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Aspects of the Minimum Wage Conversation

minimum wage machineWhat, you may ask, is depicted here? It’s an artwork called “Minimum Wage Machine, (Work in Progress),” a simple but elegant interactive demonstration by which anyone may comprehend the implications of those words. Here is the explanation provided by Blake Fall-Conroy, creator of the device:

The minimum wage machine allows anybody to work for minimum wage. Turning the crank will yield one penny every 4.97 seconds, for $7.25 an hour (NY state minimum wage). If the participant stops turning the crank, they stop receiving money.

Wow, virtual reality at its finest! What if one of these could be placed in the lobby of every office building in Washington and in the chambers of the House and the Senate? Wouldn’t it be instructive if every bureaucrat and elected official could have a taste of what (per the Bureau of Labor Statistics) 3.6 million at-or-below-federal-minimum workers experience every day?

We don’t see that happening any time soon, but in the meantime, here are some aspects and facets of the current struggle to raise the minimum wage in the United States.

How small business owners feel

The CBS MoneyWatch report on this question, written by Erik Sherman, states:

According to a poll of 500 small business owners conducted on behalf of Small Business Majority, an advocacy group, 67 percent of these firms favor boosting the minimum wage from the current rate of $7.25 an hour and adjusting it annually as the cost of living rises… Two-thirds also agreed with the following statement: ‘Increasing the minimum wage will help the economy because the people with the lowest incomes are the most likely to spend any pay increases buying necessities they could not afford before, which will boost sales at businesses.’

The poll, conducted by Greenberg Quinlan Rosner Research, also found that 85% of the surveyed small businesses already pay more than the federal minimum. So those who argue that while big corporations may not feel the hit, small businesses would suffer drastically, appear to be mistaken.

Giving a little background, the Associated Press notes that:

The minimum wage has become an issue since President Barack Obama proposed during his State of the Union address in February that the federal minimum be raised to $9 from $7.25 an hour. Democrats in Congress introduced a bill to raise the minimum to $10.10 an hour in March, but it was rejected by the House.

The survey, commissioned by a group called Small Business Majority, was carried out in early March, a month after the President had addressed the question.

And what about those tips?

For Bloomberg, journalist Jeanna Smialek interviewed an individual in a position to both speak from personal experience and to see the big picture. Gina Deluca quit being a food service industry server two years ago and started a blog called Wiser Waitress. It was an interstate relocation that changed her life. In California, even workers who got tips had to be guaranteed at least $6.75 per hour, even if their tips didn’t bring them up to that.

But when she moved to New Mexico, Deluca was shocked to learn that her wages could fall as low as $2.13 per hour — the federal minimum for workers who get tips. But wait, there’s more. Deluca says on the Wiser Waitress “About” page:

I found that there were many employers abusing the tip credit. Not only were they taking the tip credit, thus allowing them to pay servers a small tiny wage of $2.13, they were also requiring these servers to share tips with back of the house employees, sometimes the whole staff. And unfortunately , these employers were not the exception as I found the practice to be widespread and prevalent.

Smialek writes:

Legislation in Congress this year would raise the $2.13 base for the first time since 1991. The move would help many of American’s 2.3 million servers, advocates of an increase say, as well as manicurists, bellhops and other workers who rely on tips for much of their earnings. It could also spur firings and reduced hours as thin-margin businesses grapple with higher costs, say some restaurant owners and economists.

Worse and worse

Where have we heard that before? And get this: While the nation has changed from a manufacturing economy to a service economy, with more people than ever forced to settle for low-level, non-union employment, the situation for people in tipping jobs is much more severe than it has been in the recent past:

The cash base was 50 percent of the regular national minimum until 1996 legislation froze the lower rate at $2.13. It now amounts to 29 percent of the full minimum, which has been raised four times since.

Does raising the minimum wage cause some jobs to be eliminated because businesses just can’t afford to pay? Depends on whose survey results you look at. Please see Smialek’s article for more details, and last week’s House the Homeless blog post.

And, for an even better solution that could change the lives of millions of workers, please get acquainted with the Universal Living Wage.

Reactions?

Source: “Small businesses back minimum wage hike,” CBS News, 04/24/13
Source: “Small business owners support increase in federal minimum wage…,The Washington Post, 04/23/13
Source: “Waitresses Stuck at $2.13 Hourly Minimum for 22 Years,” Bloomberg, 04/25/13
Image by Blake Fall-Conroy.

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Minimum Wage on the Front Burner

Living Wage

MINIMUM WAGES (hourly):

  • Fought for by President Franklin D. Roosevelt 1938 — 25 cents, which would be more than $4 now
  • In 1974 — $2 per hour
  • Now — $7.25
  • Proposed by President Barack Obama in State of the Union Address — $9.00 per hour
  • How much it would need to be, if equivalent in spending power to 1974 — $9.31 per hour

These are a few of the pertinent facts presented by Angelo Young for International Business Times, before going on to demolish several anti-minimum-wage arguments. He quotes Roosevelt’s 1938 speech:

Do not let any calamity-howling executive with an income of $1,000 a day, who has been turning his employees over to the Government relief rolls in order to preserve his company’s undistributed reserves, tell you […] that a wage of $11 a week is going to have a disastrous effect on all American industry. Fortunately for business as a whole, and therefore for the nation, that type of executive is a rarity with whom most business executives heartily disagree.

Strong words! Young says:

It’s not likely that the debating points will change under Obama’s call to pass wage-increase legislation. His proposal to link the federal wage increase to the rising cost of living will definitely be met with Roosevelt’s ‘calamity-howling.’

What with one thing and another, the minimum wage topic did not, for a while, reside on the front burner of the national stove. That there should even be a minimum wage is still not an idea espoused by all, but as House the Homeless discussed last week, acceptance has made great strides.

It’s a debate that has been in progress for 75 years, and the last 39 years have been especially rough, cost-of-living-wise, Young says, and adds:

[…] [W]ages have not kept up with America’s cost of living, making it more difficult for the working, taxpaying bottom-bracket earners in this country to pull themselves up by their proverbial bootstraps […] working Americans in lower income brackets who live paycheck to paycheck, where any fluctuation […] means much more than just canceling premium cable subscriptions.

To that list at the top of the page, we could add:

  • Amount that Sen. Elizabeth Warren asks why workers are not paid — $22 per hour

Michael Rathbone explains:

Sen. Warren probably is referring to [a] study by the Center for Economic and Policy Research that showed what the minimum wage would be if it had kept up with increases in worker productivity… The study […] talks about average productivity. Average workers do not earn the minimum wage. This study does not track changes in the productivity of workers who make at or below the minimum wage. Isn’t it possible that the largest increases in productivity have been among more skilled employees who already earn above the minimum wage?

This is not exactly an anti-minimum-wage argument, but Freakonomics co-author Steven Levitt has an interesting take on it. In The Huffington Post‘s capsulization of his recent Q&A session via Reddit, Levitt says:

Honestly, I don’t think the minimum wage matters all that much to the economy.

Why? Because relatively speaking, the number of minimum-wage workers is small, with about 5.2% of hourly workers making the minimum or below. The article notes:

Some studies have reinforced President Barack Obama’s argument that raising the minimum wage would boost the economy. Raising the minimum wage by $1 would give households comprised of minimum wage workers $2,800 per year more to spend, according to a 2011 study from the Federal Reserve Bank of Chicago cited by CNN.

There is a corny but true parable which has many versions. This one one was adapted by the Starfish Greathearts Foundation:

An old man had a habit of early morning walks on the beach. One day, after a storm, he saw a human figure in the distance moving like a dancer. As he came closer he saw that it was a young woman and she was not dancing but was reaching down to the sand, picking up a starfish and very gently throwing them into the ocean.

‘Young lady,’ he asked, ‘Why are you throwing starfish into the ocean?’

‘The sun is up, and the tide is going out, and if I do not throw them in they will die.’

‘But young lady, do you not realize that there are miles and miles of beach and starfish all along it? You cannot possibly make a difference.’

The young woman listened politely, paused and then bent down, picked up another starfish and threw it into the sea, past the breaking waves, saying, ‘It made a difference for that one.’

It’s not accurate that only 5.2% of workers would benefit from a minimum-wage raise. There is more to it. But putting that aside, even if the lives of only 5.2% of workers were improved, like the starfish, it would make a difference for them.

Reactions?

Source: “State of the Union 2013: Obama Calls For $9 Minimum Wage,” International Business Times, 02/14/13
Source: “The $22 (An Hour) Question,” Show-Me Daily, 03/31/13
Source: “Freakonomics’ Steven Levitt: The Minimum Wage Doesn’t Matter ‘All That Much’ ,” The Huffington Post, 02/19/13
Source: “Sex Trafficking,” WomanStats, 10/17/12
Image by Barbara Ehrenreich

 

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Minimum Wage Logic Accepted

hopeless

“Consider the source” is usually said skeptically, and, of course, we always do consider it, whether skeptical or not. Here, the source is pretty impressive. It is The Economist, which Steve O’Keefe, writing for House the Homeless, described as “the house organ of the economics profession, the gold standard of consensus among economists.” He discussed an article about the minimum wage in which The Economist said, in effect, “Hey, if you do this, it increases everyone’s wealth, not just those earning the minimum wage,” and said it to the finance ministers of every country in the world.

What’s going on here? O’Keefe says:

Minimum-wage laws actually don’t reduce employment. In fact, they increase the welfare of minimum-wage workers and their employers. The Economist notes, ‘Not only has [the minimum wage] pushed up pay for the bottom 5% of workers, but it also seems to have boosted earnings further up the income scale — and thus reduced wage inequality.’

Like the Magna Carta and common law and other refinements of civilization, this study came from Great Britain, which O’Keefe says:

[…] introduced a national minimum-wage law in 1999. The British government requires a minimum wage equal to about 46% of median earnings — compared with a less generous 40% in the United States. When Great Britain instituted the national minimum wage ‘worries about potential damage to employment were widespread,’ says The Economist (itself a major worrier), ‘yet today the consensus is that Britain’s minimum wage has done little or no harm.’

In Austin, TX, the minimum wage question has been the subject of controversy. That is where House the Homeless is centered, and co-founder Richard R. Troxell was asked by Commissioner Judge Sam Boscoe to give his point of view. In an email that was circulated to all the Austin City Council members, Richard wrote:

The Fed has determined that based on a sophisticated formula that includes a two-year time lag (so as not to be distorted by new housing startups), that in the Austin Fair Market Rent Area, one can reasonably expect to pay $681 for an efficiency apartment and $834 for a one-bedroom apartment.

Apparently, in Austin, tenants would have to be making more than $16 per hour to meet the rest of their living expenses while renting a one-bedroom apartment. That’s barely enough space for a couple, or a parent and a child. In which case the parent would have to be working full-time and bringing in $16 an hour. Who makes that much? Or if it’s two adults, they both have to be working full-time for at least $8 an hour. Minimum wage is $7.25 an hour. Austin was debating whether, in light of its intense downtown renewal efforts, it should mandate a minimum hourly wage of $11.

By combining existing governmental guidelines, we establish something called the Living Wage, which means enough to allegedly live on. And even those figures are based on the idea that nobody should be spending more than 30% of their income on housing. Many people are forced to spend a much larger percentage.

As head of the campaign for a Universal Living Wage, Richard tells the world that greater income at the bottom of the economic ladder leads to greater spending at the bottom, and boosts the whole economy. Companies benefit from stabilizing the economic situation of their employees, because turnover is expensive. Then there is the matter of lower government spending, when the lowest echelon of workers rely less on government subsidies.

Richard was also recently quoted in a Fortune CNN article by Eleanor Bloxham, CEO of The Value Alliance and Corporate Governance Alliance. The subject was the need for increased transparency in corporate dealings, for instance:

One such disclosure would be whether the company pays a living wage to all its employees — and if not, what percentage of workers don’t receive it.

Bloxham’s article went on to quote Richard about the Universal Living Wage. But let’s get back to another interesting thing about The Economist‘s breathtaking discovery, which isn’t such new news after all. Here is a quotation from Richard’s book, Looking Up at the Bottom Line, which is available via Amazon, Nook, and Kindle:

Ben Bernanke, during his first month of serving as the newly appointed Federal Reserve Chairman, testified before the House Financial Services Committee. Congressman Bernie Sanders asked Mr. Bernanke if Congress should raise the Federal Minimum Wage…

Mr. Bernanke responded: ‘The concerns that some economists have raised about the minimum wage […] does it have any employment effects? That is, do higher wages lower employment of low-wage workers?’ […] Mr. Bernanke then definitively declared, ‘My response is that I think it doesn’t lower employment.’

Reactions?

Source: “Major Reversal: Economists Agree Minimum Wage Works!,” HousetheHomeless.org, 12/12/12
Source: “How to fix rampant CEO mistrust,” CNN.com, 03/14/13
Source: “The Argument in the Floor,” The Economist, 11/24/12
Image by Aidan Jones.

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KFC Says, Get a Job — LOL!

Kentucky Fried ChickenLast June, this Question & Answer appeared in the online forum ExpertLaw.com:

Question:

Is it legal for an employer to deny employment to an individual who they consider otherwise qualified, if it is discovered that the individual currently lives in a homeless shelter?

Short answer: yes. Neither federal anti-discrimination laws nor most state anti-discrimination laws preclude disparate treatment/employment discrimination against individuals residing in a homeless shelter. (ESteele, Senior Member)

A few weeks ago, in Tupelo, MS, after months of job-hunting, Eunice Jasica found work and seemed to be on track for the next phase of life — saving up to move out of the Salvation Army lodge. But when she reported for her first day on the job, fast-food franchise owner Chesley Ruff withdrew the offer of employment “due to lack of residence and transportation.”

Say what? Then, a couple of days later, the manager backpedaled and said his refusal to honor the hire was really because Ms. Jasica had no experience in the difficult and demanding field of fast-food preparation. Plus, he doubted that the 59-year-old woman could lift the 40-pound boxes in which the food arrives. So never mind, no job after all.

Adding insult to injury, he implied that the job applicant had misunderstood and was delusional about having been hired in the first place. This shabby treatment is legal according to both the great state of Mississippi and the Kentucky Fried Chicken corporation. Reporter Emily Le Coz writes:

KFC operates more than 5,200 restaurants nationwide and follows all applicable employment laws, but its independent franchisees make their own hiring decisions, said KFC Corp. spokesman Rick Maynard.

Mississippi is an at-will employment state. That means the employer or employee can terminate the relationship at any time for any reason as long as it doesn’t violate anti-discrimination statutes based on factors like race, age, color, religion, sex, national origin or disability.

In Tupelo, Maj. Sue Dorman of the Salvation Army was shocked, possibly because this didn’t fit with Mr. Ruff’s customary behavior. He had previously hired a man who was not only homeless but a former convict, who had done very well in the business, and whose success story had been featured in a newspaper. The same manager had also hired other Salvation Army residents in the past. Dorman called Ruff, who told it is not company policy to hire people who don’t have stable housing or transportation, which made it sound more like a corporate-level matter.

And indeed, when The Huffington Post made inquiries, Ruff had nothing to say, but referred questions to the chicken vendor’s head of media relations, Rick Maynard, who emailed:

KFC Corporation believes in a culture of respect toward all people, and we abide by all applicable employment laws. The restaurant in Tupelo is operated by an independent franchisee who shares our beliefs, but is responsible for making hiring decisions for the restaurant he owns.

So this was starting to resemble what is colloquially called a runaround. Meanwhile, the Huffington Post story garnered well over 1,000 comments from all over the map, both geographically and philosophically. Typical is the response of “EarthMonkey07,” who wrote:

So now in order to even get a job, you can’t appear to need it in any way? You need to already be employed (since the statistics say they won’t hire you if you’re already unemployed), housed (since they won’t hire you without an address), with transportation (they won’t hire you if you don’t have a vehicle) AND have a bank account (because they won’t hire you if you can’t do direct deposit). This is getting crazy.

Exactly. And the craziness is not exclusive to the USA. A report from a prominent organization in Great Britain, St. Mungo’s, revealed that two out of three homeless job seekers had been rejected for employment because of their homeless condition. Half had found the lack of a mailing address to be an obstacle, and two out of three lacked the appropriate clothing, tools or equipment for the jobs they applied for. Universally, even those who are lucky (or adept at hiding their true circumstances) find that the low-paying jobs they land do not come near to providing enough for housing anyway.

The really imposing feature of the St. Mungo’s report was the contrast between 1986 figures, showing that 83% of the homeless people surveyed then had some kind of paid employment, and their 2005 numbers, which revealed only 5% of their homeless clients holding jobs.

Meanwhile, because of the publicity surrounding this debacle, Ms. Jasica received several other job offers and was “tentatively hired” by On Time Transportation to drive Medicare and Medicaid patients to their doctors’ appointments. While this promises a happy ending for her particular story, many other homeless people throughout the country are not so fortunate.

Not surprisingly, House the Homeless has been involved in this struggle for years. Its Homeless Employment Survey of 2007 inspired the state of California to conduct a similar survey in 2009. Here is House the Homeless co-founder Richard R. Troxell’s candid response to Eunice Jasica’s plight:

Very sad. I for one am outraged! So while the Puritan Work Ethic remains intact for someone who has lost all of their worldly possessions, the compassion, empathy and love for one’s fellow human being has dissipated like water on the sidewalk. Shame on that franchise and shame on KFC for allowing this act of inhumanity to occur in their name. It’s only a matter of time before people will no longer accept this kind of treatment. Then what? There are 3.5 million people experiencing homelessness again this year.

In the Sacramento survey, 70% of the respondents identified the reason for their homeless condition as economic, 87% wanted to work and felt they were able to, and 42% identified their homelessness as the most significant barrier to working. Lack of transportation, as always, plays a big part in the employment equation. One of the recommendations resulting from this survey was:

Expand mail, email and voicemail services: We recommend universal coverage of a mailing address, email and voicemail services for homeless people to dramatically increase their chances for employment.

This excellent idea is, of course, one of the things that objectors are currently complaining about. They are against any plans that are put forward to provide cell phones to the homeless, because why should street people get fancy technology for free? And so it goes…

Reactions?

Source: “Q & A,” ExpertLaw.com, 06/06/12
Source: “Woman fired for being homeless,” ClarionLedger,com, 03/21/13
Source: “Eunice Jasica Claims KFC Franchise Reneged Job Offer…,The Huffington Post, 03/28/13
Source: “Hard Work for Homeless People,” samhsa.gov, 2005
Source: “Homeless Employment Report: Findings and Recommendations,” National Coalition for the Homeless, August 2009
Image by Joe Schlabotnik.

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Counting the Homeless in Austin

Jeff BridgesTo satisfy the federal requirement for the information that is needed to fairly distribute available funding, the people experiencing homelessness are counted every year. House the Homeless blog has taken an extended look at the “how” of the annual point-in-time count, which could be described as “different strokes for different folks.”

In a way, it’s good that communities can use different techniques, because if somebody discovers how to do it right, they can share that information. Just imagine, if one city could figure out how to correct the numerous flaws, and create a process that is humane, safe, dignified, and productive of justifiable results. If a community could demonstrate a good common-sense approach, their procedure would no doubt be gratefully adopted all across America.

In Texas, during the stipulated time period this January, 300 Austinites under the auspices of ECHO (Ending Community Homelessness Coalition) fanned out to enumerate the unhoused. At the beginning of February, a newspaper report stated that the number of homeless people in Travis County had decreased by 39% since 2008.

For the Austin American-Statesman, Andrea Ball learned that in the field of homelessness alleviation, despite favorable statistics, workers “on the ground” are sometimes unable to discern much improvement. Many advocates, like Alan Graham of Mobile Loaves and Fishes, question the usefulness of the annual count, saying it’s a faulty measure. He pointed out that conditions on the appointed count day may vary wildly from one year to the next. Success is influenced not only by the meteorological weather but by the law enforcement climate, which may at any particular time “crack down” in ways that drive the chronic homeless further into hiding.

In the original reportage there was some confusion about daily and weekly figures relating to shelter admissions in Austin. Apparently, the total of homeless people, inside and outside, amounted to less than the number of people who use the inside shelter in a single day. Much depends on these numbers, we are reminded by Richard R. Troxell of House the Homeless.

Richard was invited to share his thoughts with radio station KLBJ-FM, and in preparation wrote out his thoughts, some of which are rather caustic:

Excellent news! The number of people experiencing homelessness has been dramatically reduced in Austin by 39% since 2008! Or so you think if you believe the front page headlines in The Austin American Statesman. It is not until you read the 3rd page of the story that you learn that the 2012 count of the homeless (2,121) in the woods, streets, and shelters was less than the actual daily number of people served in the shelters alone (between 2,650 and 2,750 on a daily basis).

Richard also asks how much sense it makes to count people at dusk or in the dark of night. He also finds the 24-hour concept to be flawed, and fears that trying to get it done all in one day is counterproductive. He writes:

Why don’t we count them over a two week period? Because the federal government is afraid of a possible multiple survey responses by homeless folks. The same people might fill out the questionnaire more than once, and skew the numbers. For starters, this assumes that anybody is willing to do it more than once. Do we really think that homeless folks will rush to complete multiple forms? They probably don’t even like doing it once. And the result is, the numbers are skewed even more.

We could best count the folks experiencing homelessness by asking Willie Nelson to throw a bash. We’d get the city of Austin to cordon off a part of Zilker park, suspend the No Camping Ordinance and the No Sit/No Lie Ordinance, and hold a three-day love fest called ‘Everybody Counts.’ We could count and survey the homeless to our hearts’ content. We’d get the highest head count ever, and bring more federal dollars to Austin than ever before.

This homeless count process that has been used since 2000 has always been flawed, dangerous, and foolish. But now the flaw is glaring and staring us all in the face, on the front page of our paper, and on the Internet, and if you think HUD is going to accept these results then you have another think coming. On the other hand, if HUD does accept these results then we’re all in bigger trouble than I think.

With the federal government setting the minimum wage at $7.25 per hour, rendering more and more people homeless every day, do we really think we are decreasing the tsunami which is homelessness at the rate of 39% since 2008? How in the name of common sense is that possible?

The homeless community nationwide remembers advocate, activist, and hunger striker Mitch Snyder with great respect. In the face of controversy about the numbers he had cited, Snyder once remarked that the homeless can best be counted once they have been brought inside.

What could hasten that day? Please proceed to the Universal Living Wage

Reactions?

Source: “Travis County Homelessness,” Statesman.com, 02/04/13