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Archive of "Minimum Wage" Category
Terrorist Sleeper Cell Crushed by Pay Day Loan Debt (Satire)
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.”
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
Congrats America! One Out of Five of Your Kids Needs Food Stamps
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 AmericaThe 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.
Mother’s DayIn 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
lovecould care about our kids!
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
U.S. Economic Inequality at Highest Levels in 100 years
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.
Student Loans
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.
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
TV Interview on PBS Kentucky: Iraq, and Ghosts of Tom Joad
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.
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
Walmart Again Holds Food Drive for Own Underpaid Workers
Happy Thanksgiving!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.
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
Excerpt from Ghosts of Tom Joad
My current book, Ghosts of Tom Joad: A Story of the #99 PercentYou’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.
You can buy Ghosts of Tom Joad: A Story of the #99 Percent
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
Walmart (Hearts) Food Stamps
How expensive are those everyday low prices? How much do things really cost on the dollar menu? The answer is more than you think, but maybe not for the reason you think.
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.
Corporate Welfare
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.
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
First World, Third World: A Travel Essay
You travel a bit, and you wonder what happened.
(I)
Streets, laid out in the 19th century, are jammed with traffic that was never anticipated. Not just more cars; Americans traveled on foot or by horse the last time these were thought through. After moving two miles in 45 minutes, we cross a bridge built in 1901.The bridge handles the traffic decently; it was built quite wide for the trains that used to transport Americans. The over-engineering on the bridge, common in the days before computers, would prove prescient as it would be several decades before the city, the richest in America, would build modern ones, and the last of those opened in the 1960’s.
The infrastructure is old and tired but can’t be fixed it seems. Too expensive. Though the current Iraq/Syria war has already cost over one billion dollars, and the previous one over two trillion dollars, somehow there is never enough money.
(II)
The subway might be faster, but the segment I’d use for part of the journey was first opened in 1904 and is a hodge-podge of patches and repairs today. The girders holding up the street have been painted by generations of workers over the last hundred years such that when a chip appears, it is deep and noticeable, a sort of archaeological find. Theodore Roosevelt was president when the first coat of paint was applied.The subway isn’t really an option anyway. Public transportation to the airport, one of America’s busiest, is limited to a single bus that runs irregularly, with limited space for the luggage of the poor souls who need to check something, and drops off at stops at the airport equally convenient to no one. The bus isn’t yours anyway; it is designed for persons commuting out of the areas it passes through headed to work at the airport, staffing your Cinnabon. Some smiles there that don’t reach eyes. At least remember to say thanks.
On your way you pass through their crumbling neighborhoods where the open businesses are often check cashing places, we buy gold cubbies and pawn shops. Some fast food places, who pay minimum wage in the neighborhood while exporting profits to midtown banks. You can actually see over the roofs into Manhattan where the money goes, and where the morning newspaper has an article on “affordable” condos priced at over two million dollars.
(III)
The airport, originally built in 1939 (Franklin Roosevelt was President and WWII was just starting for the Greatest Generation) and randomly added to over since, is chaotic at best. At security, foreign tourists look around for validation as they are yelled at to remove their shoes. It all seems inexplicable to many from Third World places the U.S. can’t bully into following America’s security theatre script. The floor we walk on in our socks is still a bit sticky from some spill. Everyone holds their hands over their head inside the scanner, a position of submission prisoners assume. The analogy is only slightly an analogy. But people either believe in it for their freedom as they are told, or just put up with it to avoid the bullying that follows displays of even quiet resistance. Be glad you are allowed to fly at all and have not been put without your knowledge on the No-Fly list for some Josef K. offense.Everyone on the plane, which departs late without explanation offered to you, is sorted into class. Those with the right credit card, or those who paid more, are treated one way, right down to a silly scrap of red carpet at check-in that to be fair does seem to validate something to some of them, judging by the smiles and the glances back into the lines. The other people are pushed onto the plane in a scrum of unintelligible “groups” to struggle against one another for the limited resources of space to sit, or to store giant amounts of luggage they are forced to carry to avoid usurious fees. The fee has nothing much to do with the airline’s biggest cost, fuel, as the weight is the same in or under the plane. The fee just is there. It’s a kind of modern icon, in other places called disingenuously a “convenience fee,” a fee you pay to buy something else.
On the plane everyone speaks in a bully’s (that word again) passive-aggressive verbiage. Sit down or we won’t take off, and it’ll be your fault, and God help you if the other flyers turn on you. You can’t congregate near the restrooms, even though there is only a tiny space anyway, because supposedly 13 years ago that’s what the 9/11 hijackers did. You are not passengers, or customers. You are all potential terrorists and will be treated as such. Here’s half a Diet Coke as a reward for being compliant.
(IV)
Flying over the Midwest, even at 25,000 feet midday on a Tuesday, you can’t miss the huge factories and warehouses, all surrounded by empty parking lots. No jobs it seems, even at this altitude. On the ground, in three different cities over a week, you see neighborhood after neighborhood that has been “gentrified” as part of what seems like a last gasp to salvage the hunk of America that isn’t New York, the L.A.-San Francisco corridor or wherever the federal government is still hiring.In these neighborhoods tens of thousands of skilled blue collar jobs that once paid a living wage have been replaced by only hundreds of minimum wage, part-time jobs for baristas and waiters, many serving a few. A lot of people now in America don’t really make anything, besides a few apps maybe, so they serve a very few who only make deals. See it all the time. Did you enjoy your meal sir (please tip, I don’t get paid much)?
The people on the ground still hope it might work. They are not stupid and this is not to mock; they know they have been handed the dirty end of the stick in the long con and are trying what they hope might work, though hope takes time and that is another thing they don’t have. You don’t have to be an economist to see how it can’t really work, do the math, but you’ll enjoy a decent cup of coffee on the way down.
There are exceptions, good ones. The young mayor of Louisville has dedicated himself to attracting companies to his city. He talks like a man running for his city’s life, in about the best way you can run for your life. But it is a tough race.
(V)
Oh, these are “first world problems.” That’s the point, true to a point, but indeed America claims to be the most exceptional nation in the first world, so the problems are worth talking through. And this all isn’t nostalgia; it’s history.America also has its third world problems– lack of equitable health care (The U.S. ranks 56th internationally in infant mortality, worse than Cuba, Poland, Bosnia, and Serbia), malnutrition among the poor (one of five kids in America is food-at-risk), homelessness, murder and drug abuse rates rivaling any outside of combat zones, the highest percentage of a population in prison in the developed world, acts of random violence in our schools and workplaces, racism and inequality that regularly erupt into violence suppressed by militarized police.
First world, third world, you see them all and you wonder what happened, now, to us.
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
The Great (Re)Training Robbery
Barack Obama told Americans every worker deserves to know “if you lose your job, your country will help you train for an even better one.” A nice sentiment,and politically safe; it’s just the wrong answer. Those “better jobs” don’t exist, and training doesn’t create jobs. Despite all that, every year the U.S. government spends billions of dollars on job training, with little impact. What’s the right answer?In 2007 then-candidate Obama visited Janesville, Wisconsin, location of the oldest General Motors plant in America. Echoing his current promise to support unemployed Americans with job training, Obama proclaimed “I believe that, if our government is there to support you, this plant will be here for another hundred years.” However, two days before Christmas and just about a month before Obama’s inauguration, the plant closed forever, throwing 5,000 people out of work. This devastated the town, because most residents either worked in the plant or in a business that depended on people working in the plant. Congress paid for a $2 million retraining program, using state community colleges the way the government once used trade schools, a century ago, to teach new immigrants the skills they needed to work at GM.
This time around, however, those who finished their retraining programs for the most part simply became trained unemployed people, rather than untrained ones. Having a certificate in “heating and ventilation” or training in new welding techniques did not automatically lead to a job in those fields. There were already plenty of people out there with such certificates, never mind actual college degrees (the United States graduated 1,606,000 students with bachelor’s degrees in 2014.) Of those that completed some form of training, nearly 40 percent did not find work. And those in Janesville who did find work in some field saw their take-home pay drop by 36 percent. A look at Craigslist job ads for the town shows one ad for heating and ventilation work, with a demand for three years experience. Under “General Labor” the work is for janitors, newspaper delivery and things like light manufacturing at $8.50 an hour.
Obama’s calls for job training also belies the fact that the government already spends approximately $18 billion a year to administer 47 job training programs. The actual value of those programs remains unclear. The Government Accountability Office (GAO) found that only five programs assessed whether people who found jobs did so because of the program and not some other cause. In addition, the GAO learned that almost all training programs overlap with at least one other training program. “Federal job training sounds like something that should boost the economy,” writes the Cato Institute, “but five decades of experience indicate otherwise.”
The panacea myth of job training crosses party lines. The GAO reported that in 2003, under the George W. Bush administration, the government spent $13 billion on training, spread across 44 programs. Job training may again be on the GOP agenda, even if the parties differ on the details. Politically, some sort of job training just sounds good. The problem is that it won’t really help America’s 10.5 million unemployed.
So the $18 billion question is: if training is not the answer, what is?
Jobs. Jobs that pay a living wage. The 2008 recession wiped out primarily high and middle wage jobs, with the strongest employment growth in the recovery taking place in low wage employment, to the point where the United States has the highest number of workers in low wage jobs of all industrialized nations.
There are many possible paths to better-paying jobs in America whose spending power can spark a “virtuous cycle.” That would mean more employment leading to more spending and more demand, followed by more hiring. One kickstarter is simply higher wages in the jobs we do have. For example, recent Department of Labor studies show that the 13 states which raised their minimum wages added jobs (at higher wages of course) at a faster pace than those that did not. On a larger, albeit more contentious scale, are options such as a WPA-like program, changes to tax and import laws to promote domestic manufacturing, infrastructure grants and the like. There’s $18 billion to work with for a start.
No matter the path forward, the bottom line remains unchanged: Training does not create jobs. Jobs create the need for training. Anything else is just politics.
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
IDEA Festival 2014
Following my discussion about Ghosts of Tom Joad: A Story of the #99Percent, at the always-excellent IDEA Festival in Louisville, Kentucky for 2014, I promised links to the articles and statistics mentioned. This will allow anyone who heard my talk to fact check what I said, and comment below.
Here they are, along with the written text of the speech.
Louisville IDEA Festival 2014 Speech
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
New Review of Ghosts of Tom Joad: “He makes it real”
Fire Dog Lake blogger Ohio Barbarian posted this review of Ghosts of Tom Joad: A Story of the #99 Percent
Yes, I know this book was featured on the FDL Book Salon back in May. I didn’t read that live; only skimmed it after the comments were closed, and I probably wouldn’t have commented on it anyway, but when I saw Ghosts of Tom Joad, a Story of the #99Percent at my local public library, I thought I’d check it out.
I’m glad I did. It’s a great book and, in my ever so humble opinion, it is every bit as powerful as the classic John Steinbeck novel to which it refers.
Set in a fictional small town in Ohio, home of a shuttered glass factory and a shattered American Dream, the protagonist, Earl, is a high school football player who graduated around 1977. He’s not exactly a sympathetic character, at least not to me. He’s basically an ignorant jock who did as little school work as possible, then dropped out after he got hurt in the middle of dumb teenage jock roughhousing, couldn’t play anymore, and went to work in the same factory where his World War II vet grandpa and his Korean War vet dad had worked before him.
He starts out, at least, as the prototypical “small town small mind” my mother and then later myself always despised. By that I mean someone whose whole world is his little town, who never really wanted to go anywhere else, and was mostly incurious about the rest of the planet. Someone who just assumed if he didn’t get some miraculous football scholarship, he’d spend his life working at the factory, get married, and raise kids in the same little town just like his recent ancestors, and that was fine by him.
In other words, he’s who Nixon’s cabinet secretary Earl Butz was referring to when the latter said, “All the average American wants is cold beer in the fridge and a warm place to shit.”
Of course, being in a Rust Belt midwestern town, our Earl is laid off after just a few months, and quickly spirals down from one McJob to the next to Bullseye, a retail store clearly modeled by the author on Wal-Mart, to more McJobs to temp work to day labor to homelessness and despair.
Van Buren takes an interesting approach, making the whole story a series of flashbacks while Earl is riding on the city bus, which is sometimes real and sometimes metaphysical, or at least metaphorical.
I didn’t find most of the characters all that sympathetic or even likable, but that’s not necessary in order to empathize with them, at least not for me. Like Steinbeck did with The Grapes of Wrath 74 years ago, Van Buren creates a world where selfishness and greed on the part of a few has caused despair and sometimes sheer hopelessness on the part of the many, and he makes it real. I think it’s quite an accomplishment.
My favorite parts of the book are astute observations by various characters about the deliberate destruction of America’s social, economic, and even moral sustainability by the top 1% for fun and profit, and the often subconscious collusion they get from most of the rest of us because of how we’ve been told to think since birth. My very favorite is, “It ain’t about left and right anymore, it’s about up and down.” A close second is “This was no accident, no invisible hand…we changed from a place that made things…into a place that just makes deals. Making things creates jobs, and jobs create prosperity. Making deals just creates wealth for the dealers.”
Indeed. There’s more, much more, and the book is well-written and an easy read. I highly recommend it. In fact, it should be mandatory reading in public high schools and universities.
Note: Though I also write for the site Fire Dog Lake, I do not know the author of the review, and have never met him/her.
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
Once the American Dream
We were once the American Dream, and now we’re just what happened to it.
The people I am talking about in my book Ghosts of Tom Joad: A Story of the #99 Percent
In talking to people in New York the working class tends to appear as caricatures, like Joe the Plumber in interior America was to politicians, the people of Brigadoon for elections, who then fade after the candidates grab votes promising new jobs and manicured optimism for a working class that somehow still listens to them. It’s inconveniently convenient to walk among them every four years, like having to be nice at your in-laws’ house for a family gathering. Ok as long as it doesn’t drag on too long.
The View from Ground ZeroThe story is different when I talk in Kansas, Kentucky or Ohio. People there nod their heads, and everyone has a story to add: the family that lost their home to the bank, the factory that closed down and the retail outlets that replaced the factory that closed down, one after another piling up like the late spring snow we had that week. People say “But I’ll take any job. I just want to work. I’m not too proud to get my hands dirty. I still know how to sweat, the good kind.”
I believe them all. But even if they’ll accept minimum wage, how far is a couple of dollars an hour throwing construction debris into a Dumpster going to get you? Better than nothing but not much better. You going to do ten hours of labor for the phone bill? Another ten for the groceries each week? Another 20 or 30 for a car payment? How many hours you going to work? How many can you work? Nobody can make a full living doing those jobs. You can’t raise a family on minimum wage. And you can’t build a nation on the working poor. It is a rough portrait of an American past and a tough vision to push into an American future.
But my goal isn’t to speak in broad terms; I want to understand what’s happening on an almost documentary level. So what stood out was the proliferation of a new, New Economy, one designed to prey on the fact that people who don’t deserve to be poor are now poor. There are whole industries that sprang up because poor people became a new market.
Rent-to-OwnPawn shops are an old business, but one that has grown alongside the working poor. In 1911, there were only 1,976 licensed pawnbrokers in the country. By 1988, there were 6,900 pawnshops in the U.S. (one for every two commercial banks) and in 2012 there were almost 14,000 pawnshops in operation throughout the United States.
Pawn shops are one thing, but there are newer predators on the ground. I ended up buying Kenny’s story for two cups of coffee. Kenny told me that he couldn’t qualify for a credit card, the middle class’ old way of borrowing money. Average people with cards carry monthly balances of almost $16,000 and that’s at 12 to 15 percent interest, so not a helluva lot different from payday loans. Just looks cleaner. Kenny told me about the trap of the rent-to-own stores, who let people without a credit card rent a TV or a washer and dryer until they paid back a lot more than the appliance is worth. It was more like time payments than rental as most people used to understand the word. By the time you owned the appliance, it was old, and with interest you dropped $450 on a $200 item. You needed something and there wasn’t any other way to get it.
Rent-to-Own is a big, big business. According to Broke, USA: From Pawnshops to Poverty, Inc. – How the Working Poor Became Big Business
by Gary Rivlin, the largest rent-to-own operation, Rent-A-Center, reported three billion dollars in revenues in 2008. The bottom line has only gotten stronger for them since.
Cashing InKenny even said he’d tried to cash in on it for himself, working briefly for a collections agency. When folks could not pay, the debt got sold down the line. Some big bank wasn’t going to fuss over small change, so it sold the ownership of the debt to a big agency, who sold it to a smaller one like he worked for, a place that might see profit in getting 20 percent of a two hundred dollar collection. At those rent-to-own joints, customers have to sign tons of papers, all looking like they were written by a Keep Lawyers Employed committee, so that if you miss a payment the store takes back the whole appliance, not just the half they still own.
This scared the people renting, but actually the last thing that company wanted was to repo a two-year-old TV, so Kenny’s job was to knock on the door and try to get them to pay something, and at the same time see if they’d refinance at an even higher rate. Loan to pay a loan. That old TV was worth nothing to the rent-to-own store, but it was some kind of magic thing to some old lady. If she was a single mom, the TV was her babysitter — feed your sister after Wheel of Fortune, lights out after Idol — and she wasn’t going to give it up easy. When Kenny talked them into an even uglier refi deal that let them keep the TV, they’d usually thank him for helping them out. Sometimes, he said, moms without cash would offer what he called a couch payment, bed in return for a report to the boss of no one home. His last customer before he quit the job was a former soldier who owed for a bicycle he was renting/buying over time for his daughter’s ninth birthday. Kenny said to hell with it, he wasn’t going to repo a Barbie two-wheeler with pink streamers on the handlebars and reported it as No One Home in that part of America.
The Ohio town we were in was falling apart economically, but it still had its looks, to a point. This wasn’t the South Bronx. Old habits die hard. When middle class folks fall out of the middle class, they still tend to keep things neat and see that grass gets cut. But what was once maybe quaint was now just old and tired. Pretty soon I worry there’ll be no one home.
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
Booklist Namechecks Beckett for Ghosts of Tom Joad
From Booklist, here’s the newest review of Ghosts of Tom Joad, with a generous comparison to Samuel Beckett:As Earl takes an endless bus ride around his hometown of Reeve, Ohio, we witness the downwardly spiraling events of his life as he tries to make sense of how a boom town went bust. It’s the twenty-first century, and the factory that founded and funded this Rust Belt town is gone, taking with it the livelihood and lives of hardworking and hard-drinking men like Earl and his father before him. Men who were duped into bartering their dreams of glory for what would turn out to be the empty promise of a steady wage.
In a device that could well be employed in a Beckett drama, Earl’s mythical bus teems with a constant parade of unearthly visitors from his past—family, friends, and fellow downsized derelicts who, in their unreal way, convey the painful reality that erodes society when the American dream turns into a nightmare. A seasoned State Department diplomat, stalwart Iraq War whistleblower, and author of We Meant Well (2011), Van Buren turns his keen eye to the shameful treatment of the nation’s unemployed and homeless.More reviews for Ghosts of Tom Joad: A Story of the #99Percent
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
Hah Hah: You are So Poor
BREAKING: According to the Congressional Budget Office (CBO), the rich are getting richer while the poor in America continue to get poorer. And the government is contributing to all this.
You are Poorer Now than BeforeHere’s the story from the CBO:
— 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.
— In 2007, federal taxes and transfers reduced the dispersion of income by 20 percent. The share of transfer payments to the lowest-income households declined. “The equalizing effect of federal taxes was smaller” in 2007 than in 1979, as “the composition of federal revenues shifted away from progressive income taxes to less-progressive payroll taxes,” thus doing less to reduce the concentration of income, the CBO said.
— The most affluent fifth of the population received 53 percent of after-tax household income in 2007, up from 43 percent in 1979. In other words, the after-tax income of the most affluent fifth exceeded the income of the other four-fifths of the population.
You can read the full Congressional Budget Office report online.
Shut Up Serfs
Just to make sure the point is clear, the top ten percent of wealth holders own roughly 70 percent of everything in the United States. The bottom half of us have roughly five percent, and falling, because…
The Great Recession of 2008 stripped swaths of the middle class of their most valuable asset. 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.
The value of those homes and their real estate migrated into the hands of those who controlled the banks. Many homeowners were turned into renters, shoving more money upward to those who controlled the property. America’s the top earners’ wealth grew even as those responsible for the collapse were never punished and the companies involved received federal bail-out money to cover losses, being too big to fail. In a neat closing of the circle, the money came from taxes paid in part by those destroyed in the Recession.
This was one of the largest single redistributions of wealth in American, perhaps world, history. Cool– you were around to witness history in the making.
GINI
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 “exceptional nation.”
Serfs All, or at Least 99% of Us
Thanks for reading this. I hope it distracted you briefly from the daily hunger pangs you face. If you don’t complain, we’ll allow you 30 minutes of TV tonight. Now back to work serf.
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
Yer New iPhone
Apple unveils their new iPhone today. Here’s your 2014 America in a nutshell:
Be poor, Black, Muslim or expressing a political opinion and the cops will run you off the sidewalk (if not taser or kill you.)
Wait overnight on the sidewalk as a good consumer to buy the new iPhone and the cops’ll watch over you like guardian angels.
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
I’ll Be at Denver’s Tattered Cover Bookstore August 29!
I am excited that The Tattered Cover, Denver’s best independent bookstore (with its own coffee shop) will host me for an evening of reading, signing, and conversation in connection with my new book, Ghosts of Tom Joad: A Story of the #99Percent.
I’ll be at the LoDo store in historic Lower Downtown, at the end of the 16th Street Mall, near Union Station and Coors Field. The event starts at 7pm.
The store is at 1628 16th Street at Wynkoop in Denver, in the restored Morey Mercantile Building, directly across Wynkoop Street from the new EPA building next to Union Station just blocks from Coors Field. Hourly parking lots are located near the store and street side parking is also available. The zip is 80202 for your GPS, or you can call old-school to 303-436-1070 for directions.
Everyone is welcome and there is no charge. There will be a Q&A session where we can talk about the new book, the old book (We Meant Well: How I Helped Lose the Battle for the Hearts and Minds of the Iraqi People) and/or my experiences being run out of my former career with the Department of State because I wrote about their waste and mismanagement of the Iraq War reconstruction.
Since this will be my only chance to speak in Denver, please come join me at The Tattered Cover!
If you can’t make it to the event but would like an autographed copy, email books@tatteredcover.com and we’ll get one set up for you.
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
Arguments Against Raising Minimum Wage Don’t Hold Up
The arguments against raising the minimum wage don’t hold up to facts.
Aren’t most people who work for minimum wage teens?
No– 88 percent are adults, with more than a third over age 40. These workers earn half of their families’ incomes. Meanwhile, the federal minimum wage has been stuck at $7.25 an hour since 2009.
C’mon, you don’t get an education, it’s your own fault you work for minimum wage, right?Wrong. The percentage of low-wage workers with at least some college education spiked 71 percent since 1979, to 43.2 percent today. You didn’t ask, but adult (re)training programs don’t seem to help much.
O.K., I feel for those people. But won’t higher wages cause higher prices?The way you functionally subsidize companies paying low-wages to workers– ponying up the difference between what McDonald’s and others pay and what those workers need to live via taxpayer-paid SNAP (food stamps) and other benefits– is a hidden cost in plain sight. You’re already paying higher prices via higher taxes; you just may not know it.
But even if taxes go down, won’t companies pass on their higher labor costs?Maybe, but they are unlikely to be significant. For example, if McDonald’s doubled the salaries of its employees to $14.50 an hour, not only would many of them go off public benefits, but so would the company– and a Big Mac would cost just 68 cents more (another study says only 14 cents.) At Wal-mart, increasing wages to $12 per hour would cost the company only about one percent, so that made-in-China $10 item would run you all of $10.01.
So maybe prices won’t go up so much. But won’t companies, facing higher labor costs, cut back on jobs?Companies hire for business needs, such as surge Christmas help, not out of societal largess. The Los Angeles Economic Round Table concluded raising the minimum to $15 locally, and thus putting more cash into the hands of consumers, would generate an additional $9.2 billion in annual sales and create more than 50,000 jobs. A Paychex/IHS survey, which looks at employment in small businesses, found that the state with the highest percentage of annual job growth was Washington, which also has the highest statewide minimum wage. Nationwide, even a small hike to $10.10 an hour would put some $24 billion a year into workers’ hands to spend and lift 4.6 million Americans out of poverty. Consumer spending drives 70 percent of our economy.
What about small businesses?Two-thirds of all minimum wage workers are not employed by small businesses. Better yet, one survey shows three out of five small business owners favor raising the minimum wage; their profits depend on a strong local economy, which requires more money in local consumers’ hands. Most small businesses cannot off-shore jobs, or export their way to profit, so micro-economics matter. Sad to say, 50-80 percent of most small businesses already fail for various reasons, even with a minimum wage that has not kept up with inflation (wage costs are actually lower now than in the past; in 1968 the federal minimum was $1.60 per hour, approximately $10.70 in 2013 dollars.) Factors other than labor costs seem far more significant.
Don’t these anti-minimum wage arguments sound a lot like the old anti-union arguments?Yep. Many opponents at the height of union employment in the 1970s claimed high wages cost jobs. How could a business survive paying $25 an hour? If wages were cut, they said, and profits went up as costs fell, more jobs would be created. The demise of unions did certainly help raise corporate profits, but it clearly did not create jobs, at least not jobs at a living wage. One in four U.S. employees are low-wage workers. That is 20 percent higher than in the United Kingdom, and the highest percentage among industrialized nations. So how’d that all anti-union stuff work out?
If there are no clear arguments against raising the minimum wage from our perspective, why are companies so opposed?While wages have fallen, from 1978 to 2013, CEO compensation, inflation-adjusted, increased 937 percent. Funny how the two arguments to keep wages low, unions and minimum wage, track one another. It’s almost as if there was a pattern of finding ways to lower wages while keeping CEO compensation high in America, societal costs be damned.
But can’t every statistic can be argued?Sure. However, at some point, assuming one seeks more than simply a hyper-wealthy dominating a working poor, economics is about people. People who can afford to feed themselves in meaningful jobs earn not just money, but self-respect. The connection between working and taking care of yourself and your family has increasingly gone missing in America, creating a society that often no longer believes in itself. Raising the wage so many Americans now depend on for their livelihood benefits us all.
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
On The Jim Bohannon Show: Why Walmart (Hearts) Food Stamps
Following my Reuter’s piece on how Walmart, McDonalds and others profit from food stamps, I joined radio host Jim Bohannon to discuss food stamps, the minimum wage, and more.According to Jim:
When you slide into the drive-up lane at your local fast-food place and decide which of the ‘value menu’ items you choose, do you ever think about how the restaurant chain manages to keep those prices down? The fact is, you’re paying a higher price than is on the menu board. While you may get a quick, cheap burger and a dollar soft drink right away, on April 15 your tax dollars are going to pay for assistance programs helping the people who cook and serve your ‘cheap’ lunch.
Employees in the fast-food industry, many of whom work at the minimum wage, are heavy recipients of Federal and state assistance, especially taking advantage of SNAP, the Federal food stamps program. According to our guest tonight, columnist and author Peter Van Buren, fast food workers claim public assistance at more than twice the rate of other employed people. In effect, the corporations running the fast food chains are reaping big profits while the taxpayer foots the bill for the assistance programs allowing those corporations’ employees to survive. ‘Think everything on a dollar menu costs a dollar? Think again.’
Here’s the whole interview. My portion starts at 40:10 in.
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
Just Raise the Minimum Wage
Raise the minimum wage. The arguments for are strong, and the arguments against don’t hold up to facts.You still think everything on the dollar menu really costs only a dollar? Better read this. One important reason to raise the minimum wage to a living one is that people who can afford to feed themselves will not need food stamps paid for by taxpayers. Companies who profit off their workers’ labor will be forced to pay a fair price for it, and not get by on taxpayer-subsidized low wages. Just as important, people who can afford to feed themselves earn not just money, but self-respect. The connection between working and taking care of yourself and your family has increasingly gone missing in America, creating a society that no longer believes in itself. Rock bottom is a poor foundation for building anything human.
But won’t higher wages cause higher prices? The way taxpayers functionally subsidize companies paying low-wages to workers — essentially ponying up the difference between what McDonald’s and its ilk pay and what those workers need to live via SNAP and other benefits — is a hidden cost squirreled away in plain sight. Sky-high company profits are based on the in-flow of federal tax money to keep low wages manageable. You’re already paying higher prices via higher taxes; you just may not know it.
Even if taxes go down, won’t companies pass on their costs? Maybe, but they are unlikely to be significant. For example, if McDonald’s doubled the salaries of its employees to a semi-livable $14.50 an hour, not only would most of them go off public benefits, but so would the company — and yet a Big Mac would cost just 68 cents more. In general, only about 20% of the money you pay for a Big Mac goes to labor costs. At Walmart, increasing wages to $12 per hour would cost the company only about one percent of its annual sales.
What about job cutbacks? Despite labor costs not being the most significant factor in the way low-wage businesses set their prices, one of the more common objections to raising the minimum wage is that companies, facing higher labor costs, will cut back on jobs. Don’t believe it.
The Los Angeles Economic Round Table concluded that raising the hourly minimum to $15 in that city would generate an additional $9.2 billion in annual sales and create more than 50,000 jobs. A Paychex/IHS survey, which looks at employment in small businesses, found that the state with the highest percentage of annual job growth was Washington, which also has the highest statewide minimum wage in the nation. The area with the highest percentage of annual job growth was San Francisco, the city with the highest minimum wage in the nation. Higher wages do not automatically lead to fewer jobs. Many large grocery chains, including Safeway and Kroger, are unionized and pay well-above-minimum wage. They compete as equals against their non-union rivals, despite the higher wages.
Will employers leave a state if it raises its minimum wage independent of a nationwide hike? Unlikely. Most minimum-wage employers are service businesses that are tied to where their customers are. People are not likely to drive across state lines for a burger. A report on businesses on the Washington-Idaho border at a time when Washington’s minimum wage was nearly three bucks higher than Idaho’s found that the ones in Washington were flourishing.
While some businesses could indeed decide to close or cut back if the minimum wage rose, the net macro gains would be significant. Even a small hike to $10.10 an hour would put some $24 billion a year into workers’ hands to spend and lift 900,000 Americans above the poverty line. Consumer spending drives 70% of our economy. More money in the hands of consumers would likely increase the demand for goods and services, creating jobs.
In many ways, the debate over raising the minimum age mirrors what was said about unions in the 1970s. Many at the time, especially pro-business economists and politicians as they do today, claimed the high wages fought for by unions hurt American competitiveness and cost jobs. How could a business survive paying $25 an hour? If wages were cut, and profits went up as costs fell, more jobs would be created.
So how’d that work out? The demise of unions did certainly help raise corporate profits, but it clearly did not create jobs, at least not good jobs at a living wage. Quite the opposite. Want more minimum wage jobs, maybe? Keep the wage dirt poor low.
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
Walmart at the Trough: Billions Scammed from Your Tax Money
Walmart, which already is profiting mightily from federal, taxpayer paid corporate welfare in the form of food stamps subsidizing its workers’ low wages, as well as billions in direct profits from buyers shopping with food stamps, also takes advantage of tax laws that help it avoid paying federal tax.
Thanks for Shopping at Walmart, Suckers
American taxpayers subsidize much of the cost of Walmart’s executive pay. Walmart (and other large companies) uses a loophole in a tax law created by Congress in 1993 (Section 162(m) of the tax code) that allows it to deduct unlimited amounts from corporate income taxes. All Walmart has to do is deduct the cost of executive compensation if it is paid in the form of stock options and other so-called “performance pay” instead of straight salaries. Congress wrote the law to apply only to actual salaries.
A new report by Americans for Tax Fairness shows:
— Ka-Ching! $104 MILLION: Walmart reduced its federal tax bills by an estimated $104 million over the past six years by paying its top eight executives $298 million in “performance pay” that was fully tax deductible. The tax revenues lost would have been enough to cover the cost of free school lunches for 33,000 children for those six years.
— Ka-Ching! $40 MILLION: Michael Duke, Walmart’s recently retired President & CEO and currently Chairman of the Executive Committee of the Board of Directors, pocketed nearly $116 million in exercised stock options and other “performance pay” during the period 2009-2014. That translates into a taxpayer subsidy for Walmart of more than $40 million— enough to cover the average cost of food stamps for 4,200 people for those six years. FYI: Duke’s total compensation for 2013 was $27.6 million, all wrung out of those everyday low prices.
— Ka-Ching! $50 BILLION: Taxpayers would save $50 billion over 10 years, according to the Joint Committee on Taxation, if Congress changed this tax law, even if the new law allowed a generous tax deduction of one million dollars for each employee’s total compensation, with no exceptions for performance pay, as originally intended when the law was first created in 1993.
— Ka-Ching! $14 BILLION: And about those tax-payer funded food stamps. Overall, 18 percent of all food benefits money is spent at Wal-Mart. That’s about $14 billion.
— Ka-Ching! $7.8 BILLION: Taxpayers spend $7.8 billion a year subsidizing Walmart through public assistance to the company’s low paid employees.
— Ka-Ching! $3 BILLION: The four members of the Walton family, who control almost all of Walmart, shelter signficant amounts of their money from taxes by placing the cash into trusts, allowed by the tax code. To avoid taxes on the dividends generated out of these trusts, those monies are donated to the Walton Family Foundation, a registered charity. When the trusts expire upon the deaths of the elder Waltons, however, their underlying assets, along with any income earned above the amount required to go to the Foundation, will revert to the trusts’ non-charitable beneficiaries, the second or third tier Walmart heirs-in-waiting. The non-charitable beneficiaries of the trusts will likely receive these trust assets entirely free of estate taxes. Cost to taxpayers is estimated at $3 billion in lost tax revenues.
What it Means
There are some important takeaways, besides the obvious. The first concerns the minimum wage. It is clear that Walmart could easily pare off a sliver of the billions its owners take in to raise wages without raising prices. They just don’t want to. Even if prices went up, savings in food stamps that would not have to be paid to starving workers would be substantial.
The other thing to consider is the conservative argument that business growth is critical to broader economic and societal growth. Maybe in some ways, but as shown with Walmart, certainly it does not lead to larger tax revenues; quite the opposite. Somebody has to pay for all those food stamps and trust fund loopholes. That’s you.
It is important to remember that companies have been enjoying these taxpayer subsidies for their executive compensation since 1993, plus the economic benefits of food stamps to subsidize their profits and low wages. That they exist today, at the phenomenal costs to regular Americans noted above, is no secret.
So draw your own conclusions from that as to how Congress views all this corporate welfare.
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
Interview with KGNU: Ghosts of Tom Joad
I recently spoke with KGNU‘s Claudia Cragg about my personal work experience at a store I call “Bullseye,” in the minimum wage Big Box economy and how this led to Ghosts of Tom Joad: A Story of the #99Percent.
Ghosts looks up close at the drastic effects of social and economic changes in America between WWII and the decline of the blue collar middle class in the 1980’s right up to today.
Have a listen to the full interview.
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
Media Profile: Defying the State to Publish His Story
Our Town, a New York City newspaper, recently published this article by Daniel Fitzsimmons, profiling me and my book, Ghosts of Tom Joad: A Story of the #99Percent.
Peter Van Buren is an Upper East Sider and a 24-year veteran of the State Department. His experience there – including a one-year deployment to Iraq – led to him write his first book, We Meant Well: How I Helped Lose the Battle for the Hearts and Minds of the Iraqi People (MacMillan, 2011). Even before it was released, the book was frowned upon by higher ups at the State Department and they began proceedings against him for allegedly publishing classified information. He managed to beat the rap and retire with full benefits, with help from the same lawyers now representing Edward Snowden. For several years, however, Van Buren’s pension and the future of his family were at risk.
During his legal battle with the State Department, Van Buren was forced to work in the low-wage retail sector of the American economy to make ends meet. That experience is the basis for his second book, a novel, Ghosts of Tom Joad: A Story of the #99 Percent, published this year by Luminis Books. The book examines the social and economic changes in America between World War II and the decline of the blue collar middle class in the 1980s.
Van Buren, 53, grew up in New York and now lives at 2nd Avenue and East 93rd Street.
“I was born in New York, went to college in Ohio, and then moved around the world with my State Department job as a diplomat for 24 years,” he said. “After retirement, I wanted to leave Washington D.C. and re-immerse myself in this amazing city. Best decision I ever made.”
What would you say the central thesis is of your first book? Why did you decide to write it and what were some of the obstacles you faced?
We Meant Well’s thesis was two-fold: One, to document exactly how the U.S. failed in its hearts and minds mission in Iraq, the failure on the ground of the counter-insurgency “win over the people” plan of then-general David Petraeus and Secretary of State Condi Rice. The larger point was to offer lessons for how to better accomplish those goals in the hearts and minds campaign in Afghanistan. Given how poorly U.S. efforts are going in Afghanistan, now 13 years and $109 billion of reconstruction spending into the war, I guess no one took my advice. I’m actually thinking of franchising the title, We Meant Well, Too.
It was published in 2011, how long after its release did you start receiving attention from the State Department? What was their case against you built upon?The State Department is a lot like the Mafia: rule number one is that you don’t talk about family business outside the family. I broke omerta and, through my book, pointed out in quite specific detail the things State did and did not do in Iraq that contributed to the failures there. Reaction from State was sharp, and began even before the book was officially published.
Why did you decide to take a position with your book that you knew would be frowned upon by the administration?When anyone decides to blow the whistle and take on the entire resources of the U.S. government, it is motivated by conscience, the idea that what needs to be said is bigger than yourself. My whistle-blowing was nowhere close to what Chelsea Manning and Edward Snowden did, and my punishment nowhere as severe, but the motivations are the same. I saw terrible waste and mismanagement in Iraq, wastes of money and, more significantly, both American and Iraqi lives. No one else was reporting on this; indeed, because of the way State presented itself, no one but someone from the inside could have reported it to the American people. It was on me to step up. I did.
How, ultimately, were you able to withstand the State Department’s efforts against you and retire with full benefits?State tried first to stop the book, then to claim, falsely, that the book contained classified information, then to unsuccessfully prosecute me, then to fire me and take away my pension. I’ll admit, pre-Manning and pre-Snowden, I was naïve. I thought I’d get into some kind of trouble, but never saw the tsunami coming. I prevailed over the government thanks to the efforts of the Government Accountability Project, specifically Jess Radack and Kathleen McClellan. Both of these women now help represent Edward Snowden, by the way. I also was defended by the ACLU, who saw my struggle as a First Amendment issue, the right to publish. I won and the government lost. I went on to retire from State, and collect the benefits I earned from my 24 years of service.
After your first book, how did you come to the decision to turn to domestic issues in Ghosts of Tom Joad: A Story of the #99 Percent?Following State, I went to work in the minimum wage economy, not planning on another book. But what I saw shocked me. In an odd way, I had my first taste of the life of the one percent while in Iraq: unlike most Iraqis, I had more food and amenities than I could squander, nearly unlimited funds to spend as I wished (as long as the spending supported us one-percenters) and plenty of Army muscle around to keep the 99 percent at bay.
I returned to America to find another sort of regime change underway, only I wasn’t among the one percent for this one. I worked instead in America’s new minimum-wage economy, and saw firsthand what a life based on lousy wages and barely-adequate food benefits adds up to. There were no cruise missiles deployed to create the changes, but the cumulative effects of years of deindustrialization, declining salaries, absent benefits, decimated unions, the undertow of meth and alcohol abuse pulling at our people, the broad-based loss of jobs and of course wealth inequality on a radical scale was quite familiar. The willful destruction of a way of life in service to the goals of the one percent anywhere was hard to miss, but I still wanted a clearer picture. My research and experiences drive me to write about this all, and the result is Ghosts of Tom Joad.
Ghosts of Tom Joad is a reimagining of Steinbeck’s classic Grapes of Wrath, brought into our own era. The book traces the dilution of our middle class, their replacement with the working poor, and examines the effects of this not just on our economy, but on our society, our nation, our America. Like Grapes of Wrath, Ghosts is a factual look at ourselves wrapped in fiction, in this case, a single Ohio family touched by the changes in America from the 1950s through today.
I think of it as a good story, but with a conscience.
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
On the Alex Jones Show: Ghosts of Tom Joad, Iraq and More
I again join the Alex Jones Show, with guest host Dave Knight, to discuss the devolving situation in Iraq, and my new book Ghosts of Tom Joad. My portion of the show begins about two hours and eight minutes in, so feel free to fast forward to the good stuff below, or jump right to it with this link.
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
Why Don’t the Unemployed Get Off Their Couches?
And Other Critical Questions for AmericansLast year eight Americans — the four Waltons of Walmart fame, the two Koch brothers, Bill Gates, and Warren Buffett — made more money than 3.6 million American minimum-wage workers combined. The median pay for CEOs at America’s large corporations rose to $10 million per year, while a typical chief executive now makes about 257 times the average worker’s salary, up sharply from 181 times in 2009. Overall, 1% of Americans own more than a third of the country’s wealth.
As the United States slips from its status as the globe’s number one economic power, small numbers of Americans continue to amass staggering amounts of wealth, while simultaneously inequality trends toward historic levels. At what appears to be a critical juncture in our history and the history of inequality in this country, here are nine questions we need to ask about who we are and what will become of us. Let’s start with a French economist who has emerged as an important voice on what’s happening in America today.
1) What does Thomas Piketty have to do with the 99%?
French economist Thomas Piketty’s surprise best-seller, Capital in the Twenty-First Century, is an unlikely beach read, though it’s selling like one. A careful parsing of massive amounts of data distilled into “only” 700 pages, it outlines the economic basis for the 1%-99% divide in the United States. (Conservative critics, of course, disagree.)
Just in case you aren’t yet rock-bottom certain about the reality of that divide, here are some stats: the top 1% of Americans hold 35% of the nation’s net worth; the bottom 80%, only 11% percent. The United States has such an unequal distribution of wealth that, in global rankings, it falls among the planet’s kleptocracies, not the developed nations that were once its peers. 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; for Germany, 77; 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 “indispensable nation.”
Piketty shows that such inequality is driven by two complementary forces. By owning more of everything (capital), rich people have a mechanism for getting ever richer than the rest of us, because the rate of return on investment is higher than the rate of economic growth. In other words, money made from investments grows faster than money made from wages. Piketty claims the wealth of the wealthiest Americans is rising at 6%-7% a year, more than three times as fast as the economy the rest of us live in.
At the same time, wages for middle and lower income Americans are sinking, driven by factors also largely under the control of the wealthy. These include the application of new technology to eliminate human jobs, the crushing of unions, and a decline in the inflation-adjusted minimum wage that more and more Americans depend on for survival.
The short version: A rising tide lifts all yachts.
2) So why don’t the unemployed/underemployed simply find better jobs?
Another way of phrasing this question is: Why don’t we just blame the poor for their plight? Mention unemployment or underemployment and someone will inevitably invoke the old “pull yourself up by your bootstraps” line. If workers don’t like retail or minimum-wage jobs, or if they can’t find good paying jobs in their area, why don’t they just move? Quit retail or quit Pittsburgh (Detroit, Cleveland, St. Louis) and…
Move to where to do what? Our country lost one-third of all decent factory jobs — almost six million of them — between 2000 and 2009, and wherever “there” is supposed to be, piles of people are already in line. In addition, many who lost their jobs don’t have the means to move or a friend with a couch to sleep on when they get to Colorado. Some have lived for generations in the places where the jobs have disappeared. As for the jobs that are left, what do they pay? One out of four working Americans earn less than $10 per hour. At 25%, the U.S. has the highest percentage of low-wage workers in the developed world. (Canada and Great Britain have 20%, Japan under 15%, and France 11%.)
One in six men, 10.4 million Americans aged 25 to 64, the prime working years, don’t have jobs at all, a portion of the male population that has almost tripled in the past four decades. They are neither all lazy nor all unskilled, and at present they await news of the uncharted places in the U.S. where those 10 million unfilled jobs are hidden.
Moving “there” to find better work isn’t an option.
3) But aren’t there small-scale versions of economic “rebirths” occurring all over America?
Travel through some of the old Rust Belt towns of this country and you’ll quickly notice that “economic rebirth” seems to mean repurposing buildings that once housed factories and shipping depots as bars and boutiques. Abandoned warehouses are now trendy restaurants; a former radiator factory is an artisanal coffee shop. In other words, in a place where a manufacturing plant once employed hundreds of skilled workers at union wages, a handful of part-timers are now serving tapas at minimum wage plus tips.
In Maryland, an ice cream plant that once employed 400 people with benefits and salaries pegged at around $40,000 a year closed its doors in 2012. Under a “rebirth” program, a smaller ice cream packer reopened the place with only 16 jobs at low wages and without benefits. The new operation had 1,600 applicants for those 16 jobs. The area around the ice cream plant once produced airplanes, pipe organs, and leather car seats. No more. There were roughly 14,000 factory jobs in the area in 2000; today, there are 8,000.
In Louisville, Kentucky, more than 5,500 people applied for what turned out to be just 50 factory jobs in 2013, some of them temporary, paying $15.78 per hour at Ford Motor Company’s Fern Valley Road plant. State unemployment officials sifted through the thousands of applications and forwarded them to Ford staff, who narrowed the field by lottery (which in itself says something about the skill levels of the jobs offered.) The wage offered to new employees is about half what union workers receive.
In January 2014, Ford announced it would hire another 350 people, to be pulled from an existing pool of 10,000 applicants. State officials in Kentucky approved $290 million in financial incentives, using taxpayer money, to bring those jobs to Louisville. The impact of those jobs is shockingly minimal; unemployment in the area is 8.2 percent, much higher than the U.S. national average. There are some 52,763 people in the Louisville metro area unable to find work, not including those working part-time jobs or who have given up trying to find work at all.
Also in in Louisville, Kentucky, General Electric’s Appliance Park, once employed 23,000 union workers at its peak in 1973. By 2011, the sputtering plant held onto only about 1,800 workers. What was left of the union there agreed to a two-tier wage scale, and today 70% of the jobs are on the lower tier — at $13.50 an hour, almost $8 less than what the starting wage used to be. A full-time worker makes about $28,000 a year before taxes and deductions. The poverty line for a family of four in Kentucky is $23,000. Food stamp benefits are available to people who earn up to 130% of the poverty line, so a full-timer in Kentucky with a family still qualifies. Even if a worker moved to Kentucky and lucked out by landing a job at the plant, standing on your tiptoes with your lips just above sea level is not much of a step up.
People once called Millinocket, Maine the Magic City. The Great Northern Paper mill, which conjured this town out of the backwoods and sustained it for a century, employed 5,000 people and sustained a way of life. At least until it closed for good in 2008, turning the community into a ghost town. 2014 saw a rebirth of sorts, as new owners repurposed the mill into a wood pellet factory. But only 55 jobs were created. The town hopes to attract tourists now, but they have not come.
Only a generation ago, Bethlehem, Pennsylvania had a steel mill that employed 31,500 people. They were not alone; in the final quarter of what was to be the American Century, some 1.5 million steelworkers lost their jobs. Including all 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.
It is common in such circumstances to blame greedy workers, and decry how their fate was tied to selfishness and out-of-control unions. But that would be wrong, or at least only part of the story. The ratio of CEO salary-to-average-worker-salary in 1980 was 42:1, climbing to 120:1 in 2000 and stands at 204:1 today. So indeed among the complex factors that changed America’s economic landscape, greed and selfishness did indeed play a part. It is just incorrect to blame it on the workers themselves.
Low paying jobs are not a rebirth.
4) Can’t people just get off their couches and get back to work?
There are 3.8 million Americans who have been out of work for 27 weeks or more. These are the country’s long-term unemployed, as defined by the Department of Labor. Statistically, the longer you are unemployed, the less likely it is that you’ll ever find work again. Between 2008 and 2012, only 11% of those unemployed 15 months or more found a full-time job, and research shows that those who do find a job are less likely to retain it. Think of it as a snowball effect: more unemployment creates more unemployable people.
And how hard is it to land even a minimum-wage job? This year, the Ivy League college admissions acceptance rate was 8.9%. Last year, when Walmart opened its first store in Washington, D.C., there were more than 23,000 applications for 600 jobs, which resulted in an acceptance rate of 2.6%, making the big box store about twice as selective as Harvard and five times as choosy as Cornell.
Telling unemployed people to get off their couches (or out of the cars they live in or the shelters where they sleep) and get a job makes as much sense as telling them to go study at Harvard.
5) Why can’t former factory workers retrain into new jobs?
Janesville, Wisconsin, had the oldest General Motors car factory in America, one that candidate Obama visited in 2007 and insisted would be there for another 100 years. Two days before Christmas that year and just before Obama’s inauguration, the plant closed forever, throwing 5,000 people out of work. This devastated the town, because you either worked in the plant or in a business that depended on people working in the plant. The new president and Congress quickly paid for a two-million-dollar Janesville retraining program, using state community colleges the way the government once used trade schools built to teach new immigrants the skills needed by that Janesville factory a century ago.
This time around, however, those who finished their retraining programs simply became trained unemployables rather than untrained ones. It turned out that having a certificate in “heating and ventilation” did not automatically lead to a job in the field. There were already plenty of people out there with such certificates, never mind actual college degrees. And those who did find work in some field saw their take-home pay drop by 36%. This, it seems, is increasingly typical in twenty-first-century America (though retraining programs have been little studied in recent years).
Manufacturing is dead and the future lies in a high-tech, information-based economy, some say. So why can’t former factory workers be trained to do that? Maybe some percentage could, but the U.S. graduated 1,606,000 students with bachelor’s degrees in 2014, many of whom already have such skills.
Bottom Line: Jobs create the need for training. Training does not create jobs.
6) Shouldn’t we cut public assistance and force people into the job market?
At some point in any discussion of jobs, someone will drop the nuclear option: cut federal and state benefits and do away with most public assistance. That’ll motivate people to find jobs — or starve. Unemployment money and food stamps (now called the Supplemental Nutrition Assistance Program, or SNAP) encourage people to be lazy. 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% 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.
Why do so many of the employed need food stamps? It’s not complicated. Workers in the minimum-wage economy often need them simply to survive. All in all, 47 million people get SNAP nationwide because without it they would go hungry.
In Ohio, where I did some of the research for my book Ghosts of Tom Joad, 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%) and the District of Columbia (30%) topping the list. And it’s not just kids. Households with disabled people account for 16% of SNAP benefits, while 9% go to households with senior citizens.
Almost 22% of American children under age 18 lived in poverty in 2012; for those under age five, it’s more than 25%. Almost 1 in 10 live in extreme poverty.
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.
7) Why are Walmart and other businesses opposed to SNAP cuts?
Public benefits are now a huge part of the profits of certain major corporations. In a filing with the Securities and Exchange Commission, Walmart was oddly blunt about what SNAP cuts could do to its bottom line:
“Our business operations are subject to numerous risks, factors, and uncertainties, domestically and internationally, which are outside our control. These factors 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 do such businesses make from public assistance? Short answer: big bucks. 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% of all food benefits money is spent at Walmart.
Pepsi, Coke, and the grocery chain Kroger lobbied for food stamps, an indication of how much they rely on the money. The CEO of Kraft admitted that the mac n’ cheese maker opposed food stamp cuts because users were “a big part of our audience.” One-sixth of Kraft’s revenues come from food stamp purchases. Yum Brands, the operator of KFC, Taco Bell, and Pizza Hut, tried to convince lawmakers in several states to allow its restaurants to accept food stamps. 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, while companies like Coke and Pepsi pull in four billion dollars a year in revenues from SNAP money.
There is another side to big retail and fast food’s support for food stamps.
There is much talk about the minimum wage. What was once a way for teenagers and college kids to earn a little pocket money has devolved into the take-home pay for a vast swath of America. Defenders of a low minimum wage insist that most of us benefit from workers being paid very little; lower wages mean lower costs for Walmart and others, and so lower prices for us.
Makes sense, except that it is not true.
The difference between what Walmart pays the majority of its employees and what those employees need is made up by taxpayers in the form of food stamps and other assistance. Walmart is America’s largest private employer, so we’ll use them here for most of the examples, but this applies across the board.
Choose your statistic to understand the problem: about 25% of all employed people in the U.S. receive some form of public assistance; in the fast food industry, it is 53%. About 1 out of every 3 retail workers gets public assistance. In sum, American taxpayers subsidize the minimum wage with $7 billion in public assistance.
Let’s break it into a smaller piece: After analyzing data released by Wisconsin’s Medicaid program, the House Committee on Education and the Workforce estimates that a single 300-person WalMart in Wisconsin costs taxpayers $5,815 per Walmart associate in public assistance paid.
What about higher prices? The quick answer should be obvious by now. Whatever you think you are saving at the cash register in Walmart due to those lower wages, you as a taxpayer are paying anyway in taxes to feed the woman ringing you up. If store paid a living wage, step one would a lessening in demand for public assistance. Ka-ching, lower taxes!
But let’s follow the money. Walmart consistently pays the lowest wages they possibly can, and claims that keeps prices down. Walmart is not alone in this practice; the average family’s income is lower today than at any point in the last ten years, income inequality more extreme than at any point since before the Great Depression. The U.S. now has the highest proportion of low-wage workers in the developed world. The fall in wages parallels another trend line: in January of 2013, the Bureau of Labor Statistics reported that union membership had reached a 97 year low in America.
Poverty is big business.
8 ) Should we raise the minimum wage?
One important reason to raise the minimum wage to a living one is that people who can afford to feed themselves will not need food stamps paid for by taxpayers. Companies who profit off their workers’ labor will be forced to pay a fair price for it, and not get by on taxpayer-subsidized low wages. Just as important, people who can afford to feed themselves earn not just money, but self-respect. The connection between working and taking care of yourself and your family has increasingly gone missing in America, creating a society that no longer believes in itself. Rock bottom is a poor foundation for building anything human.
But won’t higher wages cause higher prices? The way taxpayers functionally subsidize companies paying low-wages to workers — essentially ponying up the difference between what McDonald’s and its ilk pay and what those workers need to live via SNAP and other benefits — is a hidden cost squirreled away in plain sight. You’re already paying higher prices via higher taxes; you just may not know it.
Even if taxes go down, won’t companies pass on their costs? Maybe, but they are unlikely to be significant. For example, if McDonald’s doubled the salaries of its employees to a semi-livable $14.50 an hour, not only would most of them go off public benefits, but so would the company — and yet a Big Mac would cost just 68 cents more. In general, only about 20% of the money you pay for a Big Mac goes to labor costs. At Walmart, increasing wages to $12 per hour would cost the company only about one percent of its annual sales.
Despite labor costs not being the most significant factor in the way low-wage businesses set their prices, one of the more common objections to raising the minimum wage is that companies, facing higher labor costs, will cut back on jobs. Don’t believe it.
The Los Angeles Economic Round Table concluded that raising the hourly minimum to $15 in that city would generate an additional $9.2 billion in annual sales and create more than 50,000 jobs. A Paychex/IHS survey, which looks at employment in small businesses, found that the state with the highest percentage of annual job growth was Washington, which also has the highest statewide minimum wage in the nation. The area with the highest percentage of annual job growth was San Francisco, the city with the highest minimum wage in the nation. Higher wages do not automatically lead to fewer jobs. Many large grocery chains, including Safeway and Kroger, are unionized and pay well-above-minimum wage. They compete as equals against their non-union rivals, despite the higher wages.
Will employers leave a state if it raises its minimum wage independent of a nationwide hike? Unlikely. Most minimum-wage employers are service businesses that are tied to where their customers are. People are not likely to drive across state lines for a burger. A report on businesses on the Washington-Idaho border at a time when Washington’s minimum wage was nearly three bucks higher than Idaho’s found that the ones in Washington were flourishing.
While some businesses could indeed decide to close or cut back if the minimum wage rose, the net macro gains would be significant. Even a small hike to $10.10 an hour would put some $24 billion a year into workers’ hands to spend and lift 900,000 Americans above the poverty line. Consumer spending drives 70% of our economy. More money in the hands of consumers would likely increase the demand for goods and services, creating jobs.
In many ways, the debate over raising the minimum age mirrors what was said about unions in the 1970s. Many at the time, especially pro-business economists and politicians as they do today, claimed the high wages fought for by unions hurt American competitiveness and cost jobs. How could a business survive paying $25 an hour? If wages were cut, and profits went up as costs fell, more jobs would be created. So how’d that work out? The demise of unions did certainly help raise corporate profits, but it clearly did not create jobs, at least not jobs at a living wage. Quite the opposite. Want more minimum wage jobs, maybe? Keep the wage dirt poor low.
9) Profit Before People
Where could the money to pay workers a living wage come from, except of course by raising prices?
The top one percent of income earners garnered 93 percent of income gains in the recent recovery. In the third quarter of 2012, corporate profits reached $1.75 trillion, their greatest share of GDP in history. During that same quarter, workers’ wages fell to their lowest share of GDP on record. The top six members of the Walton family (owners of Walmart) own as much wealth as 48 million other Americans combined. Meanwhile, among 35 economically advanced nations, the U.S. has the second highest rate of child poverty, 23%, just slightly better than Romania.
Yes, raise the minimum wage. Double it or more. We can’t afford not to.
10) Okay, after the minimum wage is raised, what else can we do?
To end such an article, it’s traditional to suggest reforms, changes, solutions. It is, in fact, especially American to assume that every problem has a “solution.” So my instant suggestion: raise the minimum wage. Tomorrow. In a big way. And maybe appoint Thomas Piketty to the board of directors of Walmart.
But while higher wages are good, they are likely only to soften the blows still to come. What if the hyper-rich like being ever more hyper-rich and, with so many new ways to influence and control our political system and the economy, never plan to give up any of their advantages? What if they don’t want to share, not even a little more, not when it comes to the minimum wage or anything else?
The striking trend lines of social and economic disparity that have developed over the last 50 years are clearly no accident; nor have disemboweled unions, a deindustrialized America, wages heading for the basement (with profits still on the rise), and the widest gap between rich and poor since the slavery era been the work of the invisible hand. It seems far more likely that a remarkably small but powerful crew wanted it that way, knowing that a nation of fast food workers isn’t heading for the barricades any time soon. Think of it all as a kind of “Game of Thrones” played out over many years. A super-wealthy few have succeeded in defeating all of their rivals — unions, regulators, the media, honest politicians, environmentalists — and now are free to do as they wish.
What most likely lies ahead is not a series of satisfying American-style solutions to the economic problems of the 99%, but a boiling frog’s journey into a form of twenty-first-century feudalism in which a wealthy and powerful few live well off the labors of a vast mass of the working poor. Once upon a time, the original 99% percent, the serfs, worked for whatever their feudal lords allowed them to have. Now, Walmart “associates” do the same. Then, a few artisans lived slightly better, an economic step or two up the feudal ladder. Now, a technocratic class of programmers, teachers, and engineers with shrinking possibilities for upward mobility function similarly amid the declining middle class. Absent a change in America beyond my ability to imagine, that’s likely to be my future — and yours.
Feudalism
If I had a crayon I’d draw you a picture, but I think you don’t really need that at this point. None of this is accidental, some sort of invisible hand at work.
The inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, or a 36 percent decline. For the top 5 percent of Americans, household net worth increased 14 percent over the same 10 years.
Companies will continue to demand Federal, state and local governments keep the minimum wage as low as possible. The same corporate entities will then continue to have those low wages subsidized by the taxpayers. Companies will continue to spew out propaganda to convince those same taxpayers that people on public assistance are lazy cheats, and that low wages mean low prices. Capping wages at 2009 levels assures that any broad rise in societal prosperity will not reach low-wage workers, and there is no broad upward path for retail workers and fry cooks. It’s not about education, either: the percentage of low-wage workers with at least some college education has spiked 71 percent since 1979, to now encompass over 43% of all low-wage workers. Meanwhile more and more money will be hoovered up by an ever-concentrated group of the super wealthy, squeezing their workers tighter and tighter. Hey, how many miles can you drive on a gallon of blood?
In today’s America, even working full-time, at most jobs you can’t earn enough to live with government assistance. More and more of everything is owned by fewer and fewer people. If you look that stuff up in a reference book, it is called feudalism. It is our future, and, of course, thank you for shopping at Walmart!
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
Interview with Jordana Green, CBS Radio
I recently sat down with Jordana Green of CBS radio’s WCCO 830AM, Minnesota, to talk about working in the minimum wage economy, whistleblowing and my book, Ghosts of Tom Joad: A Story of the #99 Percent.
Here’s the whole show. My portion begins at 20:56 in.
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
Review: Fire Dog Lake– “A Sober Reflection on the U.S. Economy”
For those visiting for the first time from TomDispatch, Salon, HuffPo or another web site, welcome. If you found my article there, A Rising Tide Lifts All Yachts, useful, please take a look at my current book on those same themes, Ghosts of Tom Joad: A Story of the #99 PercentIt’s available on Amazon, as well as at most other book sources. Buying a copy helps support the writing I do, and to keep this blog online.
Book Review of Ghosts of Tom Joad
Fire Dog Lake’s Bev Wright and Kevin Gosztola had this to say:
Ghosts of Tom Joad: A Story of the #99Percent is a sober reflection on the United States economy and how it has transformed in the past decades. Through the main character of Earl, readers are given a glimpse at how a person can so easily sink into a life where they are struggling to maintain a poor pitiful existence.
The reality Earl, his family, friends and residents of Reeve, Ohio, face is not their fault. They have very little power in this town, which has become a human sacrifice zone. They are bearing the impact of global capitalism, where it is cheaper to use sweat shops in Thailand or prison labor to make things. They are suffering the shift into a retail or service-based economy where Big Box stores are where one is most likely to find a job.
No salvation in being employed exists. There is no dignity for employees; unions are a scourge and a decent wage, breaks, sick days, etc, are all luxuries these corporations refuse to grant their workers. People work because they have to in order to get by and because they recognize they are lucky to have any job they can get.
There’s a “story truth” to what Van Buren writes that is similar to the “story truth” in the classic work of fiction, The Things They Carried
For example, Earl gets a job at a Big Box store called Bullseye:
…My job at Bullseye was to take big boxes of things off the truck and do the break down. It was called officially by Bullseye in the associate handbook, “Inbound Event Processing.” What happened is that a computer at the Bullseye headquarters called a computer at a warehouse, which notified a computer in New Jersey to send off a buy order ultimately to a factory computer in Thailand to make some more headache pills to replace the ones we had ordered for our store. They came in a big carton of say 144 smaller boxes. I tore a pick sheet off the printer, which told me to count out thirty-six of them boxes into a plastic tub labeled PHARMACY, then count out say twenty-four more and put them into a tub labeled GROCERY, and so forth. Somebody else would come into the back room from each of those departments and take their tub. Because of me and my counting, the Bullseye store could order a big cheap box of 144 and I’d divide them up right. A computer could not do that and so almost reluctantly I had a job…
The experience of Earl may be fictional, but it feels true. When Earl’s figuring out how to use pay day loans to get by and having difficulty getting a credit card, when he is sleeping in his car and discovering what it means to be homeless and when he is facing down all the drug addiction in his hometown, it has an emotional punch to it that may not be there if this was non-fiction.
Van Buren experienced some of what is in the book himself when he had to take a minimum wage job after being forced out of the State Department for blowing the whistle on corruption stemming from Iraq “reconstruction” projects.
He also traveled to parts of the country and set up situations so he could experience what it is like to be jobless or homeless, such as how to sleep in your parked car without the cops bothering you.
One of the cities he visited was Weirton, West Virginia. It used to have a steel mill. It used be a place where residents had jobs. The mill no longer operates so now what do people do? They spend time in diners. They sit at bars. They drink alcohol all day to dull the sadness from being so poor and hopeless.
Toward the end of the book, there’s a preacher, Casey, who works at a shelter. Casey talks to Earl and others who are going on about who has it worse.
Look, until we understand at a gut level we are all in this together, if we keep thinking black and white and never see the whole 99 percent of us are dirty gray, we’ll never get anywhere. We need to think leveling up, not leveling down to create an economy, hell, a society, that is sustainable. That’s the word—sustainable—because what we are doing now is gonna kill us all.
There’s an unyielding bleakness to the story in Ghosts of Tom Joad, but it is our story. It is America’s story. It is the story of failure that Van Buren has experienced, that friends and family of Van Buren have experienced, that people who know Van Buren and know of Van Buren have experienced and that everyone participating in this Book Salon chat has probably experienced to some degree.
Anyone who has not experienced the story told in Ghosts of Tom Joad is privileged, overwhelmingly. They likely live with the fear that at any moment they could be in the position of Earl. And that is why we have to face it down because we all recognize the system is dehumanizing and really could kill us all.
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
FireDogLake Book Chat Transcript
We had a great time recently on FireDogLake.com discussing Ghosts of Tom Joad: A Story of the #99Percent. If you missed that live chat, there’s a transcript now online.
Take a look at the full chat here, along with a nice review from host Kevin Gosztola.
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
Piketty’s Reality? The Revolution Will Not Be Televised
Robert Reich, once Clinton the First’s Secretary of Labor and now a professor of Public Policy at the University of California at Berkeley, has emerged as one of the clearest pre-Piketty voices on income inequality and how it is affecting America. He asks why, in the face of incontrovertible evidence of their coming demise, our middle class remains complacent.So why is there no revolution brewing?
Reich’s reasons– a working class paralyzed with fear it will lose the jobs and wages it already has, debt-laden students who are no longer a major force for social change, and an American public so cynical about government that many no longer think reform is possible– are valid. His idea that somehow some kind of reform is still possible is less so. Let’s look into this.
The Reality of Wealth
The gap between most Americans and those 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 is not some aberration. Instead, lower savings and hyper-available credit (remember fraudulent Countrywide mortgages and usurous re-fi’s?) put the middle and bottom portions of our society on an unsustainable financial path that increased spending until it triggered the Great Recession of 2008. Meanwhile, America’s the top earners’ wealth grew even as those responsible for the collapse were never punished and the companies involved received federal bail-out money (the money came from taxes paid in part by those destroyed in the Recession.) In the U.S., the wealthiest one percent captured 95 percent of post-financial crisis growth since 2009, while the bottom ninety percent became poorer. The recession represented the largest redistribution of wealth in a century.
How did the most wealthy achieve this? The reality of possession.
The Reality of Possession
A rising tide lifts all yachts, as historian Morris Berman observed. Less than half of Americans do not own any stock at all. The wealthiest of Americans own over 80 percent of all stock, and 40 percent of America’s land.
It is worse on an international scale. Only 85 human beings own half of all the world’s wealth. Seven out of ten people live in countries where economic inequality has increased in the last 30 years.
Short answer: The rich just get richer. They have no interest in reform or change. Things are working just fine for them. It is the reality of the system.
The Reality of the System
Walmart associates make minimum wage. Most associates are nowhere near full-time, so their take home pay is well below the poverty threshold.
In return for paying below-poverty wages, Walmart makes over $18,000 per employee, including $13,000 in pre-tax profits, after paying salaries, plus taxpayer subsidies of $5,815 per worker in the form of food stamps paid by the government to keep the workers nearer the poverty line than below it, and tax breaks given to “create jobs.”
The top four members of the Walmart family made a combined $28.9 billion from their investments last year. Less than a third of that would have given every U.S. Walmart worker a $3.00 raise, enough to end the public subsidy, though the four Walmart scions would have to make due with only $20 billion a year. But why bother to change when the reality of politics is so much in the company’s favor?
Essentially the interests of the 99 percent are in direct conflict with those of the one percent. The only hope lies in the reality of politics.
The Reality of Politics
Over large swaths of the earth, there are no elections. In some of the wealthiest countries in the Middle East and Asia, there is not even the pretext of anyone choosing a government. Most governments are controlled by family ascension, not unlike the scene in the Middle Ages. In many other places, elections are simply public stage plays, with the actual winners decided by corruption and manipulation. Under such circumstances, it is not surprising that power and wealth work together.
Such is the case now in the United States. According to Professor Lawrence Lessing, that 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?
It is not a coincidence that in 2016 the presidential race will likely again be a Clinton versus a Bush.
By reducing the ostensible choices to two, and by making the choice a false one as both candidates will differ little in their practices toward wealth and corporate profits, a very few super rich (indeed, a tiny subset of even the vaunted one percent) control the government. It is impossible under such circumstances for the government to create laws again the interests of the wealthy; after all, they work for them. The reality of change is that there is no reason to change.
The Reality of Change
The world has seen this before, for the West, during the Middle Ages, when feudalism was the dominant social and political state. A very, very few owned most everything of value. The 99 percent majority– serfs then, associates now– worked for whatever the feudal lords allowed them to have. In our more modern version of society, even the skilled artisan class that helped lift us out of the dark times may not exist as those activities (programming, services to the rich, medicine) are largely outsourced to places on earth were the pay even for skilled work is low.
Spayed, we’ll all accept it. Noisy but ineffective dissent will exist as a kind of entertainment, a diversion. The few real leaders among us will fall quickly under an almost-complete surveillance state coupled with militarized police. There thus, with apologies to Reich and Piketty, may be no means to foment a revolution, nor real reform. It remains possible, if not likely, that our nation will find itself in a new birth of feudalism, progress and growth a mere historical blip.
Still don’t believe me? Remember, at the fall of Rome and the beginning of the Middle Ages only two thousand people owned all the land between the Rhine and Euphrates rivers. In 2014, 85 people own half of the world’s wealth.
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
Despite Falling Revenues, Walmart Increases Pay for Top Execs
Sometimes the effects of our social and income inequality are easy to see, but hard to measure.But not in this case: despite falling revenues, and despite only reluctantly paying minimum wage to its workers, Walmart increased the pay for its top executives. The people who do the labor get little. The people who make the decisions that can cause falling revenues get more (and more and…) Could it be any clearer what is going on? A flatulence of money.
This is what Thomas Piketty’s theories look like in practice.
Some Background from a Real Economist
Economist Thomas Piketty’s new bestseller, Capital in the Twenty-First Century
In the United States, the top one percent own 35 percent of all capital, and the top ten percent of wealth holders own roughly 70 percent. The bottom 50 percent have roughly five percent. Note also that until slavery was ended in the United States, human beings were also considered capital.
The inequality is driven by two complementary forces.
By owning more and more of every thing (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 the top of layer of wealth distribution is rising at 6-7 percent a year, more than three times faster than the size of the economy.
At the same time, wages for middle and lower income people are sinking, driven by factors largely in control of the wealthy, such as technology employed to eliminate human jobs, unions being crushed and decline in the inflation-adjusted minimum wage more and more Americans now depend on for their survival.
Back to Walmart
A key question for detectives trying to figure out who may have committed a crime is to ask cui bono, “Who benefits?” Who stands to profit from a murder, from a crime? That’s often your perp.
In Walmart’s case, it is not its stockholders who profited. Indeed, this has not been a money year for Walmart shareholders. Despite an overall good twelve months for the stock market in general, Walmart stock bumbled due to lower sales growth.
No joy for Walmart’s customers, or its own employees. Walmart cited cuts in federal food stamps as one reason for its weak sales increase. Since they are paid only minimum wage (and Walmart fights vigorously against any increases) and only are given 39 hours a week or less so as not to qualify for full-time benefits, a fair number of Walmart’s own workers receive food stamps.
Good news though for Walmart’s top executives. The company employed some accounting tricks to “adjust” on paper actual revenues to make them appear higher than in reality. On the strength of that “adjusted” performance, William Simon, CEO of Walmart’s United States unit, received total compensation of $13 million last year. Of that, $1.5 million was a “performance bonus,” paid out actually for declining revenues. In fact, six of Walmart’s top executives received a total of $8.42 million in cash incentive payments for 2014 even as revenues fell and the company closed stores. The former employees of those stores, needless to say, did not receive any performance pay bonuses as they fell deeper into poverty.
Fair Play?
Walmart’s executives receiving these bonuses are the equivalent of a sports team getting paid extra because they lost. And we know that only happens when a game is rigged, right? How much more clarity into how the New Economy works do you need? More? Well, just wait for Walmart’s next earnings report and you see who is shaving points for their own benefit.
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
Piketty for Ghosts of Tom Joad Readers
Unlike that guy who cornered you at the party, I’ll admit I haven’t read all ten million pages (it’s actually 700 pages) of economist Thomas Piketty’s new bestseller, Capital in the Twenty-First Century
What Piketty says:
— There has been a significant increase in income inequality in America. Our 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 top of layer of wealth distribution is rising at 6-7 percent a year, more than three times faster than the size of the economy.
— [NOTE: In the United States, the top one percent own 35 percent of all capital, and the top 10 percent of wealth holders own roughly 70 percent. The bottom 50 percent have roughly 5 percent. Note also that until slavery was ended in the United States, human beings were also considered capital.]
— At the same time, wages for middle and lower income people are sinking, driven by factors largely in control of the wealthy, such as technology employed to eliminate human jobs, unions being crushed and decline in the inflation-adjusted 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.) This all becomes a kind of snowball effect.
— Because rich people pass on their wealth to their relatives, the children of rich people are born rich and unless they get really into hookers and blow, will inevitably get richer. They almost can’t help it. The gap between the 1 percent and the 99 percent must grow. This will create a society reminiscent of the pre-Enlightenment past.
— About the only way to change this is either via world-wide cataclysmic events such as wars, or by alterations in tax policy, specifically a progressive tax that really charges rich people more than poor people. Piketty does not seem to address the issue that many rich people profit mightily from wars, but either way, these cataclysmic events are transitory. It is not clear how Piketty sees a more fair tax system coming into play, but he seems very optimistic it will happen.
— Social reforms, such as increased education opportunities and low-cost health care, are incapable without tax changes of significantly affecting income equality.
— All of this is based on A LOT of data. Much of it is historical data, so the overall arguments are not some politically-vulnerable factoid-based stuff.
— A good Piketty quote: “The entrepreneur inevitably tends to become a rentier, more and more dominant over those who own nothing but their labor… Once constituted, capital reproduces itself faster than output increases. The past devours the future.”
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
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