Wages Up but How High is Fair?

Chicago-Raise-the-Min-Wage-Rally-300x189New Orleans       Walmart has announced that over a half-million of its workers will get a raise to $9 now and up to $10 sometime in 2016 at the cost of one-billion dollars.  This is good news, so I won’t remind people of the Pinocchio stories the company has told for years about its so-called average wages.  The company is joining Gap, Target and others that have already said they are raising wages.  Aetna Insurance several weeks ago raised all of its workers to $16 per hour to lead the way.  Economists speculate that the labor market is finally beginning to tighten and that Walmart is recognizing the inevitability of wage increases, so wanted to jump ahead of the pack, embrace reality, and try to change its reputation as one of the country’s worst employers.

All of this is happening as President Obama tries to breathe some new life into his proposal to raise the minimum wage in various steps to $10.10 per hour which has been dead-on-arrival in Congress since it moved from his mind to his mouth.  Not to rain on the parade, but Congress will no doubt use the announcement by Walmart as the nation’s largest private sector employer as evidence that there is no need for new federal minimum wage legislation.

All of this is happening as many of us have been in lengthy conversations in recent months about how to move forward on a different “living wage” strategy.  The “fight for fifteen” has won huge publicity, but aside from Aetna, very little take-up, and, practically speaking, the notion that minimum wage fast food workers might suddenly find their wages doubling from the $7.25 they are earning now ranks somewhere next to Santa Claus and the Easter Bunny on the reality scale.

What is fair and practicable?  Our brothers and sisters in Canada have tried to navigate their campaigns around figures produced by respected nonprofits that include day care cost and other facts that live for many of us only in our dreams.  A recently released poll in the States though found that there is 75% support among Americans for a $12.50 minimum wage achieved by the year 2020.  The same poll found that even in the South that number was supported by 74% including over 50% of Republicans.

We tried to reverse engineer the math using statistics based on the average housing cost in our cities for a single person to rent an apartment and assuming that would represent one-third of their income.  The results were interesting and would seem to resonate with people.  Using this formula a “living wage” now would look like the following:

Little Rock      $11.53

Baton Rouge   $11.59

Houston          $13.00

New Orleans   $13.24

Dallas              $13.56

The wage train is starting to rumble forward finally.  These numbers seem fair and make sense.  It’s campaign time!

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Please enjoy Green Day singing Working Class Hero

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$10.10 Executive Order May Have More Impact Than You Think

RaiseTheMinimumWageALittle Rock  The President in his fifth State of the Union address said that he would issue an executive order raising the minimum hourly wage for workers employed under federal subcontracts to $10.10 per hour, the same number that he and many others have been advocating on the stair step proposal for the federal minimum wage.  Some observers dismissed the impact as relatively unimportant, only affecting a couple of hundred thousand workers over coming years, since the measure only goes into effect for new contracts or as existing contracts come up for renewals.   Is this just a symbolic gesture?  I don’t think so.

            Demos, the research organization, has indicated that there are 560,000 workers making less than $12.00 per hour, and, yes, that’s more than $10.10 per hour, but all of them, and likely many more federally contracted workers will be impacted because of the impact of both wage “compression” and the attending multiplier impacts that could bring higher wages to millions of workers. 

Compression is straightforward.  If the minimum wage is $7.25 as it is now, and you are making $12 per hour or more, then employers can say, “What’s the beef,” and workers can look down and around, and reckon the unlikelihood of doing better.  If the minimum is $10.10, then $12 is bumping right into it, and is no longer as respectable a wage.  The President’s number sets the minimum standard for any wage determination set by the Department of Labor and will require the DOL to similarly adjust the minimum rates on all other contracts upward.  Furthermore under section 4c of the Service Contract Act it also makes much more elastic what are inarguably reasonable settlements on wages for collective bargaining contracts.   The impact on local economies in Washington, D.C. and wherever there are federal installations from military facilities to regional governmental offices is potentially huge.

            The other nice touch on this executive order is the fact that for the first time it is automatically linked to inflation so there’s a built in escalator, similar to what we have all advocated for decades now for the federal minimum wage to get around the Congressional stalls that have reduced the minimum wage’s purchasing power so dramatically over the last 30 years.  This is an executive order then that will keep on giving as it moves the floor higher annually, and once again will create a cost of living adjustment in effect for all federally contracted workers.  Sweet!  And, the impact is huge and will also keep touching millions of workers.

            Finally, there’s the economic impact of the moral suasion of such an order.  President Kennedy’s executive order allowing collective bargaining for federal employees unleased the dam blocking public sector bargaining across the country and unleashing the pent up organizing demands of millions of workers who are now represented by unions.  I’m sure the President is hoping his big step on minimum wages for federally contracted workers will have the same impact on raising wages for private sector, largely unorganized workers across the country. 

            And, you know what, it just might!

 

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Time to Get Wage Increases Back on the State Ballots

Chicago Raise the Min Wage RallyLafayette    Looking at the recent elections, SeaTac was the seasoning, but New Jersey was the steak when it comes to overwhelming support of the voters for raising the minimum wages to deal with stagnant pay packages and soaring inequities.   The small Seattle working class suburb of SeaTac next to the airport, passed a huge minimum wage for their community of $15 per hour, almost $6 over the Washington state minimum of $9 and change which is the highest currently in the country, so deservedly got a lot of publicity and attention, and its impact on reportedly 6000 workers is significant.   Nonetheless, the bigger news and longer shadow has to have been the 60-40 mandate given by New Jersey voters to a more modest $1 per hour increase in that state’s minimum wage from $7.25 to $8.25, which is also a dollar over the federal minimum, and here the impact will be felt by hundreds of thousands of workers.

            Given the total dysfunctional stalemate in Congress, only someone living in Portland, Maine or any of the five Michigan cities that have now legalized marijuana would realistically believe that the federal minimum wage is going to go up anytime soon with midterm elections in 2014.   Perhaps something might happen in the waning days of the Obama Administration as it did in Clinton’s time, but that’s too late, and, you can bet it will be too little.

            New Jersey was luckier in some ways though its accomplishment was huge.  The legislature had attempted to raise the state’s minimum to $8.50, but Republican, and recently re-elected, Governor Chris Christie vetoed the measure.   The legislature stiffened its back and put the $8.25 measure on the state ballot and the voters may have elected Christie with one hand, but they gave him a slapdown with the other on this issue.

            When the legislature doesn’t have the will or wherewithal to put such a matter to the voters, that means going through the arduous process of putting a minimum wage measure, hopefully with indexing to inflation or other increases, on the ballot where that option exists.   Doing so is neither easy nor cheap, but that’s what it takes, as we have learned over and over again in Missouri, Ohio, Florida, Arizona, and other states.   The benefits are calculated in the billions of increased wages paid and millions of workers and their families who collect the raises.  Even a dollar after all for a fulltime worker means another $2000 a year in wages, and that’s real money.

            There is no way to look at some of the results without understanding that voters are desperate for change and a not just a different approach and candidate, but someone new and ready to fight, which was good news for Bill de Blasio and is bad news for Hillary Clinton.  ACORN can’t drive the wage increase train at the ballot this time, but a lot of people, players, and organizations need to get on track to get it done so the voters can make it happen next in 2014 and 2016 in the general elections.

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Up with Minimum Wage – Hell, Yes! How about Hospitality Workers, Too?

New Orleans    President Obama in the State of the Union address called for an increase in the federal minimum wage, which has been stuck for the last four years at $7.25 per hour.  The President has done some bargaining, hopefully not with himself again, but the target for his proposed increase is $9.00 per hour, rather than the $9.50 he had proposed in his first term.

I’m not for quibbling though if he is really serious and finally willing to do the work to not just get an increase in the minimum, but also finally win indexing to the cost of living, which would mean low wage workers would not keep watching their paychecks shrink in the long, multi-year stretches of waiting for Congress to finally remember they need a raise.  The last serious argument for indexing was during Robert Reich’s tour at the Labor Department, but that notion was pulled back for the health care push in the first Clinton term.

Invariably, the increase would be over a number of years, rather than in one big gulp.  Maybe a bump to $8.00, then $8.50, and finally $9.00 over a couple of years, putting workers at $9 by the end of 2015 or starting 2016, more likely.  With indexing kicking in even at 2% or so with current inflation, the value of the $9.00 would stay evergreen.

The one thing I did not hear was a call to finally push back the lobbyists for the hotel and restaurant associations, and move the needle forward on tipped employees, who have been stuck around $2 bucks per hour over the last few bumps in the Fair Labor Standards Act (FLSA) governing the minimum wage.  Yes, they are supposed to get to the $7.25 figure through tips, but the enforcement is weak, and that’s putting it mildly, and the confusion for customers is huge, since most have no idea what kind of pittance they are earning.  The fast legion of tipped employees are not cocktail waitresses or brunch waiters in upscale breakfast places in New York City making $300 in tips per shift, but are humping it to make enough to bust past $8 per hour.

I will avoid ranting about my ever unpopular argument that tips are one of the major factors holding back hospitality workers from fair wages, solid unions, and dignity and respect on the job.  Nor will I list, as I have often done, the number of countries that scoff at tips as disrespectful or even refuse tips and turn them back to the customer when afforded.

Whether tips are an abomination for workers or not, the minimum wage for all the growing millions of hospitality and service workers classified as tipped employees desperately needs to be included significantly in any serious proposal for raising the minimum wage.

How about targeting the benchmark at 50% of the wage set per hour for non-tipped employees?  That would mean $4.50 for tipped workers when the FLSA number is $9.00 and so forth.

Time to move forward for ALL workers on this fight.

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