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The business case for the Yankees raising their minimum wage

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With a new federal statute, the Yankees have an opportunity to better the minor league wage situation for everyone’s benefit.

MLB: Winter Meetings Kim Klement-USA TODAY Sports

On Friday, the United States Congress passed a $1.3 trillion omnibus spending bill, which will fund the entire federal government until September. Omnibus bills often have sweeteners littered throughout—this has the effect of winning over fence-sitters—and this year many in the baseball community were surprised that their favorite sport was specifically included.

The “Save America’s Pastime Act” was introduced by Reps. Cheri Bustos (D-Ill.) and Brett Guthrie (R-Ky.) in June of 2016, largely reacting to lawsuits from minor league players over minimum wage violations. Bustos dropped her support after criticism, but it was still included in the omnibus, for reasons unknown.

The bill amends the Fair Labor Standards Act of 1938 to include the following:

“[A]ny employee employed to play baseball who is compensated pursuant to a contract that provides for a weekly salary for services performed during the league’s championship season (but not on spring training or the off season) at a rate that is not less than a weekly salary equal to the minimum wage under section 6(a) for a workweek of 40 hours, irrespective of the number of hours the employee devotes to baseball related activities.”

This means that with all of the extra time that is necessarily involved with playing and practicing baseball, players will no longer be entitled to a minimum wage for those hours. This means that cases like Kyle Johnson’s, who attempted to sue over a $12,000 per year salary, will become incredibly more common, and now codified in law.

The good news is that the Yankees have the ability to correct this in their corner. Now, I’m under no illusions here; I understand that they are business, that they likely spent money on lobbying for said legislation, and their primary concern is controlling costs. Which is why I’m not going to argue that they can embrace the better angels of their nature against their own interests; I’m going to argue that the normative “good” aligns with their best interest in the long term.

Here’s some interesting math from a recent Deadspin article courtesy of Emma Baccellieri:

“Say that a club decides to invest here and pay their 200 minor-leaguers a monthly average of $3,000, which would come out to a yearly total of $7.2 million. Not $7.2 million more than what the club is currently paying, but $7.2 million total.”

For the Yankees, it would probably cost even less than that to establish a higher floor. In a four year-old FanGraphs piece from Kiley McDaniel detailing how the team ultimately signed minor league free agent Yangervis Solarte, there was this interesting tidbit:

“Logic follows that in this sort of situation, Solarte would sign with one of the teams that spends up to $20,000 per month... The Yankees ended up signing him last offseason for $120,000... with a split contract (meaning he’d make more than the MLB minimum if he is in the big leagues: $515,000 in this case instead of the $500,000 minimum), a Spring Training invite, provisions to leave for an Asian professional club during the year if he chooses and a guaranteed $66,000 salary... Rival clubs tell me that with other minor league free agents, the Yankees will routinely go up to $30,000 or $35,000 per month, include bonuses in addition to that salary, guarantee salaries... Why don’t other teams spend what amounts to a trivial amount of money to get the minor league free agents that their scouts and analysts are telling them to target? I still haven’t gotten a satisfactory answer after asking a half dozen front office people.”

This is a good thing! While this doesn’t even touch the players drafted and controlled by the other 29 teams, it at least establishes some sort of marketplace for minor league free agents to bid up to a living wage. The problem is, no one deserves to merely bid up to a living wage. And considering the Yankees seem to adequately pay quite a few of their minor league players, the next logical step is guaranteeing a $50,000 per year salary floor for every farm hand.

If every single player had a living wage, you can guarantee a non-trivial percentage would be inclined to stick with the game, or sign from an Indy League, or come out of retirement, or the like. The percentage of these players that actually produce 1 WAR is small, but all you need is one for it to pay off considering the nearly $8-10 million required to buy a win on the open market.

Luckily that’s not the total value of this exercise; it also includes the added developmental benefits of having a more comfortable life and environment to train, and the ability to train instead of work in the offseason. If the benefit added even 0.01 WAR to each player’s lifetime projection, that could yield up to two wins to the entire farm system. The Yankees are set for a legendary run, and it’s fun to think about the stars of today and tomorrow. But most players will be unknown, and largely living precarious lives. Not only would raising the minimum wage be just and right, but it would yield results at the margins that would only help the Yankees in their quest for another dynasty.