They said that raising wages would create inflation but, whoops, here we are.
Big corporations are making record profits and my state needs to increase our minimum wage right now.
“You better eat all that.” My friend is admonishing her daughter at the kitchen table, pointing to an omelet. She’s probably said this a thousand times over the years to her children, but the look in her eye today says she’s pretty serious. Egg prices have jumped 60% (US Labor Dept, January 2023) in just one year and now is not the time to leave something on your plate.
It’s not just eggs, of course. Overall, grocery prices are up 12% (CNN, September 2022) and household budgets are feeling this acutely. While inflation may finally be easing, it did increase prices overall around 7%- perceptible to everyone and crushing for the working class and poor. The avian flu might be partially to blame for that expensive omelet, but natural disasters, the war on Ukraine, and supply chain issues are all on the pudit’s list of reasons for the rapid inflation. Regardless of the reasons, one thing is clear: Big corporations are making out like bandits while working people are sifting through the sofa cushions trying to make rent.
Amidst 40 year high inflation, the big companies we buy from are celebrating record breaking numbers. After the COVID related dip in profits, corporate profits have increased by an incredible 80% (The Hill, November 2022). By passing on more of their costs to consumers, those profits are being built by burdening the little guy. In other words, while my friend is going to need to make her kid’s omelet smaller tomorrow, corporate giants are feasting tonight.
Meanwhile, real wages have been plummeting for two years straight. On paper most of us are making more than we were before the pandemic, but it’s going less far (EPI, January 2023). Instead of passing on their huge profits to the workers who helped create them, big corporations are hoarding it and creating a topsy-turvy and unsustainable economic landscape. I’m no economist, but I am the head of a single wage household so I know a thing or two about what can be sustained and what can’t.
One thing that absolutely is unsustainable in any economy is North Carolina’s minimum wage. This year, 27 states are raising their minimum wage, and North Carolina is not one of them. In fact, we are among a dwindling number (15) of states using the abhorrent low federal minimum wage as our standard (DOL, January 2023).
I’ve worked for low wages much of my life and also tried raising my kid on them. Even before inflation, $7.25 got you nowhere towards achieving even your most basic needs. Arizona is only state where minimum wage can cover a single person’s needs vis-à-vis the local cost of living — and theirs is set at $13.82. Even in the places that have adopted the highest minimum wages ($16.50 in Washington, DC, $15.74 in Washington, $15.50 in California), nowhere can a family of four make even half of what they need to survive, even with two adults working (Divvy, 2020).
Over a dozen states, including Minnesota, Alaska, and Vermont, have voted to adjust their minimum wage to raise alongside the cost of living– but North Carolina, again, does not (EPI, September 2022). The $7.25 federal minimum wage, and thus North Carolina’s, has remained unchanged since 2009 — the longest stretch in US history. It reached its peak purchasing power in 1968 and has been collapsing since. If the federal minimum had kept pace with worker productivity and been adjusted for inflation, it would have been $21.50 in 2020 (CEPR, January 2020). Combine record high inflation and those record high corporate profits– profits fueled by workers’ work– and imagine what the minimum wage should be today.
By continuing to refuse to address wages in general and the minimum wage specifically, North Carolina is in an embarrassing race to the bottom. Our state holds two very telling distinctions: We are ranked #1 for businesses (CNBC, 2022) and #52 (far behind Puerto Rico and Washington, DC) for workers (Oxfam, 2022).
That’s what I mean by unsustainable. It’s also immoral.
Our lawmakers in Raleigh should be answering to people, not businesses. Raising North Carolina’s minimum wage would cause a ripple effect for all wages, especially for low wage earners, and would address existing shortages by propelling more people into the labor force (Monthly Labor Review, 2021).
For 15 years, critics have opposed raising the wage claiming it would cause inflation… but here we are. If every single penny of raising the minimum wage to $15 an hour was directly passed on to the consumer, then consumers would experience an overall price level of less than 0.5%. That’s a lot better on my pocketbook than the current corporate greed fueled inflation that is running at about 100 times faster (EPI, September 2022).
A time of record profits for big corporations and industry is exactly the right time for North Carolina lawmakers to tell them to raise their wages. In my mind it’s simple. For the sake of workers, consumers, and for our state as a whole:
Share the wealth with those who create it.