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The Minimum Wage–And Why the Recovery is Not Coming

Posted on July 27, 2009July 26, 2009 by Jonathan Tasini

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Today, the minimum wage rises to $7.25 an hour. We should all be glad that millions of people are going to get a bit more money in their pockets. But, this hike masks a very grim fact: the “recovery” is not going to happen anytime soon, if the measure we use for “recovery” is that working Americans are going to find meaningful, full-time, decently-paid employment.

A few weeks ago, I wrote about the scandal of the minimum wage–a level of income that at the grand sum of the new $7.25 per hour, if you worked every single week, every day, you would earn $14,645 a year–with likely no health care, no retirement, no vacation days, no sick days. By comparison, the federal POVERTY LEVEL for a family of three is $17,600–a number that is outdated because it doesn’t take into account the real cost of living. But, even that number is higher than what a person would earn at the new minimum wage.

So, the truth is that by feeling good about the new minimum wage, we are quietly accepting the fact that millions of people will continue to work as slaves–laboring at sub-standard wages. In New York State, the minimum wage hike will do very little for workers because the state minimum wage is already $7.15 and, as the Fiscal Policy Institute points out,”New York’s minimum wage will still be more than 21 percent below its peak value in 1970, which was $9.23 in today’s dollars. The 10 cents an hour increase for New York’s minimum wage workers amounts to only a 1.4 percent raise, well below the 4 percent general rate of inflation since January 2007 and even further below the nearly 7 percent inflation rise in the New York City metropolitan area.”

Remember that fact and, then, take into account what we now face in America: an effective unemployment and underemployment rate of more than 16 percent.

Yes, 16 percent. Not the 9.5 percent that the we mostly hear about. The typical number the media reports–the Labor Department’s U-3 rate–excludes people who have given up looking for work and people who only have part-time work because they can’t find full-time work (part-time workers are counted as “employed” even if they only work ONE HOUR A WEEK).

And, thanks to the glories of the “flexible” free-market, the economy we now live in has forced more people into part-time work–because that allows companies to hire and fire people without having to assume all those annoying things like health care and pensions for the workers.

16 percent of our fellow citizens do not have full-time, decent paying work. And that does not count those people working full-time for the minimum wage–who end up in poverty.

This is a national crisis and a national scandal. It is what I call The Audacity of Greed (and, in a quick shameless bit of promotion, the title of my new book just about out–feel free to join the Facebook Fan page)

So, when we hear the discussions about “recovery”, my reaction is this: until we know that we have returned to the concept of FULL EMPLOYMENT in the country (which no one seems to talk about) and until we begin to see people working for above-poverty level wages and until people can join unions in large numbers so they can have some power in the marketplace (not just to raise wages and benefits but to have dignity and respect on the job), there will be no recovery.

Why are we not marching, by the millions, to protest what is effectively the robbing of working Americans?

Jonathan Tasini: Jonathan Tasini is the executive director of Labor Research Association. Tasini ran for the Democratic nomination for the U.S. Senate in New York. For the past 25 years, Jonathan has been a union leader and organizer, a social activist, and a commentator and writer on work, labor and the economy. From 1990 to April 2003, he served as president of the National Writers Union (United Auto Workers Local 1981).He was the lead plaintiff in Tasini vs. The New York Times, the landmark electronic rights case that took on the corporate media’s assault on the rights of thousands of freelance authors.

This article originally appeared on Working Life on July 24, 2009 and is reprinted here with permission from the author.

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An American Scandal: The Minimum Wage

Posted on July 10, 2009July 11, 2009 by Jonathan Tasini

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The minimum wage is a scandal. It masks poverty. It must be dramatically raised.

On July 24th, the minimum wage will rise to $7.25 an hour. I applaud people who worked hard to pass the three-step hike. The new level will put some extra money in the pockets of millions of Americans and, modestly, bump up wages that hover above the minimum wage because some employers will want to keep workers they value.

But let’s be honest: the minimum wage is an American scandal. It is a wage that makes us think that we have set a reasonable floor for wages so employers do not exploit people.

But, the minimum wage IS a poverty-level wage. At the grand sum of the new $7.25 per hour, if you worked every single week, every day, you would earn $14,645 a year–with likely no health care, no retirement, no vacation days, no sick days. By comparison, the federal POVERTY LEVEL for a family of three is $17,600–a number that is outdated because it doesn’t take into account the real cost of living. But, even that number is higher than what a person would earn at the new minimum wage.

That is a scandal.

The minimum wage should be raised to $10 an hour, to be followed by additional hikes in the minimum wage so that it begins to reflect both the real cost of living and the incredible productivity of American workers that has not been reflected in their wages over the past 30 years. This is a proposal advocated by a variety of organizations, including Let Justice Roll.

Yesterday, I debated the minimum wage issue on CNBC:

What is startling to me, both from this recent debate and other discussions on the topic, is the continued lies that are spread about who “benefits” from the minimum wage and what truly contributes to a healthy economy.

Here are some facts (drawn from various sources, including the Economic Policy Institute):

Almost 10 percent of the workforce is affected by the minimum wage, either directly or indirectly (“indirectly” means that a rising minimum wage often increases wage levels just above the new minimum wage).

It isn’t true that the minimum wage is just a “starting wage” that people move out of, or that it is a wage just for teenagers working summer jobs or some other false argument. Four out of five minimum-wage workers are adults, and almost 3 in five of those are women. More than half work full-time. A quarter of minimum-wage workers have kids under the age of 18 and 1.2 million are single parents.

It also simply false to say rises in the minimum wage have a large, negative effect on jobs–meaning, that companies have to cut jobs because of the increased cost of a higher minimum wage. There is a logic here, as EPI points out:

“New economic models that look specifically at low-wage labor markets help explain why there is little evidence of job loss associated with minimum wage increases. These models recognize that

employers may be able to absorb some of the costs of a wage increase through higher productivity, lower recruiting and training costs, decreased absenteeism, and increased worker morale.”

But, we should only be defending the minimum wage, in my opinion, as a concept–not praising the level that it stands at. It must be far higher.

So, what is going on here?

The truth is that the scandal of the minimum wage is part of the larger picture of a decades-long robbery of the American worker. The economy that we live in thrives on the backs of people who work for poverty-level wages.

I’ve made this point before: productivity has skyrocketed over the past 30 years but wages have remained essentially flat. Some of that productivity did come from technology advances. But, most of it came because workers labored harder than ever, partly out of fear of losing a job in an economy that has forced people to pile up debt and rely on credit cards to survive.

The astounding wealth hoarded by CEOs and the top one-tenth of one percent of Americans was built up on the backs of hard labor and poverty-level wages. We do not have the slave-labor conditions seen in some other countries around the world. But, without question, the wealth of the country has been created by millions and funneled to a few.

Had the minimum wage tracked productivity over that period of time, the minimum wage should be $19 an hour.

I have also argued that the minimum wage scandal is far more important than the Bernie Madoff-type scandals. My friends, we got into the financial crisis we are in precisely because of the theft of wages of the American worker. Oh, how the free marketeers rejoiced at the decline of unions and the orgy of deregulation. But, as political leaders of both parties stood silent and were swamped by campaign cash from Wall Street and corporate interests, workers’ wages were pummeled.

And, then, what was left? An economy where people had to finance their lives through credit cards and, then, home equity–all illusions of wealth that are now gone.

So, now what? How do people like the CNBC talking heads and our political leaders, who still do not recognize wage collapse as the number one reason for our economic debacle, envision us reviving a decent standard of living for millions of people?

I say that one step is clear: a $10-an-hour minimum wage in 2010 as a small down-payment and a first step towards pushing wages back to a moral level.

This article was originally posted on Working Life on July 7, 2009 and is reprinted here with permission from the author.

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Victory at Smithfield: An Independance Day Symbol

Posted on July 7, 2009July 6, 2009 by Jonathan Tasini

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One of the ugliest fights for worker justice has taken place in Tar Heel, North Carolina, which is about 80 miles south of Raleigh. For 17 years, thousands of workers, who labor under some pretty brutal conditions in the largest pork processing plant, have sought a modicum of justice and dignity. And they just got it.

After a two-day vote, the workers approved the first-ever union contract at the Smithfield Foods plant. Here are the details via the United Food & Commercial Workers:

The new contract includes:

* Wage increases of $1.50/hour over the next four years. * Continued company-provided affordable family health care coverage. * Improved paid sick leave and vacation benefits. * Retirement security through protection of the existing pension plan. * Continued joint worker/management safety committee, including company funded safety training for workers. * Guaranteed weekly hours that protect full-time, family supporting jobs in the community * A system to resolve workplace issues. * Three working days of paid funeral leave following the death of immediate family members.

“This contract will completely transform our workplace,” said Orlando Williams. “This is the biggest four-year wage increase Smithfield workers have ever had and it will make a real difference for our families and in this community. We could never have gotten that increase without a chance to bargain with the company. We will finally have a sense of security on the job because through our union we can make sure we have a safe place to work, and that everyone’s treated fairly.”

The first thing to note is that the UFCW deserves a lot of credit. It stuck with this organizing campaign over 17 years through, among other things, a racketeering suit Smithfield filed against the union because of a very persistent corporate campaign waged by the union. In two previous union representation elections, the company brutally harassed the workers, and in particular, the union supporters, to the point that the National Labor Relations tossed out the results of the elections. Finally, last December, the union won overwhelmingly in an election that was more fair then anything in the past.

Which brings us to this point: when workers have a chance to vote for a union–free of intimidation and threats–they will do so. And certainly one step in that direction will come with the passage of the Employee Free Choice Act.

The point that I think is valuable to remember is this one:

Workers and union officials say that perhaps the most important change is that workers will be allowed to voice concerns and challenge management decisions through a formal grievance process. In the past, many workers have said they were treated disrespectfully by their supervisors and fired after speaking out or being injured.

“We really did accomplish something with this union,” said Mattie Fulcher, a 10-year employee who helps usher pigs to their deaths. “We might not have gotten the raise that we wanted, but that will come in time. This is our first contract, and it is a start.”

Too often, in the public sphere, and among the talking heads, the focus on union jobs is about wages and benefits. No doubt, that is important. But, what the workers at Smithfield gained was some POWER over how they will be treated.

Independence Day is about a lot of symbols–patriotism, flag-waving and I suppose mostly, now, a long weekend at the beach. But, it is also about gaining power and the triumph over tyranny. It is always ironic and sad to me that, too often, we assert that triumph by showcasing the very instruments of power that we now use to the detriment of other people around the world.

But, I forget that when I sit back and think, for a moment, what these workers went through–the struggle, the fight, the commitment that held them together over so many dark days–this is the America that inspires me. They have triumphed over tyranny, they have gained back the power they deserve to shape their lives. That’s what Independence Day means to me.

Jonathan Tasini: Jonathan Tasini is the executive director of Labor Research Association. Tasini ran for the Democratic nomination for the U.S. Senate in New York. For the past 25 years, Jonathan has been a union leader and organizer, a social activist, and a commentator and writer on work, labor and the economy. From 1990 to April 2003, he served as president of the National Writers Union (United Auto Workers Local 1981).He was the lead plaintiff in Tasini vs. The New York Times, the landmark electronic rights case that took on the corporate media’s assault on the rights of thousands of freelance authors.

This article originally appeared on Working Life on July 3, 2009 and is reprinted here with permission from the author.

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To Hell With Pensions: Let Them Eat Dog Food

Posted on June 29, 2009June 25, 2009 by Jonathan Tasini

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The other day, I saw an amazing spectacle: a firefighter responded to a call to a burning building in New York City and, as he was dragging the fire hose to the fire, a crowd of angry people stopped him and said, “Stop. Your pension is too generous so don’t you dare put that fire out”. Absurd, you say? Well, yes–if you mean the intensifying attacks against the pensions people earn.

Yesterday, there was an attack against firefighters’ pensions in the pages of the Daily News:

Even in the midst of a deep economic downturn, New York City taxpayers are paying billions every year to provide city workers with retirement benefits that are extraordinarily generous by any standard.

Since fiscal year 2003, the taxpayer contribution to municipal workers’ pensions has more than tripled – to $6.4 billion in fiscal year 2009. At this rate, in four years, every working-age New Yorker will be putting an average of $1,250 a year into the pension funds of municipal workers.

We cannot keep giving new workers retirement benefits at the current levels.

Take current city firefighters, for example. They are entitled to retire after 20 years of service at half pay, with their overtime included in that calculation. In 2006, the last year for which data are available, the pension benefit for a newly retired firefighter averaged just under $73,000 annually. On top of that, many get another $12,000 every December as a “Christmas bonus” to bring the annual cash total to $85,000 – all of which is exempt from state and local income taxes.

That attack came from someone from the “Citizens Budget Commission”, a self-perpetuating organization which has zero grassroots links and is simply a front run primarily by corporate leaders in New York.

Today, The New York Times carries another attack:

Mayor Michael R. Bloomberg is sounding the alarm over New York City’s pension system these days, calling it “out of control.”

Costs have ballooned, he says, threatening to bankrupt the city. Municipal unions and lawmakers in Albany created the crisis, he suggests, and left the city holding the bag.

But interviews and budget records show that the Bloomberg administration itself is responsible for much of the growth in city pension costs over the last eight years, and has repeatedly missed opportunities to rein in the spending.

Since Mr. Bloomberg took office, city contributions to the pension system have jumped nearly five-fold to $6.3 billion, from $1.4 billion, and they now account for one out of every 10 dollars in the city’s budget.

A major reason: the mayor has given the city’s 300,000 workers generous pay increases, guaranteeing that they retire with bigger pensions, which are typically 50 percent of salary. Such raises force the city to make heftier payments to the pension system now.

So, let’s talk about the real world. The average pension for a transit worker in New York is about $20,000-a year–after a job that very few of the people who attack transit workers’ “generous benefits” would ever take. Other city workers’ pensions are in the low 30s. And firefighters’ pensions average around $70,000.

If you think for a moment about what the cost of living is in New York, that isn’t a lot of money even at the “high” end.

So, what is going on here? In the public sector, the hue and cry over “generous pensions” obscures a major point: the reason city and state governments are facing budget deficits is not because of “generous” pensions. Putting aside the most recent budget shortfalls made worse by the economic crisis, the real problem is that in New York–and in virtually every other state in the country–we’ve allowed the richest people in society to escape paying their fair share.

Last December, I pointed out that New York would easily have billions more in revenue to use for basic services if the wealthiest people in the state paid a fairer share of the dues that should be required in a decent society. It is ironic, indeed, that the very people who escape paying higher taxes are some of the very people who were at the helm–incompetently, one might add–of the financial industry which, with its spectacular collapse, wiped trillions of dollars in wealth held by regular people who believed, in the absence of a real pension, that their 401(k)s would provide a decent retirement.

Indeed, the hammering of pensions in the private sector–where a decent pension is increasingly a thing of the past–is directly related to the ideological assault in the private sector. The “free marketeers” are clever–they can whip up the public’s anger about “generous” public employee benefits by effectively saying to people whose pensions in the private sector are evaporating, “look over there, people, at those overly generous benefits YOU are paying for”. It is the classic Henry Ford strategy about dividing one half of the working class against the other half. And it makes people blind and distracted–and prone to forgetting about the transit worker who gets them to work, the firefighter down the street who their kids look up to and the rest of the army of people who make life run in our society.

As progressives, though, we have to fight this ugly strategy. The answer should not be: someone doesn’t deserve a decent pension because I don’t have one. It should be: everyone deserves a decent pension and, if the very wealthy would stop for a moment from avoiding their responsibility in the public sector (by paying a fair share in dues) and stop the wide-scale looting of the wealth created in the private sector (by ending the enrichment of a handful of CEOs and top executives who reap millions of dollars in pensions benefits while the rest of the workforce gets crumbs), everyone could retire with dignity and respect.

Now, where are our political leaders with that message?

I am curious to hear about stories about the attacks against pensions in other places.

About the Author: Jonathan Tasini is the executive director of Labor Research Association. Tasini ran for the Democratic nomination for the U.S. Senate in New York. For the past 25 years, Jonathan has been a union leader and organizer, a social activist, and a commentator and writer on work, labor and the economy. From 1990 to April 2003, he served as president of the National Writers Union (United Auto Workers Local 1981).He was the lead plaintiff in Tasini vs. The New York Times, the landmark electronic rights case that took on the corporate media’s assault on the rights of thousands of freelance authors.

This article originally appeared in Working Life on June 23, 2009. Re-printed with permission by the author.

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GM, Healthcare, Trade, It’s All Related

Posted on June 10, 2009 by Jonathan Tasini

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As I noted yesterday in connection with the bankruptcy of General Motors, I am in favor of spending money on trying to save peoples’ jobs–we are talking about the survival of communities and the lives of thousands of people. But, having now spent the morning reading various media reports about the GM bankruptcy, it’s startling how little, if any, of the dialogue makes broader connections to other parts of the economic system. Put another way, it’s great to spend money to address a crisis but if you don’t see the crisis in a broader way, the money will be wasted. Here is what I mean.

GM, and the rest of the U.S.-based auto industry, arrives at this crisis because of at least four problems. One is mismanagement. So, you have to ask the question–why isn’t there an entire housecleaning, removing every top manager and executive who has had significant role in running the company into the ground? Why would we turn over billions in taxpayer money to people who have shown they are thoroughly incompetent?

Second problem–which would lead me to be a tad less vocal on the first problem. Part of the crisis that led GM to the brink is a worldwide collapse of auto sales brought on by the general economic crisis. So, not to at all excuse the performance among the ranks of pathetically incompetent managers, you can also give a Bronx cheer for this sad situation to the leaders of the financial system (Robert Rubin, please take a bow).

But, you know, the above two problems pale in comparison to my other two points. First, and this is a point I have made countless times over the past number of months when I’ve played the role of TV pundit-talking-head-defender of labor, the crying shame is that we could have avoided the auto industry collapse if we had had a single-payer, “Medicare for All” health care system which would have relieved the auto companies of tens of billions of dollars of costs that have dragged down their balance sheets. Here we have the most prominent example I can think of where stupid ideology (“We can’t have a government-run health care system, that’s socialism”) has triumphed over sound economics. If we don’t learn from that mistake, the GM money goes to waste.

And, finally, if an auto industry job was, thanks to the UAW, a ticket to the “middle-class” or, at least, some promise that you could retire with some dignity, then, you would think someone would say: whoa, so now the auto companies are seeing their future in moving more jobs to Mexico and other countries. Wonder why they are doing that? Huh–could that be because of lower wages? Nah, that’s just “protectionist” talk. Point being: sure, we should be fine with our tax dollars helping people save their jobs BUT where are the leaders who are ready to rethink a trade policy that put us precisely where we are: a world where competition is based on the lowest wage possible.

This article originally appeared in Working Life on June 3, 2009. Reprinted with permission by the author.

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Wal-Mart Jobs vs. Auto Jobs

Posted on June 10, 2009 by Jonathan Tasini

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The debate I took part in yesterday–well, it’s hard to call it a debate when your opponent is not operating with a full deck of cards…meaning facts–on CNBC really illustrates, in the most starkest terms, the two visions of America. One vision sees unionized jobs, like those that many people have had in the auto industry, as the platform upon which you build a decent society where people can live with dignity and respect. The other vision is that that sees Wal-Mart as the model–where if you work full-time (which Wal-Mart considers as a 34-hour work week) and are part of a family of four, you don’t make enough money to get above the poverty level of $21,000 a-year.

Take a look at this:

You want to both laugh and cry listening to Stephen Moore. If you try to follow his argument, good luck–because it simply isn’t coherent beyond the point “people are lining up for Wal-Mart jobs and so that must mean Wal-Mart jobs are great”. If this is the best the right-wing, pro-business folks can throw out there, boy, it’s a thin bench.

This article originally appeared in Working Life on June 5, 2009. Re-printed with permission by the author.

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Workplace Fairness

Tag: Jonathan Tasini

The Minimum Wage–And Why the Recovery is Not Coming

An American Scandal: The Minimum Wage

Victory at Smithfield: An Independance Day Symbol

To Hell With Pensions: Let Them Eat Dog Food

GM, Healthcare, Trade, It’s All Related

Wal-Mart Jobs vs. Auto Jobs

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