Not too long ago, I came across an article on the American economy arguing that it was fueled by a reliance on poverty and the threat of poverty. Sadly, I can’t find it again and offer apologies to its author, whoever she or he may be.
We’ve known for several decades that low wage jobs, few with benefits, many part time, were the only employment available to a large portion of the population. None could provide a standard of living above the poverty level. By holding a couple of jobs while relying on SNAP and other benefits, a person and his/her dependents might eke out a subsistence level existence. Everyone needs to subsist, so the jobs got filled, unemployment levels stayed low, and our consumer based economy prospered, at least on paper. First line hospitality, retail, home health care, child care and other workers filling low wage jobs served our needs, cared for our families, and assured us of low prices at a wide choice of fast food outlets, convenient big box stores, and clean surroundings.
The standard libertarian line was that the working poor only needed to work harder with more gumption to get better paying jobs offering possibilities for career advancement. It was their own fault if they weren’t up to it. It went hand in hand with their miserly approach to fully funding quality K-12 education and more generous public benefits for the people most likely to become the next generation of low wage workers on which much of our consumer economy depended. To put it crudely, if one’s business model depends on low wage workers kept in or near poverty, one must pay attention to assuring a dependable supply well into the future. I don’t believe anyone actually thought it out that way (except maybe the Koch Network) but that’s how it worked. Well intentioned conservatives would horrified to think they were in favor of such an inhumane scheme. Conservative or liberal, most of us have never given it much thought one way or the other. Some new age marxists have had a sense of it, but had only a discredited, decrepit anti capitalist script from which to recite by rote. Their only accomplishment: frighten Fox News viewers.
The season of pandemic has create greater public awareness of how dependent the nation is on the labor of the lowest paid. Physical distancing forced many businesses to close or severely limit operations. Low wage job holders were laid off en masse, as were a good many in the tiers just above them. On one hand, the nation learned it could get along just fine with less consumer spending on entertainment, travel, and eating out. On the other hand, it discovered how valuable was the work of care givers, cleaners, retail staff, food servers and cooks on which service industries depend. Many were labeled essential workers and forced to serve the public in spite of threats to their own health. There seemed to be a moment of recognition that they should be more respected and paid wages providing a decent standard of living. That recognition helped build public support for massive federal intervention to temporarily prevent the working poor from falling into unsustainable levels of poverty, and provide an economic backstop for small businesses and slightly higher paid workers only a step or two away from falling into poverty. It worked, but it didn’t please everyone.
As recovery has set in, the popular move among libertarians has been to eliminate as many government benefits as possible as a way to force a vulnerable workforce back into low wage jobs as quickly as possible. It’s all in the name of reenergizing a vibrant consumer economy, and who wouldn’t want that? I doubt if anyone’s said it out loud, but keeping low wage workers in poverty, and the next tier up living with the threat of poverty, assures a desired pot of cheap, pliable, disposable labor.
There are forces working against it. Some benefits, like new child care payments, can’t be cut by states. The expansion of the ACA provides more adequate health care for more people, and frees some from being held captive by inadequate employer based plans. There is growing public support of decent wages and benefits at the lowest level. Some low wage workers have discovered they aren’t powerless. They can demand higher pay and better working conditions. Muckraking journalists have exposed the mentality of a few major employers who have tried to hide their view of low wage labor as disposable commodities behind low prices and fast delivery. It’s exposure that could lead to laws requiring employers to treat all employees with basic dignity.
What would happen if wages and benefits for the working poor provided a modest standard of living keeping them out of poverty? What would happen if other workers were less threatened by the nearness of poverty? I have my guesses. The cost of eating out and buying things from big box stores would probably increase then level off. How much? That’s hard to tell. It depends on how willing employers are to shift pay scales to reward the lowest paid more and the highest paid less. In any case, I doubt it would trigger long term inflation. It would likely mean communities would have fewer fast food outlets to choose from. Small independent retailers would have to recalculate the cost of doing business. Experience in other nations suggests they would figure it out. Some would discover new ways to out compete big box mass merchandisers, including big e-tail.
Some public costs would go up, but with less poverty to address, other public costs would go down. As a whole, the nation would offer greater prosperity for more people. They, in turn, would spend more for the good things in life. Not that class differences would disappear, but without a large, permanent poverty class, there would be greater respect for the value first line workers provide to the well being of society. Flipping burgers, waiting tables, cleaning houses, caring for the aged would be more socially respectable ways to earn a living.
Contrary to libertarian scare tactics about creeping socialism, American capitalism would remain vibrant and profitable. Oligarchs of various stripes would have their dream shattered of a shallow democracy with them in charge. We would have a deeper democracy in which greater economic security for more people would open the way for them to speak more freely with greater diversity of thought about the politics of the nation. Would libertarian extremists still agitate to generate wider support for their views? Of course they would, but I’m guessing the nation would be less inclined to follow them.