Some Employers and Republicans Want to Lower the Minimum Wage -- Here's Why They're Completely Out of Touch

Published on Friday, June 22, 2012 by Common Dreams

By Elizabeth Parisian

If you've been on Facebook this week, you've probably seen the Chris Rock quote making the rounds:

"I used to work at McDonald's making minimum wage. You know what that means when someone pays you minimum wage? You know what your boss is trying to say? It's like, 'Hey, [if] I could pay you less, I would, but it's against the law.'"

Now it seems that some minimum wage employers are trying to pay their workers less -- and to even make it legal to do so. It seems unfathomable that anyone would consider the minimum wage -- which, for a full-time worker, provides a yearly salary that is thousands of dollars below the poverty line for a family of three or four -- to be too high. But in Arizona, Republican legislators are pushing a bill that would allow employers to pay teenagers working part-time a full three dollars per hour less than the state minimum wage, which works out to a mere $4.65 per hour.

And the Florida legislature is considering lowering the state minimum wage for tipped employees by more than half, from the current $4.65 per hour to the federal minimum of $2.13. OSI Partners, the company that owns Outback Steakhouse, supports the legislation. Given the current political discourse on how best to create good jobs and help struggling families, OSI's involvement is especially noteworthy since the firm is owned by Bain Capital, the company that Mitt Romney co-founded and in which the Republican presidential nominee still has tens of millions invested.

The federal minimum wage, currently $7.25 per hour, has been raised only three times over the last 30 years. If the minimum wage had kept up with inflation over the last few decades, it would now be $10.55 per hour -- arguably still not enough to support a family, but a marked improvement from where it is presently.

Luckily, despite the fact that some Republicans think the minimum wage is still too high for some workers, there are many, many folks who support a substantial wage increase. One of these folks is Senator Tom Harkin of Iowa, who in March introduced legislation to raise the minimum wage to $9.80 over two and a half years and peg it to inflation -- a move supported by over two-thirds of voters. Hundreds of economists, including several Nobel Prize winners, have spoken out in favor of raising the minimum wage, along with large employers like Costco and business organizations like the U.S. Women's Chamber of Commerce that recognize that higher wages are good for workers, employers, and the economy.

Unfortunately, this overwhelming support for raising the minimum wage does not extend to most of corporate America, which has a tendency to prize the short-term bottom line above all other considerations, including the ability of its workers to make ends meet. The anti-minimum wage gang will "twist itself into knots rationalizing a corporate-backed agenda," John Stoehr observes in The American Prospect. And there is no question that those opposed to raising the minimum wage will prey upon our fears of joblessness and the bad economy to try to convince us that the minimum wage needs to stay where it is.

Corporate lobbyists are busy spreading distortions and outright lies in their attempt to hold back minimum wage increases supported by the vast majority of working people. Here are some of the biggest falsehoods that are going around, along with facts you can use to discredit them (with many thanks to raisetheminimumwage.org for providing much of this information):

Myth No. 1: Raising the minimum wage will kill jobs

Facts: Rigorous research carried out over the last two decades has demonstrated that raising the minimum wage does not result in job loss -- in fact, it's been shown to result in increased employment. For example, an analysis of Illinois, which raised its minimum wage in 2004 and 2006, showed that the state experienced more job growth than surrounding states where wages remained at the federal minimum.

And contrary to the claims of corporate America, large companies can easily afford to pay workers an increased wage without suffering losses. According to the National Employment Law Project (NELP), corporate profits now represent the largest share of GDP -- and wages and salaries represent the lowest share -- in over half a century.

Myth No. 2: Raising the minimum wage will hurt small businesses

Facts: According to NELP, two-thirds of all minimum wage employees work in companies with at least 100 workers, and half of all minimum wage workers work in companies with over 500 workers. For those small businesses that do employ minimum wage workers, there is good news: a 2006 study found that small businesses experienced higher rates of growth in states where the minimum wage was higher than the federal minimum.

Margot Dorfman, CEO of the U.S. Women's Chamber of Commerce, explains it this way:

"The business owners with whom I talk every day believe that, far from hurting their businesses, raising the minimum wage in fact helps small businesses, women workers and the broader economy. Raising the minimum wage reinforces their business strategies, rather than undermining them."

Myth No. 3: We can't afford to raise the minimum wage during a recession

Facts: Raising the minimum wage would provide the stimulus we need to speed economic recovery. A 2011 study by the Federal Reserve Bank of Chicago found that every dollar increase for a minimum wage worker results in $2,800 in new consumer spending by his or her household over the following year. Put simply, low wage workers have a desperate need for any increased income and spend it quickly, often on the local level, which provides a huge boost to the economy--as even conservative economists have documented.

There is no doubt that the current federal minimum wage is too low, and that raising it would provide a much needed boost not only to low-wage workers but also to the sluggish economy. Now that election season is in full swing, it's important to find out where candidates seeking our votes stand on the issue of raising the minimum wage -- and to let them know where we, along with the majority of Americans, stand on the issue as well.

Technorati Tags: Republicans,Employers,Minimum Wage,Corporate Lobbyists,Jobs,The Economy,Current Events,National Employment Law Project,Politics

Obamacare ( ACA ) Upheld

  The United States Supreme Court has upheld ALL of the ACA, which has sent House Rep. Boehner into a closet with boxes of tissues for the many tears that will flow.

  It’s also nice to see many other republicans in mourning over some healthcare reform being deemed “ legal.” Of course, now the House leadership and Senate Minority Leader Bitch Mitch McConnell and sidekicks will come up with other ways of obstruction to keep the economy from getting better, as well as keeping their owners ( Koch Brothers ) and their “ boy “ Mitt Romney from diving even deeper in the polling.

Technorati Tags: Supreme Court,ACA,Obamacare,Healthcare Reform,Current Events,Politicd

Wasteful Government Spending: JP Morgan Chase’s $14 Billion Yearly Subsidy…

    … which as you can guess is a subsidy provided to them by you, the United States taxpayer.

   From Think Progress:

Study: Mega Bank JP Morgan Chase Receives A $14 Billion Annual Subsidy From The U.S. Government

By Pat Garofalo on Jun 19, 2012

JP Morgan Chase CEO Jamie Dimon testified on Capitol Hill today for the second time in two weeks, appearing before the House Financial Services Committee to discuss the trading debacle that has cost his bank billions of dollars. Before the hearing, Bloomberg News pointed to a new study showing that JP Morgan Chase receives a $14 billion annual subsidy from the U.S. government. This subsidy is due to JP Morgan’s reputation as a too-big-to-fail bank, which lets it borrow money at lower rates than other, less systemically risky banks:

JPMorgan receives a government subsidy worth about $14 billion a year, according to research published by the International Monetary Fund and our own analysis of bank balance sheets. The money helps the bank pay big salaries and bonuses. [...]

In a recent paper, two economists — Kenichi Ueda of the IMF and Beatrice Weder Di Mauro of the University of Mainz — estimated that as of 2009 the expectation of government support was shaving about 0.8 percentage point off large banks’ borrowing costs. That’s up from 0.6 percentage point in 2007, before the financial crisis prompted a global round of bank bailouts.

To estimate the dollar value of the subsidy in the U.S., we multiplied it by the debt and deposits of 18 of the country’s largest banks, including JPMorgan, Bank of America Corp. and Citigroup Inc. The result: about $76 billion a year. The number is roughly equivalent to the banks’ total profits over the past 12 months, or more than the federal government spends every year on education.

JPMorgan’s share of the subsidy is $14 billion a year, or about 77 percent of its net income for the past four quarters. In other words, U.S. taxpayers helped foot the bill for the multibillion-dollar trading loss that is the focus of today’s hearing.

At the last hearing, the Senate all but groveled at Dimon’s feet, and today’s questioning was not much better. But Rep. Brad Sherman (D-CA) did ask Dimon about the Bloomberg study. Dimon denied that his bank receives a funding advantage due to its size, saying that the bank is “probably pretty much like everybody else.”

As Bloomberg’s editors put it, “when Dimon pushes back against [regulations like] capital requirements or the Volcker rule, it’s worth remembering that he’s pushing for a form of corporate welfare that, left unchecked, could lead to a crisis too big for the government to contain.” Yet that’s precisely what he did today.

© 2005-2011 Center for American Progress Action Fund

Technorati Tags: Financial Reform,Politics,JPMorgan Chase,Financial Regulation,Current Events,Bank Subsidies,Corporate Welfare

America In Decline

CommonDreams.org    

Published on Thursday, June 21, 2012 by Reuters

America's Long Slope Down    by David Cay Johnston

A broad swath of official economic data shows that America and its people are in much worse shape than when we paid higher taxes, higher interest rates and made more of the manufactured goods we use.

The numbers since the turn of the millennium point to even worse times ahead if we stay the course. Let’s look at the official numbers in today’s dollars and then what can be done to change course.

First, incomes and jobs since 2000 measured per American:

Internal Revenue Service data show that average adjusted gross income fell $2,699 through 2010 or 9 percent, compared to 2000. That’s the equivalent of making it through Thanksgiving weekend and then having no income for the rest of the year.

Had average incomes just stayed at the level in 2000, Americans through 2009 would have earned $3.5 trillion more income, the equivalent of $26,000 per taxpayer over a decade. Preliminary 2010 data show a partial rebound, reducing the shortfall by a fifth to $2.8 trillion or $21,000 per taxpayer.

Wages per capita in 2010 were 4.3 percent less than in 2000, effectively reducing to 50 weeks the pay for 52 weeks of work. The median wage in 2010 fell back to the level of 1999, with half of workers grossing less than $507 a week, half more, Social Security tax data show. The bottom third, 50 million workers, averaged just $116 a week in 2010.

Social Security and Census data show that the number of people with any work increased just 1.5 percent from 2000 to 2010 while population grew 6.4 times faster. That’s why millions of people cannot find work no matter how hard they try.

In May, nearly 23 million workers, 14.8 percent, were jobless or underemployed, the Bureau of Labor Statistics reported. At shadowstats.com, a website dedicated to exposing and analyzing flaws in government economic data, economist John Williams also counts people who have given up hope of finding work. His figure for May brings the total to almost 30 million people, one in five.

PRESSURE ON WAGES

An economy with many millions more workers than jobs puts downward pressure on wages, especially for those without highly developed skills.

Now let’s look at debt per American since 2000 using Federal Reserve data:

Mortgage debt grew 51 percent through 2010, even though incomes and wages fell, which should result in steady or lower housing prices, not higher prices.

(In 2011, as banks foreclosed on more homes, mortgage debt per capita declined, but was still 42 percent greater than in 2000.)

Consumer debt was virtually unchanged, at nearly $8,300 in 2010, helping explain weak sales of automobiles, furniture and appliances.

how about trade? Exporting more than we import creates jobs and riches.

From 2000, the year before China joined the World Trade Organization, to 2011 imports from China grew 62 percent faster than exports to China, Census data show. The annual trade deficit soared to $302 billion from $112 billion.

U.S. exports to China in 2011 ($106 billion) were smaller than US imports from China back in 2000 ($133 billion), showing the lopsided nature of trade with China, where workers lack rights, safety rules are minimal and pollution rampant.

Some 56,000 American factories have closed since 2000, as jobs and the knowledge that goes with those jobs moved to China.

Trade with China has destroyed every 55th job in America, nearly 2.8 million positions, analysis of government data by Robert E. Scott of the Economic Policy Institute shows. That equals wiping out every job in the greater Philadelphia metropolitan area. Nearly two million of those jobs were in manufacturing, Bureau of Labor Statistics and U.S. International Trade Commission data show.

SHRINKING TAX REVENUE

And what of taxes? The 2001 and 2003 tax cuts were promoted as keys to prosperity. Now Mitt Romney, virtually all Republicans and a fair number of Democrats say more tax cuts will make us prosper. President Barack Obama wants to cut corporate tax rates by a third.

Again, measured per capita, the IRS data show a pattern of shrinking numbers, with modest upticks in 2010.

Individual income taxes in 2010 averaged $2,995, down $1,654 or almost 36 percent from 2000. Use 2001 as the base year — because it was both a recession year and the first year of the temporary George W. Bush tax cuts — and in 2010 per capita income tax revenues were down one third.

In 2011, as the economy improved slightly, income tax revenues rose, but were still 26 percent smaller than in 2000.

The bottom line: less income, hardly any more jobs, sharply increased mortgage debt and Washington ledgers awash in red ink as voters are asked to endorse even more tax cuts.

How many years of evidence does it take to establish that a policy worked or failed?

Will continuing our current tax, credit and trade policies produce favorable results in the future? Will they produce higher incomes?

My reading of this and tons more data is that the Bush tax cuts utterly failed, the Fed’s artificially low-interest rate policies under presidents Bush and Obama do far more damage than good (especially to savers), and that the United States is harmed both by the imbalance in the trade relationship with China and scores of trade agreements with South Korea and other low-wage countries that are deeply flawed at best.

We need to recognize that the tax cutters were snake oil salesmen, the Federal Reserve an enabler of damaging debts and that bilateral trade deals are written of, by and for global financiers, not workers.

To paraphrase the Huey Lewis song, we need a new policy.

© 2012 Reuters

David Cay Johnston is the author of Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You With the Bill).

 

Technorati Tags: The Economy,Economic Growth,Taxes,Barack Obama,American Income,U.S. Wages,Republican Party,Mitt Romney,Current Events,Politics