Despite that Karl Marx’s writings date back to the 19th century, his theory on alienation, commodities, and fetishism continue to have some relevance in today’s discussion on minimum wage. To understand the conflict in interest between consumers and workers, let’s consider how a capitalist reduces the cost of production. The capitalist either reduces labor cost or increases a product’s price. The latter is counterproductive since it will leads to less sales. So, the capitalist is inclined to opt for reducing labor cost.
What happens when the federal government sets a minimum wage? In the article “US Minimum Wage Hikes-Helping or Hurting the Workers?” Angelo Young reports how states across the United States have increased minimum wage between $7.40 and $9.04 (ibtimes.com). Does this benefit the working class? There are two sides of the story. At one end, advocates of the minimum wage increases suggest it will reduce poverty. At the other end, the opponents of minimum wage explain that it will lead to job loss.
The logic behind the opponent’s argument could be understood by Karl Marx’s exchange-value theory. Employers are only willing to pay for workers with labor power that generates gains for the company. If the minimum wage is increased, employers will have to pay their workers more, but the trick is only those who are employed. The utility of the worker to the employer depends on the productivity of the worker. So, employees, who are less productive and lead to losses, will be laid off. The less-productive worker’s labor power has no exchange-value. In the other hand, the workers who were more productive will reap benefits of the minimum wage hikes. The video “Truth about Minimum Wage” illustrates this concept. It shows how the employer will pay worker the minimum wage to those considered worth that value.
In the video, they present the option of increasing the price of product. Why is there this conflict of interest between the worker and consumer? The consumer is for one oblivious to the labor time invested in one commodity. A product is a result of an accumulation of labor. When the final product is complete, the labor time is obscured. The value is now thought to be a property of the object rather than of the workers’ labor. Karl Marx calls this the fetishism of commodities.
The person who buys the final product is ignorant to the social interactions in the production process. In the video “Tell Back on Jobs: Cooperation,” one can see how many workers help create an object like a pencil. Yet, the workers’ time investment is devalued and its value is now determined by a price tag. Yes, a higher price on a pencil can mean being able to afford to pay more workers higher minimum wages, without needing to resort to firing the lower-performing workers. Yet, why do we not pay more for a pencil? In this transaction, the consumer seeks to get the most for their money. For the customer, the pencil may not be worth the extra buck. The customer fails to understand the narratives of the workers who made the pencil.
In conclusion, minimum wage can increase unemployment if the minimum wage exceeds the use-value provided by the labor. If customers could afford and were willing to pay extra for a product, it could help save jobs by reducing cost to employer. It would enable the employers to pay the higher wages without it being a loss to their company.
Reference:
http://www.ibtimes.com/us-minimum-wage-hikes-helping-or-hurting-workers-702498 http://www.youtube.com/watch?feature=player_detailpage&v=8wlFOx4NK-I#t=27s