Minimum Wage on the Front Burner
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
Perspective: Living Wages
On March 3, 2013, the Austin American-Statesman banner masthead read, “’Living Wage’ Proviso Targeted.” (See the article, “Dallas legislator aims to stop wage requirements in incentive deals.”)
Apparently, the Dallas legislature does not want Texas municipalities, Austin-led, to require companies to pay “living wages.” The federal minimum wage is $7.25/hour, but Austin, like the federal government, has now plucked an imaginary number out of the air and dubbed it a “living wage” at only $11.00/hour. For the moment, let’s put aside the issue as to whether or not a municipality should be able to exercise its power position of employer to extract better wages for its employees.
To be clear, $11/hour is not a living wage.
A living wage is an amount that ensures that a person working 40 hours in a week will be able to afford basic: food, clothing, shelter (including utilities), and public transportation. In Austin, it is $13.10/hour. This is calculated by using a 40-hour-a-week job, spending no more than 30% of one’s income on housing ( a national banking standard), and HUD’s Section 8, Fair Market Rent Formula. It is also calculated based on the cost of an efficiency apartment in Austin, which is $681 on average.
To pay a lower wage can result in economic homelessness. At this pay scale, 3.5 million people will again face homelessness in our nation this year.
Image by Ari Moore.
Counting and Sentencing the Homeless
Last time, House the Homeless looked at some of the erratic ways in which people experiencing homelessness are counted during the annual attempt to define the extent of this social disaster. A question that might come to mind is, “Who says erratic is bad?” On the contrary, it’s good that communities have latitude to conduct the homeless census in whatever way is compatible with the bioregion, etc.
Who knows? Some municipality might come up with a better idea, one that could be adapted by others to the benefit of all. But ever since the federally mandated program started in 2005, there has been dissent, directed at either the whole concept in general, or some aspect of it.
In 2011, word came from Fremont, Ohio, that:
Despite recent data released by the U.S. Department of Housing and Urban Development showing homelessness is on the decline in the region, one local shelter director said the problem is just as prevalent as ever.
The story quoted the executive director of Fremont’s Liberty Center, Margaret Weisz, who may have spoken for many of her colleagues when she said:
Those numbers are misleading. In reality, homelessness is actually up. We have seen about a 30 percent increase over the last two years.
In Illinois, Susan Frick Carlman listed some of the things wrong with how the DuPage County census was made:
[...] driven in part by programming cuts at local domestic violence shelters, the county saw a 24 percent increase in families turning up at emergency and interim shelter sites during the latest fiscal year.
Also absent from the formal homeless equation are people who resort to friends and relatives when they lose their own homes — a practice advocates call ‘couch surfing.’In the fiscal year that ended June 30, there were 1,486 people who used emergency shelters and other interim housing. Last year the number was 1,512.
That’s a difference of what, 26 individuals? In a year? The 1,486 remaining homeless people, divided by 26 per year… Extrapolate it out — that’s 57 years to get the rest of them under a roof. Some people have an unusual definition of progress, for sure.
The journalist also mentioned that:
Among other things, the yearly report found that workers must earn more than twice the minimum hourly wage of $8.25 to afford the average rent for a one-bedroom apartment in the county.
More than twice the minimum hourly wage, did you catch that? Meaning, even if Mama and Papa are both working full-time, it’s not enough.
Ken Korczak is a freelance journalist who covers environmental, energy, poverty, and political issues. Last year, he pointed out that North Dakota had the supposedly best economy in the entire United States, with a “stunningly low” unemployment rate of 3%. Then he asked, if the economy is so vibrant and the unemployment number so tiny, why are the homeless shelters in Grand Forks and Fargo turning away hundreds of applicants every night?
As a possible answer, Korczak recommends a program led by Dr. Jill Stein, the Green Party’s 2012 Presidential nominee, and Cheri Honkala, The Green New Deal, whose literature states its goals as ending unemployment and debt in America. Their point of view is based on a belief that the system is rigged by the two dominant political parties, which might as well be one party, since they are both totally controlled by corporations. They also believe that corporations will not voluntarily pay appropriate wages, and are all too eager to reduce employees and export jobs.
The program could be financed, Stein says, by:
[...] shifting from an economy in which the majority — the majority — of our discretionary budget is spent on war and the occupation of other countries, to an economy that provides the secure, just, peaceful future we all deserve.
They believe this could be done by returning military spending to the level of a decade ago, and by “getting rid of an array of other corporate welfare schemes — such as billions in subsidies to oil and coal companies, banks and others,” says Korczak.
There is more to say about the methods of counting people experiencing homelessness. The counting is useful and necessary, if there is to be a fair appropriation of funds. But aside from sheer numbers, there are other questions it is very useful to ask.
House the Homeless recently released the conclusions of its 2013 Civil Rights Survey. As co-founder Richard R. Troxell says:
We strive to hear what people have to say about their situation and involve them in creating and pursing viable options.
These paragraphs contain some amazing stuff. People are turned down for housing. Reason given: because they are homeless. Without the proper 30-minute warning, they get ticketed for sitting or lying down in public. When they show up for a court date, the journey is wasted because they are told to return another day. (This runaround had happened to about half of the survey’s respondents!)
More than a third of them had been wrongfully deprived of belongings, by the police, and an even one-third had had their identity papers confiscated. It is very difficult for someone experiencing homelessness to obtain a useful ID. To have their ID cards, birth certificates, discharge papers, or whatever, taken away, could be the equivalent of a death sentence.
Reactions?
Source: “Liberty Center director: Recent numbers of homeless are misleading,” TheNews -Messenger.com, 03/14/11
Source: “DuPage homeless numbers defy pigeonholing,” The Naperville Sun, 02/22/11
Source: “Homeless numbers grow rapidly,” Examiner.com, 09/18/12
Source: “2013 HtH Civil Rights Survey Summary,” HouseTheHomeless.org, 02/27/13
Image by mikecogh (Michael Coghlan).
Unstable Housing Is Contemporary Slavery
As in the days of Les Miserables, people who lack wealth or property tend to be marginalized, disenfranchised, and dehumanized. Last week — and nothing has changed since then — House the Homeless discussed how, in America, poverty and homelessness are no longer lifestyles experienced chiefly by members of minority groups. Sure, ancestry is a factor in human fate, but almost always, the ultimate measuring device is money.
Recently, Northern California’s “Armstrong & Getty” radio show included the on-air reading of an email from homeless activist Ace Backwords. Here is an excerpt:
I’ve also been homeless for about 10 years… I’ve worked and supported myself for most of my life, including while I was homeless, and rarely went to the free meals or used the social services…
You see only the most grotesque and obvious members of the homeless community… The ones you don’t notice are the millions of otherwise normal people who don’t look or act homeless (which is why you don’t notice them) but just happen to be homeless. This is especially true of the latest generation of homeless — the ones in their 20s and 30s. A good percentage of them, there’s nothing particularly ‘street’ about them. They’re just normal people who got priced out of the rental market or victimized by the economic downturn. I read somewhere that 50% of recent college graduates are unemployed. And a surprising number of them end up homeless.
Whatever the percentage, isn’t it kind of shocking that any percentage of college graduates are unemployed? When even the educated white folks start finding themselves in the bread line, the situation is serious!
We also talked last week about Richard R. Troxell’s reflections on the book Why We Can’t Wait, by Dr. Martin Luther King, Jr., which was published in 1963 — almost 50 years, or half a century ago. Drawing a parallel between black Americans in the past and many people of all races in the present, Richard wrote:
… [W]ages can still be correctly characterized as slave wages as they are today even though they are set by the federal government itself. This is the case today with the federal minimum wage being set at so low a level that it leaves a full time worker firmly impoverished and unable to afford life’s basic necessities… Today, American business remains unwilling to relinquish what still amounts to a vast human reservoir of cheap labor paid at poverty wages that continues to economically enslave workers.
Part of the problem here is the “one size fits all” assumption on which the federal minimum wage is based. As Richard says, America is a nation of a thousand economies, at least. In different regions, the minimum wage needs to be different. The Universal Living Wage would go a long way toward rectifying matters.
Nicole Hudley of New America Media relates how California’s Homeless Youth Project (HYP) is trying to get a handle on the extent of the problem, as represented by raw numbers. To understand how they cope, the HYP also surveyed 200 young people, both black and white, on the streets of San Francisco. The researchers learned that while white kids are more apt to sign in at shelters, black kids are more likely to find makeshift solutions like sleeping on buses or in fast food restaurants.
Hudley writes:
The African American youth were 38 percent more likely to be placed in the foster care system by Child Protective Services than whites. African American young people were also more likely to attribute family conflict to temporary problems associated with such issues as finances or substance abuse. Whites, on the other hand, often viewed their family trouble as being permanent and irresolvable.
Perhaps this is why African American youths who succeed in eluding the foster system are less likely to call themselves homeless, because many of them manage to patch together a series of temporary semi-homes. They get more support from extended family and friends, often “couch-surfing” from one place to another and using their food stamp allotments to pay back the favor. While not, technically, the same as absolute homelessness, this mode of survival is certainly “unstable housing” and needs to be recognized as equally problematic.
The poor of all ethnic groups share in common the feedback loop between homelessness and jail and homelessness and jail, and so on. Using prisoners for slave labor is actually fine, according to the Constitution. It says so right there in the 13th Amendment, as “Jehu” reminds us. This writer also notes that anti-vagabond laws were often used in the previous century to collect black men from the streets so they could be forced to work on behalf of corporate interests for no pay.
Jehu quotes a political author named Carl V. Harris:
In 1906 the editor of the Birmingham News said: ‘Anyone visiting a Southern city or town must be impressed at witnessing the large number of loafing negroes… They can all get work, but they don’t want to work. The result is that they sooner or later get into mischief or commit crimes.’ The editor believed that such Negroes were ‘not only a menace to the public safety’ but also ‘to some extent a financial burden upon the taxpayers.’
Doesn’t that sound just like what is said of people experiencing homelessness in the present day? Unlike the American South of over a hundred years ago, where black people were demonized, we now have an entire country where anyone can be demonized, regardless of race, creed, or whatever. All they have to be is homeless. This is equality like never before — progress indeed. And yes, that was a sarcastic remark.
Reactions?
Source: “The Armstrong and Getty radio show,” Acid Heroes, 12/14/12
Source: “Homeless Black Youth Largely Invisible to Service Providers,” New America Media, 01/03/13
Source: “A critical examination of Kevin Carson’s Mutualism (Part One),” Gonzo Times, 06/09/11
Image by D.C. Atty.
Living on the Shifting Sands of Affordability
What the U.S. Census bureau calls a “conventional” amount of money to pay for housing (PDF) is 30%. According to economics experts, a family is considered financially responsible if it spends just under one-third of its income on housing costs. More than that, and the household is considered financially “burdened.” About one-third is the standard for most rental housing programs.
A Census Bureau report says:
Because the 30 percent rule was deemed a rule of thumb for the amount of income that a family could spend and still have enough left over for other nondiscretionary spending, it made its way to owner-occupied housing too.
But there are exceptions. Indeed, a mortgage website says that it is following the guidelines of most lenders by allowing a total debt-to-income ratio of up to 36%. The government report explains this:
Many households whose housing costs exceed 30 percent of their incomes are choosing then to devote larger shares of their incomes to larger, more amenity-laden homes. These households often still have enough income left over to meet their non-housing expenses.
In other words, for some people, affordability is not an issue, no matter how big a chunk of their income they spend to put a roof over their head. Lifestyle choice is the only consideration. They want gourmet kitchens and swimming pools, and if they can afford it, good for them. However, the report goes on to say:
But for those households at the bottom rungs of the income ladder, the use of housing costs in excess of 30 percent of their limited incomes as an indicator of a housing affordability problem is as relevant today as it was four decades ago.
The 30% figure is generally accepted now, and is conventional in the sense that it has been quoted since around 1980 when the government set the rent standard for subsidized housing, which shouldn’t charge more than one-third of what a family had.
But there is a strange historical wrinkle that people don’t seem to think about. This recommended proportion that came into vogue 30-odd years ago was not the same as it had been a few years before. The number had “evolved,” as the government report explains. The received wisdom about the amount of family income that should be spent on housing was different wisdom from what it had been previously.
Some of us remember Home Economics class, where we were taught that only a fool would ever consider moving into a place that costs more than 25% of your income. You spent one-fourth on housing, and there were other recommended percentages for other things the budget needed to cover. But for renting or buying a place to live, a quarter of what you made should definitely be the limit. To commit to a greater obligation was the act of an irresponsible person.
In 1968, there was the Housing and Urban Development act, and the next year, the Brooke Amendment set the rent threshold at one-fourth of family income. For the mathematically unskilled, one-fourht is less than one-third. The recommendation used to be to spend even less of the family’s total income on housing.
And guess what? Before that, it used to be considered prudent, rational, and logical to spend only one-fifth of the family income on housing, which is an even smaller proportion. The National Housing Act in 1937 created the public housing program, which had a rent standard that stopped at 20%, or one-fifth of income.
In other words, our idea of the portion of income that is reasonable and prudent to pay for housing has suffered from expectation creep. Every so often, we are presented, by the shifting sands of the affordability concept, with a new normal. Somehow, while we weren’t looking, one of the Great Universal Truths was swapped out for a different Great Universal Truth. Within one human lifespan, the expectation went from “housing should cost one-fifth of what you make” to “housing should cost one-third of what you make.” One-third is more. A lot more.
So, all other talk of housing costs is resting on a big, slimy, insidious con job. That being said, the struggle continues to provide housing that people can afford, and to get people into jobs that pay enough so they can afford housing.
House the Homeless is located in Austin, TX, where the issues of work, wages, and the affordability of housing are particularly acute lately because of the Waller Creek project which is remaking the downtown area. HtH President Richard R. Troxell recently contributed to the public discourse about subcontractor wages, informing the County Commissioners and City Council about the Universal Living Wage campaign. The concept is staggeringly simple: Any person who performs a standard 40-hour-per week job ought to be able to afford shelter (including utilities), food, clothing, and at least public transportation.
It’s kind of amazing that anybody should need this explained. But subcontractor pay is not the only matter being discussed in Austin these days. Much more on Richard’s mind, and the minds of people experiencing homelessness in the city, is the redevelopment project. Matters seem to be poised at a cusp where the agencies serving the homeless can either seize a huge advantage or lose a great deal of their ability to benefit the destitute and the striving.
The Austin Chronicle‘s Ari Phillips interviewed Richard for a thoughtful piece about the Waller Creek project and its ramifications. We quote from that article:
Troxell estimates that about 1,000 homeless individuals use the creek corridor daily. Lately, he says, the city has been encouraging the police to keep the homeless out of the area, he believes to prepare for coming development. He imagines the future Waller Creek as much like the heavily commercialized San Antonio River Walk — homeless-free…
Troxell thinks nonprofits aiding the homeless need to work together and plan ahead to build resources and move their organizations elsewhere; otherwise, the business community will buy them out one at a time. ‘If they do get bought out, the homeless community will be run over by this wave of new energy that’s coming,’ he said. ‘A wave that will be very moneyed and very police-secure.’
By the way, Looking Up at the Bottom Line, by Richard R. Troxell, is now available in electronic formats, i.e. the Kindle and the Nook.
Reactions?
Source: “Who Can Afford To Live in a Home?“ (PDF), U.S. Census Bureau, 2006
Source: “Going With the Flow,” The Austin Chronicle, 01/11/13
Image by Tim Patterson.
The Hate Crime Report
In Van Nuys, CA, a 67-year-old woman was purposely set on fire as she slept on a bus bench — one of those unfriendly pieces of public furniture specifically designed to be uncomfortable, with rigid dividers between each designated seat. But maybe, through the layers of clothing she habitually wears, Violet Phillips didn’t even feel the bumps. To be soaked with flammable liquid and then lit on fire causes pain of a different order of magnitude. Undoubtedly, Violet feels the serious burns.
Violet is what people call her at the local churches, where she is acquainted with many parishioners. But she likes to keep to herself. Journalist Mike Szymanski spoke with a representative of the intensive care unit of the University of Southern California Burn Unit and learned that:
… [S]he would only say ‘God bless you’ in reply to people’s questions.
This abominable attack happened two days after Christmas, too late to be referenced in stories about the release of the National Coalition for the Homeless (NCH) report on hate crimes of 2011, but just in time to be included in the 2012 total. The individual who has been arrested, on suspicion of attempted murder, is 24-year-old male. Let’s see how this fits in with the NCH report, which says:
… [N]early all of the attacks were carried out by teenagers and young men.
A lot of these young so-called men reportedly do these things just for fun. On behalf of The Huffington Post, Saki Knafo spoke with NCH executive director Neil Donovan, who feels that one of the big problems is the desensitization caused by electronic games that cast people experiencing homelessness in the role of targets. Also contributing to the stigmatization and degradation are video productions like “Bag Lady Fights” and “BumFights.” Donovan calls it a “campaign of dehumanization.”
But how many attacks, or anti-homeless hate crimes, are we talking about? Here’s the breakdown:
… [A]t least 32 homeless people in the United States died as a result of violent attacks in 2011, as compared with 24 the year before. The report also tallied 73 non-lethal attacks against the homeless, a drop from the previous year’s count of 89.
Despite a serious lack of funding, since 1999, the NCH has taken on the mission and challenge of filling the informational void. Their latest report is titled “Hate Crimes against the Homeless: The Brutality of Violence Unveiled” and the 94-page PDF file can be downloaded from the top of the NCH homepage. The FBI does not define the homeless as a protected group, and is not interested in keeping track of anti-homeless hate crimes. But it does tally up other hate crimes in America, and here is the alarming thing, as Knafo puts it:
… [T]he number of lethal anti-homeless hate crimes counted by the group exceeds the government’s tally of deadly hate crimes in all other categories.
In other words, for several years now, the number of homeless people murdered because of who they are has exceeded the number of victims of fatal hate crimes from all other (racial, religious, etc.) motivations, added together.
It’s a terrifyingly stringent economy where they can’t even place a foot on the first rung of the ladder to success, or even modest prosperity. In the late ’70s, the “deinstitutionalization” trend started, and was supported by many factions, for reasons that seemed good at the time. Unfortunately, psychiatric institutions were not replaced by other support systems. The combination of these national changes with other factors resulted in the current crisis where people are getting killed simply because they don’t have a place to live. Another aspect of this situation is, the elderly and confused are not the whole population of people experiencing homelessness. An enormous number of young people are out there trying to make it on their own.
Susan Saulny’s “After Recession, More Young Adults Are Living on Street,” is a companion piece to her earlier video reportage “Young and Homeless: The Recession’s Impact on Young Americans.” She talks about Los Angeles, where in 2011, there were about 3,600 unfamilied kids on the streets. The city’s shelter could sleep less than one-fifth of them. Boston is bad, all cities are bad, but the suburbs or country are nearly impossible.
The young do have one advantage. They are not so likely to be victims of the anti-homeless hate crimes per se, being better able to blend into the population. Kids like to look scruffy, and sometimes it’s hard to determine who is rich and who is destitute, on the evidence of clothes and hygiene. Plus, the young are more easily able to run away. But in shelters, it’s a different story. Saulny says the young:
[...] tend to shy away from ordinary shelters out of fear of being victimized by an older, chronically homeless population.
What is the answer? One of answers is to make sure there are jobs, both for homeless youth, so they can afford to live someplace, and for the aimless young men who victimize the homeless for kicks. Richard R. Troxell, as we know, is co-founder of House the Homeless in Austin, TX, and author of Looking Up at the Bottom Line. He recently wrote:
I sit on the Board of the National Coalition for the Homeless that produced this report. I also sit on the Civil Rights Committee and we actually generated this report. The young need to be engaged in living-wage jobs. So we need to promote our stimulus recommendations to President Obama, in order to create jobs, and then those jobs need to pay living wages.
Please learn more about the Universal Living Wage.
Reactions?
Source: “Homeless Burn Victim, Violet Phillips, Remains in Critical Condition,” Sherman Oaks Patch, 12/28/12
Source: “Anti-Homeless Hate Crimes Detailed In New Report,” The Huffington Post, 12/21/12
Source: “After Recession, More Young Adults Are Living on Street,” The New York Times, 12/18/12
Image by danieljordahl.
Major Reversal: Economists Agree Minimum Wage Works!
For many decades, economists have sounded nearly unanimous in their condemnation of the minimum wage. The consensus view among economists was that minimum-wage rules resulted in lower employment, and that the most uneducated and unskilled workers were those most likely to lose their jobs due to a mandatory minimum wage.
Well, the research is in, and the majority of economists were wrong! Surprise! Minimum-wage laws actually don’t reduce employment. In fact, they increase the welfare of minimum-wage workers and their employers.
Who says so? None other than The Economist, the house organ of the economics profession, the gold standard of consensus among economists. In a recent “Free Exchange” column, The Economist dishes the numbers on minimum-wage laws and begrudgingly concludes, “Whatever their flaws, minimum wage laws are here to stay.”
Why? Because “whatever their flaws,” they work. The Economist cites a slew of data about the effectiveness of minimum-wage laws that has become available recently — data which refutes the long-held belief that minimum-wage laws increase unemployment.
Much of this data comes from Great Britain, which 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 case you’re having trouble with the British accent, “little or no harm” means the law did quite a bit of good — by every measurable standard:
Not only has it 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. Wage gaps in the bottom half of Britain’s pay scale have shrunk sharply since the late 1990s. A new study by a trio of British labour-market economists (including one at the Low Pay Commission) attributes much of that contraction to the minimum wage. Wage inequality fell more for women (a higher proportion of whom are on the minimum wage) than for men and the effect was most pronounced in low-wage parts of Britain.
Again, let me translate from the British: The minimum-wage law boosted wages at the very bottom of the earnings scale — and all the way up the scale! As Richard R. Troxell, head of the campaign for a Universal Living Wage has eloquently argued, greater income at the bottom leads to greater spending at the bottom, boosting the entire economy. It also leads to lower government spending, lower taxes, and lower budget deficits, as those at the bottom rely less on government subsidies.
How is that possible — for increasing wages to increase profits? The Economist thinks much more work needs to be done to understand the relationship between employment and the minimum wage. The magazine goes part way by explaining that increased wages at the bottom lead to less turnover which saves more money for businesses than the wage increase costs them.
This lesson was not lost on Henry Ford. He paid workers more and thereby reduced the costs of building a car while increasing his profits. All of this is laid out in Richard R. Troxell’s book, Looking Up at the Bottom Line: The Struggle for the Living Wage. While it’s gratifying to see The Economist finally reverse its kneejerk objections to a guaranteed living wage, they have a long way to go to make up for the delays caused by their previous incorrect statements about the mythical damage caused by a minimum wage.
Source: “The Argument in the Floor,” The Economist, 11/24/12
Image by bsabarnowl (Bill McChesney).
Past Time For a Raise
The Catching up to 1968 Act of 2012 (H.R. 5901) is a piece of legislation introduced in the House of Representatives by Congressman Jesse L. Jackson, Jr. Its object is to raise the federal minimum wage to $10 per hour, an amount that may sound frightening to businesses, but apparently they do manage to adjust. Jackson points out that no job loss has been shown to result from reasonable increases in the minimum wage.
The amount is only one of the bill’s four prongs. The raise would happen immediately, or what passes for immediately in public life, two months after the enactment of the legislation. Then, after a year, the minimum wage would be tied to the Consumer Price Index. And there is a special provision for people like restaurant workers:
For workers earning their living on the basis of tips, the cash wage paid to such an employee is to be 70% of the minimum wage when the law takes effect, but in no case less than $5.50 an hour, adjusted annually as necessary thereafter.
Jackson notes that states and communities can always raise the minimum wage in their area, but it doesn’t happen very often. Ten states, he tells us, have exercised their autonomy by indexing the minimum wage to inflation, so that’s a good sign. And 70% of the American people, according to a recent poll, believe the minimum wage needs to be higher.
On the right-hand side of the Time for a Raise page is an impressive list of representatives who are co-sponsors. The information gives specifics on the position of organizations and public figures whose opinions about the minimum wage are often sought out:
The AFL-CIO, National Council of La Raza, civil rights organizations, Ralph Nader, Senate Majority Leader Harry Reid and many others have all supported raising it and indexing it. Even Rick Santorum (until recently) and Mitt Romney believed in raising the minimum wage and Mr. Romney wanted to index it to inflation.
For encouraging him to introduce the legislation, Jackson extends special appreciation and thanks to Nader. In his argument for the raising the minimum wage, Jackson (like many others) references the unfairness of the huge gap between compensation for executives and workers. CEOs and all those other “Os” could help a lot by taking voluntary pay cuts.
As House the Homeless blog has often discussed, the Universal Living Wage (ULW), as written up by Richard R. Troxell, shares a similar motivation, although it takes a different approach. The ULW accomplishes the same benefits, and adds more. It doesn’t take a sociology professor or an economist to recognize that the cost of living is different in different places around the United States. To speak of “the economy” is misleading, because we are a nation of at least 1,000 economies. One size does not fit all. Richard says:
Raising the FMW to $10.00 an hour will not get one minimum wage worker off the streets of Washington DC the day it becomes law-far from it. At the same time, $10.00 an hour will seriously hurt small business in rural America.
Harm to small businesses can be reduced by costing them money only in communities where the economy can handle it. Harm can also be reduced by planning for change to take place over a 10-year period. If the increase is eased into, businesses will know what to expect and be able to budget for it. Richard asks:
What’s wrong with spreading out the solution of this problem over 10 years if it took 50 years for it to be created? Especially, if in the end, it solves the Wage Issue Problem for all time and ensures that a person working 40 hours in a week will finally be able to afford basic: food, clothing and shelter, (including utilities) wherever that work is done throughout the United States… Remember, minimum wage jobs are the last bastion of purely American jobs. These jobs and these workers cannot be outsourced. Our workers deserve better and our employers deserve to be respected.
By a not-so-strange coincidence, Ralph Nader has also sat down with Richard to discuss the Universal Living Wage. Back in the day, both men worked for economic justice in the streets of Philadelphia, alongside the esteemed Max Weiner, founder of the Consumer Education and Protective Association (CEPA), and the Consumer Party.
Catching up has been the policy behind the federal minimum wage for far too long. “The Catching up to 1968 Act of 2012” is a cute title — one might say a “catchy” title — but, really, is that the best we can aspire to, going backwards nearly half a century? If we always go less than the distance to the goal of exiting poverty, then how long does it take us to reach that goal? The answer is, we never do. The result is a 10,000,000 people pool of economically enslaved full-time workers who remain vulnerable to the disaster of falling into economic homelessness.
And even in the best case, “catching up” would not bring us back to where we were in that golden past. Jackson noted that the proposed increase “doesn’t fully equal the purchasing power of the minimum wage in 1968 — which today would be closer to $11 per hour.” Even if “catching up” becomes law, the American worker will not be able to buy as many loaves of bread with an hour’s pay as could be bought for an hour’s wages back in 1968.
Please visit to learn more about the Universal Living Wage and the ways in which you can participate to make it a reality.
Reactions?
Source: “The Catching up to 1968 Act of 2012,” timeforaraise.org, 06/06/12
Image by cliff1066, used under its Creative Commons license.
Homelessness, Returning Veterans, and the Universal Living Wage
Memorial Day should be every day, because to forget the people and events of the past is to wallow in stupidity. In other words, ignoring makes us ignorant.
One thing that must not be ignored is the existence of an enormous number of homeless military veterans. Richard R. Troxell of House the Homeless observed Memorial Day this year by sharing his knowledge via Fox News.
On the most mundane level, many practical difficulties are in the way of returning veterans. It’s easy to think, “The military gives them training, what’s the problem?”
The problem is, as Richard explains, that even if a veteran is lucky enough to have learned a skill that can be used in the larger world — medical technician, for instance — this in no way guarantees that the person will find a job. In one state, it may be as simple as passing a written test, to be granted the certification of a licensed practical nurse. In another state, the ruling body of LVNs might not recognize government service as either legitimate training or job experience.
But the majority of veterans don’t have what are called “transferable skills,” meaning that while they may have been the very best at what they did in the military, civilian life doesn’t need that particular skill, and is not willing to pay for it. The job market isn’t that great, anyway, for anybody (with the possible exception of those willing to relocate to Minot, ND.) A lot of people are stuck with minimum-wage jobs, and Richard’s Memorial Day talk includes an introduction to the Universal Living Wage (ULW).
It’s an idea worth exploring, and the place to do that is the ULW website which includes everything — what the U.S. Conference of Mayors said about the inability of a minimum-wage worker to afford basic housing anywhere in the country; why the ULW is good for business; and why it’s good for taxpayers:
Until our businesses pay ‘Living Wages’ — the minimum amount to afford basic food, clothing and shelter — we, the taxpayers, will continue to suffer as long as we are required to pay for excess food stamps, TANF, Welfare and Earned Income Credits.
There are commonalities between returning veterans and everybody else in the job market. Some vets have never seen combat in their entire military career, so they are on a more even footing with civilians, when competing for jobs. But combat veterans are a different story. Some tend to have missing limbs, or disabling head injuries. A lot of them have post-traumatic stress disorder, which is very real, and the ways in which it manifests can be quite troublesome to society as well as to individuals and families.
Of the people experiencing homelessness in America, more than a quarter are veterans, and many of them have serious problems, which means an extra layer of difficulty in the process of becoming employed, productive, housed citizens. Even in a best-case scenario, fitting back into ordinary life is a culture shock. As Richard says, “Vets go from the battlefield to the neighborhood overnight.” The abrupt transition is disorienting.
This is, in fact, one of the major points made by Karl Marlantes in his book, What It Is Like to Go To War, where the roles of myth, ritual, initiation, reverence, and psychology are extensively discussed. Anthony Swofford, another veteran/author, says:
Marlantes is the best American writer right now on war and the extreme costs to society of sending young men and women off to combat without much of a safety net for them when they land back home.
The website Make the Connection describes the problems with which it hopes to help veterans:
Some of the challenges that come with transitioning from the military can be difficult, stressful, or put a strain on your relationships. You might find it hard to enjoy the things you usually like doing. You may be having a tough time dealing with the death of friends that you served with. Chronic pain or other medical conditions may pose additional challenges.
People who come back from combat zones might not be able to sleep like they need to. They might feel edgy and tense, and have trouble concentrating, and find it difficult to control irritable and angry impulses. Depression can envelop a life for weeks or months. A person might have an exaggerated need for perfectionism, left over from the days when a small detail could make the difference between life and death.
Returning veterans need this kind of information, and need to know they are appreciated and not as isolated from society as they might feel. Civilians need this kind of information too, to get a better picture of the reasons for the homeless veteran situation, and find inspiration to do more about it. As Richard says:
Hug and kiss a returning Veteran, then give them a Living Wage Job.
Reactions?
Source: “How homelessness impacts returning veterans,” Fox News, 05/30/12
Source: “Anthony Swofford on America’s Best War Writer, Karl Marlantes,” The Daily Beast, 11/11/11
Source: “Transitioning from Service,” Make the Connection
Image by Tracy Vierra, used under its Creative Commons license.
Affording to Live
To rent a two-bedroom apartment in Hawaii, you need either a job that pays $31.68 per hour, or four minimum-wage jobs. Closer to 4.5, actually. In California, you need either a job that pays $26.02 per hour, or more than three minimum-wage jobs. And so on.
This is a much-simplified sample of the kind of information available from the report called “Out of Reach 2012,” compiled by the National Low Income Housing Coalition. You can download the entire report on its website, or various charts and graphs such as the one at the top left of the page, which is much easier to read in full size.
It would be interesting to have overlay maps, to see where all the empty foreclosed properties are, and the areas where the most people are away in jail, and where the largest concentrations of homeless people are, and several other variables, compared to these rent figures.
We learn from Aaron Sankin in The Huffington Post that the very most expensive place to live isn’t a state at all, but a metropolitan area which includes the District of Columbia and parts of Virginia and Maryland. By strange coincidence, this is the very area where the people who make the laws live, and also the ones who influence and reward the lawmakers on behalf of corporations. By another strange coincidence, Washington, D.C., our nation’s capital, contains an enormous number of people experiencing homelessness.
Across the nation, the rate of home ownership is the lowest since 1998, so, naturally, more people are looking for places to rent. Good luck with that, prospective renters! Reviewing the Out of Reach information, Sankin says:
The report notes that the number of low-cost rental properties around the country have shrunk as a growing fraction are converted into significantly more expensive units or left to fall into disrepair and taken off the market entirely. Between 2007 and 2010, the number of properties priced at under $500 per month dropped by one million, while those going for over $1,205 increased by two million.
Economic homelessness is the concept introduced by Richard R. Troxell in Looking Up At the Bottom Line. The economic homeless are the working poor who have some kind of a job, but don’t make nearly enough to rent even the most rudimentary and utilitarian kind of apartment.
If you want to get your heart broken, read about Project Fresh Start. At one point, Troxell obtained funding for a program in which 20 adults went through a “continuum of care” program, and found work and housing. Within two years, all were homeless again, not through personal failings or lack of trying, but because people just can’t live on what they make. Richard writes:
We had gotten downtrodden people engaged, brushed off, detoxified, job trained, placed in jobs, and into housing only to realize that they were destined to fail as the wage, set by the federal government, would not sustain them. This was a powerful epiphany.
Like any epiphany worthy of the name, this one led to action: the proposal for the Universal Living Wage. The idea is to fix the Federal Minimum Wage by indexing it to the local cost of housing throughout the United States. The military already does this. In many places, not all military personnel live within the borders of the installations. When the government calculates their off-base housing and separate rations allotments, it goes according to the geography and the local cost of living. It’s not rocket science.
At least 40% of people experiencing homelessness, are working at some point during the week. Clearly, the work ethic is there, but the wage to afford basic housing is not. Richard points out that minimum-wage gigs used to be “starter” jobs, just a dip of the toe into the water, to learn what the world of work is all about, before a person would move on to a career or a real job and a union membership, something more solid. But now, an American is more likely to be trying to support an entire family on a minimum-wage job, that is, if a job can be obtained at all.
But why tell the whole story here? Please accept this invitation to the Universal Living Wage website, where there is so much more. It opens up a new world of possibility.
Reactions?
Source: “Out of Reach 2012,” NLIHC.org, 2012
Source: “San Francisco Rents The Highest Of Any City In Country,” The Huffington Post, 03/14/12
Source: “Looking Up at the Bottom Line,” Amazon.com
Image of “Out of Reach 2012″ map (left) is used under Fair Use: Reporting.
Chart of the right is by Pat Hartman.
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