wages

Rick Berman, whose past clients have included fast food giants, is secretly mobilizing corporations for a campaign to keep wages low.

The Intercept’s Lee Fang and Nick Surgey obtained a memo authored by Berman to potential corporate donors outlining the reasons for his campaign, which he aims to launch in 2018. Berman believes that November of 2018 will be a wave election for Democrats in state legislatures across America, and that Democrats will use their new majority to push for increases in the minimum wage.

“Support for doubling the Federal minimum wage to $15 and reducing tip credits does not trigger public concern. The public is insensitive to these costs,” Berman’s memo reads. “Without an ‘offense’ communications strategy, we will be overwhelmed by expensive legislation.”

Berman’s “offense” campaign involves running a series of op-eds, TV ads, video campaigns to be circulated and promoted on social media, and even tray liners and coffee sleeves for fast food restaurants to highlight the problem of youth unemployment. Berman’s overall strategy is to counter the push for a higher minimum wage with a proposed, lower, “apprentice” or “intern” wage for young people. Berman hopes this new lower wage will also lead to lower wages for other low-level workers.

“The industry response most likely to gain traction with the public is to emphasize the plight of low-skilled youth who have unemployment rates 4-5 times higher than the national rate and who are stranded on the sideline of the job market,” the memo reads. “A ‘youth’ wage will have a sobering ripple effect on all entry-level wage rates.”

However, Berman’s supposed compassion for the very real youth unemployment crisis (especially among black youth) is misleading — new jobs are being added each month, but wages are stagnating. E*Trade strategist Mike Loewengart said as much in an interview with Barron’s following the release of the June jobs report.

“Job growth is great. Low unemployment is even better,” Loewengart said. “But many argue that an increase in wages is what this economy needs most.”

And if Berman’s concern about low employment rates among youth were genuine, he would be in support of increasing the minimum wage, not lowering it. As the New York Times reported in 2016, the last time the federal minimum wage was nearly doubled was when Harry Truman was president. In 1949, Truman signed off on increasing the federal minimum wage from 40 cents an hour to 75 cents an hour — an increase of almost 88 percent. The unemployment rate was cut by nearly two-thirds over the next three years:

In December 1949, the month before the raise kicked in, the national unemployment rate was 6.6 percent. By December 1950, when the 75-cent minimum had been in place for nearly a year, it had fallen to 4.3 percent. By December 1951, it was 3.1 percent and by December 1952, it was 2.7 percent.

Support for a $15/hour minimum wage has surged across the country, with New York and California both passing legislation to raise the minimum wage in their respective states to $15/hour over the next several years. If Democrats do indeed retake majorities in state legislatures next year, a $15 hourly wage could become reality for millions of impoverished workers across America.

 

Matthew P. Robbins is a freelance economics contributor covering wages, budgets, and taxes. He lives in Chicago, Illinois with his husband and two cats. 

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