Building the Middle Class

Why are poor people in the US enslaved to tyrannical, immiserating institutions?

Santa Claus brought an interesting gift this Christmas, Barbara Ehrenreich's "Nickle and Dimed". This is a memoir of her experiment as a low wage worker. Ehrenreich is a well-educated scientist, feminist, journalist, and successful writer, so this was a dive from very comfortable upper middle class circumstances into the depths both of the low-end housing market and the minimum wage economy. While she brings a great deal of humor to the story, it is fundamentally appalling, an affront to basic decency. Our treatment of the poor should be a civil rights issue.

The first question is why we have a minimum wage at all. What is the lowest wage that natural economic conditions would bear, and what economic and social principles bear on this bottom economic rung? In ancient times, slavery was common, which meant a wage of zero. This was replicated in the ante-bellum American South- minimum wage of zero. So as far as natural capitalism is concerned, there is no minimum wage needed and people can rather easily be coerced by various social and violent means to work for the barest subsistence. The minimum wage is entirely a political and social concept, designed to express a society's ideas of minimal economic, civic, and social decency. Maybe that is why, as with so many other things, the US reached a high point in its real minimum wage in the late 1960's, 66% higher than what it is now.

Real minimum wage in the US, vs nominal.

The whole economy of low wage work is very unusual. One would think that supply and demand would operate here, and that difficult work would be rewarded by higher pay. But it is precisely the most difficult work- the most grinding, alienating, dispiriting work that is paid least. There is certainly an education effect on pay, but the social structure of low end work is mostly one of power relations, where desperate people are faced with endlessly greedy employers, who know that the less they pay, the more desperate their workers will be to get even that little amount. It is remarkable what we have allowed this sector to do in the name of "free" capitalism- the drug tests, the uniforms, the life-destroying scheduling chaos, the wage theft, the self-serving corporate propaganda, the surveillance.

Is it a population issue, that there is always an excess of low-wage workers? I think it is really the other way around, that there is a highly flexible supply of low-wage work, thanks to the petty-tyrannical spirit of "entrepreneurs". No one needs the eighth fast food restaurant, the fifteenth nail salon, or the third maid cleaning service. We use and abuse low wage labor because it is there, not because these are essential jobs. If a shortage of low-wage workers really starts to crimp an important industry, it has recourse to far more effective avenues of redress, such as importing workers from abroad, outsourcing the work, or if all else fails, automating it. What people are paid is largely a social construct in the minds of us, the society of employers who couldn't imagine paying decently for the work / servitude of others. To show an exception that illustrates the rule, nurses during the pandemic did in some cases, if they were willing to travel and negotiate, make out like bandits. But nurses who stayed put, played by the rules, and truly cared for those around them, were routinely abused, forced into extra work and bad conditions by employers who did not care about them and had .. no choices. In exceptional cases where true need exists, supply and demand can move the needle. But social power plays a very large role.

Some states have raised their minimum wage, such as California, to $15. This is a more realistic wage, though the state has astronomic housing and other costs as well. Has our economy collapsed here? No. It has had zero discernable effect on the provision of local services, and the low wage economy sails on at a new, and presumably more humane, level. When I first envisioned this essay, I thought that a much more substantial increase in the minimum wage would be the proper answer. But then I found that $15 per hour provides an annual income that is almost at the US level of median income, 34k annually for an individual. The average income in the US is only 53k. So there is not a lot of wiggle room there. We are a nation of the poorly paid, on average living practically hand-to-mouth. On the household level, things may look better if one has the luck to have two or more solid incomes.

My own individual incomes analysis, drawn from reported Social Security data.

Any any rate, a livable wage is not much different from the median wage, and even that is too low in many economically hot areas where real estate is unbearably expensive. This is, incidentally, another large dimension of US poverty, that the stand-pat, NIMBY, no-growth zoning practices of what is now a majority of the country have sentenced the poor and the young to an even lower standard of living than what the income statistics would indicate, as they fork over their precious earnings to the older, richer, and socially settled landlords among us.

So what is the answer? I would advocate for a mix of deep policy change. First is a minimum wage that is livable, which means $15 nationwide, indexed for inflation, and higher as needed in more high-cost states. It should be a basic contract with the citizenry and workers of all types that working should pay decently, and not send you to a food pantry. All those jobs and businesses that can not survive without poorly paid workers... we don't need them. Second would be a government employer of last resort system that would offer a job to anyone who wants one. This would be paid at the minimum wage, and put people to work doing projects of public significance- cleaning up roadways, building schools, offering medical care, checkups, crossing guards, etc. We can, as a society and as civil governments, do a better job employing the poor in a useful way than can the much-vaunted entrepreneurs. Instead of endless strip malls of bottom-feeding commerce, let local governments sweep up available labor for cleaning the environment, instead of fouling it. Welfare should be, instead of a demeaning odyssey through DMV- like bureaucracies, a straight payment to anyone not employed, at half the minimum wage.

Third, we need more public services. Transit should be totally free. Medical care should be completely free. Education should be free. And incidentally, secondary education should be all public, with private schools up to 12th grade banned. When we wonder why our country and politics have become so polarized, a big reason is the physical and spiritual separation between the rich and poor. While the speaker in the video linked below advocates for free housing as well, that would be perhaps a bridge too far, though housing needs to be addressed urgently by forcing governments to zone for their actual population and taking homelessness as a policy-directing index of the need to zone and build more housing.

Fourth, the rich need to be taxed more. The corrosion of  our social system is not only evident at the bottom where misery and quasi-slavery is the rule, but at the top, where the rich contribute less and less to positive social values. The recent Twitter drama showed in an almost mythical way the incredible narcisism and callous ethics that pervade the upper echelons (... if the last administration hadn't shown this already). The profusion of philanthropies are mere performative narcissism and white-washing, while the real damage is being done by the flood of money that flows from the rich into anti-democratic and anti-government projects across the land.

And what is all this social division accomplishing? It is not having any positive eugenic effect, if one takes that view of things. Reproduction is not noticeably affected, despite the richness at the top or the abject poverty at the bottom. It is not having positive social effects, as the rich wall themselves off with increasingly hermetic locations and technologies. They thought, apparently, that cryptocurrencies would be the next step of unshackling the Galtian entrepreneurs of the world from the oppression of national governments. Sadly, that did not work out very well. The rich can not be rich without a society to sponge off. The very idea of saving money presupposes an ongoing social and economic system from which that money can be redeemed by a future self. Making that future society (not to mention the future environment) healthy and cohesive should be our most fervent goal.

• How about universal basic services, like housing and transit?
• But not in this congress.
• Bernie is still on the case.
• Meanwhile, how does a soak-the-poor tax system sound?
• Mint that coin!
• Economic regression.