The
Fifteen-Dollar Fallacy
In 2018, the Pew Research Center looked at real wages in America and came up with something disturbing. According to their research, when adjusted for inflation, the real wages for most Americans have been pretty much stagnant for a long time. And by a “long time” we’re talking since 1973.
Yes, the numerical value of wages have gone up since that time. But so has inflation and the cost of living. In fact, the cost of living has risen faster than wages for roughly the same amount of time. No matter how much your paycheck has risen over the years, the spending value of that paycheck hasn’t increased. In fact, you’re lucky if you’re just keeping up. That’s why hard-working Americans need two incomes to keep the bills paid when one used to be more than enough.
And this is not hypothetical. This is empirical. This commentator personally observed this himself and with others almost two decades ago. When the cost of living goes up 7% and you only get a 4% raise for your work, you’re not keeping up. You’re falling behind. And when that happens to you year after year, then it becomes a problem.
Today, there are many of us that are lucky to get even a 2% raise for the same work they put in year after year. And that is not counting the various economic troubles we endure. For every recession or depression, when layoffs are abound and having a job is considered a blessing, most people that end up having to switch jobs don’t get to keep the same amount of money as before. In fact, their income from the new job goes down. So you’re even further in the hole than before.
Of course, not everyone in America suffers. Only the ones middle-class or lower. The ones not getting six-figure salaries. Certainly not the cushy elites in Corporate America who always seem to prosper even when the rest of the country is hurting.
So inevitably the discussion goes to helping those who are at the bottom of the corporate pyramid. “Raise the minimum wage” is the battle cry. Followed, of course, by the howls of anger from the corporate elites and the brainwashed members of the middle-class, who wail about how fast-food workers shouldn’t get paid more than firefighters or police officers or school teachers.
But... who says that they should? And who says that only the people making minimum wage should get a pay increase? We all need one. All of us who aren’t bringing in six-or-seven-or-even-eight-figure incomes are long overdue for a positive adjustment instead of the continual negative one.
And here’s the catch: firefighters, police officers, school teachers, these are all usually local government employees and their pay comes from tax revenue that the rest of us pay. The reason why they’re not getting paid more is because we aren’t getting paid more, and also because a certain political party currently being led by an orange-skinned narcissist has been obscenely fixated on cutting taxes at all levels on the very entities that have been keeping our wages low and raking in obscene profits.
It is at this point that a certain guy is put in front of us. Usually it’s a seasoned media personality with a perfectly-coiffed mustache representing a special interest group that pretends to be impartial and unbiased. He’ll mansplain to us in a soft-but-condescending tone about how clueless we all are on this subject.
And then we’ll hear what I refer to as the fifteen-dollar fallacy.
The push of late is to raise the minimum wage nationwide to at least $15-an-hour. The common focus of the wage gap is on the workers at fast food places, who work long hours and get paid minimum wages. Obviously they can’t really make a living on that much money, unlike their corporate CEO who gets paid thousands of times more, and all the while the corporation brings in record profits year after year.
Now our mansplaining mustache guy will explain to us that the reason why the fast food workers are paid so low is because the business needs to afford to offer you those $1 cheeseburgers that you like to buy. He starts talking about supply-and-demand and says that if the business has to raise their minimum wages to $15-an-hour, then they have to raise the price of those $1 cheeseburgers to compensate. Often it would be dollar-for-dollar what the minimum wage would be. So, according to the mustache guy, if said fast food place has to start paying employees $15-an-hour, then they have to raise the price of that same cheeseburger to $15.
So you can either keep employees paid low and enjoy that $1 cheeseburger, or you can pay $15 for that same cheeseburger and let the employees get paid $15-an-hour.
That’s the argument.
And it’s a load of pure cow crap.
First of all, the price of that cheeseburger has little if anything to do with wages. Wages have to do with overhead costs. The price of that little cheeseburger has to do more with what the customer is willing to pay for it. Fast-food corporations like McDonald’s can charge $1 for that cheeseburger because they know we will pay that much for it. It doesn’t have to do with wages. It has to do with the consumer.
So if that $1 cheeseburger becomes $15, guess what happens? If we decide it’s too much, then we just don’t buy it. That simple. We’ll take our business to some other fast food place, or we look for something more affordable. Maybe we go to Wendy’s or Burger King or Hardees. Or we won’t get a burger. Maybe tacos. Maybe fish. Maybe fish tacos.
But, more realistically, what McDonald’s would to is just discontinue that $1 cheeseburger and focus on their specialty food that clearly cost more than $1. It’s not the only item on their menu, after all. The only reason why they even bother selling it to us for that much is because there is just enough of a demand to allow it.
Oh, and something else needs to be pointed out. Back when minimum wage was $4.25-an-hour and people were pushing for $5, that happened to be the same number the feared price hike for that $1 cheeseburger would be. Then when it was a push for $8-an-hour, we were threatened with $8 cheeseburgers. Today the national minimum wage is $7.25. That cheeseburger is still just $1.
Again, the price of that cheeseburger has nothing to do with wages.
Let’s get brutally honest here... the real reason why Big Corporate has been fighting hard and screaming bloody murder over raising the minimum wage, and for all wages for that matter, has to do with one thing: profit. Damnable profit.
Keeping wages low, keeping employees underpaid, keeps overhead costs low, which translate into more profit. And that is all that matters for Big Corporate. It’s not about keeping cheeseburgers and other food products cheap. It’s not about frozen-versus-fresh beef patties. It’s not about whether or not the fat content sends people to the hospital or whether or not the calorie count per item is “healthy” or “unhealthy”. It’s all about profit.
And it’s far cheaper for them to hire that supposedly “non-partisan” and “unbiased” think-tank and that mansplaining guy with the perfectly-trimmed mustache to claim that wage hikes would translate into dollar-for-dollar price hikes for that $1 cheeseburger than it would to actually pay their employees more and dare to threaten their precious profit margins.
We keep hearing that wages are dependent on whatever “the marketplace will bear”. The truth is that wages in America are dependent on whatever the corporate profits will bear. It has nothing to do with the marketplace. It has to do with profits and whether or not Corporate America would be brave enough to pare down their greed to make life for their employees – and thus the rest of the country – that much better, so we could then buy more of those $1 cheeseburgers.
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