The Right’s Wrong Turn on a Living Wage

Advocating an increase in the minimum wage or standing on the “living wage” soap box can raise the ire of many conservatives. And they will try to pull rabbit out of the hat to prove to you that higher wages really hurt the working stiff and aren’t necessary.

Witness this interesting diverting tactic that some conservatives might use to deflect questions of the declining wage of American workers. I recently heard the response of a conservative economist when posed with the question of effects of a declining standard of living of American workers. He adroitly steered the question away from the issue of wages to the buying power of consumers, stating that for a mere $2000, the consumer could purchase a bevy of items that 20 years ago would have been out of reach for him or her. These items included a personal computer, a DVD player, a cell phone, and numerous other consumer items.

But what he neglected to do was answer the question. Almost all of the items mentioned wouldn’t be consider necessities. Necessities would be:
housing – with costs increasing dramatically over those 20 years of decreasing prices,
heating – with increases in energy prices,
health care – also with dramatic costs increases,
gasoline - which all know hasn’t gotten any cheaper lately

When you examine how real wages have fallen over the past 30 years and place it against paying for the increased necessities of life, you can easily see through the “buying power” argument. Plus, you add to this equation the new reality that to get prices so low on consumer products, you have to outsource jobs to other countries. This outsourcing puts the American worker out of the job that paid him/her a living wage and into the nether-realm of just-over-minimum-wage land.

Some conservatives will also point out the there have been increases in real wages and that all minimum jobs are counted in the statistics when liberals cite “inflated” numbers of people earning only minimum wage.

Okay, for arguments sake, let’s give one of our displaced workers a job in the new economy right at the average hourly wage. Let’s call him Joe and say, he makes, $8.25, which is what a study shows cited by the Heritage Foundation (http://www.heritage.org/Research/Economy/wm491.cfm).

That $8.25 per hour equals just over $17,000 before taxes. So, let’s give Joe a take home pay of $15,000. Divide that $15,000 by 12 for the monthly expenses and you get $1250 a month. Now, we have to give old Joe some liabilities. A wife (a stay-at-home model) and a child (2 years old).

Let’s examine Joe’s Monthly Budget:
Housing (2 bedroom apt) $650
Heating $ 80
Gasoline $ 80
Health Care $350
Car payment $200
Phone $ 45
Food $200
TOTAL $1605

As you can see, Joe, to provide the basics has out striped his take home pay. Joe could do without a car. Then he could do without the insurance that wasn’t included. And I guess that health care is a luxury that he can’t afford, too. Too bad that when his child gets an ear infection, he shows up at the emergency room, unable to pay, and that costs get hoisted back on us.

Okay, Scooges of the world say what your black heart’s are feeling, “The world doesn’t owe Joe a living!” Maybe in the Scrooge-vein, we should say that Joe should be thinking about reducing the surplus population?

No, in the cold harsh reality of the world, Joe isn’t owed a living wage, but please don’t use less than clever diversion tactics to say that Joe can go out and buy a new computer, DVD player, and cell phone when he can barely put food on the table, a roof over his families head, and provide for proper health care. It’s intellectually dishonest and doesn’t address the question of providing a worker a living wage for days work.

America's Great Villain Creation Set

America needs its villains. At least it thinks it does.

Think back over the past thirty years or so and review the standard operating political strategy of leaders faced with foreign policy adversaries. Whenever a President needs to muster the support of public opinion against a person, place or an ideology, it’s always in his best interest to put a face on “evil.”

How many of you remember Ayatollah Khomeini, Moammar Gadhafi, and Manuel Noriega? How many of you knew of them before they became public enemy, number one? Certainly, this rogue’s gallery won’t make any humanitarian lists and also justly deserve the infamy they engendered, but you can notice political strategy of creating a villain.

Ronald Reagan did it to an entire nation when he referred to the former Soviet Union as the “Empire of Evil.” Our current President Bush has spread the brush more broadly with the “Axis of Evil.”

And some of these villains were once allies. Saddam Hussein was provided with weapons and support during his war with Iraq. Manuel Noriega was practically handpicked by our intelligence agencies as the leader of Panama. Osama Bin Ladin was also provided with weapons in Afghanistan while rebels warred with Soviet soldiers.

It’s easy to see why this strategy has to be employed but in many cases it can be a blunt instrument and in other instances, it can hide larger, more troublesome problems. Creating a symbolic embodiment of evil in one person can help put the face on the “bad guys” for the media consuming public, but it can do little, in many instances, to alleviate the source of the problem.

In the case of how the Bush administration has elevated the villain status of Abu Musab al-Zarqawi into a class with our murder’s row, it causes a big problem because the insurgency is so much larger than one man. If Abu Musab al-Zarqawi is “smoked out,” will that end the insurgency? No. Even if Osama Bin Ladin is tracked down, Al Qaida will still be a threat.

It becomes a scenario that if we catch “fill in the blank,” all our troubles will be over. In the case of Iraq, catching Abu Musab al-Zarqawi will make little difference. The insurgency problem needs a broader, more systematic and long-term approach.

So, the next time America target’s a new enemy, make sure you know the difference between an enemy and a solution to a problem.

The United States: Good Old Meritocracy or Emerging Oligarchy?

You see them on TV – the richest people in the world. They are captains of industry, celebrities, and famous or infamous individuals and who, for the most part, live lifestyles no middle class citizen can even dream of. And most of them live and work in America.

First, let me tell you that I’m not against wealth and I actually admire those who work hard, sacrifice, and take a risk. Entrepreneurship is at the heart of America. But could those that reach the extreme upper limits of wealth actually be hurting America?

I know many conservatives will immediately balk at this line of thinking. How could one person (or a group of people) getting rich hurt anyone? Don’t these people stimulate the economy by creating jobs, innovating, and buying lots of material goods? Certainly, but when wealth gets concentrated in such a narrow strata of our population, could it actually be tying up money in the hands of a few when it could be better spread among the many?

Many economists will say that our economy isn’t a zero-sum game. One person having a lot doesn’t take away from someone else having something. They usually point to productivity and say it is almost infinitely expandable. But these same economist also fail to examine productivity in terms of real wages and the fall of real wages since the 1960’s. (see: http://www.laborresearch.org/charts.php?id=8)

Some studies will show that real wages have, indeed, increased. If you look at these you might see a slight increase of around two percent. But if you also look at how the cost of living has increased, you can easily see how that figure has dwarfed any increases in real wages.

What I do know is that in the face of real wages is that CEO pay increased from 42 times that of the average line worker’s pay to 500 times that in a mere 20 years. Did these CEOs really earn their opulent salaries? Jack Walsh led G.E. to healthy profit margins during his tenure. Steve Jobs is a gem at elevating both Apple and Pixar. Most of their “compensation” packages are really incentive packages of treasure troves of stock options used to prod them on to actually make the best moves to increase performance and the stock’s value. But what about those that didn’t perform? Michael Ovitz of Disney was jettisoned early and walked out the door with a golden parachute of $120 million dollars worth of compensation.

The topic of CEO pay (compensation) and performance is another topic for another time. But before leaving the topic, I don’t know too many of us that wouldn’t want even a portion of their compensation packages.

And don’t get me started in the likes of a Paris Hilton, who before deciding to market herself for fame and fortune, never worked a day in her life. Add to that the fact that she would never have to work to maintain an extravagant lifestyle.

My point is what do the rich really do to earn these opulent riches? Does David Lesar (CEO of Halliburton - pictured) work harder than “Joe” who puts in 55 hours a week as his job as an accountant at the firm just off the expressway?

Let’s look at Joe. He makes just above the national average at, say, $35,000. David Lesar is pulling in a total compensation package of $7.7 million dollars. By my calculations, straight up before taxes, Joe makes around $16 an hour. David Lesar makes over $37,000 an hour.

Does David Lesar actually deliver $37,000 dollars more value an hour than our poor little “Joe?” Stock holders certainly think so. The Halliburton board certainly thinks so. And maybe Joe would be a little over matched by the job.

What I’m getting at is that the U.S. is based on a meritocractic idea. You get what you earn and deserve. Work hard, achieve and you will get what you deserve. I’m sure that David Lesar worked hard, sacrificed and made all the right moves. And maybe you don’t want Joe to manage your company. But in giving David Lesar such a big salary, could it actually concentrate a dangerous and inequitable amount of money in the hands of one person when it some of that money could be spread across dozens of hard working Joes?

Anyway, isn’t this whole concept of taking from the rich and giving it to the poor immoral, though? Am I attempting to incite class warfare? From my perspective, the class war has been and is still being fought in a subtle way throughout our culture.

My point isn’t that the government needs to punish the rich. Or that the proletariat brothers need to rise up and “de-throne” the upper crust? Or that fortunes should be ripped away from heirs because life should be more fair?

My point is that the recent revisions in tax laws have tilted the playing field away from the middle class values that our present administration keeps stating that it is supporting and have started creating an oligarchy. By concentrating wealth and creating tax structures that almost guarantee that they retain their whole pie, it takes a great deal of money out of the economy and away from people who could work to attain it.

In the meritocratic ideal, people would be rewarded for working hard, contributing to society and making sacrifices. With the new oligarchy that is being created, this idea is being diminished. David Lesar has done nothing to earn $37,000 an hour. It’s certainly beyond the pale. Paris Hilton’s family fortune was not earned by Paris Hilton. Extravagant wealth concentration is dangerous to the meritocratic ideal because it says that the rich deserve to be rich and the less fortunate deserve what they get because they aren’t smart enough, aren’t hard working enough, and just aren’t plain greedy enough.

I think that many people over simplify their arguments by stating that it’s immoral to take money away people who have worked hard to earn it. Now, usually this takes the form of an attack on the progressive tax system – it isn’t fair to tax the rich more because they’ve worked hard to get it!

I’m not saying that working hard shouldn’t be rewarded. Having productive goals to shoot for in the form of some of our high achievers is a good idea. But in our current system, we are starting to create an insular system that pools money in the hands of a few while the many see real wages shrink, health care costs erode at their take home pay, and energy costs start to take huge chunks out of their small piece of pie.

Simply put, infinite productivity isn’t possible. Trickle down economics from these oligarchs won’t sustain the country. While I don’t advocate a socialistic reform, taking pieces of the large portions of pies that the advantaged have and spreading it equitably to hard working and deserving folks makes sense to me. What do you think?