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“Bad Politics And Worse Policy”: GOP’s Minimum Wage Disaster; How Chris Christie And Scott Walker Are Stepping In It

Buoyed by surveys showing that voters overwhelmingly support raising the federal minimum wage, Democrats have held Republicans’ feet to the fire this year, pressing GOP candidates and officeholders to take clear stands on the issue. Most have — and they’re overwhelmingly opposed to raising the federal wage above its current level of $7.25 an hour. And as Wisconsin Gov. Scott Walker and New Jersey Gov. Chris Christie attest, it’s exceedingly difficult for Republicans to discuss the issue without sounding both callous and clueless.

Christie’s minimum wage flub came today — during a speech before a well-heeled crowd at the U.S. Chamber of Commerce, no less. “I’m tired of hearing about the minimum wage,” Christie said, according to The Hill. “I really am. I don’t think there’s a mother or a father sitting around the kitchen table tonight in America saying, ‘You know, honey, if our son or daughter could just make a higher minimum wage, my God, all of our dreams would be realized.’”

“Is that what parents aspire to for our children? They aspire to a greater, growing America where their children have the ability to make much more money and have much greater success than they have and that’s not about a higher minimum wage,” Christie added.

Set aside for a moment the fact that a dismal labor market leaves many workers with no choice but to take minimum wage jobs. It’s true, as Christie argues, that most parents aspire to far more for their children. But in a socially stratified America with limited upward mobility, that’s an argument for measures to redistribute wealth and opportunity and to invest in disadvantaged communities with increased education funding, public works projects, and the like. Don’t look for a GOP conservative like Christie to endorse such policies.

Then there’s Walker, who faces a tough reelection battle in Wisconsin against Democrat Mary Burke. Earlier this month, Walker’s administration rebuffed a workers coalition’s effort to raise the state’s minimum wage in accordance with a state law that calls for the minimum to be a “living wage.” The administration responded to their effort by asserting that $7.25 an hour is a living wage — even though MIT calculates that a single parent would need to earn $21.17 an hour to make a living wage in the state capital of Madison. But don’t bother Walker with such figures. The minimum wage, he asserted last week, doesn’t even “serve a purpose,” explaining that he’d rather help Wisconsinites secure higher-paying jobs than the raise the minimum wage. OK, but what about the 500,000 workers in the state who’d see a raise if the minimum wage went from $7.25 to $10.10 an hour?

The GOP, it seems, is functionally incapable of talking about the minimum wage without botching basic facts or seeming downright insensitive. No, minimum wage hikes don’t kill job growth, and no, Joni Ernst, most minimum wage earners aren’t high school students who just need a little “starter wage.” The callousness caucus, though, will hear none of it.

 

By: Like Brinker, Deputy Politics Editor, Salon, October 22, 2014

October 23, 2014 Posted by | Chris Christie, Minimum Wage, Scott Walker | , , , , , , , | Leave a comment

“No, Walmart Doesn’t Create Jobs”: Contrary To The Happy Talk, It Actually Kills Them

Because it’s a such a slow news day, and because the DC big box living wage bill is still in the news, I thought I’d write about the Walmart piece I published in Salon.com earlier this week. First, an update on that living wage fight, which I’ve written about before on this site. The bill, which would require Walmart and other big box retailers to pay a minimum wage of $12.50 an hour, passed the DC City Council. It needs the signature of DC Mayor Vincent Gray to become law, but Gray hasn’t received it yet. There have been suggestions that he’s leaning toward a veto and that Council Chairman Phil Mendelson has delayed sending the bill to Gray’s desk because he’s working to shore up support for a veto-proof majority. Walmart has threatened to cancel plans to open new stores in DC if the bill is enacted.

One of the most compelling-seeming arguments that the pro-Walmart forces have been making is that DC should reject the bill and welcome Walmart into the community, because Walmart would create much-needed jobs. So I decided to look at what the research says about Walmart’s impact on employment. Guess what? Contrary to the happy talk, Walmart does not create jobs. Actually, it kills them.

Here’s why: first, at the local level, all Walmart does is put mom-and-pop stores out of business. The overwhelming body of evidence, including the most rigorous peer-reviewed studies, suggests that when Walmart enters a community, the result is a net loss of jobs; at best, it’s a wash. In fact, the biggest, best scholarly study about the impact of Walmart on local employment was done by an economist at University of California at Irvine named David Neumark, who is not exactly a wild-eyed liberal. He’s the kind of economist, actually, who writes anti-minimum wage op-eds for the Wall Street Journal.

The devastating impact Walmart has had on jobs becomes most clear when you go macro, and look at its impact not just locally, but on the national economy. In its relentless quest for low prices, Walmart strong-arms its suppliers to cut labor costs to the bone. What this has meant in practice is that many suppliers have been forced to lay off workers and ship jobs to low-wage countries overseas. Because of Walmart, countless jobs in the U.S. have been lost, mostly in manufacturing.

I’ve been thrilled by the response to my Salon piece — over 5,000 Facebook “likes,” and counting! Thus far, none of the prominent pro-Walmart voices have taken issue with it, because the facts I present are hard to dispute.

Back to the DC controversy: neoliberal pundits and politicians hate the DC living wage bill, because they don’t want to drive Walmart away. The politicians want the photo ops at Walmart openings, where they can boast about bringing “good jobs” — um, well, okay, “jobs,” anyway — into the community.

But when Walmart comes to town, significantly more local retail jobs are destroyed than created. And to the extent Walmart grows and is empowered, even more manufacturing jobs will be lost. If Walmart’s fans understood its anti-worker business model, they would get this. Walmart’s philosophy requires cutting labor costs to a bare minimum, so it makes sense that the company would not only pay workers miserable wages, but also shred as many jobs as possible.

Some of the pro-free market ideologues do grasp this. Here’s Forbes contributor Tim Worstall, for example, with a blog post helpfully entitled: “Of Course Walmart Destroys Retail Jobs: That’s the Darn Point of it All.”

I appreciate the honesty of Worstall and others of his ilk; they celebrate Walmart for its innovation and productivity-enhancing “creative destruction.” Fine. What I don’t appreciate is those pundits who then turn around and claim that Walmart is also going to magically create jobs out of thin air, as so many are doing in the current DC debate (see, for example such gold star hacks as Mona Charen, Star Parker and, inevitably, Fox News).

Let’s be clear: the brave new economic world so many conservatives and neoliberals celebrate necessitates massive job loss. In theory, the gains from productivity brought about by Walmart’s ability to produce more output with less labor inputs are supposed to benefit everyone. But in practice, they’re going almost entirely to the the top, and the economic hit is being taken by those at the bottom. Progressives need to do all they can to change this dynamic. Supporting living wage bills like the one in DC would be a great place to start.

 

By: Kathleen Geier, Washington Monthly Political Animal, August 10, 2013

August 11, 2013 Posted by | Jobs | , , , , , , , , | Leave a comment

“Debunking The Myth”: Doable, Efficient, And Necessary, A Higher Minimum Wage Will Not Reduce Jobs

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

August 9, 2013 Posted by | Jobs, Minimum Wage | , , , , , , , | Leave a comment

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