1. What do you think the minimum wage should be...?
2. How did you derive this number...?
This is a good question, and I have never seen a convincing explanation on either side.
Let's take a took at the Supply Side Movement, which told us that the Free Market needed to set labor costs.
Here is what we were told in the 80s by the Supply Side Movement (popularized by Reagan and Thatcher, influenced by the Chicago and Austrian Schools): Capital investment requires the lowest possible cost of production. The lower the labor and material costs, the higher the returns. The higher the returns, the more likely that capital will flow into investments which lead to economic growth. On the other hand, if government arbitrarily sets labor costs at a higher rate than the market will pay, the result will be a disincentive against investment and, as a consequence, lost jobs. This was a convincing argument in the 80s (after decades of regulatory overreach), which is why the US embarked on a long process of weakening Unions and removing all the postwar wage controls that created the highest paid middle class in world history. (FYI, US corporations thought the middle class had become too expensive to employ and damaged the ability of US Business to compete effectively and lift all boats).
The solution to this problem was a global project of neoliberalism. Here is a bland, dictionary definition of Neoliberalism: "Economic liberalization, free trade, open markets, privatization, deregulation, and replacing government with the private sector in all areas of American life. Key components being Lower taxes on suppliers and austerity for workers - and transferring public resources to for-profit industry." [FYI: most Conservatives don't know that the aforementioned "liberalization" means the classical liberalism of Adam Smith, were liberalism means capital freed from traditional state and religious controls. As opposed to New Deal Liberalism, which implies state controls on markets to extend freedom and opportunity to the non-wealthy]
So the plan, enacted in the 80s by Reagan, was to give American Capital greater access to the cheapest labor and raw material across the globe. This is why Reagan used the Cold War as a context to help solidify American Capital's access to cheaper labor and cheaper raw material. This involved using the admittedly real Soviet Threat as a context to construct the political conditions for cheap labor all over the globe, but mostly concentrated in Southeast Asia and Latin America. The plan worked. Go into any Walmart and read the labels on the toasters and clothing. You will see "Made in China" "Made in Taiwan" "Made in Vietnam" "Made In Grenada" "Made in Mexico", etc.
Problem is: as we shifted production to these freedom hating places (so our capitalists could make higher profits), the American worker started losing ground. He had to compete with Taiwanese sweatshop workers making $5/day in order to get corporations to move production back to the US. The result was a huge decline in American purchasing power. And/but
economic growth requires that the American worker have enough purchasing power to go into "Main Street" stores and buy things - otherwise Main Street businesses die. So starting in 1980 we expanded credit (debt) to make up for the lower wages, lost jobs and decreased benefits (-seriously, please study what happened to family debt levels starting in 1980. It will blow your ******* mind). And it was great for a while. We had two decades of massive debt-based growth. Americans flocked to shopping malls with credit cards in record numbers. When they ran out of room on their MasterCards and Visas, they turned their homes into ATMs and borrowed record amounts of cash.
Now the ******* middle class is too indebted to borrow enough to go into "Main Street" stores and buy enough stuff to sustain domestic job growth and we are facing years of de-leveraging as the largest consumer debt bubble in US history works its way through the system. Our corporations are sitting on record levels of cash - but they lack consumers. Too many of our smaller businesses can't sell what they have on the shelves. You can give them all the tax breaks you want, but they need consumers to invest and add jobs. We need to jump-start demand by revisiting some of our postwar fiscal policies, but we lack the political tools to remove the special interests that benefit from the current doctrine of neoliberalism. Oh, and we no longer have cheap energy, which was the building block of American postwar economic supremacy.
Whoops.
(Game over morons)
(You can't cannibalize workers (
consumers) to grow profits because eventually you destroy Demand)
Okay, now go back to discussing minimum wage and rearranging deck chairs on the Titanic.
