In honor of those who tried to raise the minimum wage last week, I’d like to tell a story.
Once upon a time, there were two coal miners, Adam and Ben. They were alike in almost every way. They both worked hard, they both knew the mine well, having excavated its every twist and turn. And they both had stories to tell of danger and hardship. There were the collapses in the mine, the deaths and the maimed workmates rendered useless. Others were felled by black lung.
When the owner of the mine died, Adam and Ben found that they were different from each other in a surprising way. Ben had been the owner’s illegitimate son and had inherited the mine. He used his newly acquired profits to have his own son, Ben Jr., tutored and sent on to the university, where he worked hard and learned much. Ben Jr. invested in new industries (helping lots of young entrepreneurs develop their ideas); so when the third generation came along, Ben III inherited a huge portfolio. He decided to turn it over to his lawyers and become a playboy.
One day, a new guy at the mine convinced them to go on strike for higher wages and things like workmen’s compensation and an end to child labor. After all, they were doing the difficult and risky work while living in clapboard homes and being paid in scrip — the company’s own currency for use at its store — which left them impoverished and beholden to the company. Families had to care for men whose bodies had been sundered too soon.
Ben III’s lawyers had to contact him for a response to the strike. When they finally reached him, Ben III was confused. “Mine? What mine?” he asked. (He didn’t know he had one.) Once informed, and at the suggestion of his lawyers, Ben III decided to close it. It would set a bad precedent to give in to the miners’ demands and the mine could be re-opened once they had been humbled. So the mine closed, and my story ends.
Adam and Ben’s families illustrate a problem in our economy. Though three generations of Adam’s family bore scars attesting to their struggle with the mountain and though they performed the backbreaking labor that garnered the profits, they were nevertheless powerless against Ben III. Not only were the profits his, but he also had power over those who produced them — over who was allowed to work as well as wages and working conditions; even closing the mine and thereby denying access to those who had built it and whose livelihood depended on it.
Adam’s family may not have been especially clever, but they worked hard and produced something of tremendous value. Consider that without coal, there would have been no Industrial Revolution — no factories, furnaces or locomotives. Coal was (and still is) absolutely vital to almost everything else in the economy. Yet the miners lived in abject poverty.
Contrary to popular belief, then, neither hard work nor social utility guarantee a dignified life. What’s missing is power. The miners didn’t have any.
Ownership is a form of power. It can get something for virtually nothing. To say so isn’t to disparage the hard work of Ben Jr., but only to note that it expanded his ownership rights and thus his power, which he could pass on to his son. Adam and his son’s hard work (that contributed to Ben Jr.’s portfolio) came with no such ownership or inheritance rights.
Power can be abused but can also be exercised well and judiciously (Ben Jr.). Even in the latter case, however, some who work earn advantages that others who work don't (Adam's family).
Power helps explain our situation today as well. It helps explain how, from the late 1970s to now, American productivity can rise 85 percent, but average wages rise only 6 percent with the minimum wage falling 21 percent in inflation-adjusted dollars (“Minimum wage,” Democracy Journal, 2013). It helps explain how the ratio of CEO to worker pay can rise to 325:1 (“Executive Excess,” Institute for Policy Studies, 2011). It explains how they can be handsomely rewarded for failure, as almost 40 percent of the highest-paid ran companies that were bailed out, penalized for fraud or otherwise performed miserably (“Executive Excess,” Institute for Policy Studies, 2013); and how as a Berkeley economics professor explains, the top 1 percent can continue to capture 95 percent of all income gains (“Striking it Richer,” Sept. 3, 2013).
Mary Barker teaches political science in Salt Lake City and Madrid, Spain.