Last month, the House voted to raise the national minimum wage to $15 an hour. As Meagan Day noted at the time, a lot of corporate Democrats probably felt “free to put on a show for voters” because they knew the bill wouldn’t pass the Republican-controlled Senate. Even so, it was an important show of strength for a Fight for Fifteen movement that’s been demanding the wage hike since 2012.
On the other hand, even if the increase had become law, $15 in 2019 isn’t quite what it was in 2012. And the House bill wasn’t even scheduled to fully go into effect until 2025. Speaking at a One Fair Wage event in Detroit, Rashida Tlaib said that, “when we started it, it should have been $15. Now it should be . . . $20 an hour — $18 to $20 an hour at this point.”
Conservatives reacted to Tlaib’s suggestion as if she were demanding that every low-wage worker be given a unicorn. Fox News contributor Guy Benson responded, “Why not $20? Or $50? Go, Rashida, go!” Meghan McCardle chimed in with, “Do I hear $25?” Ben Shapiro quote-tweeted McCardle and upped the ante. “They should make it $1,000 an hour and cure income inequality inside of a month, obviously.”
There’s a lot wrong with what they’re saying. To begin with, Tlaib’s critics on the Right disregarded her qualification that the reasonable range would now go up to $20 (and start around $18). They also ignored her argument from inflation.
If you plug the numbers into this handy CPI Inflation Calculator, and make the conservative assumption that the average rate of inflation between 2012 and 2019 (1.46%) will continue to hold over the course of the next six years, the 2025 equivalent of the purchasing power commanded by $15 in 2012 will be $18.15. It’s hard to imagine a crowd of people chanting about raising their wages to precisely $18.15. On the other hand, “$20 in 2020, indexed to inflation” has a nice ring to it.
Nor is there any obvious reason that “the precise equivalent of $15 in 2012” should be the outer limit of what low-income workers can reasonably demand. Even in 2012, there were plenty of cities where $15 wouldn’t have been enough to lift the bottom end of the workforces that made those cities run out of poverty.
The Minimum Wage and the Continuum Fallacy
Benson, McCardle, and Shapiro’s attempts to reduce Tlaib’s proposal to absurdity commit what logicians call the continuum fallacy. To see how this works, think about baldness. Given the way we use the word “bald,” a man with exactly five hairs on his head is bald. Add another five. He’s still bald. Add another five, and another, and another until he looks like I do when I haven’t had a haircut in a few weeks.
The formerly bald man crossed over into being clearly-not-bald at some point well before that. But when? If we had a series of slides showing him with five more hairs, and then another five, and so on, it’s unlikely that anyone watching the slideshow would be able to pinpoint the exact slide at which he crossed the line from “bald” to “not bald.” There are complicated and long-standing philosophical debates about how to think about such borderline applications of vague terms, but one thing that just about everyone who’s thought deeply about these issues agrees on is that it’s a logical mistake (a “fallacy”) to jump from the premise that the borders of some concept are vague to the conclusion that there’s no real distinction — or that there aren’t clear cases on both sides.
The usual reactionary argument against minimum wage hikes is an economic one. Raise the price of labor and demand will decrease. As Dan Crenshaw puts it, losing your job means that your wages “go down to zero.” This is often framed as a matter of good-hearted but naïve leftists not “understanding economics” and thus unintentionally hurting the very people they intend to help.
There are two problems with this claim. The first is that it ignores a variety of well-documented positive social effects of minimum wage increases. It’s plausible that, even if a $15 or $20 minimum wage did lead to a somewhat increased unemployment rate, such an increase would still be a clear net positive for the working poor. The second problem is that existing evidence seems to show that the demand for labor is inelastic enough that increasing the minimum wage actually has little to no effect on the employment rate.
Or, at least, it’s had little to no effect so far. To be fair, a hike to $1,000 an hour almost certainly would have catastrophic effects. This brings us back to the continuum fallacy. Realistically, $20 wouldn’t result in disaster. Neither would $21 or $22. At some point well before $1,000, though, the vast majority of businesses would have to shut their doors.
Where exactly is the cutoff point where such effects would begin to be seen on a large enough scale to really make an increase a net loss for low-wage workers? It’s hard to pin that down with any precision, but we can still be confident that an increase to $20 would hardly cause the economy to come crashing down around us.
Why Not All of It?
Benson, McCardle, and Shapiro are treating the idea of a $20 minimum wage as absurd, but as socialists we should be asking an even more challenging question: why just that? Assuming that supply and demand considerations stop employers from passing on all of the costs of wage increases to consumers, an increase from $15 to $20 decreases business owners’ profits and raises the share of each company’s overall revenue that goes into the hands of the workers who played the most important role generating it all in the first place. Why not increase that share even more? Why not increase it all the way by replacing capitalism with an economy based on workers’ control of economic enterprises?
Of course, even a worker-controlled firm would have various business expenses to pay. Factory equipment wouldn’t magically stop accumulating wear and tear under socialism. Someone would still have to be paid to keep the lights on.
But in what Marxist economist Richard Wolff calls a WSDE — a Workers’ Self-Directed Enterprise — decisions about all of these matters would be made democratically. And whether the workers in such an enterprise voted for a completely flat wage scale or one that incentivizes certain difficult and demanding jobs with higher wages, it’s likely that no one would be earning $1,000 an hour. Even so, in a democratic socialist system, the portion of revenue workers got to decide what to do with would be “all of it.”
Reframed in this way, the answer to Benson, McCardle, and Shapiro’s question is, “Yes, why not?”