Thursday, June 23, 2011

A Call to Increase the Minimum Wage

These last few years our nation has faced the crippling combination of huge deficits and the harshest recession in generations. The last time this country faced such troubling economic times Franklin Roosevelt put the nation back to work with monumental public projects. We built the Hoover Dam. We brought electricity to the South. We constructed the Triboro Bridge, and the Lincoln Tunnel, and built scores of public schools and roads whose names are not familiar, but whose benefits have improved thousands of lives. Sadly, these options have not been available to us during our Great Recession. Instead of learning our lessons from that crisis and making use of an opportunity to reform our society, we have instead handed over renewed tax cuts to millionaires, and given billions of dollars to investment banks to cover their bad bets. We have paid to subsidize failure, and paid to create a gap between rich and poor that’s unprecedented in modern history. The time is long overdue for a little stimulus for the working people in this country, and for big business and Wall Street to start paying their fair share of it!


A full time job that pays the federal minimum wage brings in just $15,000 a year. Parents trying to raise a family on that- even if both work full time- are fighting a battle that can’t be won. It’s time to say “that’s not acceptable in America!” To feed their children, to warm their houses, to pay their rent, they are forced to turn to the government. Welfare programs (though dwarfed by other costs) contribute to our state and federal deficits. But it’s not the people that are leeching and taking advantage of the system- it’s the big businesses! It’s the retail and fast food chains that coach their workers how to apply for food stamps instead of paying them a respectable salary. The manual laborer who gives his sweat and the best years of his life to a company, and is told he’ll have to go on Medicaid because affordable insurance doesn’t fit into the bottom line. It’s time for us to say “enough is enough”, and tell these companies that the costs of living can’t be shouldered by the state any longer! They must be forced to pay a greater minimum wage!

During this recession American workers have proven just how hard they are willing to work. Our economy has finally returned to where it was before the crisis hit, despite fewer people being employed. But even with a new-found prosperity on Wall Street, unemployment is still high, and big businesses still strive to move as many jobs as possible to cheap labor markets around the world. This all means that a shrinking number of workers have picked up the slack, and the businesses are as profitable as ever. The advantages of more being done with less simply hasn’t “trickled down” to those doing the work.  They’ve been told that they’ll have to forgo their overtime, stay longer, and give up what little vacation they have- all while millions of them are forced to accept a minimum wage that buys less today than it did in the mid 1950’s. The boost in productivity should be reflected in the nation’s minimum wages! If companies are insistent on forcing workers to race to the bottom in terms of wages and dignity, we should help those workers by raising the floor on how low they are forced to go.

Think just for a moment of what good could come from people having even a few extra dollars in their wallets. When you give a rich man a tax cut, it sits in a bank. But these are people that are ready and eager to spend money on things that they truly need, and stimulate the economy with their spending. They don’t revel in their current opportunities to be helped by the government. They’d much rather have the money and spend it themselves, so why don’t we give them that chance? After trying time and time again to boost the economy by giving tax breaks to the top one percent, why don’t we admit that it doesn’t work and abandon trickle down economics in favor of self reliance through fair wages? Let the benefits trickle up for once, in more revenue  and reduced programs for our budget! If there has ever been a crippling culmination of unforeseen errors in the way we operate it is now, and it’s time that we stop trying to use the thinking that got us into this mess to get out of it!

There will be some who will say that increasing the bottom most wage for Americans will mean the loss of jobs. The loss of which jobs? How many corporations do you know of that are employing more than the bare minimum they need to get by? What jobs will be available twenty years from now to a generation of young people raised by parents making $15,000 a year? To children raised by televisions, because mom and dad are working overtime. To young adults who can’t go to a community college because the family can’t afford the loss of a worker. We need a skilled and knowledgeable labor force for our future, and right now we are selling out our children’s tomorrow for the chance to break our backs today. We need this increase to save jobs in the long run! This isn’t an attempt to fleece American businesses, it’s an attempt to save them from their own lack of foresight! Don’t let the man who talked about tax cuts and deregulation yesterday talk to you about unemployment today. He’s part of the problem, and belongs to a class that has decided it’s better to criticize from the sidelines than risk bringing a plan of their own. If we aren’t allowed to stimulate job growth with government spending like Roosevelt did, then we have to do the most with what we have. In an ideal world, we would have the option to do both, but if our hands are tied on spending, then the least we can do is to stop businesses from shirking their responsibilities to workers.

In the 1960s that minimum wage was equivalent to $10 today. It’s steadily gone down since then, and coincidentally enough, its largest drops were seen in the 80s and 2000s- during two of Wall Streets most corrupt and destructive periods. It’s time to restore the minimum wage to the spending power it once had, and to peg its increase to the rate of inflation! Let’s cut our spending and stimulate the economy at the same time! Let’s build a strong working class with real potential for upward mobility! Let’s tell the corporations that paying a halfway decent, livable wage is the cost of doing business in the United States! We can’t wait any longer; let’s do it now, and if this Congress refuses to do it, then let’s get one that will!

12 comments:

  1. Mr. Gill, having read all the speeches posted in your innovative and thought provoking blog, I am left with a feeling of sadness that they remain UNDELIVERED. I encourage you to continue to nurture this endeavor but, also, to seek opportunities that ensure that your historical and political insights are DELIVERED to a larger audience that, inspired, will act to hold our representatives accountable for both their actions and inaction. Best, V. M. from Rocky Point

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  2. The minimum wage is *insane*. Not because it's low, but because it exists at all.

    Please, for the love of God, read this:

    http://www.fee.org/library/books/economics-in-one-lesson/#0.1_L19

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  3. Also, the idea that when you give the rich man money it "sits in the bank" is damned silly. Banks loan out their money, last I checked. Here, there's even a chapter from the exact same book debunking *that* fallacy:

    http://www.fee.org/library/books/economics-in-one-lesson/#0.1_L24

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  4. http://www.factcheck.org/2008/01/the-impact-of-tax-cuts/

    There's a wealth of information that suggests that tax cuts to the upper class don't have nearly as powerful an impact to the nation's economy as programs that benefit working families.

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  5. 1) That wasn't the question. The question was about what happens to money rich people have. And the answer is: it gets loaned and invested and moved around, just like every other dollar that is not physically hoarded.

    2) The link you provided has nothing to do with the economic impact of "programs that benefit working families."

    3) The link you provided also suggests that corporate income taxes may be an exception. So, you're okay with lowering those, then?

    So, it seems that in addition to not reading the links I posted (you didn't, did you?), you might not have entirely read the one you posted, either.

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  6. 1) It was actually about what the wealthy do when they're given tax cuts, and the answer is "not much- not enough to warrant the expense to the government". That money gets puts in banks, and sent overseas- trickle down doesn't work.

    2) I didn't say that particular link did.

    3) Corporate income taxes are a separate matter altogether. It's not what I was referring to in the speech.

    This is from a Washington Post article about the Congressional Budget Office's analysis of extending the Bush tax cuts:

    "According to the Congressional Budget Office and other authorities, extending all of the Bush tax cuts would have a small bang for the buck, the equivalent of a 10- to 40-cent increase in GDP for every dollar spent.

    Why? As the CBO notes, most Bush tax cut dollars go to higher-income households, and these top earners don't spend as much of their income as lower earners. In fact, of 11 potential stimulus policies the CBO recently examined, an extension of all of the Bush tax cuts ties for lowest bang for the buck. (The CBO did not examine the high-income tax cuts separately, but the logic it used suggests that extending those cuts alone would have even less value.) The government could more effectively stimulate the economy by letting the high-income tax cuts expire and using the money for aid to the states, extensions of unemployment insurance benefits and tax credits favoring job creation. Dollar for dollar, each of these measures would have about three times the impact on GDP as continuing the Bush tax cuts. "

    You can read the whole article at http://www.washingtonpost.com/wp-dyn/content/article/2010/07/30/AR2010073002671.html

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  7. 1) Except that your link doesn't suggest any of that. It's only about whether or not tax cuts raise more revenue for the government.

    Fact: the money of the wealthy does not "sit in banks," as you said. It is loaned out and invested. And just for good measure, Hazlitt's already torn apart the "overseas" argument. Not that you'll read this part of the book, either:

    http://www.fee.org/library/books/economics-in-one-lesson/#0.1_L13

    2) Okay, that means you haven't provided any evidence for that claim, then.

    3) I understand that you weren't talking about corporate income taxes. I'm simply asking, because in my experience people who believe the things you do don't much like lowering those, either.

    Pretty much the entire thing, though, comes from the easily falsified idea that rich people just hoard their money. Like, physically hoard it. Like Scrooge McDuck, in a big pool they swim around in. Yeah, that's the ticket.

    Over in reality, of course, that money is loaned out and either spent or invested, same as if it were spent elsewhere. Physical hoarding is the only way in which money stops moving around the economy. Period. And even equating this money with money spend on random consumer goods is being generous, because buying bread doesn't spur innovation and growth as much as general investment does.

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  8. 1) That quote from the CBO was talking about the effect of tax cuts on GDP- I don't know where you got government revenue from.

    2) http://www.cbo.gov/ftpdocs/118xx/doc11874/EconOutloook_SummaryforWeb.pdf

    Page 5 features a graph of a number of different proposals the CBO analyzed, and their effect on job creation. Increasing aid to the unemployed has about ten times the effect from extending the Bush tax cuts.

    3) I haven't studied corporate tax rates, I don't really want to make a judgment one way or the other. From what I have read, my instinct is that the tax rates themselves are fine, but nobody effectively pays their tax rate. There are too many loopholes.

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  9. 1) I got it from actually reading the link. The question mentions growth, but the answer only takes about revenue.

    2) Once again, reading the source shows that it doesn't support the claim. The graph in question is only about short-term effects for one, but more important is that it's not a statement about growth or many of the other "effects." It is ONLY a statement about employment. But I'm not disputing that we can just "buy" employment. Of course we can. We can hire people to dig holes and then fill them back in, too. The problem is in thinking of jobs as an end rather than a means in the first place, and making no distinction between more or less productive ones. But sure, if you make mere employment, regardless of circumstance, your economic priority even at the expense of general standard of living and overall growth, I have little doubt you can achieve it through such ends. But that doesn't mean it increases real wages in total. In fact, it can't, empirically.

    I'd provide another link here, but I have the distinct impression you're not reading them.

    3) Fair enough, if you have no opinion either way.

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  10. 1) Well I'm talking about the Washington Post quote about the CBO estimate, which plainly talks about GDP.

    2) Yes, unemployment is only one metric, and yes, that graph is about short term benefits. It still is an example where programs for working class families outperform tax cuts.

    I am certainly willing to look at another source. Please understand that I simply haven't had the time to read a whole books worth of information.

    And let me just say, that differing viewpoints and debate will always be welcome here. You've been very civil, and I'll never delete a civil comment.

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  11. Appreciated. Most blogs with a liberal slant (and, to be fair, this is probably true of more conservative ones) greet such disagreements with a mindless dogpile of mocking. Anyway...

    1) I barely know where to start with the Washington Post article. But the most egregious claim is that there's apparently some sort of difference because "top earners don't spend as much of their income as lower earners," which makes zero sense, for the reasons about hoarding I outlined above.

    2) It outperforms tax cuts for this one express purpose, sure. But that doesn't make it better for the economy as a whole. I think the obsessive focus on employment as the end-all and be-all of economics is pretty misguided, as I think is pretty well-evidenced by how easily one can reduce the philosophy to absurd examples, like digging random holes.

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  12. By the way, I don't think I mentioned this, but this is actually a very nice idea for a site. I couldn't disagree more with most of the content, but I like the concept very much.

    I also forget to include in my last reply: I understand that you don't have the time to read whatever I might throw at you. And in general I find people who try to conduct online discussions by assigning homework to the other person to be insufferable. But in this instance the work is in very small, digestible blocks, freely available online, and directly relevant to the discussion at hand. That's the brilliance of Hazlitt's book, really.

    I would strongly recommend, in particular, the section about minimum wage that I linked to, since that was the main thrust of this hypothetical speech. There are disagreements to be had on many economic issues, but to my mind there is no greater chasm between the insanity of an idea and its political popularity than there is with the minimum wage.

    ReplyDelete