The Cost of a Living Wage

Our society is failing to provide a living wage for tens of millions of Americans. In 2012, the total percentage of American workers making less than 1968’s minimum wage was between 39.6% and 46.6% ($22,339.20)[1].   An unsettlingly large percentage of Americans currently struggle to live at, or below, the poverty level. It is why America has more children living in poverty than almost every other developed nation in the world, with the exception of Romania. In 2012 there were 21.8% of children under the age of 18 living in poverty[2]. Americans need a living wage.

There are many who say we’re already giving millions of dollars in government benefits to a bunch of lazy, entitlement-rich malcontents. Why should they get a “free ride”? Well, the simple truth is that over 90% of those receiving benefits are: the elderly, the disabled, and those in a working household[3]. This misconception is one of the radical rights, formerly known as those crazy neocons, talking points, as this recent headline clearly illustrates, “Why work when you can live comfortably on the government dole?” [4]. This headline comes from the necon paper The Washington Examiner. It is bankrolled by billionaire, Philip Anschultz, who also repeatedly tried to get intelligent design creationism taught in America’s public school system via The Discovery Institute, of Seattle, WA. Yes, one of the most conservative groups is located in the heart of Liberalia.

My biggest concern in all this is how it will affect our future. No developed country, other than Romania, has a higher percentage of kids in poverty than America. We’re living with crippling income disparity, as evidenced by the chilling fact that many Wal Mart employees will have to work for nearly 800 years to make what their CEO, Michael Duke, made in 2012[5]. The effects of this on society are troubling.

Joseph Stiglitz, a Nobel prize winning economist, eloquently stated, “The price of allowing the US to continue down the path of inequality, as 1 percent of Americans now control 40 percent of the country’s wealth, is the undermining of economic growth, the erosion of democracy and the growing instability of American society itself. American income inequality presents a frightening specter, he argues, for the global economy.  The risk is that the middle class is going to be harder and harder hit, and that there will be prosperity for only the few at the top. But the middle class is important for stable growth and a strong democracy. When a society becomes more and more divided, it becomes increasingly class-driven, and it’s very hard for democratic processes to work well in that kind of society.”[6]

We’ve seen the impact of money’s influence on legislation. In the past there was Enron’s contribution to the energy bill, which was a disaster. Currently the Koch brothers’ are hell-bent on profits, and have already destroyed thousands of jobs in renewable energy field by using pseudo-science, and good old-fashioned lobbying. They’re also bankrolling the Tea Party, and were behind the Tea Party’s failed attempt at blackmailing the government via a government shutdown. Doesn’t this undermine America’s ability to achieve stable economic growth, while robbing the chances for millions of Americans to follow their dreams?

This reflects poorly on our culture. Today, different factions of society aren’t separated by minor ideological differences; they’re separated by trenches of hate. We’ve gone from a land of opportunity, to a land where tens of millions of children live in poverty.

Our politicians, bought and paid for by Lobbyists, Inc. have become their spokesmen. A few of the 1% club have actively tried shaming us into doing things against our own self-interests, e.g. Romney’s 47% comment vs. the fact that the vast majority of said 47% come from staunchly Republican states[7]. If we don’t turn this trend around soon, and learn to help one another, things will get worse.

A living wage isn’t merely an economic issue, but a moral issue that reflects society’s values.

 

[1] http://www.ssa.gov/cgi-bin/netcomp.cgi?year=2012

[2] http://www.census.gov/hhes/www/poverty/about/overview/

[3] http://www.washingtonpost.com/blogs/ezra-klein/files/2012/09/2-10-12bud-f1.jpg

[4] http://washingtonexaminer.com/examiner-editorial-why-work-when-you-can-live-comfortably-on-the-government-dole/article/2537928

[5] http://www.huffingtonpost.com/2013/04/23/walmart-wages-to-ceo-annual-salary_n_3140618.html

[6] http://www.globalpost.com/dispatch/news/regions/americas/united-states/121226/joseph-stiglitz-us-income-inequality

[7] http://www.businessinsider.com/mitt-romney-47-percent-no-income-tax-map-red-republican-states-2012-9

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Death of the American Dream: Income disparity and our burgeoning two class society

If you’re earning less than $10.74 an hour then you’re making less than your grandparents did back in the 60’s, when they were working a minimum wage job. The $1.60/hr they made in 1968 is worth $10.74/hr today. With that in mind, it’s hard to deny the painful truth: wages have decreased by over 32% since 1968 for 99% of Americans. The reason? A money and power grab by the top 1%, and the resultant income disparity that will eventually result in the elimination of the middle class. Raising the minimum wage to the levels of our grandparents would go a long ways to helping those most in need.

Real Value of the Federal Minimum Wage, 1968-2012 (in 2012 dollars)x

 

Bootstrapping is what made America great. But ask any of the tens-of-millions of working poor if hard work is enough to prevent them from living paycheck to paycheck? The sad truth is that repressed wages have turned the American dream into a nightmare. Couple this with the shocking fact that over 45 million Americans lack decent healthcare, while millions more are one check away from losing their coverage, and an ugly picture of our modern day American lifescape begins to take shape. How did we get into such a predicament? Are we still the greatest country in the world?

Since 2009, 95% of the income gains have gone to the top 1%, and that’s actually down from the 121% in gains they earned from 2009 to 2011. Odds are good that many of our grandparents will work until the day they die – their dreams died a long time ago. This is what happens when people aren’t paid a living wage. Many of us face a similar fate if we allow this income disparity to continue unchallenged. The irony is that employees today are far more productive  than they were back in the 60s.

If we were to tie the minimum wage to production, it would currently be around $22/hr. From 1973 through today, technology and education have resulted in tremendous gains in worker productivity. Unfortunately compensation hasn’t followed suit.

 comparing productivity with hourly wages, inflation-adjusted with the Consumer Price Index (CPI)

We face an uphill battle. Now that money is the driver behind free speech (e.g. Super PACs) the voices of the poor and middle class, i.e. you and me, have been nearly silenced by roar of the 1%. They’re creating large swaths of low information voters who actually believe the half-truths being sold to them. How many of you have heard the Job Creators meme? It’s almost as ubiquitous as the socialized healthcare meme, and the compromised Canadian and British health care systems memes. Which are false, by the way, as many of my Canadian friends will happily attest to.

Out of 141 countries, the U.S. has the 4th highest degree of wealth inequality in the world, trailing only Russia, Ukraine, and Lebanon. The reason for this disparity is simple; corporations are influencing legislation through lobbying efforts and Super PACs, and then reaping financial windfalls. The more they win, the more everyone else loses. Months before their epic (and well documented) collapse, Enron Corporation had three of their top officials secretly meet with [then] Vice President Dick Cheney, who was heading the energy task force. These officials were instrumental in crafting legislation that gave Enron, and their ilk, hundreds of billions of dollars in tax breaks and other benefits. How could such extreme corruption influence policy? Greed is green, and money is the great equalizer. Many former Enron employees, having lost everything, will be working until the day they die. The first step is to raise minimum wage. The minimum it should be raised to is the levels of our grandparents, $10.74/hr. Ideally, I’d like to see it also reflect the vast gains in productivity, and would be happy with a minimum wage around $16/hr. It would instantly and drastically improve the lives of tens of millions of Americans.

However, the 1% club wants to horde all money, and it has become even more obvious over the past decade. One of the greatest periods of economic growth occurred during President Clinton’s term, 1993 – 2000. This resulted in income growth across the board. During this time incomes for the bottom 99% grew by over 20%. While still repressed, they weren’t backsliding. However, from 2002-2007 incomes for the bottom 99% grew by a mere 7%, while those for the top 1% grew by almost 70%. This is, in large part, the result of policies enacted by the Bush administration – including sweeping tax changes that benefitted the top 1%. Most of these were implemented after the Enron debacle, even though Enron executives had a hand in crafting the legislation.

Change in income and share of income from 1979 to 2009

Today, the 1% aren’t content with merely working in the background. The Koch brothers and Rupert Murdoch are bankrolling the Tea Party, and there’s no doubting the poisonous influence these Puppets of the Plutocracy have had on Washington. Tea Party members were instrumental in shutting down the government, as part of a bluff to undermine President Obama’s Affordable Care Act, because having over 45 million Americans living paycheck to paycheck, and living without adequate healthcare isn’t unfair enough. The bluff quickly unraveled hours after the Koch brothers, in a face-saving move, publicly stated that they weren’t behind the shutdown (nudge nudge, wink wink). Following this announcement, a rash of meetings ensued to resolve the crisis and limit the political fallout. But how does this affect you and me?

The influence the Koch brothers have had on our country has been devastating. Their meddling with renewable energy legislation, using Koch-supported think tanks and junk science, among other tactics, has resulted in the elimination of tens of thousands of jobs, higher utility costs, and more pollution (not to mention the long-term effects of said pollution). On the upside, the Keystone pipeline will create upwards of 50 jobs. The Koch brothers have spent over $67,000,000 from their family foundations to deny the existence and extent of global climate change, promote fossil fuel use, and undermine renewable energy legislation. But the most immediate impact has been the tremendous loss of jobs.

Today, thanks to the influence of big money on Washington politics, we’re being told & sold even less of the truth, while a new charade of morality carries on. Change starts by addressing income disparity. I’m not talking about higher taxes. That’s a tough sell, though the tax rates during Clinton’s presidency didn’t affect economic growth, and in fact possibly helped to spur growth. Giving people a living minimum wage, one that’s adjusted for inflation, is the logical next step. And $16/hr would be a great starting point.

The regulations and policies being instituted today to address income disparity pale to those enacted during the New Deal (after the Great Depression). The result of the New Deal permanently reduced income concentrations until the 1970s, which, coincidentally is when this current run of income disparity started. Coincidence? Until drastic changes are enacted to address this issue, income concentration will compromise economic stability, eliminate the middle class, and kill the American dream for tens of millions. We’ll be left with a two-class society of excessive wealth and extreme poverty.

Unless we face this issue head-on we may be witnessing the birth of America’s Plutocracy.