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“Barking Up The Wrong Tree”: Ted Cruz Keeps Talking About ‘Wages’ — But He Won’t Support Raising Them

“Washington” is keeping wages down and impoverishing the American middle class, at least according to Ted Cruz, who has adopted economic populism as a line of attack against the political establishment as a routine part of his stump speech in recent months.

The Texas senator has tried to link rival Donald Trump to Democratic frontrunner and perennial enemy of the American right, Hillary Clinton. But the argument that the federal government, and by extension the Obama administration, was responsible for the decline in wages of American workers, was yet another baseless charged levied against a rhetorically-convenient “Washington establishment.”

Where to start. It’s unclear whether or not Cruz believes in a minimum wage. He has argued against a minimum wage, saying it leads to job losses among American minority groups. “Every time we raise the minimum wage, predictably what happens is a significant number of people lose their jobs, and they’re almost always low-income, they’re often teenagers, African Americans and Hispanics,” he said, voicing concern for demographic groups that are unlikely to vote for him anyhow, and for whom his policies don’t reflect the concern of his talking points.

In Cruz’s mind, the minimum wage is best left to the states. While he assails the loss of American jobs, sounding much like a vague, rehearsed mashup of Donald Trump and Bernie Sanders in their criticism of outsourcing, his policies have a different end in mind: employment above all else.

“I think it’s bad policy,” said Cruz on CNBC, criticizing the existence of a minimum wage. “And you know, one observation I make to folks is next time you go to a fast food restaurant and you start ordering on an iPad, you’re seeing the minimum wage.”

During a Senate hearing in 2014, Cruz spoke out against President Barack Obama’s proposed federal wage increase to $10.10. He said:

The undeniable reality, the undeniable truth, is if the President succeeded in raising the minimum wage it would cost jobs for the most vulnerable. The people who have been hurt by this Obama economy would be hurt worse with the minimum wage proposal before this body. In 2013 the President in his State of the Union address proposed raising the minimum wage to $9.00. Now a year later the request has magically changed to $10.10. The only reason (there’s no economic justification) the only reason is politics. And I suppose if the approval ratings of democratic members of this body continue to fall in another month we’ll see a proposal for $15.00 an hour and then maybe $20.00 or $25.00 an hour. But I think the American people are tired of empty political show votes. The nonpartisan congressional budget office says that raising the minimum wage could cost a loss of 500,000 to 1 million jobs.

Cruz is barking up the wrong tree. It is not the $7.25 an hour minimum wage that made companies like Carrier, whose managers were infamously recorded laying off 1,400 at its Indianapolis plant earlier this year, outsource those jobs to Mexico. As the Economic Policy Institute pointed out in a 2003 report, NAFTA resulted in a period of job growth in the U.S. between 1994 and 2000. But starting in 2001, jobs started disappearing. “Job losses have been primarily concentrated in the manufacturing sector, which has experienced a total decline of 2.4 million jobs since March 2001,” read the institute’s report. “As job growth has dried up in the economy, the underlying problems caused by U.S. trade deficits have become much more apparent, especially in manufacturing.” It pointed to systemic turmoil in internationalized labor markets, the result of free trade agreements, which allow companies to move to where living costs (and thus labor) are cheapest.

But for Cruz, the problem has always been the minimum wage, despite evidence to the contrary: Another EPI report released in 2013 outlining the benefits of increasing the minimum wage to $10.10 concluded, “Raising the federal minimum wage to $10.10 by 2016 would lift incomes for millions of American workers and provide a modest boost to U.S. GDP.”

Despite the doomsday predictions from Cruz and the rest of the 2016 Republican field, the report also predicted large increases in employment. By increasing the federal minimum wage to at least $10.10, low wage earners would experience a recovery of real income the likes of which we haven’t seen in decades.

However, the federal minimum wage has not budged by even a penny, leaving wage increases largely to states or large American cities, exactly the sort of decentralized political process Cruz would be expected to support: Los Angeles, San Francisco, Seattle have all instituted $15 per hour minimum wages following concerted efforts by local organizations that stemmed partly from frustration over partisan gridlock in Washington. Both California and New York’s governors signed bills this year approving wage increases to the $15 an hour benchmark over a period of time. A total of 29 states, and Washington, D.C., have instituted their own minimum wages exceeding the federal minimum wage, as a result of slow progress on the federal level.

Since the minimum was last raised to $7.25 in 2009, it has lost 8.1 percent of its purchasing power as a result of inflation, according to Pew Research. The OECD has described the American minimum wage as an outlier amongst wealthy, industrialized nations — it should really be around $12, if we were to use GDP per capita as a guide. American workers are in desperate need of a minimum wage increase, not just poorly paid employment.

 

By: Saif Alnuweiri, The  National Memo, April 29, 2016

April 30, 2016 Posted by | Jobs, Minimum Wage, Ted Cruz | , , , , , , , , | Leave a comment

“The Great Detroit Betrayal”: The Residents, Employees And Retirees Are Not The Tragic Heroes Who Brought The City Down

Detroit has filed for bankruptcy. Most of the spot-news coverage has focused on the immediate fiscal crisis of the city, but the immediate fiscal crisis really isn’t what got the city into such deep trouble. Certainly, Detroit’s contracts with its employees and its debts to its retirees don’t explain anything about how and why this once-great city has come to such grief. Those contracts and retirement benefits are par for the course for major American cities—certainly, no more generous than those in cities of comparable size.

Any remotely accurate autopsy of the city will find the cancer that killed Detroit was the decline of the American auto industry. The failure of U.S. automakers in the ’70s, ’80s and ’90s to make better cars at a time when foreign-made autos were beginning to enter the U.S. market was surely one factor. Another was the trade deals that made it easy for Detroit automakers to relocate to cheaper climes—most particularly, NAFTA, which boosted maquiladoras while shuttering auto plants in the United States, disproportionately, in Greater Detroit. Taken in aggregate, the U.S. trade deals of the past half-century have benefited finance while crippling manufacturing, and Detroit—along with swaths of Cleveland, Chicago, Pittsburgh, and other industrial cities—paid the price.

A second factor is the racial polarization that Detroit has never managed to overcome. As far back as the 1920s, the Detroit factories attracted workers who didn’t always get along. In particular, it drew hundreds of thousands of workers from the African American South and white Appalachia. Since its formation in the 1930s, the United Auto Workers has spent much time and energy trying to combat white racism, and to keep tensions between these two groups from erupting in violence. The union didn’t always succeed. While it generally managed to get both its white and black members voting for liberal Democrats for state and national office, it seldom managed, even during the height of its strength in the ’30s, ’40s and ’50s, to get its white members to vote for its endorsed candidates for Detroit city office. Why the difference? Because city officials, unlike state and national ones, set Detroit’s policing and housing policies, and many white Detroiters, including auto workers, wanted to preserve racially segregated housing and a brutal, racist police force.

As mass suburban development came to Detroit in the decades following World War II, the city became prey to epochal white flight. By the late ’80s, when pollster Stan Greenberg conducted his now famous study of Macomb County—a white, working-class suburb adjoining Detroit, which had voted overwhelmingly for John Kennedy in 1960 and just as overwhelmingly for Ronald Reagan in 1984—he discovered a white electorate convinced that Democrats had created a government that benefited only blacks. Any notion of regional cooperation between increasingly black Detroit and its white suburbs was a non-starter.

As the auto plants closed and the whites fled, Detroit hollowed out. In time, as jobs and services vanished, blacks fled as well. In 1950, the city was home to 2 million people. Today, it is home to 700,000. Its unemployment rate, at 18.6 percent, is the highest of the 50 largest American cities. Its tax revenues, not surprisingly, can’t support adequate city services. And today’s bankruptcy filing is likely to reduce those services still further, while likely reducing the monthly pension checks of its retirees, though they and their unions have a strong moral claim to most favored creditor status. Moral claims often don’t amount to much, however, in bankruptcy proceedings.

Is it right to call what has happened to Detroit a tragedy? Not, surely, in a strictly Greek sense. There was hubris aplenty, but it was the hubris of auto executives who certainly don’t live within the city limits and won’t suffer the bankruptcy’s consequences. As for those who will suffer them—the residents, employees and retirees of Detroit—they’re not the tragic heroes who brought the city down. They’re the tragic victims.

 

By: Harold Meyerson, The American Prospect, July 19, 2013

July 21, 2013 Posted by | Auto Industry | , , , , , , , , | 1 Comment

“The Heartland Election”: Ultimately Determined By “Makers” Quite Different From The Ones In Paul Ryan’s Speeches

When Mayor Bobby J. Hopewell talks about the importance of manufacturing to this friendly Michigan town with a name that lends itself to song, he doesn’t reel off the usual list of heavy industries typically associated with the word “factory.”

He speaks of Kalsec, the Kalamazoo Spice Extraction Company founded in 1958 that produces and markets natural herbs and spices for food manufacturers. He mentions Fabri-Kal, a 62-year-old packaging company that describes itself as “the seventh-largest plastic thermoformer in North America.” Think of products in drug stores encased in heavy plastic. And he doesn’t leave out the pharmaceutical industry, long vital to his city’s economy.

Yes, we still make a lot of stuff in the United States of America, and one of the good things about this election is that it is likely to be decided in the nation’s industrial heartland — in the towns and cities of Ohio above all, but also in Michigan, Pennsylvania and Wisconsin.

President Obama almost certainly needs these states to win reelection, and if he does, manufacturing is destined for a larger role in the American economic conversation. Many promises have been made this year to the people and the communities whose ability to thrive has long depended upon manufacturing. The campaign’s thrust should move them to the heart of our efforts to seek a path up from the financial catastrophe that engulfed the country in 2008.

For two decades now, we have acted as if nearly all of us are destined to work in the tech industry or health care — or to survive on money that trickles our way courtesy of the world of finance. But while Hopewell is proud of the part played in his city by universities and those engaged in work involving what he calls “intellectual property,” he adds: “We are major makers in the region.”

When Hopewell is asked if he used the term “makers” in the way Paul Ryan does in drawing a distinction between “makers” and “takers” — between those who produce and those who get government aid — this Democrat laughs heartily. No, he says, his views have little in common with Ryan’s. The mayor is talking about manufacturing, pure and simple.

Leaders of traditional factory towns are by no means interested in a stagnant world in which members of each generation follows their parents into the same old factory job. On the contrary, this city is proud of “The Kalamazoo Promise,” the remarkable initiative of anonymous local donors who have established a fund that pays for a college education for every graduate of the city’s schools.

In Parma, Ohio, the industrial suburb of Cleveland where both Bruce Springsteen and Bill Clinton recently campaigned on Obama’s behalf, Mayor Tim DeGeeter said the top priority of the city’s blue-collar workers is a college education for their children. Parma and places like it, he adds, also want the sort of economic development that creates higher-end jobs so graduates can stay in the area, “and not have to move to Phoenix or Charlotte.”

What both mayors are saying (there are many like them) is that they want the market system to work for their communities, but do not want to leave their citizens utterly at the mercy of decisions made by economic actors far away, or of economic forces that no one controls.

This is why the rescue of the auto industry has been such a defining campaign issue in the Midwest. In Parma, DeGeeter notes that the auto revival means that GM recently made a $20 million investment in its stamping plant in the city. “That helps me sleep at night,” he says.

Hopewell says that even though the auto industry is not as important to Kalamazoo as it is in the Detroit area, “you can’t be a Michigander and not understand the importance of the auto industry, and not understand what it has done for our state.” The Republican sweep in Michigan in 2010 suggested it might be open to the GOP’s presidential candidate this year. But so far, it has remained anchored in Obama’s camp.

More broadly, white voters without college educations are voting for Obama at nearly twice the rate in the Midwest as in the South. In the Midwest, Obama is drawing 41 percent of their votes, according to a recent Washington Post/ABC News Poll, compared with only 24 percent in the South. If Obama prevails, “makers” of a sort quite different from the ones in Ryan’s speeches will have played a central role.

 

By: E. J. Dionne, Jr., Opinion Writer, The Washington Post, October 28, 2012

October 29, 2012 Posted by | Election 2012 | , , , , , , , , | 1 Comment

   

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