Fight for $15! This is the battle cry for higher wages. Seemingly awesome. It is now taking hold on both sides of the nation. At this point, Los Angeles, San Francisco, Berkley, Oakland, Seattle, and now New York, have wage agreements that when eased in over time (3-6 years) will result in higher minimum wages!
For a decade, between 1997 and 2007, Congress failed to raise the Federal Minimum Wage at all. This set workers’ wages (coupled with normal inflation) on a trajectory that was so negative and so severe it resulted in putting the basics of life, including housing, beyond the reach of millions. In fact, the ever shrinking minimum wage relative to the cost of daily necessities has become so extreme that even such things as basic rental housing have moved beyond the reach of full time, 40 hour a week, minimum wage workers. Inaction on the part of Congress has only added to the 3.5 million people now experiencing homelessness in this nation. When the federal government failed to act, the people in desperation, jumped into the fray pushing for higher wages in their areas.
This is the very core of our American Dream…a fair wage for a fair day’s work! If you work hard, keep your head down, eventually you can get ahead, get married, and raise a family.
New York Governor Andrew Cuomo has indicated his support for recent economic changes. In fact, at a recent rally celebrating the NY wage proposal, he was noted as saying, “This is just the beginning. We will not stop until we reach true economic justice.” Awesome! Finally, we will acknowledge that the minimum wage worker, the janitor, construction laborer, hotel worker, bank teller, fast food worker, theater attendant, farm worker, receptionist, nurse’s aide, maid, poultry processor, child care worker, home care aid, garage attendant, etc. make up the socio-economic base of our society and that they all need living wages.
But wait a minute! Did we just mention farm workers? These are strictly rural workers. What about all the other minimum wage rural workers? While 80% of Americans live in urban areas according to the 2010 census, 20% of all workers are scattered throughout rural America. How will they and others in their situation, ever attain income-equity if they aren’t unionized and are too few in concentrated numbers to affect change? And by the way, ten states have passed laws that prevent local minimum wages to rise about the Federal Minimum Wage (currently set at $7.25 per hour or $2.13 per hour for agricultural workers).
And while we’re at it, when we examine the $15.00 for those who are organized and in states where it is OK to have a minimum wage above the federal minimum wage, we find that even $15 per hour falls significantly short of what is needed to become housed and to get by on a daily basis. Then we examine the common sense of the Universal Living Wage (ULW) formula, we see that it is based on three existing government guidelines:
- spend no more than 30% of your income on housing,
- work a full 40 hours per week,
- index the wage to the local cost of housing.
We calculate that the wage required to afford a one bedroom apartment using the HUD Fair Market Rents in a few notably cities with high costs of living-
|City/State||Hourly wage for an efficiency apartment||Hourly wage for a one-bedroom apartment|
|New York, NY||$23.00||$24.02|
|Los Angeles, CA||$17.56||$21.21|
|San Francisco, CA||$24.15||$31.44|
$15 per hour is a far cry from any of these basic requirements, and as we have seen in the past, when some of these $15 amounts go into effect as much as six years away, their value will be highly degraded due to inflation and we will be right back where we started. At the same time, currently in rural America we see that in areas such as found in a few sample cities in the table below-
|City/State||Hourly wage for an efficiency apartment||Hourly wage for a one-bedroom apartment|
|Little Rock, AR||$10.31||$11.90|
This again is a significant distance from the $15 per hour bench mark in the opposite direction. We cannot destabilize small business throughout rural America as we work to stabilize our minimum wage workers.
What we need to do is act smart and address these two major concerns right up front. First, we have all learned by now that one size (or one wage amount) does not fit all. In fact, we have learned that we are a nation of 1,000 plus economies. Each population area throughout the nation has its own cost of living. We’ve all traveled; we know this to be true. We all know it costs much more to visit/live in Washington DC than it does to visit/live in Rapid City, South Dakota. The ULW formula takes this very real concern into account. We realize that by simply ascribing $15/ hour in an area that only requires $10 per hour would seriously hurt small business in that area. We must not saddle them with a one size fits all $15 per hour wage when it’s unnecessary and destructive to small business. Instead, we can use the HUD Fair Market Rent values to determine what a person should reasonably expect to pay for an apartment and other living necessities throughout the nation in areas about the size of counties. Then by simply making the wage relate to the cost of housing by indexing it to the local cost of housing, we ensure that no matter what that housing cost rises to, if we put in our 40 units of work per week, we’ll be able to afford basic housing and the core necessities of life without hurting small business. This is also a reason for people to be drawn away from welfare and back into work.
We need to keep the federal standard created in 1938 after the Great Depression that established The Federal Minimum Wage, in play for the entire nation. We need to be able to afford the basics in life: food, clothing and shelter (now transportation is added with the ULW formula) but we must tweak The Federal Minimum Wage so it is based locally. By using the same principle throughout the nation, but by indexing it locally, we find that over time, we are able to make the wage relate to even the most costly of housing markets in urban America without hurting small businesses in rural America.
This approach finally solves the problem of wage inequality at the minimum wage level while ensuring that a full time minimum wage worker is able to afford a roof over their head, (other than a bridge), and without adding to the existing homeless population. Finally, it gives businesses the opportunity to plan ahead by knowing exactly what the wage of employees will be now and in the future.
Photo: Steve Rhodes
I have learned that, before people can think outside of their immediate needs, they must have those needs met. I refer to Maslov and the Hierarchy of Needs.
To that end, I have turned my attention to the core economics of the situation.
I have taken the existing Federal Minimum Wage (for those who can work) and tweaked it with a formula (based on existing government guidelines) that ensures that if a person puts in 40 units of work in a week , they will be able to afford basic food, clothing, housing, (utilities included) public transportation and access to the emergency room, wherever that work is done throughout the United States.
This will end homelessness for over 1,000,000,000 people instantly and prevent economic homelessness for all 20,000,000,000 minimum wage workers (immigrants included.)
You can find more details in my 2nd book, Looking up at the Bottom Line, and on the website www.UniversalLivingWage.org.
In my third book, Livable Incomes: Solutions that Stimulate the Economy, I deal with the Prevention of Homelessness. This includes fixing the Supplemental Security Income (SSI) for those who cannot work. From my perspective, looking at our capitalistic society the economy is paramount. This enables us to meet people’s basic needs.
People can either work or they can’t. At the lowest level, The Federal Government has set two standards: the Federal Minimum Wage for those who can work and SSI for those who cannot work.
Not surprisingly, the National Conference of US Mayors has said that a full time minimum wage worker cannot get into and keep (over time) a one bedroom apartment anywhere in the US. That wage is $7.25 per hour. The SSI stipend for people who cannot work is about half of that failed amount at $4.22 per hour.
Our approach to fixing this problem is different than that being promoted by the President (one size fits all) in that we recognize that we are a nation of a thousand plus economies. As a result, our formula indexes to the local cost of housing. In this fashion, if someone puts in 40 units of work (be it from one job or more) they will be able to afford the basics in life…food, clothing and shelter as outlined.
We have addressed the SSI standard in a similar fashion.
Since we devised our formula in 1997, the United States Military has converted its pay system to encompass our tenet of “Geographic Considerations” and changed from VAH, Variable Housing Allowance to BAH, Base Housing Allowance. Since then, the federal Government has similarly created “Locality Pay,” so that when people are transferred to a more expensive area, they are compensated.
Now it’s just, We The People, who are not supported this concept. As a result, 3.5 million people will again fall out of the work force and into homelessness again this year.
Image: 401(K) 2012
For the Christian Science Monitor, staff writer Schuyler Velasco compiled a list of the American corporations where the yawning abyss between CEO pay and employee pay is most apparent. For every dollar the average McDonald’s employee makes, CEO Donald Thompson takes home 1,196 of them. How is it possible that any human being’s time is worth more than a thousand times as much as the time of another human being?
Existential questions aside, McDonald’s is the most egregious example of ridiculously munificent executive compensation, followed by Starbucks and Dollar General. Among the top 10, the least discrepancy is found at AT&T, where the biggest boss makes only 558 times the wage of an average worker.
Ratcheting up Salaries
For Dissent Magazine, Colin Gordon explains the process of deciding how much to pay a bigwig. A show of detached neutrality is made by deferring to the wisdom of a “compensation committee.” The members are other bigwigs with similar job descriptions. Next week, one of those execs will be up for a raise, and guess who will be on his compensation committee? That’s right — the very same guy whose salary he is deciding today. Gordon says:
These compensation committees […] have perfected a machine for ratcheting up executive pay. As a general rule, CEO pay is calculated from a benchmark of peers. The result is a lucrative game of leapfrog. The selection of peers is arbitrary — and often consists of cherry-picking larger and successful firms with higher-paid executives.
In effect — with very limited input from shareholders and no demonstrable connection to firm performance — top executives set their own salaries.
Shareholders Lack Clout
Supposedly, performance-based pay is subject to shareholder approval, and a reasonable person might ask, “Why don’t they take charge, and rein in these greed-heads?” But as it turns out, the deck is stacked. The system contrives to make shareholder influence largely theoretical. Their role is purely advisory and the corporation doesn’t have to do what they recommend.
For a giant business with high-powered lawyers on retainer, it is very easy to circumvent any rule. The corporate entity can hide, even from its own stockholders, exactly what is going on, in what Gordon calls “a concerted effort to camouflage the level and terms of executive pay packages with various forms of stealth compensation (such as lavish retirement deals) or rigged performance measures (such as stock options).” Even worse, there are two classes of shareholders. Gordon says:
Increasingly, shareholding is dominated by the block holdings of big institutional investors (mutual funds, pension funds, and the like). And many public firms use ‘dual class’ shares to distribute voting rights more narrowly than stock ownership.
Stockholding citizens, even the most socially conscientious, have very little clout. And what do the execs get paid for? Who knows, but it’s a pretty sure bet they are not busy figuring out how to reduce the income gap, and pay enough so that none of their employees need to apply for government relief.
Universal Living Wage
Eleanor Bloxham, CEO of The Value Alliance and Corporate Governance Alliance, believes that a company should be transparent about whether it pays a living wage to every person who works for it. For a recent Fortune CNN article, she quoted House the Homeless President Richard R. Troxell about the Universal Living Wage concept, so please go and take a look.
Also, please remember Economic Gap Day is coming up on Tuesday, September 2. Everyone is urged to organize or join a demonstration in a highly visible public place. Check out this video of a past Economic Gap Day to catch the vibe:
The Universal Living Wage means basic food, clothing, shelter (including utilities), public transportation, and access to an emergency room! This must be the minimum standard for every American and all people.
Source: “CEO Vs. Worker Pay: Walmart, McDonald’s, and Eight Other Firms With Biggest Gaps,” CSMonitor.com, 12/12/13.
Source: “Fatter Cats: Executive Pay and American Inequality,” DissentMagazine.org, 04/24/14.
Source: “Inequality in the U.S.: Are We Making Any Progress?” Fortune.com, 08/04/14.
Image by Devendra Makkar.
The Beatles, Frank Sinatra, and Bill Clinton had all stayed at the Shoreham. With 1,000 people in attendance, it still felt as if it was nowhere near capacity. The excitement and energy level was palpable. The din was almost numbing as we waited in line and slowly worked our way to the security checks. The president of the United States was coming! But the “participants,” as the name badge around our necks stated, were perhaps more excited that Gloria Steinem, Nancy Pelosi, and Michelle Obama were also scheduled speakers. The original title of the conference, White House Economic Summit on Working Families — which is what attracted me — had now been converted to the White House Summit on Working Families…after all, this summit was about families.
Gloria Steinem, celebrated feminist, spoke to the importance of women in the workplace when she shared the European Union’s plan to legislatively ensure that every Board of Directors be comprised of 40% women by 2020. She pointed to studies that show that the presence of women in business settings introduces compromise and increased business productivity.
U.S. House Democratic leader Nancy Pelosi (a hero of mine) continued to set the tone of the summit when she announced that “one in five children in America lives in poverty.”
Business leaders such as Sheila Marcelo, CEO of Care.com, informed us that in three states child care now costs more than state college tuition.
Speaker after speaker echoed themes that called for paid maternity leave, flexible work hours, wage equality, and comprehensive health and child care.
Congresswoman Pelosi declared, “The bottom line is, 21st century families deserve 21st century workplaces, and Congress should pass the Pregnant Workers Fairness Act and increase opportunities for American workers.”
Vice President Joe Biden shared the major sacrifices of his wife, Dr. Jill Biden, who helped him raise children after his first wife was tragically killed in a car accident shortly after Biden’s election to the U.S. Senate. He spoke adamantly about the role of “family” in all of our lives and the need to make major changes designed to support the structure and enhance all of our families.
President Obama also spoke of the many sacrifices of his mother as a single parent. He let it be known that she did whatever she had to do to provide for her family, including accepting food stamps. He went on to talk about the importance of minimum wage workers. He spoke of his proposed increase in the current $7.25/hour minimum wage to $10.10/hour. He said that 28 million people would benefit from his proposed increase to the Federal Minimum Wage.
I learned that, following the general group session, the Breakout Session on Hourly Workers would be held in the Ambassador Room. I located the room and placed my prepared documents about the Universal Living Wage on each of the yet-to-be-filled 450 seats where participants would get their marching orders on the proposed $10.10/hour minimum wage. I returned to hear the last of the morning speakers before people moved to the breakout sessions.
Not one to leave anything to chance, I again left the morning session and checked on the documents that I had left just minutes before on the chairs. They were gone! I had previously befriended a media person who had been setting up equipment. He directed me to the person, Bill Flanagan, who had removed my documents. I confronted him, got his identification and my documents back. He said that they “had not been authorized by the White House.” He worked for the Center for American Progress Action Fund. I took my documents and returned later for the breakout session when I planted myself in front of the audience microphone.
When I finally reached the microphone, I shared with the people that in 2006, Beth Schulman, author of The Betrayal of Work, stated that “people are no longer using minimum wage jobs as stepping stones, but rather they are remaining in those jobs for ten years or longer and being forced to try and raise families on that wage.” I told the audience that:
$10.10 = “Old Thinking!”
We are a nation of over a thousand economies. One size does not fit all! If the goal in raising the Federal Minimum Wage is that we cross the Federal Poverty Guideline and escape poverty, but the raised amount is always less than the amount needed to reach that goal line, then how will we ever escape poverty? We won’t. “Something is better than nothing” is not true if we are forever economic slaves and if that approach also attacks small businesses. Business benefits from labor. They should pay “a fair wage for a fair day’s work” but not suffer for it.
Instead, we must index work to the local cost of housing, so that a person can afford the basics in life, wherever that work is done throughout the U.S. (without ending up living on our streets).
I then told them that I was embracing common sense and that today I had come with a solution that will fix the plight of minimum-wage workers/families across America!
Universal Living Wage
I explained that the Universal Living Wage uses existing government guidelines that ensure that if a person works 40 hours in a week (be it from one job or more), he or she would be able to afford basic food, clothing, shelter (including utilities), public transportation, and access to emergency rooms, wherever that work is done throughout the nation. This will end homelessness for over 1 million people, and prevent economic homelessness for all 20 million minimum-wage workers. It will stimulate the national housing economy, save billions in taxes, and stabilize small businesses across America.
Several speakers behind me then stepped to the microphone and asked, “Why are we were not demanding a Living Wage approach?” The sound of their questions faded in my ears as I stepped out into the hallway and proceeded to hand out information about the Universal Living Wage to the rest of the “participants.”
“You have not converted a man because you have silenced him.”
— John Morley, 1st Viscount of Blackburn
The Federal Minimum Wage has slipped into distinct disrepair. The historical one-size-fits-all approach, be it $7.25 per hour, or even the proposed $10.10 per hour, is antiquated. Our national economy has evolved into a thousand-plus economies. We’ve all traveled, and we all know that the cost of living in Washington, D.C., is different than it is Austin or in Harlingen, Texas, etc.
At long last, there is talk of indexing the Federal Minimum Wage (FMW) to the cost of living. This would make complete sense if the wage had enabled minimum-wage workers to afford life’s necessities to begin with. But, until that piece of the puzzle is fixed, the proposed cost-of-living increase only addresses the inflation aspect of the wage. The core wage itself is still too little to enable people to afford the basics of life: food, clothing, and shelter.
To solve the failings of the FMW, we must index it to the local cost of housing, as it is the single most expensive item in the budget of every American. The failure of the FMW is that it is creating homeless people. But by indexing to the local cost of housing, we account for the nationwide variation in local economies without crushing small businesses in rural America. This will ensure that if a person works 40 hours in a week, be it from one job or more, they will be able to afford basic food, clothing, and shelter (including utilities) wherever that work is done throughout the U.S. This will end economic homelessness for over 1,000,000 minimum-wage workers.
— by Richard R. Troxell, from a recent letter to the editor at The Austin American-Statesman
Image by Social Alterations
House the Homeless is a powerful presence in Austin, Texas. The nonprofit organization and its president, Richard R. Troxell, are constantly at the forefront of the effort to help everyone have a good and productive life. Richard holds the invincible belief that America could end homelessness within its borders, and the only thing standing in the way is the lack of political will to do so.
As always, at the top of the list is the need for a living wage indexed to the local cost of housing, one that covers (at very least) the necessities of shelter, food and clothing. He is convinced of the necessity to change two federal standards, the minimum wage and Supplemental Security Income — which means businesses taking care of the people who work, and SSI taking care of people who can’t work.
On the local level, plenty of progress could be made right now by adopting the policy of “Discharge No One into Homelessness,” which would apply to every institution — the military, hospitals, the foster care system, the prison system and so on — and ensure that no one leaving any of those places would be ejected into the streets.
House the Homeless released the report entitled “Prevent Homelessness at Its Core: 10-Year Plan to End Homelessness, Restore Human Dignity and Save Business and Taxpayers $ Millions!” This White Paper was sent to the President and First Lady, all the members of the U.S. Senate and House of Representatives, and many governors, Cabinet members and other influential people.
Additionally, when funding is acquired, the plan is to send it to every mayor in the country. They are the ones responsible for building shelters in their towns, and making laws that apply to people experiencing homelessness. They are the ones who have to deal with their local hospital emergency rooms being filled with homeless people who have no health care alternative. Hopefully, individual mayors will petition the Conference of Mayors to do something, and the Conference of Mayors will petition Congress for relief in the cities. If only 14 mayors (just 1% of their number) would speak up, that would make a significant difference.
Richard has been a staunch voice every time a journalist needs perspective on such things as an apparent hate crime or a renewed effort by the city to make the lives of homeless people more miserable. Recently, he wrote:
Our nation is relying on an all-volunteer military to protect the people of this nation and maintain the stability of the entire planet. We have failed to protect the protectors. In so doing, we have disgraced our nation and failed our Veterans who have selflessly sacrificed everything to ensure our freedom. House the Homeless calls for a full scale Congressional investigation into all allegations of mismanagement, abuse and neglect. The entire VA Disability program needs to be investigated by the United States Attorney General and placed in Special Receivership.
Strong words! Why would he say that? Among other things, remember the gigantic backlog in processing all veterans’ disability claims? If not, please review “Homelessness and the Disabled American Veterans Agenda.” Recently, we looked at the situation in Austin, thanks in part to the journalistic enterprise of Jeremy Schwartz of the Austin American-Statesman, which resulted in Bell County hiring a veterans services officer decades after the law required it. Why did it take a national scandal to implement this?
Image by Señor Codo
What Higher Minimum Wage Does for Workers and the Economy
Honest economists such as Federal Reserve Chairman Ben Bernanke have haltingly told the truth on the question of whether raising the minimum wage adversely affects the employment rate: “My response is that I think it doesn’t lower employment.”
Additionally, study after study has shown that 98% or more of all minimum wage increases have been directly spent back into the local economy, thus acting as a local economic stimulant.
Unfortunately, the “Fair” Minimum Wage Act falls short, would hurt small businesses in rural America, and maintains a repressive wage system that would keep workers in a state of poverty throughout our nation.
First of all, how long would it take a worker to climb out of poverty if every step he or she took was less than the distance to reach that poverty goal line? The answer is FOREVER. They would never get there. That has been the Congressional response to minimum wage worker needs for decades. The mantra has been, “Well something is better than nothing.” Clearly, that is not true if our path to escape poverty is forever blocked.
The failure of the Federal Minimum Wage (FMW) has manifested itself as 3.5 million workers falling out of work and into homelessness every year for the last 20 years. The single most costly item in the budget of every American is housing. That is why the Universal Living Wage campaign, since 1997, has chosen to index the FMW to the local cost of housing across America.
Unfortunately, the “Fair” Minimum Wage Act fails to to recognize that we are a nation of 1000+ separate economies. Everyone else knows the cost to live in Washington, D.C., is different from living in Harlingen, Texas, or Fort Lauderdale, Florida, or Santa Cruz, California. ONE SIZE DOES NOT FIT ALL! Let’s imagine the “Fair” Minimum Wage Act becomes law and the national standard becomes $10.10 per hour. This will not get one homeless minimum-wage worker off the streets of Washington, D.C.! At the same time, this will hurt small businesses in rural Fargo, North Dakota, and Cumberland, Maryland, and Erie, Pennsylvania.
By using the formula of the Universal Living Wage — using existing government guidelines to index the FMW to the local cost of housing — we ensure that a person working 40 hours in a week (be it from one job or more) will be able to afford basic food, clothing, shelter (including utilities), public transportation and access to a hospital emergency room.
Richard R. Troxell
Consult Looking Up at the Bottom Line…The Struggle for the Living Wage for supportive documentation.
Image by Lynn Friedman