It’s not Trump you have to worry about. You’re thinking short-term.
As people struggle to find third-parties to blame for Hillary Clinton’s defeat (pick one or more: Putin, Bernie Bros, Comey, The Media, Electoral Collegians, the Racist/Misogynist Hordes), an amorphous group has emerged as a popular domestic target: stupid poor white people who do not understand how much better they have had it over the last eight years.
These slack-jawed yokels just can’t seem to grasp that they have great jobs in a growing economy. The numbers prove it: the U.S stock market is at record highs and unemployment at its lowest level since the Great Recession.
“Anyone claiming America’s economy is in decline is peddling fiction,” Obama said in his 2016 State of the Union address. He said his team has created a “more durable, growing economy” with “15 million new private-sector jobs since early 2010.” Tim Kaine also used the 15 million jobs talking point in the vice presidential debate.
But the problem isn’t jobs per se, it is income inequality.
This is the basis of the sense of economic disenfranchisement that drove many voters to seek change this past election, even if after seeing Sanders pushed out of the race that change meant overlooking Candidate Trump’s many shortcomings.
A big part of this inequality is while more Americans are working, more are working part time without benefits. Since 2007, the number of Americans involuntarily working part time has increased by nearly 45 percent.
Coupled with that is what many of those workers see as the failure of the Affordable Care Act (ACA; Obamacare) to live up to its promises. ACA was supposed to be the government supplying a key benefit employers refused to offer to part-timers. People may indeed now have access to insurance, but with high deductibles, they may not have access to healthcare. These are not people with ideological problems with Obamacare. They need help for their families and want the ACA changed.
In addition, because larger employers have to start paying into the ACA fund for each employee who works more than 29 hours a week, employers who offer the most jobs, retail, hospitality, and fast food, have cut most part-timers to 29 hours a week, down from the once-standard 39 hours a week that kept them outside of overtime.
Wages saw their biggest jump this year since 2008 — 2.9%. However, most of that increase came only in states that chose to raise their minimum wages independent of the stagnant federal minimum wage. And with inflation running about 2%, most of any increase was washed away. And what is .9% of minimum wage anyway? Pretty close to not a helluva lot.
Higher costs and less money. And of course for part-timers, vacation days, sick leave, pensions, child care, and other benefits remain elusive at best. The result is a workforce making up the gaps with multiple jobs, food benefits, and opioids. And they voted against the candidate that made a talking point out of saying she would maintain the status quo that was killing them.
Trump, of course, is unlikely to change much, but he represents change and that apparently was enough for a very large number of voters who still believe government may yet help them.
Their inevitable disappointment is likely to lead one of two ways: a complete giving up, a sad resignation they should be happy they get anything at all, or a rage that will seek out a true demagogue.
For despite all of the apocalyptic prose spewing out of cranky Clinton supporters and all the newly-minted, New York-based, Midwestern blue collar experts, Trump is not the antiChrist of American politics. He is a minor celebrity who stumbled into a stream of history, a classic case of being in the right place at the right time.
But keep an eye out in eight years for the next guy. That’s the one to fear.
BONUS: Here’s another opinion on all this, titled “It was the racism, stupid: White working-class ‘economic anxiety’ is a zombie idea that needs to die.”
And if Dems, progressives, liberals, whoever, keeps insisting poor whites are racist-sexists who voted for Trump primarily because he encourages their hate vibe, then the next Democratic candidate will lose their votes again. Given the drift of the economy, there will be more of them next time, too. This election was a pay-attention-notice to the Democratic party, and it is so far not just ignoring it, it is saying the whole notion is wrong.
Copyright © 2017. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity. Follow me on Twitter!
Both the New York Times and the Wall Street Journal have run their stories. You can Google them (fine, here’s one), and the articles from smaller outlets that will follow, but I can save you some reading time, because they are all basically the same:
Oh my God, the Midwest is a freaking mess. Nobody has jobs, middle-aged white people are doing heroin and meth, and everyone is on food stamps. These people are angry as hell at, well, they say the government.
Trump and Hillary have been through (name the one small town you stopped in) and promised to bring back the old industrial jobs (Trump) or some hi-tech something (Hillary.) I stopped by a (diner, bar, waffle house, VFW hall) and talked to (name of the one guy you talked to.) He told me times are tough, but these people are tough. They built the mills, they pulled America up by its bootstraps. They’ll make it. Quote some Bruce Springsteen song you heard that afternoon driving east as fast as you could. Done.
The reporter then rushes back to New York to bathe in Purell and drown his/her disgust in warm PBRs and Starbucks spiced lattes. Next story is about a new start-up in Brooklyn that is creating a social media platform for dogs or something.
Understanding the Heartland
Most reporters act shocked to find people “out there” so angry. They can’t understand why the “folks” take food stamps but think handouts are for lazy people. They can’t understand why someone without health insurance, coughing up chunks of the asbestos they breathed in every day at the factory, opposes Obamacare.
The people the reporters speak with feel they got cheated. They worked hard, they paid taxes, they sent kids off to war (every small Midwest town has a memorial stone, if not three, to the local people who died in WWII, Korea, Vietnam, Iraq…) Then they got screwed by, well, someone. The lucky ones now work for minimum wage at a local Walmart full of junk made overseas. The rest visit the charity pantries and spend their food stamps not because they are lazy like “those people” (a code word for urban African-Americans; the few people of color in these towns tend to feel the same way), but because they are hungry. They wait like a cargo cult for the boom years to return, someday, somehow.
Trump gets this at a visceral level. He tells them it is not their fault, or his, though both share blame. It was the Japanese, or the Chinese, or some mythical Big Government, or regulations, or even the unions that gave the same workers higher pay and good benefits. It doesn’t have to make sense, it just has to play to a crowd angry and confused looking every four years for some answer, and some hope.
I Saw Them, The Ghosts of Tom Joad
I grew up in Ohio during the 1970s and 80s, and watched the industrial heartland fall apart in front of my eyes. Our town had a huge Ford plant. It was sold to Toyota, who cut jobs by half before closing it all down because they got better tax incentives in Kentucky. I don’t know what happened in Kentucky, but I can guess.
I wrote a book about all this, the last fifty years of the Midwest. When you look at it as a historical event, today’s state of things is as inevitable as sunset.
The book is Ghosts of Tom Joad: A Story of the 99 Percent. Close to four years ago I tried to sell it to a couple of the larger publishers in New York. No literary agent wanted it, no publisher was interested. As one put it, declining me, “You’re saying there’s poor people in Ohio?” Another was clearer: “Who wants to read a book about unemployed whites?”
The first publisher outside of New York I approached, one located in Indiana, immediately took the book.
How Trump May Win the Swing States
I fully doubt Donald Trump has read my book, or many books at all for that matter. Someone on Trump’s team, however, is very aware of the unfocused anger in the Midwest I wrote about, and is working hard to use that to get some votes. If Trump takes the swing states of Ohio and Pennsylvania, it will be because of that staffer’s insight. Maybe s/he’ll write a book about it.
Until then, here’s more about my book, Ghosts of Tom Joad: A Story of the 99 Percent:
Copyright © 2017. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity. Follow me on Twitter!
How ya’ doing? I mean money-wise. Too much? Maybe not enough?
So let’s listen to economist Paul Krugman explain why we are so screwed. Not we will be screwed, or maybe things will go that way, or we will in the future. Nope, it already happened, though most of us haven’t yet figured it out.
Krugman, and the economist he discusses, Thomas Piketty, paid attention in math class, and the other classes, too. That’s why they understand this stuff and I’m still trying to suss out why no matter how many hours I stay on the job and how much I save, it is never enough.
In case you’re reading this on your 15 minute break at Target, I’ll try to summarize.
The American Dream (Patrimonial Capitalism)
The myth of the American Dream is the dominating factor in keeping people mostly complacent in the United States. You know it — work hard, and your life will improve. Well, maybe not your life, but your kids’, or at least your grandkids’. If that doesn’t work, it is the fault of the Irish immigrants, or the darn Chinese, or those welfare freeloaders. Ask Donald Trump how it all works.
The thing that makes the myth so powerful is that the tiny percent that is true sounds better than the 99 percent which is a lie. As long as near-constant growth could be assured, enough pieces would fall to the the lower and middle classes to make the Dream seem real. It helped that a kindly media would promote the heck out of every exception, whether it was the shoeshine boy in the late 19th century who went to college, or the plucky guys who invented some new tech in their garage and became billionaires. See, you can do it too, just like if we run hard enough, everyone can be in the Olympics. It’s just a matter of wanting it, believing in yourself, having passion and grit, right?
The Undeniable Reality of the Now
The bulk of the industrial jobs are gone and never coming back; ask Detroit, or the people in Youngstown and Weirton. People have been talked out of most union jobs, convinced somehow that organizing was not in their own interest, and now they find themselves accepting whatever minimum of a wage they can get. Food stamps and other need-based programs are finding more and more middle class users, as suburban people who once donated to charities are now lining up out front of them. Health care paid for by our own taxes is seen as a give away to lazy people. This is the stuff Bernie Sanders talked about.
Like with gravity, the universe doesn’t care if you “believe” it or not; it is just true, independent of what you “think.” That you have been taught this all is something you can choose to believe or not is the weight that holds us all down.
Drilling Down Into Our Miserable Lives
In case you have a few more minutes on your break, or if you’ve been laid off since starting this article, here are some more things happening out there whether you believe in them or not. You can read more about all of this in Thomas Piketty’s book, Capital in the Twentieth Century.
— Our income inequality rate is higher than it ever has been in our own history, is growing, and is higher than in countries in Western Europe and Canada.
— The inequality is driven by two complementary forces. By owning more and more of everything (capital) rich people have a mechanism to keep getting richer, because the rate of return on investment is a higher percentage than the rate of economic growth. This is expressed in Piketty’s now-famous equation R > G. The author claims wealth is growing at six-to-seven percent a year, more than three times faster than the size of the economy.
— Wages are largely stagnant, or sinking, driven by factors in control of the wealthy, such as automation that eliminates human jobs and the not-adjusted-for-inflation minimum wage more and more Americans now depend on for their survival.
— All of this is exacerbated by America’s lower tax rate on capital gains (how the rich make their money) versus wages (how the 99 percent make their money.)
— Because rich people pass on their wealth to their relatives, the children of rich people are born rich and unless they get really into fast women and cocaine, will inevitably get richer. They can’t help it. The gap between the one percent and the 99 percent must grow.
— Social reforms, such as increased education opportunities and low-cost health care, are incapable without tax changes significantly affecting income equality. The only people who can change society are those who profit from it not changing. That’s the big reveal on why we are in so much trouble.
FUN FACT: Until slavery was ended in the United States, human beings were also considered capital, just like owning stocks and bonds today.
Copyright © 2017. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity. Follow me on Twitter!
One of the defining aspects of traditional capitalism is that the Capitalist, that one percent guy from the Monopoly game with the top hat, spats and monocle, invests capital. That investment, in land, a factory, an oil well, creates value (the monies) for him, and jobs for the rest of us.
The idea is that because the Capitalist risks his money/capital, he is assuming the greater risk and thus deserves the greater gain. This has been the way things have worked since feudal lords controlled land and allowed sharecroppers to keep pennies on the dollar they earned for him, on through to when people built factories and opened stores.
Traditional capitalism is that stuff you slept through in Econ 101. Risk gain, employment, jobs, whatevers unless you live off an allowance from Daddy.
Until the arrival of the gig economy.
The Gig Economy
For those who are living off an allowance from Daddy, or are one of the eleven Americans who still hold a traditional “job” where you do stuff, get paid a regular salary not tied to how many sneakers you sew each day, and receive those “benefits” you once heard grandpa speak of, the gig economy is where you work piecemeal, get paid a few table scraps and have no benefits or job security because you really don’t work for anyone.
These “gigs” are almost always performing low-level services, such as delivering food to or driving around people much wealthier than you. Those people cannot be bothered to walk to a restaurant or pilot a motor vehicle or clean up their kids’/doggies’ poo, so you do it because you don’t have many other options in hope of earning something more than minimum wage.
The gig economy is sometimes also known as the 1099 economy, after the IRS form used to report non-employee earnings, or the on-demand economy based on the way people get or don’t get opportunities to work. No one knows how big this shadow economy is, given the shifting nature of the work and the cash payments sometimes involved. But it is big and it is growing.
The less-discussed game changer of the gig economy is that traditional capitalists no longer need to put much money at risk at all. In fact the companies behind the gig economy, the people who run Uber and the others, are economically viable because they offload their cost of capital — the investment and depreciation on cars and the cost of keeping a driver fed and healthy — onto the drivers, who are only willing to accept such a bad deal because the labor market sucks. See how that works?
And if that’s not problem enough, the cheaper wages paid (for example, by Uber) to drivers, and thus the cheaper rides, also drive business with capital structures which make social sense out of business. They can’t compete with “drive your car into the ground, make whatever you might get along the way while we cash in.”
And when you talk about driving these days, you’re talking about Uber.
Uber has succeeded in almost completely pushing its operating costs (absent the relatively small investment needed to run the app and backoffice) down to people who often can’t afford it but are lured into trying because the alternatives seem even lower paying.
To drive for Uber, you need a late model car, in great shape, with four doors. It doesn’t have to be a black sedan, but if it isn’t Uber will exclude you from a number of ride requests.
So where does someone without a lot of money get a late model black sedan? If they can afford it, they buy one, but that means laying out a lot of money and taking on some heavy credit up front. More than likely, however, what a budding Uber driver does is lease his black sedan from an Uber-suggested third party contractor. You’ll find them right on the Uber website. They’ll take an average $500 deposit to sign you into a three year lease running $300 a month. So that all adds up to a capital investment by the driver of $11,300 over three years.
Next capital cost to the driver is insurance, expensive insurance, because the cheap minimum stuff you buy off the TV ads is not going to cover you driving passengers around. Don’t worry, though, as Uber will sell you just what you need, albeit at $4,600 a year. That works out to $13,800 for three years.
And, hey, driver, you need to pay for licensing, gas, maintenance, fines, regular car washes, depreciation of your vehicle and all the other stuff. Over three years, let’s call it $5,000.
So overall, the cost for you to get a job with Uber is about $30,100 over three years. If you don’t have the cash on hand, and need to borrow it, add on 13% interest or more if using a credit card, maybe more for second-level sources for people who don’t qualify for good credit.
But wait — many jurisdictions are now demanding additional licenses from Uber drivers, claiming they are operating a business. One of the more extreme plans under consideration is in Newark, New Jersey. The city is looking at a $500 annual fee to operate in the city, $1,000 additional license to pick up and drop off passengers at the airport and Newark Penn Station, and a $1.5 million insurance coverage requirement.
If the driver fails to make any of those payments, s/he instantly becomes unemployed, unable to pay enough to have a job to earn enough to pay for that job. This is, in economic terms, an extractive process — a third party takes profit, leaves the true costs of capital to the workers, and when they fail, to society who will need to step in and provide food benefits as a last resort.
In addition to having to raise their own capital to essentially buy themselves a job driving for Uber, drivers face risks far above the simple “risk” associated with any “investment.”
In addition to the obvious risks of accidents, bad reviews, and good/bad weather that cuts the number of people seeking rides, perhaps the biggest financial risk to any driver is Uber itself.
Imagine a situation where there are 10 riders in a city, and ten Uber drivers. For argument’s sake, let’s say each driver gets one fare a night. Uber makes money on its 27% share of 10 rides. Now, increase the number of Uber drivers to 100 (which makes getting a ride easier and faster for quicker profit for Uber and protects Uber when drivers quit) while the number of rides stays at 10. That means 90 drivers make nothing each night. Independent of the number of drivers, Uber still makes the same money on its share of 10 rides.
In 2015, Uber doubled the number of drivers in the U.S. As of October 2015, the company had 327,000 active drivers, more than doubling the 160,000 that gave rides in 2014. Some of the new drivers are absorbed by growth in ridership, some are not.
The other risk is that Uber sets prices, which vary even though the driver’s costs do not. For example, in order to theoretically boast ridership, Uber lowered prices in New York City such that individual drivers saw an average decline in payouts of 15%. The company also experimented with rate cuts in 99 other North American cities.
UberPool is a new service where multiple customers headed the same way can “share” a car.
Imagine two Uber drivers each carrying a single passenger along the same route which results in a fare of $11. After Uber takes its brokerage cut as well as its “safety fee” (even though the company still has the poorest driver background checks in the taxi industry), each driver ends up with $8 each in pocket, while Uber ends up with $6, a 27% commission for Uber.
Now along comes UberPool, and these same two serial riders get picked up by a single driver. Since UberPool offers passengers a substantial discount for sharing a ride, that means each passenger now pays $6 (in this example). After Uber takes its commission, including the safety fee, the payout to the driver is $4 for each passenger, or a total of $8. So the driver makes the same amount, but Uber’s take of the overall $12 for this ride is also $4 – a 33% overall commission. So Uber makes a higher percent on UberPool rides, yet the driver makes about the same amount.
The other side of financial risk is financial return, what you get after investing capital. For Uber drivers, there is no realistic average. Take a look at one of the many online driver forums and you’ll see a range of claimed payouts so wide (from sub-minimum wage to thousands a week) that it is of no real value. Here is at least one reasonable breakdown of costs and payouts.
Leaving aside the forum posters who are just lying for whatever reason, the variables of driving for Uber are such that averages are not really possible. One of the few variables under the driver’s control is number of hours worked, and many of those who claim high weekly payouts also claim to drive 12 or more hours a day. Leaving aside the not inconsequential question of whether you feel it’s safe to catch those guys 11.5 hours into their shift, it leaves the economic question of how many hours a week it takes in the gig economy to earn a decent living.
The New World Order
Unlike conventional labor, where one starts at zero on day one and begins earning money, or traditional self-employment where in return for capital investment one keeps 100% of the profits, the gig economy’s main point is that people working for places like Uber start behind, maybe $10,000 in the hole after they secure a car, insurance and all the rest. Uber, however, begins profiting from the driver’s labor immediately, and loses nothing when the driver is pushed aside.
All of the gain, none of the risk, in the New Economy where people pay for their own jobs.
What other business is there where the Capitalist takes almost no risk, invests no capital, and pushes all that down on his workers alone, while raking in money? Oh, rights, pimps. Welcome to the gig economy.
Won’t paying for Bernie’s healthcare make us pay higher taxes like in Europe?
Not likely. Here’s what Hillary doesn’t want to tell you.
Free or very low-cost universal health care is available to citizens of all the countries marked in green, below, as well as China, North Korea, Thailand and Vietnam, left off for some reason:
You’ll see the U.S. stands alone. Somehow our nation, alone among industrialized nations and some not so industrialized, has yet to figure out how to find a why to provide affordable healthcare for all of its citizens.
One of the arguments posited is that the U.S. is too big for some poncy European system to work, but of course China and Russia are bigger. Another is that quality of care suffers, but people in Japan have some of the longest life spans in the world, and things are pretty good across Europe.
But the argument that seems to stick best in America is that such “utopian” healthcare schemes are simply too expensive, that taxes over there are so much higher than in America.
So keeping in mind that most of the places that offer free or very low-cost universal health care also offer free or very low-cost college (how’s it feel that a degree at Podunk State U costs more than Oxford University — about $12,000 a year for UK and EU students?),
And, most of those other countries have dollar-adjusted higher minimum wages. And they save extraordinary amounts of money that in the U.S. end up being spent on social welfare and public health for people who are unhealthy because they can’t afford to see a doctor.
But let’s look at some tax figures:
Oops. The average U.S. income tax rate is actually higher than some of those places.
And of course in the U.S., in addition to federal income tax, we also pay state and sometimes city tax. And Social Security/Medicare tax of 7.65% And property tax, sales tax and taxes/surcharges on cell phones, airports, hotels, restaurant meals and on and on. And of course other countries also have other taxes; the point is Americans are already paying a lot of taxes and getting damn little in return.
And on top of that, we also pay (those who can afford it…) for health insurance. For 2012, the annual premiums for employer-sponsored family health coverage averaged $15,745, up 4% from 2010, with workers on average paying $4,316 toward the cost of their coverage. And of course those premiums paid do not include deductibles and co-pays.
And prescription medicine costs. Americans pay more for drugs than anyone in the world. Drug prices in the United States are often up to 10 times more expensive than in almost all other developed countries.
And that is how Bernie Sanders comes to the conclusion that even if taxes rise, the single-payer health care system he proposes would save an average American family of four almost $6,000 per year.
Think about it. Doctor’s orders!
Food stamps are for hungry people, which we should not have in America. There are of course cheaters, just like there are wealthy people who cheat on their taxes. The tax cheats won’t starve to death, or see their children go hungry, but released drug felons in many states will.
It used to be that when you served your time for a crime, your “debt to society” was considered paid, and you were ready to re-enter society. But for many released drug felons, the punishment continues long after they leave jail.
The felony drug ban is a Congressional-mandated lifetime restriction on Temporary Assistance for Needy Families (TANF; note the word family there) and food stamps (SNAP) for anyone convicted of a state or federal drug felony, unless states opt out. In states where the ban applies, a person released from a prison sentence are denied basic assistance at a time of extreme vulnerability.
A study by The Sentencing Project found that in the 12 states that impose the lifetime ban, an estimated 180,000 women alone are impacted. If you include the other 24 states that impose a partial ban, the number of people affected is significantly higher. And since law enforcement is happily conducted with racial bias, people of color are disproportionately denied assistance.
The felony drug ban can be traced back to the 1990s, when politicians of both parties sought political gain by getting “tough on crime.” Senator Phil Gramm , the sponsor of the ban, argued that “we ought not to give people welfare benefits who are violating the nation’s drug laws.” After just two minutes of floor debate, the measure was adopted by unanimous consent as part of the 1996 welfare “reform” legislation.
Of course there are other post-prison punishments on felons. The most significant is that few employers will hire an ex-felon, and more employers than ever now run mandatory background checks even for lousy minimum wage jobs. Pell grants are not available for felons, and most schools will deny them financial aid, ensuring most can’t receive the education they need to get back on their feet. Men and women with prior drug convictions are also typically denied public housing and other benefits. A lot of banks won’t deal with a felon.
Now, let’s see a show of hands out there.
Who thinks making a man or woman unemployed, hungry, potentially homeless and without a chance at education is going to reduce the chances s/he won’t recommit a crime? Nope, it’s just damn mean and stupid.
In America, we have a very crude understanding of social welfare programs. For most Americans, anything the government gives to its people (i.e., us) to keep us healthy, fed and educated, is a “handout” to lazy people who don’t deserve it.
Helping each other, using our tax money for us, as does most of the civilized world, is somehow wrong. In America, we’d prefer you starve to death, quietly if possible, as the rest of us are binge watching Netflix whilst eating Doritos.
Doritos we worked for, dammit. Albeit at our minimum wage jobs at Walmart, but whatever.
And with that, welcome to that rotting greenish boil head otherwise known as Oklahoma, where the Republican Party compared Americans receiving food stamp benefits to park animals fed by the public.
In the since-deleted Facebook post, the Oklahoma GOP offered a “lesson” by comparing the distribution of food stamps to 46 million Americans to a policy of the National Park Service to discourage the public from feeding animals “because the animals will grow dependent on handouts and will not learn to take care of themselves.”
Party Chairman Randy Brogdon offered a faux-apology in another Facebook post: “I offer my apologies for those who were offended – that was not my intention.”
Which is hilarious and clear proof he was dropped on his head as a child by his alcoholic mother, because of course it is obvious that comparing needy people to animals is offensive to absolutely everyone. Even a park animal could see that.
This also isn’t the first time the GOP has compared Americans to animals. In 2014, South Dakota Senate candidate Dr. Annette Bosworth’s posted a nearly identical post to her Facebook campaign page:
FUN FACT: A very large percentage of food stamp recipients are children (“cubs”), the elderly, and disabled people. Maybe it’s time to thin the herd.
Every candidate shouts about job creation, and some talk about the recovery from the last recession. Every month the Department of Labor releases new statistics about how many jobs have been created, improvements in the unemployment rate, and on and on.
There are parts of the society and the country where some of that is even partly true. But for about 20% of our states, it is not even partly close. An awful lot of the good news is just a numbers game.
Data compiled by the Associated Press shows ten U.S. states still have not regained all the jobs they lost in the Great Recession, even after six and a half years of “recovery,” while many more have seen only modest gains.
The figures are one more sign of the economic inequality, the one field America remains the undisputed global leader. The on-the-ground reality of negative job growth is why many Americans feel the economy has passed them by, and fuels support for angry candidates Donald Trump and Bernie Sanders.
Wyoming has three percent fewer jobs it did when the recession began. Alabama’s job total post-recession is -2.7 percent, followed by New Mexico at -2.6. New Jersey (Chris Christie!) has one percent fewer jobs than it did at the end of 2007, and Missouri is just below its pre-recession level. The other five losers are Mississippi, Nevada, Maine, Connecticut, and West Virginia.
Among the other states, several show only small gains past pre-recession job totals. Illinois, statewide with a population of over 12 million, has only 8,600 more jobs than it did in December 2007. Arizona’s job count is up just 9,200 with a population of six million (not counting illegal aliens.) And Ohio (Kasich!!!) has added just 58,100 jobs with its population of almost 12 million. Those gains are more or less (it’s less) statistically insignificant.
The states that saw the highest rates of job growth tell the story of the last few years. Some of the biggest gainers include:
Washington DC is a big, big winner, with significant growth from America’s largest employer, the federal government, all fueled significantly by the very profitable War of Terror.
The oil and gas drilling boom lifted North Dakota’s job count by more than 20 percent, though falling energy prices have caused significant layoffs in the past year. Need to check back with North Dakota in a year or two.
Texas has also benefited from the energy boom, as well as greater high-tech hiring in cities like Austin.
Utah and Colorado have also benefited from fast-growing information technology companies. Colorado especially has a large aerospace (read: defense) industry, so good for them.
Are international trade deals, such as NAFTA and the TPP, good for America, or bad for America?
The answer is yes, depending on who you ask.
What Are NAFTA and TPP?
The North American Free Trade Agreement (NAFTA), which went into force in 1994, and the Trans-Pacific Partnership (TPP), which is still pending ratification in the U.S. and elsewhere, are examples of the type of broad-based, large-scale international trade agreements now discussed by American presidential candidates with the same tone of voice used to speak of that wet soup in street gutters. Indeed, even discussing the subject of whether they are good or bad for America may be little more than an academic argument at this point; Trump has sworn to make no new trade agreements and says he will not support the TPP. Hillary is a little cagier in her response, but, for the record, for now, says she too will not support TPP.
But let’s slow things down a bit, and look into that key question, of how things like NAFTA and the TPP might affect Americans. After all, candidates do occasionally say one thing during the campaign, and another when actually in office, right?
International trade deals are agreements between countries, often groups of countries, that are designed to promote more trade, more goods and services, and sometimes more workers, moving across borders. The deals typically reduce taxes and tariffs, change visa rules, and sometimes soften regulations that keep foreign products out. The phrase used most often is “lower the barriers.”
So, if widgets made expensively in the U.S. can be made more cheaply in Vietnam and then imported into the U.S., something like TPP can facilitate that by lowering American tariffs on widgets. Meanwhile, Vietnam might be required to change its agricultural import system to allow American genetically modified fruit to flow into Hanoi’s supermarkets.
NAFTA is a good place to start in learning more, as it involves three countries — the U.S., Canada, and Mexico — that generally get along, play reasonably fair, and already had a robust cross-border trade. Lots of non-variables there. Plus, since NAFTA’s been around for over 20 years, there should be a decent consensus on how it worked. That will provide a real world example to weigh against a newcomer like the TPP.
There are numbers. For example, the U.S. Chamber of Commerce says increased trade from NAFTA supports about five million U.S. jobs. Unemployment was 7.1% in the decade before NAFTA, and 5.1% from 1994 to 2007. But then again unemployment from 2008 to 2012 has been significantly higher.
You can find similar ups and downs on imports and exports, value of goods, and the like. Some are clearer than others; since 1993, U.S. exports to Canada and Mexico have climbed 201 percent and 370 percent. The problem is trying to attribute them. Global economics is a complex business, and pointing to a singularity of cause and effect is tough.
Want to see for yourself? Here, and here, and here, and here are articles from smart people who can’t figure out if NAFTA has been a good thing or a bad thing. It is not that simple. And NAFTA, remember, was just three countries. The TPP would draw in 12 nations.
The Latin phrase cui bono means “who benefits?,” and is used by detectives to imply that whoever appears to have the most to gain from a crime is probably the culprit. More generally, it’s used in English to question the advantage of carrying something out. In the case of things like NAFTA and TPP, the criminal context might be more applicable.
Most everyone can agree that NAFTA made certain products cheaper for American consumers, as manufacturing costs are lower in Mexico than Idaho. American companies who found new export markets abroad also saw a rising tide of new money. The problem is that for many Americans, in the words of historian Morris Berman, that rising tide lifted all yachts, and not all boats.
Allowing American firms to make things abroad and import them into the U.S. free or at low tariff cost moves manufacturing jobs out of the United States. No argument there among economists. The current celebrity case, cited by several candidates, is that of Carrier. Carrier just sent 1,400 jobs making furnaces and heating equipment to Mexico. Workers there typically earn about $19 a day, less than what many on Carrier’s Indiana assembly line used to make in an hour.
Carrier will see higher profits due to lower costs. They may or may not pass on some portion of those savings to American consumers. They have put Americans out of work.
Economists will often claim that such job losses are part of the invisible hand, how capitalism works, duh. The laid off workers need to learn to code and build web pages, migrate to employment hot spots such as California like modern day Tom Joads. But pay a visit to nearly anywhere in what we now blithely call America’s Rust Belt, and see how that’s working out.
Retraining industrial workers just does not happen overnight, even if there was free, quality education (there’s not.) Indeed, since the beginnings of the hollowing out of America, it has not happened at all. The risk is also that retraining takes unemployed, unskilled people and turns them into unemployed, skilled people. Training is only of value when it is connected to a job. Remember, as all those unemployed Carrier people somehow learn to build web pages, America’s colleges are churning out new workers, digital natives, who already have the skills. Even Silicon Valley’s needs are finite.
Patterns do emerge, and the American people know they’ve been had at the expense of corporations that do indeed benefit from international trade agreements. Many Americans see that average workers and thousands of communities have been screwed by trade agreements which put them in direct competition with low wage workers around the world.
Everybody Wins, Except for Most of Us
Economist Robert Scott says he knows. He claims over the last 20 years, trade and investment deals have increased U.S. trade deficits and cost Americans their jobs. For example, the agreement allowing China into the World Trade Organization led to trade deficits that eliminated 3.2 million jobs between 2001 and 2013. Meanwhile, the United States already faces a trade deficit with countries in the proposed Trans-Pacific Partnership that cost two million U.S. jobs in 2015.
In his 2008 book, Everybody Wins, Except for Most of Us, Josh Bivens shows that while the most privileged Americans have benefited from cost-savings due to trade, increased global integration harms working Americans. Bivens estimated that the growth of trade with low-wage countries reduced the median wage for full-time workers without a college degree by about $1,800 per year in 2011.
A Broader View
Of course there are dissenting opinions; another economist cautions “to understand how dismantling trade barriers helps the country, we also need to take a broader view of the American economy, and not focus solely on disruptions and lost jobs in particular sectors.”
And that makes sense, if you believe economics is about money.
But if one is asking whether or not international trade agreements are good, or bad, for America, one needs to think bigger. On a whole-of-society level, economics is about people. We all want American companies to make money. It’s also great that Walmart is full of low-cost consumer electronics from Asia, or Carrier air conditioners fresh from Mexico, but you need money — a job — to buy them.
Think broader, and you’ll see economics is about people. Let that answer the question for you about whether international trade agreements are good or bad for your part of America.
CEO Andy Puzder (above) said “We could have a restaurant… where you order on a kiosk, you pay with a credit or debit card, your order pops up, and you never see a person.”
Puzder’s interest in an employee-free restaurant has been sparked by rising minimum wages. “With government driving up the cost of labor, it’s driving down the number of jobs,” he says. “You’re going to see automation not just in airports and grocery stores, but in restaurants.”
The CEO has been an outspoken advocate against raising the minimum wage, writing op-eds on how a higher minimum wage would lead to reduced employment opportunities. “This is the problem with Bernie Sanders, and Hillary Clinton, and progressives who push very hard to raise the minimum wage,” says Puzder. “Does it really help if Sally makes $3 more an hour if Suzie has no job?”
So let’s unpack Puzder’s remarks, and call bullsh*t on him.
The federal minimum wage hit its high point in 1968 at $8.54 in today’s dollars and while this country has been a paradise in the ensuing decades for what we now call the “One Percent,” it’s been downhill for low-wage workers ever since. In fact, since it was last raised in 2009 at the federal level to $7.25 per hour, the minimum has lost about 8.1% of its purchasing power to inflation. In other words, minimum-wage workers actually make less now than they did in 1968.
So if Puzder cannot make money by paying circa-1968 wages with 2016 prices in force, he needs some business lessons.
But are wages really what this is all about? Let’s see what else Puzder had to say.
“They’re always polite, they always upsell, they never take a vacation, they never show up late, there’s never a slip-and-fall, or an age, sex, or race discrimination case,” says Puzder of swapping employees for machines.
Ah, yes, there we have it.
Puzder doesn’t want cheaper labor per se, he wants to quit trying to figure out how to make his people work like machines, and just have machines work like he wishes people would do. Stupid people, with their need for time off and desire not to be discriminated against.
BONUS: Guess what? One of the nation’s highest minimum wages, in Seattle, has not led to mass unemployment at all.
DOUBLE BONUS: In addition, while we all grieve for poor CEOs forced to pay out a living wage, think bigger. Higher wages mean fewer people needing food assistance, which means lower taxes. Higher wages also puts more money into the economy, usually the very local economy. Unlike wealthy people like CEOs, who tend to save their money or invest it, lower income people spend their wages. An extra dollar to a Carl’s, Jr. worker moves quickly into the hands of a local food store, which uses the dollar to purchase goods, which boosts the whole blessed mess.
SUPER SIZE BONUS: Bloomberg reported Puzder’s salary and other compensation as $4.485 million, so he is doing well. His restaurant chain is doing well, too, as profits rose more than 30 percent last year.
DESSERT: Puzder also lobbied against a Department of Labor rule change that currently allows him to deny his restaurant assistant managers overtime by claiming they are executives.
A SECOND DESSERT: Puzder argues that social welfare “programs have the unintended consequence of discouraging work rather than encouraging independence, self-reliance, and pride, and that, because of government assistance, low-wage employees across the United States are refusing promotions and additional hours for fear of losing public assistance.”
So I’ll have fries with that bullsh*t please!
More Americans work for less than minimum wage than work for minimum wage. They are the people who occupy tipped positions, mostly working as servers in restaurants.
They fall outside the minimum wage, and thus do not have even the weak assurances of an income the minimum provides. And those tips — they are great at some swanky joints, weak at lesser ones. Tips ebb and flow, depending on the weather (rain and snow can keep customers home), cheapo patrons and which shift one pulls; daytime Tuesday is not as good as Saturday night. Or a four top who orders wine with each course, or that family on vacation who “just wants ice water.” Your income depends as much on luck as anything you do with your time and labor.
Or here’s one strategy that does not depend on luck: encourage your waitresses to dress sexy, such as at Hooter’s, to pull in more tips, mixing sexual exploitation with exploitation of wages.
And save the speech about how all these folks should go out and get a different job if they don’t like the system. Almost two million Americans work below minimum, and they do not have access to two million currently available, better paying, jobs.
But from the restaurant owner’s side, the deal is sweeeeeeeeeet. They get to pay subminimum wage, and leave it up to the customers to make up their payroll. And if the customer stiffs the waiter, that’s no skin off the owner’s nose. And of course some owner’s skim the tips, and/or require servers to share their tips with the back of the house kitchen staff, diluting a small amount of money further.
The owners have no interest in having the government mess with that solid gold system if it can be helped.
As an example, New York state’s hourly minimum wage for tipped workers rose from $5.00 to $7.50 on January 1 (standard, non-tipped, minimum wage is $9.00 an hour in the state), much to the dismay of the New York State Restaurant Association. The restaurant owners lobbying group sent a letter to NY Governor Andrew Cuomo demanding that he freeze the tipped wage for five years. This letter comes just weeks after the National Restaurant Association filed an appeal with the state Supreme Court, claiming that Cuomo’s plan to raise the minimum wage further by 2018 is part of a longstanding pattern of discrimination “against the hard working men and women that own New York’s restaurants.”
Implied is a hearty “up yours to the working men and women that work in New York’s restaurants.”
Oh, and by the way, want to know if your favorite restaurant owner supports the freeze? You can’t. The Restaurant Association’s letter had more then 100 restaurant owners included as signatories. However, the Association will not release the names of the signatories because restaurateurs who have taken “political stances” in the past “have received death threats.” So it’s a safety issue. Right.
Employers should be responsible for paying their own employees, not relying on customers to hand over cash just to keep
serfs servers on the job.
When presidential candidate Bernie Sanders talks about income inequality, and when other candidates speak about the minimum wage and food stamps, what are they really talking about?
Whether they know it or not, it’s something like this.
My Working Life Then
A few years ago, I wrote about my experience enmeshed in the minimum-wage economy, chronicling the collapse of good people who could not earn enough money, often working 60-plus hours a week at multiple jobs, to feed their families. I saw that, in this country, people trying to make ends meet in such a fashion still had to resort to food benefit programs and charity. I saw an employee fired for stealing lunches from the break room refrigerator to feed himself. I watched as a co-worker secretly brought her two kids into the store and left them to wander alone for hours because she couldn’t afford childcare. (As it happens, 29% of low-wage employees are single parents.)
At that point, having worked at the State Department for 24 years, I had been booted out for being a whistleblower. I wasn’t sure what would happen to me next and so took a series of minimum wage jobs. Finding myself plunged into the low-wage economy was a sobering, even frightening, experience that made me realize just how ignorant I had been about the lives of the people who rang me up at stores or served me food in restaurants. Though millions of adults work for minimum wage, until I did it myself I knew nothing about what that involved, which meant I knew next to nothing about twenty-first-century America.
I was lucky. I didn’t become one of those millions of people trapped as the “working poor.” I made it out. But with all the election talk about the economy, I decided it was time to go back and take another look at where I had been, and where too many others still are.
My Working Life Now
I found things were pretty much the same in 2016 as they were in 2012, which meant — because there was no real improvement — that things were actually worse.
This time around, I worked for a month and a half at a national retail chain in New York City. While mine was hardly a scientific experiment, I’d be willing to bet an hour of my minimum-wage salary ($9 before taxes) that what follows is pretty typical of the New Economy.
Just getting hired wasn’t easy for this 56-year-old guy. To become a sales clerk, peddling items that were generally well under $50 a pop, I needed two previous employment references and I had to pass a credit check. Unlike some low-wage jobs, a mandatory drug test wasn’t part of the process, but there was a criminal background check and I was told drug offenses would disqualify me. I was given an exam twice, by two different managers, designed to see how I’d respond to various customer situations. In other words, anyone without some education, good English, a decent work history, and a clean record wouldn’t even qualify for minimum-wage money at this chain.
And believe me, I earned that money. Any shift under six hours involved only a 15-minute break (which cost the company just $2.25). Trust me, at my age, after hours standing, I needed that break and I wasn’t even the oldest or least fit employee. After six hours, you did get a 45-minute break, but were only paid for 15 minutes of it.
The hardest part of the job remained dealing with… well, some of you. Customers felt entitled to raise their voices, use profanity, and commit Trumpian acts of rudeness toward my fellow employees and me. Most of our “valued guests” would never act that way in other public situations or with their own coworkers, no less friends. But inside that store, shoppers seemed to interpret “the customer is always right” to mean that they could do any damn thing they wished. It often felt as if we were penned animals who could be poked with a stick for sport, and without penalty. No matter what was said or done, store management tolerated no response from us other than a smile and a “Yes, sir” (or ma’am).
The store showed no more mercy in its treatment of workers than did the customers. My schedule, for instance, changed constantly. There was simply no way to plan things more than a week in advance. (Forget accepting a party invitation. I’m talking about childcare and medical appointments.) If you were on the closing shift, you stayed until the manager agreed that the store was clean enough for you to go home. You never quite knew when work was going to be over and no cell phone calls were allowed to alert babysitters of any delay.
And keep in mind that I was lucky. I was holding down only one job in one store. Most of my fellow workers were trying to juggle two or three jobs, each with constantly changing schedules, in order to stitch together something like a half-decent paycheck.
In New York City, that store was required to give us sick leave only after we’d worked there for a full year — and that was generous compared to practices in many other locales. Until then, you either went to work sick or stayed home unpaid. Unlike New York, most states do not require such a store to offer any sick leave, ever, to employees who work less than 40 hours a week. Think about that the next time your waitress coughs.
Minimum Wages and Minimum Hours
Much is said these days about raising the minimum wage (and it should be raised), and indeed, on January 1, 2016, 13 states did raise theirs. But what sounds like good news is unlikely to have much effect on the working poor.
In New York, for instance, the minimum went from $8.75 an hour to the $9.00 I was making. New York is relatively generous. The current federal minimum wage is $7.25 and 21 states require only that federal standard. Presumably to prove some grim point or other, Georgia and Wyoming officially mandate an even lower minimum wage and then unofficially require the payment of $7.25 to avoid Department of Labor penalties. Some Southern states set no basement figure, presumably for similar reasons.
Don’t forget: any minimum wage figure mentioned is before taxes. Brackets vary, but let’s knock an even 10% off that hourly wage just as a reasonable guess about what is taken out of a minimum-wage worker’s salary. And there are expenses to consider, too. My round-trip bus fare every day, for instance, was $5.50. That meant I worked most of my first hour for bus fare and taxes. Keep in mind that some workers have to pay for childcare as well, which means that it’s not impossible to imagine a scenario in which someone could actually come close to losing money by going to work for short shifts at minimum wage.
In addition to the fundamental problem of simply not paying people enough, there’s the additional problem of not giving them enough hours to work. The two unfortunately go together, which means that raising the minimum rate is only part of any solution to improving life in the low-wage world.
At the store where I worked for minimum wage a few years ago, for instance, hours were capped at 39 a week. The company did that as a way to avoid providing the benefits that would kick in once one became a “full time” employee. Things have changed since 2012 — and not for the better.
Four years later, the hours of most minimum-wage workers are capped at 29. That’s the threshold after which most companies with 50 or more employees are required to pay into the Affordable Care Act (Obamacare) fund on behalf of their workers. Of course, some minimum wage workers get fewer than 29 hours for reasons specific to the businesses they work for.
It’s Math Time
While a lot of numbers follow, remember that they all add up to a picture of how people around us are living every day.
In New York, under the old minimum wage system, $8.75 multiplied by 39 hours equaled $341.25 a week before taxes. Under the new minimum wage, $9.00 times 29 hours equals $261 a week. At a cap of 29 hours, the minimum wage would have to be raised to $11.77 just to get many workers back to the same level of take-home pay that I got in 2012, given the drop in hours due to the Affordable Care Act. Health insurance is important, but so is food.
In other words, a rise in the minimum wage is only half the battle; employees need enough hours of work to make a living.
About food: if a minimum wage worker in New York manages to work two jobs (to reach 40 hours a week) without missing any days due to illness, his or her yearly salary would be $18,720. In other words, it would fall well below the Federal Poverty Line of $21,775. That’s food stamp territory. To get above the poverty line with a 40-hour week, the minimum wage would need to go above $10. At 29 hours a week, it would need to make it to $15 an hour. Right now, the highest minimum wage at a state level is in the District of Columbia at $11.50. As of now, no state is slated to go higher than that before 2018. (Some cities do set their own higher minimum wages.)
So add it up: The idea of raising the minimum wage (“the fight for $15”) is great, but even with that $15 in such hours-restrictive circumstances, you can’t make a loaf of bread out of a small handful of crumbs. In short, no matter how you do the math, it’s nearly impossible to feed yourself, never mind a family, on the minimum wage. It’s like being trapped on an M.C. Escher staircase.
The federal minimum wage hit its high point in 1968 at $8.54 in today’s dollars and while this country has been a paradise in the ensuing decades for what we now call the “One Percent,” it’s been downhill for low-wage workers ever since. In fact, since it was last raised in 2009 at the federal level to $7.25 per hour, the minimum has lost about 8.1% of its purchasing power to inflation. In other words, minimum-wage workers actually make less now than they did in 1968, when most of them were probably kids earning pocket money and not adults feeding their own children.
In adjusted dollars, the minimum wage peaked when the Beatles were still together and the Vietnam War raged.
Many of the arguments against raising the minimum wage focus on the possibility that doing so would put small businesses in the red. This is disingenuous indeed, since 20 mega-companies dominate the minimum-wage world. Walmart alone employs 1.4 million minimum-wage workers; Yum Brands (Taco Bell, Pizza Hut, KFC) is in second place; and McDonald’s takes third. Overall, 60% of minimum-wage workers are employed by businesses not officially considered “small” by government standards, and of course carve-outs for really small businesses are possible, as was done with Obamacare.
Keep in mind that not raising wages costs you money.
Those minimum wage workers who can’t make enough and need to go on food assistance? Well, Walmart isn’t paying for those food stamps (now called SNAP), you are. The annual bill that states and the federal government foot for working families making poverty-level wages is $153 billion. A single Walmart Supercenter costs taxpayers between $904,542 and $1.75 million per year in public assistance money, and Walmart employees account for 18% of all food stamps issued. In other words, those everyday low prices at the chain are, in part, subsidized by your tax money.
If the minimum wage goes up, will spending on food benefits programs go down? Almost certainly. But won’t stores raise prices to compensate for the extra money they will be shelling out for wages? Possibly. But don’t worry — raising the minimum wage to $15 an hour would mean a Big Mac would cost all of 17 cents more.
My retail job ended a little earlier than I had planned, because I committed time theft.
You probably don’t even know what time theft is. It may sound like something from a sci-fi novel, but minimum-wage employers take time theft seriously. The basic idea is simple enough: if they’re paying you, you’d better be working. While the concept is not invalid per se, the way it’s used by the mega-companies reveals much about how the lowest wage workers are seen by their employers in 2016.
The problem at my chain store was that its in-store cafe was a lot closer to my work area than the time clock where I had to punch out whenever I was going on a scheduled break. One day, when break time on my shift came around, I only had 15 minutes. So I decided to walk over to that cafe, order a cup of coffee, and then head for the place where I could punch out and sit down (on a different floor at the other end of the store).
We’re talking an extra minute or two, no more, but in such operations every minute is tabulated and accounted for. As it happened, a manager saw me and stepped in to tell the cafe clerk to cancel my order. Then, in front of whoever happened to be around, she accused me of committing time theft — that is, of ordering on the clock. We’re talking about the time it takes to say, “Grande, milk, no sugar, please.” But no matter, and getting chastised on company time was considered part of the job, so the five minutes we stood there counted as paid work.
At $9 an hour, my per-minute pay rate was 15 cents, which meant that I had time-stolen perhaps 30 cents. I was, that is, being nickel and dimed to death.
Economics Is About People
It seems wrong in a society as wealthy as ours that a person working full-time can’t get above the poverty line. It seems no less wrong that someone who is willing to work for the lowest wage legally payable must also give up so much of his or her self-respect and dignity as a kind of tariff. Holding a job should not be a test of how to manage life as one of the working poor.
I didn’t actually get fired for my time theft. Instead, I quit on the spot. Whatever the price is for my sense of self-worth, it isn’t 30 cents. Unlike most of this country’s working poor, I could afford to make such a decision. My life didn’t depend on it. When the manager told a handful of my coworkers watching the scene to get back to work, they did. They couldn’t afford not to.
When most people talk about economics there are lots of statistics, as if economics is about math. Economics is really about people. It shows who we are as a nation and tells us what we will become. In 21st century America, our hope now is that we’ll someday better people than we have become. But do the math; it’ll be a hard road.
In its most individual definition, jobs and work earn people money. They can feed themselves and their families, live inside and all the rest.
But at a more societal level, a broader, more fundamental level, work is more. Work can define a person, work can give purpose, make someone feel useful, engage the resources of a society, create goals. You could almost call it a soul, knowing that work saved more lives than any preacher.
The absence of work does just the opposite. People may be saved from starving by public assistance or charity (a vital part of society, caring for one another), but without purpose, they become cynical. They turn to drugs, legal like alcohol or illegal like meth, to replace the purpose and to fill the time. Without work, people give up. Rock bottom is a poor foundation for a nation to build on.
So here’s what is happening in our America. See if you can figure out where this all leads to.
Manufacturing was until the late 1970s the source of unprecedented wealth, spread proportionally across the economic spectrum in America. There were super rich people, and there were poor people, but there was also a thriving middle class that accounted for a huge section of our society. Without those jobs, economic apartheid, the one percent and the 99 percent, are inevitable.
As just one example, since the 2009 taxpayer-paid bailout, General Motors has cut high-paid workers for cheaper labor, hiring. The automaker hired around 18,000 hourly production workers, allowing the company to remove skilled trade jobs. The Center for Automotive Research says General Motors Company saves approximately $57,000 a year per worker when it replaces a skilled $32 per hour union worker with a $15 per hour less-skilled, temp or non-unionized employee. These were once the “good jobs” that sustained a growing economy. They are gone. They have been replaced with…
Service jobs. Service jobs do not create anything. They simply move some money from one hand to another, with a larger company taking a cut and sending the cash off to another city, another state, or another country. In 2014 America, manufacturing employs 1/10 of Americans. Services accounts for nearly 90%. America’s largest single employer in 1960 was General Motors. In 2014, it is Walmart. The “occupations” that account for the most jobs now are retail salespersons, cashiers, and restaurant workers. Those jobs pay minimum wage or less (for restaurant workers who can get tips), rarely offer any benefits and are rarely full-time.
Working for subsistence wages, supplemented with public benefits, does not create value for humans. It is a modern-day form of feudalism, or perhaps more similar to raising livestock than growing a society.
My book, Ghosts of Tom Joad: A Story of the #99 Percentconfronts these issues head on. The book is fiction, in that it wraps the economics and societal changes of the last fifty years into the story of one family. The book is all true in that what happens to that family, and in particular the main everyman character Earl, happened to millions of American families that believed the myths of growth, hard work and a sustainable middle class even as the super wealthy were pulling the money right out of their hands in front of their eyes. Ignore the rising waters, until you feel them up to your Katrina-like lips.
Choosing to not believe something doesn’t make it go away.
My book is set in Ohio, but the stories in it can be taking place today anywhere in the United States outside a few pockets of affluence centered on a few major cities, or a handful of growth industries such as government and defense.
If you want to know where the 99 percent came from, this is part of the answer. Think of it as a good story, with a conscience.
I was eating in the food court below Grand Central Station in New York. There was a cold rain outside, and a good portion of the people around me appeared to be homeless.
Many were making the rounds of the trash cans and tables, eating the food they found. There were cops nearby, as well as National Guardsmen on terror watch duty. There seemed to be a sort of understanding at work, such that the cops left the homeless alone as long as the homeless left the paying customers alone.
I wasn’t going to finish my meal. There wasn’t much left, but some. What was the right thing to do?
A) Leave the meal. A mouthful for someone hungry is better than nothing;
B) Throw it away. It would have been embarrassing to offer a small amount available only because I’d already gorged myself;
C) Go buy another full meal (I could afford it) and give it to one of the hungry people;
D) Demand my government stop spending 54% of my taxes on war (actually more, if you consider black budgets, paramilitary forces, and intelligence costs) and start taking care of its own people. I have the resources to feed one person, but we have the resources to feed all Americans. If only we were willing. I don’t always know what’s right, but I know what is wrong.
The middle class, which for 40 years has represented a majority of the country in practice, and formed the foundational belief in what has been known as the “American Dream,” is now just half the United States, according to a new report.
Over at least the last four decades, productivity gains have gone largely to the top of the economic pyramid, increasing both their income and wealth. Real income growth has been flat for most Americans, even as the cost of living has increased.
Need it in numbers?
The share of America’s income going to the middle class has fallen from 62 percent in 1970 to 43 percent now. Today, the majority of our national income goes to the upper class, which reaps a 49 percent share. (by comparison, the share of income going to the upper class in 1970 was just 29 percent). The median wealth of middle class households has fallen by more than one-fourth since the beginning of this century.
Need it in simple terms?
The rich are getting very much richer, seeing their wealth grow exponentially. The middle class is shrinking. Meanwhile, the poor are still poor and their numbers are growing. We are indeed heading toward a society within a society within the world’s wealthiest nation — one percent of “us” now own half of everything.
The implications of this path are dark.
At the point where a handful of people control most of the wealth, and the other money in our nation is so diffuse as to make those individuals in the bottom 99 percent of our society irrelevant except as cheap labor, we live in a modern day version of feudalism. Money is power, and a select handful now can control elections with “donations,” can have laws written and rewritten to match their needs, can keep a lid on the minimum wage more and more of us depend on now to get by, manipulate college loan and mortgage rates to keep people in debt, and secure ownership of the land we live on and the places we live. Hyper-wealthy people through their charitable foundations are free to social-engineer our world, paying to say grow one form of educational system while leaving another to wither on limited funding.
How did the wealthy pull off the greatest peaceful takeover of a nation in human history? Very easily. Their master stroke, however, was not to take predatory capitalism to its extreme, but to do so without sparking more than a whisper of disagreement from the very people they trod upon.
Here is the linchpin of how the rich have taken us: they have convinced average Americans to act and vote against their own interests, in part by manipulating them into opposing any program that has a chance of benefiting black and brown equally or more than themselves. Decent health care and nutrition for everyone? That’s socialism!
Our entire culture is fear-based, from our religion to our media to Wall Street. It drives everything, and fear is the most powerful tool that rulers can use to manipulate people. It is this constant state of fear that really makes us exceptional compared to every other advanced nation.
People, we have been bought. Someone else now, in every effective and meaningful way, owns us. Suckers.
We hear a lot about the “one percent” and the “99 percent” but what kind of net worth scores you a top slot in the real-life Hunger Games here in America? How much money do you need to be just average? The answers tell you just about everything you need to know about modern day America.
Short answer: Oh, we’re so screwed.
The Federal Reserve’s 2013 Survey of Consumer Finances released in September of 2014 is among the most recent data. The nice folks who compiled all of this waded through massive amounts of data. They caution they did not include 11 ultra high net worth individuals due to identity issues whatever that means, so the very top of this accounting could actually be even worse in reality. And don’t forget, the super-rich have had two whole years to accumulate even more money since this all was tabulated.
Let’s start at the top. The term “one percent” is now semi-meaningless, though you will need about $8 million to join them anyway. What really matters now is the top .1 percent. To crack that level you need to have well over $30 million in net worth.
But I get it, no one here is packing those kind of bucks. We’re all sort of average Americans, right? Maybe. To count yourself in at the 50 percent mark you need to possess some $82,000. How are we doing, students and young marrieds? Keep in mind net worth is what you own minus what you owe, not necessarily how much money you earn. So those students loans and that VISA card debt count against your ranking here, sorry.
The good news is that if you own nothing, have no savings or investments but also have no debt — you are precisely at zero — you are in the 11.8th percentile of net worths. Yep, that means about 11 percent of us have negative net worths. About a third of us have a net worth of only $15,000, not exactly a significant bumper against some bad luck, like losing your job or getting sick.
It’s a pretty bleak picture, but here it is:
But rich people have problems, too. Luckily, a group of brave psychiatric professionals, dubbed “wealth therapists,” have emerged to come to their aid.
The UK Guardian (America’s best newspaper) profiled Clay Cockrell, a former Wall Street worker turned therapist, who spends his days helping New York’s wealthiest people.
So what issues are America’s One Percent struggling with? Cockrell tells us there is guilt over being rich in the first place, which makes the rich feel that they have to hide the fact that they are rich. And then there is the isolation – being in the One Percent, it turns out, can be lonely.
And the problem is growing. According to Oxfam, the richest One Percent have seen their share of global wealth increase from only 44 percent in 2009 to 48 percent in 2014. It will break 51 percent by next year.
The wealth therapists also say things have only gotten worse for their clients since the debate over income inequality that has been spurred on by movements like Occupy Wall Street.
“The Occupy Wall Street movement singled out the One Percent and painted them globally as something negative,” said Jamie Traeger-Muney, another wealth psychologist. “I am not necessarily comparing it to what people of color have to go through, but it really is making value judgments about a particular group of people as a whole.”
Traeger-Muney specializes in the unique issues inheritors face. “You can come up with lot of words and sayings about inheritors, and not one of them is positive: spoiled brat, born with a silver spoon in their mouth, trust fund babies, all these things,” she said, adding “I am shocked by things that people say. If you substitute in the word Jewish or black, you would never say something like that.”
Hyper-wealthy, we all feel your pain. Thus, today, we are all part of the One Percent. #WealthyLivesMatter (say the wealthy.)
In another step in the long political tradition of imposing bombastic, faux populist, hate-mongering solutions to problems that don’t really exist, Maine Governor Paul LePage announced he is tired of able-bodied food stamp recipients zipping around on jet skis instead of looking for jobs that do not exist.
His state thus proudly announced it will disallow Supplemental Nutrition Assistance Program (SNAP, the official term for food stamps) benefits for childless households with certain assets worth more than $5,000. A home equity and a person’s primary vehicle (but what if that vehicle is a $1.5 million Ferrari?) won’t count against the limit, but the state has issued a list of things that could: “bank accounts, snowmobiles, boats, motorcycles, jet skis, all-terrain vehicles, recreational vehicles, campers” and other valuables.
“Hard-working Mainers should not come home to see snowmobiles, four wheelers or jet skis in the yards of those who are getting welfare,” LePage said in a statement. Left out of course is how those “hard-working Mainers” know exactly how is getting welfare among jet ski owners, but, whatever, when you are inciting hatred you don’t sweat the details.
OK. So if you are poor, you need to become poorer to get food assistance, because, sure if you have more than $5,000 bucks worth of whatever you are rich enough. The, after those one-time sell offs of your assets for pennies on the dollar to richer folks, you are then poor enough for welfare. Circle of life kinda stuff.
Of course all this righteousness begs the question of how many SNAP recipients in Maine have jet skis in their yards. Exactly how many?
“We hear examples and concerns from clients and constituents quite frequently,” a spokesperson for the governor replied. He declined to give a number, or an estimate, or to cite even one specific case.
He also declined to answer the “So what?” question; so what if someone who needs food assistance has minimal assets. Is the idea that one needs to sell off everything one owns, down to the walls, and only then ask for something to eat? How the f*ck mean of a society are we?
Federal law imposes resource limits for SNAP eligibility, but states generally waive the limit for applicants if they already qualify for even modest assistance from another means-tested safety net program. It’s a policy called broad-based categorical eligibility, and most states offer it.
In the aftermath of the Great Recession, almost all states also waived time limits on food stamp benefits for able-bodied adults without dependents, and those limits are coming back now that the unemployment rates are falling. LePage’s administration imposed the time limit — billed as a “work requirement” — ahead of schedule, ending benefits for 9,000 Mainers this year.
Oh, and about those jobs. Minimum wage in Maine is $7.50 an hour. Most minimum wage jobs offer 29 or fewer hours a week. So, even before taxes, that works out to $217 a week. Assuming a full 52 weeks of employment, that adds up to $11,310. So hah hah, the poverty line in Maine for one person is $11,945.
“What’s next? Grandma can’t buy groceries until she sells her engagement ring?” said Representative Drew Gattine, a Democrat who co-chairs the state legislature’s Health and Human Services Committee. (Answer: No. For no apparent reason, jewelry will not count toward the asset limit in Maine.)
Now, one more question.
How much in free food benefits are those lazy ass jet skiers in Maine sucking up? In other words, how much money will the new system in Maine save those angry tax payers, especially given the bureaucratic infrastructure needed to discover who has assets such as jet skis, and then to process them out of the SNAP system, lousy free-loaders?
The average person in Maine receives all of $122.79 a month in food benefits.
In my last book, Ghosts of Tom Joad: A Story of the #99 Percent two characters are talking, Earl, the main guy, and his friend, Preacher Casey.
What Casey said is pretty close to a lot of the things the Pope tried to say while he was in the U.S. last week, so I thought it might be worth reading here while the American media focuses ever-so-briefly on the plight of our poor, and the economy that made them that way.
We understood that getting along meant you could only be so selfish, that only watching out for yourself just would not work in a place where we had to live together. Sermon on the Mount said all that Casey told me, but we did it on our own in a practical way. I guess you can make a life outta not getting along if you only read one book, hating on certain people because one page of the Bible says to, while ignoring the rest of what it says, which is pretty goddamn clear about love.
Casey was still laughing on the bus when I remembered telling him that.
Casey and me ended up talking a lot as we became friends. Casey read a lot of books. He seemed to understand things that had happened around me and my life in a way that made it clear that Reeve was not an island like we thought it was. In fact, what had happened to us here had happened to a lot of places. A “hollowing out,” Casey said, in a kind of sermon of his own:
“Earl, money isn’t spread around like it used to be. After the war, until about the time you were in junior high school, incomes rose at the same level for everyone. But then things changed—you saw it, your mom and dad for sure. The top one percent of Americans watched their income grow dozens of times more than the rest of us, until that same small group of people held forty percent of all the
wealth in the U.S.”
“Look at Detroit,” Casey went on, “my old hometown. The U.S. emerged from the Second World War with Heaven’s only functioning army, with more than half of the industrial capacity in the world and as banker and creditor to allies and enemies. That was the highest hill our country climbed, and Detroit sat at the summit. Detroit was looking into a future where the rising prosperity was going to fuel a demand for cars unlike any consumer demand in human history. There was so much money and growth and potential that everyone ate well.
“When it rains like that, people can’t help but get wet. My own father started as a toolmaker’s apprentice right after high school and ended up making $35 an hour, with a pension, health care, employee discounts on the cars he helped build and a union picnic every Fourth of July.”
“Detroit rode that all up until about 1973, when everything went over the hill, not just in Detroit, but most everywhere — wages fell, benefits fell, production fell, population fell, home values fell. You can buy a house in Detroit for $6,000 today. Greatest generation and all, no, they were the greatest exception. It all happened quickly, in only the course of a few decades, two or three generations. My dad got out okay, but my older brother didn’t. He told me he felt thrown away, that he never thought this was so fragile. I hate to say it so crudely — God forgive me — but America lost its balls.”
“C’mon Casey,” I said, “that’s what business does, even I know that. It’s their job to make as much money as they can for them, not for us. A dog can’t help being a dog, so you don’t kick at him for peeing on a tree, right?”
“Earl, I’m not talking about anything radical here. I’m talking about a little bit of a balance. Those fights between your mom and dad over money you told me about, they were real. They were talking to each other about what was happening in America, all around them, without even knowing it. A very few people were choosing for them. Business became all appetite.
Now we are reaching for a zero-sum point where wealthy people believe that to gain anything requires them to take it from someone else. Wal-Mart already makes billions, but it fights even tiny increases to the minimum wage. If McDonald’s doubled its employees’ salaries to $14.50 an hour, a Big Mac would cost only 68 cents more.
“Actually, even all this talk about minimum wage is missing a big point: more Americans work for sub-minimum than for minimum wage. People who might get tips only have to be paid $2.13 an hour in some places. And that $2.13 has not changed by law in twenty-two years due to lobbying by the restaurant business. Owners are doing okay, as restaurant prices have gone up in the last twenty-two years. Just like in Roman times, the lion’s share beats the Christians’ share any day.”
“This is where my religious and political views meet up, Earl. Most wealthy folks say they’re religious people, but when the churches are rich and the regular people poor, you gotta wonder who is serving who. Most of those wealthy ignore one of the highest ideals from the Sermon — caring. Those words aren’t just some more poetry of hopefulness that passes for Christianity. He said quite clearly, ‘they who hunger and thirst for righteousness, they should be satisfied.’ But it ain’t just about handing over a few crumbs, saying it’s better than no bread at all.
“Getting into Heaven isn’t about earning merit badges, here’s one for those canned goods you didn’t want anyway at Christmas or another for tossing change into a cup. It’s about how you live a life in total, what you do 99 percent of the time, what you make of the world you live in. It isn’t religion that’s wrong, same as it isn’t business that’s wrong. It’s greed and selfishness that’s wrong, no matter what channel you’re watching.”
I always thought the Bible was like the dictionary, all the words was inside and you could scramble them around to mean anything you like, but Casey made sense.
“Look Earl, even though the original Owner was barefooted, what happens upstairs in my church is that as soon as some expensive shoes hit that floor it seems like the place loses its purpose. Me, I preached for the Lord a long time, but some days I think God’s the laziest man on earth. What I want is to be able to look out over my congregation and say to them forget most of what I’ve said but go out and be kind to each other, help each other and walk humbly when you have something others still need. When they hear someone cry in America because they’re hungry, I want that to be louder in their ears than any sermon.”
“So okay, Preacher, when’s it going to get better? When are we going to be able to live like our grandparents did?”
“Earl, nostalgia isn’t history. This is a story about change, and it’s important for you to know how that happened. Here we are forty years on still talking about recovery like it was as real as an election year promise. Prosperity is not something that will follow if we simply wait long enough. Like my friend says, cut through all the lies and there it is, right in front of you: America used to be a developing nation, in the best sense of that word.
“Almost in spite of themselves, the robber barons built prosperity through jobs. We had to get past the horrors of enslaving other human beings, past making children work in factories, past killing men in mines and machines. There were dark times, criminal times, but people had a sense of ‘we’ll get past this.’ Then we crossed a line. Manufacturing in America became expensive. Businesses sought lower costs and higher profits. String
that out as far as it goes and it means paying workers as close to zero—or zero if you somehow could like with slavery — and pulling in as much profit — as close to one hundred percent — as you somehow could. The question seemed to have become, ‘How many miles can you drive on a gallon of our blood?’
“We watched a reversal of two hundred years. American workers never earned as much again as they did in 1973. It was soon after that someone laid off a steelworker who became Patient Zero of the new economy.”
“The numbers are too consistent, the lines too straight. This was no accident, no invisible hand. Earl, we changed from a place that made things —radiators, cash registers, gaskets, ball bearings, TVs — into a place that just makes deals. Making things creates jobs, and jobs create prosperity. Making deals just creates wealth for the dealers. It’s math. The money that went up had to come from somewhere. That was right out of your father’s pocket.
“The deal makers don’t care because they don’t live here, hell, they don’t live anywhere. We live here.”
Just don’t die in the street where we have to step over your body on the way to the nail salon.
Oh, and by the way, this is a wholly made up problem created by frightened politicians. According to a study by the National Institute of Alcohol Abuse and Alcoholism, differences between the proportion of welfare and non-welfare recipients using illegal drugs are statistically insignificant.
But that did not stop Arizona.
Arizona proudly claims it spent $1.7 million dollars to test 87,000 people on public assistance for drug use. The total number of drug cheats caught in the first three years of the program, 2009-2012, was exactly one — a single positive result, which saved the state precisely $560, minus the $42 cost of the drug test itself. But oh my, since 2012, they got two more of the danged varmints.
Luckily, the Arizona drug testing is being done in a scientific way. The state asks new welfare recipients whether they’ve used drugs in the past 30 days, and only those who answer yes are tested.
Now the goody-goodest news of all is that Arizona apparently has got them some cheap drug testing. The ACLU estimates that an average drug test costs $42, bringing the total cost as high as $3.65 million if all of the Arizona welfare recipients were subjected to the full-price tests. But who knows,maybe there was GroupOn.
And luckily the money being spent on these drug tests is not going to feed hungry people, so it’s not being wasted on American who are wasted.
It is not just Arizona who wastes taxpayer money to solve a non-problem. Have a look:
Applicants for benefits that required drug screening, March 2013–September 2014: 69,587
Total required to take follow-up drug test at additional cost: 1,646
Disqualified due to a positive drug test: 69
Applicants for benefits that required drug screening, August 2012–July 2014: 9,253
Total required to take follow-up drug test at additional cost: 1,878
Disqualified due to a positive drug test: 29
Applicants for benefits that required drug screening, July 2014–December 2014: 11,300
Total required to take follow-up drug test at additional cost: 273
Disqualified due to a positive drug test: 24
Applicants for benefits that required drug screening, July 2014–December 2014: 4,044
Total required to take follow-up drug test: Unknown
Disqualified due to a positive drug test: 108
The neat thing is that Florida used to (they were stopped by court order) requires welfare applicants, who have little money hence the application, to pay for their own drug tests up front. If they passed the test, they eventually had their money refunded.
Note that if you can afford your own food, take all the drugs you want. Smoke up, Arizonians, and order that pizza delivered when you get the munchies. Damn hippies.
It wasn’t just a business, it was a way of life– what residents of Bethlehem, Pennsylvania referred to simply as “The Steel”– a mill once America’s second largest steel producer with 31,500 souls working in a single facility.
The mill made the steel for the Empire State building and the Golden Gate Bridge, and for WWII warships. After cheap imports flooded the United States in the 1980s, the Bethlehem Steel facility closed, leaving behind a mile-long scar of rusted out buildings people call the brownfields, along the Lehigh River. Allentown, Billy Joel’s bitter saga of industrial decline, name-checked the town.
The Promise of Legalized Gambling
So as soon as Pennsylvania legalized casinos in 2004, Bethlehem scrambled for one of the first, and won. Symbolically, Las Vegas’ Sands corporation would build right on top of the old mill. Everyone hoped the casino would replace a decent portion of the jobs lost when The Steel left. But by 2014, there were only 2,200 positions at the casino, plus 700 at leased businesses inside. Was a casino really the answer?
Even those new jobs didn’t come for free. Roads, some $10 million worth, had to be built or repaired to make it easier for out-of-towners (New York is only 75 miles away) to reach the casino. The city added to its police force. Since the casino was located outside the downtown business district, the city paid for a shuttle bus to try and draw players to their shops. But the casino had its own retail mall competing with anything local. No one should “plan on a casino to bring about urban renewal,” said a Wynn Casinos property manager in nearby Philadelphia, “because that’s not what casinos do.”
The House Always Wins
Still, there was money to be made in Bethlehem. Casino profits, of course, were repatriated to the owners in Las Vegas. Pennsylvania requires casinos to pay a 55 percent tax on revenues, but only four percent of that goes to the host community. For Bethlehem in 2013, that totaled $9.5 million, not game-changing money for an area so economically devastated for so long. Baltimore, an early adopter of casino gambling as an economic resurrection strategy, has seen similar results. In Atlantic City, the first major destination outside Las Vegas to feature legalized gambling, four major casinos closed in the past year.
Bringing in a casino is about jobs and money. Jobs created statewide in Pennsylvania via gaming do not even equal the number lost in Bethlehem alone. As of 2013, Pennsylvania casinos directly employed only 17,768 people, leaving significant questions about the role of gaming in lifting America’s devastated rust belt towns out of unemployment-driven malaise.
As for money, a report notes that after some initial successes, revenues in Pennsylvania from gaming declined by 2013. Statewide, casinos did contribute about $81 million in taxes last year. However, it is unclear how much of the revenue behind those taxes came from local residents, what might be called churning rather than creation, a back-door tax on those ill-prepared to lose money at the slots (affluent people visit casinos less often than poorer people do.) One group of frequent visitors who have found a way to beat the house come from New York’s Korean community; they sell the promotional meal vouchers from the casino on the black market.
Competition is a serious problem, as new casinos open in surrounding states. For example, New Jersey is considering a casino at the Meadowlands, only 30 minutes outside New York City, which will pull many away from Bethlehem’s new bright lights. Pennsylvania is also among the states with the highest casino tax rate in the nation, raising further the question of market cannibalization should gaming corporations seek out lower rates in adjoining states. Casino revenues nationwide have not recovered their 2007 peaks, and Moody’s projects a drop through 2015, cutting industry earnings by as much as 7.5 percent.
Don’t Gamble if You Can’t Afford to Lose
Only a generation ago, Bethlehem, Pennsylvania had a steel mill employing tens of thousands of people at good wages. Including benefits, an average union steelworker made $26.12 per hour then, the equivalent of $40.66 today. It was enough to create one of the most powerful economies on earth, supported by a robust middle class driving demand for housing, cars, everything. They could afford to gamble a bit on yearly vacations, too.
The typical casino worker today in Bethlehem makes $10-12 an hour. Many are part-time. They labor in the shadow of the mill that helped build the Empire State building and the Golden Gate Bridge, a new way of life that may flounder on a bad roll of the dice.
Does income inequality matter to the richest Americans? Not very much. Here’s why. And it’s more than just greed-is-good; the rich will just get richer.
A study by economists at Washington University in St. Louis tells us stagnant income for the bottom 95 percent of wage earners makes it impossible for them to consume as they did in the years before the downturn. Consumer spending, some say, drives the U.S. economy, and is likely to continue to continue to dominate, as the decomposition of America’s industrial base dilutes old economy sales of appliances, cars, steel and the like. That should be bad news for the super-wealthy, us buying less stuff?
But that same study shows that while rising inequality reduced income growth for the bottom 95 percent of beginning around 1980, the group’s consumption growth did not fall proportionally at first. Instead, lower savings and hyper-available credit (remember Countrywide mortgages and usurous re-fi’s?) put the middle and bottom portions of our society on an unsustainable financial path which increased spending until it triggered the Great Recession. So, without surprise, consumption fell sharply in the recession, consistent with tighter borrowing constraints. Meanwhile, America’s the top earners’ wealth grew. The recession represented the largest redistribution of wealth in this century.
The gap between most Americans and those few who sit atop our economy continues to grow. For two decades after 1960, real incomes of the top five percent and the remaining 95 percent increased at almost the same rate, about four percent a year. But incomes diverged between 1980 and 2007, with those at the bottom seeing annual increases only half of that of those at the top.
This leaves the very real issue for the rich of who will buy all the stuff their big corporations make? But don’t worry. They’ve got it handled.
Taxpayer Subsidies to Big Corporations
Don’t worry about the big guys; they have figured out how to profit off poverty. Wal-Mart, Target and Kroger have made profits of $75.2 billion off food stamp purchases, even setting a new record in 2012.
And never mind how food stamps and other benefits are used by those same retailers to subsidize the low wages they pay their workers. Meanwhile, the same bill in Congress that would cut food stamps pays out farm subsidies to America’s billionaires, including Microsoft co-founder Paul Allen, Charles Schwab and S. Truett Cathy of Chick-fil-A.
The American Beverage Association, a lobby group that includes Coca-Cola, strongly opposes restricting soda purchases by food stamp recipients. Why? Recipients spend from $1.7 to $2.1 billion annually for sugar-sweetened beverages. While alcohol and other unhealthy items are restricted for purchase with stamps, soda stands available.
Government Defense Spending
About the only manufacturing-industrial sector of the American economy left prevailing over all foreign competition is defense. America buys its military hardware almost exclusively from domestic corporations (with a few crumbs tossed to allies like the UK and Israel) and fills the job ranks of the industry, contractors, and military with Americans.
In 2011, the U.S. government spent about $718 billion on defense, including arms sales and transfers to foreign governments. Hardware alone accounted for $128 billion. The total figure does not veterans benefits of $127 billion in 2011, or about 3.5 percent of the federal budget. America’s newest aircraft carrier cost $13 billion, not including development costs.
The Stock Market
The stock market (which set record highs in 2013) is a significant source of wealth in America. Indeed, what could be easier than placing money into an investment and, with no sweat or effort of one’s own, seeing it grow. A rising market lifts the national economy, and a rising tide lifts all boats.
The truth is closer to a rising tide lifts all yachts, as historian Morris Berman observed. Less than half of Americans own any stock at all. The wealthiest five percent of Americans meanwhile hold some 70 percent of all stock.
Bump the “top” group to the wealthiest ten percent of Americans and they own over 80 percent of all stock. At the same time, the lowest 90 percent own the leftover 20 percent.
So Don’t Worry about the Rich
These examples– and there are more– see tax write-offs, use of trusts to limit inheritance tax, offshore banking, large scale real estate (the top ten percent own about 40 percent of America’s land) show that income inequality is not a problem for the rich, and it is not a problem for America’s “economy” per se. The huge concentration of wealth in a small number of hands, and the methods by which those few acquire and maintain their wealth, means that the 99 percent of us edge closer and closer to playing no significant role in the economy anyway. We are becoming merely the collateral damage of income inequality.
There are many sides to whistleblowing. The one that most people don’t know about is the very personal cost, prison aside, including the high cost of lawyers and the strain on family relations, that follows the decision to risk it all in an act of conscience. Here’s a part of my own story I’ve not talked about much before.
At age 53, everything changed. Following my whistleblowing first book, We Meant Well: How I Helped Lose the Battle for the Hearts and Minds of the Iraqi People, I was run out of the good job I had held for more than 20 years with the U.S. Department of State. As one of its threats, State also took aim at the pension and benefits I’d earned, even as it forced me into retirement. Would my family and I lose everything I’d worked for as part of the retaliation campaign State was waging? I was worried. That pension was the thing I’d counted on to provide for us and it remained in jeopardy for many months. I was scared.
My skill set was pretty specific to my old job. The market was tough in the Washington, D.C. area for someone with a suspended security clearance. Nobody with a salaried job to offer seemed interested in an old guy, and I needed some money. All the signs pointed one way — toward the retail economy and a minimum-wage job.
And soon enough, I did indeed find myself working in exactly that economy and, worse yet, trying to live on the money I made. But it wasn’t just the money. There’s this American thing in which jobs define us, and those definitions tell us what our individual futures and the future of our society is likely to be. And believe me, rock bottom is a miserable base for any future.
Old World/New World
The last time I worked for minimum wage was in a small store in my hometown in northern Ohio. It was almost a rite of passage during high school, when I pulled in about four bucks an hour stocking shelves alongside my friends. Our girlfriends ran the cash registers and our moms and dads shopped in the store. A good story about a possible date could get you a night off from the sympathetic manager, who was probably the only adult in those days we called by his first name. When you graduated from high school, he would hire one of your friends and the cycle would continue.
At age 53, I expected to be quizzed about why I was looking for minimum-wage work in a big box retail store we’ll call “Bullseye.” I had prepared a story about wanting some fun part-time work and a new experience, but no one asked or cared. It felt like joining the French Foreign Legion, where you leave your past behind, assume a new name, and disappear anonymously into the organization in some distant land. The manager who hired me seemed focused only on whether I’d show up on time and not steal. My biggest marketable skill seemed to be speaking English better than some of his Hispanic employees. I was, that is, “well qualified.”
Before I could start, however, I had to pass a background and credit check, along with a drug test. Any of the anonymous agencies processing the checks could have vetoed my employment and I would never have known why. You don’t have any idea what might be in the reports the store receives, or what to feel about the fact that some stranger at a local store now knows your financial and criminal history, all for the chance to earn seven bucks an hour.
You also don’t know whether the drug tests were conducted properly or, as an older guy, if your high blood pressure medicine could trigger a positive response. As I learned from my co-workers later, everybody always worries about “pissing hot.” Most places that don’t pay much seem especially concerned that their workers are drug-free. I’m not sure why this is, since you can trade bonds and get through the day higher than a bird on a cloud. Nonetheless, I did what I had to in front of another person, handing him the cup. He gave me one of those universal signs of the underemployed I now recognize, a we’re-all-in-it, what’re-ya-gonna-do look, just a little upward flick of his eyes.
Now a valued member of the Bullseye team, I was told to follow another employee who had been on the job for a few weeks, do what he did, and then start doing it by myself by the end of my first shift. The work was dull but not pointless: put stuff on shelves; tell customers where stuff was; sweep up spilled stuff; repeat.
It turned out that doing the work was easy compared to dealing with the job. I still had to be trained for that.
You had to pay attention, but not too much. Believe it or not, that turns out to be an acquired skill, even for a former pasty government bureaucrat like me. Spend enough time in the retail minimum-wage economy and it’ll be trained into you for life, but for a newcomer, it proved a remarkably slow process. Take the initiative, get slapped down. Break a rule, be told you’re paid to follow the rules. Don’t forget who’s the boss. (It’s never you.) It all becomes who you are.
Diving straight from a salaried career back into the kiddie pool was tough. I still wanted to do a good job today, and maybe be a little better tomorrow. At first, I tried to think about how to do the simple tasks more efficiently, maybe just in a different order to save some walking back and forth. I knew I wasn’t going to be paid more, but that work ethic was still inside of me. The problem was that none of us were supposed to be trying to be good, just good enough. If you didn’t know that, you learned it fast. In the process, you felt yourself getting more and more tired each day.
Patient Zero in the New Economy
One co-worker got fired for stealing employee lunches out of the break room fridge. He apologized to us as security marched him out, saying he was just hungry and couldn’t always afford three meals. I heard that when he missed his rent payments he’d been sleeping in his car in the store parking lot. He didn’t shower much and now I knew why. Another guy, whose only task was to rodeo up stray carts in the parking lot, would entertain us after work by putting his cigarette out on his naked heel. The guys who came in to clean up the toilets got up each morning knowing that was what they would do with another of the days in their lives.
Other workers were amazingly educated. One painted in oils. One was a recent college grad who couldn’t find work and liked to argue with me about the deeper meanings in the modern fiction we’d both read.
At age 53, I was the third-oldest minimum-wage worker in the store. A number of the others were single moms. (Sixty-four percent of minimum-wage employees are women. About half of all single-parent families live in poverty.) There was at least one veteran. (“The Army taught me to drive a Humvee, which turns out not to be a marketable skill.”) There were a couple of students who were alternating semesters at work with semesters at community college, and a small handful of recent immigrants. One guy said that because another big box store had driven his small shop out of business, he had to take a minimum-wage job. He was Patient Zero in our New Economy.
State law only required a company to give you a break if you worked six hours or more under certain conditions. Even then, it was only 30 minutes — and unpaid. You won’t be surprised to discover that, at Bullseye, most non-holiday shifts were five-and-a-half hours or less. Somebody said it might be illegal not to give us more breaks, but what can you do? Call 911 like it was a real crime?
Some good news, though. It turned out that I had another marketable skill in addition to speaking decent English: being old. One day as a customer was bawling out a younger worker over some imagined slight, I happened to wander by. The customer assumed I was the manager, given my age, and began directing her complaints at me. I played along, even steepling my fingers to show my sincere concern just as I had seen actual managers do. The younger worker didn’t get in trouble, and for a while I was quite popular among the kids whenever I pulled the manager routine to cover them.
Hours were our currency. You could trade them with other employees if they needed a day off to visit their kid’s school. You could grab a few extra on holidays. If you could afford it, you could swap five bad-shift hours for three good-shift hours. The store really didn’t care who showed up as long as someone showed up. Most minimum-wage places cap workers at under 40 hours a week to avoid letting them become “full time” and so possibly qualify for any kind of benefits. In my case, as work expanded and contracted, I was scheduled for as few as seven hours a week and I never got notice until the last moment if my hours were going to be cut.
Living on a small paycheck was hard enough. Trying to budget around wildly varying hours, and so paychecks, from week to week was next to impossible. Seven hours a week at minimum wage was less than 50 bucks. A good week around the Christmas rush was 39 hours, or more than $270. At the end of 2013, after I had stopped working at Bullseye, the minimum wage did go up from a little more than $7 to $8 an hour, which was next to no improvement at all. Doesn’t every little bit help? Maybe, but what are a few more crumbs of bread worth when you need a whole loaf not to be hungry?
Working to Be Poor
So how do you live on $50 a week, or for that matter, $270 a week? Cut back? Recycle cans?
One answer is: You don’t live on those wages alone. You can’t. Luckily I had some savings, no kids left in the house to feed, and my wife was still at her “good” job. Many of my co-workers, however, dealt with the situation by holding down two or three minimum-wage jobs. Six hours on your feet is tough, but what about 12 or 14? And remember, there are no weekends or holidays in most minimum-wage jobs. Bullseye had even begun opening on Thanksgiving and Christmas afternoons.
The smart workers found their other jobs in the same strip mall as our Bullseye, so they could run from one to the next, cram in as many hours as they could, and save the bus fare. It mattered: At seven bucks an hour, that round trip fare meant you worked your first 45 minutes not for Bullseye but for the bus company. (The next 45 minutes you worked to pay taxes.)
Poverty as a Profit Center
Many low-wage workers have to take some form of public assistance. Food stamps — now called the Supplemental Nutrition Assistance Program, or SNAP — were a regular topic of conversation among my colleagues. Despite holding two or three jobs, there were still never enough hours to earn enough to eat enough. SNAP was on a lot of other American’s minds as well — the number of people using food stamps increased by 13 percent a year from 2008 to 2012. About 1 in 7 Americans get some of their food through SNAP. About 45 percent of food stamp benefits go to children.
Enjoying that Big Mac? Here’s one reason it’s pretty cheap and that the junk sold at “Bullseye” and the other big box stores is, too: Those businesses get away with paying below a living wage and instead you, the taxpayer, help subsidize those lousy wages with SNAP. (And of course since minimum-wage workers have taxes deducted, too, they are — imagine the irony — essentially forced to subsidize themselves.)
That subsidy does not come cheap, either. The cost of public assistance to families of workers in the fast-food industry alone is nearly $7 billion per year. McDonald’s workers alone account for $1.2 billion in federal assistance annually.
All that SNAP money is needed to bridge the gap between what the majority of employed people earn through the minimum wage, and what they need to live a minimum life. Nearly three-quarters of enrollments in America’s major public benefits programs involve working families stuck in jobs like I had. There are a lot of those jobs, too. The positions that account for the most workers in the U.S. right now are retail salespeople, cashiers, restaurant workers, and janitors. All of those positions pay minimum wage or nearly so. Employers are actually allowed to pay below minimum wage to food workers who might receive tips.
And by the way, if somehow at this point you’re feeling bad for Walmart, don’t. In addition to having it’s workforce partially paid for by the government, Walmart also makes a significant portion of its profits by selling to people receiving federal food assistance. Though the Walton family is a little too shy to release absolute numbers, a researcher found that in one year, nine Walmart Supercenters in Massachusetts together received more than $33 million in SNAP dollars. One Walmart Supercenter in Tulsa, Oklahoma, received $15.2 million, while another (also in Tulsa) took in close to $9 million in SNAP spending.
You could say that taxpayers are basically moneylenders to a government that is far more interested in subsidizing business than in caring for their workers, but would anyone believe you?
Back in the Crosshairs
Some employees at Bullseye had been yelled at too many times or were too afraid of losing their jobs. They were not only broke, but broken. People — like dogs — don’t get that way quickly, only by a process of erosion eating away at whatever self-esteem they may still possess. Then one day, if a supervisor tells them by mistake to hang a sign upside down, they’ll be too afraid of contradicting the boss not to do it.
I’d see employees rushing in early, terrified, to stand by the time clock so as not to be late. One of my fellow workers broke down in tears when she accidentally dropped something, afraid she’d be fired on the spot. And what a lousy way to live that is, your only incentive for doing good work being the desperate need to hang onto a job guaranteed to make you hate yourself for another day. Nobody cared about the work, only keeping the job. That was how management set things up.
About 30 million Americans work this way, live this way, at McJobs. These situations are not unique to any one place or region. After all, Walmart has more than 2 million employees. If that company were an army, it would be the second largest military on the planet, just behind China. It is, in fact, the largest overall employer in the country and the biggest employer in 25 states. When Walmart won’t pay more than minimum, it hurts. When it rains like that, we all get wet. This is who we are now.
I Was Minimum
It’s time to forget the up-by-the-bootstraps fantasies of conservative economists bleating on Fox. If any of it was ever true, it’s certainly not true anymore. There is no ladder up, no promotion path in the minimum-wage world. You can’t work “harder” because your hours are capped, and all the jobs are broken into little pieces anyone could do anyway. Minimum wage is what you get; there are no real raises. I don’t know where all the assistant managers came from, but not from among us.
I worked in retail for minimum wage at age 16 and again at 53. In that span, the minimum wage itself rose only by a few bucks. What changed, however, is the cast of characters. Once upon a time, minimum-wage jobs were filled with high school kids earning pocket money. In 2014, it’s mainly adults struggling to get by. Something is obviously wrong.
In his State of the Union Address, President Obama urged that the federal minimum wage be raised to $9 an hour. He also said that a person holding down a full-time job should not have to live in poverty in a country like America.
To the president I say, yes, please, do raise the minimum wage. But how far is nine bucks an hour going to go? Are so many of us destined to do five hours of labor for the cell phone bill, another 12 for the groceries each week, and 20 or 30 for a car payment? How many hours are we going to work? How many can we work?
Nobody can make a real living doing these jobs. You can’t raise a family on minimum wage, not in the way Americans once defined raising a family when our country emerged from World War II so fat and happy. And you can’t build a nation on vast armies of working poor with nowhere to go. The president is right that it’s time for a change, but what’s needed is far more than a minimalist nudge to the minimum wage. Maybe what we need is to spend more on education and less on war, even out the tax laws and rules just a bit, require a standard living wage instead of a minimum one. Some sort of rebalancing. Those aren’t answers to everything, but they might be a start.
People who work deserve to be paid, but McDonald’s CEO Donald Thompson last year took home $13.7 million in salary, with perks to go. If one of his fry cooks put in 30 hours a week, she’d take in a bit more than $10,000 a year — before taxes, of course. There is indeed a redistribution of wealth taking place in America, and it’s all moving upstream.
I got lucky. I won my pension fight with my “career” employer, the State Department, and was able to crawl out of the minimum-wage economy after less than a year and properly retire. I quit Bullseye because I could, one gray day when a customer about half my age cursed me out for something unimportant she didn’t like, ending with “I guess there’s a reason why people like you work at places like this.” I agreed with her: There is a reason. We just wouldn’t agree on what it was.
I’m different now for the experience. I think more about where I shop, and try to avoid big places that pay low wages if I can. I treat minimum-wage workers a little better, too. If I have to complain about something in a store, I keep the worker out of it and focus on solving the problem. I take a bit more care in the restroom not to leave a mess. I don’t get angry anymore when a worker says to me, “I really can’t do anything about it.” Now I know from personal experience that, in most cases, they really can’t.
Above all, I carry with me the knowledge that economics isn’t about numbers, it’s about people. I know now that it’s up to us to decide whether the way we pay people, the work we offer them, and how we treat them on the job is just about money or if it’s about society, about how we live, who we are, the nature of America. The real target now should be to look deeply into the apartheid of dollars our country has created and decide it needs to change. We — the 99 percent, anyway — can’t afford not to.
Islamic State (IS) announced that its primary terrorist sleeper cell in the United States has been crushed by payday loan debt. Homeland Security and the FBI, actively trying to convince several fourth graders to “make a terror club” so they could be arrested, were unavailable for comment.
“It all began well enough,” said IS spokes-jihadi Abdullah. “We sent five brothers into the decadent hell of the United States with ten thousand dollars and some AK’s and rocket launchers.”
“Sh*t started to go wrong from almost day one. It turns out 99 percent of Americans are much better armed, so right away they had to go to Walmart and pick up some assault rifles. Well, you know, you can’t just go into Walmart for one thing, and next you know, they laid out for Sam’s Club memberships and bought freaking patio furniture. We had them in a $20 a night motel with orders to keep a low profile and they show up with patio furniture.”
“Next thing that happened was after I sent them out to buy some burner cellphones, you know, those cheap ones they could use once and then throw away. I don’t know what kind of salesperson they encountered at Best Buy, but next thing I know IS is on the hook for five iPhone6’s. Plus five year contracts. Plus those idiots bought the full maintenance plans. Oh, and get this — their contracts had limited data, so after a couple of 30 gig HD beheading video downloads, we were racking up overage charges.”
“We had told the brothers to eat most meals at Chik-fil-A. We’d read online that the restaurant hated gays, independent women and most of the other tenets of Sharia, so that seemed safe. But next thing you know, two of the brothers are too fat for their suicide vests, and one now has diabetes. If he loses his foot like the doctor thinks, he can’t drive the suicide bomb van. Please.”
“But the real killer was running out of funds. We lost thousands of dollars to ATM fees we did not anticipate, so we had some of the martyrs seek out part time work. Do you know it’s impossible to live on minimum wage in America? The best those dumbasses could do was work at the Dollar Store and Wendy’s, then their hours got cut. They had no choice but to turn to the payday loan shop in the same strip mall where they pawned the AK’s. It seemed like a good deal — money was deposited overnight to their checking account — but now we’re up to like 234 percent interest, and these two huge guys named Vito and Sal are knocking on the motel room door at 4 am demanding their money back.”
“We just gave up. I have ordered the brothers to dismantle the sleeper cell. Now that we know what a useless, poor, rapacious society America is, thinking we can hasten its demise with a few terror acts is a joke. You people are doing it to yourselves.”
Data released by the Census Bureau Wednesday showing a staggering 16 million children in the U.S., about one out of five kids under the age of 18, received food stamp assistance in 2014.
Overall, more than 46.5 million Americans were on food stamps last year, according to the Department of Agriculture. Food stamps are officially known as the Supplemental Nutrition Assistance Program, SNAP.
More and More Hungry Kids in America
The census numbers show while one percent of Americans wallow in obscene, record-setting amounts of wealth, large swaths of the country remain in real trouble. In 2014 more American kids relied on food stamps than at any time since the 2008 economic crash. In raw, hungry mouth numbers, nine million children received food stamps in 2007 compared to 16 million now, and 26 million Americans of all ages received assistance compared to the 46.5 million now. It’s a new personal best, a new record and thus a new low for America.
These statistics come from the 2014 Current Population Survey’s Annual Social and Economic Supplement, which has collected statistics on families and living arrangements for more than 60 years.
Congress: Parents are Lazy
“The spike in food stamp spending has caught the attention of Congress, and House Republicans tried to cut the program by around $4 billion a year in 2013,” the Associated Press reports. “In an eventual compromise, Congress agreed to cuts of around $800 million a year. The food stamp program will be under scrutiny in the new Republican Congress.”
But really, lazy is what lazy does. Why shouldn’t we cut public assistance and force people into the job market?
So Cut the Damn Handouts
At some point in this kind of discussion, someone will drop the nuclear option: cut federal and state benefits and do away with most public assistance. That’ll motivate parents to find jobs or watch their kids starve. Why should tax dollars be used to give food to people who won’t work for it? “If you’re able-bodied, you should be willing to work,” former House Majority Leader Eric Cantor said discussing food stamp cuts.
The problem with such statements is 73 percent of those enrolled in the country’s major public benefits programs are, in fact, from working families — just in jobs whose paychecks don’t cover life’s basic necessities. McDonald’s workers alone receive $1.2 billion in federal assistance per year. It’s not complicated. Workers in the minimum-wage economy often need them simply to survive.
In Ohio, where I did some of the research for my book Ghosts of Tom Joad: A Story of the #99 Percent, the state pays out benefits on the first of each month. Pay Day, Food Day, Mother’s Day, people call it. SNAP is distributed in the form of an Electronic Bank Transfer card, or EBT, which, recipients will tell you, stands for “Eat Better Tonight.” EBT-friendly stores open early and stay open late on the first of the month because most people are pretty hungry come the Day.
A single person with nothing to her name in the lower 48 states would qualify for no more than $189 a month in SNAP. If she works, her net monthly income is multiplied by .3, and the result is subtracted from the maximum allotment. Less than fifty bucks a week for food isn’t exactly luxury fare.
Sure, she can skip a meal if she needs to, and she likely does. However, she may have kids; almost two-thirds of SNAP children live in single-parent households. Twenty percent or more of the child population in 37 states lived in “food insecure households” in 2011, with New Mexico (30.6 percent) and the District of Columbia (30 percent) topping the list. And it’s not just kids. Households with disabled people account for 16 percent of SNAP benefits, while nine percent go to households with senior citizens.
What’s for Dinner?
So, to recap. In a time when some 20 percent of our own children need help just to be fed, Congress wants to cut further the thing that stands between those kids and malnutrition. Our system is trending toward asking kids (and the disabled, and the elderly) to go to hell if they’re hungry. Many are already there.
Yep, that’s us today in America.
BONUS! A 2013 report by the United Nations Children’s Fund, on the well-being of children in 35 developed nations, shows the United States ranks 34th of the 35 countries surveyed, above only Romania and below virtually all of Europe plus Canada, Australia, New Zealand and Japan. We
love could care about our kids!
Unless you are very, very rich, you are getting poorer. Federal Reserve chief Janet Yellen warned that the gap between the rich and poor in the United States is widening and has reached a near 100-year high.
The One Percent of the One Percent
Not sure? Between 1979 and 2007, income grew by 275 percent for the top one percent of households, compared to only 18 percent for the bottom twenty percent of us. Back in 1980, 0.01 percent of the population owned three percent of national wealth. Today that top 0.01 percent, only about 32,000 people, owns 11 percent of national wealth. That’s a staggering increase from an already high base. It suggests even the one percent no longer are that big of a deal in the economy. We need now to pay attention to the one percent of the one percent.
“By some estimates, income and wealth inequality are near their highest levels in the past hundred years,” Yellen said, noting the gap has grown steadily over recent decades, despite a brief pause during the 2008 crisis when pretty much everyone got whacked.
About the 2008 Recession
“But widening inequality resumed in the recovery, as the stock market rebounded,” Yellen said, noting that “wage growth and the healing of the labor market have been slow, and the increase in home prices has not fully restored the housing wealth lost by the large majority of households for which it is their primary asset.”
If you read that carefully, it means that the rich, who earn their money in significant part via capital, owning stock and things like multiple pieces of real estate, have done just fine recently.
The rest of us, who work for wages as our primary income, are still in trouble. If your home, assuming you still own it post-2008 (and that’s a huge assumption. Some five million homes were lost to foreclosure between 2008 and 2013. 8.2 million more foreclosure starts took place in that same time period. Another three million homes in the next three or four years will face foreclosure), is not in a high-growth area, then the value of the one piece of capital you do have, then it does you little good.
None of this is new or shocking. Economist Thomas Piketty in Capital in the Twenty-First Century laid out the very simple math: R > G. R is capital and G is wage growth, and the value of capital, stuff the rich own, always, always grows faster than wages. Thus the rich get richer and the poor stay poor.
The Fed chief also warned of the burden of student loan debt, which quadrupled between 2004 and 2014. In a bit of an understatement, she added “I think it is appropriate to ask whether this trend is compatible with values rooted in our nation’s history, among them the high value Americans have traditionally placed on equality of opportunity.”
Americans owe over $1.2 trillion in college loans. Many students will work as essentially indebted servants for many years to pay them off. Or maybe their parents will. Or both. Yellen said that the trend in recent years in the United States has seen “stagnant or falling living standards for many families.”
The One Percent of the One Percent of the One Percent
Yellen offered no remedies for decreasing the rich-poor gap, because why should she. She works for the wealthy.
With the concentration of wealth, 132 people in the U.S. essentially control elections. They do so by donating, just that handful of people, over 60 percent of the SuperPac money. Those 132 people represent 0.000042 percent of the total number of voters; most other contributions to candidates are small, many below $200. How much is your vote worth?
Yellen went on to say two “cornerstones of opportunity” are resources available to children and access to higher education, and added that ownership of a family business and inherited wealth can also be important sources of economic opportunity.
Let’s look at that. Poor people have no resources available to their children. Rich people can pass on robust inheritances. Result: kids of the rich get richer. Wouldn’t life be easier if you knew you’d be a billionaire once daddy kicked it? And as for that access to higher education, please refer back to Yellen’s earlier statement about student loan debt. Escalating tuition costs that have contributed to a dramatic increase in student loan debt — the outstanding balance quadrupled from $260 billion in 2004 to $1.2 trillion this year. Of course the rich pay cash for college, so this debt is disproportionately, and increasingly, affecting poorer families and may put college and graduate degrees out of reach.
Global, But Worse in the U.S.
Globally, the gap between the haves and have-nots has reached levels not seen since the 1820s, the OECD said earlier this month, in a report that looked at trends in health, education, inequality, the environment and personal security.
The mathematical measure of wealth-inequality is called “Gini,” and the higher it is, the more extreme a nation’s wealth-inequality. The Gini for the U.S. is 85; Canada, 72; and Bangladesh, 64. Nations more unequal than the U.S. include Kazakhstan at 86 and the Ukraine at 90. The African continent tips in at just under 85.
Odd company for the self-proclaimed most powerful nation on earth.
As part of the 2014 Louisville Idea Festival, I spoke with Bill Goodman of KET, Kentucky Educational Television, the PBS station in Louisville about both of my books, We Meant Well: How I Helped Lose the Battle for the Hearts and Minds of the Iraqi People and Ghosts of Tom Joad: A Story of the #99 Percent.
Walmart, who pays its workers so little and/or gives them so few hours, that they cannot feed themselves while the Walton family rakes in billions, does have its sense of humor. Either that or they could just care so little about what anyone thinks that they are just like, whatever, what are you going to do about it anyway except buy more junk you don’t need from us on Black Friday?
As it did to national scorn last Thanksgiving, Walmart raised a smiley-faced middle finger to its own “associates” by asking some of them to dig deep into their low-wage pockets to give to each other. An Oklahoma City Walmart is asking employees to donate food to help their coworkers make ends meet during the holiday season, according to a photo posted by the labor-backed coalition Making Change At Walmart. A sign on the collection bin reads, “Let’s succeed by donating to associates in need!!!” In 2013, the same thing happened at a Walmart store in Canton, Ohio.
Technically,the food drives are not Walmart corporate policy, so hey, all is forgiven, amiright? Though hey, a Walmart spokesperson did characterize the Ohio effort as “part of the company’s culture to rally around associates and take care of them when they face extreme hardships.” And Walmart checked, ’cause it cares you know, and the Oklahoma food drive is just for two associates who don’t have health insurance because Walmart doesn’t provide any to its hourly workers, so it is not like the whole freaking store is starving or anything. You can have it both ways apparently at Walmart.
And who wants to subsidize freeloaders with our hard-earned tax dollars anyway? Oh, wait. Actually Walmart hauls in a monster truck load of public assistance for itself. Those low, low daily wages are subsidized by your taxes. The company’s low wages leave huge numbers of its employees on public assistance programs such as food stamps and Medicaid. By one estimate, a single Walmart superstore requires up to $1.7 million in public assistance spending every year. The company eats up a total public assistance cost of $6.2 billion per year. That’s how Walmart can “afford” to pay its associates so little and yet they don’t pass out from hunger in the aisles during your Black Friday orgy of consumerism. Neat!
But Walmart loves its food stamps as more than just fodder to feed the work animals. Walmart loves selling to stuff to the food stamp people of America. A lot of stuff.
How much profit does Walmart make from public assistance? In one year, nine Walmart Supercenters in Massachusetts received more than $33 million in SNAP dollars. In two years, Walmart received about half of the one billion dollars in SNAP expenditures in Oklahoma. Overall, 18 percent of all food benefits money is spent at Walmart. That’s about $14 billion.
But maybe all is not lost. Protesters left a huge food bin outside of Walmart heiress Alice Walton’s $25 million Manhattan condo. Alice has a net worth of $35 billion dollars. Alice made $100 million this past year, so at least she is doing OK this Thanksgiving.
It can’t get any plainer than this friends: Walmart’s owners make profits on an amazing scale by giving workers as little as possible while scooping up as much government money as possible.
Do your soul a favor and stay out of Walmart this holiday season.
My current book, Ghosts of Tom Joad: A Story of the #99 Percentis a complex novel telling the story of America from the end of World War II through the present day.
You’ll travel through the economic boom years and the rise of a robust middle class, fueled by union wages and industrialization, peaking in the mid-1970s. The decline of all those factors is the second half of the book, the story of how we became a nation defined by the working poor, the 99 percent.
Here’s what one reviewer said:
I wasn’t ready for this one. I guess I was expecting something a little more MSNBC. You know, the kind of book that contains nothing but glowing praise for the Occupy movement and endless tirades about how shopping at Wal-Mart makes you an evil person. The kind of book that you can almost tell was written on an iMac computer over three weeks in a Starbucks café by a dude wearing those thick hipster glasses.
Man, I wasn’t even close. “Ghosts of Tom Joad” is a heartbreaking tale of one man against the world, or rather the world against one man. I don’t think you can call it an epic since it takes place almost entirely within a small town in rust-belt Ohio, but it’s definitely raw, gritty, and painful. The narrator pulls no punches when it comes to describing his downward spiral into underemployment and homelessness, and the novel that results is heartbreakingly authentic.
The beginning of the book shows a simpler time for the main character, Earl. His boyhood is not idyllic, however, and the scene excerpted below foreshadows the problems he will experience in the New Economy.
Excerpt from Ghosts of Tom Joad
Jeff’s old man kept a small boat. It had seen better days, floating as much out of stubbornness any more than anything else. Seats two safely. Rides low in the water. We’d take it out on the river from time to time, drinking beer when we could, horsing around.
It was a heavy, humid Ohio night, still then soft around us. Car sounds far off. The current was light and the river half dry in summer, so we figured loading the four of us into a boat made for two wouldn’t be a problem. Then we met Pam, this girl Tim sort of liked and Tim made us take her along. Tim had it on good authority she had lost her virginity already and was willing to lose it some more. She had a Farrah ’do, as this was the late 1970s.
We got the boat into the water and climbed in well enough. Pam devoted herself to worrying about five people in a boat that might safely hold two. Pam was right, like girls then usually were about those kind of things. The boat drifted along with the current, ending up in the center of the river two beers later. We could see a few lights reflecting off the water, pretty, and I guess that’s what inspired Tim to try and put his arm around Pam, who was less inspired by the romantic scene and shrugged him off a bit too hard. The boat rocked and water came over the shallow sides. I was laughing, and so was Jeff, when the whole thing flipped over, dumping the five of us into the river. I couldn’t touch the bottom, but it was easy enough to doggy paddle over to the far bank. I looked over, laughing, at Tim, Rich and a really unhappy Pam. Her Farrah ’do was ruined. The boat was gone.
So was Jeff.
Tim and Pam went off looking for him down the river bank, thinking maybe he swam off that way. Rich heard him first – Jeff, in the water, shouting for us. I figured he was kidding around like always, pretending to drown in eight feet of warm water, when I saw Rich dive back in. I went right after him, and we reached Jeff in a few wet splashes. Rich grabbed him first, and we pulled him over to the bank. He was crying, snot all down his face, white as Wonder Bread. He had been wearing his heavy work boots, lace-ups, and they’d filled with water, pulling him under. Jeff was a strong kid back then, and was able to claw his way up to the surface and shout, but if Rich had not gone in after him, he’d have drowned that night while we watched.
It was either Jeff’s earlier laughing or Jeff’s recent shouting that brought out the cops. One fat one came up to me and said, “Son, how many kids were in that boat?” And I said, truthfully, “Sir, there were five of us.” Me, Jeff and Rich were right there. Tim and Pam hadn’t come back, likely seeing the cop car lights and running. Five of us, just like I said.
“Don’t worry son, we’ll find your friends.” The cop put me in the back of his car with a blanket, right before that fire truck came and all those men waded into the shallow part of the river. Flashlights were swinging criss-cross over the water and the men would yell for a bit, then tell each other to “Be quiet and just listen for a minute dammit, there’s two kids out there somewhere. We ain’t gonna let them die for no reason –”
I figured out the reason. When the now tomato-faced fat cop came over to see how I was doing, I told him that Tim and Pam probably weren’t coming back. He put his hand on my shoulder and said, “Not if I can help it, son.” I told him Tim and Pam weren’t in the river. Nobody drowned. Nobody was missing. Tim and Pam had just run away. When he asked me how many in the boat a first, I didn’t want to lie and so I said, “Five officer, honest.”
We heard Tim never got to make out with Pam that night, but he walked her home and she said maybe she’d think about it. It was the first time I realized you could die without getting old first, and that stuck with me.
Lovin’ It: Food Stamps
The Supplemental Nutritional Assistance Program (SNAP, the current name for food stamps) is often thought of as something for the unemployed, though nothing could be further from the truth. Actually 73 percent of those enrolled in the country’s major public benefits programs are from working families, just stuck in jobs whose paychecks don’t cover life’s basic necessities. The United States now has the highest proportion of low-wage workers in the developed world, most of whom receive only the minimum wage (the federal standard is $7.25 an hour) and typically are capped by their employers well below 40 hours a week so they won’t qualify for benefits. Hard work doesn’t always pay off. The math: even full time at $7.25 is only $290. How do you live on that?
You don’t. You turn to food stamps and other forms of public assistance to make up the gap between minimum wage and a living wage. Which is just what large minimum wage employers count on you doing.
Fast food workers claim public assistance at more than twice the rate of other employed people; McDonald’s workers alone receive $1.2 billion in federal assistance each year. About one out of every three retail workers gets public assistance. After analyzing Medicaid data, the House Committee on Education and the Workforce estimated a single 300-person Walmart in Wisconsin costs taxpayers $5,815 per associate in public assistance paid. Overall, American taxpayers subsidize the minimum wage with $7 billion in public assistance. Those dollar amounts are what low prices actually cost you.
Profits Before Poverty
Why else do many large companies like food stamps? Because poverty is big business.
Public benefits are now a huge part of corporate profits. The CEO of Kraft admitted that the mac n’ cheese maker opposed food stamp cuts because beneficiaries were “a big part of our audience,” as one-sixth of Kraft’s revenues come from food stamp purchases. Pepsi, Coke, and the grocery chain Kroger lobbied against SNAP cuts, an indication of how much they rely on the money.
Products eligible for SNAP purchases are supposed to be limited to “healthy foods.” Yet lobbying by the soda industry keeps sugary drinks on the approved list, allowing companies like Coke and Pepsi to pull in four billion dollars a year in SNAP money revenues. Yum Brands, the operator of KFC, Taco Bell, and Pizza Hut, tried unsuccessfully to convince lawmakers in several states to allow its restaurants to accept food stamps.
In a January 2014 filing with the Securities and Exchange Commission, Walmart was oddly blunt about what SNAP cuts could do to its bottom line. Walmart’s business risks, the filing said, include: “changes in the amount of payments made under the Supplemental Nutrition Assistance Plan and other public assistance plans, [and] changes in the eligibility requirements of public assistance plans.”
How much profit does Walmart make from public assistance? In one year, nine Walmart Supercenters in Massachusetts received more than $33 million in SNAP dollars, more than four times the SNAP money spent at farmers’ markets nationwide. In two years, Walmart received about half of the one billion dollars in SNAP expenditures in Oklahoma. Overall, 18 percent of all food benefits money is spent at Walmart. That’s about $14 billion.
Others also profit well from food stamps. Food stamps are distributed via Electronic Benefits Transfer or EBT (some recipients claim the acronym really means “Eat Better Tonight.”) JPMorgan Chase holds the contracts in half the United States to handle the transactions. In Florida, JPMorgan’s contract is worth $83 million, and in New York, it’s worth more than $112 million. Meanwhile, until recent changes, customer service for the JP Morgan EBT program was done via offshore call centers in India and Mexico who paid far below domestic wages.
So don’t believe anyone who says raising the minimum wage will automatically drive prices up. Whatever you think you are saving at the cash register in Walmart (or at McDonald’s, KFC, Target…), you are paying in taxes to feed the woman ringing you up. If the business paid a living wage, there could a lessening in demand for public assistance. At the same, give some thought to how much tax money is ultimately finding its way into the hands of a few large corporations via SNAP sales, another form of welfare, albeit the corporate kind.
Higher prices? You’re already paying more than you think.