As fast-food workers strike across the nation, progressives must separate fact from fiction in order to secure a living minimum wage.
Fast-food workers are going on strike from New York to Seattle to demand higher wages, highlighting the never-ending controversy over the consequences of raising the minimum wage. Many news stories seem to suggest that economists have decided a higher minimum wage will cause job loss. However, with more analysis, we undercover the truth: there is no clear link between a higher minimum wage and reduced employment.
John Schmitt, a Senior Economist at the Center for Economic and Policy Research, reported in February 2013 that multiple meta-studies (studies that use statistical techniques to analyze a large number of separate studies) found that for both older and current studies alike, there is no statistical significance in the effect of an increased minimum wage. Put plainly, if the effect is not statistically significant, then there is no proven effect— increases in the minimum wage do not cause job loss.
Accordingly, a few weeks ago, over 100 economists at organizations ranging from the Center for American Progress to Boston University signed a petition in support of increasing the minimum wage. They present current research from well-established organizations such as the National Bureau of Economic Research that shows there are no negative employment effects from minimum wage increases. This includes the most comprehensive data available, based on the increasingly accurate testing that has occurred as more and more states increase minimum wage levels. Even more importantly, this recent series of studies uses cutting-edge econometric techniques to control for extraneous variables such as economic downturns and geographic effects. When economists do that, they find that minimum wage increases do not reduce employment.
Logically, this makes a lot of sense. A higher minimum wage is a win-win situation economically: Employees have more money to be consumers and are more productive, while businesses wind up reducing costs in the long run, since they won’t have to spend as much money hiring and training new workers (by analyzing data from five separate studies, economists representing the Political Economy Research Institute found that McDonald’s could easily make up for the costs of a higher minimum wage with a mere five-cent price increase on Big Macs). It’s just as Henry Ford realized—when he paid his workers more, they became part of his customer base, making his company even more profitable. Increasing the customer base and expanding customer pockets helps stimulate the entire economy, badly needed in the current recession.
So if we have no evidence linking high wages to job loss, our next question is: Are higher wages needed as a poverty reduction tool?
Currently, the 2013 federal poverty guidelines stipulate $23,550 for a family of four as poverty level. A $7.25 minimum wage currently nets the protesting fast-food workers $15,080 a year if the workers are lucky enough to work 40 hours a week. In a typical household with two parents and two children, parents who make $7.25 an hour earn far below the living wage of $13.55, according to an MIT wage calculator. The numbers become even starker when you separate out true living expenses: food, medical care, housing, transportation, and other needed expenses add up to a required $37,540 annual income before taxes, which is notably different from the poverty guidelines that the U.S. Department of Health & Human Services set. Even if the two parents worked 40 hours a week for 52 weeks, they would only earn $30,160 in total, significantly below the resources they need to live. Moreover, these estimates are only for a typical nuclear family. The struggle that single-income families, large families, or families living in high-cost cities go through is exponentially higher.
The buying power of the minimum wage has steadily been waning due to the effects of inflation for the past 40 years. When prices increase, a worker’s paycheck buys less and less. To put it in perspective, we look to another brief by John Schmitt: If minimum wage had continued to match productivity growth, it would have been $21.72 per hour in 2012. If we only adjust for the cost of living, a minimum wage pegged to inflation would be $10.52.
A huge bulk of evidence makes the case that increasing the minimum wage is a doable, efficient, and necessary change for the economy. This change needs to happen now. We as Americans have a moral obligation to make sure that other Americans who are working hard to support themselves and their families are able to make a living.
By: Emily Chong, The National Memo, August 8, 2013
I’ve just begun my second four-year term as president of the National Organization for Women. I was reelected — by acclamation, I’m proud to say — at NOW’s 2013 Conference in Chicago over the July 4th weekend.
My vision for the next four years of activism begins with something that’s long overdue — the election of a women president of the United States.
And not just any woman. A feminist woman who will stand up for our issues against those who would turn the clock back to the 1950′s.
Women need to be thinking — and acting — for the long-term, not just for this year’s elections or next year’s. We need to be preparing for the next president, and the ones after that. That’s what our adversaries have been doing.
As the grassroots arm of the women’s movement, NOW is strong and getting stronger. We are focusing our power — the power of a whole lot of pissed-off women — identifying targets and achieving goals.
As we look towards the 2014 elections, we know that the stakes couldn’t be higher. The radical fringe that controls the Republican party is chomping at the bit for a replay of 2010, and this time they mean to take over the Senate as well as the House.
The Supreme Court has just made our job harder by eviscerating Section 5 of the Voting Rights Act. Now dozens of state and local jurisdictions, freed from having to pre-clear changes in their voting laws with the U.S. Department of Justice, will race to erect new barriers against voting by such “undesirable” voters as people of color, seniors, immigrants and younger citizens.
We are committed to restoring the Act, and correcting the Supreme Court’s sordid attempt to enhance the political power of those who already have so much.
Beyond our electoral challenges, NOW is doubling down on fighting for women’s economic security. We support the initiative launched last week by House Democratic Leader Nancy Pelosi, Rep. Rosa DeLauro (D-CT), Congresswoman Doris Matsui (D-CA), Congresswoman Donna Edwards (D-MD), and House Democratic women to address real economic needs facing women and families: ensuring equal pay for equal work, promoting work and family balance, and providing access to quality, affordable child care.
As Congresswoman Rosa DeLauro said,
Women are really struggling financially. They are looking for an increase in the minimum wage and equal pay, so they can raise their income, support their families and have a chance for a better life. So today, 165 years after the Women’s Rights Convention at Seneca Falls, we are launching a woman’s economic agenda to address these severe financial pressures. Raising wages for millions of struggling women is central to ensuring work pays for them and their families. Closing the wage gap, increasing the minimum wage, expanding educational opportunities and supporting women entrepreneurs are crucial to making sure that women — and America — succeed.
Of course, wage security isn’t the only linchpin of economic equality for women. We need access to the full range of reproductive health services, because, as this Valerie Tarico column in the Huffington Post says, “Anybody who says that talking about reproductive rights is a distraction from talking about economics is not running the numbers.”
Unintended pregnancies push women out of the workforce, keep women from earning their full potential as business leaders, contribute to absenteeism and lost wages and throw state and federal budgets out of whack. According to the Guttmacher Institute, every public dollar spent on contraception saves three dollars that would otherwise be spent on Medicaid payments for pregnancy-related and newborn care.
Another enormous economic burden facing women is the crushing cost of student loans. As Elizabeth Warren, the sponsor of the Bank on Student Loan Fairness Act has said,
Students owe more than $1 trillion in student loan debt — more than all the credit card debt in the entire country. But they didn’t go on a shopping spree at the mall–they did exactly what we told them to do. They worked hard, they played by the rules, and they got an education.
As I wrote in this column for the Huffington Post, because women are paid less than men are paid after college, student loan repayments eat up a larger part of women’s earnings.
Like a bad penny, economic insecurity follows women through school, in the workplace, at home, and far too often, in what should be a safe and secure retirement.
This year, we are rolling out NOW’s Campaign to Break the Social Security Glass Ceiling to add a good offense to our ongoing defense against cuts in this crucial program.
We are calling for a range of improvements in benefits for women — including a caregiver credit, so women will no longer be penalized in their retirement years for having dropped out of the paid workforce to care for children or family members; a higher minimum benefit for low-wage workers (who are, very disproportionately, women); modernized rules for divorced and widowed spouses; and equal treatment for same-sex couples and their families — and we show how to pay for it by requiring the wealthiest to pay their fair share into the system.
Simultaneously, our national action campaign to Let Them Put a Ring On It expands and deepens NOW’s commitment to achieving equal marriage rights in all states, at all levels of government. We’ll engage NOW’s chapter leaders and activists to press for passage of the Respect for Marriage Act, which would repeal DOMA including the provisions not struck down by the Supreme Court. And we’ll ramp up our work with coalition partners in key states to reverse anti-marriage measures and pass laws recognizing the full rights of loving, committed same-sex couples.
As NOW feminists, our goal is nothing short of radical inclusiveness, as we work to build an organization, a movement, and a society that values diversity and upholds respect for every single woman and girl, no matter where she comes from, what she looks like, where she works or who she loves. We are stronger together, and united for equality.
By: Terry O’Neill, President, National Organization for Women; The Huffington Post Blog, August 5, 2013
“Big Money Begets Massive Influence”: How The Koch Brothers Are Buying Silence Without Spending A Dime
Between buying elections, billionaire brothers Charles and David Koch shop for big pieces of American media and culture. And, hey, why not?
We already knew of the Kochs’ efforts to buy Tribune Company, the parent of the Los Angeles Times and the Chicago Tribune, among other major newspapers. Then, last week, The New Yorker‘s Jane Mayer took a thoughtful, in-depth look at the machinations that led New York’s PBS station, WNET, to pull from the air a documentary critical of David Koch, one of the station’s biggest funders. The story raises plenty of questions about the extent to which the public owns public media and the role of money in the arts and culture (see anything at Lincoln Center’s David H. Koch Theater lately?). But it also provides a rare intimate look at what happens when big money begets massive influence, often without a dime changing hands.
Mayer describes the fate of two documentary films. One took on income disparities in America by profiling the inhabitants of one tony Park Avenue building — including David Koch. Under pressure, WNET aired the film but, in a highly unusual concession, offered Koch airtime to rebut it after it aired. The second film, “Citizen Koch,” made by the very talented, Academy Award nominated team of Tia Lessin and Carl Deal, explored the influence that Koch and others like him have on our elections in the post-Citizens United world. But in the face of Koch’s wrath, the film’s distributor, a public television player with a history of gutsy moves, uncharacteristically lost its stomach for the fight and dumped the film entirely. Regardless, Koch decided to not give a hoped-for gift after the first film aired. Without lifting a finger or even taking out his checkbook, Koch cast a pall over the documentary film world.
The process that led to “Citizen Koch” being pulled from the airwaves illustrates exactly the point that Lessin and Deal’s film makes: Money can not only buy action in our democracy, it can also buy silence. As former Republican presidential candidate Buddy Roemer points out in the film, “Sometimes it’s a check. Sometimes it’s the threat of a check. It’s like having a weapon. You can shoot the gun or just show it. It works both ways.”
Koch and his brother Charles, both billionaire industrialists, pledged to spend a whopping $400 million on the 2012 elections, the overwhelming majority of it on behalf of Republican candidates. But that doesn’t just mean that Republicans are jumping to please the brothers — it means that many of those in positions of influence, regardless of their political leanings, need to take into account whether or not it’s worth the trouble of unnecessarily antagonizing the Kochs. Just as the public is unlikely to hear about the film PBS didn’t run, it’s almost impossible to know about the principled progressive stands that our allies in government decided not to take.
Koch’s billions are a formidable political weapon, even without owning any influential newspapers. Thanks to the Supreme Court’s ruling in Citizens United, it’s a more powerful weapon than ever, and we know it’s having an impact even when they don’t choose to deploy them. The result is a distorted government that responds to the whims of billionaires more easily than the needs of ordinary Americans.
As activists work to undo the damage being done by Citizens United, one of our main challenges is reminding voters of the dangerous, invisible effects that decision has on the country. It’s a remarkable irony that by trying to hide a film about the danger of money in politics, the Kochs may have made it clearer than ever before.
By: Michael B. Keegan, The Huffington Post, July 31, 2013
Jobs are returning with depressing slowness, and most of the new jobs pay less than the jobs that were lost in the Great Recession.
Economic determinists — fatalists, really — assume that globalization and technological change must now condemn a large portion of the American workforce to under-unemployment and stagnant wages, while rewarding those with the best eductions and connections with ever higher wages and wealth. And therefore that the only way to get good jobs back and avoid widening inequality is to withdraw from the global economy and become neo-Luddites, destroying the new labor-saving technologies.
That’s dead wrong. Economic isolationism and neo-Ludditism would reduce everyone’s living standards. Most importantly, there are many ways to create good jobs and reduce inequality.
Other nations are doing it. Germany was generating higher real median wages until recently, before it was dragged down by austerity it imposed the European Union. Singapore and South Korea continue to do so. Chinese workers have been on a rapidly-rising tide of higher real wages for several decades. These nations are implementing national economic strategies to build good jobs and widespread prosperity. The United States is not.
Any why not? Both because we don’t have the political will to implement them, and we’re trapped in an ideological straightjacket that refuses to acknowledge the importance of such a strategy. The irony is we already have a national economic strategy but it’s been dictated largely by powerful global corporations and Wall Street. And, not surprisingly, rather than increase the jobs and wages of most Americans, that strategy has been increasing the global profits and stock prices of these giant corporations and Wall Street banks.
If we had a strategy designed to increase jobs and wages, what would it look like? For starters, it would focus on raising the productivity of all Americans through better education — including early-childhood education and near-free higher education. That would require a revolution in how we finance public education. It’s insane that half of K-12 budgets still come from local property taxes, for example, especially given that we’re segregating geographically by income. And it makes no sense to pay for the higher education of young people from middle and lower-income families through student debt; that’s resulted in a mountain of debt that can’t or won’t be paid off, and it assumes that higher education is a private investment rather than a public good.
It would also require greater accountability by all schools and universities for better outcomes — but not just better test results. The only sure thing standardized tests measure is the ability to take standardized tests. Yet the new economy demands problem-solving and original thinking, not standardized answers.
Better education would just be a start. We would also unionize low-wage service workers in order to give them bargaining power to get better wages. Such workers — mostly in big-box retailers, fast-food chains, hospitals, and hotel chains — aren’t exposed to global competition or endangered by labor-substituting technologies, yet their wages and working conditions are among the worst in the nation. And they represent among the fastest-growing of all job categories.
We would raise the minimum wage to half the median wage and expand the Earned Income Tax Credit. We’d also eliminate payroll taxes on the first $15,000 of income, making up the shortfall in Social Security by raising the cap on income subject to the payroll tax.
We’d also restructure the relationships between management and labor. We would require, for example, that companies give their workers shares of stock, and more voice in corporate decision making. And that companies spend at least 2% of their earnings upgrading the skills of their lower-wage workers.
We’d also condition government largesse to corporations on their agreement to help create more and better jobs. For example, we’d require that companies receiving government R&D funding do their R&D in the U.S.
We would prohibit companies from deducting the cost of executive compensation in excess of more than 100 times the median compensation of their employees or the employees of their contractors. And bar them from providing tax-free benefits to executives without providing such benefits to all their employees.
And we would turn the financial system back into a means for investing the nation’s savings rather than a casino for placing huge and risky bets that, when they go wrong, impose huge costs on everyone else.
There’s no magic bullet for regaining good jobs and no precise contours to what such a national economic strategy might be, but at the very least we should be having a robust discussion about it. Instead, economic determinists seem to have joined up with the free-market ideologues in preventing such a conversation from even beginning.
By: Robert Reich, The Robert Reich Blog, June 11, 2013
“Why Our Schools Are Segregated”: There Is Little Support For Aggressive Policies To Integrate Metropolitan Areas
In the May issue of Educational Leadership, I attempt to show how our misunderstanding of the origins of racial segregation stands in the way of efforts to narrow the black-white academic achievement gap.
Socially and economically disadvantaged children perform, on average, at lower levels of achievement than advantaged children. The achievement gap primarily results from disadvantaged children coming to school unprepared to take advantage of what schools have to offer, not primarily from inadequate teachers or schools. Children who come to school from households with poor literacy levels, who are in poor health, whose housing is unstable, whose parents are suffering the stress of unemployment, and who are themselves stressed as well in neighborhoods with high levels of crime and violence, cannot be expected to achieve, on average, as well as middle class children, even if all have high quality instruction.
Disadvantaged children’s obstacles to achievement are exacerbated when these children are concentrated in racially and economically homogeneous and isolated schools. Meaningful narrowing of the achievement gap will not be possible without breaking down these barriers and integrating black children into middle-class schools.
Otherwise informed opinion accepts that school segregation is “de facto” because schools are located in segregated neighborhoods, and that residential segregation today is also mostly “de facto,” the result of personal choices, financial means, or demographic changes.
Partly from this conviction, there is little support for aggressive policies, including race-conscious ones, to integrate metropolitan areas, a necessary precondition for meaningful school integration. The Supreme Court’s view, expressed in the Louisville-Seattle school integration case (“Parents Involved,” 2007), that there is no constitutionally mandated remedy for existing (“de facto”) segregation is also widely accepted.
Yet most Americans have forgotten that residential racial segregation, North and South, was created and perpetuated by, and continues to exist today because of, racially motivated and racially explicit federal, state and local banking regulation, mortgage guarantee, public housing, law enforcement, planning and zoning, highway and school construction, urban renewal and other policies that succeeded in their purpose of creating racially segregated metropolises. The racial segregation of major urban areas today offends the Constitution.
Familiarizing Americans with the history of state-sponsored segregation is necessary before support will be possible for policies to undo that segregation.
By: Richard Rothstein, Economic Policy Institute, June 10, 2013