The Bishop and the Butterfly: Murder, Politics, and the End of the Jazz Age
    Danny Cardwell's picture

    Raising The Minimum Wage Only Treats Symptoms

    By Danny Cardwell on Wed, 02/11/2015 - 12:28pm |

    In theory it would be easy to raise the minimum wage and help millions of people in poverty. There is, however, a consequence that comes with doing this: a small percentage of those who need the most help would be hurt as some jobs would be reduced or eliminated. There's enough Prima facie evidence for us to admit that low wages and depressed living standards are a structural part of our economy. Many industries are dependent on a supply of low skilled and immobile labor. I'm not sure if we can untangle the necessity for human suffering from our economic equation.

    Most Americans are clueless about our macroeconomic dependence on developing capitalist countries in Asia. The multinationals who exploit their poverty and relaxed labor laws are waiting for that freight train called Trans-Pacific Partnership (TPP) to deliver a new lower wage demanding work force. It's conceivable that one day all goods produced by companies with a few hundred million dollars in market capitalization will be made offshore. I wonder: what's left for America? Our move from agrarian economy  to industrial economy wasn't smooth, but teaching farmers to work in factories is proving to be easier than teaching factory workers to work in information technology.
     
    At the highest levels of a production based economy the function of capital is to produce more human labor, who can produce more goods, which leads to more capital. Even with the ever improving economic numbers it would be unrealistic to think the market forces at work could be contained by tweaking our system. 

    The sad actuarial truth is that a hike in the minimum wage would help millions in the category of the working poor, but it would also hurt some small businesses who have built their financial models based on the ability to pay substandard wages. If raising the minimum wage was purely a utilitarian decision it would be a no-brainer. One tragedy of our current economic situation is that millions are working their fingers to the bone with no chance of getting out of poverty. The minimum wage hasn't kept pace with inflation and our trade deficits are crushing any chance of ever revitalizing American Industry.  

    Comments

    Danny, you are correct that low wages and depressed living standards are a structural part of our economy--but not our manufacturing economy. Factory workers still do relatively well compared to low-end service workers and agricultural labor.

    Since those service and agriculture jobs can't easily be exported, a rise in the minimum wage will not have employment impact you predict. To the contrary, wage growth will increase Americans' buying power, which will provide an economic boost.

    PS The future of American manufacturing is not as clear-cut as you think.

     


    by Michael Wolraich on Wed, 02/11/2015 - 12:51pm

    I'm all for a raise in the minimum wage. I agree that consumers drive the market. I worry that the manufacturing jobs we still have will become obsolete once it's cheaper to do business elsewhere.


    by Danny Cardwell on Wed, 02/11/2015 - 5:50pm

    It's already cheaper to do business elsewhere, and low-end manufacturing jobs are already obsolete. Domestic manufacturers simply cannot compete with developing countries on labor costs. The only growth opportunities for US manufacturing are in high-end products--like Germany and Japan have done--or automated production.


    by Michael Wolraich on Wed, 02/11/2015 - 6:23pm

    Michael, some middle-tech domestic manufacturing sectors have been growing and will grow more as the general economy improves. Examples are packaging. coatings, paint making, manufactured housing, boat manufacturing, specialty vehicles and so forth---most of whom aren't subjected to major foreign competition. My company performs environmental services for many of these types of companies. As they grow they have jobs in the $12-$16 dollar range. The problem here is the labor force---especially men in the twenty--forty age group who are up to a certain amount of physical labor.and want a job---the sad truth is that many of these candidates, mostly men, are unemployable due to drugs, poor work ethic and this includes whites and blacks. One of my clients has gone through scores of applicants, actually hired four people over a six week period and none of them lasted. One was arrested when the cops actually came to the plant and put him in handcuffs. Another one failed a drug test after a week on the job. The others just weren't up to the job even though it is not exceptionally physically demanding---drive a fork lift, and also be able to lift 25 lbs, get to work on time, for example, and my client is one of most fair people I know. So there is growth potential in other than killer new industries and high end products---but it is now constrained by lack of ready-to-go-to-work workers. The operative for these industries, and these unemployed people from a policy stand point,it seems to me, is more government sponsored infrastructure spending with an all out effort to train and rehab potential workers so that they can migrate into industrial jobs. Even the salary ranges I mentioned above are not enough to support a family and barely enough if two people are working---which is why we also need the kind of transfer payments Obama is talking about.


    by Oxy Mora on Wed, 02/11/2015 - 9:33pm

    Thanks for the correction, Oxy. I've exaggerated and over-generalized the state of domestic manufacturing. The US still has a much larger manufacturing base than most people realize.

    But I think we're fundamentally in agreement. America's days of competing on price are long past. To grow in the global market, we have to compete on quality, which means higher wages/compensation and better training/education.


    by Michael Wolraich on Thu, 02/12/2015 - 11:08am

    I find it hard to believe that a majority or even a significant minority of the 20 to 40 year old unemployed male population are as bad as you assert. I'd need a lot more evidence to accept that. I'm not doubting your experiences, intelligence or honesty, but it might not be the whole story.

    Perhaps your experiences are an anomaly on the fringe of the bell curve. Perhaps there is other work in your area that is siphoning off most of the better workers. Perhaps the client your speak of is a different person as a boss than you know him as a colleague or friend.  Perhaps the work conditions are more onerous when one is living with them daily than they appear from the outside. Perhaps your clients are excluding a significant number of quality workers who smoke an occasional joint or simply don't want to put up with the piss tests. Perhaps there're other reasons.

     


    by ocean-kat on Thu, 02/12/2015 - 2:21pm

    Kat, thanks, yes, I may have overplayed it a little there, having just talked to my frustrated client. I can assure you he is not the problem.

    I'm talking about $12 an hour jobs in a factory setting. I operate in ten states, with thirty or more (I always knock on wood when I say that) clients and the story is consistent, the pool of people who you would put your career and managerial trust in is limited. The people I have (knock on wood) have an average of more than 15 years' in the company. Many just didn't work out. I'm thinking of the guy who locked himself into a YMCA room for a week with vodka and heroin---forgot the name for that concoction and a guy who left after one week's pay and then disappeared into a titty bar and we were never able to locate him to send him a 1099. 

    Personally, I have no problem with pot. But no one can operate a business without tons of insurance, vehicle, liability, workers comp, excess liability---to mention a few. In most cases the policies are very clear about drug testing. There really isn't a choice. If I didn't get this insurance, enough per year to buy a small house in Akron for cash, and something bad happened I would lose the business the jobs would disappear and I'd be living in my van---come to think about it, I was happier then.

    Bear in mind that the products being produced are in many cases vital to folks' lives. In one case my client's product goes into airplane manufacturing.

    From a personal standpoint I don't think these jobs are attractive. When I'm on site I use the plant restrooms and break rooms---OMG, the odors would knock you off your feet. I exaggerate.

    Edit to add: I'm talking plant workers, not my own workers. My workers are pretty well paid for jobs which are based mostly on work ethic, life-experience mechanical skills and no particular educational achievement. The annual salary range is about $40--$60

    And yes, these plants could clean up their acts a little and clean their restrooms better.

     

     


    by Oxy Mora on Thu, 02/12/2015 - 3:36pm

    Maybe some folks have it all figured out,...Stay home and collect welfare checks,  letting some other sap go to work and pay taxes?

    The Republicans are coming for them.


    by Resistance on Thu, 02/12/2015 - 9:53pm

    Resistance, I think the Republicans already came and conquered that one. I don't think the "welfare loafer" is what we're parsing here. I think what we are trying to discuss here is the tradeoff between the realities of what a company does, what the job requirements are and what better pay and conditions the employers might make versus the complexities of what workers want and are able to provide. I was pretty judgmental and Kat was right to call me on it. But I don't think cutting welfare is the answer to a better match between employers and workers. In fact, more training and education and more government transfers are needed.  


    by Oxy Mora on Fri, 02/13/2015 - 1:11pm

    After reading this letter from Bernie Sanders

     Republican Efforts To Cut Social Security Benefits Pit...

    It is becoming more apparent, the Republicans are going to turn the American people into spying against one another.

    Turn on your neighbor, if you suspect DI fraud  otherwise there will not be anything left for the elderly at retirement time.

    A NAZI propaganda plan ; "Your plight is directly a result, of the non- working class.

    "Everyone must work and support the motherland" 

    Genocide of European Roma (Gypsies), 1939–1945

    This is why I am so mad at Obama; because  he didn't destroy the Republican party when he had the opportunity, after his first inauguration.

    I guess Obama wanted to prove he wasn't a Socialist and by doing so he allied himself with those wanting to destroy Socialism.

    Why would Obama care, he's got his. 


    by Resistance on Sat, 02/14/2015 - 10:03pm

    Oh my my . . .

    ~OGD~


    by oldenGoldenDecoy on Sun, 02/15/2015 - 9:40pm

    So you think it's funny; that the banker class got bailed out and got the gold, while the peasant class got the shaft? 

    Continued at bottom of page for those with selective memories. 


    by Resistance on Sun, 02/15/2015 - 11:08pm

    Bottom of page 


    by Resistance on Sun, 02/15/2015 - 11:10pm

    I think the minimum wage is important, though.  First, some people are working jobs where only the minimum will be paid and those people need whatever help we can give them.  A higher minimum wage and the earned income tax credit are the two levers we have for helping such people.

    There's also an implicit societal contract we have which is that work is rewarded with a sustainable life.  If you believe that contract is important, and I think most people do because work is one of the primary organizing forces in our society, then I think you have to strengthen that contract to say that all full-time work should be supported by a livable wage.  Our current minimums fall far short of that.  At least for aduls who are expected to support themselves with full time work, we should make sure that full time work does the job.


    by Michael Maiello on Fri, 02/13/2015 - 12:22pm

    Boy Howdy!

    I fully agree with this:

    There's also an implicit societal contract we have which is that work is rewarded with a sustainable life.  If you believe that contract is important, and I think most people do because work is one of the primary organizing forces in our society, then I think you have to strengthen that contract to say that all full-time work should be supported by a livable wage.  Our current minimums fall far short of that.

    Wish to see what Living Wage is for a Sustainable Life?

    Take the time and play with this interactive calculator from MIT . . .

    Poverty in America - Living Wage Calculator

    While the minimum wage sets an earnings threshold under which our society is not willing to let families slip, it fails to approximate the basic expenses of families in 2013. Consequently, many working adults must seek public assistance and/or hold multiple jobs in order to afford to feed, cloth, house, and provide medical care for themselves and their families.

    Establishing a living wage, an approximate income needed to meet a family’s basic needs, would enable the working poor to achieve financial independence while maintaining housing and food security.

    http://livingwage.mit.edu/

    ~OGD~


    by oldenGoldenDecoy on Fri, 02/13/2015 - 1:57pm

    WELL PUT!


    by Richard Day on Fri, 02/13/2015 - 2:27pm

    AMEN

    The calculator provides good information  

    Why isn't this calculator televised at the bottom of the screen of every 30 second Insurance Company sales pitch.

    Instead of just watching how $45.00, compounded over the next 20 - 30 years will assure a nice retirement.  ( If you live that long)  put money in the hands of their customers and they can put more money aside.  

    On the bottom of the screen 

    How much money do you need to make and still have money for retirement -  Living Wage Calculator     

    The insurance companies should help the people get more money in their pockets now and the people will pay it forward, benefiting the Insurance companies in the process.

    A win/win for both   


    by Resistance on Sat, 02/14/2015 - 10:29pm

    Danny,

    What we need is a workers' bill of rights in this country. If a company wants to do business the United States, they should have to pay workers a certain wage and maintain certain level of employment based on the revenue that they are pulling from the economy. If the company doesn't want to do that, they should clear out and open up the market to someone who is willing to make just a billion dollars in profit instead of 100 billion. In 1965, CEOs were paid only 20.1 times more than the average worker. Today they make 231 times the average worker (http://www.minnpost.com/community-voices/2012/09/redistribution-wealth-has-gone-upward-not-down-early-80s).

    We need to stop buying into the proposition that if we just make people rich enough they'll take care of us. We need to take care of ourselves, and our lower and middle-class workers. Then when they spend their money on goods and services and pay their taxes we'll have a thriving economy again. When we put money in the pockets of the poor and middle class it circulates. When we give it to the rich it goes into offshore accounts and we never see it again.

    We're being sold a bill of goods. Corporations are making more profits than they ever made in history. So there's no reason for unemployment to be so high. They are corporatists are purposely keeping unemployment high in order to strangle the middle class into accepting a lower standard of living that is more in keeping with the global economy. So we need to make business dance to a different drummer if they want to do business in the United States. If they don't, let 'em do business somewhere else. There are others who will happily take their place, and for far less money.


    by Wattree on Sun, 02/15/2015 - 7:53pm

    When we put money in the pockets of the poor and middle class it circulates. When we give it to the rich it goes into offshore accounts and we never see it again.

    CIRCULATION ?

    Immigrants Sending Money Back Home Face Fewer Options ...

    www.npr.org/.../immigrants-sending-money-back-home-face-fewer-op...

    NPR

    Jul 9, 2014 - The giant remittances economy — which consists of folks, mainly immigrants, sending money across borders — has been expanding for years.

     World Bank projects that global remittances will rise to $681 billion,

    Illegal Aliens Sent $21.6 Billion in Cash Back to Mexico in ...

    Fly Away: Illegal aliens taking U.S. jobs sent tens of billions out of the country, draining the U.S. economy.


    by Resistance on Sun, 02/15/2015 - 10:59pm

    Corporate Welfare Nearly Double the Cost of Social Programs

    .

    About $59 billion is spent on traditional social welfare programs. $92 billion is spent on corporate subsidies. So, the government spent 50% more on corporate welfare than it did on food stamps and housing assistance in 2006.

    .

    http://thinkbynumbers.org/government-spending/corporate-welfare/corporate-welfare-statistics-vs-social-welfare-statistics/

    Demographics Are Against the GOP, So They’ve Become Dangerous

    http://wattree.blogspot.com/2014/04/demographics-are-against-gop-so-theyve.html

    .

    Corporate Welfare for Wal-Mart

    http://www.progress.org/tpr/corporate-welfare-scandal-hits-wal-mart/


    by Wattree on Mon, 02/16/2015 - 12:27pm

    Wattree, I fully support the idea of some sort of legislation that not only protects workers, but also empowers them. There are adjustments to labor laws we can make to facilitate the creation of a workers bill of rights; I hope we can find enough politicians who aren't on the take to support these kinds of ideas.

    by Danny Cardwell on Mon, 02/16/2015 - 6:44am

    Thanks for commenting!

    by Danny Cardwell on Mon, 02/16/2015 - 7:22am


    by Resistance on Sun, 02/15/2015 - 11:09pm

    The trust fund babies and corporations thought that if they got ride of unions that the population would have no way to demand higher wages.  Now the population is putting pressure on government to raise wages by law.  Wages will go up because the workers need a basic standard of living and will fight for them.  They have done it in the past and will do it in the future. 


    by trkingmomoe on Mon, 02/16/2015 - 8:25am