During yesterday’s Republican Primary Debate, Donald Trump and other candidates stated that they would not raise the minimum wage. Trump took this level of thinking even lower, proclaiming “Our wages are too high.” He thinks the only way for America to be competitive is for “people to work really hard” to “enter that upper stratum.”
This kind of language is out of touch. Bill Clinton and Newt Gingrich teamed up to “end welfare as we know it.” Most poor Americans work, but they don’t make enough money to get ahead. It’s easy for a billionaire who was born into a wealthy family to tell others to work hard. It’s also dishonest. Our economy does not produce enough jobs that pay enough for people to enter the middle class, much less Trump’s “upper stratum.” Complex problems need thoughtful solutions, not cliches.
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?
Daily Kos features an article by Hunter on presidential candidate Rand Paul’s explanation for income inequality. The senator from Kentucky told Chris Wallace of Fox News: “The thing is, income inequality is due to some people working harder and selling more things.” Hunter asks an important question: How much is Senator Paul’s own success a matter of his hard work and how much of it is based on the great base of support built by his father’s decades of hard work? The same question could be asked about the Walton heirs.
From a different angle, how much harder do CEOs work than the average U.S. worker? According to the SEC (as cited in yesterday’s Chicago Tribune), some of Chicago’s CEOs must be working incredibly hard:
- James McNerney of Boeing earns $28.9 million annually, 611 times the average worker’s annual income.
- Peter Liguori of Tribune Media has annual compensation of $23 million, 487 times what the average worker makes.
The rest of the top ten Chicago CEO earn between $21 million and $15.6 million, which is also 466-331 what the average American worker earns.
My problem is not simply income inequality. When Senator Paul and other conservatives talk about hard work and “takers,” they disrespect the work done by millions of Americans. They project a divided society where the lucky few deserve wealth and security and most Americans live pay check to pay check in constant fear of losing a job and have little hope for the future. I don’t think the problem of income equality is simple to explain or solve. Dismissing it as a matter of hard work is insulting to all Americans.
Laura Clawson of Daily Kos looks at the dilemma faced by labor unions in the upcoming Democratic primary. Most experts still think that Hilary Clinton will win the nomination. That view is opposed by the progressive wing of the Democratic Party, which supports Bernie Sanders. Unions will have to walk a tightrope in making endorsements. Many see Sanders as more pro-union. That said, Clinton has supported unions as well and has called for an increase in the minimum wage.
I’m a big fan of Bernie Sanders. However, if Hilary Clinton is the nominee, I would happily support her. Given our current political climate, the Democrats are the only real alternative to a party that is anti-union and opposes raising the minimum wage.
One of the biggest problem facing low wage workers is their schedule. Many companies have turned to work models such as “on call” scheduling that gives employees little control over their time or their lives. Laura Clawson of Daily Kos reports that a group of Democratic senators and representatives have proposed “The Schedules That Work Act.” This bill would give workers at companies with 15 or more employees the right to request changes in their schedule, especially in cases related to health concerns or child/elder care. It would also give employers incentives not to use on call schedules or split shifts. Clawson is a realist. She notes that this bill means nothing as long as Republicans control the Senate and House.
This is a problem since many experts think the House will stay in Republican control into the next decade. What can workers do? First, they should consider schedule to be as important as salary. Next, if they have to take a low wage job or one with a bad schedule, they need to keep looking for a better job. Over the last 25 years, we’ve seen that employers have no loyalty to employees. Layoffs are part of doing business. Workers have to take the same attitude. If you’re in a bad job, keep looking for something better. When you find it, layoff your employer.
Much has been made of a comment by presidential candidate and former Florida Governor Jeb Bush, who said that economic growth depended on people working “longer hours and, through their productivity, gain more income for their families. That's the only way we're going to get out of this rut that we're in.” According to a source cited by Mark E. Anderson of Daily Kos, American work on average 46.7 hours per week.
My problem with Bush’s comments is that Americans are already working too many hours. As Anderson points out, many people go to work even when they’re sick because they are not eligible for paid sick leave. The problem ignored by Bush is that Americans are not getting the kind of raises they have in the past. Working Americans are stressed by too much work, burdened by death, and frightened by insecurity. President Obama put it best: “America needs a raise.”
During his last State of the Union Address, President Obama declared that “America needs a raise.” Yesterday, he acted on those words. The president announced that salaried employees (5 million Americans) making as much as $50,400 would be eligible for overtime. As Laura Clawson of Daily Kos puts it, employers will no longer be able to use exempt status (salaried employees) to keep from paying overtime. This move by the Obama Administration (if it’s not overturned by a court challenge) will either give employees more money or more time off. The 40 hour week will again become meaningful to millions of Americans. It’s a good day for working people.
P.S. President Obama is featured in The Huffington Post on his overtime reform. The president express great confidence that he is doing the right thing for American workers: "That's how America should do business. In this country, a hard day's work deserves a fair day's pay. That's at the heart of what it means to be middle class in America." I agree, but would add that what the president is doing will also help the working class and the working poor, who are often victims of wage theft. We all deserve a fair day's pay.
Where is the money going? Corporate profits are up. Productivity keeps going higher and higher. Despite this “good news,” most Americans feel insecure in their jobs and income. So, where is the money?
Laura Clawson of Daily Kos shows one area where the money has gone: CEO pay. While I recommend that your read Clawson’s article, the whole story is told in a graph that accompanies the article. Before the mid-1990s, CEOs’ average pay was less than 100:1 the pay of average workers. By the end of the 1990s, the ratio had moved to 300:1. Since that time, the average has gone up and down. Still, it has ranged between 200:1 to 400:1.
This trend is only part of the story. If CEOs pay has moved this way, it’s logical to assume that other senior leaders have received healthy raises. I’m not arguing that these salary increases can’t be justified – because anything can be justified. The reality is that if pay disparity rewards the top of the pyramid, those at the bottom and middle will lose. The fight over the minimum wage is a good thing, but we also need to thing about who is being reward for economic growth and enhanced productivity. Do we want a society where a few have security and most people are running scared?
Laura Clawson of the Daily Kos reports on a big change in labor law that might impact millions of Americans. The Department of Labor is considering an increase to the threshold for overtime pay from $23,360 to $52,000, which means any worker, including salaried employees, making less than that amount would be legally entitled to overtime pay. Clawson notes that this is a change President Obama could make without legislative approval. She also says that the move would probably be opposed in the legislature and courts. Even so, changing the threshold would be a good way to help low wage workers, and it would be a fit punishment for employers who pay employees salary so they do not have to pay overtime. I hope President Obama and the DOL put working people first – raise the threshold.
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