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A GLOBAL MINIMUM WAGE WOULD REDUCE POVERTY AND CORPORATE POWER  
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Lawrence S. Wittner
December 24, 2024
Foreign Policy in Focus
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_ The rich are growing astronomically richer while poverty reduction
has ground to a standstill. In today’s world of widespread poverty
and unprecedented wealth, how about raising the wages of the most
poorly-paid workers? _

Why there’s no global minimum wage. Wages are integral to the
fulfilment of work. Around the world, most countries have set a
minimum wage, but there are a few that argue against it., CNBC

 

This October, the World Bank reported
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percent of the global population―almost 700 million people―live
today on less than $2.15 per day,” while “44 percent of the global
population―around 3.5 billion people―live today on less than $6.85
per day.” Meanwhile, “global poverty reduction has slowed to a
near standstill.”

In early 2024, the charity group Oxfam International noted that,
since 2020, “148 top corporations made $1.8 trillion in profit, 52
percent up on 3-year average, and dished out huge payouts to rich
shareholders.” During this same period, the world’s five
wealthiest men “more than doubled their fortunes from $405 billion
to $869 billion,” an increase of $14 million per hour. As corporate
elites gathered in Davos for a chat about the world economy, 10
corporations alone were worth $10.2 trillion, more than the GDPs of
all the countries in Africa and Latin America combined.

The world’s vast economic inequality “is no accident,” concluded
a top Oxfam official. “The billionaire class is ensuring
corporations deliver more wealth to them at the expense of everyone
else.”

Although inequalities in income and wealth have existed throughout
much of human history, they have been softened somewhat by a variety
of factors, including labor unions and―in modern times―minimum
wage laws [[link removed]]. Designed
to provide workers with a basic standard of living, these laws create
a floor below which wages are not allowed to sink. In 1894, New
Zealand became the first nation to enact a minimum wage law,
and―pressured by the labor movement and public opinion―other
countries (including the United States in 1938) followed its lead.
Today, more than 90 percent of the world’s nations have some kind of
minimum wage law in effect.

These minimum wage laws have had very positive effects upon the lives
of workers. Most notably, they lifted large numbers of wage earners
out of poverty
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In addition, they undermined the business practice of slashing wages
(and thus reducing production costs) to increase profit margins or to
cut prices and grab a larger share of the market.

Even so, the growth of multinational corporations provided businesses
with opportunities to slip past these national laws and dramatically
reduce their labor costs by moving production of goods and services to
low-wage nations. This corporate offshoring of jobs and
infrastructure [[link removed]] gathered
steam in the mid-twentieth century. Initially, multinational
corporations focused on outsourcing low-skilled or unskilled
manufacturing jobs, which had a negative impact on employment and
wages in advanced industrial nations. In the twenty-first century,
however, the outsourcing of skilled jobs, particularly in financial
management and IT operations, rose dramatically. After all, from the
standpoint of enhancing corporate profits, it made good sense to
replace an American IT worker with an Indian IT worker at 13 percent
the cost. The result was an accelerating race to the bottom.

In the United States
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this export of formerly good-paying jobs to low-wage, impoverished
countries―combined with “free trade” agreements, a corporate and
government assault on unions, and conservative obstruction of any
raise in the pathetically low federal minimum wage ($7.25 per
hour)―produced a disaster. The share of private-sector
goods-producing jobs at high wages shrank, since the 1960s, from 42 to
17 percent. Increasingly, U.S. jobs were located in the low-paid
service sector. Not surprisingly, by 2023 an estimated 43
million Americans lived in poverty
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while another 49 million lived just above the official poverty line.
Little wonder that, in this nation and many others caught up in
corporate globalization, there was an alarming rise of right-wing
demagogues playing on economic grievances, popular hatreds, and fears.

If, therefore, wages in underdeveloped nations and in advanced
industrial nations are not keeping pace with the vast accumulation of
capital by the world’s wealthiest people and their corporations, one
way to counter this situation is to move beyond the disintegrating
patchwork of wage-floor efforts by individual nations and develop a
global minimum wage.

Such a wage could take a variety of forms. The most egalitarian
involves a minimum-wage level that would be the same in all nations.
Unfortunately, though, given the vast variation among countries in
wealth and current wages, this does not seem practical.
In Luxembourg, for example
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the average yearly per capita purchasing power is 316 times that of
South Sudan. But other options
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more viable, including basing the minimum wage on a percentage of the
national median wage or on a more complex measurement accounting for
the cost of living and national living standards.

Over the past decade and more, prominent economists and other
specialists
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made the case for a global minimum wage, as have a variety of
organizations
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an appropriate entity to establish it, they have usually pointed to
the International Labor Organization [[link removed]], a UN
agency that has long worked to set international labor standards.

The advantages of a global minimum wage are clear.

* It would lift billions of people out of poverty, thus enabling
them to lead far better lives.
* It would reduce the corporate incentive for offshoring by limiting
the ability of multinational corporations to obtain cheap labor
abroad.
* By keeping jobs in the home country, it would aid unions in
wealthy nations to retain their memberships and provide protection
against “corporate blackmail”―the management demand that unions
either accept contract concessions or get ready for the shift of
corporate jobs and production overseas.
* By raising wages in impoverished countries, it would reduce the
poverty-driven mass migration from these nations and, thereby, deprive
rightwing demagogues in wealthier countries of one of their most
potent issues.

Of course, higher labor costs at home and abroad would reduce
corporate profits and limit the growth of billionaires’ wealth and
power.  But wouldn’t these also be positive developments?

_[LAWRENCE S. WITTNER ([link removed] ) is
Professor of History Emeritus at SUNY/Albany and the author
of Confronting the Bomb
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University Press).]_

* Global minimum wage
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* Minimum Wage
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* economic inequality
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* poverty
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* corporate power
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* Globalization
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* neo-liberalism
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* Neoliberalism
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* Internationalism
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* north-south global divide
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