WASHINGTON, March 5, 2014 – President Obama ate lunch today with four New England governors at the Café Beauregard in New Britain, Connecticut. Café Beauregard pays its workers more than $10 an hour, well above the federal minimum wage. Over his steak sandwich Obama observed, “nobody who works full time should have to live in poverty.”
That’s a refrain the president has made before, and it begs the question, “why not?”
“Should” is normative. You should be nice to strangers and hold doors open for others. You should write thank-you notes for gifts and after dinner parties. What you “should” do is about good manners and good morals. But we don’t demand either as a legal obligation.
It is likewise unconscionable that anyone would pay workers less than the full value of their labor. Too many employers try to underpay their workers to enrich themselves. They take advantage of people who need a job in a market with surplus labor. They justify it as “supply and demand,” pretending that markets tell them what they must do, as if they have no volition to do more than what they must.
But it is also true that firms adjust for labor costs. There are always substitutes, either by replacing two low-skilled workers with one more-skilled worker, replacing servers with touch screens, or dishwashers with disposable cutlery. And some labor just isn’t worth much.
Obama says that “nobody who works full-time should live in poverty.” We might respond, “nobody who wants a job should be unable to find one,” or ask him how deep in poverty is poverty. There’s no situation so bad that it can’t be worse, no low-wage poverty that can’t be turned into no-wage poverty. And if some labor isn’t worth much, it will never be worth more without practice, without experience, without a job.
Nobody should live in poverty, but poverty can be the poverty of too little money or the poverty of no hope. We can escape from the poverty of too little money if we have the opportunities to learn and to improve. That is what society owes the poor – opportunity. Obama should be focused on why opportunity is shrinking, not on raising wages for some while closing off opportunity for others, and for good.
The worst poverty is the poverty of no hope. After trillions of dollars spent in a war on the poverty of too little money, we have a nation that has more and more people being plunged into the poverty of no hope. They are abandoning the labor market, staying home, raising the demands for government poverty relief. And that only tackles basic physical needs without ever tackling the most basic of all needs – hope.
No one whose labor is worth $10 an hour should receive $7.25. But no one whose labor is currently worth only $8 an hour should have hope of something better taken away by being thrown out of the labor market. An increase in the federal minimum wage to Obama’s target of $10.10 an hour is estimated by the CBO to un-employ about 500,000 people, and perhaps up to a million. A number of politicians consider that a fair price to pay for the people who will be lifted from poverty.
It may be, but the calculus of whose hope should be destroyed so that others can make more money is one that few are arrogant enough to employ. If we can create greater opportunity in this country, those who are worth more than they’re getting will have a better chance to get it, and we’ll tackle the true poverty in America. The president should be focused on jobs, not wages.Click here for reuse options!
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