By Peter Mathews | The Long Beach City Council recently voted for a “Living Wage” of $13.26 per hour for Long Beach Airport and Convention Center workers, including their retail workers. Minimum wage has lost 20% of purchasing power since 1973, and President Obama recently called for cities across the nation to raise the minimum wage, since Congress will not.
Since 1973, the top 1% of the population has captured over 70% of the new income. Since 2009, the top 1% has captured 93% of the new income generated. Since 1973, the rich have gotten richer, the poor have gotten poorer, and the American middle class has shrunk by 10%. In 1980 the average CEO was making 40 times the income of the average American worker. Today, the average CEO is making 400 times the income of the average worker. Poverty and hunger have increased significantly among low and moderate income Americans.
We must commend the Long Beach City Council for trying to uplift the plight of these specific workers, by guaranteeing them a “living wage.” If minimum wage had kept up with increased worker productivity since the 1970s, it would be $21 per hour. If it had kept up with inflation it would be $16 per hour. However, such a steep, sudden increase may place an unbearable burden on small business. We know that American small businesses employ two- thirds of American workers.
That’s why the local, state, and federal governments must reduce the tax burden on small businesses as they create a living wage or raise minimum wage, for millions of poor and middle class Americans. Governments must also reduce many of the burdensome, unnecessary, and unproductive regulations on small businesses, while keeping the necessary ones. This approach is the most balanced, and the only one that will work to benefit American workers andentrepreneurs.
Two prominent founders of the United States of America, James Madison and Alexander Hamilton helped establish a “Commercial Republic.” An important part of the business of America was going to be business. Another founder, Benjamin Franklin, an amazing inventor and business entrepreneur, wanted other Americans to be able to do the same: create new ideas, new products, new services, and new jobs so all could prosper.
However, President Abraham Lincoln put the concept of entrepreneurship in perspective when he noted, “Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.”
Lincoln’s vision, and the vision of Madison, Hamilton, and Franklin, were complimentary and gave birth to the American Dream. Without adequately paid workers, the guarantee in the American Declaration of Independence of the Rights to Life, Liberty, and the Pursuit of Happiness would be empty. Without well paid workers and a large middle class, there would be no one to help produce and buy the products that guarantee adequate profits for successful business entrepreneurs, and the quality of life for 99% of Americans would deteriorate. As will American democracy. To some extent even Henry Ford knew this. He increased his workers’ pay so they could afford to buy his cars, which generated more profits for him, and a better life for them.
When will our political and corporate leaders of today start re-applying these practical and ethical principles?
The Long Beach City Council has lessened the burden on some workers. It, and other levels of American government, must now act to lighten the burden on other workers and to liberate the genius and energy of small businesses.
Peter Mathews is a full time Professor of Political Science at Cypress College and Adjunct Professor of Sociology at Long Beach City College. He is a featured political analyst and contributing partner on the “Head-On” Show on KEIB AM 1150 radio on Saturdays between noon and 2PM.