The minimum wage has been a fact of American economic life since 1938. And yet, 76 years later, right-wing politicians and their corporate allies are still fighting it. Maybe I haven’t been paying attention, but I don’t remember a time when arguing against the existence of the minimum wage—not just against raising it—was even a topic for discussion. So, you’ll excuse me if I am outraged by an outbreak of arguments contending that a federally mandated minimum wage is bad for America.

In the conservative echo chamber, one line of argument is that lefties have been erroneously using the example of Henry Ford’s $5-a-day wage, 100 years ago,  as a justification for raising the minimum wage. The argument alludes to what is being dubbed “The Ford Myth.” The myth, goes the argument, is that Henry Ford raised his factory workers’ wages to $5 a day as a way of enabling the workers to buy the products—cars—that they were producing, and that his motives were, at least in part, charitable.

To their credit, the debunkers appear to be correct. Historical records do, indeed, show that Henry Ford raised wages not to get his workers behind the wheel of his products or improve their lives, but rather to reduce turnover at his factories. Forbes Magazine summarizes the real motives this way:

It simply isn’t true that his motive was to enable his workers to buy his cars. Instead, Ford calculated that by making his wages more attractive than his competitors in the market for industrial labor, he would gain by reducing turnover costs. In 1913, to maintain a factory workforce of about 14,000, Ford had to hire more than 52,000 men. The assembly line jobs were very tiresome and repetitive. Workers often quit, sometimes even in the middle of a shift.

With his business experience and the logic of human action as his guide, Ford concluded that the cost of additional pay would be more than offset by the reduced costs of labor turnover.

Well, all right, then. Myth debunked.  If only the argument stopped there.

Instead, grasping for another way to undermine the minimum wage concept, conservative writers take it one illogical step too far. In an article called “ Obama Is The Latest To Fall For The Henry Ford Urban Myth,” Forbes’ George Leef accuses President Obama of naivete and disingenuousness, saying:

Obama leaps from the premise that if one business owner profited from voluntarily increasing worker pay, then it must be a good policy for the government to compel all business owners (or at least those who hire low-skilled workers) to raise worker pay.

Perhaps President Obama did get Ford’s motivations wrong. In the face of the historical evidence, it’s hard to argue against that characterization. But, even without an advanced degree in economics, I can see that the writer is ignoring one huge economic truth: In our capitalist economy, very little in the way of benefits for workers has been accomplished without a government mandate. Unfettered capitalism—the preferred system of the super-rich—has a dismal record when it comes to looking out for the good of the worker. Waiting around for corporations to make moves designed to better the lives of their workers is a losing strategy.

I’m still wrestling with the logic of Republicans twisting the Ford Myth debunk-athon into an argument against the minimum wage. But even if I don’t have it all worked out, there’s one argument that I know is correct: Having a minimum wage—and increasing the minimum wage to jibe with current economic realities—is the right thing to do.

The post Another bogus argument against raising the minimum wage: The “Ford myth” appeared first on Occasional Planet.

Three measures in Missouri garnered enough petition signatures to make it on the November 2012 ballot, but will Missourians’ conviction be enough? With nearly twice the required minimum number of signatures on each petition, Missourians submitted ballot measures to raise the minimum wage, increase the country’s lowest cigarette tax, and cap loan annual percentage rates (APR) at 36%. Once reviewed and approved by the Missouri Secretary of State, they should be on the November ballot, but opposition is fierce.

Moneyed interests are fighting the petition to cap loan APR’s with bully tactics that include physically preventing signers from accessing petitions, harassing signature gatherers and signers, perhaps even breaking into a gatherer’s car to steal more than 2,000 signatures. Payday lenders and their enablers also filed a lawsuit claiming that the language of the measure is “deceptive.” Faith leaders and proponents disagreed.

In early April, a circuit court judge sided with lenders, ruling the petition’s language “insufficient, unfair, likely to deceive petition signers and voters.” The Missouri attorney general’s office filed an appeal of the ruling, but now the opponents of the cap are pushing Secretary of State Robin Carnahan to invalidate the more than 180,000 signatures in order to keep it off the ballot in November.

It is clear from the sheer number of signatures alone that many Missourians agree the current annual percentage rate of payday and title loans is exorbitant. Efforts to inform voters are paying off. More than 430% APR on a single small loan does little to help low-income people—who are overwhelmingly targeted by these types of lenders—stem the tide of debt, and Missourians know this. Voters’ interests, however, may not be enough against a huge Missouri predatory lending industry willing to bully, buy, and lawyer their way to victory.

It may come as little surprise that big tobacco is also waging a battle to prevent Missourians from voting to raise Missouri’s tobacco tax from 17 cents to 90 cents per pack. Despite garnering over 220,000 signatures and an apparent mandate, this ballot measure’s language was also challenged in court. A trial judge in Cole County recently upheld the measure’s language, declaring it clear and fair. Pending the secretary of state’s review and approval, the measure could make it to the ballot.

It’s worth noting, however, that the Missouri legislature had quite a few bills last session regarding a cigarette tax increase and unilaterally failed to bring them to the floor. Again, this is not a big surprise, especially given this year’s antics and the many failures of the Missouri legislature to enact laws for the greater good. (What happened to all those jobs we were promised?)

Voters have also defeated efforts to raise the tobacco tax twice in the last decade. Recent budget cut battles, austerity measures, and public sector layoffs may convince them that increased tobacco tax is much-needed revenue for education and smoking cessation programs.

The Missouri Chamber of Commerce is opposing the ballot initiative to raise the minimum wage to $8.25 from its current level of $7.25 per hour and also allows for increases every year based on inflation. Opponents claim paying employees a full dollar more per hour is a financial hardship on employers during “fragile” economic times and could abate hiring, but they made the same claim in 2006 when the economy was in better shape, and unemployment was about half the levels we’ve been seeing.

There is no evidence to suggest that giving low wage workers a small raise in itself harms the job market, though it’s not difficult to argue that paying people too little is seriously distressing for millions of families. All three of the Republican candidates currently duking it out [in extreme fashion] in the primary to run against Claire McCaskill could not even tell you what the minimum wage is, much less how detrimental or beneficial it is. And yet they all oppose increasing the minimum wage for Missourians and across the country. Disconnect much?

Wages nationwide and around the world have scarcely kept pace with inflation, as countless experts and economists have asserted. Though our personal hardships may be a testament to this fact, it is difficult to predict whether an extremely and increasingly polarized red state—complete with newly drawn political districts–will disregard all the paid-for political noise and vote in their own best interests.

We’ll find out in November.

The post Missouri ballot initiatives: Will big-business’ interests trump voters’ interests? appeared first on Occasional Planet.

Robert Reich has been a contrarian about most of the Obama economic policies, but that does not necessarily make him a negative person.  In fact he is as jocular as a short skinny man can be, focusing his biting wit first on himself; then on others. He deserves a lot of slack when he critiques policies because at heart he is an optimist and when there are reasons to cheer, he’ll be among the first.

How can you tell when someone is a “doomsayer” or someone with a clear vision in contrast to conventional wisdom?

When it comes to advocating trickle-down economics, he’ll say that a Democrat who advocates it is someone who is most likely abandoning the traditional constituents of the party.  This means that Democrats are walking away from almost everyone except the very wealthy and the extreme social conservatives.  This is not your father’s Democrat; certainly not your grandfather’s, which included embracing FDR’s New Deal.

Recently, the Obama administration has been justifiably touting some positive economic numbers.  Corporate profits are up; the stock-market has soared since the Obama inauguration, companies such as General Motors that were bailed out are now profiting and repaying their loans from the government with interest.

And now we hear what we have long awaited, unemployment is down and jobsare up.  In his March 4 post, Reich says:

The Bureau of Labor Statistics reports 192,000 new jobs in February (220,000 new jobs in the private sector and a drop in government employment), and a drop in the overall unemployment rate from 9 to 8.9 percent.

But to get to the most important trend you have to dig under the job numbers and look at what kind of new jobs are being created. That’s where the big problem lies.

The National Employment Law Project did just that. Its new data brief shows that most of the new job

 

s created since February 2010 (about 1.26 million) pay significantly lower wages than the jobs lost (8.4 million) between January 2008 and February 2010.

He illustrates this with these chilling statistics:

While the biggest losses were higher-wage jobs paying an average of $19.05 to $31.40 an hour, the biggest gains have been lower-wage jobs paying an average of $9.03 to $12.91 an hour.

In other words, the big news is not jobs as some would want us to believe. It’s wages.  We work for basically two reasons: (a) a way of gaining personal fulfillment, and (b) accruing income that allows us to purchase necessities, and if possible, some discretionary items.  Whether an individual makes the federal minimum wage of $7.25 / hour or $5,000 / hour as some hedge fund managers do, he or she is still counted as employed.

The Economic Policy Institute maintains a dynamic web site on “The State of Working America” with hundreds of graphs and charts.  The graph below illustrates how since 1973 wages for the wealthy have grown rapidly while those of the poor have declined.  This is not news to anyone, but it is a fact that is rarely pointed out when monthly employment figures are released

Structural changes make the situation worse.  Reich points out, “Millions of private-sector workers have been fired and then re-hired as contract workers to do almost exactly what they were doing before, but without any benefits or job security.”  When combined with the outsourcing that has taken place since 1973, it’s no small wonder that the American worker’s worries do not end with whether or not they are employed, but at what wage.

Current American capitalism means that we have high unemployment with low wages which forces more and more consumers to shop at the likes of the Dollar Store.  If we had lower unemployment with high wages, consumers could more readily afford Target, Macy’s, or even more expensive stores such as Needless Mark-up (or something like that).

In his blog, Reich repeatedly points out that the most secure jobs are those in the public sector.  They cannot be outsourced and wages at least keep up with inflation.  At least that’s the way it was before Scott Walker’s Wisconsin and the vision that he any most Republicans have of the American economy.

As we give kudos to the Obama administration for beginning to reverse declining employment trends, we need to keep the pressure on to ensure that the jobs that are created are ones that pay decent wages.  As is so often the case, when this administration gets to an intersection, it tends to look right before crossing.  We need to do more to ensure that it looks both ways.

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