Monday, March 20, 2006

The Limping Wage

Democratic advocates seem to have found, at long last, an issue that they can gain traction with: the the living wage.

This has been bubbling along for several years here in Memphis, largely on the efforts of MIFA, in the link above. Note that they claim:
Thousands of Memphis workers are not able to meet their families' basic needs for shelter, food, transportation, and health care on their wages alone. Despite working hard, they are forced to rely on public assistance, charitable help, or second and third jobs in order to make ends meet. Without a living wage, they face uncertainty about how they will care for themselves and their children.
Remember these claims for later. Note also their idea that one job -- no matter the kind of job or type of work -- should provide sufficient income to support a whole family. Remember that, too.

It comes before the City Council as well. Take this Memphis Flyer story, which goes into some detail about the micro-management of the local business economy proposed:
The coalition has been pushing for a living-wage ordinance that includes health benefits since 2003. They'd also like the ordinance to require companies that receive tax freezes or city contracts to pay their workers a living wage.

"We're certainly pleased that the council is making some movement on the living wage, but what we want to see is a comprehensive ordinance that covers the city contracts and tax freezes," said Rebekah Jordan, director of the Mid-South Interfaith Network for Economic Justice and a member of the coalition.

While Mitchell's resolution is only expected to cover full-time city employees, she said she'd like to see companies that receive PILOTs (payment-in-lieu-of-taxes) pay their employees a median income of $35,000 a year, well above the $20,000 a year advocated by the Living Wage Coalition.
There was also this earlier Flyer story with more information on the supporters of the living wage and what they want to achieve:
...Rebekah Jordon, executive director of the Mid-South Interfaith Network for Economic Justice...

...Jacob Flowers, director of the Mid-South Peace and Justice Center. Flowers was upset that tax freezes through the payment-in-lieu-of taxes (PILOT) program mean that neither the retail portion of Peabody Place nor Hampton Inn will pay full taxes until 2037, while the companies pay workers as little as $7 an hour.

Brad Watkins, chair of Democracy for Memphis and a member of the Living Wage Coalition, said that legislators recognize that the living wage is an important issue.
You'll notice that while $7.00 an hour isn't a "living wage" neither is it the current minimum wage.

This is a point I have made here and elsewhere: very few businesses pay the actual legal minimum. Most start people out at $7 or $8 an hour, voluntarily, because folks won't work for less. In fact, there's a sign above Patterson near the University of Memphis right now advertising entry-level jobs at FedEx Ground at $10 per hour! We'll also come back to this again.

A couple of weeks ago, Tennessee General Assembly Democrats, including Memphis' State Senator Steve Cohen, held a press conference in Nashville announcing they were going forward with living wage legislation via an increase in the minimum wage. I happened to catch the PBS show Tennessee Legislative Report which had extended excerpts from the press event.

What struck me was the complete lack of hard numbers they presented. No idea of how many were affected, or would be affected, by the proposed changes. No mention of how many earned the minimum wage, or how many jobs only offered minimum wage. But there were repeated mentions that the minimum wage hadn't been raised in a decade and how inflation had made it meaningless. Cohen also made pointed mention of how "single mothers" couldn't support their families on $5.15 an hour. But, again, no hard numbers. Just a lot of emotional heart-string tugging.

Yesterday, the Tennessean ran an excellent article on the minimum wage legislation that did, finally, offer some hard numbers. And eye opening they were, too; so instructive that they ended up at the bottom of the story, the dank cave of unwelcome information in news stories.

At the halfway point, we get begin to get hard numbers:
Nationally, the federal Bureau of Labor Statistics says about 2 million American workers, 2.7% of the work force, earned $5.15 an hour or less in 2004 (the most recent year of available data). The workers were generally young, single and without high school diplomas. Many worked in bars and restaurants and got tips on top of their hourly wages.
Note that recipients are "generally young, single and without high school diplomas." No mention of what kind of work pays this level, though the Tennessean story begins with a portrait of car-wash workers.

It's also important to spot that last sentence about bar and restaurant work and tips. There is an important exception to the minimum wage law for these kinds of jobs. It allows for a lower base wage ($2.13 an hour, as the story goes on to report later) because tips from customers make up the difference.

Notice that the reporter doesn't break these numbers down, to obtain the actual number of workers who do non-alternative minimum work. He is content to conflate two issues into one to bolster his argument.

The story continues:
About 40,000 people — fewer than 3% of the state's hourly workers — have jobs that pay at or below the federal minimum wage, according to the U.S. Labor Department. Most of those are in food processing and serving.

Nationally, federal statistics suggest that eight of 10 employees who work in food and drinking establishments are actually paid above minimum wage.
So there you go, less than 3% of Tennesseans are paid below %5.15 an hour and many of them are under the restaurant exception! Note, too that the writer preferred to use the ambiguous, but higher "less than 3%" rather than the accurate but lower "2.7% " or whateve the real number is. Hmmmmm....

Keep reading all the way to the very bottom and you finally learn this:
Fewer than 2% of the job orders processed by the Tennessee Department of Labor and Workforce Development in Davidson County in the past year paid less than $6.15 an hour. But about 10% of the job orders received statewide in the past 12 months paid less than $6.15.

Increasing the minimum wage probably wouldn't have a direct impact on employers such as Kroger or McDonald's, where wages already are above the $6.15 an hour level, observers said.

The lowest starting wage at area Kroger stores, for example, is $6.50 an hour for a stock person, Kroger spokeswoman Melissa Eads said. If they're willing to work during the day, they get a $1 per hour premium.

"It's an extremely tight labor market," Eads said. "It's a constant struggle for us to find people."
Many of you are thinking Why make such a big deal about so few people? Why not just support this? Because it is government tinkering to buy votes with your money, that's why.

Few people will be directly affected by raising the minimum wage, as we've seen. But many more will be affected by the artificial floor placed on wages that will drive labor negotiations for higher wages of their own later on. It does have an inflationary impact over time.

The Commercial Appeal got into this on Sunday, with this story by old-regime holdover Richard Locker. Locker opts to focus less on the practical numbers of the minimum wage proposals than on the inside-baseball politics. But he does break down the 40,000 figure from above for us:
The federal Bureau of Labor Statistics says 7,000 Tennessee workers are paid at the federal minimum wage and 33,000 mostly restaurant and other exempt employees are paid less.

But 162,000 are paid between $5.15 and $6.15 and would see an increase if it passes.
Now we're getting somewhere. Tennessee has 2,250,000 workers in 2004, per the US Deptarment of Labor. That means roughly 7.2% are affected by the minimum wage rise! Very different from the "less than 3%" number being wielded above.

But as I said, Locker focuses on the politics. Try these selected passages. Do you see any point of view embedded in this "news" story?
For the first time in a generation, the Tennessee legislature is debating enacting a state minimum wage, at $1 over federal minimum wage -- but its fate likely rests with the Republican-majority Senate.

...The Democratic proposal is gaining ground because the federal minimum wage of $5.15 an hour hasn't been increased since Sept. 1, 1997.

The wage bill has set off a classic confrontation between Democrats and Republicans, labor and business.

It also underscores how the Tennessee legislature is evolving. For decades, conservative, pro-business Democrats ruled both chambers, mostly siding with business over labor.

But the Senate's new Republican dominance, and the GOP's deepening conservatism, leaves Democrats more willing to consider such measures.

The House Democratic Caucus endorsed the minimum wage. Senate Democrats haven't endorsed it as a group but Democratic Sens. Steve Cohen of Memphis, Doug Jackson of Dickson and others are sponsoring Senate versions.

Democrats and the Tennessee AFL-CIO Labor Council base their support on Congress' failure to increase the federal minimum wage in a decade...
Ahhhh... I'd have to excerpt too much. Go read for yourself.

There are two really jaw-dropping passages, though. First is this whopper:
For decades, conservative, pro-business Democrats ruled both chambers, mostly siding with business over labor.
If this is true, how does it explain TennCare? Sheesh....

And then there's this winner:
Democrats may want to cite Arkansas Republican Gov. Mike Huckabee, who wants his state's minimum wage raised. It's "pretty clear" people can't live on $5.15 an hour, [Bredesen] said.
Never mind the non-sequitur that few "live" on $5.15 an hour, but don't you like how Locker manages to work in this bit of advice by just quoting the governor? Yeah, me too.

But wait! There's more. The Smart City Memphis blog has also tackled the living wage idea. We'll begin with their first recent post and look at selected passages. It opens:
More and more, cities and states are stepping in to address issues that traditionally would have been the province of the federal government.
"Traditionally" these would have been local issues, but for the efforts of Progressive, Labor and Demcoratic activists to nationalise it and hand power to the Federal government to trump all the millions of local businesses to set their own demands and needs.
And with recent reports that the salaries of young workers are declining and that family earnings are headed in the wrong direction, state legislatures are jumping on minimum wage as a powerful populist issue.
No citations for these assertions. (A regular failing of the "trust us, we're authorities" attitude of Smart City.) The author just spend a couple of paragraphs trying to argue that it's some kind of bi-partisan opportunism to find a winning issue by citing California Governor Schwarzeneggar (a RINO by many measures), but notice now it's "state legislators" and not Democrats pushing this issue. Nice elision to an incorrect conclusion!
Taking a lesson from the Religious Right, which manages to concoct a yearly vote on something dealing with gays to get out their base vote (last year, it was protecting the sanctity of marriage, and this year, it appears to be prohibiting gay adoptions, although we guess lesbian couples will be allowed to keep their own babies), more mainstream political interests are looking to the minimum wage as a GOTV issue for themselves.
Again, nice bit of misdirection and false metaphor used to also score some unrelated political points here.

"Anti-gay" activism is a reaction to efforts by gay activists to change things into something they haven't been. Living wage is the latest effort in a century-long effort to equalise wages of workers with the profits and salaries of business owners and managers. They don't track. Equating them as "get out the vote" is slightly disingenuous at best; factoring in the emotional factor, it's dishonest.
The campaign has enlisted no less an authority to their cause than the widely respected economist David Ciscel of University of Memphis. His 1999 white paper, “What Is a Living Wage for Memphis?” articulates the case convincingly and serves as the Bible for the campaign. Also, he is the “truth squad” for the movement, correcting the misstatements by City Hall functionaries fighting the living wage notion.
I have emailed Prof. Ciscel to ask him about the paper and his involvement with the Living Wage Coalition. If I hear back, I'll post an update.
Incredibly, city and county governments have people on their payroll beging paid less than the living wage. In late 2004, there were 226 people in city government paid less than the living wage. When county government contemplated a policy to raise all wages just to the poverty threshold in the late 1990’s, the money was directed instead for “salary adjustments” for higher paid employees.
Note the fait accompli of the faux surprise that some City and County employees are paid less than $10 or $12 an hour! Even though it's perfectly legal and normal.

On the other point, who is surprised to learn that the top-level employees of Memphis and Shelby County were looking after themselves rather than others? It's like saying you're suprised it rains around here.

The discussion that followed that post was lively and pointed and I leave it to the reader to study it.

A few days later, pushed by the comments, the SMC blog posted a follow-up, intended to bolster its arguments. It was piss poor work.

The whole thing can be boiled down to the three points the author highlighted:
1. They improve human dignity.
2. They increase the spendable income in the area.
3. Higher wages force business innovations.
Point the first is just flat silly. What business is it of local government to "improve human dignity." What kind of economic argument is that?

The second point is blurry at best. The argument is that families at the low end need help to meet the basics like shelter, food and health care. I don't think they mean "spendable income" in quite that way. Shelter (ie. rent or home debt) goes to a single entity, like a landlord or bank. Health care means insurance, which means the money goes to enormous corporate financial entities. Food means groceries, which I think might apply.

But if they tried to make "spendable income" mean things like entertainment, then they've failed (or been lying) in their original argument about just how poor some of these families are!

Then there's point the third, which they even restate in a devastating way: "High wages lead to innovations -- often techniques that reduce labor needs." In other words, higher wages force businesses to find ways to employ fewer people by using technology. Methinks the SMC love of technological advances got the better of them here.

Again, read the comments that followed, which make a lot of good points about how businesses will respond to the living wage laws proposed. Mostly, the answer is by moving away or disconnecting from government.

Except, of course, those people who want to make a very nice living by taking advantage of City and County laws by exploiting them. Look at the rather nice cottage industry of local firms manned by the locally well-connected (ie. Reginald French and his IT company) who help the firms doing business with Memphis and Shelby County meet their "diversity quotas." These sham firms provide a way for businesses to be seen as meeting the need to hire x number of minority workers while extracting hefty management and consulting fees from the cost of business. It ends up costing the taxpayers more than it should for the same work, but now done with lower, uncontrolled, quality.

The living wage is social engineering. It's tinkering with things as they are to get the desired outcome as it should be. "Should be" of course, is defined by those seeking to inflict their ideas on the rest of us.

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