Earlier this week, I was a guest on The Sam Lesante Show, a long-running TV talk show on Channel 13 in Hazleton, PA. My friend Sam Lesante played devil’s advocate as we discussed my book Letter to the One Percent:
It is time for the states to lead.
Every once in awhile in the history of this great country of ours, the federal government just can’t get the job done. Partisan gridlock, constitutional uncertainty, public distrust all play a role. But one of the great strengths of the American system is that the states — those laboratories of democracy, as Louis Brandeis called them — can act when Washington will not. Abolitionism, women’s suffrage, health care reform, gay rights: All started at the state level.
This is one of those times. Our national system is inert. Our national leaders are mired in the muck of inaction.
And yet there is hope. For today is Election Day, and on this day, we will elect 36 governors. This is no time to stay home when the polling places are open. This is a time to choose leaders who will act where Washington has not.
I can think of no better example of the choice we face as a country today than the minimum wage.
After World War II, Congress set the minimum wage at approximately half the average wage in the country. In today’s dollars, it was over $10 an hour. Earning the minimum wage, one full-time worker could support a family of three above the poverty line.
Unlike Social Security or Medicare payments, the minimum wage is not indexed to the cost of living. Only Congress can raise it. The last time they did so was 2009. Democrats proposed raising it again earlier this year, but the majority of senators opposed it.
The feds have failed to act. It’s time for the states to lead.
And we have ample evidence that they can. Twenty-three states already have minimum wages higher than $7.25. Five states — Alaska, Arkansas, Illinois, Nebraska, and South Dakota — have an initiative on today’s ballot to increase theirs.
But not everyone is onboard.
“I don’t think it serves a purpose,” said Wisconsin’s Republican governor Scott Walker last month.
“I don’t think as governor I want to be the cause of someone losing their job,” said Greg Abbott, the Republican candidate for governor in Texas, in explaining his opposition to raising the minimum wage. Pennsylvania’s Republican governor Tom Corbett made a similar argument when stating his opposition last year.
At least they pretended to know what they were talking about. When Republican Governor Rick Scott was asked what Florida’s minimum wage should be, he said, “How would I know?”
These men are on today’s ballot in four of our nation’s largest and most influential states.
And they are tragically out-of-step with the lessons of economic history. In a recent study, the economists Hristos Doucouliagos and T.D. Stanley survey the vast research that economists have done measuring the impact of the minimum wage in recent decades — 64 papers in total — and they find “little or no evidence” that minimum wage increases caused job losses.
On the contrary, raising the minimum wage is a clear boost to the economy. In another recent paper, the economist Arindrajit Dube found that raising the minimum wage significantly reduces the poverty rate, a finding that is consistent with the other 12 studies economists have published in recent years measuring the same effect in different ways.
Only a politician severely out-of-touch with the modern economy could think otherwise. Today’s corporations don’t have to cut back jobs when wages rise. They have to cut back profits, which are at an all-time high. In the long run, they might not have to cut back anything. Higher wages lead to higher productivity, better health, fewer strikes, lower turnover, and higher consumption, which in turn leads to more demand for their products and therefore higher profits.
Individual companies may not want to raise wages if their competitors won’t, but when everyone does it, everyone benefits.
Trying to save money by keeping the minimum wage low is like trying to improve your health by starving yourself. It’s classic shortsighted behavior, hardly the visionary leadership that we’d like to see in the governor’s mansion.
That’s why today’s election matters. In this age of do-nothing politics, it’s easy to despair, but we must remember the intent behind the design. The same founding fathers who created a federal system that resists radical change also created a state system that encourages experimentation. Today we celebrate their creation, and we direct its attention to the challenges of our time.
If the feds do not act, the states will. We the voters will make sure of it.
This op-ed was originally published in the Huffington Post.
(Source: Matt Cowgill)
There’s a man who lives in Chicago. We’ll call him Roger.
Roger is a good man. A hard-working man. Never got in trouble with the law. Never borrowed money he couldn’t repay.
Roger grew up in a bad neighborhood. It wasn’t easy for him to finish high school, but he did it. He even got himself into community college — at least, until his family ran out of money and he had to drop out to pay the bills.
Roger got a job at a fast food restaurant. It was only minimum wage, but the economy was weak and they were the only ones hiring.
By this point, Roger was married. His wife was pregnant. They lived in a 20-by-15-foot apartment. No kitchen. No furniture. They shared a bathroom with four other families.
Roger counted himself lucky. The other families crammed four, five, even six people in a room. At least he and his wife had the apartment to themselves. All 300 square feet of it.
Roger worked his butt off. He took every shift he could get. He sweated and served and smiled the whole time. He started making $7.25 an hour when the minimum wage went up. Then $8 an hour when he’d been there a couple years. Then $9. And finally, last year, $10.
But it wasn’t enough. They never gave him enough hours to claw his way out of poverty. Even with his wife working nights at temporary jobs — she couldn’t work days because they couldn’t afford daycare — they just barely reached the poverty line for a family of three.
It was at this point that Roger got transferred to another branch. The company said they needed experienced workers in a newer restaurant, and Roger had shown himself worthy of such a responsibility.
Roger’s new commute was twice as long, but he didn’t complain. He had too many friends who were unemployed. At least he could feed his family. Barely.
Two weeks into his new job, Roger got his paycheck. At first, he thought it was a typo. He went to his boss and pointed out the error. The manager told him the number was correct. That’s what the company told him to pay Roger: $7.25 an hour.
Roger insisted it was a mistake. So his boss contacted the accounting department at corporate headquarters and asked for an explanation.
The message came back: When an employee moves to a new branch, his pay goes back down to minimum wage. He can earn his old wage again the same way he did last time — after several years of service at that restaurant.
And so, Roger now makes $7.25 an hour. He has to get food stamps to feed his family. He still lives in that 20-by-15-foot room with his wife and son.
His son will start kindergarten next year. His brain is underdeveloped for his age, but that’s common for kids living in poverty. He’ll struggle like his father did. The local public schools have low test scores and high dropout rates. Roger prays everyday that his son will enjoy a better life than he’s had, but right now it’s almost impossible for him to imagine such a future.
There are millions of Roger’s in America today. They cook our food and clean our buildings. They package the toys that we buy our children for Christmas. They help us find that perfect gift for that special someone, and they ring it up at the cash register. They smile and laugh, joke and shake our hand, but they’re dying inside. They’re living in squalid, cramped apartments — if they live in an apartment at all. They’re missing payments on student loans. They’re worrying they won’t be able to afford groceries next week. They’re probably not getting the necessary medical care unless they’re bleeding profusely, and they’re definitely not saving for retirement.
One in four American employees work in low-wage jobs. That’s the highest percentage in the industrialized world by far.
That’s what’s at stake in the “fiscal cliff” debate. Roger needs help. We all need help. None of us can do it by ourselves.
We must not abandon them. We must not abandon each other. We must preserve the government programs that help us when we are at our most desperate. Above all, the most fortunate among us must not be unwilling to share a little more of their good fortune so that this nation might heal its lingering wounds.
May 2013 be better than 2012 for Roger’s family and for yours.
This op-ed was published in today’s South Florida Sun-Sentinel.
Barack Obama and Mitt Romney agree on one thing: Outsourcing is a problem.
Of course, they disagree on who’s to blame. To Obama, it’s private equity firms like Romney’s Bain Capital. To Romney, it’s deficit spending like Obama’s 2009 fiscal stimulus.
(As I pointed out two weeks ago, there’s plenty of evidence that the 2009 stimulus created millions of jobs right here in America. But never mind.)
“Countries around the world are…giving their workers and companies every advantage possible,” says Obama, but “we can win that competition.”
On Romney’s website, you can find the same language. He says our tax code “needs to be more competitive and business friendly.” We need to create a “level playing field for American products in foreign markets.”
This rhetoric is more dangerous than it seems.
It’s true that many of our exports are at a disadvantage. In countries that we trade with, the average manufacturing wage is 65 percent of the American average. In Mexico, manufacturing workers earn 11 percent of what their U.S. counterparts make. In China, they earn 3 percent.
So, the question is: Just how “level” does Mitt Romney want the “playing field” to be?
When it comes to outsourcing, Romney has a solution, but he won’t say it…because you won’t like it: The easiest way to create a “level playing field” is to lower American wages.
The dirty secret about Republican economics is that it’s all about cheap labor.
While most of the industrialized world (and much of the developing world) has experienced rising real wages in the past thirty years, American wages have stagnated.
Union membership has plummeted. The minimum wage has failed to keep up with inflation. Taxes and regulations that previously restricted the rich from siphoning the wealth of the middle class have been eviscerated.
In short, Mitt Romney’s game plan has already been put to the test.
We were told that it was a new era. We were told that we needed to sacrifice our job security, our wage increases, our retirement benefits — all in the name of globalization. We were told that America couldn’t compete with those costs around its neck. We were told that the manufacturing sector was deadweight. We were told that the working class was pulling us down. We were promised a better world filled with high-tech jobs and rapid innovation, low taxes and rising asset prices, cheap imports and even cheaper investments.
We did everything we were told. We gave up our protections and our power. And, in return, we got lower economic growth, higher inequality, productivity growth that went almost entirely to the top 1 percent, and — irony of all ironies — even bigger trade deficits.
All that cheap labor didn’t make us “competitive” after all.
All it did was line corporate coffers with more profits than ever before.
But not everyone made that mistake. According to the conservative Heritage Foundation, U.S. tax revenue is currently 27 percent of GDP. In Denmark, it’s a whopping 49 percent. They have the world’s highest minimum wage and arguably the lowest level of income inequality. Yet their unemployment rate (7.7 percent) is currently lower than ours (8.1 percent), and their economy grew at the same rate as ours from 1979 to 2007.
For another comparison, look at Sweden, where tax revenue is 48 percent of GDP. They consistently battle Denmark for the world’s lowest level of income inequality, yet they’re also ranked as the second most competitive country in the world (after Switzerland). Their unemployment rate (7.8 percent) is also lower than ours, and their economy grew faster than ours from 1979 to 2007.
Needless to say, unions are more prevalent and powerful in both of these countries than in the U.S. But arguably the most heavily unionized country is Germany, where employee representatives sit on corporate boards and have a say in industry-wide decisions. Germany’s unemployment rate (5.6 percent) is way lower than ours, and they boast a large trade surplus.
Clearly, we can raise wages and compete in the global economy at the same time. We don’t need a “level playing field” to beat outsourcing. We just need a proactive government.
This op-ed was published in today’s South Florida Sun-Sentinel.