Class Warfare
Jan 7th, 2009 at 8:31 am by Susie
I’ve been writing about this for years, but since most of the top-level bloggers aren’t really familiar with Paycheck World, they didn’t. Oh well!
I should think this class warfare was self-evident, but maybe not. So read this from Daily Kos (h/t Seeing the Forest):
Basically, the basic bargain was roughly this–if you worked hard and became more productive, you would see that sweat of the brow in your wages. And from the post-war era until the 1970s, that deal basically held–as you can see from the lines that are basically close together until the 1970s.
Then, the lines diverge–dramatically. You can see it yourself. If the lines had continued to track closely together as they did prior to the 1970s, the MINIMUM WAGE would be more than $19 an hour. THE MINIMUM WAGE!!!
So, in short: people had no money coming in in their paychecks so they were forced to pay for their lives through credit–either plastic or drawing down equity from their homes. There are lots of reasons that this happened–greed, the attack against unions, de-regulation, dumb trade deals.
But, the point is: we will never fix the economic crisis, whether through short-term economic stimulus and certainly not through tax cuts, until paychecks are re-inflated. Dramatically.
I outlined a whole set of solutions to bailout American workers but the main one is simple: raise wages. Dramatically. And end–and I know some people cringe at the term–the class warfare that has been underway for the past three decades.
Also a major factor: The two-paycheck family obscured this wage deflation. After all, with both husband and wife working, it almost added up to one healthy paycheck! (As you can imagine, single moms like me had no trouble figuring it out.)
I used to read years ago that Republicans actually liked the influx of women into the workplace for precisely this reason: It gave them cover for deflating wages. Nice work, guys!
“The two-paycheck family obscured this wage deflation. After all, with both husband and wife working, it almost added up to one healthy paycheck! (As you can imagine, single moms like me had no trouble figuring it out.)”
Yup. I’ve been saying this for years myself.
Also, this has led to a lot of other social problems as well, because the whole scheme devalues parenting. So because neither parent is at home for junior, you have to hope the schools will provide guidance and mentoring. And here in Philly, where the schools do not do that, you end up with kids on the street getting into trouble. You end up with parents who aren’t involved with their kids’ education (who has time or energy)?
and yes, you have two people working twice as hard to make a little more than one person does. It’s a rotten way to live.
Nixon + Reagan + (Bush x2) = Wealth Distribution; unfortunately, the distribution has been upward. Clinton was able to balance the federal budget and leave a surplus, but he was unable to stop the distribution wheels put in motion in the early 70’s.
For an interesting perspective on the history of how we got into this mess go listen to the crash course on economics at: http://www.chrismartenson.com/
The whole thing is broken down into (20) 12-15 minute chapters so you can listen as time permits. Things are going to get worse before they can get better.
Good in theory. But $19 an hour minimum wage? Um, yeah… there goes my small business.
And if you look at the graph the white hourly compensation line pancakes right at 1980 and stays flat. Let’s put our thinking caps on: which union busting conservative was elected president in 1980? Hint, he was a B-movie actor.
@3Oregonian - I’m always curious about this complaint. If it’s a national minimum wage why does your business *individually* become become non viable compared to your competitors? You are all paying the same minimum; you will all raise your prices accordingly. In my experience the failures that micro businesses suffer are mostly due to lack of management expertise. I know it’s damned hard to manage a micro business but don’t take it out on the backs of the working stiffs.
Labor won’t get re-inflated until the supply is curtailed and that won’t happen because Versailles on the Potomac refuses to acknowledge that deregulation and unfettered free trade are only working out for the very rich. We now have to depend on “bubbles” to get any relief from the Friedmanism that’s torn up our economic foundation. First, it was the tech bubble that provided coverage when our manufacturing base all but disappeared. When those jobs were sent overseas along with accounting, radiology, engineering and other white collar jobs, the housing bubble was created. That lasted until so many jobs were lost that people couldn’t pay their mortgages. Now, Versailles wants to create “green” jobs and we’ll see some partial recovery until those jobs are shipped out.
Tom Harkin used to tell this story about one of his constituents who, after the tractor factory shut down, had to go to work at McDonald’s for one third of what he had been making. And of course his wife had to go to work too. And the Reagan Administration pointed to that with pride, saying “Hey, we just created another job!”
I don’t have a business, I work for a small business. To hear him tell, it’s all he can do to keep going in this economy. I certainly would have thought that an increased minimum wage would be harmful.
After all, raising the minimum wage is kinda like the new law to protect children from lead in their clothing and toys. Good in theory… but in the end, large corporations will benefit and small business will bear the brunt.
I thought that was the American way? (only mildly sarcastic, there)
And the1980s child care/abuse panic was intended to re-build guilt in working women, so they didn’t advocate for a living wage that could support them, their families and their child care providers. It was far easier to demonize professional child- rearers (and, by implication, the women who allowed their children to be cared for outside the home) than it was to allow women and men the right to earn salaries high enough to make their families secure, even with *one* income.
See, the point isn’t necessarily how high minimum wage should be. The point is how high minimum wage would be IF IT HAD KEPT PACE WITH INCREASED PRODUCTIVITY. As in, Assholes, we’re making you rich and you’re whining about how much you have to pay us.
Like I’ve been saying. Eat the rich.
Oregonian: For several decades conservatives argued vehemently that increasing the minimum wage meant a net loss in minimum wage jobs. Through most of the 80’s and 90’s this became Economics 101 orthodoxy. A handful of economists kept crunching numbers and finding virtually no evidence of job loss through increases in the min. wage. Over time they produced a body of work which became all but impossible to ignore. So what happened next?
Well, the conservatives admitted they had been wrong all along, apologized and got behind legislation to increase the min. wage.
Hahahaha, damn, I am funny. No, of course they didn’t do that. Instead they hoisted a new red flag: the death of small businesses.
First, it’s vitally important to recognize they have never conceded how completely wrong they were on the unemployment argument. Thus take anything they say with a big grain of salt. Second, as “oh that” pointed out @4 above, you are most likely competing only against other small business’ today – I seriously doubt you are working at a mom-n-pop store down the street from a Wal-Mart. Economies of scale do matter and if your small business is hanging on by a thread in the face of competition from a multi-national there is a possibility a big jump in the minimum wage would be devastating.
Of course, from the end of WW II to the present every “small is beautiful” defense of small business has come from the left and every piece of federal legislation benefitting big business at the expense of small business has come from the right. I find it rather difficult to take the crocodile tears of a Lawrence Kudlow defending mom-n-pop operations from mean old government seriously when he has spent years defending Wal-Mart – the single greatest enemy of small business this country has ever seen.
The right opposes any step that will give more money, benefits, or dignity to wage earners.
What Bob said.
Word.
As far as minimum wage goes. If you are running a business that depends on screwing your employees [who are really investors of labor]….tough shit.
I have a small business that manufactures a small product. Most of our customers are middle class 65 - 125k households. Most of my product is shipped overseas. America’s middle class is shrinking and that really hurts.
Instead of prioritizing raising minimum wage right now, I’d put three things on the table:
1] Medicare coverage starts at 45 - 50 and those below 18 years of age. This is a 300-1800.00 per wage increase AND it really helps small business.
2] Catastrophic coverage for all citizens once the yearly bill exceeds 10,000.00
3] Public Health insurance with a flat 6% of wage premium, the first 10,000 of income is exempted, like SSI it has a cap at 150,000.00 inflation adjusted.
I’m curious how Martigan blames this on “Nixon + Reagan + (Bush x2) = Wealth Distribution; unfortunately, the distribution has been upward.” Nixon increased social spending more than any president had up to that time; he actually was a very big funder of domestic programs like that. He created SSI and other similar programs.
More than putting the blame on any single President (or the ones who just happen to be Republican, with Gerald Ford getting off for some reason), the blame probably lies in the specific economic facts of the ’70s. The economy was horrible, the worst since the Great Depression, and yes, women were going to work en masse for the first time outside of the home. Both of those things would independently depress wages, so together of course they did.
It could also be worth noting that any blame Nixon may hold for this is in fact due to his creation of new agencies and regulations (OSHA, the DEA, many, many others) that probably cost businesses more to comply with, thus also possibly contributing to depressed wages. Income taxes also increased about this time, including Social Security and Medicare, which employers and employees split, which would also help depress wages.
Finally, as far as the minimum wage hurting small business, I don’t know. I do know that it (along with taxes) serves to encourage the hiring of illegal immigrants as labor– undocumented workers often might even make more than the minimum wage, but they don’t cost as much in benefits as an American worker and of course usually work harder. If Oregonian has to hire workers at $19 an hour, but the large corporation down the street is hiring illegal immigrants off the books at $10 an hour, Oregonian may not be able to compete. Of course, Oregonian could hire illegal immigrants, but that might be harder to do and “hide” in small businesses that also need the tax breaks from employee salaries. If minimum wage is $19 an hour, everyone will be affected from it but it would also be the same as if the minimum wage was $7.50 or $14 or what have you. There will be resultant inflation to whatever the minimum wage is. Oregonian would not be affected any more than if the MW is $7.50 unless there was no inflation (and there would be inflation).
Personally, I think the actual minimum wage would be higher if the federal and state governments didn’t set it (when they set the wage at $5.50 or $7.50 it implies that that is a good wage when the market might not say it is). It was first set by pressure from all-white labor unions that wanted to keep blacks out of their jobs.
@GlibertarianGirl at 13:
“undocumented workers often might even make more than the minimum wage, but they don’t cost as much in benefits as an American worker and of course usually work harder”
Do you have any actual ties to reality left? Do you even bother to read what you write before posting? And if so, do you chuckle mightily at how farcical it is, or do you die a little inside and hit the Post button anyway?