On March 26, 2015, Jason Easley writes on Politicus USA:
In the midst of a Senate budget vote-a-rama that Republicans are filling with anti-Obamacare and economy killing votes, Senator Bernie Sanders took the Senate floor and dropped the fact bomb that raising the minimum wage is real job creator.
Sen. Sanders said, “The simple truth is that in America people working full time should not be living in poverty. Since 1968, the real value of the federal minimum wage has fallen by close to thirty percent, and people all over this country and in state after state on their own have voted to raise the minimum wage. And, by the way, in state after state where the minimum wage has gone up, more jobs have been created. Let us stand today with the tens of millions of workers who are struggling to put food on the table to take care of their families.”
The Sanders amendment to raise the federal minimum wage failed to pass 48-52. The good news for Democrats and the left is that Sen. Sanders fell just three votes short of passage as just a simple majority of fifty-one votes are required to pass budget amendments.
Labor Department data for the first six months of 2014 revealed that the 13 states that raised their minimum wage created more jobs than the 37 that didn’t, “In the 13 states that boosted their minimums at the beginning of the year, the number of jobs grew an average of 0.85% from January through June. The average for the other 37 states was 0.61%.”
There are decades worth of data and studies that confirm what Sen. Sanders was saying. The Republican opposition to raising the minimum wage is ideological. The anti-minimum wage position lacks credible non-partisan statistics and data to support its claims. Republicans hang their opposition on a myth that raising the minimum wage kills jobs, but 64 studies have proven that the Republican talking point to be false.
Sen. Sanders dropped a dose of reality on Senate Republicans today. If the 52 Republican Senators who voted no really wanted to boost the economy, the first thing they should do is reverse course and support raising the minimum wage.
Senator Bernie Sanders needs to look at the economic inequality problem from a different perspective. That perspective includes the realization that the purpose of a for-profit business corporation is to “maximize profit” by striving to keep labor input and other costs at a minimum in order to maximize profits for the owners or to stay competitive. They strive to minimize marginal costs, the cost of producing an additional unit of a good, product or service once a business has its fixed costs in place, in order to stay competitive with other companies racing to stay competitive through technological innovation. Reducing marginal costs enables businesses to increase profits, offer goods, products and services at a lower price (which people as consumers seek), or both. Increasingly, new technologies are enabling companies to achieve near-zero cost growth without having to hire people. Thus, private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever increasing role.
The result is that the price of products and services are extremely competitive as consumers will always seek the lowest cost/quality/performance alternative, and thus for-profit companies are constantly competing with each other (on a local, national and global scale) for attracting “customers with money” to purchase their products or services.
But seeking the lowest labor cost results in millions of people who, dependent solely on their wage incomes, suffering financially because they can not earn more than the competitive rate of wages, and struggling to avoid falling into poverty conditions. As a result we have a problem because the vast majority of the population are wage slaves because they have no other means to earn income.
While the role of business corporations is to efficiently produce products and services, which produces wealth and thus income to those who own the corporations, business corporations should also act justly and serve and enhance the community well-being. This should be a proper function of government regulation to ensure that corporations do not disregard the health and welfare of the people and their communities. This then is the moral basis upon which a minimum wage boost is advocated.
The problem that Sanders and others have advocating for solutions to economic inequality is that their mind-set is limited by ONLY thinking in terms of human productive input––as in labor’s contribution––while failing to understand that fundamentally, economic value is created through human and non-human contributions. Those who OWN business corporations know that the productive capital factor input represents upward of 98 percent of the total contributions. In concentrated capital ownership terms, roughly 1 percent own 50 percent of the corporate wealth with 10 percent owning 90 percent. This leaves 90 percent of the people scrambling for the last 10 percent, with them dependent ONLY on their labor worker wages to purchase capital assets. Thus, we have the great bulk of the people providing a mere 10 percent or less of the productive input. Contrast that to the less than 5 percent who own all the productive capital providing 90 percent or more of the productive input, and who initiate and oversee most of the technological advances that replace labor work with capital work.
As a result, the trend has been to diminish the importance of employment with productive capital ownership concentrating faster than ever, while technological change makes physical capital ever more productive. Corporate decision makers know this, whether in the United States or China, or anywhere organized assemblies of people engage in production. Technology is an easier and faster way to get a job done. Because technology increases the profitability of companies throughout the world, technology always has the advantage over human labor when the costs of them are the same. But because this is not well understood, what we as a society have been doing is to continually shift the work burden from people labor to real physical capital while distributing the earning capacity of physical capital’s work (via capital ownership of stock in corporations) to non-owners through make-work job creation, minimum wage requirements, and welfare programs. Such policies do not function effectively.
Boosting the minimum wage will result in either increasing consumer prices, reducing job opportunities, or replacing labor completely with “machines,” which are becoming more and more sophisticated every day. While there is no question that ALL people need a livable income, and the greater the income the more financially secure and affluent one can be, but to put the focus entirely on the government boosting the minimum wage is not the solution we should be seeking.
The REAL solution is to lift all legal barriers to universal capital ownership access by every child, woman, and man as a fundamental right of citizenship and the basis of personal liberty and empowerment. The goal should be to enable every child, woman, and man to become an owner of ever-advancing labor-displacing technologies, new and sustainable energy systems, new rentable space, new enterprises, new infrastructure assets, and productive land and natural resources as a growing and independent source of their future incomes. This would enable our business corporations to operate more efficiency and competitively, while broadening wealth-creating ownership participation, creating new capitalists and “customers with money” to support the products and services being produced. This can be achieved without any reduction in wages or benefits.
Sander’s thinking is the result of being stuck, as is the entire playing field of advocates for change, in one-factor thinking––that is, the labor worker. While he tiptoes around an understanding with previous statements that tie economic inequality to concentrated ownership of productive capital asset wealth, he remains, at least publicly, oblivious to the most powerful and increasingly productive factor––non-human physical capital (the land, structures, tools, machines and robotics, computerization, etc.) that is responsible for 90 percent of the production of the products and services needed and wanted by society. Sanders focus should be on broadening personal ownership of capital asset formation simultaneously with financing the growth of the economy, instead of just talking about the continued concentration of capital ownership and the dire consequences for labor workers or the limited financial good that a minimum wage boost would create.
What Sanders should really being doing, this year and in the upcoming 2016 presidential election year, if he REALLY wants to get traction and national media attention and reduce EVERY OTHER politician to shame, is leading a national discussion on the topic of the importance of capital ownership and how we can expand the base of private capital ownership simultaneously with the creation of new physical capital formation, with the aim of building long-term financial security for all Americans through accumulating a viable capital estate.
This is the approach necessary for business corporations to best serve their constituencies — customers, owners, and employees — instead of just constantly concentrating more wealth ownership among a tiny minority.
