This post has been updated to include a link to the editorial.
The TAB editorial isn’t online yet but I’ve done my best to post a legible copy here. I’d love to hear what others have to say about Andy Levin’s take on raising the minimum wage (over three years) to $15/hour for fast food chains and big box retailers.
You have to read the whole thing because he brings up several points. It’s difficult to pull excerpts without taking him out of context, but I think I’m safe with this one:
“I’m also troubled by the lack of faith some have in entry-level employees to improve their skill sets and move up in the workforce. And worst of all? The apparent lack of confidence many of these workers have in themselves to eventually do something more with their lives.”
I submit that an alternative way to view many of “these workers” is that
they’re simply trying to survive and moving up in the workforce is beyond their wildest dreams. It might not be a question of lack of confidence; it might be a question of lack of resources.
New York Governor Andrew Cuomo wrote in an op/ed column in yesterday’s New York Times about fast food workers:
“…73 percent are women, 70 percent are over the age of 20, and more than two-thirds are raising a child and are the primary wage earners in their family.
Fast-food workers and their families are twice as likely to receive public assistance compared with other working families. Among fast-food workers nationwide, 52 percent — a rate higher than in any other industry — have at least one family member on welfare.”
I would suggest that for some people who are born with many odds stacked against them, survival is doing something with their lives.
Thank you for drawing attention to the editorial, which was completely uninformed, lacking in substance, and based on myth not facts.
Not only did the editor ignore the corporate welfare inherent in paying such low wages to workers, who often need food stamps and government subsidized health care to survive, he also didn’t mention that the minimum wage today, if adjusted for inflation, would already be much higher.
He also didn’t appear to have read anything by economists who have concluded that raising the minimum wage can stimulate the economy because those receiving an increase in pay spend it locally. His “lack of faith” argument was just plain condescending toward those who work in these low-wage jobs, straight out of Paul Ryan’s mythology.
Thanks for posting that Gail. I read the editorial yesterday and was more than a bit taken aback with Andy Levin’s point of view – i.e. lack of confidence of workers is a big part of the problem.
When people talk about workers striving for something better, that’s certainly good advice for an individual. When talking about the wider issue of extremely low wages for a sizable fraction of our country’s workers, that advice is beside the point.
Yes, an individual may eventually move to a higher wage job. That’s great. Good for them. That has no affect on the wider problem. The reality of our present day economy is that a sizable portion of jobs in the country pay less than subsistence wages and the government (i.e. tax payers) then top up those wages with additional benefits (e.g food stamps, etc). Whether any individual escapes the minimum wage prison or not, those jobs remain and will be filled by a different subsistence wage worker.
Aside from the human cost of the status quo, this is a weirdly perverse form of government subsidy to low wage employers.
The biggest source of the problem is a historic shift that took place in the last 20 years or so. For nearly the entire 20th century an unofficial social contract ruled capitalism in America. As productivity, and profit rose, the proceeds were shared between the owners, the managers, the employees, and the customers. That compact ended roughly 20 years ago.
Since then, productivity of American businesses continued to rise, profits continued to rise but the benefits no longer trickle down to any but the top echelon of employees. Wage’s have been completely flat for the bottom half of the work force for the last 20 years, while cost of living has risen.
Take a look at what venture capitals Nick Haneuer has to say about the current economic situation and what he sees for the future
Unfortunately, supporting of raising the minimum wage aren’t able to deal with the law of unintended consequences, as Seattle’s new $15/hour minimum wage is resulting in restaurant closings.
http://www.washingtonpolicy.org/blog/post/seattles-15-wage-law-factor-restaurant-closings
I’m rarely surprised by your opinions, but the absurdity of this one blew me away. Particularly after a version of it
was just debunked in your own backyard making headlines all over the country as Market Basket showed what actually happens when employees are paid living wages, participate in profit sharing, have health insurance and are basically treated right.
Here are a few comments on your commentary.
“McDonald’s, Wal-Mart and Target have agreed to raise their entry-level wage levels (after being shamed into it) … though how those wage hikes will ultimately impact the general economy remains to be seen.” Really?
Do you really think they can’t afford to pay a livable wage without firing people? Have you not noticed how top heavy these corporations are? Or the ridiculously fast growing divide between compensation for employees and executives? Or how their profit keeps soaring? Do you not realize that more money in the pocket for low wage earners is ALL put back into the economy while more compensation for high income earners gets put into investments or somewhere overseas?
“What really concerns me about all this, however, is the mindset of those who are demanding the $15 an hour wage …” You never actually say what their collective mind set is, but it is presumptuous to think there is ONE.
“there would have to be a “ripple effect” This effect must be similar to the “trickle down effect,” both of which are myths.
“… lack of confidence many of these workers have in themselves to eventually do something more with their lives.” Low income workers may have a lack of almost everything in their lives, security, food, daycare, and the time and energy to do anything but try to survive and take care of their families but they no lack of people telling them “they should do something more with their lives.” No, that they have in abundance.
“People can take college or certificate courses to better market themselves, while working a low-paying job to help make ends meet.” Here you have truly gone off the rails and proved that you have absolutely no idea WHO these low wage workers are, but like a lot of entitled people, you know what they should do to be better.
@Joshua Norman – As the comments below that story make clear, the story is completely wrong and full of inaccuracies. The two most obvious being that the new minimum wage for restaurants is $11 not $15, and much more importantly – this increased minimum wage has NOT gone into effect yet (April 1).
This is way, way, way off topic, but since we all love our politics I am going to announce that I just got off the phone with David Olson and if everyone certifies their signatures there is a fifth and sixth candidate for the ward 2 alderman at large. This means there would be a primary in ward 2. Also, there is a candidate in ward 1 against Scotty and Al Ciccone. All the Aldermanic incumbents took out papers. It’s odd that so many challengers came out in ward 2 and no other ward. Maybe the only ward where people are watching, I don’t know.
In the SC side, no challengers. Rather, confusing considering their past year, but as of today, all 8 took out papers and no one is challenging any of them.
Jerry, I disagree.
http://www.nfib.com/article/bnew-seattle-restaurants-closing-their-doors-ahead-of-minimum-wage-increase-68463/
I do share your concern about how the productivity of American businesses continued to rise, profits continued to rise but the benefits no longer trickle down to any but the top echelon of employees. Wage’s have been completely flat for the bottom half of the work force for the last 20 years, while cost of living has risen. I believe that there are better ways to improve the lot of working-class Americans than mandating that businesses pay a wage increase.
For starters, America needs to put an end to its open-borders immigration model which has resulted in over 11 Million illegal aliens and 1 Million new legal immigrants annually. According to the Federation of Americans for Immigration Reform, illegal aliens cost Massachusetts taxpayers $1.9 Billion annually in benefit payments for illegal aliens. America should make efforts to increase deportations of illegal aliens, enforce the immigration laws already on the books and cut off taxpayer-funded benefits for illegals
Second, End the H-1B program because it enables businesses to replace highly-skilled, highly paid employees with entry-level immigrants.
Third, Eliminate burdensome regulations on businesses.
Fourth, Cut taxes on domestic production/services and put tariffs on imports. It makes no sense that a business headquartered in Massachusetts pays 40% federal and state tax based on its profits earned from serving American customers yet if it was to reincorporate outside of the US and export its good and services to the US, it would pay as little as 0% total tax.
Whether one believes that a $15 per hour minimum wage is a good idea or not, it is inescapable that there will be businesses adversely affected.
For companies that are publicly traded, the pressures of quarterly earnings cycles will likely affect their bottom lines and stock prices, leading to possible layoffs. For smaller private companies, often with tight margins, the squeeze might be too much for them to stay afloat.
Rushing to judgment on this is not a good idea. Letting the Seattle experiment play out might be very enlightening.
Clearly if there aren’t significant negative side effects, workers gaining added compensation seems like a good thing. But…
Like many others I am chagrined that the gap between lowest and highest paid has grown so much. But any solution needs to avoid doing more damage.
@Joshua Norman – There may be other reasons to enact each of your four suggestions. I have a hard time though seeing how enacting any one (or all) of them would make any significant difference in the abysmal wages of our lowest paid workers. Particularly #3, and #4.
Those wages are not that low because businesses can’t afford to pay higher wages. If that was the case, then over the last 20 years, as productivity and profits climbed, those wages would have climbed too. Why would you expect now that if you cut taxes or the regulatory burden, businesses would suddenly decided to use the saved money to increase those wages, rather than continue what they’ve been doing for the last 20 years?
@Jerry. I’m in total agreement with your position. If someone is willing to work a 40 hour week, they deserve to make enough to live with dignity.
@Dan Fahey – Agreed. We should watch the Seattle experiment closely and only draw conclusions from carefully collected comprehensive data rather than anecdotes.
It has been my experience that whenever a minimum wage has been raised nationally or in any state, there are always many loud voices definitively declaring that it will destroy thousands of jobs or destroy whole industries. Yet once the wage goes up, there’s a short period of adjustment, and life goes on and there is no wholesale job loss. Meanwhile thousands and thousands of citizens lives are substantially improved.
Yes, increasing the minimum too much, too suddenly can certainly cause problems but doing nothing is even more clearly causing big problems.
In my not so humble opinion, the minimum wage should be high enough to keep people from needing food stamps, etc. Otherwise, we are subsidizing business – often the same businesses whose execs want lower taxes and fewer “handouts” to people.
I know that increasing the minimum wage hurts some small businesses – there are definitely cases, especially in cities where rents are high and the increased cost makes the difference between being able to pay the rent or not. I don’t know what the answer to that is. But I do know that it’s good for the economy for people to earn enough that they have some disposable income left to buy goods beyond subsistence – Henry Ford used that reasoning a century ago when setting his factory workers’ wages so that they could afford to buy his products.
http://www.bls.gov/cps/minwage2013.pdf
4.3% of hourly workers are paid minimum wage, and half are under 25. Minimum wage jobs aren’t supposed to be long term jobs. They are best for teenagers, and those looking to pick up extra hours without having to learn a skill that would net them a higher paying job (like the jobs that Mr. Levin alluded to that currently pay $15/hour). If you are still in a minimum wage job after years with a company you are doing something wrong.
I also see 2 unintended(?) consequences of higher minimum wages: a lack of jobs available to teenagers looking for their first experience in the work force, and
But Jerry is that the scenario here where we are talking about a substantial increase in minimum wage?
As a general proposition I don’t like to see government imposing itself unless absolutely necessary, and perhaps we are at that stage with the minimum wage issue. But we darn well better be fairly certain we won’t do more harm than good. And I grant that companies are often their own worst enemy by not doing what is “right” by their employees because they can get away with not doing so. And who they can’t snub or those high paid employees who have the ability to walk if not taken care of.
@Jeff Dowder – A diiferent way of reading those same number from that report are 3.3 million jobs pay at or below the federal minimum wage and half of those jobs are people older than 25.
More importantly, those figures include only the Federal minimum wage. More than 1/2 the states, including many of the most populous, including Massachusetts are not included in those figures since the minimum wage in those states are already higher than the federal minimum .
BTW – Today’s federal minimum wage is $7.25. 1968’s federal minimum wage, adjusted for inflation was $10.34.
Can a case be made that big business in not looking out for the individual worker , is like, at a micro scale, 40b real estate developers not looking out for the citizenry of Newton?
In both instances its all about profit at the expense of the individual,.. Worker or neighbor / homeowner.
@Blueprintbill – that’s about the most blatant attempt at “thread hijacking” that I’ve seen in a while
I like that Andy Levin has a different point of view from the former editor of the TAB. If Dan Wolf’s proposed legislation passes, these same minimum wage workers will never be able to afford to buy a home in Newton. BTW, this will never pass in 2015!
Jerry, my proposed solutions help reduce the supply of labor (while adhering to Basic First Principles of the U.S. Constitution), reduce the demand and cost of vital infrastructure necessities and help boost economic growth, which will result in workers getting raises and promotions without relying on giving government increased powers over businesses.
@Joshua Norman – I think you miss the main point that I was making. Economic growth by itself will do nothing to raise the wages of the bottom end of the pay scale. Over the last 20 years we’ve had long periods of economic growth, massive run ups in the stock market, no shortage of growth, profits and prosperity – yet those bottom edge wages haven’t budged. Lots more wealth has been created in the last 20 years, it just hasn’t found its way to the bottom half of the populace.
As I mentioned in my first comment, this last 20-30 years period is the first time when general economic growth didn’t translate into wage growth for the entire work force. Instead, nearly all of the proceeds from that wide economic growth went completely to a small fraction of the populace – the top 10%
Why would you believe that a new burst of economic growth would be any different?
Jerry, profit growth has not translated into wage growth over the last 20-30 years is because the supply of labor has grown much faster than the demand for labor. Technology has reduced the need for significant growth in the labor supply. Unfortunately, America’s open borders immigration policy, as well as the recent phenomenon of offshore outsourcing to the Third World has resulted in a huge growth in the available labor supply for American businesses.
I am the only person here on this thread that recognizes the need to enforce our immigration laws. Unfortunately, the labor unions have thrown in with the open-borders crowd when it comes to immigration, even though it has negative impacts on wages and working conditions.
https://www.numbersusa.com/problems/union-leaders
Oh Jerry Reilly, open your mind .
“Blatant thread hijacking ” ??? What about hijacking an entire V 14 blog to advertise theatrical productions ? Lets not be calling the kettle black here. At least my Irish prizefighting grandfather knew when to throw a punch.
@blueprint bill – “Irish prize fighting grandfather” – oh than I’m sure you’ll be wanting too see “the Beauty Queen of Leenane ” by Irish playwritell Martin McDonagh. Opens next Friday. How many tickets can I put you down for?
Now what was that you were saying about 40B?
Leenane is a very picturesque village – blissfully unaware of 40b projects 😉
My wife tells me the play does have a Boston connection, and very dark!
It’s articles and opinions like these, about low wage earners, that feed into NIMBYism and creste a false image of those who would move into Affordable Housing.