Amy Goldstein, Janesville: An American Story (NY: Simon & Shuster, 2017), 297 pages, $27.00
In Janesville, Wisconsin December 23, 2008 the General Motors Plant closed right after the last Chevy Tahoe rolled off the assembly line. The closing left everyone in fear in a town of 63,000 about three fourths of the way between Chicago and Madison. In Janesville, the book, author Amy Goldstein writes a narrative account of the personal losses resulting from a strictly economic decision made by absentee managers.
The book begins earlier in June 2008 when the announcement comes for the plant to be closed. Narrative continues with year by year events through 2013 followed by a brief epilogue. Material includes personal interviews of people and families affected by the shut down. Goldstein lists these people at the beginning as a “Cast of Characters” that she followed and interviewed over five years. The cast of characters has 14 family members from three families and eleven other people.
Goldstein divides the material into fifty-five generally short chapters with six yearly breaks – 2008, 2009, and so on - to help readers keep track of time. All three families relied on jobs in manufacturing from GM and from Lear Corporation, an auto parts supplier making car seats for GM. The Lear plant would close shortly, April of 2009. One family, the Vaughns, had both spouses lose jobs at Lear. The other families, the Whiteakers and the Wopats, had one spouse lose a job at GM, which provided their primary support.
Two of the eleven other people in the story, Kristi Beyer and Sue Olmstead, lost manufacturing jobs from plant closures; Beyer worked at Lear, Olmstead lost a job at another Janesville auto parts supplier. The remaining nine people Goldstein followed include their Congressman Paul Ryan, a state senator, three educators, two business women, the director of Rock County job center and a journalist now doing a radio show.
The unemployed Vaughns go back to school at Blackhawk Technical College. Mike studies HR and Barb studies law enforcement. They find jobs in their new fields at lower pay.
The unemployed Jerald Whiteaker takes a $4,000 buyout rather than continue in layoff since he knows he does not want to leave Janesville. He takes a succession of low paid jobs that prevent him from supporting his family. His two daughters get jobs and his wife works part time. They get by, barely.
The unemployed Matt Wopat takes unemployment and SUB benefits for a while before deciding to return to school in a Blackhawk degree program. He does not plan to leave Janesville but retains his UAW negotiated option to work at his Janesville wage of $28 an hour at another GM plant. After a short stint in school he does not see much return from his Blackhawk efforts and so decides to leave for a job at GM’s Fort Wayne, Indiana plant. He commutes back to Janesville on weekends.
The unemployed Kristi Beyer attends classes in law enforcement at Blackhawk with Barb Vaughn. After two years they finish and both take jobs at the county jail at much lower wages of $16.47 an hour.
The stories of coping by the laid off move along interspersed with stories of Janesville and Wisconsin politics and efforts by others to provide charitable services or otherwise cope with the dulling effect of a regional recession and 13.4 percent local unemployment.
Goldstein describes efforts to cope with details of charity efforts, describing a new food bank called ECHO (Everyone Cooperating to Help Others) and an enterprising high school teacher who stockpiles food in a closet to donate to needy students not too embarrassed to ask for it. A charity health clinic operated before the GM shutdown, but now overwhelmed, it has to turn away patients.
A social worker at the Janesville Schools, Ann Forbeck, works as a homeless student liaison with a mission to help homeless students in a system with four hundred homeless kids. Homeless shelters, it turns out, do not admit teenagers and no one over 15 is eligible for foster care. Goldstein follows Forbeck through her extensive fund raising efforts to provide for teenagers, her many refusals, and an incident of a brother and sister dumped out of car abandoned by a mother who shouts “I can’t keep these kids” before driving off. Finally after several years delay we learn she co-founds a group that provides temporary shelter for homeless teens.
The Rock County supervisors devised an incentive package to keep GM in Janesville with $152 million of state and local incentives, additional UAW give backs of $213 million and some private incentives. Goldstein reported it as the largest incentive subsidy offered in Wisconsin history; it was barely half of Michigan giveaways.
A local banker, Mary Willmer, and a wealthy local women, Diane Hendricks, also promote luring business investment with tax breaks. They approached the Janesville City Council to help bring a start up tech company with a $25 million government grant and 125 jobs. There is opposition but only 1 vote against $9 million of incentives from the declining coffers of Janesville. There would be many delays.
These were the years of Governor Scott Walker’s cuts in school budgets and attacks on unions. Goldstein reviews the protest that included some from Janesville that join the throngs on the Wisconsin capital steps. A later chapter covers the Walker recall vote. Janesville Local 95 of UAW works for the governors recall, but mostly with help by those older and retired since only 438 remain as UAW members out of more than 7,000 from a decade before. Mary Willmer and Diane Hendricks support Walker with $510,000 in contributions in the winning campaign, but Janesville votes for recall, although only 53 to 46 percent.
Goldstein gives periodic reports on Paul Ryan, but these reports only add depressing details to a disheartening story; Ryan has no help for Janesville. He offers his personal “American Idea” for an approach to poverty: people who need help should not look to government like the case of FDR’s New Deal or LBJ’s Great Society. Instead they should turn to the generosity of their own community, which he thinks the dedicated people of Janesville are doing so well. He sounded like Herbert Hoover in the great depression, but there are few signs of anger from the victims in her stories. She also reports on repeated efforts of the director of the Rock Country Job Center, Bob Borremans, to get Congressman Ryan to visit the Center, but he never came.
The book reads easily in a direct journalistic style and readers can follow along and wonder what they might do in the same situation. For the most part, Goldstein does not offer judgments and refrains from moralizing opinions or conclusions. Readers will have to do that. There are detailed source notes and a bibliography that lists 15 related books that take a look at other disruptions brought by corporate America’s unilateral decisions. Two of them, George Packer’s book, The Unwinding, and Steven Greenhouse’s book, The Big Squeeze, are reviewed on this site.
I wish though she had asked more questions. Could the Wopats admit the $28 dollar wage and the option to move to Fort Wayne be appreciated as part of an UAW negotiated contract? It would have been worse without the UAW. What happened to house and real estate values? When a primary employer picks up and leaves house prices take a tumble. Did Matt Wopat commute to Fort Wayne because he could not afford to move, or was it just a choice? Would they continue to vote for Paul Ryan, and why?
No one in the book questioned what continues in the United States as the absolute right of corporations to move and destroy local job and housing markets, or to demand tax subsidies and special favors to stay, or to come, to a place like Janesville. If companies move and the CEO, its management, board of directors, and stockholders make profitable gains, while wage earners confront even bigger losses, no one compares gains and losses. Everyone accepts the glorious workings of the free market, even the victims; just ask Paul Ryan.
Saturday, November 24, 2018
Friday, November 9, 2018
My Plan for Infrastructure Spending
My Plan for Infrastructure Spending
Politicians have returned to talking infrastructure spending to boast the economy and create jobs. The press actually suggests it could be something bipartisan. Trouble is titanic budget deficits make new infrastructure hard to pay for especially when Congress keeps cutting taxes for the rich who do not agree they should have to pay taxes.
Two years ago Trump discussed ways to make it profitable for his friends in business to take over infrastructure expansion, but they couldn’t figure out how to make it profitable for business to bother without turning over parks, waterways, airports and highways to corporate America and letting them charge monopoly prices.
I have a good plan though because I notice the credits at the beginning and end of PBS television news and views has a longer and longer list of foundations and trusts that give away money. The rich hope to get us to feel good about them so they can feel good about themselves.
The growth of foundation portfolios goes with tax cuts for the rich and corporate America, and with income inequality. It should also help Americans realize the United States has an idle rich so bloated with income and assets they can’t possibly spend on themselves they put it in tax free foundations. That way they can direct national resources by personal preference without need to respond to representative government, or those pesky voters.
For the last three decades, at least, America’s productivity gains have been converted to profits not wages. These profits to the rich and foundation assets amount to lost wages for the working class. But the rich can show their public spirit by contributing 25 percent of their required annual foundation giveaways to pay for infrastructure spending. Here is a plan that requires nothing from Trump or a do-nothing Congress.
It’s a perfect, fast action plan, but I’m not holding my breath! Chairitee! Chairitee!
Politicians have returned to talking infrastructure spending to boast the economy and create jobs. The press actually suggests it could be something bipartisan. Trouble is titanic budget deficits make new infrastructure hard to pay for especially when Congress keeps cutting taxes for the rich who do not agree they should have to pay taxes.
Two years ago Trump discussed ways to make it profitable for his friends in business to take over infrastructure expansion, but they couldn’t figure out how to make it profitable for business to bother without turning over parks, waterways, airports and highways to corporate America and letting them charge monopoly prices.
I have a good plan though because I notice the credits at the beginning and end of PBS television news and views has a longer and longer list of foundations and trusts that give away money. The rich hope to get us to feel good about them so they can feel good about themselves.
The growth of foundation portfolios goes with tax cuts for the rich and corporate America, and with income inequality. It should also help Americans realize the United States has an idle rich so bloated with income and assets they can’t possibly spend on themselves they put it in tax free foundations. That way they can direct national resources by personal preference without need to respond to representative government, or those pesky voters.
For the last three decades, at least, America’s productivity gains have been converted to profits not wages. These profits to the rich and foundation assets amount to lost wages for the working class. But the rich can show their public spirit by contributing 25 percent of their required annual foundation giveaways to pay for infrastructure spending. Here is a plan that requires nothing from Trump or a do-nothing Congress.
It’s a perfect, fast action plan, but I’m not holding my breath! Chairitee! Chairitee!
Friday, August 10, 2018
Grown Up Anger
Daniel Wolff, Grown Up Anger: The Connected Mysteries of Bob Dylan, Woody Guthrie and the Calumet Massacre of 1913, (NY: Harper-Collins, 2017), $26.99
In Grown Up Anger author Daniel Wolff connects a labor history narrative with the evolution of mid 20th century protest music. As the title suggests, the labor history emphasizes the 1913 copper strike in Keweenaw County in Michigan’s Upper Peninsula, and the protest music discussion emphasizes the work of Woody Guthrie and Bob Dylan. Woody Guthrie was born in 1912 while Bob Dylan was born in 1941, and so the music covers the depression era in the 1930’s into the modern era. There are 14 chapters with 259 pages.
It was not obvious to me how the title, Grown Up Anger, relates to labor history and protest music but Wolff uses the opening pages to explain his choice. “History happens in a classroom. I didn’t (voluntarily) approach the world that way.” Instead he connected through anger, “Specifically, the voice of Bob Dylan.” Wolff explains his feeling that Dylan’s “Like A Rolling Stone” was the sound of unresolved anger, which “didn’t seem to need to justify itself.”
Since it was July 1965 and Wolff was thirteen years old, he felt adolescent anger that could not be discussed with dismissive adults; “If you did, you got a look that meant, ‘Oh, yes, you’re a child.’’ By now, 52 years later, looking back generates Grown Up Anger, which can be written down in articulate prose.
The remainder of Chapter One provides a reminiscence for 1960’s music and the Bob Dylan and Woody Guthrie place in it. Wolff introduces the Guthrie song “1913 Massacre” that makes an early connection to the Keweenaw copper strike, a song I did not previously know about. Chapter 2 introduces more Bob Dylan biography; chapter 3 introduces more Woody Guthrie biography. Both chapters relate their early interest in music.
Chapter 4 narrates the early history of Keweenaw County, Michigan copper mining and union organizing, which picks up again and continues in chapters 7, 9, and 12. The history moves along to the December 24, 1913 Christmas party and the infamous “Massacre” that took place at Italian Hall in Calumet. I reviewed a book length account of the 1913 Keweenaw strike by Steve Lehto, Death’s Door on this blog. Death's Door Death's Door Lehto, Ella Reeve Bloor and Arthur Thurner are also important sources used in Wolff’s account.
The other chapters - 5, 6, 8, 10, 11, and 13 - return to narrate and analyze the music and careers of Guthrie and Dylan. We find out “both Guthrie and Dylan spent their childhoods in relatively prosperous, supportive, Middle American families.” Woody Guthrie and his cousin Jack Guthrie left Oklahoma for California looking for music careers. They succeeded getting a radio show and confronted the great “Okie” migration in John Steinbeck’s Grapes of Wrath and In Dubious Battle in the process.
Dylan was 14 in 1955 when Emmett Till was murdered in Mississippi and was already trying to express himself through music. He graduated from Hibbing High in 1959 and recalled “I just turned my back on it. It couldn’t give me anything.” He went to the University of Minnesota and then to New York to pursue music as a career.
While Dylan and Guthrie remain the central theme of the music narrative it wanders and weaves its way into a variety of related historical events and musical figures. There are composer-musicians, Earl Robinson, Paul Robeson, Lead Belly, Alan Lomax, Pete Seeger, Joan Baez; music groups, the Kingston Trio, Peter, Paul and Mary, the Weavers; agitators and activists, Upton Sinclair, Bill Haywood, Elizabeth Gurley Flynn.; one composer-musician-activist Joe Hill. There are music titles and discussion of lyrics for many songs, especially Dylan and Guthrie songs and the songs of others that influenced them and of their influence on each other.
As the discussion moves along it mixes more with politics and political events; the House Un-American Activities Committee and the Communist purges of the 1940’s and early 1950’s. Suddenly lyrics were subversive and folk singers like Guthrie and the Weavers were denounced as Communists. Wolff describes the post 1955 folk revival and the Guthrie and Dylan part in it. The Dylan song “Like a Rolling Stone” has a suspicious connection to a doggerel poem composed by Joe Hill on the eve of his execution, or assassination as I would see it. The first stanza in his twelve line poem reads “My will is easy to decide. For there is nothing to divide. My kind don’t need to fuss and moan. Moss don’t grow to a rolling stone.”
A final chapter takes a driving tour through present day Keweenaw where copper mining ceased in 1968, fifty years ago. Wolff gives inequality data from 1913 and today and finds nothing has changed. The book ends with a brief allegory where the landscape beneath the surface in the world’s shell remains a molten core in a “kind of rage.” Enough said.
I cannot think of a comparable book, but that’s not a criticism. The narrative reads easily and chapter titles and divisions help move the story along. There are footnotes although they are not numbered but appear by the page rather than by number, which I don’t like. A bibliography includes some standard labor history books like Philip Foner, Jeremy Brecher, Melvin Dubofsky and Foster Rhea Dulles. I wonder about the audience that reads the book since I am guessing people interested in Guthrie and Dylan would not know much about strikes like the Keweenaw strike. In that way people interested in the music could get a first introduction to labor history. America would be better off if it knows more of its labor history. I predict it would create more Grown Up Anger.
In Grown Up Anger author Daniel Wolff connects a labor history narrative with the evolution of mid 20th century protest music. As the title suggests, the labor history emphasizes the 1913 copper strike in Keweenaw County in Michigan’s Upper Peninsula, and the protest music discussion emphasizes the work of Woody Guthrie and Bob Dylan. Woody Guthrie was born in 1912 while Bob Dylan was born in 1941, and so the music covers the depression era in the 1930’s into the modern era. There are 14 chapters with 259 pages.
It was not obvious to me how the title, Grown Up Anger, relates to labor history and protest music but Wolff uses the opening pages to explain his choice. “History happens in a classroom. I didn’t (voluntarily) approach the world that way.” Instead he connected through anger, “Specifically, the voice of Bob Dylan.” Wolff explains his feeling that Dylan’s “Like A Rolling Stone” was the sound of unresolved anger, which “didn’t seem to need to justify itself.”
Since it was July 1965 and Wolff was thirteen years old, he felt adolescent anger that could not be discussed with dismissive adults; “If you did, you got a look that meant, ‘Oh, yes, you’re a child.’’ By now, 52 years later, looking back generates Grown Up Anger, which can be written down in articulate prose.
The remainder of Chapter One provides a reminiscence for 1960’s music and the Bob Dylan and Woody Guthrie place in it. Wolff introduces the Guthrie song “1913 Massacre” that makes an early connection to the Keweenaw copper strike, a song I did not previously know about. Chapter 2 introduces more Bob Dylan biography; chapter 3 introduces more Woody Guthrie biography. Both chapters relate their early interest in music.
Chapter 4 narrates the early history of Keweenaw County, Michigan copper mining and union organizing, which picks up again and continues in chapters 7, 9, and 12. The history moves along to the December 24, 1913 Christmas party and the infamous “Massacre” that took place at Italian Hall in Calumet. I reviewed a book length account of the 1913 Keweenaw strike by Steve Lehto, Death’s Door on this blog. Death's Door Death's Door Lehto, Ella Reeve Bloor and Arthur Thurner are also important sources used in Wolff’s account.
The other chapters - 5, 6, 8, 10, 11, and 13 - return to narrate and analyze the music and careers of Guthrie and Dylan. We find out “both Guthrie and Dylan spent their childhoods in relatively prosperous, supportive, Middle American families.” Woody Guthrie and his cousin Jack Guthrie left Oklahoma for California looking for music careers. They succeeded getting a radio show and confronted the great “Okie” migration in John Steinbeck’s Grapes of Wrath and In Dubious Battle in the process.
Dylan was 14 in 1955 when Emmett Till was murdered in Mississippi and was already trying to express himself through music. He graduated from Hibbing High in 1959 and recalled “I just turned my back on it. It couldn’t give me anything.” He went to the University of Minnesota and then to New York to pursue music as a career.
While Dylan and Guthrie remain the central theme of the music narrative it wanders and weaves its way into a variety of related historical events and musical figures. There are composer-musicians, Earl Robinson, Paul Robeson, Lead Belly, Alan Lomax, Pete Seeger, Joan Baez; music groups, the Kingston Trio, Peter, Paul and Mary, the Weavers; agitators and activists, Upton Sinclair, Bill Haywood, Elizabeth Gurley Flynn.; one composer-musician-activist Joe Hill. There are music titles and discussion of lyrics for many songs, especially Dylan and Guthrie songs and the songs of others that influenced them and of their influence on each other.
As the discussion moves along it mixes more with politics and political events; the House Un-American Activities Committee and the Communist purges of the 1940’s and early 1950’s. Suddenly lyrics were subversive and folk singers like Guthrie and the Weavers were denounced as Communists. Wolff describes the post 1955 folk revival and the Guthrie and Dylan part in it. The Dylan song “Like a Rolling Stone” has a suspicious connection to a doggerel poem composed by Joe Hill on the eve of his execution, or assassination as I would see it. The first stanza in his twelve line poem reads “My will is easy to decide. For there is nothing to divide. My kind don’t need to fuss and moan. Moss don’t grow to a rolling stone.”
A final chapter takes a driving tour through present day Keweenaw where copper mining ceased in 1968, fifty years ago. Wolff gives inequality data from 1913 and today and finds nothing has changed. The book ends with a brief allegory where the landscape beneath the surface in the world’s shell remains a molten core in a “kind of rage.” Enough said.
I cannot think of a comparable book, but that’s not a criticism. The narrative reads easily and chapter titles and divisions help move the story along. There are footnotes although they are not numbered but appear by the page rather than by number, which I don’t like. A bibliography includes some standard labor history books like Philip Foner, Jeremy Brecher, Melvin Dubofsky and Foster Rhea Dulles. I wonder about the audience that reads the book since I am guessing people interested in Guthrie and Dylan would not know much about strikes like the Keweenaw strike. In that way people interested in the music could get a first introduction to labor history. America would be better off if it knows more of its labor history. I predict it would create more Grown Up Anger.
Friday, June 29, 2018
Harley-Davidson Motor Cycles, Trade Wars and our Obsolete Constitution
Harley-Davidson Motor Cycles, Trade Wars and our Obsolete Constitution
Harley-Davidson Motor Cycles recently announced it will be moving some production to Europe to avoid new tariffs made in retaliation to unilateral increases in United States tariffs. Harley officials reported a $2,200 price penalty from the Trump tariff war. In spite of the abuse and ridicule from Trump, Harley-Davidson Motor Cycles did what any business has to do week in and week out; they adjusted to a change in economic circumstance. In this case Trump made a significant change in their market condition imposing tariffs with a guaranteed retaliation.
For at least 50 years the United States sent representatives to repeated meetings of the General Agreement on Tariffs and Trade(GATT) with instructions to negotiate lower tariffs and trade barriers. The world economy and companies like Harley-Davidson have adjusted completely to the lower tariffs. The Trump tariffs make American companies especially vulnerable because retaliation only affects American products made in America; every other company from every other country now has a price advantage over American companies like Harley-Davidson.
More companies will have to do what Harley-Davidson does, which will accelerate job loss in the United States. Trump remains immune to economic forecasts and market conditions while his conduct continues to be so erratic no one can predict how bad things might get.
Congress?
Congress granted Presidents the dictatorial power to impose tariffs for national security reasons, but has allowed Trump to define national security as anything he wants. Congress can take the power back anytime it wants. As Trump threats and bluster translate into retaliation by other countries a weak and plaintive protest of corporate America has appeared in the media, but nothing happens about the tariffs. Corporate America appears powerless to challenge Trump, a Republican no less.
Congress can be obnoxious and threatening and make life a misery for administrators; it can stall and obstruct, but it can’t make a simple decision to stop an idiotic policy that guarantees economic loss as Harley-Davidson officials so clearly understand.
The current Trump tariff abuses highlight the workings of an obsolete constitution. The founding fathers designed a Congress with machinery designed for obstruction; very small numbers can obstruct majorities in a bicameral Congress filled with rules to block decisions. No balance of power remains among the three branches of government we all learned about in high school. The initiative and power have all passed to the President and his executive branch machinery. Anyone who doubts that should ask why corporate America with all its money bags looks at economic loss as a spectator in a brewing trade war?
Harley-Davidson Motor Cycles recently announced it will be moving some production to Europe to avoid new tariffs made in retaliation to unilateral increases in United States tariffs. Harley officials reported a $2,200 price penalty from the Trump tariff war. In spite of the abuse and ridicule from Trump, Harley-Davidson Motor Cycles did what any business has to do week in and week out; they adjusted to a change in economic circumstance. In this case Trump made a significant change in their market condition imposing tariffs with a guaranteed retaliation.
For at least 50 years the United States sent representatives to repeated meetings of the General Agreement on Tariffs and Trade(GATT) with instructions to negotiate lower tariffs and trade barriers. The world economy and companies like Harley-Davidson have adjusted completely to the lower tariffs. The Trump tariffs make American companies especially vulnerable because retaliation only affects American products made in America; every other company from every other country now has a price advantage over American companies like Harley-Davidson.
More companies will have to do what Harley-Davidson does, which will accelerate job loss in the United States. Trump remains immune to economic forecasts and market conditions while his conduct continues to be so erratic no one can predict how bad things might get.
Congress?
Congress granted Presidents the dictatorial power to impose tariffs for national security reasons, but has allowed Trump to define national security as anything he wants. Congress can take the power back anytime it wants. As Trump threats and bluster translate into retaliation by other countries a weak and plaintive protest of corporate America has appeared in the media, but nothing happens about the tariffs. Corporate America appears powerless to challenge Trump, a Republican no less.
Congress can be obnoxious and threatening and make life a misery for administrators; it can stall and obstruct, but it can’t make a simple decision to stop an idiotic policy that guarantees economic loss as Harley-Davidson officials so clearly understand.
The current Trump tariff abuses highlight the workings of an obsolete constitution. The founding fathers designed a Congress with machinery designed for obstruction; very small numbers can obstruct majorities in a bicameral Congress filled with rules to block decisions. No balance of power remains among the three branches of government we all learned about in high school. The initiative and power have all passed to the President and his executive branch machinery. Anyone who doubts that should ask why corporate America with all its money bags looks at economic loss as a spectator in a brewing trade war?
Thursday, June 28, 2018
DC Initiative 77 and the Tip wars
On June 19, 2018 District of Columbia voters had a chance to vote on Initiative 77 to do away with the sub minimum wage and the tip credit for tipped employees like waiters, waitresses, and bartenders. They did so by a 55 percent to 44 percent margin. [D.C. voters approve initiative to raise minimum wage for tipped workers to $15, Washington Post, June 20, 2018]
The minimum wage in Washington, DC is $12.50 an hour in 2018, but as with the Federal minimum wage the District of Columbia has a sub minimum wage for businesses with employees who customarily receive tips. The sub minimum wage in DC is $3.33 an hour. Under rules governing the sub minimum wage those restaurants that pay a sub minimum wage must verify the additional amount from tips are enough to bring an employee up to at least the minimum wage, a practice known as taking the tip credit. If tips are not enough to equal the minimum wage then the employer is expected to keep track of the short fall and make up the difference. Notice that means all tips paid above $3.33 an hour up to $9.17 an hour, or $12.50 minus $3.33, are in lieu of normal wage obligations and become a subsidy to the restaurant.
Initiative 77 eliminates the sub minimum wage gradually by raising the current $3.33 cash wage plus tips to be a $15.00 an hour cash wage by 2025. After 2025 any tips will be the property of servers in addition to their cash wage; the business subsidy will gradually disappear.
The subsidy from the sub minimum wage dates from 1942 and a decision by the U.S. Supreme Court to ratify a private scheme to use tips as wages. The wage data reported by the Bureau of Labor Statistics in its Occupational Employment Survey suggest the restaurant subsidy scheme in the sub minimum wage does not ensure employees are paid the minimum wage. In DC the median wage reported for waiters and waitresses in 2017 was only $11.86, not $12.50, which means something over half of waiters and waitresses earn less than the minimum wage including tips.
California, Oregon and Washington are three states that abandoned the sub minimum wage for tipped employees. California and Oregon have a minimum wage of $10.5 an hour and Washington $11.50 an hour for all industries. The Bureau of Labor Statistics reports all 31 of California metropolitan areas and 5 sub state non-metropolitan regions have a median wage for waiters and waitresses above their minimum wage; and for Oregon’s 8 metropolitan areas and 4 sub state non-metropolitan regions; and for Washington’s 13 metropolitan areas and 4 sub state non-metropolitan regions.
The effect in these three states suggests it pays for the working class waiter and waitress to get rid of the sub minimum wage subsidy for restaurants. If, or when, restaurants confront much higher food prices they have to experiment with a combination of cost cutting and price increases. They might serve smaller portions, or change the menu to save costs while experimenting with higher prices. I’m hard pressed to understand why they expect to avoid doing that when wage costs rise. They have had this favor since 1942 and judging from their publicity campaign against changing it they think it as their inalienable right.
The Washington Post article mentioned above goes on to discuss the grimy politics of DC voter initiatives because apparently the city council and always the U.S. Congress can overrule a voter initiative. To justify throwing out a District wide election opponents of the working class debase democracy by complaining only 18 percent voted in the election as an excuse to ignore voters. They act as though they know the other 82 percent would have defeated the measure, and we all should respect the lethargy of no shows. If it was Trump talking I could understand it, but the DC city Council?
Strike! Strike?
The minimum wage in Washington, DC is $12.50 an hour in 2018, but as with the Federal minimum wage the District of Columbia has a sub minimum wage for businesses with employees who customarily receive tips. The sub minimum wage in DC is $3.33 an hour. Under rules governing the sub minimum wage those restaurants that pay a sub minimum wage must verify the additional amount from tips are enough to bring an employee up to at least the minimum wage, a practice known as taking the tip credit. If tips are not enough to equal the minimum wage then the employer is expected to keep track of the short fall and make up the difference. Notice that means all tips paid above $3.33 an hour up to $9.17 an hour, or $12.50 minus $3.33, are in lieu of normal wage obligations and become a subsidy to the restaurant.
Initiative 77 eliminates the sub minimum wage gradually by raising the current $3.33 cash wage plus tips to be a $15.00 an hour cash wage by 2025. After 2025 any tips will be the property of servers in addition to their cash wage; the business subsidy will gradually disappear.
The subsidy from the sub minimum wage dates from 1942 and a decision by the U.S. Supreme Court to ratify a private scheme to use tips as wages. The wage data reported by the Bureau of Labor Statistics in its Occupational Employment Survey suggest the restaurant subsidy scheme in the sub minimum wage does not ensure employees are paid the minimum wage. In DC the median wage reported for waiters and waitresses in 2017 was only $11.86, not $12.50, which means something over half of waiters and waitresses earn less than the minimum wage including tips.
California, Oregon and Washington are three states that abandoned the sub minimum wage for tipped employees. California and Oregon have a minimum wage of $10.5 an hour and Washington $11.50 an hour for all industries. The Bureau of Labor Statistics reports all 31 of California metropolitan areas and 5 sub state non-metropolitan regions have a median wage for waiters and waitresses above their minimum wage; and for Oregon’s 8 metropolitan areas and 4 sub state non-metropolitan regions; and for Washington’s 13 metropolitan areas and 4 sub state non-metropolitan regions.
The effect in these three states suggests it pays for the working class waiter and waitress to get rid of the sub minimum wage subsidy for restaurants. If, or when, restaurants confront much higher food prices they have to experiment with a combination of cost cutting and price increases. They might serve smaller portions, or change the menu to save costs while experimenting with higher prices. I’m hard pressed to understand why they expect to avoid doing that when wage costs rise. They have had this favor since 1942 and judging from their publicity campaign against changing it they think it as their inalienable right.
The Washington Post article mentioned above goes on to discuss the grimy politics of DC voter initiatives because apparently the city council and always the U.S. Congress can overrule a voter initiative. To justify throwing out a District wide election opponents of the working class debase democracy by complaining only 18 percent voted in the election as an excuse to ignore voters. They act as though they know the other 82 percent would have defeated the measure, and we all should respect the lethargy of no shows. If it was Trump talking I could understand it, but the DC city Council?
Strike! Strike?
Thursday, June 14, 2018
GOP Repeals Michigan Wage Law
In Michigan the Republican controlled legislature repealed the prevailing wage law that applied to public construction projects. Supporters cited by the Detroit Free Press [Det. FP, June 7, 2018] claim repeal will save taxpayers money as projects paying prevailing wages “cost 10-15 percent more than if it was built by the private sector.” State representative Gary Glenn called prevailing wages a “discriminatory relic of the past.” He claims it will save “hundreds of millions of dollars.”
No one quoted in the Free Press mentions a dollar wage when speaking of a prevailing wage, but if repeal will save money then wages must fall and for wages to fall there must be a big surplus of labor. Since business keeps whining about labor shortages, they contradict themselves.
The U.S. Bureau of Labor Statistics reports the median wage for 50 construction and extraction occupations, which in Michigan is $22.67 an hour, or $47,167 a year. That puts Michigan 19th among the fifty states and the District of Columbia. A 10 percent cut would be $4,717 and leave $42,438 a year.
If, as seems likely, business contractors bid on public projects then there can be no guarantee the contractors will bid lower in response to repeal of a prevailing wage law. Unless there is vigorous competition among many contractors they maybe able to bid as usual and pocket the wage savings themselves. It appears quite likely taxpayers will get nothing from this repeal.
The Free Press reported that all Democrats in the House voted against the measure and therefore Republicans take the entire responsibility for repeal, which makes the whole episode another in string of examples of politics in a divided society. Saving taxpayers was just the excuse. Democrats will have to figure out why so many in the working class vote for Republican pickpockets who lower their standard of living.
No one quoted in the Free Press mentions a dollar wage when speaking of a prevailing wage, but if repeal will save money then wages must fall and for wages to fall there must be a big surplus of labor. Since business keeps whining about labor shortages, they contradict themselves.
The U.S. Bureau of Labor Statistics reports the median wage for 50 construction and extraction occupations, which in Michigan is $22.67 an hour, or $47,167 a year. That puts Michigan 19th among the fifty states and the District of Columbia. A 10 percent cut would be $4,717 and leave $42,438 a year.
If, as seems likely, business contractors bid on public projects then there can be no guarantee the contractors will bid lower in response to repeal of a prevailing wage law. Unless there is vigorous competition among many contractors they maybe able to bid as usual and pocket the wage savings themselves. It appears quite likely taxpayers will get nothing from this repeal.
The Free Press reported that all Democrats in the House voted against the measure and therefore Republicans take the entire responsibility for repeal, which makes the whole episode another in string of examples of politics in a divided society. Saving taxpayers was just the excuse. Democrats will have to figure out why so many in the working class vote for Republican pickpockets who lower their standard of living.
Monday, June 11, 2018
The Birth of a New American Aristocracy - Review
Matthew Stewart, “The Birth of a New American Aristocracy: The gilded future of the top 10 percent – and the end of opportunity for everyone else” Atlantic Monthly, June 2018, 48-63
In his ten part cover story for the June 2018 Atlantic author Matthew Stewart begins dividing United States wealth into three classes: the top .1 percent, the next 9.9 percent and the 90 percent at the bottom. He defines the 9.9 percent as the new aristocracy in order to argue their self-deception makes them a cause of our growing inequality, destabilizing politics and eroding democracy.
Readers get financial information to help define the groups. The .1 percent have 160,000 households and 22 percent of American wealth in 2012, up from 10 percent in 1963. Assets of $1.2 million in 2016 puts a household in the 9.9 percent and the assets of the 9.9 percent exceed the combined assets of the top .1 percent and the lower 90 percent.
In the mass media mobility justifies inequality, but Stewart reports several research efforts that show the average income of children correlates significantly with the average income of parents. In other words, the wealth of the current generation depends very much on having wealthy parents. Comparisons with other countries show the correlation of wealth between generations gets higher in countries with higher inequality. Since the United States has the highest inequality, a parent’s wealth does a better job predicting their children’s wealth than other developed countries. Mobility today requires winning the mega-millions jackpot.
That finishes part 2, part 3 through part 6 describes some ways the 9.9 percent game the system. Those in the 9.9 percent tend to be people of “good family, good health, good schools, good neighborhoods and good jobs.” They meet and marry in process of “assortative mating.”
Part 4 outlines the game in education. Matthews reports 2.2 percent of America’s high school students graduate from private high schools and make up 26 percent of Harvard students. Education for the “sake of society” has given way to a private benefit measured by higher salary, which helps the financial benefit of the college premium correlate with a decrease in social mobility. Part 5 takes up tax subsides that favor the 9.9 percent and the .1 percent who then fill the media whining about food stamps and welfare cheats. In part 6 readers learn the returns to real estate in the “right places” may account for essentially all of the increase in the concentration of wealth over the last 50 years and coincidentally much of the isolation of the 9.9 percent from the 90 percent.
These first six parts establish a platform to discuss the politics of resentment. Part 7 confronts and scoffs at the 9.9 percent’s delusions of a meritocracy, which Stewart argues has evolved into a class of aristocracy over only a few decades. In part 8 – the Politics of Resentment – inequality provokes a chain of consequences: resentment, political division, instability. Here Stewart lets Trump make his case by citing examples of Trump stoking the fires of resentment for political gain. Stewart concedes the .1 percent delight in their manipulations, but blames the 9.9 percent for taking “our cut of the spoils” while looking “on with smug disdain” and taking it all for granted. Stewart reminds readers that resentment breeds an increase in inequality as every change made by Trump so well demonstrates: the new tax law to wit. At the end of part 8 Stewart warns the 9.9 percent they will soon find themselves the target of economic attack.
Part 9 provides a sobering reminder: reform seldom relieves inequality. History suggests it takes depression, violence, or warfare to bring change and Stewart gives the American Civil War as one example. Remember slavery is a system of cheap labor that guarantees inequality. Lincoln in his famous house divided speech addressed that issue before the civil war: “A house divided against itself cannot stand. I believe this government cannot endure permanently half slave and half free. . . . It will become all one thing, or all the other.” Free labor in competition with slave labor generated poverty, inequality and a violent political instability. Our high school textbooks emphasize the stance of the abolitionists and their ethical and moral objections to slavery. They were a factor, but the civil war started much more for economic reasons: inequality and the depressing effects of a dual wage system.
Part 10 offers a tiny bit of optimism by suggesting the 9.9 percent could get hold of themselves and offer the country some leadership. Leaders should support the larger social order and help direct resources to causes in the common good like health care. Many people of my acquaintance have wondered why so many of the 90 percent keep voting for people like Trump and the Republican pickpockets. I thought of that when Stewart mentioned the poor, southern white boys in butternut and gray that died by the tens of thousands to save the wealth and life of the southern planter class that so crudely exploited them. The United States has had one civil war and I get the feeling Stewart believes the Trump base could bring another. We can hope not, but if it comes to pass the Trump base will join the .1 percent on the one side, and the 9.9 percent will be the other; the resentful always join the authoritarians. Mr. Stewart has warned you.
In his ten part cover story for the June 2018 Atlantic author Matthew Stewart begins dividing United States wealth into three classes: the top .1 percent, the next 9.9 percent and the 90 percent at the bottom. He defines the 9.9 percent as the new aristocracy in order to argue their self-deception makes them a cause of our growing inequality, destabilizing politics and eroding democracy.
Readers get financial information to help define the groups. The .1 percent have 160,000 households and 22 percent of American wealth in 2012, up from 10 percent in 1963. Assets of $1.2 million in 2016 puts a household in the 9.9 percent and the assets of the 9.9 percent exceed the combined assets of the top .1 percent and the lower 90 percent.
In the mass media mobility justifies inequality, but Stewart reports several research efforts that show the average income of children correlates significantly with the average income of parents. In other words, the wealth of the current generation depends very much on having wealthy parents. Comparisons with other countries show the correlation of wealth between generations gets higher in countries with higher inequality. Since the United States has the highest inequality, a parent’s wealth does a better job predicting their children’s wealth than other developed countries. Mobility today requires winning the mega-millions jackpot.
That finishes part 2, part 3 through part 6 describes some ways the 9.9 percent game the system. Those in the 9.9 percent tend to be people of “good family, good health, good schools, good neighborhoods and good jobs.” They meet and marry in process of “assortative mating.”
Part 4 outlines the game in education. Matthews reports 2.2 percent of America’s high school students graduate from private high schools and make up 26 percent of Harvard students. Education for the “sake of society” has given way to a private benefit measured by higher salary, which helps the financial benefit of the college premium correlate with a decrease in social mobility. Part 5 takes up tax subsides that favor the 9.9 percent and the .1 percent who then fill the media whining about food stamps and welfare cheats. In part 6 readers learn the returns to real estate in the “right places” may account for essentially all of the increase in the concentration of wealth over the last 50 years and coincidentally much of the isolation of the 9.9 percent from the 90 percent.
These first six parts establish a platform to discuss the politics of resentment. Part 7 confronts and scoffs at the 9.9 percent’s delusions of a meritocracy, which Stewart argues has evolved into a class of aristocracy over only a few decades. In part 8 – the Politics of Resentment – inequality provokes a chain of consequences: resentment, political division, instability. Here Stewart lets Trump make his case by citing examples of Trump stoking the fires of resentment for political gain. Stewart concedes the .1 percent delight in their manipulations, but blames the 9.9 percent for taking “our cut of the spoils” while looking “on with smug disdain” and taking it all for granted. Stewart reminds readers that resentment breeds an increase in inequality as every change made by Trump so well demonstrates: the new tax law to wit. At the end of part 8 Stewart warns the 9.9 percent they will soon find themselves the target of economic attack.
Part 9 provides a sobering reminder: reform seldom relieves inequality. History suggests it takes depression, violence, or warfare to bring change and Stewart gives the American Civil War as one example. Remember slavery is a system of cheap labor that guarantees inequality. Lincoln in his famous house divided speech addressed that issue before the civil war: “A house divided against itself cannot stand. I believe this government cannot endure permanently half slave and half free. . . . It will become all one thing, or all the other.” Free labor in competition with slave labor generated poverty, inequality and a violent political instability. Our high school textbooks emphasize the stance of the abolitionists and their ethical and moral objections to slavery. They were a factor, but the civil war started much more for economic reasons: inequality and the depressing effects of a dual wage system.
Part 10 offers a tiny bit of optimism by suggesting the 9.9 percent could get hold of themselves and offer the country some leadership. Leaders should support the larger social order and help direct resources to causes in the common good like health care. Many people of my acquaintance have wondered why so many of the 90 percent keep voting for people like Trump and the Republican pickpockets. I thought of that when Stewart mentioned the poor, southern white boys in butternut and gray that died by the tens of thousands to save the wealth and life of the southern planter class that so crudely exploited them. The United States has had one civil war and I get the feeling Stewart believes the Trump base could bring another. We can hope not, but if it comes to pass the Trump base will join the .1 percent on the one side, and the 9.9 percent will be the other; the resentful always join the authoritarians. Mr. Stewart has warned you.
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