The United States minimum wage has now risen to the same level (adjusted for 2009 $) as 1984. Between 1968 and 1990 the minimum wage had steadily
dropped from its peak at just over $10 an hour at the end of Lyndon Johnson’s second term as President. Under Richard Nixon it dropped considerably
from $10 to ~$7.25 then went back up under Carter fluctuating between $8-9 an hour until Ronald Reagan became President when it steadily dropped from
about $8.30 to just below $6 at the end of his Presidency.
Why did the minimum wage drop so much under Ronald Reagan? He had argued, even in the debates with Carter, that the unemployment crisis was being
exacerbated, especially among young blacks, by the high minimum wage which may require a higher wage being paid than the job is actually worth
(according to the market) thus less jobs were available. This same general theory was tied into the policies of Neoliberalism which he brought into
government, same with the policies of Thatcher (UK), and have not been abandoned by the ‘Conservatives’ since but has in fact been adopted by the
‘Third Way’, New Democrats (Clinton, Gore, Obama) and New Labour (Blair, Brown).
The late ‘70s stagflation allowed the monetarists on the Right to rise up against the Bretton Woods System of Keynesian economics which had been
established to plan the economy in a way that would not permit a return of the 1930s Depression. But these policies were observed as failures, mostly
due to the high spending of the Johnson and Nixon administrations (Great Society + Viet Nam War) which led Nixon to removing the Dollar from a gold
backing causing mass inflation tied in with the oil crisis, this destroyed the Keynesian system. In Great Britain after the ‘Winter of Discontent’
the Dries rose up in the Tory Party to gain control under the leadership of Margaret Thatcher. This same battle was played out in the US between
Reagan and Bush, Sr.
What does this have to do with the minimum wage? Well by arguing that we need jobs which were being stopped by the high minimum wage they lowered the
minimum wage which allowed for new jobs to be created except this time they were from the services sector. Meanwhile the Neoliberal policies advocated
the opening of borders for free-trade which encouraged industry to move abroad (also add in the high tax, regulations of the Keynesian era which had
not been removed yet). Combined this allowed for more jobs to be created for lower pay and less economic security while exporting our manufacturing
overseas without everyone noticing because they had jobs outside of this once crucial industry.
But the problem then became immigration which fueled the crisis. Since industry was being exported, encouraged by the ideology of free-trade, it also
encouraged the importing of cheap foreign labor which undermines native labor costs. So in order for people to compete with these low-skilled,
low-paid immigrants who were taking the jobs domestically, combined with them taking the jobs which had been exported, the Neoliberals were able to
again sit at the table and argue that we should let minimum wage either stagnate our cut it further so that more jobs could be created.
The Neoliberals openly encouraged the mass immigration from the third world and the outsourcing of jobs to the third world all for the benefit of big
business while having the right-wing cheer on free-trade (protectionism/fair trade is evil) and having the left-wing cheer on mass immigration (closed
borders/quota system is evil). Big business got rich, the politicians got rich, we became poorer and sharp divisions were created in our nations based
on the resentment towards immigrants who could not be assimilated. It was a win-win for the elite, a lose-lose for the workers.
edit on 12/9/2011 by Misoir because: (no reason given)