“Calling The Republican’s Bluff”: Who Cares About The Value Of Work?
Finding a way out of our current political impasse requires some agreement on what problems we need to solve. If anything should unite left, center and right, it is the value of work and the idea, in Bill Clinton’s signature phrase, that those who “work hard and play by the rules” ought to be rewarded for their efforts.
This is why one of last week’s most important and least noted political events was the introduction of the 21st Century Worker Tax Cut Act by Sen. Patty Murray, D-Wash. Murray favors a minimum wage increase to $10.10 an hour, but she also has other ideas that would help Americans at the bottom of the income structure to earn more.
Let’s start with principles, and then move to specifics.
There’s a new vogue among conservatives: to talk less about entrepreneurs and to stop talking altogether about “makers” and “takers.” Instead, many of the wisest heads on the right are urging a focus on work. The new emphasis reflects a realization that President Obama won in 2012 in large part because Mitt Romney and his party failed to convey empathy for those who live on wages and salaries.
An early champion of this view was Ramesh Ponnuru, a writer for National Review. “The Republican story about how societies prosper — not just the Romney story — dwelt on the heroic entrepreneur stifled by taxes and regulations,” he wrote shortly after the election. It is, Ponnuru added, “an important story with which most people do not identify.”
Writing earlier this year in National Affairs magazine, Henry Olsen of the Ethics and Public Policy Center was more biting. “Modern conservatives,” he argued, “have tended to discount the moral value of the average person, focusing instead on extolling the moral superiority of the great.”
Two other conservative thinkers, Reihan Salam and Rich Lowry, say the antidote is for Republicans to become “the party of work.” As they see it, work “stands for a constellation of values and, like education, is universally honored.” The GOP, they said, “should extol work and demand it.”
Yes, that last phrase — “demand it” — could lead to a darker kind of politics involving the demonization of those who simply can’t find jobs. Thus did Rep. Paul Ryan, R-Wis., get into trouble for mourning “this tailspin of culture, in our inner cities in particular, of men not working and just generations of men not even thinking about working.”
No matter what Ryan was trying to say, he seemed to be emphasizing the flaws of the unemployed themselves rather than the cost of economic injustice. My Post colleague Eugene Robinson captured this well: “Blaming poverty on the mysterious influence of ‘culture’ is a convenient excuse for doing nothing to address the problem.”
Nonetheless, many conservatives really do realize that they need to embrace hardworking Americans. But the question stands: What are they willing to do about it?
This is where Murray comes in. Her bill would rid the tax code of certain disincentives to work. She notes that “the second earner in a household often pays a higher tax rate on his or her earnings than the first.” Her plan would right this by offering a 20 percent deduction on the second earner’s income up to roughly $60,000 a year. (The benefit is focused on lower-income families, so it phases out at about $130,000 in joint annual income.) For a $25,000-a-year second earner in the 25 percent bracket, she says, this would mean $1,250 “back in their pocket for groceries, child care or retirement savings.”
She’d also expand the earned-income tax credit for workers without children and lower the eligibility age from 25 to 21. The changes would increase their maximum benefit from $487 to about $1,400 a year. It’s hardly nirvana. But it’s real money, especially for someone earning around $15,000 a year. The proposal would cover its roughly $15 billion annual cost by closing loopholes already identified as worthy of being scrapped by the GOP’s leading tax reformer, Rep. Dave Camp of Michigan.
You can, of course, look at what Murray is doing as a way of calling the conservatives’ bluff on the matter of work. But that will be true only if the right allows its bluff to be called.
In making their case, Salam and Lowry quoted Abraham Lincoln on the need “to advance the condition of the honest, struggling laboring man.” If conservatives are serious about this (and about the honest, laboring woman, too) they’ll join Murray in raising the minimum wage and in seeking a tax code more in harmony with the dignity of work.
By: E. J. Dionne, Jr., Opinion Writer, The Washington Post, March 30, 2014
“The Real Job Killers”: Forget What Republicans Say, The Real Job Killers Are Lousy Jobs At Lousy Wages
House Speaker John Boehner says raising the minimum wage is “bad policy” because it will cause job losses.
The U.S. Chamber of Commerce says a minimum wage increase would be a job killer. Republicans and the Chamber also say unions are job killers, workplace safety regulations are job killers, environmental regulations are job killers, and the Affordable Care Act is a job killer. The California Chamber of Commerce even publishes an annual list of “job killers,” including almost any measures that lift wages or protect workers and the environment.
Most of this is bunk.
When in 1996 I recommended the minimum wage be raised, Republicans and the Chamber screamed it would “kill jobs.” In fact, in the four years after it was raised, the U.S. economy created more jobs than were ever created in any four-year period.
For one thing, a higher minimum wage doesn’t necessarily increase business costs. It draws more job applicants into the labor market, giving employers more choice of whom to hire. As a result, employers often get more reliable workers who remain longer – thereby saving employers at least as much money as they spend on higher wages.
A higher wage can also help build employee morale, resulting in better performance. Gap, America’s largest clothing retailer, recently announced it would boost its hourly wage to $10. Wall Street approved. “You treat people well, they’ll treat your customers well,” said Dorothy Lakner, a Wall Street analyst. “Gap had a strong year last year compared to a lot of their peers. That sends a pretty strong message to employees that, ‘we had a good year, but you’re going to be rewarded too.’”
Even when raising the minimum wage — or bargaining for higher wages and better working conditions, or requiring businesses to provide safer workplaces or a cleaner environment — increases the cost of business, this doesn’t necessarily kill jobs.
Most companies today can easily absorb such costs without reducing payrolls. Corporate profits now account for the largest percentage of the economy on record. Large companies are sitting on more than $1.5 trillion in cash they don’t even know what to do with. Many are using their cash to buy back their own shares of stock – artificially increasing share value by reducing the number of shares traded on the market.
Walmart spent $7.6 billion last year buying back shares of its own stock — a move that papered over its falling profits. Had it used that money on wages instead, it could have given its workers a raise from around $9 an hour to almost $15. Arguably, that would have been a better use of the money over the long-term – not only improving worker loyalty and morale but also giving workers enough to buy more goods from Walmart (reminiscent of Henry Ford’s pay strategy a century ago).
There’s also a deeper issue here. Even assuming some of these measures might cause some job losses, does that mean we shouldn’t proceed with them?
Americans need jobs, but we also need minimally decent jobs. The nation could create millions of jobs tomorrow if we eliminated the minimum wage altogether and allowed employers to pay workers $1 an hour or less. But do we really want to do that?
Likewise, America could create lots of jobs if all health and safety regulations were repealed, but that would subject millions of workers to severe illness and injury.
Lots of jobs could be added if all environmental rules were eliminated, but that would result in the kind of air and water pollution that many people in poor nations have to contend with daily.
If the Affordable Care Act were repealed, hundreds of thousands of Americans would have to go back to working at jobs they don’t want but feel compelled to do in order to get health insurance.
We’d create jobs, but not progress. Progress requires creating more jobs that pay well, are safe, sustain the environment, and provide a modicum of security. If seeking to achieve a minimum level of decency ends up “killing” some jobs, then maybe those aren’t the kind of jobs we ought to try to preserve in the first place.
Finally, it’s important to remember the real source of job creation. Businesses hire more workers only when they have more customers. When they have fewer customers, they lay off workers. So the real job creators are consumers with enough money to buy.
Even Walmart may be starting to understand this. The company is “looking at” whether to support a minimum wage increase. David Tovar, a Walmart spokesman, noted that such a move would increase the company’s payroll costs but would also put more money in the pockets of some of Walmart’s customers.
In other words, forget what you’re hearing from the Republicans and the Chamber of Commerce. The real job killers in America are lousy jobs at lousy wages.
By: Robert Reich, The Robert Reich Blog, February 28, 2014
“Contrary To Popular Belief”: In Real Life, Higher Minimum Wage Doesn’t Kill Jobs
Economists and government officials endlessly speculate on the impact of raising the $7.25 federal minimum wage.
Most recently, a report by the nonpartisan Congressional Budget Office said that raising the federal minimum wage to $10.10 an hour might cut employment by 500,000 workers. That is balanced by the projection that higher pay could also boost about 900,000 people out of poverty.
But some places in the U.S. already have real-life experience with raising their minimum wage.
Washington state, for example, has the nation’s highest rate, $9.32 an hour. Despite dire predictions that increases would cripple job growth and boost unemployment, this isn’t what happened.
At 6.6 percent, the unemployment rate in December was a click below the U.S. average, 6.7 percent, and the state’s job creation is sturdy, 16th in the nation, according to a report by Stateline, the news service of the Pew Charitable Trusts.
In Seattle, where metropolitan-area unemployment is 5.3 percent, that $9.32 sounds so yesterday. The mayor and city council are practically in a race to see who can move faster and with more gusto to increase the minimum wage to $15 an hour.
Safe bet: They will make a move by summer. Seattle could then surpass San Francisco, another city that fancies its role as a laboratory. The City by the Bay’s minimum wage is the highest (not counting airport workers), at $10.74 an hour, and officials are discussing a new rate of about $15.
While Seattle and San Francisco are unrepresentative of the nation, they have helped pressure their states to raise their minimum wages. Fifteen years ago, Washington voters approved an initiative giving the lowest-paid workers a raise almost every year, with increases now tied to inflation. Those increases produced the highest U.S. rate, although California could lap that in 2016 when it hits $10 an hour. Washington governor Jay Inslee and Democratic legislators have been pushing to raise the statewide amount to almost $11 or $12 an hour, but that now seems unlikely this year.
Critics of the voter-approved increase in Washington said it would harm the economy and cause businesses to flee to lower-wage states, such as neighboring Idaho, where the minimum wage is $7.25 an hour. That didn’t happen, as the experience of Washington counties bordering Idaho show.
At the Olive Garden in Coeur D’Alene, Idaho, the spaghetti and meatballs are about $1.70 cheaper than at the Olive Garden about a half-hour away in Spokane, Washington. That may be explained by Idaho’s lower minimum wage, taxes, land costs or something else. A restaurant spokeswoman would only cite vague costs of products and of doing business in various locations. Whatever it is hasn’t stopped Olive Garden from operating two restaurants in the Spokane area.
Bruce Beckett, government affairs director of the Washington Restaurant Association, said he wasn’t aware of any restaurants bailing out of Spokane for Idaho. He said he had heard anecdotes about local restaurateurs buying cheaper supplies in Idaho — fairly small potatoes.
Two bakeries moved across the border a few years ago, said Robin Toth of Greater Spokane Incorporated, a Chamber of Commerce and economic-development organization, but she said those businesses cited Washington’s taxes, not its higher minimum wage, as the reason for doing so.
Yes, but what about businesses that can be based anywhere?
The Spokane chamber group had heard of one telemarketing company that had considered an operation in Spokane, then chose El Paso, Texas, instead. The company mentioned the higher minimum wage.
To be fair, it is difficult to measure what didn’t happen: the businesses that didn’t locate in the state, the job growth that vanished, the young people who missed opportunities. There is fear that adults are taking some jobs from teenagers. The state teenage unemployment rate is about 30.6 percent, compared with a national figure of 22.9 percent.
But over the years, states have raised the minimum wage above the federal level without major harm.
A study at the University of California at Berkeley compared hundreds of pairs of adjacent counties in states with differing minimum-wage rates and concluded that a higher minimum wage didn’t significantly affect employment.
“We found in these cross-border comparisons that employment did not decline on the higher wage side of the border,’’ said Michael Reich, one of three authors.
The research found that employers in places in the U.S. where the minimum wage was higher, as in eastern Washington, had an easier time recruiting and retaining workers, said Reich, who directs Berkeley’s Institute for Research on Labor and Employment.
“As a result, they saved on hiring and turnover costs, as well as the costs of not being able to fill all their vacancies,” he said. “Increased labor supply, together with small price increases in restaurants, could explain why we did not find employment moving to lower wage areas, such as in western Idaho.’’
Minimum-wage workers are younger, often single, perhaps working two jobs in leisure, hospitality, food preparation and serving. A single individual working full time and being paid Washington’s minimum wage earns more than the federal poverty level.
That changes if the earner is supporting a family. Maybe Seattle’s ascent into $15 territory — along with a few other cities — will eventually give Washington and other states the political will to follow this path. There is little real-life evidence to discourage them.
By: Joni Balter, The National Memo, February 24, 2014
“Minimum Truth”: The Hollow Argument Against Higher Wages
In the midst of a crucial political debate that plainly favored proponents of a higher minimum wage, the Congressional Budget Office dropped a bombshell headline this week. Increasing the minimum to $10.10 an hour – as demanded by President Obama and Democrats on Capitol Hill – will “cost 500,000 jobs.” At a moment when employment still lags badly, that assertion was potentially devastating.
Almost lost in much of the predictable media coverage was the CBO’s estimate that a minimum-wage increase would lift at least 900,000 workers and their families out of poverty – and boost incomes for at least 15 million more.
But as top economists have repeatedly pointed out, such damning employment numbers are fuzzy and unreliable, while the CBO’s poverty numbers probably underestimated the positive impact of a higher minimum.
Moreover, those 500,000-jobs-lost headlines were highly misleading, with the strong implication that more than half a million actual people would be laid off — which is wrong. In fact, the CBO number is meant to estimate the number of jobs that employers might not fill when workers leave, or the number of jobs that employers might not create as quickly if they must pay a higher wage. It doesn’t mean that people will lose their current jobs, but those people seeking low-wage jobs may have to look slightly longer to find them.
What about that nice round number of 500,000? Naturally it is rounded to the nearest hundred thousand, but more to the point is that the headlined number is simply the midpoint of an estimated range from “slight impact” or zero lost jobs on the low end to one million on the high end.
Such a million-job spread represents substantial uncertainty. Skeptics may consider the uncertainty even greater because the CBO report relied heavily on disputed assumptions by conservative economists – and diverged from the consensus of top US economists, who expect that moderate increases have a vanishingly small impact on employment.
But even if 500,000 fewer jobs are created in the short run, that somewhat notional cost must be weighed against the indisputable benefit to low-wage workers. As economist Dean Baker explains:
With 25 million people projected to be in the pool of beneficiaries from a higher minimum wage, this means that we can expect affected workers to put in on average about 2 percent fewer hours a year. However when they do work, those at the bottom will see a 39.3 percent increase in pay.
While overstating the negative effect of raising the minimum wage on jobs, the CBO study understated the positive effect on families living in poverty. Its estimate of 900,000 families lifted above the poverty line is based on computer simulations. But historical research into the effect of previous minimum-wage increases suggest a much more robust benefit to the working poor.
According to University of Massachusetts economist Arindrajit Dube, who has studied the effects of minimum-wage increases in recent decades, the impact on poverty is much more powerful than the CBO suggests. He quotes a study by the Hamilton Project, a centrist economic think-tank based at the Brookings Institution, which suggests that as many as 35 million families will benefit from an increase to $10.10 an hour due to “spillover effects” raising income among workers who already make slightly more than the minimum.
Dube’s studies of the historical effect of past minimum-wage increases indicate that raising the federal minimum to $10.10 would lift somewhere between 4.6 and 6 million households above the poverty line.
Raising the minimum wage will also reduce profiteering by large, highly profitable employers like Walmart and McDonalds, whose workers rely on government benefits – such as the Earned Income Tax Credit and food stamps – to supplement inadequate paychecks. Survey after survey reflects the strong public appetite for higher wages at the low end. But popular approval is not the only way that companies can actually benefit from improving workers’ earnings and livelihoods.
The Gap clothing chain just announced that its workers will soon receive better pay to bring them above the current federal minimum. Announcing that his company will voluntarily raise its lowest-paid workers to $9 this year and $10 next year, Gap CEO Glenn Murphy said he regards the expense as a “strategic investment” that would pay for itself many times over in better productivity and morale (as well as lower job turnover and training costs).
When the clear social benefits of raising wages are contrasted with the dubious warnings of lost jobs, there is no real argument. If we intend to address poverty and reduce inequality, higher wages across the workforce are imperative – but especially at the bottom.
By: Joe Conason, The National Memo, February 21, 2014
“Phony Experts On Retainer”: Fight Over Minimum Wage Illustrates Web Of Industry Ties
Just four blocks from the White House is the headquarters of the Employment Policies Institute, a widely quoted economic research center whose academic reports have repeatedly warned that increasing the minimum wage could be harmful, increasing poverty and unemployment.
But something fundamental goes unsaid in the institute’s reports: The nonprofit group is run by a public relations firm that also represents the restaurant industry, as part of a tightly coordinated effort to defeat the minimum wage increase that the White House and Democrats in Congress have pushed for.
“The vast majority of economic research shows there are serious consequences,” Michael Saltsman, the institute’s research director, said in an interview, before he declined to list the restaurant chains that were among its contributors.
The campaign illustrates how groups — conservative and liberal — are again working in opaque ways to shape hot-button political debates, like the one surrounding minimum wage, through organizations with benign-sounding names that can mask the intentions of their deep-pocketed patrons.
They do it with the gloss of research, and play a critical and often underappreciated role in multilevel lobbying campaigns, backed by corporate lobbyists and labor unions, with a potential payoff that can be in the millions of dollars for the interests they represent.
“It is the way of Washington now — and that is unfortunate,” said John Weaver, a Republican political consultant who has helped run several presidential campaigns. “Because if it’s not dishonest, it’s at least disingenuous.”
In this case, the policy dispute is over whether increasing the minimum wage by nearly 40 percent to $10.10 an hour within two and a half years would reduce poverty or further it.
Even if the legislation never passes — and it is unlikely to, given the political divide in Congress — millions of dollars will be spent this year on lobbying firms, nonprofit research organizations and advertising campaigns, as industry groups like the National Restaurant Association and the National Retail Federation try to bury it. Liberal groups, in turn, will be spending lots of money as they try to make the debate a political issue for the midterm elections.
The left has its own prominent groups, like the Center for American Progress and the Economic Policy Institute, whose donors include nearly 20 labor unions, and whose reports, with their own aura of objectivity, consistently conclude that raising the minimum wage makes good economic sense. But none has played such a prominent and multifaceted role in recent months as the conservative Employment Policies Institute.
The Employment Policies Institute, founded two decades ago, is led by the advertising and public relations executive Richard B. Berman, who has made millions of dollars in Washington by taking up the causes of corporate America. He has repeatedly created official-sounding nonprofit groups like the Center for Consumer Freedom that have challenged limits like the ban on indoor smoking and the push to restrict calorie counts in fast foods.
In recent months, Mr. Berman’s firm has taken out full-page advertisements in The New York Times and The Wall Street Journal and plastered a Metro station near the Capitol with advertisements, including one featuring a giant photograph of Representative Nancy Pelosi, the California Democrat who is a proponent of the minimum wage increase, that read, “Teens Who Can’t Find a Job Should Blame Her.”
These messages, also promoted on websites operated by Mr. Berman’s firm, including minimumwage.com, instruct anyone skeptical about the arguments to consult the reports prepared by the Employment Policies Institute, most often described only as a “nonprofit research organization.”
But the dividing line between the institute and Mr. Berman’s firm was difficult to discern during two visits last week to the eighth-floor office at 1090 Vermont Avenue, a building near the White House that is the headquarters for both.
The sign at the entrance is for Berman and Company, as the Employment Policies Institute has no employees of its own. Mr. Berman’s for-profit advertising firm, instead, “bills” the nonprofit institute for the services his employees provide to the institute. This arrangement effectively means that the nonprofit is a moneymaking venture for Mr. Berman, whose advertising firm was paid $1.1 million by the institute in 2012, according to its tax returns, or 44 percent of its total budget, with most of the rest of the money used to buy advertisements.
Disclosure reports filed by individual foundations show that its donors in recent years have included the Lynde and Harry Bradley Foundation, a longtime supporter of conservative causes. Mr. Berman and Mr. Saltsman would not identify other donors, but did say they included the restaurant industry. But its tax return shows that the $2.4 million in listed donations received in 2012 came from only 11 contributors, who wrote checks for as much as $500,000 apiece.
Mr. Saltsman, 30, who has an undergraduate degree in economics from the University of Michigan and previously worked for the federal Bureau of Labor Statistics, drafts dozens of letters to the editor and opinion articles for newspapers, arguing that increasing the minimum wage would hurt more than help. Other special institute projects included a recent survey of lawmakers who support the minimum wage increase asking if they pay their interns — a report The Daily Caller, a conservative online publication, then released, calling out the lawmakers with unpaid interns as hypocrites.
The major reports released by the institute are prepared by outside academics, like Joseph J. Sabia, an associate professor of economics at San Diego State University, who has collected at least $180,000 in grant money from Mr. Berman’s group over the last eight years to deliver seven separate reports, each one concluding that increasing the minimum wage has caused more harm than good — or at least no significant benefit for the poor.
“There is never a good time to raise the minimum wage,” Mr. Sabia said at a briefing in the Longworth House Office Building late last month that was co-sponsored by the institute, as he laid out the findings of his newest report to Capitol Hill staff members and reporters. “You are not reaching the poor workers you want to help.”
Mr. Sabia said in an interview late last month that his research conclusions were developed independently. “I don’t write advocacy policy briefs,” he said. His papers are also submitted to academic journals, which publish them after a peer-review process — a standard, he noted, that publications put out by left-leaning groups like the Economic Policy Institute often do not meet.
What is clear is that the reports by the Employment Policies Institute are a critical element in the lobbying campaign against the increase in the minimum wage, as restaurant industry groups, in their own statements and news releases, often cite the institute’s reports, creating the Washington echo chamber effect that is so coveted by industry lobbyists.
“Once you have the study, you can point to it to prove your case — even if you paid to get it written,” said one lobbyist, who asked not to be named because his clients rely on him to use this technique.
But some questions have been raised about the institute-funded work. Saul D. Hoffman, a professor of economics at University of Delaware, examined the employment data Mr. Sabia used for a 2012 paper funded in part by the institute. Mr. Hoffman concluded that the narrow cut of data Mr. Sabia picked was perhaps unintentionally skewed, and once corrected, it would have showed that the 2004 increase in New York State’s minimum wage had no negative impact on employment — the opposite of the conclusion the institute had proclaimed in its news releases.
Mr. Berman, 71, a onetime auto mechanic turned labor lawyer and restaurant industry executive, rejected any suggestion that his reports were based on bias or faulty data.
“I get very upset when people say we are putting out junk science and twisted economics, because that happens to be our criticism of other people,” Mr. Berman said in an interview at his office. Yet internal company documents show that members of Mr. Berman’s team — at least when they have been involved in some of the other corporate-backed projects — have discussed ways to massage academic data to change outcomes.
For example, an academic study published by researchers at the University of Southern California concluded that soda had higher concentrations of high-fructose corn syrup than advertised. Mr. Berman’s team, hired by the corn refining industry to defend its sweeteners, mobilized staff at his Center for Consumer Freedom to challenge the results.
“If the results contradict U.S.C., we can publish them,” said an email sent to Mr. Berman and other staff in October 2010 from a Berman employee at the time, referring to the University of Southern California report. The exchange became public recently as a result of a lawsuit between the sugar and corn refining industries. “If for any reason the results confirm U.S.C., we can just bury the data.” Mr. Berman said that the employee who wrote that email left more than a year ago and that such practices were not allowed at the institute.
Left-leaning groups like the Citizens for Responsibility and Ethics in Washington have filed legal complaints, arguing that the large payments to Mr. Berman’s for-profit firm may violate the law, an accusation that Berman and Company strongly disputes.
What is most important, said Lisa Graves, the executive director of an organization responsible for the online publication PR Watch, is that newspapers detail Employment Policies Institute’s corporate ties when they cite research it publishes. Such disclosure happened in less than 20 percent of the cases over a three-year period, an analysis by PR Watch found.
“They are trying to peddle an industry wish list, but mask it as if they are independent experts,” she said. “They are little more than phony experts on retainer.”
By: Eric Lipton, The New York Times, February 9, 2014
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