“Minimum-Wage Increases; The Justice Of Redistribution”: To Not Be Victims, Workers Must Be Compensated For Value Of Their Work
As we enter the new year, 3 million low-wage workers in 21 states will gain a small increase in their wages, thanks to increases in state minimum wages. People you know will see a wage increase — your neighbor, your teenage kid, the person who serves you coffee and donuts.
The minimum-wage increase is a good thing because it increases income in a small way to the workers on the low rungs of our economy. A stagnant minimum wage redistributes income from workers to owners and managers and, ultimately, shareholders and customers. As the minimum wage has failed to keep up with inflation and productivity increases, our political economy has redistributed significant income from low-wage workers to owners over the past 40 years. One reason this happened is that workers have no leverage vis-à-vis corporations. They are price takers for their labor.
Minimum-wage increases reverse this redistribution so that workers win back a little bit of what they have lost. Minimum wages should be associated with value added instead of the powerlessness of workers to demand higher wages. But minimum-wage workers are not compensated for the value of their work for their employers. Raising the wage begins to remedy that undercompensation. If the wage goes too high, then employers will not hire workers, because their compensation exceeds the value of their work. But as we have seen, this is not the case with minimum-wage increases, which simply means that for the past decades workers have been paid less than the value of their work for employers.
How does increasing the minimum wage redistribute income? An increase in the wage results in a decrease in the payments to managers and profits for the establishment. That’s redistribution. We can argue that this might not happen because of productivity increases by the worker, but that merely means that the productivity increases (or a portion thereof) that might have gone to the employer instead go to the employee — hence redistribution from owners to workers. Redistribution also can occur between worker and customer. If a restaurant increases prices due to an increase in the minimum wage, in an attempt to avoid a decrease in profits, then the customers pay more. These customers have the disposable income to patronize restaurants. We can make the assumption that the customers have greater incomes than the people who wait on them. Thus, an increase is again redistributive, with the increase coming from increased prices paid by customers. Imagine: In Seattle an Amazon IT person goes out to lunch. (It feels like they all do.) Instead of paying $15 at the Skillet truck, they pay $17. They have lost $2, and the Skillet truck workers will have seen an increase in their wages. Redistribution to minimum-wage workers is good for them and pushes up the floor for the bottom half of all wages.
We too often equate increasing the minimum wage with living standards and poverty levels. This is dangerous for several reasons, including the fact that it sets a precedent for slicing and dicing the minimum wage: Do you have dependents? Do you pay for your own health insurance? How old are you? Are you paying for tuition yourself? All these are important questions, but taken to their logical conclusion, they move the minimum wage into welfare policy, so that an 18-year-old student could get paid less than a 25-year-old who is on her parents’ health insurance, and she might get paid less than a single mom with one kid, who could get paid less than a spouse in a household with three kids, etc. These are life situations best handled by social policy, social insurance and the appropriate provisions of public goods and services. But a focus on the minimum wage as welfare policy debases the fact that we should be raising the minimum wage because we should be insuring that workers are paid the value of their work. That is, such a focus disrespects workers as workers.
A lot of liberals don’t want to call increases in the minimum wage “redistributive.” It brings the reality of class conflict too close to the surface, apparently, and portrays workers as workers, not as victims. But in order for workers to not be victims, they must be compensated for the value of their work. That is not happening now, not in these United States. These state minimum-wage increases begin to reverse the damage, precisely because they are redistributive, from the owners of capital to the workers they employ. That is a good thing — and an excellent beginning for the new year!
By: John R. Burbank, ; The Blog, The Huffington Post, December 31, 2014
“Falling Further Into A Hole”: Wage Stagnation Puts The Squeeze On Ordinary Workers
Laurie Chisum works as a manager for a small office-equipment company in Orange County. She puts in about 30 hours a week on the job and spends much of her time at home caring for her mother, who is afflicted with Alzheimer’s disease.
She’s not complaining — she’s thankful to have a steady paycheck. But no matter how hard she works, it feels as if she just can’t get ahead.
“It’s been six years since anyone at our company has had a raise,” said Chisum, 52. “It seems like I just keep falling further into a hole. The price of gas has gone down, but nothing else has.”
It’s a refrain we’ve heard throughout the year: wealth gap, income inequality, wage stagnation.
No matter how you say it, the upshot is the same. The rich are getting richer and everyone else is feeling squeezed.
The wealth gap in this country is now the widest it’s been in decades, according to a report this month from the Pew Research Center.
The median net worth of upper-income families reached $639,400 last year. That’s nearly seven times as much as for those in the middle and almost 70 times what people at the lower end of the economic spectrum are making.
That’s not just a data point. It’s sad proof of a system that grossly favors the rich over ordinary working families — even when the economy is improving.
“Far too many people simply aren’t feeling the benefits of this economic growth,” said U.S. Labor Secretary Thomas Perez. “People are working harder and smarter, but their sweat equity hasn’t translated into financial equity.”
David Neumark, director of the Center for Economics and Public Policy at the University of California, Irvine, said that “people at the top have had phenomenal wage growth,” whereas “people at the lower end of the spectrum have seen their real purchasing power decline.”
Corporate profits are at or near record levels. So’s the stock market. Chief executives are doing just fine, thank you very much. A recent report found that some of the biggest U.S. companies pay their CEOs more than they pay in federal income taxes.
For ordinary working stiffs, the numbers are more sobering. Average hourly wages rose an itsy-bitsy 0.4 percent in November, according to the Labor Department. And this was seen as good news because average wages increased a pitiful 0.1 percent in October and didn’t budge in September.
For the year, average hourly earnings through November rose 1.7 percent, according to the Bureau of Labor Statistics. Since the end of the recession in 2009, they’ve gained about 11 percent.
At the same time, though, the consumer price index — the cost of living — has increased 1.3 percent since the beginning of the year and about 11 percent since the end of the recession.
Wages, in other words, are barely keeping pace with overall inflation. That’s why many people feel as if they’re stuck in a financial rut.
“You wonder from month to month what else you’re going to have to cut back on,” said Chisum, a single mom who also is caring for a grown son with Down syndrome.
Things look even tougher when you tighten the focus on specific expenditures, such as food and rent.
Average food costs have climbed 12.5 percent since the end of the recession, according to the bureau. Average residential rents have risen 12 percent. The average cost of healthcare has jumped nearly 17 percent.
In that context, the 11 percent gain in wages since 2009 means that each of these necessities has taken a bigger bite out of family budgets and has left fewer dollars for other expenditures, such as the occasional restaurant meal or movie.
“There’s no evidence I can see that this is going to change in the near future,” said Edward Lawler, a professor at the University of Southern California’s Marshall School of Business. “These are tough times for workers.”
One key issue, he said, is that labor unions have less clout than they once enjoyed. This denies workers a unified voice at the bargaining table.
Improvements in technology have boosted productivity and allowed employers to limit hiring. And it’s become easy to ship jobs abroad, where people are willing to work for a fraction of the cost of American workers.
All these factors conspire to keep wages down while profits and the compensation of senior managers skyrocket.
Earlier this month, Microsoft shareholders approved an $84-million pay package for the company’s new chief executive, Satya Nadella, making him one of the country’s highest-paid corporate leaders. He’s run the company for less than a year.
Boeing, Ford, Chevron, Citigroup, Verizon Communications, JPMorgan Chase and General Motors each paid their CEOs more last year than they paid in income taxes to Uncle Sam, according to a report from the Center for Effective Government and the Institute for Policy Studies.
A recent study by Harvard Business School found that most Americans believe chief executives make roughly 30 times what the average U.S. worker makes. That was indeed the case in the 1960s. Nowadays, CEOs pull down more than 350 times the average worker.
Chief executives are important people, to be sure. But is their importance to a company 350 times that of their employees? I doubt most people — other than CEOs — would think so.
More effective unions would help, as would programs to give workers the skills they need to compete better in the 21st century workplace.
Chris Tilly, director of the University of California, Los Angeles’ Institute for Research on Labor and Employment, said a key step would be establishing a national minimum wage of $10 to $12 an hour, and then indexing that wage to consumer prices so that paychecks automatically rise with inflation.
“That way you wouldn’t have to wait for Congress to act every year,” he said. “This would be a basic decision that wages would keep up with the cost of living.”
Perez, the labor secretary, also called for a higher minimum wage, plus “strengthening overtime protections” and “ensuring that workers have a strong voice in the workplace.”
A rising tide lifts all boats. At least that’s how we’re told things are supposed to work.
The reality is that the tide is rising in a big way for some, and they’re comfortably sunning themselves on the decks of their yachts.
For most others, that rising tide is more like a stormy sea threatening to swamp the family lifeboat.
We’ll likely hear a lot in the coming year about how the economy is improving and businesses are thriving. Chief executives will point toward fast-rising stock prices as proof that they’re worth every million they’re paid.
And everyone else will try to make their 0.4 percent hourly pay hike go as far as they can.
By: David Lazarus, Columnist, The Los Angeles Times; The National Memo, December 29, 2014
“The Real Deadbeats”: You’re Not The Deadbeat. The Waltons Are The Deadbeats
If you are tired of your taxpayer dollars being used to pay Wal-Mart employees the money that the Waltons refuse to pay them, then you might be interested in the large Black Friday protests that are occurring at 1,600 Wal-Mart stores in 49 states throughout the nation right now.
“I have to depend on the government mostly,” says Fatmata Jabbie, a 21-year-old single mother of two who earns $8.40 an hour working at a Walmart in Alexandria, Virginia. She makes ends meet with food stamps, subsidized housing, and Medicaid. “Walmart should pay us $15 an hour and let us work full-time hours,” she says. “That would change our lives. That would change our whole path. I wouldn’t be dependent on government too much. I could buy clothes for my kids to wear.”
The nation’s largest employer, Walmart employs 1.4 million people, or 10 percent of all retail workers, and pulls in $16 billion in annual profits. Its largest stockholders—Christy, Jim, Alice, and S. Robson Walton—are the nation’s wealthiest family, collectively worth $145 billion. Yet the company is notorious for paying poverty wages and using part-time schedules to avoid offering workers benefits. Last year, a report commissioned by Congressional Democrats found that each Walmart store costs taxpayers between 900,000 and $1.75 million per year because so many employees are forced to turn to government aid.
This isn’t complicated. If you have a job at Wal-Mart and you still need Medicaid, food stamps and subsidized housing, then you aren’t just getting shafted by the Waltons. You’re also being paid your missing wages by the federal government. You’re not the deadbeat. The Waltons are the deadbeats.
By: Martin Longman, Political Animal, The Washington Ponthly, November 28, 2014
“One Silver Lining For Liberals”: As Democrats Fall, Minimum Wage Thrives On Election Night
Democrats suffered a series of disastrous defeats on election night, decisively losing their Senate majority and falling short in several gubernatorial races in which they hoped to defeat Republican incumbents. But there was one silver lining for liberals: Tuesday’s elections proved, once again, that the minimum wage is a winning issue.
Initiatives to raise the minimum wage appeared on the ballot in four reliably Republican states. In all four, they passed easily.
Even as Alaskans appeared to boot Democratic senator Mark Begich out of office — he has declined to concede the race — they still overwhelmingly voted to raise their state’s minimum wage to $9.75 per hour. Tellingly, although his future colleagues in the Senate have steadfastly opposed any efforts to raise the federal minimum wage, Republican senator-elect Dan Sullivan announced in September that he would support the state initiative. This was a flip-flop from his position in the Republican primaries, and probably had something to do with polls showing the measure’s overwhelming popularity in the Last Frontier.
Similarly, Republican Tom Cotton’s easy victory over Democratic senator Mark Pryor didn’t stop Arkansans from boosting their minimum wage to $8.50 per hour. Like Sullivan, Cotton decided not to oppose the overwhelmingly popular measure. Although he voted against raising the federal minimum wage as a congressman, he announced in September that he would support the state hike “as a citizen.”
In South Dakota, Republican Mike Rounds easily defeated Democrat Rick Weiland and Independent Larry Pressler. But voters still raised their state’s minimum wage to $8.50 per hour. Rounds opposed the measure, while his opponents supported it.
And in Nebraska, Republican Ben Sasse defeated Democrat Dave Domina in a landslide, even as voters raised the state’s minimum wage to $9 per hour. Although Sasse opposed the measure, he avoided discussing the issue on the campaign trail.
More than half of the states in the nation now have minimum wages higher than the federal level.
Clearly, even in red states, there is broad support for one of the key planks of the Democratic economic agenda. But, just as obviously, it was not a determining factor in how midterm voters cast their ballots. This presents an opportunity for congressional Republicans.
The next round of Senate campaigns will take place in a far more liberal battleground than Tuesday’s elections did — and, if history is a guide, they will feature a more liberal electorate. This will put blue-state Republicans like Kelly Ayotte (R-NH), Mark Kirk (R-IL), and Pat Toomey (R-PA) in jeopardy. One easy way for them to blunt the economic attacks sure to come their way on the campaign trail would be joining with Democrats to raise the federal minimum wage.
While the House of Representatives has refused to consider a minimum-wage hike in the past, they may have a different attitude when the bill is coming from a Republican-controlled Senate. After all, they supposedly want to prove that they can govern. And, as Tuesday’s elections prove, conservative voters are unlikely to punish them for giving working families a boost.
By: Henry Decker, The National Memo, November 5, 2014
“Policies That Are Simply Repugnant”: Beneath The Republican Wave, Voters Still Reject Right-Wing Ideology
In the wake of a “wave election” like the 2014 midterm, Americans will soon find out whether they actually want what they have wrought. The polls tell us that too many voters are weary of President Obama, including a significant number who actually voted for him two years ago. Polls likewise suggest that most voters today repose more trust in Republicans on such fundamental issues as economic growth, national security, and budget discipline. But do they want what Republicans in control will do now?
If they are faithful to their beliefs, the Republican leadership in Washington will now seek to advance a set of policies that are simply repugnant to the public – most notably in the Ryan budget that they have signed up to promote (except for the caucus of ultra-right Republicans who consider that wild plan too “moderate”).
House Speaker John Boehner and Mitch McConnell, the new Senate Majority Leader, will have to try to repeal Obamacare — but they will likely be pushed further than that. Proposals to reduce Medicare to vouchers, privatize Social Security, and gut the Federal agencies that protect the health and safety of ordinary citizens and the preservation of clean water and air will soon emerge. They will continue to let the nation’s infrastructure crumble. And they will attempt to shift the burden of taxation from the wealthy to the middle class, working families, and even the poor.
Attention to all these basic questions has been deflected, for the moment, by demagogic campaigns blaring the Ebola virus and Islamist militants at the border, as well as disaffection with the president. But that level of distraction will not last, once the Republicans begin to bring forward the kind of extremist legislation that their Tea Party base (and the billionaire lobby surrounding the Koch brothers) will demand.
When Americans look at real issues – even in this era of dissatisfaction and distraction – they display little interest in Republican-style solutions. The most obvious examples in this election are the referendum ballots on the minimum wage, which passed by two-to-one margins both in deep-red states such as Arkansas and in suddenly purplish places like Illinois, which elected a Republican governor. In Alaska, South Dakota, and Nebraska, where Republican candidates romped at every level, voters passed state minimum wage increases by wide margins.
While GOP candidates in this year’s election set aside their “free-market” principles in the face of voter sentiment for higher wages – including Tom Cotton, who won a Senate seat in Arkansas – the Republican platform declared plainly in 2012 that the minimum wage “has seriously restricted progress in the private sector.” They aren’t simply against federal minimum wage increases, which they consistently oppose in Congress. They are against the very idea of a legal minimum wage, period.
In the president’s home state, where the election of a Republican governor is regarded as a political bellwether, the simultaneous rejection of right-wing ideology went beyond the minimum wage. Voters in Illinois overwhelmingly approved a “millionaire’s tax” – a special 3 percent state income tax surcharge on every resident earning more than a million dollars annually. Increasing taxes on the wealthy is, of course, anathema to the Republican right.
Even worse, from the Republican perspective, is that revenues from the millionaires tax will be dedicated to public education – another element of American democracy that the GOP constantly seeks to undermine.
Finally, the Illinois electorate approved a law mandating insurance coverage of prescription birth control, directly repudiating the Hobby Lobby decision by the Supreme Court’s right-wing majority. Like the minimum wage and the millionaires tax, this referendum was advisory and not legally binding. Republicans mocked all three as obvious attempts to draw Democratic voters to the polls. And as a political ploy, if that is what those ballot questions represented, they did not succeed.
But taken with the minimum wage referenda in other, more conservative states, they appear to represent prevailing sentiment among the American people.
Today, Republicans have every reason to celebrate a smashing victory that had very little to do with ideas and policies – and everything to do with an unpopular president’s streak of bad luck. What will happen when the right begins to implement its extremist ideology remains to be seen.
By: Joe Conason, Editor in Chief, The National Memo, November 5, 2014
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