“It’s Not Just About Burger Flippers”: A Preview And A Parable, McDonald’s And The Fate Of The Middle Class
In recent weeks fast-food workers have staged dramatic one-day strikes in cities across the country, demanding a $15 starting wage, instead of about $8 on average at places like McDonald’s. The strikes have prompted much debate about fast food and the cost of a Big Mac. But this moment isn’t just about burger-flippers—it’s about the realization that the American middle class has been hollowed out to the point of decimation. Today, one in four jobs is low-wage, and at current pace it will be one in two jobs by 2024—which means that what fast-food companies pay people today will affect us all.
Companies like McDonald’s may protest that their margins are too thin, their workforces too transient to justify a $15 minimum wage. Yet in other countries the company pays exactly that wage and manages to make profits while charging only a few cents more for burgers. In this sense, fast-food workers are like water drops on a hot griddle: once they’re vaporized, everyone else is about to get cooked. And as these strikers are now showing, more and more low-wage workers in America, even ones that aren’t unionized, are tired of being vaporized.
A $15 minimum wage is the key building block to “middle-out economics” (a concept I’ve helped shape, along with my co-author Nick Hanauer). Middle-out economics, as opposed to trickle-down, says that the best job creator is a healthy middle class with the purchasing power to generate and sustain demand. It says – as Henry Ford figured out a long time ago – that workers aren’t costs to be cut; they are customers to be cultivated. Investing in that middle class makes more sense than expanding tax breaks for the wealthy.
A middle-out policy agenda includes a more progressive tax system, but also focuses on high-skill education and fostering more entrepreneurs. And it crosses left-right lines: after all, the rock-bottom wages of a “free enterprise” like Wal-Mart leads to more “big government” spending on food stamps and Medicaid. A $15 minimum wage would take tens of millions off the dole and turn them into more robust consumers and less dependent citizens.
The fast-food strikes have framed the issue and are a sign of a reorganization of labor itself. Because traditional unions now cover only a tiny slice of the private workforce, new forms of organized, joint action are emerging to pressure employers for a better deal, such as coalitions of domestic workers in various states, or advocacy centers for oft-abused guest workers.
Too many American think that the plight of the low-wage worker has nothing to do with them. In fact it is both a preview and a parable. The fate of the middle class rests, in part, on whether more Americans learn to see the fate of fry cooks as their own.
By: Eric Liu, Time Magazine, August 7, 2013
“Blessed Are The Rich”: Charles Koch Is Such A Clueless Visionary
One thing I’ve come to value in the last couple of years is the altruism and keen economic insights of the fourth-richest man in America: Charles Koch.
Even though Koch was raised rich and has now amassed a personal fortune of about $34 billion, he recently gave us a deeper sense of his true worth, measured not in dollars, but in values.
“We want to do a better job of raising up the disadvantaged and the poorest in this country,” he declared. Excellent thought — FDR couldn’t have put it better! Noting that a big problem for the poor is that the Powers That Be “keep throwing obstacles in their way,” Koch cut to the chase, saying, “We’ve got to clear those out.”
Yes, Charlie, I’m with you! Clear out such barriers as the offshoring of middle-class jobs, union busting, poorly funded schools and the lack of affordable health care, housing and child care.
But, alas, that’s not at all what Koch had in mind as obstacles to be cleared out. Rather, he proposes to “help” poor people by eliminating — ready? — “the minimum wage.” Why? Because, explains this clueless son-of-the-rich, having a wage floor “reduces the mobility of labor.”
In case you don’t dwell in the plutocratic, narcissistic, Ayn Randian fantasyland where the Kochs hang out, “labor mobility” is right-wing psychobabble for social Darwinism. Remove all remnants of America’s economic safety net, they coldly theorize (while wallowing in their nests of luxury), and the poor will be “freed” to become billionaires.
As Charles puts it, if the disadvantaged had no protections in the workplace and no government programs to ameliorate their poverty, they would then have to scramble just to live, thus freeing them from reliance on society’s helping hand. Freeing them to do what? Well, Koch says, they could then “start a business … drive a taxicab … become a hairdresser.”
What a visionary he is! Where you and I might see people trapped in debilitating poverty, Charles sees a Brave New World of billionaire hairdressers!
But he’s not the only 1-percenter having utopian visions for hard-hit Americans. For example, I can’t begin to tell you how grateful America’s homeless people are going to be once they hear about Andy Kessler, who has been thinking long and hard about their plight, selflessly seeking ways to eradicate intractable poverty.
Kessler is a former hedge-fund whiz, which means he was in the business of making … well, money. Beaucoup bundles of it. But having seen his 16-year-old son volunteer at a homeless center, he was motivated to develop a plan to solve homelessness — and here it is: Stop dishing out soup to those people, and shut down all those damn shelters!
The homeless problem, he recently wrote in an op-ed piece for The Wall Street Journal, stems from “all this volunteering and charitable giving” by do-gooders like his son. Homeless folks ought to be working, he lectured, but they’re not, “because someone is feeding, clothing and, in effect, bathing them.”
Golly, Andy, I recall that Jesus said something about our Godly duty to feed and clothe the needy — and even to wash the feet of the poor.
But apparently, Jesus just didn’t grasp the essence of true morality. “Blessed are the rich!” is Kessler’s spiritual mantra. “Where does money come from … to help the unfortunate?” he asked. And yea, I say unto thee, the Holy Hedge-Funder answered his own deep question: It comes from “someone (who) worked productively and created wealth.”
Thus, he sagely concluded, the answer to poverty, to truly helping the poor, is not to pamper the takers, but to provide more tax breaks for the makers of wealth (like him) — the ones who produce “good old-fashioned economic growth.”
Wow, what a role model this guy is for America’s youth — including that misguided boy of his! Wouldn’t you like to buy Andy and Charles for what they’re worth … and sell them for what they think they’re worth? That would fund a whole lot of homeless programs.
By: Jim Hightower, the National Memo, July 24, 2013
“Family Struggles”: McDonald’s Employees Don’t Need Financial Planning, They Need Raises
McDonald’s recently partnered with Visa to put out what they call the Practical Money Skills Budget Journal (pdf), a “helpful” tool for McDonald’s employees to keep track of their earnings and expenses. There have been a flurry of responses to the “McBudget” including realistic comparisons, snarky analysis, and talk of unicorns as a means for transportation. Others have defended the budget, claiming that it gives low-wage workers the necessary tools for financial planning.
Coincidentally enough, we also recently released an online tool related to family budgets—along with Elise Gould and Nicholas Finio, we developed EPI’s Family Budget Calculator, a measure of just how much income it takes for families to buy the necessities for an adequate but modest lifestyle. Our basic budgets include the cost of rent, food, health care, child care, transportation, other necessary expenses and taxes in each of 615 communities across the country. While families at these budget levels may be able to pay their bills and put food on the table, our family budgets imply a pretty austere lifestyle. There is no savings, no vacations, no cable or internet service, and, certainly, no restaurant visits.
The EPI family budgets look at six different family types, ranging from a one-parent, one-child households to a two-parent, three-child households. When you combine what we found in our rigorous family budgets with the McDonald’s budget, some startling results stand out. Meeting the goals in the McDonald’s sample budget requires a monthly net income of $2,060, which is $816 less than what a one-parent, one-child household needs in rural Mississippi, where the post-tax cost of living is lowest. And it is $1,397 less than the median one-parent, one-child family budget. One could argue that our family budgets (which presume the presence of kids) are not particularly relevant to McDonald’s employees, on the grounds that minimum wage workers tend to be teenagers themselves. But that would be wrong. We have shown before that the bulk of the minimum wage workforce are adult employees working at least 20 hours per week, not teenagers or part-timers looking to make a little extra spending money.
Ironically, by suggesting that someone needs a monthly net income of $2,060 to meet their sample budget, the McBudget implies that one 40-hour week minimum-wage job is severely inadequate, and that even two full-time, full-year minimum wage workers would fall short of even this unrealistically low standard. This may be why the McDonald’s budget suggests a second job. A full-time, full-year worker would need to earn about $15.00 an hour (before taxes) to reach this budget level, or would have to work more than 40 hours each week. The McDonald’s sample budget is also underestimating (often radically) many basic necessities, such as rent and health insurance ($20 per month!), and missing others, like child care, that are essential for sustaining employment. (Since its original release, they have increased the heating allowance from $0.00 to $50.00 per month.)
What these two budgets make clear is that the struggles of tens of millions of American families to make ends meet is not a failure of financial planning, it’s a failure of financial resources. Even if McDonald’s employees meticulously track all of their expenses, they will still fall short of what is necessary to make ends meet, let alone actually be able to save $100 every month, as the McDonald’s budget suggests. It’s tempting to believe that all America’s low- and moderate-wage workers need to get by is better life skills, when in fact what they really need is a raise.
By: Hilary Wething, Economic Policy Institute, July 18, 2013
“Nothing To Lose But Power”: Wal-Mart Plays Hardball In The District of Columbia
There’s a power struggle going on in Washington right now, not between Republicans and Democrats but between Wal-Mart—which is supposed to open six stores in the District—and the city council, which has a bill pending to require big-box retailers to pay a living wage. As you surely know, Wal-Mart was built on keeping costs as low as possible, particularly labor costs. The model Wal-Mart recruit is someone who has no other employment options and will take whatever they can get. The retail colossus isn’t going to let some uppity city council tell it how much it can pay its employees:
The world’s largest retailer delivered an ultimatum to District lawmakers Tuesday, telling them less than 24 hours before a decisive vote that at least three planned Wal-Marts will not open in the city if a super-minimum-wage proposal becomes law.
A team of Wal-Mart officials and lobbyists, including a high-level executive from the mega-retailer’s Arkansas headquarters, walked the halls of the John A. Wilson Building on Tuesday afternoon, delivering the news to D.C. Council members.
The company’s hardball tactics come out of a well-worn playbook that involves successfully using Wal-Mart’s leverage in the form of jobs and low-priced goods to fend off legislation and regulation that could cut into its profits and set precedent in other potential markets. In the Wilson Building, elected officials have found their reliable liberal, pro-union political sentiments in conflict with their desire to bring amenities to underserved neighborhoods.
For Wal-Mart, this isn’t just about these particular stores. They can make money even if they pay a higher wage at these stores, and with over 10,000 stores around the world, the D.C. locations are a drop in their enormous bucket anyway. It’s about their relationship both to the people they employ and to the communities they locate in. It’s about power, and as far as they’re concerned, power has to reside with Wal-Mart. Their employees do what they’re told and get paid what they’re told, and if they don’t like it they can go find another job. By the same token, the city council gives Wal-Mart what it wants, and if it doesn’t they can try to find somebody else to open a store there.
My guess is that in the end, either the city council will cave or Mayor Vincent Gray will veto the bill (he says he’s considering it). Why? Because Wal-Mart can walk away from the D.C. stores without a second thought, while the council desperately wants both the jobs the stores will bring and the ability for their constituents to have a convenient place to shop. One side has virtually nothing to lose, while the other side has a great deal to lose.
Would Wal-Mart make less money if they paid their employees a little more? Not necessarily. There are other models out there, most notably Costco and Trader Joe’s, which believe that by giving their employees higher wages and good benefits, they can reduce turnover and provide better service, which lowers costs and increases sales. And it works: they’ve achieved steady growth and excellent profits by making their employees happy.
But the idea that the way to deal with employees is to basically treat them like the enemy, which includes not just paying them as little as possible but also reacting to any hint of solidarity among the employees like an outbreak of the Ebola virus, is bred into Wal-Mart’s DNA. Think I exaggerate? Back in 2000, 11 meat-cutters at a Wal-Mart in Texas voted to join a union. The company responded by announcing that it was immediately eliminating the meat-cutting departments at 180 stores and switching to pre-packaged meat, and would eventually eliminate the meat-cutting departments at every store in the country. They don’t screw around, as the D.C. Council has just discovered.
By: Paul Waldman, Contributing Editor, The American Prospect, July 10, 2013
“A Growing Inequality”: Not All Kinds Of Inequality Are Created Equal
In America, not all kinds of inequality are created equal.
For the past half-century, the de jure inequality of demographic groups has proven increasingly vulnerable to public pressure. From the Civil Rights Act of 1964 to last week’s Supreme Court decision striking down a key part of the Defense of Marriage Act, legal barriers against racial and sexual minorities as well as women have crumbled. Changes in the law have followed the same pattern: First, a handful of generally radical activists brought attention to the existence of a legal double standard; then, a mass movement grew in support of eliminating discriminatory laws and practices; only after this did government respond with legal remedies.
In each case as well, the movements’ success in diminishing their “otherness” — that is, establishing their full humanity — in the eyes of the majority of their fellow Americans has been key to ending legal discrimination. The shift in public opinion on same-sex marriage, for instance, follows decades when growing numbers of gay men and lesbians felt just secure enough to out themselves to their families, friends and co-workers, in the process normalizing what had been a concealed, and presumably shameful, status. The immigrant rights movement’s focus on the Dream Act kids — young people, many of whom are talented students, brought here as children and still forced to lurk in the shadows — put the most appealing human face on undocumented immigrants. That is at least partly responsible for what is now majority public support for enabling the undocumented to become citizens. (Whether that majority support carries any weight with xenophobic House Republicans, secure in their gerrymandered districts, is another question.)
Some forms of legal inequality persist in other guises. Another Supreme Court decision last week, striking down provisions of the Voting Rights Act that limited discriminatory practices in particular Southern states, will make it easier for black and Latino electoral participation to be limited. Just as those states once required voters to pass absurd tests or pay taxes to vote — measures almost always designed to apply only to blacks — now they will likely require voters to produce documents that the poor and students disproportionately lack (as, in fact, Texas did within hours of the high court’s ruling). Today’s vote supressionists are driven less by discrimination for its own sake than fear that their hold on power will weaken if minorities and the young vote in large numbers.
But while social and legal inequality has diminished over the past century, economic inequality has been on the rise since Ronald Reagan’s presidency. The public policies of the past 30 years — deregulating finance and encouraging the sector’s growth, failing to bolster workers’ declining bargaining power — are rightly understood to have reversed the more egalitarian economic policies of Franklin Roosevelt and Lyndon Johnson. But the economic inegalitarianism of the past three decades also makes a mockery of Thomas Jefferson’s vision of equality, which went beyond mere equality of creation. Jefferson believed that a nation of yeoman farmers was the best defense against the inequalities of wealth and power that would threaten the republic if cities grew too populous. He also believed, of course, in the institution of slavery — the paradox that haunts his legacy and our history to this day.
The belief that diminishing economic inequality would help build a more robust economy underpinned the legislation of both the New Deal and the Great Society. Granting workers the power to bargain with their employers, the preamble to the 1935 National Labor Relations Act states, would increase their capacity to consume and give the economy a shot in the arm. So, too, the 1938 Fair Labor Standards Act, which created the national minimum wage. Social Security and Medicare, by reducing poverty among seniors, also bolstered the national economy. Repeal any one of these and the economy would crumple. Indeed, the de facto repeal of the National Labor Relations Act — as employers have learned to exploit its loopholes and deny employees bargaining power — is a major factor in the decline of wage income.
How, then, do we decrease economic inequality — the one kind of inequality that continues to expand even as other forms contract (if slowly and unevenly)? The challenge isn’t to persuade the majority to embrace a minority but, rather, to embrace itself. Americans tend to blame themselves rather than changes in economic rules and arrangements for failing to achieve financial security. But with most of the nation falling behind, the problem and the solution aren’t individual. Like Jefferson’s generation, Americans must band together to create a more egalitarian land.
By: Harol Meyerson, Opinion Writer, The Washington Post, July 2, 2013
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