Why corporate America should make the feds pony up for a minimum wage increase

Here's a modest proposal for corporate America and its underpaid workers

Fast food strike, September 2014
(Image credit: (Scott Olson/Getty Images))

Sometimes morsels of truth come from the most surprising places. A report released Monday by the Harvard Business School found reason to worry over the growing gap between rich and poor Americans, its authors noting:

Overall, respondents saw weaknesses in those aspects of the U.S. business environment that drive the prospects of middle- and working-class citizens — for instance, the education system, the quality of workplace skills, and the effectiveness
of the political system. And they saw strengths
 in aspects that influence company success, such as the quality of management, the vibrancy of capital markets, and firm access to innovation. [HBS.edu]

Based on a survey of Harvard Business alumni, the report is almost fawningly pro-business, but it still acknowledges that while things appear to be looking up for wealthy Americans in charge of firms, prospects appear relatively dim for the low-wage workers who make those companies run. Confirming that the fate of low-income workers hangs in the balance, the report nervously concludes:

…we see a need for business leaders to act — to move from an opportunistic patchwork of projects toward strategic, collaborative efforts that make the average American productive enough to command higher wages even in competitive global labor markets. Without such actions, the U.S. economy will continue to do only half its job, with many citizens struggling. And in the long run, American business will suffer from an inadequate workforce, a population of depleted consumers, and large blocs of anti-business voters. [HBS.edu]

As usual when market solutions are proffered up as a panacea to poverty, concrete strategies are in short supply. The report spends most of its time suggesting that workers should just become worthier of higher wages; that is, that they somehow invest in skills training that happens to align perfectly with the interests of business. Some of this training should begin in elementary school, the report suggests, even though it has been repeatedly shown that the "education" solution far underestimates the scourge of poverty.

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But the report is spot on insofar as it predicts growing unrest in response to untenable conditions for low-income workers. As MSNBC's Ned Resnikoff points out in relation to fast food strikes currently sweeping the nation, the direst circumstances produce the most intense protests. In North Carolina, where wages are remarkably low on the national scale, where unemployment benefits have been shredded and Medicaid not expanded, workers have the least to lose and the most to gain from demonstrations that force businesses to negotiate with them.

So it seems the situation the Harvard Business School's report fears has already come to pass. While the report envisions only market solutions to this problem, the ones they offer are mainly preventative: to make workers worth more. But the moment for prevention now seems to be in the past, and without prospects for higher wages across the board, it only recedes further and further on the horizon.

A more intelligent move for business would be to lobby for better benefits for low-income populations at large. This is because, as Resnikoff's reporting from North Carolina details, there are ultimately two venues through which income is delivered: the market and the state. A check from an employer spends exactly the same as a check from the state. And in the case of North Carolina, both avenues to income have emphatically failed low-income workers: the market isn't paying enough to live on, and the support of the state has been withdrawn as well.

So, here's my modest proposal for corporate America: if you refuse to pay your workers more, get the government to do it. Unleash your post-Citizens United campaign coffers to make the federal government pay for a minimum wage increase itself and strengthen its own programs. The former could be a universal basic income or a basic income lite, i.e. a more robust version of Germany's vaunted "Kurzabeit" program, which paid the salaries of employees who otherwise would have been fired during the depths of the recession. And while you're at it, push both federal and state government to restore and strengthen state programs, like education and health care. The latter would at least be a temporary relief for people who strike because they can't pay their rent or afford health care while working full time.

Because if you don't and the situation continues to deteriorate — with businesses refusing to raise wages and state programs eviscerated by cuts — then business will encounter more confrontations with workers, as the Harvard report suggests. The period for prevention is now long gone — and free market responses seem increasingly ineffective and wishful in the face of a rising tide of inequality and unrest.

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