Pay the People!

Pay the People! Plot Summary

Introduction

The American economy stands at a critical crossroads, facing unprecedented inequality and a broken social contract. Over decades, the prosperity created by millions of working people has been increasingly diverted into the hands of a tiny number of very rich people, undermining the stability of our entire economic system. Since 1973, the share of income going to the top 1% has nearly tripled, while the federal minimum wage has lost over 30% of its purchasing power since its last increase in 2009. This book presents a clear, data-driven argument for why raising the wage floor isn't just good for workers—it's essential for businesses and the entire American economy. Through extensive research and compelling case studies, we explore how fair wages lead to reduced employee turnover, increased productivity, stronger consumer demand, and ultimately greater profits for businesses. This isn't just economic theory—it's demonstrated by companies like Walmart that have raised wages and seen their performance improve, and by states with higher minimum wages that consistently outperform their lower-wage counterparts. The evidence shows that the current system of suppressing wages to maximize short-term profits is self-defeating, creating a race to the bottom that undermines the consumer base businesses need to thrive. A sustainable economy requires reconnecting worker compensation to business success, ensuring that when companies prosper, all workers benefit—not just those in the executive suite.

Chapter 1: The Economic Case for Fair Wages

Consumer spending drives approximately 70% of the American economy. This simple fact reveals why fair wages are so crucial for economic health—people need money to spend at businesses for those businesses to succeed. When workers make so little that they can barely afford necessities, they cannot participate meaningfully in the broader economy. Someone earning the federal minimum wage of $7.25 per hour (about $15,000 annually) isn't buying new appliances, eating at restaurants, or upgrading their smartphones. For those businesses, these low-wage workers essentially don't exist as customers. This dynamic creates a fundamental contradiction for businesses that rely on consumer spending while simultaneously keeping wages as low as possible. Research consistently shows that higher minimum wages increase consumer spending and stimulate local economies. When workers earn more, they spend more at local businesses, creating a virtuous cycle that benefits everyone—including the businesses that initially feared wage increases would hurt them. This is precisely what Henry Ford understood in 1914 when he doubled wages for his workers; productivity soared, turnover plummeted, and Ford Motor Company's profits doubled within two years. The benefits of fair wages extend far beyond just those earning the minimum wage. Data shows that when minimum wages increase, workers already earning above that level also see wage increases, creating a ripple effect throughout the economy. Studies indicate that raising the federal minimum wage to $15 per hour would indirectly raise wages for an additional 11.6 million workers who already earn more than $15. This multiplier effect explains why states with higher minimum wages see stronger economic outcomes across multiple measures. Businesses that oppose minimum wage increases often fail to consider these broader economic effects. They focus narrowly on the increased cost of labor without accounting for increased consumer spending, reduced turnover, higher productivity, and improved worker morale. We've seen this mistake repeated throughout American history, yet the evidence consistently proves these fears unfounded. States with higher minimum wages aren't suffering economically—in fact, they're thriving. The success of higher minimum wages isn't theoretical—we have dozens of case studies from across the country. Thirty-one states now have minimum wages above the federal line, with seventeen at $13 or higher. Despite claims that raising wages would destroy jobs and hurt businesses, these states—particularly those with the highest minimum wages like California, New York, and Massachusetts—are among the most economically vibrant in the nation. Even corporate executives have admitted this reality. The CFO of Denny's was caught on an earnings call telling investors that California's minimum wage increase helped their restaurants in that state outperform the rest of the country. Small business owners, who understand their local economies intimately, overwhelmingly support higher minimum wages. A 2016 internal poll conducted by the U.S. Chamber of Commerce found that 80% of executives supported raising their state's minimum wage, despite the Chamber's aggressive lobbying against such increases. The business case for fair wages isn't just compelling—it's now proven beyond reasonable doubt.

Chapter 2: Breaking the Myths About Minimum Wage

For decades, opponents of raising the minimum wage have relied on a series of myths to justify keeping wages low. These myths persist despite overwhelming evidence to the contrary. Perhaps the most pervasive myth is that raising the minimum wage will force businesses, especially small businesses, to close. This prediction has been made before every minimum wage increase in history, yet it consistently fails to materialize. Research shows that small businesses in states with higher minimum wages actually grow faster than their counterparts in states with $7.25 per hour minimums. Another common myth is that the minimum wage is merely a "starter wage" for teenagers. This characterization ignores reality. The average age for a low-wage worker is thirty-five; over a third are in their forties or older, and more than a quarter have children to support. Only about 17% of minimum-wage workers are teenagers. Furthermore, the notion that minimum-wage jobs are temporary stepping stones to better opportunities is increasingly false. A Harvard Business Review study found that after tracking 181,000 people who took low-wage jobs in 2012, more than 60% were still in low-wage jobs years later. Opponents frequently claim that raising the minimum wage will decrease earnings because businesses will cut hours or eliminate jobs. The evidence contradicts this claim. The Federal Reserve Bank of New York examined counties along the New York-Pennsylvania border, where New York's minimum wage increased while Pennsylvania's remained at $7.25. Their analysis found that New York counties saw higher wage growth with no adverse effects on employment. By 2022, leisure and hospitality workers in New York earned nearly 50% more than their Pennsylvania counterparts, yet employment levels remained comparable. The myth that raising the minimum wage will drive automation is similarly unfounded. While some jobs will inevitably be automated regardless of wage levels, studies find that counties that raised wages to $15 per hour saw substantially higher job growth in the fast-food sector—one of the industries most susceptible to automation—than similar counties that didn't raise their minimum wage. Some suggest the free market will naturally solve wage problems without government intervention. This ignores how markets actually function. Markets operate according to rules and power dynamics, and the current rules have systematically favored employers over workers for decades. The brief period of wage gains after the COVID-19 pandemic has already begun to reverse, demonstrating that without structural changes, workers' gains are temporary while corporate power remains entrenched. Perhaps the most easily disproven myth is that raising the minimum wage will drive up prices and cause inflation. When Congress last increased the minimum wage between 2007 and 2009, inflation actually decreased. More recently, states with $15+ minimum wages experienced inflation levels at or below the national average in 2022. This makes economic sense—labor costs typically represent a relatively small percentage of business expenses. Even in labor-intensive industries like fast food, total labor costs (including management) account for only about one-third of expenses. The final myth we must address is the claim that minimum-wage workers don't earn more simply because their labor isn't worth more. This ignores the massive productivity gains American workers have achieved. Between 1979 and 2020, net productivity increased by 61.8%, while inflation-adjusted wages increased by only 17.5%. If wages had kept pace with both inflation and productivity gains since 1968, the minimum wage would be nearly $26 per hour. The disconnect between productivity and wages isn't a reflection of worker value—it's a reflection of power imbalances in the labor market.

Chapter 3: How Low Wages Harm Business Performance

Low wages create a destructive cycle that undermines business performance across multiple dimensions. One of the most significant impacts is chronic employee turnover. When workers can barely survive on their wages, they constantly search for better opportunities, creating a revolving door that damages productivity, morale, and ultimately profitability. The data clearly demonstrates this reality: workers earning the federal minimum wage have a greater than 70% chance of leaving their job within a year. At $15 per hour, that turnover rate drops to 42%, and at $20 per hour, it falls to 35%. This turnover isn't just disruptive—it's extraordinarily expensive. Even the most conservative estimates place the cost of replacing a single employee at 33% of their annual salary. More realistic assessments range from 50% to 300% of annual compensation. For a worker making $8 per hour, replacement costs average $3,500—equivalent to 437 hours of work at that wage. When factoring in recruitment, training, lost productivity, and administrative costs, turnover represents a massive drain on business resources that could otherwise be invested in growth or higher wages. Beyond direct turnover costs, low wages severely impact workplace morale and productivity. Financial stress is a major distraction for workers, with surveys showing that more than half of employees spend three or more working hours per week dealing with personal financial issues. These are hours they're not performing at their best, directly affecting business performance. Research consistently demonstrates a connection between employee satisfaction and business profitability. A London School of Economics study found that higher employee satisfaction correlates not only with productivity but also with customer loyalty and higher stock returns. Many businesses compound the problem of low wages with unpredictable scheduling practices. Two-thirds of service workers receive their schedules less than two weeks in advance, and weekly hours can fluctuate by up to 32%. This inconsistency makes it nearly impossible for workers to plan childcare, budget effectively, or maintain stable sleep patterns. These pressures create a constant state of stress that undermines performance. When companies experiment with more consistent scheduling, they see productivity increases of up to 24% and sales increases averaging 3.3%. Poor treatment of employees doesn't just affect those directly impacted—it creates a contagious negativity throughout an organization. When employees leave, their remaining colleagues must take on additional work without additional pay, accelerating burnout. Social connections that make work enjoyable are broken, and the workplace culture deteriorates. Each departure increases the likelihood of more employees quitting, creating a vicious cycle that can devastate a business. The economic impacts extend beyond individual businesses to affect entire communities and industries. States with lower minimum wages and fewer worker protections consistently show higher turnover rates and lower employee retention. Over the last twenty-five years, workers in states that voted for Trump in 2020 spent 0.2 to 0.5 fewer years in their jobs than workers in states that voted for Biden. This pattern holds across industries but is concentrated among the lowest-income, least-educated workers—precisely those most affected by wage policies.

Chapter 4: The Real Cost of Employee Turnover

The most insidious aspect of America's low-wage economy is wage theft—the illegal underpayment of workers. Every year, employers steal approximately $50 billion in wages from their employees, more than three times the estimated losses from shoplifting and more than twice the value of all burglaries, car thefts, and robberies combined. This widespread crime affects over 4.5 million workers annually, pushing more than 300,000 below the poverty line. Wage theft takes many forms, from failing to pay overtime to illegal deductions, misclassification of employees as independent contractors, and violating minimum wage laws. It's particularly rampant in industries where wage laws are already compromised. In the restaurant industry, for example, the Department of Labor found that 84% of full-service restaurants had committed some form of wage theft. Tipped workers are especially vulnerable, as their complex compensation structure creates opportunities for exploitation. Workers facing wage theft have few practical recourses. The power imbalance between employers and employees makes reporting violations risky—workers who complain may face retaliation, including reduced hours or termination. For undocumented immigrants, the dangers are even greater, as they fear deportation if they contact authorities. Even when workers do report violations, enforcement mechanisms are woefully inadequate. The Department of Labor's Wage and Hour Division has barely more than a thousand investigators to cover a workforce of over 150 million. The failure to enforce wage laws illustrates a fundamental inequality in America's justice system. Shoplifters stealing $2,500 in merchandise face felony charges, while corporate executives who steal millions from workers typically face only civil penalties, if anything. This double standard sends a clear message: crimes committed by the powerful against the vulnerable aren't treated with the same seriousness as crimes committed by the poor against the wealthy. Another form of wage suppression comes through the manipulation of overtime rules. Federal law requires overtime pay for hours worked beyond 40 per week, but employers increasingly classify workers as "managers" to avoid this requirement. In 1975, more than 60% of full-time salaried employees qualified for overtime pay; today, just 15% do. A study by economists at Harvard University and the University of Texas at Dallas found a 485% increase in jobs mislabeled as managerial between 2010 and 2019. Companies like Amazon exemplify how treating workers as disposable costs ultimately backfires. Amazon's ruthless focus on efficiency over worker well-being has created dangerous working conditions and astronomical turnover rates. Internal documents leaked in 2022 revealed that Amazon loses about 3% of its hourly workforce every week—an annual turnover rate exceeding 150%, compared to an industry average of 43%. This churn costs the company an estimated $8 billion annually, nearly a quarter of its 2021 profits. The human costs of these practices extend beyond the workplace. Financial instability creates chronic stress that damages physical and mental health. Workers forced to juggle multiple jobs with unpredictable schedules struggle to be present parents and engaged community members. Children of low-wage workers often grow up in precarious circumstances, perpetuating cycles of disadvantage. These societal costs aren't reflected in corporate balance sheets, but they represent real damage to our collective well-being.

Chapter 5: Wage Theft: America's Hidden Crime Wave

The distinction between "low-skill" and "high-skill" jobs serves as a convenient justification for wage inequality, but it fundamentally mischaracterizes the nature of work. Every job requires specific skills and abilities. The term "low-skill" is really just another way to convey "low education requirement." It implies that the only professional skills that matter are those learned in college and developed in white-collar settings, while devaluing the considerable abilities required in service, retail, manufacturing, and agricultural work. Many so-called low-skill workers possess abilities that would be highly valued in higher-paid positions: organizational skills, interpersonal competence, problem-solving abilities, and resilience under pressure. Restaurant servers manage complex social interactions while balancing the needs of multiple tables. Agricultural workers harvest crops with speed and precision for hours in demanding physical environments. These positions require substantial skill—they simply aren't skills typically acquired through formal education. This language matters beyond semantics. As journalist Annie Lowery notes, "The term low-skill as we use it is often derogatory, a socially sanctioned slur Davos types casually lob at millions of American workers, disproportionately Black and Latino, immigrant, and low income." This framing shapes policy discussions, allowing politicians and business leaders to dismiss concerns about low wages by suggesting workers simply need more education or training rather than addressing structural power imbalances in the labor market. The COVID-19 pandemic revealed the hollowness of this distinction when millions of "low-skill" workers were suddenly designated "essential." From grocery clerks to delivery drivers to meatpacking workers, these employees kept the economy functioning while others worked from home. Their essential status didn't translate into better compensation or working conditions; instead, they faced significantly higher mortality rates. Workers in food and agriculture experienced mortality increases almost twice that of the general population. During the brief period of labor market tightness following the pandemic, many workers used their newfound leverage to leave bad jobs—not to stop working, but to find better opportunities. This "Great Reshuffle" revealed that when given options, workers will choose dignity and fair compensation. The labor participation rate actually grew during this period, contradicting claims that "no one wants to work anymore." What workers rejected wasn't work itself but exploitation and disrespect. Corporate America's response to this brief period of worker empowerment was telling. Bank of America released an internal memo (later leaked) expressing hope that unemployment would increase to reduce worker leverage, worrying that a tight labor market would lead to rising wages "across virtually every industry, income and skill level." This reaction reveals a fundamental truth: many business leaders aren't concerned with market efficiency when it benefits workers—they want a tilted playing field that preserves their advantage. The problem extends beyond economic exploitation to cultural attitudes that justify inequality. Many well-off Americans view poverty as a moral failing rather than a structural problem. This perspective ignores the reality that environment, status, and fortune heavily influence economic outcomes. Someone born into a wealthy family is exponentially more likely to end up rich than someone born into poverty, regardless of individual choices or work ethic. These attitudes have real consequences. They justify policies that make accessing assistance difficult and humiliating, treating poverty as deserving of punishment rather than remediation. The psychological impact on low-wage workers is devastating—beyond material deprivation, they face a loss of dignity and social standing. Even when working full-time and doing everything right, millions find themselves unable to achieve basic financial security, trapped in a system designed to keep them struggling.

Chapter 6: Building a Stronger Economy Through Fair Pay

Congressional inaction on the minimum wage has created an unprecedented crisis. The federal minimum wage hasn't increased since 2009—the longest period without an increase since its establishment in 1938. This paralysis has allowed inflation to erode the wage floor's value by approximately 30% over fifteen years. A worker earning $7.25 per hour in 2023 effectively earned the equivalent of just $5.12 in 2009 dollars. The politics behind this stagnation reveal a democratic system increasingly responsive to wealth rather than popular will. Despite polls consistently showing overwhelming public support for raising the minimum wage—including majority support among Republican voters—Congress has failed to act. Research by Princeton's Martin Gilens and Northwestern's Benjamin Page found that when it comes to policy change, the only opinions that substantially influence legislation are those of economic elites and organized business interests. This political reality reflects the outsized influence of money in politics. The 2022 midterm elections cost a record $8.9 billion, forcing members of Congress to spend approximately half their time fundraising from wealthy donors. This dynamic inevitably skews their worldview and priorities toward the concerns of the rich rather than ordinary workers. Industry associations like the National Restaurant Association and the Chamber of Commerce wield enormous influence, often writing legislation themselves. The tipped minimum wage illustrates how historical racism continues to shape modern policy. Tipping was originally imported from Europe but gained prominence in America after the Civil War as a way for employers to hire newly freed African Americans without paying them. When the Fair Labor Standards Act was debated in the 1930s, Southern Democrats refused to support minimum wage protections that would apply equally to Black workers. The resulting carve-outs for occupations with significant African American workforces—including agricultural, domestic, and restaurant work—codified racial wage disparities into law. Today, the tipped minimum wage remains frozen at $2.13 per hour, where it has been since 1991. This system creates volatile incomes, making financial planning nearly impossible for tipped workers. It also fosters environments ripe for sexual harassment—71% of restaurant servers are women, and 90% report experiencing harassment at work. The seven states that have eliminated the tipped minimum wage have lower poverty rates among tipped workers and less sexual harassment in restaurants. Another egregious example is the 14(c) program, which allows employers to pay disabled workers significantly less than the minimum wage—sometimes as little as $1 per hour. Originally intended to encourage hiring disabled workers, this program has instead created segregated workshops where workers perform menial tasks without opportunity for advancement. A 2001 audit found that only 5% of people in these workshops find outside employment. The gig economy represents another frontier in wage suppression. While offering flexibility, gig work shifts costs from companies to workers, who must provide their own equipment, pay their own expenses, and receive no benefits or legal protections. The results are predictable: gig workers are more than twice as likely as standard employees to earn less than $10 per hour, and 29% earn less than their state's minimum wage. These examples demonstrate how our economic system has been structured to allow exploitation of vulnerable workers. Creating a stronger, more stable economy requires addressing these systemic issues by establishing a solid wage floor for all workers—regardless of industry, ability status, or classification.

Chapter 7: Raising the Wage Floor Benefits Everyone

The fundamental challenge facing America today is that our economic system increasingly concentrates wealth at the top while leaving a growing number of workers struggling to afford basic necessities. This isn't just a moral failing—it's an economic mistake that creates instability throughout society. The fear of economic freefall affects not just those at the bottom but extends into the middle class, where many families live one crisis away from financial ruin. Mark Rank, a leading expert on poverty at Washington University in St. Louis, notes that "nearly three-quarters of Americans will experience at least one year below the poverty line." This widespread vulnerability creates chronic stress that permeates society, fraying social connections and fueling political extremism. Just as walking across a balance beam two inches above the ground feels manageable while the same task a thousand feet up produces paralyzing fear, living in an economy with such a low floor for poverty keeps everyone on edge. Raising the minimum wage addresses this problem at its root by providing stability and dignity to millions of workers. It creates a ripple effect that benefits the entire economy: workers earn more and can spend more, businesses see increased consumer demand and reduced turnover, and communities experience greater social cohesion and reduced public assistance costs. Rather than a zero-sum game where higher wages must come at the expense of business profits, fair wages create a positive-sum outcome that strengthens the entire economic ecosystem. The evidence for this virtuous cycle comes from multiple sources. States with higher minimum wages consistently show stronger economic performance across numerous metrics. Companies like Walmart that have raised wages have seen improved business results, with higher sales, lower turnover, and increased stock prices. The seven states without a subminimum tipped wage have stronger restaurant industry growth than the national average. Even in the high-turnover fast-food sector, counties that raised minimum wages saw stronger job growth than those that maintained lower wages. Establishing a fair wage floor would also address many of the inequities built into our current system. It would reduce racial and gender wage gaps, as women and people of color are disproportionately represented in low-wage jobs. It would decrease reliance on public assistance programs, which currently subsidize employers paying poverty wages. It would reduce wage theft by establishing clearer standards and increasing the consequences for violations. Perhaps most importantly, it would restore dignity to millions of workers who contribute essential services to our economy yet struggle to provide for their families. The path forward requires overcoming entrenched political and economic interests that benefit from the status quo. It requires recognizing that the extreme inequality we see today isn't the inevitable result of market forces but the product of deliberate policy choices that can be changed. It requires understanding that fair wages aren't charity—they're an investment in a more stable, prosperous, and just society that benefits everyone, including businesses themselves.

Summary

The evidence presented throughout this examination makes an undeniable case: fair wages benefit not just workers but businesses and the entire American economy. The current federal minimum wage of $7.25 per hour—unchanged since 2009—has created an unsustainable situation where millions of full-time workers cannot afford basic necessities despite their essential contributions to society. This isn't just unjust; it's economically counterproductive, undermining consumer spending, increasing costly employee turnover, and creating unnecessary social instability. The data consistently shows that higher minimum wages lead to stronger economic outcomes. States and companies that have raised wages have seen improved performance across multiple metrics. The myths used to justify low wages—that they'll cause job losses, drive inflation, or primarily affect teenagers—have been thoroughly debunked by real-world evidence. What emerges instead is a portrait of a system deliberately structured to benefit those at the top while exploiting vulnerable workers, particularly women and people of color. By raising the wage floor, we can create a more stable economic foundation that supports sustainable growth and shared prosperity. This isn't about charity or government overreach; it's about restoring balance to a system that has become dangerously tilted, recognizing that a thriving economy depends on workers who can fully participate as both producers and consumers.

About Author

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John Driscoll

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