Refuse to raise minimum wage & you facilitate downward spiral

  • Published in Letters

To The Daily Sun,

As the CEO of a software company that I founded in the 1980s, I know that one has to keep expenses under control to maintain profitability. Our biggest cost beyond overhead and equipment was labor, the men and women who actually produced our products. As the company grew so did the salaries of our employees. We also extended our benefits to include family health plans, retirement plans and free eye glasses.

As I look at today's business climate, I am appalled to see what has happened to the American worker. Wages have increase by just 5 percent in the years 1979 to 2012, despite productivity growth of nearly 75 pecent. These indisputable statistics illustrate that workers no longer share in rising labor productivity. In the light of even modest inflation, workers are generally working much harder and getting paid less. Computers, automation and increased employee work-load with the threat of moving jobs away, has left workers with little bargaining power. Never before, have people been so fearful to even ask for a raise. Another factor is the utilization of foreign manufacturing to produce our products.

In a healthy capital market, increases in productivity usually go hand in hand with increases in wages and salaries. Unfortunately, since 1979 corporate top executives and corporation shareholders are the only people who have enjoyed the benefits of higher productivity. Anyone who has money in the stock market has seen huge increases in corporate earnings. Ironically, did you ever notice that when a large company announces a layoff of thousands of people, its stock price goes up?

Look at the workers in McDonald's. They are working every minute and get very little time to rest. Most are no longer teenagers, but people with families to support. Many are paid the minimum of $7.20 an hour, which comes out to about $13,100 a year, before deductions.

Perhaps, you read this and say to yourself, "Who cares? No one I know wants to work at McDonald's"? The reason why you should care is that pay scales are like the animal food chain. The upper end relies on the lower end. Managers and senior employees in a company are affected by the salary of lower income employees. If the starting pay in your company is cut or frozen, the salary of higher paid workers will also be affected. If your salary is "too high" you could be eliminated.

Economists tell us that by 2020 nearly 42 percent of all jobs will be low-paying jobs. By refusing to raise the minimum wage, the Congress is facilitating this downward spiral.

Nick Vazzana