The struggle between cities governed by progressive politicians and state institutions run by rural representatives took a strange turn in Ohio when, to prevent Cleveland from raising the minimum wage to $15, GOP state senators attached to a bill concerning a ban on bestiality a ban on raising the minimum wage in cities. The bill also included something concerning pet stores and another thing that gave wireless companies more power to place antennas without interference from a community.
But the question we must ask is: Why are so many rural representatives so concerned about what happens in the city? The small town or barns they represent can keep their low wages. That's fine with the city. What has a rural representative got to gain from managing the affairs of a city? In fact, by their own reasoning, a small town with low wages should attract business from expensive cities. So, why this insistence by rural representatives on low wages in cities? The fact that it makes no sense exposes the fact that low wages are not really about keeping costs low. The economic answer to low wages is, yes, strong but inadequate. The left needs to come to terms with this inadequacy, otherwise we will continue to fight the same, very limited battle with these politicians who use rural votes to keep the very rich in power.
To begin with, one of three main reasons for low wages is to keep the working class and the left fighting for higher wages. Yes, there is the basal reason that low wages mean more money for CEOs and shareholders. But this reason, which has connections to what is known as vulgar Marxism (base/superstructure), provides only an economic answer but not a political one (the political being in the superstructure of society—its laws, culture, entertainment, and so on). But it is as important, if not more important, to be aware of or be able to provide an answer to the political advantages of the low wage, one of which is it ties up the left. Indeed, it may even exhaust all of their political resources to this one, really absurd cause. Why absurd?
It is very well known that reasonable wages, wages that make life (with its necessities, which include its pleasures) affordable, improve productivity and the alignment between a firm's management and its employees. Costco, the world's third-largest retailer, pays an "average wage of almost $21 per hour," makes good profits and has a stable workforce, the latter being the source and cementing process for institutional memory (IM). Not enough is said about about the importance of IM in commerce because mainstream economists and the business press keep going on and on about the spirit and greatness of the entrepreneur. But IM, which is social rather than individualistic in nature, helps to cut costs by the reduction of redundancies, errors, and relearning. In fact, the developmental economist Ha Joon Chang argues in the paper "Institutions and economic development: theory, policy and history" that one of the things that makes a rich country rich and poor country poor is that a poor country, with its desperately low wages, cannot develop a good number of commercial institutions that are gravid-heavy with IM. The value added in high-income countries is made possible by IM. This is why, say, Zimbabwe cannot manufacture airplanes. It is condemned to low wages, which, in the long run, are more expensive for a firm than reasonable wages.
So, why do we find, everywhere in US, this great pressure to keep wages low when they are not good for long-term economic growth? Not just to increase short-term profits (the economic) but more devastatingly, to keep the workers struggling for high wages (the political).
Another important reason for low wages is provided by the Italian Marxist (or the general intellect school) and, again leads to the political. This is how it goes: With financialized capitalism, wage increases are rented. By this the Italian Marxists, one of whom is Christian Marazzi, mean that in the past, you got a pay increase and you put it in your pocket. After financialization, which began in the 1980s, you must borrow (or rent) your pay increase from banks or credit card agencies. In this regime, which sustained effective demand at low or flat wages, and you can't become a high-income society with weak effective demand, household indebtedness exploded. And the immense pressure of this kind of indebtedness has had real political consequences. Because wages are stagnant, middle-class workers become more dependent on rising home values to make ends meet. This removes an important democratic check on speculation by chaining a large number of voters to Wall Street's real estate roulette table.
There is finally, for the right, the danger of decreasing the rural population. If, say, Cleveland thrives, which is what would certainly happen if it increased the minimum wage—the benefits of which are improvements in productivity, stability for IM accumulation, and demand-related multiplier effects—then you'd have job seekers flowing from the rural areas to this city, which like almost all big American urban areas (the exception being Phoenix), is politically progressive. This flow would drain the GOP's base/swamp. It is politically better for them to hinder the city's economic growth and to keep wages low for everyone.