The True Cost of Low Prices is Exploited Workers

This piece was originally published in the New York Times “Room for Debate” section on May 12, 2015.

The true costs of goods and services is a secondary issue to stagnant and exploitative wages: The cost of certain goods might go up, but more people would be able to afford them with better compensation. The current price of low-cost goods and services in the United States is low-income, exploited workers living in poverty. But the country as a whole isn’t broke, only its workers are — while corporations and C.E.O.s are richer than ever.

The value of the federal minimum wage has declined 24 percent since 1968. If we re-established the relationship between the minimum wage and the overall median wage to its 1968 level, we would raise wages for 35 million people, a full quarter of the workforce.

The situation is even worse for those earning tips, such as nail salon workers. Their pay is set at $2.13 an hour by the federal government. If tips don’t supplement these workers’ paycheck to the regular minimum, they have to ask their employers for the difference. (And good luck with that.)

But low and stagnant wages are not the result of benign, abstract economic forces. They reflect conscious policy choices by lawmakers influenced by powerful corporate lobby groups like the Chamber of Commerce and the National Restaurant Association.

The poor economic outcomes of workers that result from corporate lobbying efforts are scandalous considering the economy’s net productivity has increased 93 percent since 1968 and low-wage workers have far more education today.

Employers steal billions in wages from their workers every year because of a lack of will and/or government resources to adequately enforce labor standards. Meanwhile, the powerful lobbies work to effectively disempower workers by convincing legislatures to water down collective bargaining rights and weaken unions.

Corporations can also outsource work to countries with even weaker labor standards. But for the many jobs that can’t be outsourced, employers hire workers who lack a lawful immigration status. Undocumented immigrants — who make up 5 percent of the labor force — aren’t fully protected by U.S. labor standards and can’t complain about unpaid wages and substandard working conditions because their employer can get them deported. Unsurprisingly, they earn far less than citizens.

Meanwhile, some businesses hire workers with a temporary immigration status (“guestworkers”) and spend millions lobbying for new and expanded guestworker programs. High unemployment and flat wages in low-wage occupations suggest employers don’t need guestworkers to fill labor shortages, but they hire them because guestworkers become instantly deportable when fired and aren’t protected from retaliation or allowed to switch jobs if they have an abusive employer.

We need a different legal framework — one with the goal of broadly shared prosperity — even if it results in higher prices for some goods and services. Laws should be amended to vastly improve basic labor standards and adequately fund their enforcement. And Congress needs to legalize unauthorized immigrant workers and ensure that new or expanded labor migration programs are used to fill real labor shortages, and not just to lower wages and exploit the powerless.