Wage theft is a serious crime, so serious, in fact, that a court has ordered several New York-based franchise owners of Papa John’s to pay $500,000 to 250 workers. According to Laura Clawson of Daily Kos, owners have paid workers less than the minimum wage and work off the clock. One owner, Abdul Jamil Khokhar, was arrested and will spend 60 days in jail as part of a plea agreement. This story underscores the need for all American workers to understand wage theft and support their fellow workers when they are victims of such exploitation. Wage theft usually hurts low wage workers, people who have the most to lose. If we want low wage workers to be responsible, we need to ask their employers to do the same.
Daily Kos’s Mark E. Anderson examines increased productivity and stagnant wages between 1948 and 2014. His article includes a very informative graph that shows how these two economic measures were almost aligned. Now productivity doubles wages. Where has the money gone? Anderson argues that work has gone overseas where labor is cheaper and profits have gone to executives and investors. I agree, but would add one other big factor: automation. I was working with a client this weekend who works for a large technology manufacturer. His company will be able to shed hundreds of tech jobs once they move to cloud-based systems. Jobs can come back from China. Once they are automated, they are gone forever. Anderson makes a great point in concluding his article: What are the super rich and executives going to do when no one can afford to buy their products?
Over the past few months, I’ve heard two radio commercials that are very interesting. Both are targeting employers and offering web-based solutions for recruiting new employees. The two companies sponsoring these ads are Zip Recruiter and Pro Jobs Network. The fact that these companies exist and are advertising shows that the job market is tight for small and mid-sized businesses. Employers need to have another company recruit and screen candidates. It’s easy to focus on negative news like major corporations laying off thousands of employees. At the same time, we need to remember that most Americans work for small and mid-sized companies. As long as online recruiting companies are advertising, it’s safe to assume that they are hiring. That’s good news for the economy and American workers.
P.S. Zip Recruiter offers functions that job seekers can use to search for jobs. Pro Jobs Network is only for employers.
USA Today’s Susan Page recently interviewed Secretary of Labor Thomas Perez. She asked Perez about a paradox in the current economic recovery: unemployment is down with little increase in wages. Perez said that there is still “slack” in the market, which would mean that unemployment would have to go even lower to drive increased wages. He also discussed a White House Summit on Workers, which will take place on October 7, 2015. This sounds like good news, but what results will it bring? Perez captured the general mood of American workers this way: “They’re hard and falling behind.” Page cast this as a “disparity between the wealthy and the middle of the workforce.” I would respectfully disagree. From the Occupy protests to the ongoing Fight for 15, low wage working people are voicing their frustration and demanding justice in a way that the middle class is not. That said, most American (I’d guess 70-80%) are feeling anxiety and a lack of security. President Obama put it best when he said, “America needs a raise.”
I admire former Labor Secretary Robert Reich’ ability to take complex ideas and present them in language that should be accessible to most working people. Citing the coming of Labor Day, Reich reflects on the “shared” or “on call” work models that are becoming more and more popular as ways to staff and manage employees. He cites studies that say 40% of Americans can be working under such conditions over the next five years.
From the employer’s standpoint, this model makes sense. Why pay people to work when they are not needed? The problem with this business model, as Reich points out, is that it gives the loyal no security. They don’t know when or how they will earn their next dollar. The worst part of such a work schedule is that it leaves works panicked about their future. We need to respect labor and have laws that limit employers’ ability to offer “uncertain” work.
Jeanna Smialek of Bloomberg reports on a topic that it describes as “depressing” – wages. Despite steady increases in hiring, Smialek notes that wages have increased at a 2% rate since the end of the “Great Recession” in 2009. She cites two other measures that have held back pay increases: low productivity and low inflation. Bloomberg focuses on how this news impacts the economy. I’m more concerned with working people and what they are paid. More people are employed every month, and consumer sentiment remains negative. That doesn’t make sense. It would seem that increased opportunities to get new jobs and change jobs should make workers happier. However, as this fine article notes, too many Americans feel that their income is not letting them get ahead. If that’s the new normal, we’re in big trouble.
USA Today had some good news: benefits are on the rise. Companies offering paid maternity leave have increased over the last year from 12% to 21%. Over the same period, paid sick leave has increased from 33% to 42%. Family leave is up from 19% to 24%. The article even cited some companies that are offering “unlimited vacation.”
This all sounds good. However, as I’ve noted in recent posts, income is not rising in a significant way for most Americans. Payscale offers an informative chart that demonstrates how little pay in the U.S. has changed from 2007 to the Present. Benefits are good only when they are needed. Wage increases give people more control over their lives, more of a feeling of security.
Bloomberg is one of my favorite sources to learn about the economy and how it affects workers. Dan Moss, Bloomberg’s Executive Editor for Economy, has a short article on a good measure to understand how to gauge changes in hourly earnings. The Employment Cost Index (ECI) is a quarterly report from the Bureau of Labor Statistics. According to Moss, it “looks at how much employers are compensating the same position over a period of time. In other words, what is the pay of a builder, or plumber, or, God forbid, a journalist for a job over a period of time.” He says the number to watch is 2%, which is where the index has been stuck for a long time. Moss cites a forecast by Morgan Stanley that says the index will move to 2.6%, which he calls “encouraging.” I hope this is good news. In any case, it is good to have another tool to analyze what we are earning.
P.S. USA Today reported the latest ECI data, and the news was ugly. The second quarter increase was only 0.2%, "the slowest pace on record dating to the early 1980s." The article goes on to discuss how this lack of growth is odd given drops in unemployment. Employers should have to pay more to hire new employees and keep existing employees in a tight labor market. I will keep watching this topic and follow up with other news and views about how our very strange economy affects workers.
Huffington Post reports that New York is making a big stride toward a state-wide minimum wage of $15 per hour for fast food workers. A panel set up by Governor Andrew Cuomo, a politician often criticized for not being liberal or progressive. It’s not clear if this measure would only apply to the fast food industry or if it would cover all industries. In any case, this is another example of politicians admitting that the current minimum wage is too low. America needs a raise, and hopefully leaders in New York will set a good example.
Why do Germans tend to carry more cash in their pockets than people in the U.S.? This sounds like a weird question, but I think it says a lot about workers’ rights. An article from USA Today (via the Chicago Sun-Times) reports that the average German saves more than Americans, and they use credit cards less. The average German carries $123 in cash compared to $74 for Americans. Where 53% of Americans have credit cards only 32% of Germans use them. The article cites history as the cause of this difference: “Germany’s cash obsession is deeply rooted in the scare from its economic crisis between World War I and II.” Later, it claims, “After losing WWII and suffering massive destruction, Germans believed frugality and hard work would help them recover.”
I do not dispute these claims. But I think there maybe another important reason that Germans can pay cash and keep more of it in their pockets: They are better paid and have more rights as employees. According to a 2011 study by the Bureau of Labor Statistics, German workers earned $47.38 dollars per hour compared to $35.33 for the average American worker. German Workers also receive more vacation time (six week on the average) and more of a safety net during times of high unemployment. While historical factors may affect how Germans think about cash, they also have more of it and a better sense of job security. I think Americans also believe in hard work and frugality, but too many of them aren’t making enough money. America needs a raise.
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