Rethinking the Minimum Wage

I wrote most of this post Thursday, but Blogger ate it. I'm doing my best to reconstruct it now. (The problem seems to be that the "Save As Draft" button doesn't, um, save anything. Anyone else having that problem?)

The idea stemmed from the agreement between J-Dizzle and the Madison Republicans to raise the minimum wage, in the process, wiping out any municipality's individual attempts to increase it, and, likely, clearing the way to raise their own salaries.

Now, I'm not suggesting, as the title of this post might indicate, that I am opposed to the increase. I think that, given the circumstances, it's the least we can do. But I also strongly feel that, given the circumstances, it really is the least we could have possibly done.

After Blogger ate my first attempt at this, I found one of my favorite writers had actually written much of what I wanted to say. So I will at this point quote liberally from Barbara O'Brien:

"...workers in the world's richest nation can no longer count on the private sector to provide them with economic security." The words above are from [Friday's] Paul Krugman column. These are true words. 
 
I realize that many people will disagree that American workers can no longer count on the private sector for economic security, but the evidence says otherwise.   The Financial Times says that "Real wages in the US are falling at their fastest rate in 14 years." [. . .]
 
I don't believe the general public is yet fully aware of the danger we're in. Of course, many people will not see the danger as long as the system is working for them. They're like sunbathers on a beach watching a tsunami roll in; as long as they're still dry, no problem. I think increasing numbers of people  sense that something's going wrong, but many are still in "it must be my fault" or "this is just bad luck" or "maybe it'll turn around soon" phases. And their employers and political leaders are not explaining the danger with true words. Instead, they're offering excuses and empty promises.
 
People don't yet see that what's happening is a systemic change. It's not going to turn around unless action is taken to make it turn around.. And there will be no action until the public demands it.
 
The U.S. auto industry, Krugman writes, is "weighed down by health care costs for current and retired workers, which run to about $1,500 per vehicle at G.M." Other companies are going the Wal-Mart route. Krugman writes that while General Motors declines,

Today, Wal-Mart is America's largest corporation. Like G.M. in its prime, it has become a widely emulated business icon. But there the resemblance ends.

The average full-time Wal-Mart employee is paid only about $17,000 a year. The company's health care plan covers fewer than half of its workers.

Note that many Wal-Mart employees rely on Medicaid, which of course is facing massive budget cuts.
 
For years the right-wing mantra has been that the private sector can provide economic security for all more efficiently than government, and government safety-net programs were wasteful "entitlements." Well, folks, the Right is wrong. Maybe the private sector could provide for the economic security of its workers, assuming our health care crisis is resolved, but it won't without government regulation. [. . .]

What kind of America do we want to be? Over the past 50 or so years the Right has persuaded much of the American middle class that "entitlements" and "safety nets" amounted to taking money away from virtuous working people to support a parasitic underclass. The middle class took its own safety nets for granted. Well, folks, sometimes you don't know what you've got 'til it's gone.
 
We value work, initiative, and self-reliance. But government is necessary to maintain a system that rewards work and initiative and facilitates self-reliance. Left with no government oversight, our corporate overlords would soon turn America into a place where labor is ruthlessly exploited, and in which people who depend on a paycheck are crushed into hopelessness.

Indeed. Many on the right here in Wisconsin are lamenting the compromise that let the minimum wage increase through--see my arch-rival Owen, for example--because it is exactly the kind of government intervention in the market that they have been conditioned for so long is inexcusable and unacceptable.

Yet, without action, the minimum wage would remain at a 55-year low. And while not every low-wage worker earns the minimum, it remains true someone with two kids at home needs to earn one-and-a-half times the minimum wage to remain above poverty level. Plus, you can bet that virtually no one earning minimum, or even 1.5 times minimum, is getting much in terms of health benefits from their employers. At the rate things are going, the cost of buying health care for a family will be greater soon than even double minimum wage. This is why your average Wal-Mart store costs you and me $420,000 in federal taxes, and even more from the states. Wal-Mart's great success has not come from the hard work of the people or the ingenuity of the obscenely wealthy people running the company; its success has come from decades of state and federal subsidy.

At any rate, to get to my point: I believe it's time for Democrats to stop talking about the minimum wage. I believe, even, that it's time for Democrats to stop talking about the costs of health care. I think that instead, we need to offer a larger, systematic vision of change.

I wrote a a few weeks back about what Mike McCabe said at the People's Legislature: Anti-progressives are trying to sell the people on a vision of the well-known past, even if that past no longer applies. Progressives are losing because we can't get our stuff together well enough to offer any kind of compelling alternate vision of the future. In other words, Republicans are trying to sell the dismantling of Social Security on the notion that government hand-outs are wrong, and that the private sector can take care of you. Well, maybe 30 years ago, when you retired from GM with a handsome pension and guaranteed health care, Social Security didn't mean much to you. Today, though, your pension is gone and your health care is far from guaranteed. We need Social Security now more than ever. But we can't formulate that compelling vision, so we kind of huff about and say, "But it's not broken!" This misses the point and answers the wrong argument: Conservatives' attempts to privatize Social Security aren't about fixing it.

Or take the minimum wage: Conservatives would have us believe that raising the minimum wage will lead to unemployment (which is not true). Progressives have no competing vision, other than to say, "But poor people are poor!" That also misses the point and answers the wrong argument. Conservatives' moves to block the minimum wage increase are all about padding the bottom line for the Wal-Marts of the world, not giving poor people jobs.

The same for health care. When HillaryCare™ was all the rage in Democratic circles (and, oh, how I wish we had truly acted then--a decade of double-digit health care cost increases has broken us), we lost the debate because Republicans' opposition was based on ensuring the health of insurance companies, not Americans. And yet, Democrats, who, dadblammit, ought to be able to win on this issue, couldn't articulate the kind of vision that would win against Harry and Louise.

Are you noticing a pattern? The Republican/ Conservative version of the vision is always about the bottom line of the American corporation, through the elimination of pension guarantees, added juice to the stock market, or protection of Wal-Mart's profit margin. They know what they're selling and can fight the fight every time it comes up because they have the solid platform. Problem is, of course, that it's a platform that doesn't do a damned thing for the people.

Kevin Drum has been hitting this pretty hard in the last month or so, and he puts the economics of the situation into words that non-economists and even Republicans can understand, replete with pretty pictures. For example, he notes that "Democratic presidents have consistently higher economic growth and consistently lower unemployment than Republican presidents. If you add in a time lag, you get the same result. If you eliminate the best and worst presidents, you get the same result. If you take a look at other economic indicators, you get the same result. There's just no way around it: Democratic administrations are better for the economy than Republican administrations." And yet the vision Republicans sell is that they are better for the economy--in part because they make no secret of their support for the bottom line.

Or take this one:

Democratic presidents tend to promote policies that either keep income inequality in check or lower it a bit (Jimmy Carter is the exception), while Republican presidents pursue policies that make income inequality worse. The upper and lower lines are guesstimates of what income inequality would be if we had followed only Republican policies or only Democratic policies since 1947. Pure Democratic rule would have produced a slight decrease in inequality, while pure Republican rule would have produced a staggering increase in the ratio to 6:1.

This is important because it's at the heart of the difference between liberal and conservative views of what's good for the economy. I won't try to pretend that I can prove this, but I believe pretty strongly that the single most important economic indicator you can look at is the health of the working and middle classes, the (approximately) middle 60% of the country. Why? Because if unemployment is low and middle class incomes are growing, then everyone wins. The poor win because a healthy middle class is more likely to support safety net and anti-poverty programs, and the rich win because a healthy middle class drives overall economic growth.

Conservatives drive up income inequality because they focus primarily on the well off, which benefits only the well off. Liberals keep income inequality in check because they focus (or should focus) primarily on the working and middle classes, which benefits everyone. And that's the underlying reason that Democratic presidents are better for the economy than Republican presidents. If you keep the unemployment level low and middle class incomes growing, the rest of the economy will pretty much take care of itself.

Today, Drum writes about income mobility and--if you only read one of these that I'm citing, read this one--points out what those at the bottom already know: The deck is so badly stacked against you that you just can't get ahead. When you consider how many obstacles lie in the path to success for your average minimum-wage (or just above) worker--from health care to higher education to the ability to declare bankruptcy and get out from under predatory debt--there is little or no hope any more.

And yet, that's what the Republicans are selling. That's the way they are able to make their pro-business message resonate with those business sees as replaceable commodities. Barbara O'Brien dissects David Brooks (Bobo) today:

Bobo says a large majority of "poor Republicans" agreed with the first statement. However, 79 percent of people identified by Pew as "Disadvantaged Dems" agreed with the second.

Bobo interprets this, thus:

Many people have wondered why so many lower-middle-class waitresses in Kansas and Hispanic warehouse workers in Texas now call themselves Republicans. The Pew data provide an answer: they agree with Horatio Alger.

These working-class folk like the G.O.P.'s social and foreign policies, but the big difference between poor Republicans and poor Democrats is that the former believe that individuals can make it on their own with hard work and good character.

I'd put it another way: Poor people who vote Republican think the established order--the "system"--works for them. Poor people who vote Democratic think the system works against them. Are we looking at Democratic pessimism versus Republican optimism, as Brooks thinks? Or are we looking at realists versus schnooks?

Brooks's own words reveal that these optimists are distrustful of Wall Street and big business, but they still have faith that they can improve their own lives through hard work, determination, and good character. And maybe they can. But seems to me that "optimists" who are stalked by fear "their lives will fall apart" are cultivating cognitive dissonance of Godzilla proportions.

Kevin Drum picks up from there:

Read the whole article until you get to that line. You'll read all about Kay Cody and her brothers and their kids. You'll read about the instability in their lives. You'll learn what the stock market did to Kay's 401(k). You'll learn about how envious they are of their father and his guaranteed pension and generous Social Security check. And then, after reading all that, you're suddenly jerked out of your chair and told that Kay Cody thinks private accounts are a great idea anyway. It's mind boggling.

This is What's The Matter With Kansas? territory, and you just want to grab these guys by the shoulders and shake hard: If you want the government to provide more security, quit voting for the guys who are trying to tear it down! Here is Kay's daughter:

"I see how my grandparents were able to get by, but my husband and I just struggle from paycheck to paycheck," she said. "I don't have a pension and I'm not expecting Social Security to hold up long enough for me. Where is all the government's money going? Who is it benefiting? Nothing is benefiting me."

That's right! And things will stay that way until you STOP .... VOTING .... FOR ..... REPUBLICANS!

Now, I'm not sure that "STOP VOTING FOR REPUBLICANS" is really the alternative vision we Democrats and progressives should be selling. I don't know that it will work. I'm also not sure that I have the vision down--I'm not certain I can put it into words. But believe that it's there, and it has to be a vision that offers hope without bigotry, homophobia, and unbridled corporatism.

I fell in love (politically) with Howard Dean two years ago because he was able to articulate something very close that that vision: We are all in this together, he said, and we can do better. And his vision didn't rely on the fundamentalist preachers or the CEOs to pull America through, it relied on us. As much as it burns me, the Republicans keep winning the battle for those who work hard and hope to get ahead; somehow these second Americans (thanks, John Edwards, for the best frame on this issue) don't see that the way to overcome the obstacles the first America lays in their paths is by voting for Democrats and progressives willing to look at the system as a whole.

The minimum wage debate is a symptom and a distraction; it's time to talk about real change.