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“Higher Wages Are Good For Companies Too”: The Intellectual Rigors Of Low-Wage Work Are Too Frequently Dismissed

Barbara Gertz is 25 and works at a Walmart in Aurora, Colorado, stocking shelves on the overnight shift. She and her husband, a cement mason, can get by most months, but there have been days Barbara has called in sick because she can’t afford the gas to drive to work.

Higher wages would obviously benefit Barbara and her colleagues at Walmart who protested last Friday. They would also benefit fast food workers striking tomorrow in 100 cities across the country who earn, on average, $11,000 a year.

But according to Zeynep Ton, an adjunct professor at MIT Sloan School of Management, higher wages are better for companies, too.

Ton’s book, The Good Jobs Strategy: How the Smartest Companies Invest in Employees to Lower Costs and Boost Profits, comes out in January and in it, she describes how large retail companies like Mercadona, Trader Joe’s and Costco have been able to invest in workers without raising prices. “These companies think about employees not as costs to minimize but as capable human beings with the potential to generate sales and profits,” Ton recently wrote on her blog. “Doesn’t all this cost a lot? Of course it does. But that’s only part of the strategy. These companies also design and manage work in a way that makes their employees more productive and takes full advantage of a committed, motivated, and capable (that is, well-paid, well-trained, and well-treated) workforce.”

Here’s one of Ton’s favorite examples of why the so-called Good Jobs Strategy works: During the recession, both Walmart and Mercadona, Spain’s largest supermarket chain, had to cut costs and did so by reducing the variety of products they carried. Walmart customers were annoyed when their local store stopped carrying their favorite brand of potato chip, or toilet paper or T-shirt. Sales dropped; Walmart’s chief merchandising officer had to leave the company. At Mercadona, customers were unfazed if an item they wanted was out of stock because workers, who as a matter of company policy are trained in every department, were able to recommend a replacement. Sales figures increased, even after Mercadona reduced its prices by 10 percent. Workers would let management know if there was a particular product that too many customers seemed to miss. “They could do this because they are empowered, cross-trained and have the time to engage the customer,” Ton writes. By comparison, Barbara told me that “there’s just a total lack of respect” for associates at Walmart. She mentioned a friend who politely pointed out an inventory problem to her supervisor and was fired the next day for the very mistake she tried to correct.

Ton’s argument is that workers who are paid fairly and treated respectfully are more productive and more innovative, across industries and on all salary levels, at Google or at Walmart. “Low-cost retail work is not trivial and how you perform that work makes a big difference for the company’s bottom line,” Ton has written. Retail work requires intuition and charm, quick decision-making, a good memory. As Mike Rose, an education professor at UCLA, has eloquently written the intellectual rigors of low-wage work are too frequently dismissed.

Ton’s Good Jobs Strategy also applies to fast food industry. In-N-Out Burger, the cultishly beloved West Coast hamburger chain, is a good example. The starting wage is $10.50 per hour, significantly higher than at McDonald’s. They have the lowest turnover rate in the fast-food industry. Like Mercadona and Trader Joe’s, In-N-Out keeps overhead low by limiting their offerings, by doing just a few things—hamburgers, cheeseburgers, milkshakes—really, really well.

With more than half of fast food workers on public assistance, costing taxpayers an estimated $7 billion a year, the demands of Thursday’s strike is in the public’s best interest as well. On Tuesday, the Washington, DC, Council voted to increase the minimum wage to $11.50 per hour and to extend paid sick leave to tipped workers, having found, despite theories to the contrary, that such a policy does not discourage new businesses from opening or cause preexisting businesses to relocate. President Obama recently endorsed raising the federal minimum wage to $10.10 an hour.

If political pressure and public protest don’t cause McDonald’s and Walmart to increase worker pay, perhaps pure profit-driven thinking will. After all, what if Barbara had to call in sick on one of the busiest days of the year?

 

By: Jessica Weisberg, The Nation, December 4, 2013

December 6, 2013 Posted by | Corporations, Minimum Wage | , , , , , , , | Leave a comment

“The Wages Are Too Damn Low”: Hiking The Minimum Wage Has Little Or No Adverse Effect On Employment

As I mentioned in the lunch link roundup, increasing the minimum wage is all the rage in lefty precincts today. DC is considering a raise, and Democrats generally are smelling a winning issue. (For a deeper look, Arindrajit Dube had a long piece on it over the weekend.)

Conventional economists tend to despise minimum wage laws, because they’re a form of price control, and that gives The Market a sad. Setting a minimum price of labor, according to Econ 101, should increase unemployment, because some people won’t have a marginal product above the wage floor. But as Paul Krugman pointed out in his column this morning, the evidence just doesn’t support this conclusion:

Still, even if international competition isn’t an issue, can we really help workers simply by legislating a higher wage? Doesn’t that violate the law of supply and demand? Won’t the market gods smite us with their invisible hand? The answer is that we have a lot of evidence on what happens when you raise the minimum wage. And the evidence is overwhelmingly positive: hiking the minimum wage has little or no adverse effect on employment, while significantly increasing workers’ earnings.

It’s important to understand how good this evidence is. Normally, economic analysis is handicapped by the absence of controlled experiments. For example, we can look at what happened to the U.S. economy after the Obama stimulus went into effect, but we can’t observe an alternative universe in which there was no stimulus, and compare the results.

When it comes to the minimum wage, however, we have a number of cases in which a state raised its own minimum wage while a neighboring state did not. If there were anything to the notion that minimum wage increases have big negative effects on employment, that result should show up in state-to-state comparisons. It doesn’t.

As others have noted, there’s good reason to believe that increased wages at large businesses would work out well for the businesses themselves. Businesses would both reduce turnover—the hiring process is expensive, and there is a great deal of churn at the bottom of the labor market—and increase their employees purchasing power, a hefty fraction of which would likely be spent at their own place of employment or somewhere similar. I’d guess that wages are held down out of class panic and a desire for increased profits for their own sake rather than some strict business reason.

Personally, if I had to choose, I would rather see more broad-based economic stimulus through fiscal and monetary action rather than a minimum wage hike. (Though I would still support one on its own merits.) But if they don’t like it, American elites have no one to blame for this but themselves. If the power structure can’t ensure full employment through normal channels, then demands for economic justice through more easily-understood channels will only become more common.

 

By: Ryan Cooper, Washington Monthly Political Animal, December 2, 2013

December 4, 2013 Posted by | Minimum Wage | , , , , , , , , | Leave a comment

“Better Pay Now”: Let’s Give It A Try For The Person On The Other Side Of The Cash Register

’Tis the season to be jolly — or, at any rate, to spend a lot of time in shopping malls. It is also, traditionally, a time to reflect on the plight of those less fortunate than oneself — for example, the person on the other side of that cash register.

The last few decades have been tough for many American workers, but especially hard on those employed in retail trade — a category that includes both the sales clerks at your local Walmart and the staff at your local McDonald’s. Despite the lingering effects of the financial crisis, America is a much richer country than it was 40 years ago. But the inflation-adjusted wages of nonsupervisory workers in retail trade — who weren’t particularly well paid to begin with — have fallen almost 30 percent since 1973.

So can anything be done to help these workers, many of whom depend on food stamps — if they can get them — to feed their families, and who depend on Medicaid — again, if they can get it — to provide essential health care? Yes. We can preserve and expand food stamps, not slash the program the way Republicans want. We can make health reform work, despite right-wing efforts to undermine the program.

And we can raise the minimum wage.

First, a few facts. Although the national minimum wage was raised a few years ago, it’s still very low by historical standards, having consistently lagged behind both inflation and average wage levels. Who gets paid this low minimum? By and large, it’s the man or woman behind the cash register: almost 60 percent of U.S. minimum-wage workers are in either food service or sales. This means, by the way, that one argument often invoked against any attempt to raise wages — the threat of foreign competition — won’t wash here: Americans won’t drive to China to pick up their burgers and fries.

Still, even if international competition isn’t an issue, can we really help workers simply by legislating a higher wage? Doesn’t that violate the law of supply and demand? Won’t the market gods smite us with their invisible hand? The answer is that we have a lot of evidence on what happens when you raise the minimum wage. And the evidence is overwhelmingly positive: hiking the minimum wage has little or no adverse effect on employment, while significantly increasing workers’ earnings.

It’s important to understand how good this evidence is. Normally, economic analysis is handicapped by the absence of controlled experiments. For example, we can look at what happened to the U.S. economy after the Obama stimulus went into effect, but we can’t observe an alternative universe in which there was no stimulus, and compare the results.

When it comes to the minimum wage, however, we have a number of cases in which a state raised its own minimum wage while a neighboring state did not. If there were anything to the notion that minimum wage increases have big negative effects on employment, that result should show up in state-to-state comparisons. It doesn’t.

So a minimum-wage increase would help low-paid workers, with few adverse side effects. And we’re talking about a lot of people. Early this year the Economic Policy Institute estimated that an increase in the national minimum wage to $10.10 from its current $7.25 would benefit 30 million workers. Most would benefit directly, because they are currently earning less than $10.10 an hour, but others would benefit indirectly, because their pay is in effect pegged to the minimum — for example, fast-food store managers who are paid slightly (but only slightly) more than the workers they manage.

Now, many economists have a visceral dislike of anything that sounds like price-fixing, even if the evidence strongly indicates that it would have positive effects. Some of these skeptics oppose doing anything to help low-wage workers. Others argue that we should subsidize, not regulate — in particular, that we should expand the Earned Income Tax Credit (E.I.T.C.), an existing program that does indeed provide significant aid to low-income working families. And for the record, I’m all for an expanded E.I.T.C.

But there are, it turns out, good technical reasons to regard the minimum wage and the E.I.T.C. as complements — mutually supportive policies, not substitutes. Both should be increased. Unfortunately, given the political realities, there is no chance whatsoever that a bill increasing aid to the working poor would pass Congress.

An increase in the minimum wage, on the other hand, just might happen, thanks to overwhelming public support. This support doesn’t come just from Democrats or even independents; strong majorities of Republicans (57 percent) and self-identified conservatives (59 percent) favor an increase.

In short, raising the minimum wage would help many Americans, and might actually be politically possible. Let’s give it a try.

By: Paul Krugman, Op-Ed Columnist, The New York Times, December 1, 2013

December 2, 2013 Posted by | Economic Inequality, Minimum Wage | , , , , , , , | Leave a comment

“Coverage That Is Surprisingly Affordable”: As Glitches Fade, Obamacare Approval Will Rise

The latest polls on Obamacare are bleak. A Kaiser Family Foundation survey found that almost half of those questioned last week had an unfavorable opinion of the law. Just a third had a favorable opinion, even less than the 40 percent support for the law in the Nov. 14 Gallup poll.

But those poll numbers will change as more people like Bob Freukes of St. Louis and Donna Smith of Denver are finally able to shop for coverage on the new health insurance websites — and find coverage that is surprisingly affordable.

Considering all the negative stories about the malfunctioning HealthCare.gov website and policy cancellations folks have been receiving, the steep decline in support for Obamacare shouldn’t surprise anyone.

But in the very week that poll numbers reached an all-time low, people who had tried for more than a month to enroll online in a health plan were finally able to do so.

Just minutes after the administration’s tech surge team said 90 percent of applicants were now able to enroll online, I started getting emails from people eager to share their success stories.

“My wife and I are both self-employed small sole proprietors,” wrote Freukes, a photographer. “This will be the first time in our married lives we will have health insurance.”

Freukes said that over the course of the past year, he and his wife — married 30 years and are now in their fifties — rarely went to the doctor because of the expense.

“We paid for doctor visits, prescriptions, eye glasses and everything else out of [our] own pockets, always knowing we were one major illness away from bankruptcy.

“We tried to find an affordable policy, but the going rate for my wife and me was roughly $900-$1,400 dollars a month with deductibles in the $5,000 range.” Considering that their combined annual income is often no more than $25,000, health insurance was out of the question.

Not only will they finally have coverage starting January 1, it will cost the Freukes less than they had expected because of the federal tax credits available to low- and middle-income individuals who buy coverage on the state exchanges. In fact, with the tax credits, the Freukes will not have to pay monthly premiums at all.

“I sat rubbing my eyes in amazement as the website did the math. Our portion of the premium for both plans was ZERO. No cost to us at all. I was stunned.”

Donna Smith wasn’t that fortunate, but she at long last will be able to get a comprehensive policy that she can afford.

Like Bob Freukes, it took Smith weeks of effort before she was finally able to enroll in a plan. Her delay, though, was caused by a different, though no less frustrating quirk in the system. Colorado is one of 13 states and the District of Columbia operating their own exchanges, which generally have experienced fewer problems than the federal website, where residents of most states have been sent. Several thousand people were able to begin the application process in Colorado but they had to wait — and wait and wait — while state officials checked to see if the applicants were eligible for Medicaid.

Smith knew her income was too high to qualify for Medicaid, but she nevertheless had to fill out an extensive questionnaire and was put in what she described as a “bureaucratic black hole” for 37 days. It was an agonizing wait for Smith, a cancer survivor who — along with husband Larry — had to file for bankruptcy several years ago because of medical debt. If her name sounds familiar, by the way, it might be because you’ve seen her in the movies. When she wrote filmmaker Michael Moore about her plight, he included her in the 2007 documentary, SiCKO. Since then she has been an active supporter of health care reform.

After she finally got the Medicaid denial she was expecting, Smith called Connect for Health Colorado — the name of the state exchange — and worked with an employee to complete her application.

“If people can get through the Medicaid process, I think they’ll be pleasantly surprised,” said Smith, who has been paying $875 a month for an individual policy. Beginning next year, she will be covered in a better plan, but it will cost her only $450 a month after factoring in a $72 federal tax credit.

As happy as she was to discover she will soon have affordable coverage —and that it can’t be canceled if her cancer returns, thanks to Obamacare — she still believes a single-payer, Medicare-for-all type system would be better.

She has a point. The Affordable Care Act is far from perfect. But in the coming months and years, millions of us who have been unable to find affordable coverage will at long last be insured. Poll numbers will eventually reflect that.

 

By: Wendell Potter, The Center for Public Integrity, November 25, 2013

December 1, 2013 Posted by | Affordable Care Act, Uninsured | , , , , , , , | Leave a comment

“The GOP War On Christmas”: Compassionate Conservatism Is As Much An Oxymoron As “Free Agency” In The Sports World

Most of us will eat a great dinner Thursday and we have a lot to be thankful for. But many Americans won’t have much to eat on Thanksgiving or any other day for that matter.

The Boston Globe recently profiled Lurinda DaRosa, a single mother of two children who lives in the Dorchester neighborhood of Boston. Lurinda had a job but unfortunately she hasn’t been able to work since she had heart surgery.

Before November 1st, Lurinda received $66 in federal nutrition benefits every month. You can imagine it’s not easy to feed three people on that kind of budget. Don’t try it at home. A gallon of milk at the local supermarket costs $2.99. You can do the math, so you can imagine how tough it was for Lurinda and her children when her federal food assistance allowance dropped to $37 a month effective November 1. The allowance for the DaRosa family and millions of other Americans decreased because House Republicans refused to extend the Supplemental Nutrition Assistance Program benefits that were part of the Economic Recovery Act.

Whatever happened to compassionate conservatism anyway? These days, compassionate conservatism is as much an oxymoron as the phrase “free agency” in the sports world is.

Lucinda and her family will soon take another hit for the holidays from the GOP Grinch who stole Christmas. The deadline for a new federal budget agreement is 10 days before Christmas. The Republican budget proposal is Rep. Paul Ryan’s “Path to Prosperity” which is a path to poverty for millions of Americans. Under the Ryan budget there will an additional $39 billion in cuts in nutrition assistance for people like Lurinda and her kids over the next 10 years. Good luck with that.

Forty-seven million Americans were on the wrong end of the cuts that just went into effect. Thirty-seven million of the people who suffered the cuts were women and children. The cut took food out of the mouths of babes. And Republicans wonder why so few women vote for them anymore. Ten million of the recipients of the reduced allotments were seniors. A million veterans were also at the wrong end of the budget axe – I hope they didn’t build up too much of an appetite fighting for our freedom. Thank you for your service.

Meanwhile President Obama’s calls to congressional Republicans to cut the hundreds of billions of dollars of corporate welfare fall on deaf ears. Big business has thousands of highly paid lobbyists in Washington. Hungry Americans just don’t have much clout in the capital.

The burden on federal taxpayers would be lighter if Republicans in the House of Representatives would follow the Senate’s example and vote to increase the minimum wage. The best Wal-Mart can do is to sponsor food drives for its workers. McDonald’s does its part by sending its workers a pamphlet on stretching their food dollar. If McDonald’s really wants to help, the fast food giant could pay its workers a living wage.

Conservatives trot out the Bible at the drop of a hat to justify their extremism. During the holiday season, they might want to check out Matthew 25:34-36. In the Sermon on the Mount, Jesus said “Then the King will say to those on his right, ‘Come you who are blessed by my Father; take your inheritance, the kingdom prepared for you since the creation of the world. For I was hungry and you gave me something to eat.'”

This time of year, conservatives complain that liberals are trying to take Christ out of Christmas. One way for Republicans to put Christ back into Christmas would be practice a little Christian charity by voting against the Ryan budget next month.

 

By: Brad Bannon, U. S. News and World Report, November 26, 2013

November 28, 2013 Posted by | GOP, SNAP | , , , , , , , | 1 Comment

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