food to help the poor through the laws of “onaah.” The owner could not keep more than 1/6th profit in order that others could be sustained as well (Bava Batra 90a, Choshen Mishpat 231:20). For the rabbis, the value of maintaining an orderly just society where the needs of all can be met trumps the full autonomy of owners to maximize their profits to no end.
The primary wage responsibilities fall upon employers. Rebbeinu Yonah, the 13th century Spanish rabbi, taught:
Rebbeinu Yonah is teaching that when we hire a worker and find that they are still poor after we pay them, then we must treat them as “members of our households” (b’nei beitecha). If we choose to become an employer then we must take responsibility to ensure our workers do not live in poverty.
The minimum wage, in its current state, is a collective violation of the Biblical prohibition of oshek (worker oppression), as workers remain poor while they work to their full capacity (Leviticus 19:15). The previous verse tells us that we must not be enablers of social wrongs (lifnei iver) linking the two responsibilities of fair wages and Jewish activism. Now is the time for a collective Jewish intervention to ensure that those who work can live.
Today, one working in New York City on the current minimum wage of $7.25 an hour will have a gross annual income between $12,000-$14,500, based on a 35- to 40-hour work week, after which Federal and state income tax, Social Security, and other taxes are deducted. These workers, often working multiple jobs, beg for food, pile on debt, and take handouts. It is evil to argue that one working all day every day should live in poverty. There is no theory that trumps the imperative for basic justice in a nation with record corporate profits. As Barbara Ehrenreich, who once described her vain attempt to survive on a wage (above the minimum) in Nickel and Dimed, wrote in 2007: “There is no moral justification for a minimum wage lower than a living wage. And given the experience of the …states that have raised their minimum wages, there isn’t even an amoral economic justification.”
Today, we can act to create change! We must make our Jewish voices heard in Congress at this crucial time where legislators are deciding whether or not to raise the minimum wage. Uri L’Tzedek and partners now have over 400 clergy members calling for a rise in the minimum wage in New York. Has your rabbi signed on? Have you signed on?