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 V.14 No.24 | June 16 - 22, 2005 

Ortiz y Pino

Marketplace Pieties Are Downright Dangerous

The Great Superstition surfaced again last week. During City Council debate over the possibility of nudging the minimum wage in Albuquerque up a measly $2 an hour above the federal minimum level, a powerful mystic force was invoked against the idea.

Funny how invoking the sanctity of "the marketplace" is only done when a proposal will hurt working people, never when it might help them. City Council tampering with the minimum wage, we were warned by a lobbyist/spokesperson for the Greater Albuquerque Chamber of Commerce, could unleash economic catastrophe on our city.

The intent (as it always is when the Great Superstition, the "market," is invoked) was to freeze all action, suspend all thought and surrender all judgment. We are not to worry our silly little heads, logically working out what the best policy might be. We have only to turn all economic matters over to the "free market" and then stand back to observe in awe while, like a gyroscope, the mechanism rights itself.

As devotees of the cult like to point out, the marketplace magically produces perfectly balanced results every time. It's almost Biblical in its inerrancy.

Unless, of course, you are on the bottom of the economic ladder, down where a few eggs are being broken to make omelets possible for those lucky winners on the upper rungs. On the bottom, as Barbara Ehrenreich so clearly documents in her best seller, Nickel and Dimed, the market seems much less like a gyroscope than like a Cuisinart, with minimum wage employees being the ones chopped and diced.

I went back and read Nickel and Dimed again last week as I sought something a little more tangible to use in figuring out the minimum wage issue than the pure faith in dogmatic laissez-faire economics the Chamber's priests were urging. And I also stumbled on a wonderful piece in the May 2005 issue of Harper's, an essay on the evangelical roots of economics by Gordon Bigelow entitled "Let There Be Markets."

Reading the two works together will, I must caution you, create doubt about the validity of "the market." So if you are one of those prone to easily slide into heresy or if you are unable to resist the temptation to mix in experience-based facts with your beliefs, you should skip them. They are too true for free marketeers to stomach.

Bigelow points out that "markets are not spontaneous features of nature; they are creations of human civilization ... economies exist because human beings create them." And what most economists exclude in their calculations is the better part of what makes us human: our social interactions and our irrational desires.

I'll leave for another time his examination of the intertwining of evangelical Christianity and free market economic theory and how that confusion continues to plague our society even today. But one last comment of Bigelow's fits the topic at hand: "The wages of sin are often a private jet and a wicked stock-option package. The wages of hard moral choice are often $5.15 an hour. Free markets don't promote public virtue; they promote private interest. In this way they are neither free nor helpful in promoting freedom."

It's a point that Ehrenreich's book develops dramatically. She spent several months experiencing firsthand what life is like for people earning minimum wage jobs today. She worked as a waitress in a small café, as a chambermaid in a hotel, as a domestic cleaning service employee and as an "associate" at a Wal-Mart. She tried to live on the wages she earned at those jobs, finding housing in tiny trailers, run-down motels and cramped basement apartments and eating at fast food and convenience store counters.

She simply could not live on one full time job at minimum wage. This is because housing costs, even in the dilapidated places she stayed, ate up way more than 50 percent of whatever she earned. "You don't need a degree to see that wages are too low and rents are too high," she concludes.

Rents are sensitive to demand, but wages are not. As Alan Greenspan told Congress in 2000, "the economic laws linking low unemployment to wage increases may no longer be operative."

He meant something weird is happening. The mighty "market" isn't acting right. Pay should be getting better, but it isn't. Every McDonald's and Wal-Mart in town is perpetually hiring; every Lotaburger and 7-Eleven has a permanent "Help Wanted" sign welded to the front door. You'd think they'd be forced to increase wages to attract good help.

But what seems to be happening is that federal minimum wages are actually serving as a ceiling for starting workers. Since survival is impossible at those wages there's a revolving door, a constant stream of new employees, a guarantee that the work is done by someone just learning the job.

The work requirements of the federal government's welfare reform policies have artificially juiced the labor pool. Thousands of previously unemployed women and teenagers are now required to work at whatever jobs are offered as long as the minimum wage is offered. Apparently, it is perfectly all right for the federal government to tamper with market dynamics as long as the tampering is benefiting businesses.

The market divinities apparently only have to be appeased when government tampering might help employees a little. That makes treating the market like a pious revelation from God downright dangerous for working folk.

The opinions expressed are solely those of the writer. E-mail jerry@alibi.com.

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