|Source: Continuous Improvement Associates|
Contents: Summary Unions and a minimum wage are absolutely necessary. That's primarily because the number of jobs in what's called the "labor market" is manipulated by federal-level policies. Beyond this, U.S. wages are depressed by illegal corporate collusion to drive down wages, offshoring, importing foreign workers, competition against prison and slave labor, and hiring undocumented workers without labor protections that allows wage theft. On the manipulation of the number of jobs, despite the Federal Reserve's dual mandate to fight inflation and maintain full employment, its concern about inflation is paramount. Its actions assure there are always more people who need jobs than jobs. Game theory lets us understand that this promotes cut throat competition that drives wages to between zero and subsistence level. This means competition for too few jobs does not provide even decent wages for those at the bottom, much less living wages. The only way for those who work for a wage to get fair treatment is by cooperation, that is, by joining unions. "Right to Work" laws are the strategy by which "conservatives" undermine cooperation. Competition for jobs among states for corporate expansion and relocation with tax breaks and other concessions also does not work; it leads to infrastructure backlogs, low wages, less worker protections, and it breaks up extended families when new workers have to leave to find a job where the jobs go thanks to corporate subsidies. Those tax breaks and concessions are given for the ostensible quest for more jobs in a region, but the real goal is to pay lower wages and increase corporate profits. What's vital to understand about jobs is this: The quantity of jobs is determined in the short run by aggregate demand and over the long run by the Federal Reserve's estimate of the minimum level of unemployment that would cause inflation due to a wage-price spiral ... if the Federal Reserve even thinks, without evidence, that unemployment might be too low and cause inflation, it will shut down the economy to put people out of work. Because of this, a higher, lower, or eliminated minimum wage has nothing to do with the number of jobs in the economy over the long run. Short-run, raising the minimum wage will increase aggregate demand and increase the number of jobs. Even when the cause of inflation is not from rising wages, the Fed raises its target level of unemployment at which it will "cool" the economy to put people out of work, reducing demand and inflation. Even if it even thinks there might be inflation coming, without evidence, it puts people out of work to pre-emptively "fight inflation." There's a clear parallel in our economy between low wages -- wages inadequate to support other than a poverty standard of living -- and low taxes for regions that are inadequate to provide funding for infrastructure and public services to support quality of life. Competition among regions for the too-few jobs that there are drives all regions to higher infrastructure backlogs and lower quality of life. This intervention and biases against those who work for a wage drive millions into poverty. These biases drive down all wages, including those of low- and high-tech workers. Despite this, "conservatives" oppose any policies that would mitigate the suffering, preferring instead "let them starve" policies. So-called "conservatives" and libertarians say our economic system is just not "free" enough, buying into what is effectively a quite insane religion based on belief in a "free market" that is the "hand of God in action" free from government interference. Sadly, liberals have largely bought into "free market' ideology and don't address the root causes of the suffering described here. They propose various ways of helping the disadvantaged, such as job training, educational vouchers, college student loans, and various forms of welfare. These band aids leave the fundamental problems with our "free market" economic system, a system that drives millions into poverty, largely unaddressed. So liberals want to apply band aids to help people; "conservatives" want to rip them off the bleeding wound because they think the band aids "cause dependency." The more I worked on this article, the more I realized this is one sick f'ing nation. Finally, labor should not even be a "market commodity" as "conservatives" believe. That's because those who work for a wage are not widgets; they are real people, the supply of which cannot be, and should not be, manipulated, created and destroyed as can be the case for actual widgets. Note: my previous article, There's no 'free market' for Labor, has much of this same information. This should be more readable. -------------------------------------------------------------------- Why Unions and a Minimum Wage Are Necessary. The Colorado Springs Independent story, "Blood for Coal," and "State of the unions" "Street Smarts" comments (April 16, 2014) reveal that Americans don't understand why unions -- and a minimum wage, also, by the way -- are absolutely necessary. One comment was, "I choose individuality over union collectivity." This is a false choice ... it illustrates the logical fallacy of the false dilemma. Both the individual and the collective are important. It's vital that we balance attending to both. Those who defend capitalism argue against increases in the minimum wage, and especially against a "living wage", saying it destroys jobs. Never mind that's a lie; but even if it were true, how can anyone defend a system they believe will collapse upon itself if people working for a wage would get a "living wage" ... so they don't DIE? Arguing for such a system is insane.
Unions and a minimum wage are absolutely necessary. That's primarily because the number of jobs in what's called the "labor market" is manipulated by federal-level policies. Beyond this, U.S. wages are depressed by illegal corporate collusion to drive down wages, offshoring, importing foreign workers, competition against prison and slave labor, and hiring undocumented workers without labor protections that allows wage theft.
On the manipulation of the number of jobs, despite the Federal Reserve's dual mandate to fight inflation and maintain full employment, its concern about inflation is paramount. Its actions assure there are always more people who need jobs than jobs. Game theory lets us understand that this promotes cut throat competition that drives wages to between zero and subsistence level. This means competition for too few jobs does not provide even decent wages for those at the bottom, much less living wages.
The only way for those who work for a wage to get fair treatment is by cooperation, that is, by joining unions. "Right to Work" laws are the strategy by which "conservatives" undermine cooperation. Competition for jobs among states for corporate expansion and relocation with tax breaks and other concessions also does not work; it leads to infrastructure backlogs, low wages, less worker protections, and it breaks up extended families when new workers have to leave to find a job where the jobs go thanks to corporate subsidies. Those tax breaks and concessions are given for the ostensible quest for more jobs in a region, but the real goal is to pay lower wages and increase corporate profits.
What's vital to understand about jobs is this: The quantity of jobs is determined in the short run by aggregate demand and over the long run by the Federal Reserve's estimate of the minimum level of unemployment that would cause inflation due to a wage-price spiral ... if the Federal Reserve even thinks, without evidence, that unemployment might be too low and cause inflation, it will shut down the economy to put people out of work. Because of this, a higher, lower, or eliminated minimum wage has nothing to do with the number of jobs in the economy over the long run. Short-run, raising the minimum wage will increase aggregate demand and increase the number of jobs.
Even when the cause of inflation is not from rising wages, the Fed raises its target level of unemployment at which it will "cool" the economy to put people out of work, reducing demand and inflation. Even if it even thinks there might be inflation coming, without evidence, it puts people out of work to pre-emptively "fight inflation."
There's a clear parallel in our economy between low wages -- wages inadequate to support other than a poverty standard of living -- and low taxes for regions that are inadequate to provide funding for infrastructure and public services to support quality of life. Competition among regions for the too-few jobs that there are drives all regions to higher infrastructure backlogs and lower quality of life.
This intervention and biases against those who work for a wage drive millions into poverty. These biases drive down all wages, including those of low- and high-tech workers.
Despite this, "conservatives" oppose any policies that would mitigate the suffering, preferring instead "let them starve" policies. So-called "conservatives" and libertarians say our economic system is just not "free" enough, buying into what is effectively a quite insane religion based on belief in a "free market" that is the "hand of God in action" free from government interference.
Sadly, liberals have largely bought into "free market' ideology and don't address the root causes of the suffering described here. They propose various ways of helping the disadvantaged, such as job training, educational vouchers, college student loans, and various forms of welfare. These band aids leave the fundamental problems with our "free market" economic system, a system that drives millions into poverty, largely unaddressed.
So liberals want to apply band aids to help people; "conservatives" want to rip them off the bleeding wound because they think the band aids "cause dependency." The more I worked on this article, the more I realized this is one sick f'ing nation.
Finally, labor should not even be a "market commodity" as "conservatives" believe. That's because those who work for a wage are not widgets; they are real people, the supply of which cannot be, and should not be, manipulated, created and destroyed as can be the case for actual widgets.
Note: my previous article, There's no 'free market' for Labor, has much of this same information. This should be more readable.
Why Unions and a Minimum Wage Are Necessary.
The Colorado Springs Independent story, "Blood for Coal," and "State of the unions" "Street Smarts" comments (April 16, 2014) reveal that Americans don't understand why unions -- and a minimum wage, also, by the way -- are absolutely necessary.
One comment was, "I choose individuality over union collectivity." This is a false choice ... it illustrates the logical fallacy of the false dilemma. Both the individual and the collective are important. It's vital that we balance attending to both.
Those who defend capitalism argue against increases in the minimum wage, and especially against a "living wage", saying it destroys jobs. Never mind that's a lie; but even if it were true, how can anyone defend a system they believe will collapse upon itself if people working for a wage would get a "living wage" ... so they don't DIE? Arguing for such a system is insane.
A minimum wage is one thing, but there should be a living wage in America, the "exceptional nation" according to "conservatives." Those who call themselves "conservative" complain that paying a living wage will drive companies out of business. That may well be true.
Fine. Because businesses can be uneconomic for many reasons: higher material costs, higher transportation costs, inefficiency, changing technology, more competition, changing consumer preferences .... Not paying a living wage should be one of those reasons.
Why? What happens to many who are not paid a living wage? They die! That's the ultimate in "going out of business" on a personal level. Somehow that seems to be just fine with "conservatives". They are more concerned with preventing uneconomic businesses from dying than preventing humans from dying. Amazing.
Seriously think about this: Those who defend "free market" capitalism argue against increases in the minimum wage, and especially against a "living wage", saying it destroys jobs. Never mind that's a lie; but even if it were true, how can anyone defend a system they believe will collapse upon itself if people working for a wage would get a "living wage" ... so they don't DIE? Arguing for such a system is insane.
Microeconomic reasoning vs Macroeconomic reasoning. The number of jobs is a macroeconomic issue.
Microeconomic reasoning: The higher the price of something, the less of it is available. Therefore a higher minimum wage will result in fewer jobs and less economic activity.
Macroeconomic reasoning: The greater wages at the bottom the more money the cash-strapped will spend, which produces more economic activity and more jobs. If the living wage is applied nationally, taking into account regional differences in the cost of living, no businesses will be at a competitive disadvantage.
Here's a perfect example of the difference between liberals and "conservatives" ... Karen Handel, a Republican, explains:
Karen Handel: 'I Do Not Support A Livable Wage' (VIDEO) By CAITLIN MACNEAL 6/6/17
During Tuesday night's debate for an open U.S. House seat in Georgia, Republican candidate Karen Handel said that she does not support a "livable wage."
"This is an example of the fundamental difference between a liberal and a conservative: I do not support a livable wage," she said on Atlanta's WSB-TV in response to a viewer question about raising the minimum wage. "What I support is making sure that we have an economy that is robust with low taxes and less regulation."
Handel said that raising the minimum wage could "dramatically" hurt small businesses.
Handel's opponent, Democrat Jon Ossoff, said that "the minimum wage should be a living wage." He noted that he supports raising the minimum wage gradually so that businesses can slowly adapt to the increase.
The minimum wage isn't simply a wage for teenagers. Looking at the distribution of minimum wage workers by age in 2015, 24 percent are teenagers; slightly more than half of all minimum wage and below workers are 16-to-24-year-olds. Data from the Congressional Budget Office describes the average minimum wage worker as full-time and 35 years old. In 2013, there were almost as many at-or-below minimum wage workers over the age of 25 (1,638,000) as there were between the ages of 16 and 24 (1,663,000).
The need to attend to the individual is obvious. For the collective, not so much; in fact, for many even the very idea of attending to the collective is anathema. This despite the fact that in many cases attending to the collective (gasp) is the only way to prevent economic and societal failure. Many policies described as "socialist" are simply pragmatic; they're necessary to avoid systemic failure and, therefore, the failure of millions of individuals through no fault of their own [see Why Government and for What?].
Recognizing and addressing the inherent systemic weaknesses and failures of capitalism is not an attempt to give individuals a pass for personal failures. People do make stupid decisions and fail. But when there's system failure, the rhetoric of "take personal responsibility" is meant to deflect from individuals who control government for not taking their own personal responsibility for the policy failures they created, often in service to ignorant ideology or corporate and personal greed. Blaming individuals for their problems that were created by systemic failures -- demonizing the poor -- is ignorant, stupid and downright evil. It destroys lives.
When it comes to wages, as I document here, making individuality the sole consideration dooms wages to drop to between zero and subsistence level. And that's exactly what's happened over the last 35 years. This is no accident; it's been the plan. Eliminating the minimum wage and eliminating unions to make more of a "free market" won't reverse that; it makes it worse ... by design.
Even the Wall Street Journal's MarketWatch understands that low wages are a major problem:
The federal minimum wage peaked in 1968 at $8.56 (in 2012 dollars) compared to its current $7.25/hour. The eroding effect of inflation is small potatoes compared to how the minimum wage has lagged increases in U.S. productivity. Had the minimum wage kept pace with productivity gains it would have been $21.72 in 2012.
It's difficult to raise the minimum wage despite public opinion in favor. A Feb 2013 Pew Research poll found overall that 71 percent of the public favor raising it to $9.00/hour; even Republicans favor it by 50 to 47 percent. Even so, Republicans block increases.
Even the International Monetary Fund (IMF) urges U.S. to raise minimum wage because "would be helpful from a macroeconomic point of view." From a BBC report: "Labor markets are weaker than is implied by the headline unemployment number" and "Given its current low level (compared both to US history and international standards), the minimum wage should be increased," the IMF said.
Many Republicans want to entirely eliminate the minimum wage. For example, Sen. Tom Coburn (R-OK) stated, "I don't believe you ought to interfere in the market!" Coburn insisted. "If Oklahomans want a minimum wage, we ought to have it. I don't believe there ought to be a national minimum wage. Thats my position. ... And I believe that markets work better than bureaucrats, and I think theres lots of downsides, ..." he continued.
Mr. Coburn is obviously ignorant, or lies about, prior federal interference in, and manipulation of, the "labor market" that I describe below. He doesn't want a national minimum wage even though it's policy at the national level that makes a minimum wage necessary.
Another example is Repubican Senator Ron Johnson who also doesn't understand that pay is rigged at both the bottom and the top. He thinks his pay is reasonable, but a federal minimum wage is not. Republican Senator Against Minimum Wage Says His $700,000 Salary Is 'Pretty Reasonable'. "Sen. Ron Johnson (R-Wis.) has openly opposed a federal minimum wage, but recently said on a radio interview that the $700,000 per year salary he got from his own company was "pretty reasonable.""
It's not unusual for government to not be aligned with public opinion. A new study from Princeton and Northwestern Universities found that the US government does not represent the interests of the majority of the country's citizens, but is instead ruled by those of the rich and powerful.
Contrary to "TEA Party" rhetoric, people are not "Taxed Enough Already;" they've been "Paid Too Little" for decades. The issue should not be couched as "raising the minimum wage," but "restoring the minimum wage to previous levels" because it's been steady eroded by inflation.
That erosion is just fine with those who vehemently oppose even its existence and have the misguided idea that eliminating the minimum wage and unions would allow the "free market" to set wages and create more jobs. As explained here: labor demand is manipulated downward to assure depressed wages ... there's no "free market" for labor.
This is misguided and destructive because it's economically unsound. The minimum wage, band-aid that it is, must be raised for a sound economy.
So again, people aren't "Taxed Enough Already", they're paid too little.
So why is it that wages at the bottom drop to between zero and subsistence level? It's primarily because national policies assure there are always more people who need jobs than there are jobs (more on this below).
Here's the enormous problem with having excess people who need jobs. Consider what happens when there are 10 people and only 9 jobs. The "added value" of that 10th person is zero ... that person is simply not needed.
Moreover, we can understand, based on game theory, that the added value of any one of the 10 is zero. Why? Because employers can ask each person, "One of you 10 is going to be without a job, do you want it to be you?" Employers have all the leverage and can drive down wages.
Because employers have leverage and workers do not, there's great incentive for one or more persons to opt out of cooperative behavior and take the job. It forces wages down because each person is forced to at least try to survive.
The alternative: the 10 stick together and say, "We're not going to let you do that to us." That prevents employers from paying what amounts to "slave wages" -- enough to keep someone alive, but no more -- in order to increase profits. Employers may have to pay a person enough to eat, get to work, and have a place to stay, but they need pay no more than that, because there's always another person available to take the place of, for example, a person who dies or whose health fails.
The Prisoner's Dilemma is a special case of this effect. We see it in police dramas. Two separated culprits are each told that there'll be lenient treatment for the one who rats on the other. One usually does, even though trusting each other and acting cooperatively would allow them both to go free.
This is what happens relative to jobs, because people are unorganized and desperate, they'll take whatever they're offered, even when the wage is ridiculously low. Desperation leads people to defect as in the Prisoner's Dilemma, rather than stick together,
Corporations face this problem in avoiding paying bribes when doing business in countries with corrupt governments. The Committee for Economic Development (CED) stated: "In South Korea during the 1980s, for example, if corporations did not pay, they were forced out of business."
Many see political donations in the U.S. as shakedowns. The CED noted: "The malign and corrupting nature of the soft money system is demonstrated by the fact that corporate executives have felt coerced into giving ever-escalating soft money contributions with ever-increasing frequency by subtle threats of retribution that accompany soft money solicitations." This only gets worse with Supreme Court's Citizens United and McCutcheon v. FEC decisions.
Regional governments face the same problem when trying to get a national sports team to locate in their areas: it's "build us a stadium at public expense or we'll go elsewhere." The book, Co-opetition by Brandenburger and Nalebuff on game theory applied to business, has a section on this titled, "Sacking the Cities."
Reading Co-opetition led me to realize the same thing is happening both to those who work for a wage and to regional governments. Taxes are "income for regions" just as wages are income for individuals. Regions and individuals are being sacked for corporate gain.
Because there are more people than jobs, regions often compete based on giving corporations favorable tax breaks, fewer protections for labor, greater ability to pollute and redistribute costs onto the public (called less "burdensome regulation"), or other financial incentives (many say "bribes").
The race to the bottom in taxes leaves all regions with insufficient revenue to provide basic public services and funding for infrastructure -- and lower quality of life for their citizens. Regions need a "regional minimum wage" in order to provide an at least minimal quality of life.
Sound pothole familiar, Colorado Springs?
Development interests (those who profit from growth: the growth machine) love this because they're enriched at the expense of the community at large. The Colorado Springs Stormwater Enterprise effectively taxed the public for infrastructure that should have already been paid for as a cost of growth as it occurred. There are charges on utilities rate payers for the Southern Delivery System to pump water uphill from Pueblo; it's effectively a tax to supports future growth in Colorado Springs.
These are clear examples of what should be called "cost-side socialism" -- the redistribution of costs onto the public. That is inherent in deregulated, "free market" capitalism ... that is, capitalism that's free to pass costs onto the public. in fact, that is what "free market" capitalism is: the other kind of socialism: socializing costs as opposed to socializing income, with the former being much more prevalent than the latter.
Many call socialism theft, but theft is an inherent aspect of capitalism that's gets too little attention.
Why We Help by MARTIN A. NOWAK, 11/1/12, Scientific American
MARTIN A. NOWAK is professor of biology and mathematics at Harvard University and director of the Program for Evolutionary Dynamics. His research focuses on the mathematical underpinnings of evolution.
... My work indicates that instead of opposing competition, cooperation has operated alongside it from the get-go to shape the evolution of life on earth, from the first cells to Homo sapiens. Life is therefore not just a struggle for survival—it is also, one might say, a snuggle for survival. And in no case has the evolutionary influence of cooperation been more profoundly felt than in humans. ..
Evolutionary cycles of cooperation and defection by Lorens A. Imhof, Drew Fudenberg, and Martin A. Nowak. (received for review March 29, 2005)
The main obstacle for the evolution of cooperation is that natural selection favors defection in most settings. In the repeated prisoner's dilemma, two individuals interact several times, and, in each round, they have a choice between cooperation and defection. We analyze the evolutionary dynamics of three simple strategies for the repeated prisoner's dilemma: always defect (ALLD), always cooperate (ALLC), and tit-for-tat (TFT). We study mutation–selection dynamics in finite populations. Despite ALLD being the only strict Nash equilibrium, we observe evolutionary oscillations among all three strategies. The population cycles from ALLD to TFT to ALLC and back to ALLD. ...
Competition is worshiped in America. But these cases illustrate that, all too often, not only does competition not work, it leads to systemic failure. So how to address this kind of "race to the bottom" dynamic? By cooperation.
For people, cooperation means forming a union. For companies, it's also by collective action according to the International Centre for Collective Action (ICCA) that fights corruption: "When acting jointly, businesses, civil society and the public sector can more effectively tackle corruption. ... Collective Action provides a way out of the [prisoner's] dilemma."
"Right to Work" laws are not meant to protect workers' rights; they are deliberately and maliciously designed to make collective action impossible. Such laws allow those who benefit from union actions to not pay union dues ... that's called "free riding." They obviously undermine a union's ability fund activities on behalf of members, which is of course why anti-union ideologues pass such laws in the name of "freedom."
Such irony, because it leaves those who work for a wage with depressed wages and less control over their lives, which is hardly more "freedom." Anti-union policies are really about the "freedom" of those who oppose unions to drive workers into poverty by effectively denying them the ability to act cooperatively. That kind of "freedom" makes people less free to cooperate in order to divide and conquer.
"Right to Work" laws make as much sense as allowing those who use the highway system and benefit from national defense to not pay taxes. That would be called "free riding", too. It's really "free loading" at the expense of everyone else.
Just as policies allowing free riding to destroy unions of people who work for a wage, it would destroy the Union of the United States, which is why the U.S. Constitution provides for government to "promote the general Welfare" and tax for that purpose.
Another irony is that, while "conservatives" hate unions of people, they love the "Unions of Money" we call corporations. They're given special tax privileges and limited liability. Now they're even given the same rights of individuals to "free speech" and even religious rights. Incredible.
But corporations are property, not people. And money is property, not speech. It's a perversion to consider them otherwise.
There's a policy at the national level to create an economy with more people who need jobs than there are jobs. It's little understood that the U.S. Federal Reserve does this. When I explain this, some have responded that it's nothing more than a "conspiracy theory".
A Harvard course, Econ 1420 on American Economic Policy, a slide on trade policy noted the two factors that determine the number of jobs (included here and below at The Complaint: A Higher Minimum Wage Is a Job Killer):
Jobs in a particular industry that are lost, for whatever reason (trade, technology, higher minimum wage, abandoning fossil fuels), will be replaced -- or not -- depending on these factors: either aggregate economic demand or the Federal Reserves NAIRU target.
But it's not a "conspiracy theory"; it's fact, because this policy is clearly described in Federal Reserve meeting minutes. meetings that are held in secret and only released years later.
Many oppose the Fed's existence, complaining about "fiat currency." But, if that's a problem, it's not the main problem. Though the Fed has by law a dual mandate to hold down inflation and maintain full employment, it primarily focuses on inflation. This major focus on inflation is the big factor that holds down employment and, because there are more people who need jobs than jobs, it suppresses wages, too.
It's not "fair" because "labor market" demand is highly manipulated at the federal level to depress demand well below supply. This false belief leads "economic conservatives" to rail against a minimum wage, and even more against the idea of a living wage, as interfering with the "invisible hand" God in their sacrosanct "free market."
Here's what the Fed does to determine unemployment and drive down wages.
Everyone aware of stock market behavior knows that when unemployment is "too low" or employment "too high" -- "too low" or "too high" in the view of Fed policy makers from the banking sector -- the Fed raises interest rates and/or reduces the money supply. Because these actions depress the economy, BLS lower unemployment and higher employment reports are most often taken by the public as a signal to sell stocks because of fear of what the Fed will do in response.
The travesty, and the tragedy, for so many is that the Fed does this no matter what the cause of inflation, even though the cause may be speculation or oil shortages or whatever (and not rising wages).
Here Fed Governor Laurence H. Meyer, January 16, 1997, makes this clear [italics added]:
That is, we have to make you unemployed to compensate for oil price increases. Too bad. So sorry.
Command and Control: So-called "conservatives" complain they don't want a "socialist command and control economy." But this reveals we've already got a secretive "capitalist command and control economy"!
In Secrets of the Temple, William Greider compares what goes on in the U.S. economy to the accelerator and the brakes in a car. This is a long, 800 page, book that's a "must read." It's fascinating; for me it read like a thriller ... couldn't put it down. Book review: SECRETS OF THE TEMPLE: How the Federal Reserve Runs the Country. By William Greider. 798 pages. Simon & Schuster. $24.95.
Congress controls the accelerator; with more spending it pushes on the economic activity accelerator and with less the economy coasts and slows. The Federal Reserve controls the brake by increasing interest rates and decreasing the money supply to reduce economic activity.
Note that when the Fed decreases interest rates and/or increases the money supply in an attempt to increase economy activity, the theory being that those actions will increase investment. But it doesn't any more than taking your foot off the brake causes your car to accelerate ... it's like pushing on a rope.
Recently, it has tried to increase economic activity because Congress (stupidly) would not push on the accelerator (by stimulus spending). That's mostly futile because what it really does with low interest rates and a greater money supply is to blow economic bubbles -- e.g., the dot-com bubble and the housing bubble -- because easy money increases speculation. But, inevitably, speculative bubbles burst and the economy falls into recession ... the latest being the Great Recession that was the worst since the Great Depression. Another is coming.
More on the Federal Reserve at:
Fed Governor Meyer refers above to NAIRU, the Fed's estimate of the Non-Accelerating Inflation Rate of Unemployment, against which they compare actual unemployment to gauge whether it's, in their view, too low.
Here's how it works: The Fed compares its NAIRU target against actual unemployment to determine monetary policy. If unemployment is lower than its NAIRU target, the Fed raises interest rates or restricts the money supply. Besides killing jobs, this policy also sledge hammers interest-sensitive industries, such as home builders and motor vehicle sales.
So, despite any right to the "Pursuit of Happiness", the Fed promotes worker insecurity to hold down inflation. Here's Alan Greenspan (February 26, 1997):
This means The Fed will preemptively put you out of work if they think, even lacking evidence, that unemployment is too low and might cause inflation by setting off a "wage-price spiral," the Fed will raise interest rates or reduce the money supply to "cool the economy." Kind of makes the Pursuit of Happiness difficult, doesn't it?
This reduces economic activity, demand for products and services, and demand for the labor that supplies them. "Cool the economy" sounds innocuous enough, but it really means putting people out of work. More on this at the links in the section above.
Former Federal Reserve chairman, Bernanke, admits the war on inflation is a "conspiracy theory".
Ben Bernanke Is Fed Up By Chad Stone 10/09/15. The former Fed chair says he's no longer a Republican because the GOP has lost its economic policy mind. Bernanke:
They saw inflation where it did not exist and, when the official data did not bear out their predictions, invoked conspiracy theories. They denied that monetary or fiscal policy could support job growth, while still working to direct federal spending to their own districts. They advocated discredited monetary systems, like the gold standard.
In Bernanke's harsh but accurate judgment, "fiscal policymakers, far from helping the economy, appeared to be actively working to hinder it." He's talking about Republican congressional efforts to use "must pass" legislation – e.g., raising the legal limit on total federal debt or approving annual spending bills to fund the government – as bargaining chips to achieve deep cuts in government spending, even when the economy is weak.
Like anyone who understands the issue, Bernanke notes that refusing to raise the debt limit isn't about controlling spending, it's about government not paying its bills: "It is like a family running up large credit card bills and then refusing to pay." We can forgive the public for not understanding this, but not its elected representatives. To Bernanke, nothing justifies taking the economy hostage by refusing to raise the debt limit. ...
This vicious NAIRU theory pushed by the Federal Reserve is a prime reason why idiots like O'Reilly are absolutely wrong when he says it's not society's fault that children and others are poor, homeless and hungry; instead he spews the typical "conservative" line that there's plenty of support for them. Even the person who says O'Reilly is wrong doesn't understand what the Fed does and the other policies that drive millions into poverty. Here's the video:
Perfect: Watch a Fox News guest call out Bill O'Reilly: "You are confusing an economic status of someone with their character"
There is widespread belief that the Federal Reserve is a government agency. Excerpt from the Federal Reserve's FAQ on Who owns the Federal Reserve?
... the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.
This deceptive wording gives the impression that the Federal Reserve is a government agency.
Despite this widespread belief, it is not government. But Helen Brown is correct that it's privately owned. A secretive, "independent entity within government" is not "government." At best it is quasi-government with little to no oversight by Congress or citizens. See "Who Owns The Federal Reserve?" by Helen Brown to understand that the Fed is privately owned and its shareholders are private banks.
Big Subsidy: The banks that own the Federal Reserve get a big subsidy:
Maintaining that it "is not a private, profit-making institution" ignores that the member banks that own the stock get a return of 6% per year: pretty damn good considering current interest rates available to the public. Not only do the Federal Reserve's member banks get interest, outrageously, they don't pay any taxes on that interest.
Federal Reserve Act Section 7. Division of Earnings [retrieved 8/17/15, update of May 23, 2013, italics added]
(a) Dividends And Surplus Funds Of Reserve Banks.
1. Stockholder Dividends.
A. In General. After all necessary expenses of a Federal reserve bank have been paid or provided for, the stockholders of the bank shall be entitled to receive an annual dividend of 6 percent on paid-in capital stock.
B. Dividend Cumulative. The entitlement to dividends under subparagraph (A) shall be cumulative.
2. Deposit Of Net Earnings In Surplus Fund. That portion of net earnings of each Federal reserve bank which remains after dividend claims under subparagraph (1)(A) have been fully met shall be deposited in the surplus fund of the bank.
(b) Transfer For Fiscal Year 2000. ...
(c) Exemption From Taxation. Federal reserve banks, including the capital stock and surplus therein, and the income derived therefrom shall be exempt from Federal, State, and local taxation, except taxes upon real estate. [12 USC 531. Part of original Federal Reserve Act. Designated subsection (c) by act of Aug. 10, 1993 (107 Stat. 338).]
Subsidy May End: But this bank subsidy may end:
Congress to Eliminate Billions in Wall Street Subsidies to Fund Repair of Nation’s Highways, C. Robert Gibson, 10/9/15
Currently, the Federal Reserve pays out a 6 percent annual dividend to roughly 2,900 banks — JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo net approximately $350 million apiece each year from the dividend. These banks own stock in the Federal Reserve as a means of becoming members of regional Fed branches around the country, and unlike other stocks, the big banks are guaranteed to never lose money on their investment in the Fed. For years, the Congressional Progressive Caucus has proposed reducing that dividend to 3 percent in order to pay for repairing American infrastructure.
"Conservatives" disparage Social Security and Medicare as "entitlements", even though people pay into those funds for decades. But this "tax free money" to the banks is an on-going subsidy and "bailout." Talk about "entitlement" and theft from the public!
Subsidy Reduced, not ended. The subsidy was reduced, but Republicans want it restored. The banks rule!!!
Big Banks in a Tizzy Want to Take Their Billions and Go Home, The Intercept, David Dayen, 12/11/15.
The highway bill deal reduced the annual dividend to the rate of interest on 10-year Treasury notes, capped at 6 percent. (The current rate is around 2.2 percent.) This change only affects banks with more than $10 billion in assets, but it saves the federal government around $1 billion a year.
Now, enter Republican Reps. Randy Neugebauer of Texas and Bill Huizenga of Michigan. The crux of their proposed rider on the omnibus bill is this: If banks can’t have their free 6 percent dividend, then they shouldn’t have to pay for any stock at all.
Evidently the rider was not included. Yeah, sure, this was about "hometown banks."
Bankers 'disappointed' that financial riders not in omnibus bill By JOSEPH LAWLER, 12/16/15
"We're profoundly disappointed that lawmakers were unable to enact common-sense reforms in this session of Congress that would help America's hometown banks better serve their clients, customers and communities and make the loans that drive our economy forward," incoming American Bankers Association president Rob Nichols said in a statement Wednesday morning.
Banks had been seeking a number of changes to the 2010 Dodd-Frank financial reform law in the bill. They had also just recently been handed a loss in a highway funding bill that raised money for roads and bridges by cutting the dividend paid by the Federal Reserve to its members banks.
It's not just low-wage workers whose wages are suppressed. Corporate cartels engage in wage fixing by way of illegal, "no poaching" agreements to not recruit employees from each other.
Think about that "no poaching" characterization: "Now at that time [of Robin Hood] the deer in a a royal forest belonged to the king, and killing one of the king's deer was therefore treason, and punishable by death." So using this term implies these employers believe they own their employees ... they are effectively viewed as their "wage slaves."
This wage suppression undoubtedly affected the wages of high-tech workers throughout the nation. So much for any pretense that corporations believe in a "free market." They effectively formed corporate cartels, using threats to compel less strong corporations to comply:
So-called "conservatives" ignore this kind of behavior, but complain that "union thugs" compel workers to join unions.
Such secret corporate cartels as these, Federal Reserve policies described above, and tax policies that greatly favor capital over wages form the very real and cruel "invisible hand" that crushes the income of those who work for a wage. Two articles from Forbes:
Though the Federal Reserve clearly emphasizes concern about inflation over full employment, that's not enough for many Republicans. For example, U.S. Senator, Bob Corker (TN), a member of the Senate Banking Committee, want the Fed to move to a single, more focused mandate, one that directs the Fed to focus solely on price stability [that is, solely on "fighting inflation"]. His goal is to forget about any need for full employment; assure an excess of workers over jobs to drive down wages. For Corker, jobs and higher wages for you are unimportant in comparison.
Yes, this is the same Bob Corker who lied prior to a UAW union vote that Volkswagon expansion in Tennessee depended on the vote being against a union. This was another Corker effort to drive down wages.
That's false. This idea derives from a lack of understanding of what actually determines the number of jobs in the United States. From a Harvard course, Econ 1420 on American Economic Policy, a slide on trade policy had this:
Now this fundamental truth about the economics of jobs in the U.S. applies no matter what the issue. It's as true for the effects of minimum wage as it is for trade; trade does reduce wages, but not the number of jobs.
So this points to three ways to depress wages.
Currently, in 2014, the Federal Reserve is not the problem. The U.S. is recovering from the Great Recession caused by the banks, unemployment is depressed from a lack of aggregate demand. The Federal Reserve is not putting on the brakes; it's rapidly increasing the money supply and interest rates are extremely low.
What is the problem is that Congress has taken it's foot off of the spending accelerator (under the guise of reducing debt) which causes the economy to slow down and reduce aggregate demand.
These are the two ways the economy is rigged. As also explained here:
Yes, the Economy Is Rigged, Contrary to What Some Economists Try to Tell You by Dean Baker, Center for Economic Policy Research (CEPR), 5/07/16
... First, the overall level of employment is a political decision. We would have many more people employed today if the deficit hawks had not seized control of fiscal policy back in 2011 and turned the dial toward austerity. The beneficiaries of higher employment are disproportionately those at the middle and bottom of the income distribution: people with less education and African Americans and Hispanics. So the politicians pushing austerity decided that millions of people at the middle and bottom would not have jobs.
Furthermore, in a weaker labor market, it is harder for those at the middle and bottom to get pay increases. So the shift to austerity also meant that tens of millions of workers would have to work for lower pay. ...
Another major way to rig the economy to depress wages is to offshore higher-paying jobs. Many millions have lost manufacturing, semiconductor and information technology jobs.
While it's true that some jobs might be lost due to a higher minimum wage, some will also be gained by an increase in aggregate demand as minimum wage workers spend more money. As explained in this article.
A review of research on how adjacent counties in different states, where one state raised the minimum wage and another did not, reveals some studies show differing impact. While some studies show there is "a strong correlation between a higher legislated minimum wage rate and a higher unemployment rate," that is, a higher minimum wage has a negative impact on unemployment. Other studies show that raising the minimum wage had insignificant impact, little or no impact, or no impact on employment.
Well, of course! Such differing results should be unsurprising, considering the number of jobs is determined by factors other than the minimum wage. Why this is not understood is beyond me.
Note: 1/16/17: When so-called "conservatives" say raising the minimum wage is a "Job Killer", they're lying. They apply microeconomics principles to a macroeconomic issue.
A report that analyzed every minimum-wage hike since 1938 should put a bunch of nonsense ideas to rest by Nick Hanauer, Contributor, Business Insider, 5/6/16
From the fear-mongering headlines marking passage of $15 statutes in New York and California, you would think nobody ever dared raise the minimum wage before.
"Raising minimum wage risky," the Lexington (Kentucky) Herald-Leader tersely warned.
"Raising minimum wage hurts low-skill workers," the Detroit News bluntly declared.
"Even left-leaning economists say it's a gamble," Vox solemnly cautioned.
Nonsense. We have been raising the minimum wage for 78 years, and as a new study clearly reveals, 78 years of minimum-wage hikes have produced zero evidence of the "job-killing" consequences these headline writers want us to fear.
In a first-of-its-kind report, researchers at the National Employment Law Project pore over employment data from every federal increase since the minimum wage was first established, making "simple before-and-after comparisons of job-growth trends 12 months after each minimum-wage increase."
What did the researchers find? The paper's title says it all: "Raise Wages, Kill Jobs? Seven Decades of Historical Data Find No Correlation Between Minimum Wage Increases and Employment Levels."
The results were clear. Of the nearly two dozen federal minimum-wage hikes since 1938, total year-over-year employment actually increased 68% of the time.
In those industries most affected by the minimum wage, employment increases were even more common: 73% of the time in the retail sector, 82% in low-wage leisure and hospitality. ...
But while there is no evidence that raising the minimum wage is the "risky" "gamble" that doomsayers describe, the devastating economic costs of keeping wages too low are very well documented.
After decades of stagnant wages, 73 million Americans - nearly one quarter of our population - now live in households eligible for the Earned Income Tax Credit, a benefit exclusively available to the working poor.
And according to a 2014 report from the Organization for Economic Cooperation and Development, rising income inequality (and the reduced consumer demand that comes with it) knocked 6% to 9% off US economic growth over the previous two decades. ...
Note: 3/29/15: Minimum Wage increase in Seattle isn't causing restaurants to close
Already in Seattle, even though the higher minimum wage, from $9.32 to $11.00/hour, does not take effect until 4/1/15 "conservatives" have already crowed that it's causing restaurants to close, Hot Air, 3/14/15 (a perfect name for a "conservative" site). But, that's false. See No, the minimum wage isn't forcing these Seattle restaurants to close, LA Times, 3/16/15. "How many owners cited the minimum wage as a factor in their actions? None." Also see, Minimum Wage Increase Killing Seattle Restaurants? Anatomy Of A Lie From Inside The Bubble, Forbes, 3/22/15.
Note: 4/28/16: Still isn't causing Seattle restaurants to close
The "conservative" argument, based on applying a microeconomic perspective to a macroeconomic issue is that a higher minimum wage will cause prices to increase and that will cause businesses to fail. After all, they say, "It's obvious that when the price of something goes up, there's less demand for it." Not happening.
After A Year, Seattle's New Minimum Wage Hasn't Raised Retail Prices
More than a year after a new minimum wage took effect in Seattle—$12.50 an hour now for small employers, increasing to $15 an hour by January 2018—prices at most stores haven't gone up.
In a new report, researchers from the University of Washington presented data that showed "little or no evidence" of price increases in most sectors. Before the minimum wage law took effect, most retailers said they would have to charge more—and most low-wage workers were worried that they would have to spend more for necessities. So far, that hasn't happened. ...
One exception to the trend was restaurants, which raised prices 7%-9% because they rely so heavily on labor. Even there, however, owners sometimes found other ways to cut expenses as they paid workers more, such as closing during slow hours or asking customers to wait a little longer because fewer people are waiting tables. ...
In expensive cities like Seattle, it's hard to argue that low-wage workers can survive without a higher minimum wage. In the University of Washington report, the researchers studied employees who couldn't pay bills even with government assistance. On average, by the end of the month, their net bank balance was -$138.
"The basic message is that it's impossible—families are not making ends meet, they have expenses that exceed their incomes," says Vigdor. "The minimum wage is a band-aid for them, but truth be told, they need more than that. If you're going to live in a community that's expensive, then this kind of ends up being part of the bargain. You're going to have to expect that in order to have people to serve you your meals or serve you in retail outlets or do anything for you—the labor costs are going to be there."
But what about those jobs that are lost because employers can't afford to pay a higher wage (such as a living wage)? After all, there could be some lost.
Businesses -- and their associated jobs -- may be, or may become, uneconomic for many reasons: higher costs of materials, more efficient competing products or processes, higher costs of transportation, shifts in consumer preferences, changes in government spending priorities, and many more.
Therefore jobs can be lost for many reasons. A major one is that "big box" stores drive small businesses under and pay lower wages. As noted below, offshoring causes job losses, too. More big box stores and offshoring cause major job losses -- millions of them.
So why is it that there seems to be more concern about the effect of jobs lost due to a higher minimum wage? It's because it likely a higher minimum wage has a negative effect on corporate profits, whereas the big-box model and offshoring increase profits.
It's not necessarily true that profits will be lower thanks to a higher minimum wage. That's because, when wages are higher, consumers have more dollars to spend, which increases demand ... and increased sales can increase profits ... which leads to a more business and more jobs.
When jobs don't pay a living wage, they should be considered uneconomic.
This government spending would be eliminated, or significantly reduced, if all businesses were required to pay a living wage. This would eliminate the government spending that effectively subsidizes businesses that pay low wages.
For example, government subsidies to WalMart:
A secret behind Wal-Marts rapid expansion in the United States has been its extensive use of public money. This includes more than $1.2 billion in tax breaks, free land, infrastructure assistance, low-cost financing and outright grants from state and local governments around the country. In addition, taxpayers indirectly subsidize the company by paying the healthcare costs of Wal-Mart employees who dont receive coverage on the job and instead turn to public programs such as Medicaid.
Report: Walmart Workers Cost Taxpayers $6.2 Billion In Public Assistance by Clare O'Connor, FORBES, 4/15/14
Walmart's low-wage workers cost U.S. taxpayers an estimated $6.2 billion in public assistance including food stamps, Medicaid and subsidized housing, according to a report published to coincide with Tax Day, April 15.
Americans for Tax Fairness, a coalition of 400 national and state-level progressive groups, made this estimate using data from a 2013 study by Democratic Staff of the U.S. Committee on Education and the Workforce.
"The study estimated the cost to Wisconsin's taxpayers of Walmart's low wages and benefits, which often force workers to rely on various public assistance programs," reads the report, available in full here.
"It found that a single Walmart Supercenter cost taxpayers between $904,542 and $1.75 million per year, or between $3,015 and $5,815 on average for each of 300 workers." ...
And your tax dollars subsidize exorbitant CEO pay. From Fast Food CEOs Rake in Taxpayer-Subsidized Pay, Institute for Policy Studies, 12/2/13:
Here's Bill Maher on the subject:
Well said! So, want to cut government spending and corporate tax subsidies? Require businesses to pay a living wage.
However, some don't agree when Bill Maher says, "Do you want smaller government with less handouts, or do you want a low minimum wage? Because you cannot have both." Too many want to significantly reduce eliminate SNAP and low income housing support.
The "free market" CATO Institute writes: "... public housing, housing vouchers, and other types of housing subsidies undermine or eliminate these benefits of market-based housing." The libertarian thinking is that "... the effort to achieve the better home, not the home itself, that is the real engine of social improvement." The wealthy need higher pay so they'll work harder; but the poor should get lower pay for incentive to work harder.
An article in Forbes, We Are Seeing The Effects Of Seattle's $15 An Hour Minimum Wage by Tim Warstall, 3/16/15, has this:
... Starting April 1, all businesses must begin to phase in the wage increase: Small employers have seven years to pay all employees at least $15 hourly; large employers (with 500 or more employees) have three. ...
... the interesting thing we’d like to know. Which is, what is the effect of raising the minimum wage on unemployment? Freed from the impacts of everything else happening in the economy? And there the standard answer is that it will raise unemployment and no, no one has managed to come up with a convincing case against this standard wisdom.
Depends on what he considers a "convincing case" ... I expect nothing would be. But I explain above why it's not a "job killer." Tim Warstall simply does not understand what determines the number of jobs, which I describe above.
As later noted in a Forbes article, Minimum Wage Increase Killing Seattle Restaurants? Anatomy Of A Lie From Inside The Bubble by Rick Unger 3/22/15, this is a lie.
Never mind that not so much as one of the restaurant closings discussed in the original piece referenced the coming rise in minimum wage as a reason for their decision to shutter their business. And never mind that the owner of one of the four eateries discussed is currently opening two new restaurants in Seattle. It was a headline that opponents of the citywide minimum wage increase could not resist—and the facts could not be allowed to stand in the way.
The Seattle Times actually did the research:
"Conservative pundits say recent Seattle restaurant closures may have been linked to the city’s new $15 minimum wage. We find that claim to be false."
The Numbers Are In: After $15 Minimum Wage, Seattle's Restaurants Are BOOMING By Colin Taylor 10/23/15
From a Brooking article on The "Ripple Effect" of a Minimum Wage Increase on American Workers:
An insightful comment from one who was for a while against raising the minimum wage because that would make her wage closer to the minimum.
It's obvious that sending jobs offshore cuts corporate costs and undercuts the pay of all those kinds of jobs that are offshored. It does not, over the long run, increase unemployment as noted above. Shockingly to many, U.S. policies even subsidize the offshoring of jobs.
It's also a surprise to many that the NAFTA "free trade" agreement, along with U.S. farm policy, created our problem with illegal immigration. Of course, this really isn't a problem for corporations, Republicans, and corporate Democrats because it produces exactly the kind of workers they want: not subject to a minimum wage, not subject to labor protections, and they can't vote: a trifecta.
One need only observe Republican efforts to eliminate the minimum wage, destroy unions, and make it more difficult to vote to realize that undocumented workers provide their ideal worker. No wonder they oppose a path to citizenship.
This is obviously true and has been discussed for decades. And it's still being discussed. Before wages have even gone up a higher minimum wage is being blamed for McDonald's plan to use touch screens. As shown in the photo I took at the Detroit airport in October 2014, when the Michigan minimum wage was $8.15, this is already happening at wages a lot lower than $15/hr.
'McJobless in Seattle" as order screens arrive: Labor Day reality check for $15 minimum wage by Steve Berman, 9/8/15
... McDonald’s has unveiled its plan to use touch-screen technology in self-service kiosks where customers can order and pay for their food.
According to a Business Insider report last month, McDonald’s franchisees see the minimum wage issue as “a major threat to the survival of the operator community,” and are encouraging the company to put “every resource available” into reducing labor costs through technologies such as kiosks and automatic fry dispensers.
Liberals never learn.
Actually, it's "conservatives" who "never learn" as I explain in this article. They apply microeconomics thinking to a macroeconomics problem. Systems are complex and don't behave in the "price goes up and demand goes down" way microeconomics would tell you. The number of jobs is not determined by the wage paid. OMG!
We've seen "jobs will be replaced by technology" coming for hundreds of years, since the Luddites opposed technology in the mills. When I was in college in the 60s, the big concern was, with all the labor-saving technology on the horizon, what would people do with all their free time? Haha! Did that happen? No!
From Forbes: Will Technology Make Us All Jobless? by Charles Sizemore, 10/11/13
WEF founder says technological revolution 'will destroy employment' By Oliver Joy, CNN, 1/23/14.
Oh, no problem, say "conservatives": "The 'free market' will take care of it."
As if corporate collusion and offshoring jobs aren't enough to suppress wages, corporatists push to allow more foreign workers into the country. Though Ted Cruz opposes amnesty and a path to citizenship for illegals, he's proposed increasing the number of H-1B visas by a factor of 5 from 65,000 to 325,000 to allow U.S. employers to hire foreigners in high-tech fields. He wants this even though millions of IT and manufacturing workers have lost their jobs. For example, Colorado Springs has lost 50% of both these categories since their peaks in 2001.
It appears that Cruz doesn't want the undocumented here to have amnesty (as Saint Ronald Reagan allowed) or a path to citizenship, because without that they will continue working for below minimum wage, will be non-voters, and won't be subject to burdensome labor protections.
Republican opposition to unions and to a minimum wage as well as their drive to make voting more difficult, shows that undocumented workers are their ideal labor force. It's the kind of effective status they want for everyone who works for a wage.
The large excess of people who need work over the number of jobs available has led to a major shift of concern.
A typical complaint about capitalism is that it exploits those who work for a wage. That's especially true now as economic returns flow increasingly to the top 1 percent. A Wall Street Journal article: Some 95% of 2009-2012 Income Gains Went to Wealthiest 1%: "That [inequality] trend has been unfolding for more than 30 years, with the highest earners only temporarily set back by the most recent downturn."
In David J. Blacker's book, "The Falling Rate of Learning and the Neoliberal Endgame (p. 94-95)," he observes that the trend is away from exploitation to eliminization:
So much for you. If they can't find a way to profit from you, they get rid of you. Have a good day.
Hawking: "If machines produce everything we need, the outcome will depend on how things are distributed.
"Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine-owners successfully lobby against wealth redistribution. So far, the trend seems to be toward the second option, with technology driving ever-increasing inequality."
No kidding. It's not being a Luddite to recognize this reality.
Who knew? I sure didn't.
Shocking: Wage theft is TWICE theft from bank robberies, convenience store robberies, street and highway robberies, and gas station robberies combined: $280M vs. $139M.
Or more, much more, because "most victims never report wage theft and never sue. The real cost of wage theft to workers is much greater, and could be closer to $50 billion a year":
Question: Why aren't those people and corporations arrested and in prison for this theft?
Wage Theft is a Bigger Problem Than Other Theft, But Not Enough is Done to Protect Workers, Ross Eisenbrey, 4/2/14
Wage theft is a far bigger problem than bank robberies, convenience store robberies, street and highway robberies, and gas station robberies combined. Employers steal billions of dollars from their employees each year by working them off the clock, by failing to pay the minimum wage, or by cheating them of overtime pay they have a right to receive. Survey research shows that well over two-thirds of low-wage workers have been the victims of wage theft, but the governmental resources to help them recover their lost wages are scant and largely ineffective. ...
An Epidemic of Wage Theft Is Costing Workers Hundreds of Millions of Dollars a Year, Brady Meixell and Ross Eisenbrey, 9/11/14
... The total annual wage theft from front-line workers in low-wage industries in the three cities [New York, Chicago, and Los Angeles] approached $3 billion. If these findings in New York, Chicago, and Los Angeles are generalizable to the rest of the U.S. low-wage workforce of 30 million, wage theft is costing workers more than $50 billion a year.
It is useful to compare the cost of these wage and hour violations with crimes that are better recognized and greatly more feared, though they are much smaller in their overall dollar impact. All of the robberies, burglaries, larcenies, and motor vehicle thefts in the nation cost their victims less than $14 billion in 2012, according to the FBI's Uniform Crime Reports. That is well over [three times 14/50=3.6] ... the estimated cost of wage theft nationwide. ...
Walmart Loses $224 Million Lawsuit For Stealing Lunch Breaks From 187,000 Workers By Grant Stern, 4/11/16
This past week, Walmart lost its appeal of a $224 million dollar judgement to its Pennsylvania employees for forcing all of them to work through lunch breaks. The Supreme Court declined to hear Walmart’s appeal, so 187,000 workers who have been waiting to get paid since 2006 will finally receive their paychecks. National labor union Making Change at Walmart rejoiced saying, "The world’s largest retailer won’t be able to continue to mistreat its workers and get away with it. Walmart workers, when they come together, have a powerful voice that cannot be silenced." ...
Walmart has become famous for selling cheap imported goods from overseas for prices so low they strangle local businesses – and for paying starvation wages to its employees. Adding insult to injury, a Bloomberg investigation recently discovered that the retail colossus has squirreled away some $76 billion dollars in foreign tax havens like Luxembourg where Walmart has no stores, but sheltered $1.3 billion dollars paying a 1% tax rate. The US Corporate income tax rate is 35%. This technique, which Walmart uses shaved their US income tax bill from $455 million all the way down to $13 million. And that’s just one fraction of the billions stashed away. ...
Papa John’s Ordered to Pay Almost $800,000 in Wage Theft Case by Jessica Mason Pieklo, Rewire, 2/9/15
A Papa John’s pizza franchise in New York must pay its workers nearly $800,000 in unpaid wages over allegations the business underpaid employees and failed to pay overtime, a state judge ruled last week.
New York Attorney General Eric Schneiderman in December sued Emstar Pizza Inc., which operates seven Papa John’s franchise locations in Brooklyn and Queens, alleging that Emstar underreported hours worked by employees over the past six years, rounded employee hours down to the nearest hour, and did not pay overtime.
Attorney General Schneiderman is also considering legal action against the franchisor, Papa John’s International Inc., on the theory that it is a joint employer and thus liable for the actions of its franchisees, according to reporting from the New York Post. ...
This is another form of theft ... of money and time from peoples' lives.
It's one reason we're poorer than our parents. And Obama could fix it -- without Congress. Excerpt:
... In 1975, more than 65 percent of salaried American workers earned time-and-a-half pay for every hour worked over 40 hours a week. Not because capitalists back then were more generous, but because it was the law. It still is the law, except that the value of the threshold for overtime pay -- the salary level at which employers are required to pay overtime -- has been allowed to erode to less than the poverty line for a family of four today. Only workers earning an annual income of under $23,660 qualify for mandatory overtime. You know many people like that? Probably not. By 2013, just 11 percent of salaried workers qualified for overtime pay, according to a report published by the Economic Policy Institute. And so business owners like me have been able to make the other 89 percent of you work unlimited overtime hours for no additional pay at all. ...
You're competing with prison labor, too. That's big business and tantamount to slavery ... no need to go to China for slave labor.
American Slavery, Reinvented by WHITNEY BENNS, The Atlantic, 9/21/15
... Some viewers of the video might be surprised to learn that inmates at Angola, once cleared by the prison doctor, can be forced to work under threat of punishment as severe as solitary confinement. Legally, this labor may be totally uncompensated; more typically inmates are paid meagerly-as little as two cents per hour-for their full-time work in the fields, manufacturing warehouses, or kitchens. How is this legal? Didn't the Thirteenth Amendment abolish all forms of slavery and involuntary servitude in this country?
Not quite. In the shining promise of freedom that was the Thirteenth Amendment, a sharp exception was carved out. Section 1 of the Amendment provides: "Neither slavery nor involuntary servitude, except as punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction." Simply put: Incarcerated persons have no constitutional rights in this arena; they can be forced to work as punishment for their crimes. ...
For example prison labor is "paid somewhere between 93 cents and $4.73 per day." From
So, you're in competition, even in this "land of the free", with prison labor making less than $0.60/hour. Example:
American Slavery, Reinvented by WHITNEY BENNS, 9/21/15 The Thirteenth Amendment forbade slavery and involuntary servitude, "except as punishment for crime whereof the party shall have been duly convicted."
Convict leasing was cheaper than slavery, since farm owners and companies did not have to worry about the health of their workers.
If you see "Made in America" on a product, it could very well be made by prison slave labor.
Prisoners compete for a share of 'Made in USA' By Rick Helfenbein, The Hill, 5/05/16
Since it is now illegal to import products made with prison labor, why is it still legal to use prison labor in America? Has our own government just issued a non-compete clause for foreign prisoners, or have they issued a free pass for U.S. prison labor to compete on products that are protected under the Berry Amendment as "Made in USA"? ...
Our federal government does, in fact, promote, allow and encourage inmates to assemble garments behind prison walls, under a growing and longstanding program called UNICOR. Prisoners earn as little as 23 cents an hour working on assembly lines, and their products often compete for business with legitimate government contractors who operate under under the Berry Amendment (a law that requires U.S. military uniforms to be made in the U.S.). These respectable American companies make apparel and footwear for many branches of the U.S. government and often use the Berry business as an anchor, to help them run their U.S. factories so they can compete in the global marketplace. ...
It is illegal to import products that use prison labor.
(While, at the same time, it is legal to utilize U.S. prison labor to make the same exact same products that are banned as imports.)
It is a requirement that footwear be covered by the Berry amendment [(a law that requires U.S. military uniforms to be made in the U.S.].
(While, at the same time, it is a fact that the DOD still grants vouchers to circumvent that requirement.)
More examples in this article:
23 Cents an Hour? The Perfectly Legal Slavery Happening in Modern-Day America By Terrell Jermaine Starr, AlterNet, 7/1/15
The government and corporations have a pool of powerless, exploitable workers in skyrocketing prison populations.
The Prison State of America, Chris Hedges, 12/28/14. Excerpt describing the corporate ideal worker:
Prisons employ and exploit the ideal worker. Prisoners do not receive benefits or pensions. They are not paid overtime. They are forbidden to organize and strike. They must show up on time. They are not paid for sick days or granted vacations. They cannot formally complain about working conditions or safety hazards. If they are disobedient, or attempt to protest their pitiful wages, they lose their jobs and can be sent to isolation cells. The roughly 1 million prisoners who work for corporations and government industries in the American prison system are models for what the corporate state expects us all to become. And corporations have no intention of permitting prison reforms that would reduce the size of their bonded workforce. In fact, they are seeking to replicate these conditions throughout the society. ... (continued)
The prison population has skyrocketed since the 1980s. See Addiction to Prisons thanks to criminalizing relatively innocuous use of drugs like marijuana (say, compared to alcohol), privatized prisons introduce a profit motive to put more people in prison ... and to put those prisoners to work at slave wages to increase corporate profits by undercutting all wages. Contracts with private prisons even guarantee occupancy rates -- "lockup quotas" -- to guarantee the profits of the private prison industry.
The U.S. now even has what's well-known to be a School-to-Prison Pipeline to increase the efficiency of filling prisons. A particularly nasty example of profiting from sending people to prison is the "Kids for Cash" judge who was convicted and got a 28 year sentence for ruining the lives of more that 2000 children ... one even committed suicide.
Prison labor is often actual slave labor.
The Supreme Court upheld the right of the state to prohibit members of the Prisoner's Labor Union from soliciting other inmates to join the union, to bar all union meetings, and to refuse to deliver union materials in the mail. Prisoners who refuse to work, fail to meet production quotas, or complain about working conditions are often denied privileges or benefits (e.g., better housing assignments or extended visitation), or find themselves in solitary confinement. [emphasis added]
Naomi Klein on prisoners used for deadly-dangerous work as firefighters at wage-slave pay
From Naomi Klein & Avi Lewis: Climate Change Could Be Catalyst to Build a Fairer Economic System, Democracy Now! 10/5/15"
... it takes a lot to shock me, because I’ve been immersed in this stuff for a long time. But I didn’t realize that a third of California’s firefighters are prison inmates, being paid $2 an hour to fight California’s—yeah, and for CAL FIRE, it’s apparently half of the firefighters. So this is incredibly dangerous work. They’re being paid $2 an hour, or—and if they’re not actively fighting fires, some of them are being paid less than $2 a day. And it turns out that there are forces in California that are resisting prison reform measures that would lower California’s prison population, because they’re worried about the impact of their firefighter supply."
These 7 Household Names Make a Killing Off of the Prison-Industrial Complex by Kelley Davidson, 8/30/15
"Insourcing," as prison labor is often called, is an even cheaper alternative to outsourcing. Instead of sending labor over to China or Bangladesh, manufacturers have chosen to forcibly employ the 2.4 million incarcerated people in the United States. Chances are high that if a product you're holding says it is "American Made," it was made in an American prison.
On average, prisoners work 8 hours a day, but they have no union representation and make between .23 and $1.15 per hour, over 6 times less than federal minimum wage. These low wages combined with increasing communication and commissary costs mean that inmates are often released from correctional facilities with more debt than they had on their arrival. Meanwhile, big businesses receive tax credits for employing these inmates in excess of millions of dollars a year.
While almost every business in America uses some form of prison labor to produce their goods, here are just a few of the companies who are helping prisoners pay off their debt to society, so to speak. ...
[They are: Whole Foods, McDonald's, Wal-Mart, Victoria's Secret, Aramark, AT&T, BP.]
Seriously, this is one sick, f'ing nation. "Land of the Free". Hah.
Perhaps the greatest political hatred is directed against what are called "illegal immigrants" with a complete lack of understanding of how our national farm policies and "free trade" agreements like NAFTA have created the problem ... see the section on Offshoring Jobs.
But corporations actually love them as it puts Americans in competition with, for example, detained migrant workers: Using Jailed Migrants as a Pool of Cheap Labor.
It is true that, for example in Georgia, which has passed "possibly the worst anti-immigration law in the nation," that it
The corporate-minded regularly assert, without contradiction, that Americans are simply too lazy to do such work; and that, without paying sub-poverty wages to imported farm workers, we wouldn't be able to afford farm products. OMG, produce prices would skyrocket.
That's completely false. Using the advanced mathematical tool of arithmetic, it's easy to show that we don't need such low wages to have affordable fruits and vegetables. Go to "Are Poverty Wages for Ag Workers Necessary? No.", to see the data and calculations. Excerpt:
Republican Rep. Steve King believes that your Labor Is A Commodity Just Like Corn Or Beans. He said on the House floor, "I think the free market should set the wages. Labor is a commodity just like corn or beans or oil or gold, and the value of it needs to be determined by the competition, supply and demand in the workplace."
Of course he turns a blind eye to Federal Reserve policies that manipulate labor supply in the "labor market." But the problem is deeper than that. The term, "labor market," is used so often that it comes as a shock to many, economic conservatives in particular, that the very idea that labor should a "market commodity" is anathema (dedicated to evil).
Why? Market forces are appropriate for dealing with an excess of supply over demand for widgets. Excess widgets can be discarded or sold at fire sale prices; perhaps factories are torn down. Alternatively, marketing and advertising can be used to increase demand.
But applying these same ideas to a "labor market" means that excess workers would be either killed or paid a wage so low that they cannot live (the case for many now), which leads to death. Considering "values," that's immoral; it's treating people as commodities to be bought and sold ... wage slavery (see the section below).
As seen in U.S. past and present history, slavery is perfectly compatible with the capitalism that rules the world.
46 million people living as slaves, latest global index reveals by Annie Kelly, The Guardian, 6/1/16.
The report ranks incidences of slavery in 167 countries, with India having the highest number of slaves while North Korea has the highest percentage of slaves per capita. This year’s estimates are nearly 30% higher than in the previous report, which estimated 35.8 million people living in slavery in 2014.
Forrest says the rise is partially due to more accurate methodology but he also believes the number of people trapped in slavery is increasing year on year.
“It is time to draw a line and say, no more,” he said. “This isn’t Aids or malaria, it is a man-made problem that can be solved, and it’s time to take real action to free the world from slavery once and for all.” ...
Another article referencing the above article:
Shrimp sold at Walmart, Costco tied to slave labor, CBS MoneyWatch, 6/11/14
Costco didn't immediately respond to a request for comment. Costco told USA Today that it is "working with our suppliers of Thai shrimp to require them to take corrective action to police their feedstock sources with respect to poor labor practices."
On slavery and ecocide.
Your Phone Was Made By Slaves: A Primer on the Secret Economy ... an excerpt from Blood and Earth, by Kevin Bales, as recommended by Longreads
... It makes sense that slavery and environmental destruction would go hand in hand. In some ways they spring from the same root. Our consumer economy is driven at its most basic level by resource extraction, pulling things from the earth, an extraction that we never actually see. We pull food from the earth, of course, but we also pull our cellphones from the earth, our clothing, our computers, our flat-screen televisions, our cars—it all comes from the earth, ultimately. And pulling things from the earth can be a dirty business. To make our consumer economy hum and grow and instantly gratify, costs are driven down as low as they can go, especially at the bottom of the supply chain; this can lead to abusive conditions for workers and harm to the natural world. Taken to the extreme it means slavery and catastrophic environmental destruction. But all this normally happens far from any prying eyes. It’s a hidden world that keeps its secrets.
But there’s no secret about the engine driving this vicious cycle. It is us—the consumer culture of the rich north. Shrimp, fish, gold, diamonds, steel, beef, sugar, and the other fruits of slavery and environmental devastation flow into the stores of North America, Europe, Japan, and, increasingly, China. The profits generated when we go shopping flow back down the chain and fuel more assaults on the natural world, drive more people toward enslavement, and feed more goods into the global supply chain. Round and round it goes— our spending drives a criminal perpetual motion machine that eats people and nature like a cancer.
How closely linked are these two crimes? Well, we know environmental change is part of the engine of slavery. The sharp end of environmental change, whether slow as rising sea levels and desertification, or disastrously sudden like a hurricane or a tsunami, comes first to the poor. I’ve seen men, women, children, families, and whole communities impoverished and broken by environmental change and natural disasters. Homes and livelihoods lost, these people and communities are easily abused. Especially in countries where corruption is rife, slavers act with impunity after environmental devastation, luring and capturing the refugees, the destitute, and the dispossessed. ...
The Global Slavery Index estimates there are 29.8 million people in modern slavery. Modern slavery includes buying, selling, & trading humans as property, forcing persons to work without their without consent, by threats or coercion, and human trafficking.
When corporations collude to interfere in the freedom to leave one job for another, we don't think of that as slavery, but it's a limitation on freedom (Corporations Collude to Drive Down Wages: Corporate Cartels). Federal Reserve actions to drive down wages restrict the ability of others to act for their own commercial benefit. The concept of "wage slavery" in the U.S. is dismissed, but it's all too real.
Specifically, relative to current, treasonous TPP legislation, slavery or not is being debated. That it's even being debated should be an outrage:
Is the TPP Okay With Slavery? Really? by Mike Lux, Huffington Post, 05/28/15
So the fast track plan to pass the Trans-Pacific Partnership has run into a new wrinkle after an amendment passed in the Senate debate: slavery. Yes, really, slavery: the Senate voted for an amendment that would make it more difficult for countries that engage in slavery to be in the TPP, and the Obama administration objected. This is bizarre stuff, folks, but welcome to the world of international trade deals. From Ryan Grim's article the day Fast Track was passed, about the amendment in question:
That measure would bar governments considered to be complicit in human trafficking from receiving the economic benefits of a fast-tracked trade deal. Menendez, the author of the provision, has described it as a human rights protection that will prevent U.S. workers from competing with modern-day slave labor. ...
The President does not want an anti-slavery provision in what he calls the "most progressive trade deal of all time" because it would keep a country noted for its egregious slave trade out of the treaty? I have to admit this bothers me just a little. Okay, a massive amount. We're not going to object to slavery because a country that openly engages in it might trade more with China than with us? Doesn't this kind of blow up the whole "most progressive trade agreement in history" thing? ...
Yes, it damn well does! It reveals what's obvious since he appointed Geithner & Summers as his economic advisors. Obama is not a socialist, but at the extremist "right" on economics. Want a valid reason to hate Obama? Well this is it.
Finally, those who call themselves, "conservative," hate collective "Unions of People," but they have no problem with the collective "Unions of Money" we call corporations. See Conservative Collectivism.
The knowledge of realities related to unions and the minimum wage should give everyone a glimpse of how they're robbed by "labor market" manipulation and other right-wing economic policies. For some of the policies that drive people into poverty and maldistribute income in the first place, see The Data & Why It's Happening and Wealth Happens.
For these reasons and others, the U.S. middle class is sinking economically: Report Confirms: U.S. Middle Class Is No Longer The World's Richest.
If you being robbed, and the "conservative" policies destroying the U.S. economy, don't make you furious, I don't know what will.
The typical man with a full-time job–the one at the statistical middle of the middle–earned $50,383 last year; in 1973 that was $53,294, measured in 2014 dollars to adjust for inflation.<p></p>The median male worker who was employed year-round and full time earned less in 2014 than a similarly situated worker earned four decades ago. And those are the ones who had jobs.<p></p>It’s not hard to understand why so many voters (who don’t need Census Bureau tables to understand what’s happening to their paychecks) are drawn to candidates who acknowledge this reality<p></p>From The typical male U.S. worker earned less in 2014 than in 1973 by: David Wessel, 9/18/15, Brookings Institution.<br></br>
Trump's secretary of labor pick believes workers are ‘overprotected' and shouldn't get breaks by Erin Corbett, Raw Story, 12/28/16
During their interview, Puzder called California a socialist state, adding that "You can't be a capitalist" there. He then complained about workers regulations and overtime laws, boasting his belief that "workers are overprotected." He also claimed that workers should not have breaks.
OC Weekly reported the following statement from Puzder's interview:
"Have you ever been to a fast food restaurant and the employees are sitting and you're wondering, 'Why are they sitting?'" Puzder asked. "They are on what is called a mandatory break." He shared a laugh with the interviewer, saying the so-called nanny state is why Carl's Jr. doesn't open up any new restaurants in California anymore.
... Even before the release of this 2009 interview, Puzder was on record as an opponent of raising the minimum wage. He suggested in 2014 that increasing the minimum wage would hurt low-wage workers. At that time, he was earning 291 times more than minimum-wage employees working for his fast-food chains.
Puzder's company was also hit with a class-action lawsuit in 2013 for "allegedly failing to pay its general managers overtime, even while requiring them to be on call 24 hours a day," according to Law 360.
Former Labor Secretary Robert Reich slammed Puzder as "anti-worker" during a CNN panel earlier this month. He pointed to the fact that "The Department of Labor came into his restaurants and found that half his restaurants had wage and labor violations that violated the law of the United States." ...
Pudzer definitely has low-life credentials and is the perfect Trump pick.© 2003 Continuous Improvement Associates
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