“The Boost That Comes From Raising The Minimum Wage”: Au Contraire, Raising Wages Does Not Destroy Jobs
The standard argument — really, the only argument — against raising the minimum wage is that it will lead to job loss. The argument is beloved by die-hard opponents of raising the wage because it provides them with a veneer, however flimsy, of concern about the welfare of the working poor.
Economic studies have repeatedly shown that argument to be spurious. Now the latest survey of 350,000 small businesses from Paychex, a payroll provider company, and IHS, a business analysis firm, provides strong indications that the exact opposite may be true.
In April, the Paychex/IHS survey, which looks at employment in small businesses, found that the state with the highest percentage of annual job growth was Washington — the state with the highest minimum wage in the nation, $9.32 an hour. The metropolitan area with the highest percentage of annual job growth was San Francisco — the city with the highest minimum wage in the nation, at $10.74.
This suggests that the relationship between a high minimum wage and job creation needn’t be inverse. If anything, it suggests that relationship is direct.
To be sure, the Bay Area economy is booming, but minimum-wage opponents would nonetheless have us believe that mandating the payment of close to $11 an hour must cause job loss at least in fast-food joints and Chinatown’s kitchens. San Francisco shouldn’t be creating more small-business jobs than any other city. It’s theoretically impossible.
So much for the theory. San Francisco is doing exactly that.
The compatibility of higher wage standards and job creation shouldn’t come as a surprise. A classic study of fast-food employment by former White House economic adviser Alan Krueger and Berkeley economics professor David Card demonstrated that raising the minimum wage does not lead to an appreciable decline in employment. Opponents of a higher wage have invoked a recent study by the Congressional Budget Office that argued a raise in the national minimum wage from $7.25 to $10.10, as President Obama has advocated, might cost up to 500,000 jobs. But even that study said that the raise would increase the wages of 16.5 million Americans — at least 33 times the number of those who might lose jobs — and elevate 900,000 people out of poverty.
What critics of a higher minimum wage ignore is that, by putting more money into the pockets of the working poor — a group that necessarily spends nearly all its income on such locally provided basics as rent, food, transport and child care — an adequate minimum wage increases a community’s level of sales and thereby creates more jobs. The Los Angeles Economic Roundtable recently concluded that raising the hourly minimum to $15 in Los Angeles County — the nation’s largest, home to 10 million people — would generate an additional $9.2 billion in annual sales and create more than 50,000 jobs.
The Seattle City Council is expected to enact a proposal from Mayor Ed Murray, developed by a business-labor task force, to phase in a $15 citywide minimum wage over seven years. The progress of the measure is a testament not only to the fast-food workers nationwide who’ve been campaigning for $15 hourly pay from McDonald’s and other chains but also to local labor and community leaders. They injected that issue into last year’s mayoral election, winning a pledge from Murray to push for the $15 standard. With direct employee-employer collective bargaining close to a dead letter in the private-sector economy, the likely success of the Seattle measure points to a new model for bargaining, in which progressive governments respond to worker pressure by legislating the wage increases employees can no longer win in the workplace.
In a nation where most people’s wages have been stagnant or dropping for many years, and where the combination of globalization and de-unionization has stripped from workers the bargaining power they once possessed, the role of government in addressing wage issues has become more central than ever. By investing in job-creating public works, by raising the minimum wage, by lowering taxes on those corporations that give their workers annual productivity increases and raising taxes on those that don’t, government can take up the slack created by the suppression and near-disappearance of private-sector unions. But first, it must dispel the canard that raising wages destroys jobs. Now it can point to San Francisco and Washington as evidence that it doesn’t.
By: Harold Meyerson, Opinion Writer, The Washington Post, May 21, 2014
“A Mislearned Lesson”: McDonald’s Indigestible Excuse For Low Pay
When Henry Ford realized it was good business to pay employees enough to buy the products they built, it was a breakthrough, not only because the idea challenged the reflex to pay as little as possible, but because the product was a car. He was talking real bucks.
McDonald’s has mislearned the lesson.
In response to escalating protests by McDonald’s employees calling for higher wages and the right to form a union without retaliation, McDonald’s chief executive, Don Thompson, defended the company at the annual meeting on Thursday, saying that McDonald’s pays a competitive wage.
But what constitutes “competitive” in the fast-food industry is precisely the problem. Hourly pay averages about $9. The low pay is possible in part because employers rely on taxpayers to subsidize it through public assistance and on non-unionized workforces to swallow it. The competitive fast food wage, in short, is not enough to live on.
Mr. Thompson presumably knows that. But he is paid not to understand what the protestors are demanding because his own pay is based on profits that are derived in part by keeping worker pay low.
Of course, if the political economy were functioning as it is supposed to – with Congress imposing reasonable boundaries on businesses, markets and the economy – workers wouldn’t have to get their bosses to understand what it’s like to live on $9 an hour, because Congress would make sure that no one had to.
The McDonald’s workers are asking for $15 an hour. That sounds like a lot compared to the current minimum wage of $7.25 an hour and compared to the Democratic proposal to raise the minimum to $10.10. But it’s actually closer to where the minimum wage would be today if it had kept pace over the years with growth in labor productivity.
McDonald’s workers are not asking for too much. Democrats are asking for too little and Republicans won’t even go along with that.
By: Teresa Tritch, Taking Note, The Editors Blog, The New York Times, May 23, 2014
“GOP’s New Plutocratic Populism”: A Bizarre Vision Of The Working Class
Fresh off his victory over Tea Party challenger Matt Bevin, Senate Minority Leader Mitch McConnell headed to the American Enterprise Institute Thursday to make himself over as a GOP populist. The party, as you’ve heard, has decided it needs “middle-class outreach” – since it’s given up on outreach to women, Latinos, African-Americans and the LGBT community – and thus some intellectuals and politicians have tried to craft “a middle class agenda.”
While the party should continue to stand for the free market and business interests, McConnell said, it had to face facts: “For most Americans whose daily concerns revolve around aging parents, long commutes, shrinking budgets and obscenely high tuition bills, these hymns to entrepreneurialism are as a practical matter largely irrelevant. And the audience for them is probably a lot smaller than we think.”
That, you’ll recall, was the takeaway from Mitt Romney’s 2012 campaign, where the plutocrat’s self-satisfied slogan “You built that!” was meant to mock Obama’s declaring that nobody builds a business entirely alone, but seemed to mock anyone who drew a paycheck, which is most of us.
But what is the tangible help McConnell and his friends are now offering to middle-class families? Very little, it turns out. McConnell had the audacity to present his union-busting National Right to Work Act as a pro-middle class reform, ignoring the way the labor movement actually built the middle class from the 1940s through the 1970s. Oh well.
The AEI event also included Sens. Mike Lee and Tim Scott, along with House Majority Leader Eric Cantor and writers like Ross Douthat, Ramesh Ponnuru and Reihan Salam, who contributed to a collection of essays on the new middle-class agenda called “Room to Grow.” They talked about helping single mothers, tackling student debt and ending corporate cronyism. But they offered very few ideas that would make a difference, and their good ideas are strangled by GOP orthodoxy. Lee wants to develop a package of tax cuts and credits for the middle class, for instance, but it adds $2.4 billion to the deficit so he hasn’t worked out his numbers.
The Utah Tea Party favorite also proposes to help the middle class while cracking down on the poor: Since he believes poverty programs create a “disincentive to work,” he wants to cut them and step up work requirements for those who do get help. “We don’t want people to have to make that kind of awful choice” between welfare and work, Lee told a reporter, so we’ll cut back welfare and make it harder to access. Bless his heart.
Ending corporate cronyism seems like a place the two parties might find common ground, but every time Democrats and a few Republicans put together a proposal for cutting the tax loopholes that make the tax code so unfair, conservatives squash it.
Still, let’s give the folks behind “Room to Grow” credit for trying, again, to buck the prevailing pro-plutocrat direction of their party. In the conservative Washington Free Beacon, Matthew Continetti praised the agenda, but offered a caveat. “I do not doubt for a moment that if the Republican Party adopted Room to Grow as its platform tomorrow, then both the GOP and the country would enjoy a better future,” he wrote. But he remembered a similar reception for Douthat and Salam’s widely praised “Grand New Party: How Republicans Can Win the Working Class and Save The American Dream,” and concluded the GOP “is no closer to embracing the ideas of Salam [and] Douthat…than it was when we celebrated the publication of ‘Grand New Party’ at the Watergate in 2008.”
Continetti deserves credit for explaining exactly why that is:
The outreach Republicans make to single women and to minorities inevitably repels the groups that give the party 48 percent of the popular vote—Christians and seniors and men. As has been made abundantly clear, 48 percent of the popular vote does not a presidential victory make. But 48 percent is not quite something to sniff at either. That number can always go down.
So if the GOP can craft an agenda that it can sell to Christian senior men, this middle-class thing is a go. Otherwise, it’s going to have to wait for people with the courage to sacrifice part of that 48 percent to get to 51 percent.
By: Joan Walsh, Editor at Large, Salon, May 23, 2014
“The Human Consequences”: Cost Of The Medicaid Expansion Rejection In Lives As Well As Dollars
The more research that is done on the human toll of denying people health insurance, the easier it is to place a price in lives as well as dollars of decisions like that made by nearly half the states to reject the Medicaid expansion provided for in the Affordable Care Act. At Politico Magazine (in a piece given the wonderful, Celine-esque title, “Death on the Installment Plan”) Harold Pollack of the University of Chicago utilizes the findings of last week’s study on the lives saved by RomneyCare in Massachusetts to make some suggestions for those that might be saved by making Medicaid available to more non-elderly adults:
As a matter of fiscal policy, [rejecting the Medicaid expansion] makes little sense. The federal government would initially cover 100 percent of the costs. Its share will gradually drop to 90 percent over the coming years. Over the next decade, the federal government will cover more than 95 percent of the Medicaid expansion’s total cost. Edwin Park of the Center on Budget and Policy Priorities notes that the ACA raises state expenditures on Medicaid and the Children’s Health Insurance Program (CHIP) by only 1.6 percent, when compared with what expenditures would have been in the absence of health reform.
Even the above figures overstate states’ true fiscal burden, since these federal dollars would cover many services such as mental health care, public hospital services and services to the correctional population that would otherwise be supported by states and localities. Medicaid expansion is a significant economic stimulus to the states that have adopted it. Even in deeply conservative states such as Texas, the expansion is strongly supported by the medical community, hospitals, cities and localities and other key constituencies.
Texas and other huge states like Florida are leaving tens of billions of dollars on the table. When asked to give an accounting of themselves, officials offer flimsy justifications to evade two obvious realities: First, Republican politicians do not want to embrace the centerpiece domestic policy achievement of the Obama presidency. Second, many of these same politicians display conspicuously tepid concern for the wellbeing of the expansion’s most obvious beneficiaries: poor, nonwhite, politically marginal residents of their own states….
Nearly 5 million low-income Americans are income-eligible for Medicaid under the ACA, yet live in states that now reject the Medicaid expansion. Within this rather small but critical low-income population, that same one-per-830 estimate [made in the Massachusetts study] implies that almost 5,800 people will die every year as a result of being left uninsured. That’s only an estimate. It may overestimate—or underestimate—the true human consequences. In my view, there’s no escaping the fact that partisan opposition to the ACA is costing thousands of actual human lives every year.
That’s a hell of a toll for scoring an ideological point.
By: Ed Kilgore, Contributing Writer, Washington Monthly Political Animal, May 12, 2014
“The Four Biggest Right-Wing Lies About Inequality”: Don’t Listen To All Those Right-Wing Lies
Even though French economist Thomas Piketty has made an air-tight case that we’re heading toward levels of inequality not seen since the days of the nineteenth-century robber barons, right-wing conservatives haven’t stopped lying about what’s happening and what to do about it.
Herewith, the four biggest right-wing lies about inequality, followed by the truth.
Lie number one: The rich and CEOs are America’s job creators. So we dare not tax them.
The truth is the middle class and poor are the job-creators through their purchases of goods and services. If they don’t have enough purchasing power because they’re not paid enough, companies won’t create more jobs and economy won’t grow.
We’ve endured the most anemic recovery on record because most Americans don’t have enough money to get the economy out of first gear. The economy is barely growing and real wages continue to drop.
We keep having false dawns. An average of 200,000 jobs were created in the United States over the last three months, but huge numbers of Americans continue to drop out of the labor force.
Lie number two: People are paid what they’re worth in the market. So we shouldn’t tamper with pay.
The facts contradict this. CEOs who got 30 times the pay of typical workers forty years ago now get 300 times their pay not because they’ve done such a great job but because they control their compensation committees and their stock options have ballooned.
Meanwhile, most American workers earn less today than they did forty years ago, adjusted for inflation, not because they’re working less hard now but because they don’t have strong unions bargaining for them.
More than a third of all workers in the private sector were unionized forty years ago; now, fewer than 7 percent belong to a union.
Lie number three: Anyone can make it in America with enough guts, gumption, and intelligence. So we don’t need to do anything for poor and lower-middle class kids.
The truth is we do less than nothing for poor and lower-middle class kids. Their schools don’t have enough teachers or staff, their textbooks are outdated, they lack science labs, their school buildings are falling apart.
We’re the only rich nation to spend less educating poor kids than we do educating kids from wealthy families.
All told, 42 percent of children born to poor families will still be in poverty as adults – a higher percent than in any other advanced nation.
Lie number four: Increasing the minimum wage will result in fewer jobs. So we shouldn’t raise it.
In fact, studies show that increases in the minimum wage put more money in the pockets of people who will spend it – resulting in more jobs, and counteracting any negative employment effects of an increase in the minimum.
Three of my colleagues here at the University of California at Berkeley — Arindrajit Dube, T. William Lester, and Michael Reich – have compared adjacent counties and communities across the United States, some with higher minimum wages than others but similar in every other way.
They found no loss of jobs in those with the higher minimums.
The truth is, America’s lurch toward widening inequality can be reversed. But doing so will require bold political steps.
At the least, the rich must pay higher taxes in order to pay for better-quality education for kids from poor and middle-class families. Labor unions must be strengthened, especially in lower-wage occupations, in order to give workers the bargaining power they need to get better pay. And the minimum wage must be raised.
Don’t listen to the right-wing lies about inequality. Know the truth, and act on it.
By: Robert Reich, The Robert Reich Blog, May 5, 2014
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