Send tips to Curtis Black, Newstips Editor
curtis@newstips.org
NEWSTIPS HOME | About | Follow on Twitter @ChicagoNewstips


Don’t fear 15

With fast-food and retailer workers striking in 58 cities Thursday — a dramatic increase over the seven cities where similar actions took place last month — calling for a $15-an-hour wage, here’s an interesting historical note:

Fifty years ago, when Martin Luther King spoke at the March on Washington, one of the demands was a minimum wage increase from $1.15 to $2 an hour.  That would be just over $15 in today’s dollars.

In case we’re tempted to get carried away with this “dream,” the Chicago Tribune offers us University of Chicago economist Allen Sanderson’s advice: “Don’t fight for 15.”

All in all, it’s a pretty thorough demonstration of how far the dismal science can stray from any connection with reality.

First of all, he warns that if workers become too expensive, they risk being replaced by automation.  In fact, though, it’s really hard to imagine how much more automated McDonald’s could be.   Or to picture computerized checkouts at Macy’s.

He suggests higher wages would mean even higher unemployment rates for minority teens.  That might be a factor if there were a better job market for older people, but there isn’t — especially with an economy that is quickly replacing middle-class jobs with low-wage ones.

More than half of new jobs are in low-wage retail and hospitality sectors, according to the Chicago Political Economy Group.  And the number of college graduates earning minimum wage is steadily growing.

In fact the surge in youth unemployment came before the 2008 crash, while the economy was growing (not very fast), as federal funding for youth jobs was eliminated.  As we noted at the time, it was the first economic recovery in which youth unempoyment increased.  That was without a minimum wage hike, too.

Really poor?

Sanderson then looks into the “claim” that “one can’t live on $8.25 an hour and that someone working full-time would be in poverty.”  Not true at all, he says — a full-time minimum wage worker earns $16,500 a year, a generous $1,000 above the federal poverty level for a two-person household.

Of course, if the full-time worker had two kids rather than one, the family would be at about 20 percent below the poverty level.  Which is not exactly quibbling.

But the reality is that only about one-third of minimum wage workers have full-time jobs.  That’s one of the reasons fast-food workers want a union — so they can negotiate over things like scheduling.

And the poverty level is widely discredited.  It was developed in the 1960s and is based on a moderate food budget, multiplied by three.  But since then other costs — particularly housing and health care — have grown at a much higher clip.

In 2009 the Social Impact Research Center of the Heartland Alliance estimated (pdf) that in order to meet basic needs in Illinois — housing, child care, food, transportation, and health care — using tax credits but not public benefits (with no allowance for leisure, travel, or emergencies), a single parent of two children would have to earn $23 an hour.

WBEZ recently profiled a part-time Macy’s worker who earns minimum wage plus commissions.  She also works second part-time for minimum wage as a telemarketer.  She’s got four children and a partner who also works a minimum wage job.  She’s also on food stamps and Medicaid.

“At the end of the week, I still don’t have enough money to put food on the table and clothes on my children’s back,” she says.

Who pays?

A crucial question, Sanderson says, is who will end up paying for these wage increases.  Will it be stockholders with lower returns, or customers with higher prices?

We looked at this a couple weeks ago, when the Tribune asked whether customers would be willing to pay higher prices to cover higher wages — but failed to give any idea of what those prices might be.  You’d think an economist would be interested in this detail.

Economists Jeanette Wicks-Lim and Robert Pollin of the University of Massachusetts have indeed looked into this — they say a $15-an-hour wage for McDonald’s workers would raise the average  price of a Big Mac by 22 cents.  Ouch!

How about McDonald’s shareholders?  According to Paul Buchheit, the corporation’s profits average out to $18,200 per worker.  There’s certainly room to pay a little more without too much pain at the top.

But there’s another question that’s just as crucial, which never seems to get asked: who pays for the low-wage economy?  Besides Macy’s workers who can’t quite cover food and clothes, that is.

Who pays for the food stamps and Medicaid to supplement Macy’s minimum wage?  Who pays the $5,815 a year that an average Wal-Mart worker gets in public benefits?

First in line, of course, are taxpayers — which in Illinois disproportionately means individuals over corportions (the state leads in several outmoded tax loopholes for corporations, and two-thirds of corporations in the state pay no income tax), and with our regressive tax structure, it means moderate-income taxpayers bear a heavier burden.

Right after that come all the residents who don’t get the services they need — like the hundreds of thousands who’ve had their health care cut, including hundreds of medically-fragile children and many others shunted into nursing homes.  Or the thousands of Chicago schoolchildren who don’t have libraries or art teachers.

Because Macy’s and Wal-Mart need our tax assistance in order to keep their wages low.  (And please don’t ask them to pay more taxes!)  Why aren’t the deficit hawks at the Tribune screaming about that?

Beyond that, everyone who’s waiting for the economic tide to rise — all the unemployed, underemployed, and discouraged workers, all the small businesses that are barely hanging on — would be helped by the immediate boost to our economy of higher wages for a major sector of the workforce.  Workers with a little extra money will spend it, and that’s good for everyone.  The Center for Tax and Budget Accountability has estimated that a $2 boost to our minimum wage would inject $2.5 billion into the state economy and generate 20,000 jobs.

That could even help get more people shopping at places like McDonald’s, or at Macy’s and Wal-Mart — all reporting declining sales, all citing slack consumer demand.

Instead, our political and opinion leaders are forcing us into a downward spiral of growing low-wage work, anemic job creation, and increasing austerity in public services.

The members of the Workers Organizing Committee are displaying remarkable courage, standing up for themselves and their families in a threatening economic environment, with little besides their own solidarity and nerve to sustain them. In fact they are standing for a better economy for all of us.

Meanwhile the defenders of the status quo deploy every scare tactic they can to get them to back down.

My guess is that’s not going to work.

***

The invaluable Dirt Diggers Digest gives an overview of McDonald’s history in light of Thursday’s strike –including union resistance when the company initially tried to move into San Francisco and Detroit in the 1970s, McDonald’s role pushing for a lower minimum wage for teenagers, and its resistance to efforts to ensure that farmworkers picking its tomatoes are paid decently.

“More than any other restaurant operator, [McDonald’s] has worked to suppress pay rates, enforce harsh work procedures and prevent unionization. In other words, it epitomizes everything that the current strikes are trying to change.”

But “McDonald’s response to the farmworker campaign shows that, when put under enough pressure, it will make concessions.”

Print this Post Print this Post

Category: labor, poverty, retail

Tagged: , , , , , , , ,

Comments are closed.


Get Newstips in Your Inbox!

Enter your email address:


Subscribe in a reader

Archives

*

*

*



*










CAN TV is a network that belongs to the people of Chicago.  For updates on local programs, and live, timely coverage of community events, sign up at http://www.cantv.org