Corporations now expect you to believe that higher wages are a bad thing. Don’t listen to them.
CNBC reporter Jeff Cox wants you to feel pity for American employers. Unemployment is so low, Cox reports, that employers are having a hard time finding workers. (The truth is way more nuanced than the bustling job market Cox is painting here, but let’s allow him to play his argument out.) In fact, his thesis statement is right in the first line of the story:
America’s labor shortage is approaching epidemic proportions, and it could be employers who end up paying.
Huh. But I thought that was how the free market was supposed to work? Don’t all those trickle-down pundits claim that the market establishes wages? And isn’t this a clear-cut case of the market demanding that workers be paid more? And anyway, don’t employers always pay for labor? What’s the big deal here?
I mean, the first thing you learn in Econ 101 is supply and demand. Based on Cox’s story, it seems like the demand for jobs is through the roof, while supply is dwindling because fewer Americans are looking for work. (This is a system so simple that even Mitt Romney can understand it.) So it stands to reason that because demand for labor has increased, businesses should pay more for that labor.
But wait! There’s a hitch! It turns out that those wages might have a downside. Cox interviews Jim Baird, an executive at Plante Moran Financial Advisors, about the conundrum:
“How much might rising labor costs chew into corporate profits? How much will be passed through to customers in the form of higher prices? That remains to be seen,” Baird said.
Wow. That sounds like the exact same brand of fear-mongering that local restaurant owners whip out every time a city contemplates going to a $15 minimum wage. So now large employers and corporations are going to try to protect their huge profits by coaxing American workers into skipping a pay raise—and they’re going to use the boogeyman of “higher prices” to do it.
And yet, the data doesn’t bear those threats out; when Seattle went to a $15 minimum wage, studies showed no overall impact on grocery store or restaurant prices. How can that be? The thing that the usual band of corporate-crony ‘experts’ fails to acknowledge is that when you raise wages, workers don’t invest it offshore like corporations—they spend that money, supercharging the economy by increasing consumer demand.
There is no all-seeing, all-knowing Free Market that fairly establishes wages. Workers don’t earn what they deserve—they earn what they can negotiate.And in this time of declining union power, when most workers are advocating for themselves against huge and insanely wealthy corporations, the deck is stacked against worker wages.
Last year, Paul Ryan and Donald Trump promised that the money from their corporate tax cuts would result in a $4000 annual increase in wages for American workers. They stopped talking about that $4000 raise when it failed to materialize. Instead, corporations just offloaded their newfound additional wealth to shareholders through stock buybacks. In fact, corporate America has broken all records for stock buybacks since the Trump tax cuts were passed.
Just once, I wish someone at CNBC would write a story about whether those buybacks—$189 billion in the first quarter of this year, thanks to companies like Apple and Bank of America—would result in higher prices for consumers. But of course, they’ll never do that, because CNBC knows that it’s corporations, and not workers, who buy advertisements.
Instead, CNBC and financial “experts” will continue to use a false “free market” narrative to blame workers for demanding a living wage. But as their claims become more and more ridiculous, it gets easier and easier to spot them as the trickle-down lies they truly are.