Wednesday, December 7, 2016

Dashed Hopes for Increase in Federal Minimum Wage May Be Just the Start of Hard Times

by Nomad



On 29 November, some 40 people were arrested at a protest outside a McDonald’s restaurant in Detroit. They had gathered to demand wage increases. With picket signs and a loudspeaker, hundreds of workers demanded a minimum wage increase to $15 an hour. Said one protesting worker:
“They are a multi-billion dollar company and they can afford to help us support our families. I cannot support my family on $8.50.”
On that day, there were similar demonstrations in hundreds of US cities, including the commercial hubs of New York City, Chicago, and Los Angeles.
The protests were put together as part of the "Fight for $15," a US-based international movement seeking a minimum wage of $15-per hour for low-paid workers.
Given the outcome of the last election, few expect these nationwide protests to have any impact.

Efforts to raise the federal minimum wage may, in fact, come to a crashing halt the very moment President Trump is inaugurated. 
During the campaign, he made the off-hand remark that wages were too high. He said:
"Taxes too high, wages too high. We're not going to be able to compete against the world. I hate to say it, but we have to leave it the way it is. People have to go out, they have to work really hard and they have to get into that upper stratum. But we cannot do this if we are going to compete with the rest of the world. We just can't do it."
It was a truly insulting thing for a man of Trump's wealth to say.

The Competitive Excuse

That excuse has worn pretty thin with many American workers. Is it really possible (or even fair) that Americans should have to compete with Third World workers who earn little better than slave wages? 

Later, Trump clarified what he meant. No, Trump said on Fox News, not all wages were too high. In his revision, he claimed that he meant that only minimum wages were too high.
(Presumably, the salaries of CEOs, actors, and sports players were all just about right.)

Of course, that's not what he actually said and certainly not what he meant. How can we be so sure what Trump meant when he said wages were too high? 

Well, take his remarks in context. He claimed that raising wages would damage our competitiveness.
Yet, more than half (55%) of the minimum wage workers are employed in the leisure and hospitality industry, about 14% in retail, 8% in education and health services, and the rest scattered among other industries. Those are not kind of jobs that will weaken American competitiveness. These are not manufacturing jobs, for instance, jobs that Chinese workers can do at a cheaper wage.

For some reason, nobody on Fox bothered to ask Trump how keeping a McDonalds' employees at poverty level will make America more competitive.
As with all things Trump, the irony was painful to watch. Here we had a billionaire telling his angry working class supporters that they needed to take a cut in pay. And when confronted, he turns and blames workers who make the lowest wage!

And to everybody's astonishment, they never even noticed. They would vote just as blindly, just as heedlessly in November.

The Many Myths of Minimum Wage

Opposition attempts to win the hearts and minds of the people against any increase in the federal minimum wage have largely failed. That's a little surprising too because they pulled out all stops and resorted in a barrage of misleading statements.

The Department Of Labor under President Obama attempted to address each of the objections on a web page.

No, increasing the minimum wage will not cause people to lose their jobs. That's not only my opinion and it's just Obama's opinion.
In a letter to the President and congressional leaders, over 600 economists, including 7 Nobel Prize winners wrote that evidence showed that "increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market."
Research suggests that a minimum-wage increase could have a small stimulative effect on the economy as low-wage workers spend their additional earnings, raising demand and job growth, and providing some help on the jobs front."
What about that fearmongering tactic about how small business owners will be hard hit? Another myth.
A July 2015 survey found that 3 out of 5 small business owners with employees support a gradual increase in the minimum wage to $12. The survey reports that small business owners say an increase "would immediately put more money in the pocket of low-wage workers who will then spend the money on things like housing, food, and gas. This boost in demand for goods and services will help stimulate the economy and help create opportunities."
We have been told again and again that increasing the minimum wage would be damaging to the economy. Many people actually believe that, especially conservative Republicans. 

The truth is that, since 1938, the federal minimum wage has been increased 22 times. For more than 75 years, real GDP per capita has steadily increased, even when the minimum wage has been raised. 

There's another problem with that argument. It hasn't been shown to be true in the past and it hasn't been shown to be true today. Here's what I mean. 
Twenty-nine states and the District of Columbia currently have a minimum wage higher than the federal minimum. 
So far, the sky hasn't fallen. 

Taking it to a nationwide level, according to this, would have none of the negative effects we have heard about. Increasing the federal minimum wage will boost the earnings for nearly 38 million low-wage workers. 
Instead of damaging the economy, an increase will, in all likelihood, strengthen the economy. How so? A raise for minimum wage earners will put more money in more families' pockets, which will be spent on goods and services, stimulating economic growth locally and nationally.

Contrary to what is widely stated as fact, minimum wage workers are not just teenagers. The typical minimum wage worker is not a high school student earning weekend pocket money. In fact, 89 percent of those who would benefit from a federal minimum wage increase to $12 per hour are age 20 or older, and 56 percent are women.

These are people who depend on one or two minimum wage jobs just to survive while rent, food prices and utilities continue to climb. These are not high schoolers but members of the working class from all sides of the political spectrum.

Un-Masking the Working Class Crusader

Donald Trump got elected by branding himself as the champion of the woebegone middle-class, a crusader for the working class. 
He tweeted 
The middle-class has worked so hard, are not getting the kind of jobs that they have long dreamed of - and no effective raise in years. BAD
As journalist Katie Johnston from the Boston Globe explains:
Working class voters who feel left behind by the economy turned out in droves for Trump, in hopes that his policies could improve their financial situations, and many of them backed a higher minimum wage in state ballot initiatives.
David Cooper, a senior economic analyst at the Economic Policy Institute, a Washington think tank, was quoted in the Globe article as saying: 
“The minimum wage is probably the clearest example of a policy where the majority of ordinary working Americans are calling for action and some so-called elites in Washington, specifically Republican members of Congress, are ignoring them. If Trump really wants to be a champion of the working people, he should press for a raise in the federal minimum wage.”

In Search of a Living Wage

For quite some time, whether the millionaire Congress or the billionaire president are aware of it, wage levels have lapsed far below the standard living wage. Minimum wages are not living wages, far from it. 
A minimum wage is the least amount an employer is obligated to pay his employees. The living wage is, on the other hand, a measure of basic needs.

To understand that, we must look at a wide variety of factors,. such as "geographically-specific expenditure data related to a family’s likely minimum food, child care, health insurance, housing, transportation, and other basic necessities (e.g. clothing, personal care items, etc.) costs."

The graph below shows exactly the true disparity between what minimum wage is and what it should be to be a living wage.


If you would like to know more about what a living wage looks like in your area, then try using this The Living Wage Calculator. The calculator estimates the living wage needed to support families of twelve different compositions, such as single adult, couple or couples with children. 
The results are for the most part depressing. Even with the proposed increase, minimum wages would barely lift most workers above the poverty line.  

That's true as much for conservative breadwinners as it is for liberal families. Despite the fact that Americans keep working harder and producing more economic growth, there hasn't been any significant increase in their wages for the last 40 years
Studies have found that the American public has every right to be angry.
Adjusted for inflation, the federal minimum wage peaked in 1968 at $8.54 (in 2014 dollars). Since it was last raised in 2009, to the current $7.25 per hour, the federal minimum has lost about 8.1% of its purchasing power to inflation. 
You read that correctly. When you factor in inflation, minimum wage levels have not actually increased since1969. That's right, back when Richard Nixon was president, Elvis was alive and Apollo was landing on the moon.

The Perverted Logic Of Paul Ryan

When it comes to minimum wage, the Republicans in Congress has been far less ambiguous. They have vowed to kill any attempt to raise the lowest level of wages for American workers.  

Speaker of the House of Representatives Paul Ryan tried to have it both ways by claiming that wages should go up, just not minimum wages.  Ryan has voted against raising the minimum wage at least 10 times since he’s been in office.
Without federal impetus to help encourage wages at the lowest level to rise, wages across the board will remain in hibernation.

In a perverse form of reasoning, Ryan claimed last year that the reason people on minimum wage are on government assistance program is not because they cannot survive on their wages but because they are too reliant on food stamps, Medicaid, housing assistance, and other assistance! 

That's a pathetic and peculiar thing. And nobody except for the only the most naive seems to believe Ryan's nonsense. In fact, support for higher wages is one of the few issues that unite voters from both parties.
Raising the federal minimum wage is an issue with broad popular support. Polls conducted since February 2013 when President Obama first called on Congress to increase the minimum wage have consistently shown that an overwhelming majority of Americans support an increase.

That said, this broad support for raising the minimum wage has not been quite evenly divided between the two parties. A Pew Research Center survey from January 2014 found clear partisan differences in support.
Overall, 73% of people favored an increase in the federal minimum to $10.10 an hour, mirroring a Democratic-backed proposal that failed to move ahead in Congress last year. But while large majorities of Democrats (90%) and independents (71%) said they favored such an increase, Republicans were more evenly split (53% in favor and 43% opposed).
Even Republican voters might have a change of heart when they see  how the effects of the Republican agenda on the struggling middle class. 

Without a Safety Net

Blocking minimum wage hikes alone might not become a major issue before mid-terms. However, to compounding the problem, Trump and Congress haven't hidden their determination to slash social safety nets  like affordable healthcare and food stamps and other government assistance programs. 
Despite what Trump has said, this safety net slaughter includes the sacred cow of all social programs, Social Security. The man heading the Trump transition team, Michael Korbey, is a former lobbyist who has spent much of his career advocating for cutting and privatizing the program. Back in the 90s, Korbey called it "a failed system, broken and bankrupt."

According to a U.S. Census Bureau report released last year, 21.3 percent of U.S. population participates in some kind of government assistance program each month.  
It never seems to cross Republican minds that these families don't apply for this assistance because they are greedy or lazy but they actually need it.

If confirmed by the Republican-dominated Congress, Trump's choice for Health and Human Services, Tom Price, has made it clear what he thinks of government assistance for the poor. 
“As a nation, we should promote the goal of reducing the number of Americans reliant upon government assistance."
Also clear is Price's position on Obamacare- which has allowed poverty-stricken families to obtain health care they couldn't otherwise afford. In debates on the Affordable Care Act in 2009, Mr. Price railed against “a stifling and oppressive federal government.”

Price seems to have no clue that government assistance programs are, for many families, their only lifeline and they do not find the federal government in any way stifling or oppressive.

As  a report by the Democrats on the Committee on the Budget points out: 
A 2016 report from the Department of Health and Human Services shows that anti-poverty programs – including various forms of cash assistance, nutrition and housing assistance, refundable tax credits, and Social Security – together reduced the poverty rate by more than one-third between 1967 and 2012. In 2014, these programs cut the poverty rate nearly in half, from 27 percent to 15 percent – lifting nearly 40 million people, including 8 million children, out of poverty.
That positive trend has now come to screeching halt. With no chance of increasing minimum wages for millions of Americans, the next four years are likely to be fairly hard times.

Misguided voters, by listening to the daffy declarations of a well-established huckster- a billionaire living in a palace, no less- they have thrown away their chance for a more prosperous future.
They haven't understood that fact yet but sooner or later they will.


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