By Steve Brawner
© 2014 by Steve Brawner Communications, Inc.
Arkansans in November will vote on whether or not to raise the minimum wage incrementally from its current $6.25 an hour to $8.50 by the beginning of 2017. There is no organized opposition, the State Commerce of Commerce doesn’t have an opinion, and polls have shown it is likely to pass.
For perspective on this Arkansas-based issue, let’s check with a self-described “zillionaire” from Seattle.
Nick Hanauer earned his billions starting and helping start more than 30 companies and was an early investor in Amazon.com. He’s written a widely shared piece for Politico magazine, “The Pitchforks Are Coming … For Us Plutocrats.” A plutocrat is a powerful, wealthy person.
Hanauer says the shrinking middle class is bad for everyone. The top 1 percent earn about 20 percent of the nation’s income while the bottom half earn just 12 percent – a gap that is widening. He points out that capitalist societies don’t survive long without a healthy middle class – the economy’s real job creator. As the middle class shrinks, consumers have less money to spend at businesses owned by rich people. Eventually, he writes, the common people get restless, and then you have problems – historically, either a revolution or a police state. As Hanauer jokingly told radio host Tavis Smiley, the super-rich have the most to gain or lose “because we’re the ones that go to the guillotine.”
Hanauer’s only specific prescription in his piece is raising the minimum wage. In Seattle, the economy has boomed even as the minimum wage has increased to $15 an hour – which would be too high for Arkansas.
Arkansas is one of only four states whose minimum wage falls below the federal level of $7.25 per hour. According to the Bureau of Labor Statistics, in 2012 there were 50,000 employees here above the age of 16 earning at or below the federal minimum wage. That’s about 6.9 percent of all workers here who, if they work 40 hours a week and never take a vacation, earn $13,000 a year before taxes.
You might say that’s not fair. If you do, Hanauer would say you’re using the wrong language. He says supporters of raising the minimum wage should stop talking about fairness and instead focus on the economic benefits that occur when work pays. People who earn a livable wage have money to spend at local businesses and don’t require government assistance, as do many fast-food and other low-wage workers now. “The fundamental law of capitalism is, when workers have more money, businesses have more customers,” Hanauer told Smiley.
The same argument is being made – and should be made more aggressively – by supporters of the private option. That’s the state program that uses Medicaid dollars to buy private insurance for low-income Arkansans. It had enrolled 163,480 people as of July 31.
One of the arguments opponents make is that it’s an expansion of government, and they are right, in one way. But remember that the private option is a benefit for “low-income Arkansans,” not “no-income Arkansans.” Recipients are engaged in some form of employment that had made them ineligible for free government health care through Medicaid. They’ve made choices to try to be self-sufficient. If the private option is repealed, the practical result will be that they will get free health care anyway because they won’t be able to afford it on their own. Moreover, the message sent to recipients will be that they are better off not working and instead should depend on the government like some of the people they know.
The wealth gap must be addressed. Without a strong middle class, both democracy and capitalism are corrupted. There’s a reason why the Wall Streeters who nearly wrecked the economy were bailed out: They make the rules. And without a strong middle class, the economy enters a death spiral where not enough people spend not enough money to support not enough businesses, which then hire not enough people.
But how we talk about the wealth gap is as important as what is done about it. Please, no more political movements encouraging us to see ourselves as victims. Hanauer is right: As society debates issues like raising the minimum wage, the focus should be on self-sufficiency, not fairness. There are many things about which Americans can’t agree, including what’s “fair,” but most of us believe this: It’s better for people to earn a real paycheck than to accept a government handout.