The Bureau of Labor Statistics (BLS) reckons that by 2020 the overwhelming majority of jobs will still require only a high school diploma or less, and that nearly three-fourths of “job openings due to growth and replacement needs” over the next decade will pay a median wage of less than $35,000 a year, with nearly 30 percent paying a median of about $20,000 (in 2010 dollars).
Right now about 50 million Americans are working in: office and administrative support occupations (median wage of $31,250), sales and related occupations ($24,840), food preparation and serving occupations ($18,900). Not too much knowledge required. The growth jobs of tomorrow, according to the BLS: Childcare workers ($19,430), personal care aides ($19,730), home health aides ($20,610), janitors and cleaners ($22,210), teacher assistants ($23,220), nonconstruction laborers ($23,460), security guards ($23,900) and construction laborers ($29,730).
The column by Alexander Cockburn appearing in the April 23, 2012 edition of The Nation raises the issue of “Why We Must Raise The Minimum Wage.”
Cockburn writes:
“Everyone knows the story of Henry Ford more than doubling his production line workers’ pay to $5 a day in January 1914. Ford explained to aghast fellow capitalists that he would be creating customers for his cheap cars, building a new American middle class.
“Nearly a century later, in 2005, Walmart CEO Lee Scott called on Congress to raise the minimum wage, since “our customers simply don’t have the money to buy basic necessities between pay checks.” Walmart haters whacked away at Scott for hypocrisy, but he was being perfectly reasonable in identifying what was then and is now America’s number-one problem: a huge chunk of the population barely survives on starvation wages. If you adjust for inflation, median personal income hasn’t moved for almost half a century. Nearly a quarter of US households have zero to negative net worth. It just takes one unlucky turn of the cards—an illness, an accident, a brush with the law—to put them under.”
His solution:
“Higher wages for the jobs that are out there. The current federal minimum wage is $7.25 per hour. Work a forty-hour week for $7.25 and you end up with $15,080 a year. This is just above the federal poverty line for an individual ($11,000) but well below the line for a family of four ($22,000). And it’s just a bit more than the manufacturer’s recommended retail price for the Ford Fiesta ($13,200), Ford’s cheapest car this year. In 1914 an assembly line worker could buy a Model T with four months’ pay. ”
In reality, Alexander Cockburn’s does not provide the solution! His solution essentially keeps vast pools of people at near poverty or poverty levels and does not create a strong middle class with the purchasing power to sustain American economic growth.
What will work is simultaneously broadening private, individual ownership of new productive capital investment as the American economy grows, turning labor workers and others into new capitalists who will benefit from expanded earnings through the full-dividend payout of the earnings the investments generate, which in turn will strengthen consumer demand and create even greater economic growth and growing asset portfolios for ALL Americans, thus reducing dependence on government redistribution “make-work employment” and “welfare” programs.
Modern technology and rapidly developing intelligent systems technology means that modern industry, the employer of middle class prosperity, simply does not need millions of new workers, while the population of available workers is multiplying. Truly intelligent “machines” (productive capital) will have the potential to eliminate poverty and usher in a new age of prosperity, opportunity and economic justice while closing the gap between rich and poor through broadened access to capital credit for investment in new productive capital assets so that everyone can become a capitalist with income from ownership of the economy’s future productive capital assets.
Free market capitalism can be a good thing because it involves the principle of private ownership. Private ownership creates incentive for individuals and business corporations to acquire productive capital, because the profits accrue to the owners. The problem is that there presently exists no means by which the majority of American citizens can fully benefit from the unprecedented productive potential of technological innovation in which the non-human factor of production is displacing the human factor of production. As most customers for the products and services that can be produced are labor workers, market demand will exponentially decline unless society’s customer base can gain access to capital credit to acquire long term viable ownership portfolios in future productive capital assets.
President Obama invokes “the knowledge economy,” putatively replete with well-paying jobs demanding advanced skills in all the high-tech arts that can make America great again. But this is not the real economy of tomorrow for most Americans.
Up to this point in our history, wages and salaries have been paid to labor workers to provide income that generates consumer demand in the market. Without jobs, labor workers cannot buy the products and services that are produced, and without customers, business enterprises cannot expand production. The principle operative of capitalism is to maximize income to the owners of the business corporation, not to create jobs or provide income for labor workers.
This is a fundamental structural problem plaguing the capitalist system. It explains why the middle class is in decline and poverty persists despite capitalism’s obvious capability to produce and meet demand for products and services needed and wanted by our citizenry. With declining labor worker incomes and the prospects of more people living with insufficient or no income, demand in the market likewise declines. Without a job there is no money. And as technological innovation gains exponential momentum there will be fewer and fewer jobs for labor workers to produce the products and services that they cannot buy because they don’t have jobs. Thus, this vicious circle is the current embodiment of capitalism.
Capitalism is not designed to benefit the working class and poor. Capitalism is designed to benefit the owners of productive capital. Few people can save enough to become wealthy by investing their savings. Yet the financial system is based on “savings” and as a result the percentage of people that derives most of their income from returns on productive capital investments is small. But it does not have to be.
What if we could reverse this trend and turn the vast pool of Americans into productive capital owners and thus consumers? If that were done, more labor workers would be required (at least in the short term) to produce products and services that would be demanded by these new consumers, who are as well the new capitalist owners of the productive capital assets created to expand productive capacity to meet demand. This would effectively recover the economy from the present recession to the point where business enterprises again can profitably sell their products and services. And as companies expand to meet demand with investment in new productive capital, new owners would participate and through their income dividend payout create more demand.
Such a system can be created that rewards labor workers with skills that are in demand, while at the same time provide capital dividend income to them and to those not needed for the production of products and services. Such a creation would embrace productive capital as a replacement for labor as the principal factor in the production with continued productivity growth. Thus, the future economy would generate material wealth for ALL Americans created by technological invention embodied in superautomation, automate factories, intelligent machines, and sophisticated computerization.
http://www.thenation.com/article/167183/why-we-must-raise-minimum-wage
