• U.S. Added 177,000 jobs in August, All of Them in the Service Industry

    September 9, 2016 // 7 Comments »



    In portraying herself as a virtual Barack Obama third term, Clinton ties herself not only to a foreign policy that continues to inflame the Middle East, but also to his domestic economic record. A key element is job creation, the cornerstone of any real growth.


    For example, during her acceptance speech at the Democratic National Convention, Hillary Clinton praised Obama’s efforts to steer the nation’s recovery.

    “Now, I don’t think President Obama and Vice President Biden get the credit they deserve for saving us from the worst economic crisis of our lifetimes,” she told the crowd in Philadelphia. “Nearly 15 million new private-sector jobs… And an auto industry that just had its best year ever.”

    Leaving aside some fuzzy math to get to that tally of 15 million new jobs, Clinton purposefully passes off quantity with what we’ll call quality.

    A quality job is one that is sustainable, with full-time status and benefits, the kind of work that both rebuilds America’s soul while at the same time makes work more profitable than unemployment benefits and aid. Most importantly for the greater economy, a quality job is one that allows the worker to put money into society. Rising tide lifting all boats.

    The latest job statistics show that is not what is happening.


    While the Bureau of Labor Statistics announced the U.S. added some 177,000 jobs in August, all of them were in the low-paying service industry. Fast food, store clerks, that sort of thing. Basically Americans not making anything, but simply passing existing money around in some zero-sum game. A cashier earns a dollar which she turns over to the dry cleaner who later buys a Big Mac. At some point a corporation pulls that dollar out of the hands of its workers as “profit,” perhaps to offshore it to avoid taxes.

    And if the job stats reporting only new service jobs were not dismal news enough, Bureau results show that in the same time period some 2,000 construction and 5,000 goods-producing jobs evaporated. In July, mining and logging companies dumped 7,000 positions. Those thousands of workers were thrown into the pool seeking employment.

    No one is saying we should revive so-called dead industries, or that America revert fully to a 1950s style heavy iron economy. But economics is about people, and those people need jobs they can earn a living doing.


    BONUS: Clinton’s solution? Hillary claims during her first 100 days in office she will launch “the biggest infrastructure and jobs program that we’ve had since World War II.” That mirrors the huge stimulus program that President Obama signed into law in 2009, during his own first 100 days in office.

    Clinton’s plan would see $300 billion in spending on transportation projects spread over five years, $60 billion per year. She plans to raise the money via new taxes on the wealthy that Congress is highly unlikely to agree to.



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    Won’t Paying for Bernie’s Healthcare Make Us Pay Higher Taxes Like in Europe?

    April 22, 2016 // 8 Comments »



    Won’t paying for Bernie’s healthcare make us pay higher taxes like in Europe?

    Not likely. Here’s what Hillary doesn’t want to tell you.


    Free or very low-cost universal health care is available to citizens of all the countries marked in green, below, as well as China, North Korea, Thailand and Vietnam, left off for some reason:


    You’ll see the U.S. stands alone. Somehow our nation, alone among industrialized nations and some not so industrialized, has yet to figure out how to find a why to provide affordable healthcare for all of its citizens.

    One of the arguments posited is that the U.S. is too big for some poncy European system to work, but of course China and Russia are bigger. Another is that quality of care suffers, but people in Japan have some of the longest life spans in the world, and things are pretty good across Europe.

    But the argument that seems to stick best in America is that such “utopian” healthcare schemes are simply too expensive, that taxes over there are so much higher than in America.

    So keeping in mind that most of the places that offer free or very low-cost universal health care also offer free or very low-cost college (how’s it feel that a degree at Podunk State U costs more than Oxford University — about $12,000 a year for UK and EU students?),

    And, most of those other countries have dollar-adjusted higher minimum wages. And they save extraordinary amounts of money that in the U.S. end up being spent on social welfare and public health for people who are unhealthy because they can’t afford to see a doctor.



    But let’s look at some tax figures:

    Oops. The average U.S. income tax rate is actually higher than some of those places.


    And of course in the U.S., in addition to federal income tax, we also pay state and sometimes city tax. And Social Security/Medicare tax of 7.65% And property tax, sales tax and taxes/surcharges on cell phones, airports, hotels, restaurant meals and on and on. And of course other countries also have other taxes; the point is Americans are already paying a lot of taxes and getting damn little in return.

    And on top of that, we also pay (those who can afford it…) for health insurance. For 2012, the annual premiums for employer-sponsored family health coverage averaged $15,745, up 4% from 2010, with workers on average paying $4,316 toward the cost of their coverage. And of course those premiums paid do not include deductibles and co-pays.

    And prescription medicine costs. Americans pay more for drugs than anyone in the world. Drug prices in the United States are often up to 10 times more expensive than in almost all other developed countries.


    And that is how Bernie Sanders comes to the conclusion that even if taxes rise, the single-payer health care system he proposes would save an average American family of four almost $6,000 per year.

    Think about it. Doctor’s orders!




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    Calling Bull on Fast Food CEO Who Says Higher Min Wage Forcing Him to Automation

    March 22, 2016 // 7 Comments »

    andy


    The CEO of Carl’s Jr. and Hardee’s visited a fully automated restaurant, and it’s given him some evil ideas on how to deal with rising minimum wages.

    CEO Andy Puzder (above) said “We could have a restaurant… where you order on a kiosk, you pay with a credit or debit card, your order pops up, and you never see a person.”

    Puzder’s interest in an employee-free restaurant has been sparked by rising minimum wages. “With government driving up the cost of labor, it’s driving down the number of jobs,” he says. “You’re going to see automation not just in airports and grocery stores, but in restaurants.”

    The CEO has been an outspoken advocate against raising the minimum wage, writing op-eds on how a higher minimum wage would lead to reduced employment opportunities. “This is the problem with Bernie Sanders, and Hillary Clinton, and progressives who push very hard to raise the minimum wage,” says Puzder. “Does it really help if Sally makes $3 more an hour if Suzie has no job?”


    So let’s unpack Puzder’s remarks, and call bullsh*t on him.

    The federal minimum wage hit its high point in 1968 at $8.54 in today’s dollars and while this country has been a paradise in the ensuing decades for what we now call the “One Percent,” it’s been downhill for low-wage workers ever since. In fact, since it was last raised in 2009 at the federal level to $7.25 per hour, the minimum has lost about 8.1% of its purchasing power to inflation. In other words, minimum-wage workers actually make less now than they did in 1968.

    So if Puzder cannot make money by paying circa-1968 wages with 2016 prices in force, he needs some business lessons.


    But are wages really what this is all about? Let’s see what else Puzder had to say.

    “They’re always polite, they always upsell, they never take a vacation, they never show up late, there’s never a slip-and-fall, or an age, sex, or race discrimination case,” says Puzder of swapping employees for machines.

    Ah, yes, there we have it.

    Puzder doesn’t want cheaper labor per se, he wants to quit trying to figure out how to make his people work like machines, and just have machines work like he wishes people would do. Stupid people, with their need for time off and desire not to be discriminated against.



    BONUS: Guess what? One of the nation’s highest minimum wages, in Seattle, has not led to mass unemployment at all.

    DOUBLE BONUS: In addition, while we all grieve for poor CEOs forced to pay out a living wage, think bigger. Higher wages mean fewer people needing food assistance, which means lower taxes. Higher wages also puts more money into the economy, usually the very local economy. Unlike wealthy people like CEOs, who tend to save their money or invest it, lower income people spend their wages. An extra dollar to a Carl’s, Jr. worker moves quickly into the hands of a local food store, which uses the dollar to purchase goods, which boosts the whole blessed mess.

    SUPER SIZE BONUS: Bloomberg reported Puzder’s salary and other compensation as $4.485 million, so he is doing well. His restaurant chain is doing well, too, as profits rose more than 30 percent last year.

    DESSERT: Puzder also lobbied against a Department of Labor rule change that currently allows him to deny his restaurant assistant managers overtime by claiming they are executives.

    A SECOND DESSERT:  Puzder argues that social welfare “programs have the unintended consequence of discouraging work rather than encouraging independence, self-reliance, and pride, and that, because of government assistance, low-wage employees across the United States are refusing promotions and additional hours for fear of losing public assistance.”


    So I’ll have fries with that bullsh*t please!



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    Restaurants Demand State Freeze Servers’ Wage

    February 25, 2016 // 12 Comments »

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    More Americans work for less than minimum wage than work for minimum wage. They are the people who occupy tipped positions, mostly working as servers in restaurants.


    They fall outside the minimum wage, and thus do not have even the weak assurances of an income the minimum provides. And those tips — they are great at some swanky joints, weak at lesser ones. Tips ebb and flow, depending on the weather (rain and snow can keep customers home), cheapo patrons and which shift one pulls; daytime Tuesday is not as good as Saturday night. Or a four top who orders wine with each course, or that family on vacation who “just wants ice water.” Your income depends as much on luck as anything you do with your time and labor.

    Or here’s one strategy that does not depend on luck: encourage your waitresses to dress sexy, such as at Hooter’s, to pull in more tips, mixing sexual exploitation with exploitation of wages.

    And save the speech about how all these folks should go out and get a different job if they don’t like the system. Almost two million Americans work below minimum, and they do not have access to two million currently available, better paying, jobs.

    But from the restaurant owner’s side, the deal is sweeeeeeeeeet. They get to pay subminimum wage, and leave it up to the customers to make up their payroll. And if the customer stiffs the waiter, that’s no skin off the owner’s nose. And of course some owner’s skim the tips, and/or require servers to share their tips with the back of the house kitchen staff, diluting a small amount of money further.



    The owners have no interest in having the government mess with that solid gold system if it can be helped.

    As an example, New York state’s hourly minimum wage for tipped workers rose from $5.00 to $7.50 on January 1 (standard, non-tipped, minimum wage is $9.00 an hour in the state), much to the dismay of the New York State Restaurant Association. The restaurant owners lobbying group sent a letter to NY Governor Andrew Cuomo demanding that he freeze the tipped wage for five years. This letter comes just weeks after the National Restaurant Association filed an appeal with the state Supreme Court, claiming that Cuomo’s plan to raise the minimum wage further by 2018 is part of a longstanding pattern of discrimination “against the hard working men and women that own New York’s restaurants.”

    Implied is a hearty “up yours to the working men and women that work in New York’s restaurants.”


    Oh, and by the way, want to know if your favorite restaurant owner supports the freeze? You can’t. The Restaurant Association’s letter had more then 100 restaurant owners included as signatories. However, the Association will not release the names of the signatories because restaurateurs who have taken “political stances” in the past “have received death threats.” So it’s a safety issue. Right.

    Employers should be responsible for paying their own employees, not relying on customers to hand over cash just to keep serfs servers on the job.



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    You Can’t Earn a Living on the Minimum Wage

    February 20, 2016 // 17 Comments »

    child


    When presidential candidate Bernie Sanders talks about income inequality, and when other candidates speak about the minimum wage and food stamps, what are they really talking about?

    Whether they know it or not, it’s something like this.


    My Working Life Then

    A few years ago, I wrote about my experience enmeshed in the minimum-wage economy, chronicling the collapse of good people who could not earn enough money, often working 60-plus hours a week at multiple jobs, to feed their families. I saw that, in this country, people trying to make ends meet in such a fashion still had to resort to food benefit programs and charity. I saw an employee fired for stealing lunches from the break room refrigerator to feed himself. I watched as a co-worker secretly brought her two kids into the store and left them to wander alone for hours because she couldn’t afford childcare. (As it happens, 29% of low-wage employees are single parents.)

    At that point, having worked at the State Department for 24 years, I had been booted out for being a whistleblower. I wasn’t sure what would happen to me next and so took a series of minimum wage jobs. Finding myself plunged into the low-wage economy was a sobering, even frightening, experience that made me realize just how ignorant I had been about the lives of the people who rang me up at stores or served me food in restaurants. Though millions of adults work for minimum wage, until I did it myself I knew nothing about what that involved, which meant I knew next to nothing about twenty-first-century America.

    I was lucky. I didn’t become one of those millions of people trapped as the “working poor.” I made it out. But with all the election talk about the economy, I decided it was time to go back and take another look at where I had been, and where too many others still are.


    My Working Life Now

    I found things were pretty much the same in 2016 as they were in 2012, which meant — because there was no real improvement — that things were actually worse.

    This time around, I worked for a month and a half at a national retail chain in New York City. While mine was hardly a scientific experiment, I’d be willing to bet an hour of my minimum-wage salary ($9 before taxes) that what follows is pretty typical of the New Economy.

    Just getting hired wasn’t easy for this 56-year-old guy. To become a sales clerk, peddling items that were generally well under $50 a pop, I needed two previous employment references and I had to pass a credit check. Unlike some low-wage jobs, a mandatory drug test wasn’t part of the process, but there was a criminal background check and I was told drug offenses would disqualify me. I was given an exam twice, by two different managers, designed to see how I’d respond to various customer situations. In other words, anyone without some education, good English, a decent work history, and a clean record wouldn’t even qualify for minimum-wage money at this chain.

    And believe me, I earned that money. Any shift under six hours involved only a 15-minute break (which cost the company just $2.25). Trust me, at my age, after hours standing, I needed that break and I wasn’t even the oldest or least fit employee. After six hours, you did get a 45-minute break, but were only paid for 15 minutes of it.


    The hardest part of the job remained dealing with… well, some of you. Customers felt entitled to raise their voices, use profanity, and commit Trumpian acts of rudeness toward my fellow employees and me. Most of our “valued guests” would never act that way in other public situations or with their own coworkers, no less friends. But inside that store, shoppers seemed to interpret “the customer is always right” to mean that they could do any damn thing they wished. It often felt as if we were penned animals who could be poked with a stick for sport, and without penalty. No matter what was said or done, store management tolerated no response from us other than a smile and a “Yes, sir” (or ma’am).

    The store showed no more mercy in its treatment of workers than did the customers. My schedule, for instance, changed constantly. There was simply no way to plan things more than a week in advance. (Forget accepting a party invitation. I’m talking about childcare and medical appointments.) If you were on the closing shift, you stayed until the manager agreed that the store was clean enough for you to go home. You never quite knew when work was going to be over and no cell phone calls were allowed to alert babysitters of any delay.

    And keep in mind that I was lucky. I was holding down only one job in one store. Most of my fellow workers were trying to juggle two or three jobs, each with constantly changing schedules, in order to stitch together something like a half-decent paycheck.

    In New York City, that store was required to give us sick leave only after we’d worked there for a full year — and that was generous compared to practices in many other locales. Until then, you either went to work sick or stayed home unpaid. Unlike New York, most states do not require such a store to offer any sick leave, ever, to employees who work less than 40 hours a week. Think about that the next time your waitress coughs.


    Minimum Wages and Minimum Hours

    Much is said these days about raising the minimum wage (and it should be raised), and indeed, on January 1, 2016, 13 states did raise theirs. But what sounds like good news is unlikely to have much effect on the working poor.

    In New York, for instance, the minimum went from $8.75 an hour to the $9.00 I was making. New York is relatively generous. The current federal minimum wage is $7.25 and 21 states require only that federal standard. Presumably to prove some grim point or other, Georgia and Wyoming officially mandate an even lower minimum wage and then unofficially require the payment of $7.25 to avoid Department of Labor penalties. Some Southern states set no basement figure, presumably for similar reasons.

    Don’t forget: any minimum wage figure mentioned is before taxes. Brackets vary, but let’s knock an even 10% off that hourly wage just as a reasonable guess about what is taken out of a minimum-wage worker’s salary. And there are expenses to consider, too. My round-trip bus fare every day, for instance, was $5.50. That meant I worked most of my first hour for bus fare and taxes. Keep in mind that some workers have to pay for childcare as well, which means that it’s not impossible to imagine a scenario in which someone could actually come close to losing money by going to work for short shifts at minimum wage.

    In addition to the fundamental problem of simply not paying people enough, there’s the additional problem of not giving them enough hours to work. The two unfortunately go together, which means that raising the minimum rate is only part of any solution to improving life in the low-wage world.

    At the store where I worked for minimum wage a few years ago, for instance, hours were capped at 39 a week. The company did that as a way to avoid providing the benefits that would kick in once one became a “full time” employee. Things have changed since 2012 — and not for the better.

    Four years later, the hours of most minimum-wage workers are capped at 29. That’s the threshold after which most companies with 50 or more employees are required to pay into the Affordable Care Act (Obamacare) fund on behalf of their workers. Of course, some minimum wage workers get fewer than 29 hours for reasons specific to the businesses they work for.


    It’s Math Time

    While a lot of numbers follow, remember that they all add up to a picture of how people around us are living every day.

    In New York, under the old minimum wage system, $8.75 multiplied by 39 hours equaled $341.25 a week before taxes. Under the new minimum wage, $9.00 times 29 hours equals $261 a week. At a cap of 29 hours, the minimum wage would have to be raised to $11.77 just to get many workers back to the same level of take-home pay that I got in 2012, given the drop in hours due to the Affordable Care Act. Health insurance is important, but so is food.

    In other words, a rise in the minimum wage is only half the battle; employees need enough hours of work to make a living.

    About food: if a minimum wage worker in New York manages to work two jobs (to reach 40 hours a week) without missing any days due to illness, his or her yearly salary would be $18,720. In other words, it would fall well below the Federal Poverty Line of $21,775. That’s food stamp territory. To get above the poverty line with a 40-hour week, the minimum wage would need to go above $10. At 29 hours a week, it would need to make it to $15 an hour. Right now, the highest minimum wage at a state level is in the District of Columbia at $11.50. As of now, no state is slated to go higher than that before 2018. (Some cities do set their own higher minimum wages.)

    So add it up: The idea of raising the minimum wage (“the fight for $15”) is great, but even with that $15 in such hours-restrictive circumstances, you can’t make a loaf of bread out of a small handful of crumbs. In short, no matter how you do the math, it’s nearly impossible to feed yourself, never mind a family, on the minimum wage. It’s like being trapped on an M.C. Escher staircase.

    The federal minimum wage hit its high point in 1968 at $8.54 in today’s dollars and while this country has been a paradise in the ensuing decades for what we now call the “One Percent,” it’s been downhill for low-wage workers ever since. In fact, since it was last raised in 2009 at the federal level to $7.25 per hour, the minimum has lost about 8.1% of its purchasing power to inflation. In other words, minimum-wage workers actually make less now than they did in 1968, when most of them were probably kids earning pocket money and not adults feeding their own children.

    In adjusted dollars, the minimum wage peaked when the Beatles were still together and the Vietnam War raged.


    Who Pays?

    Many of the arguments against raising the minimum wage focus on the possibility that doing so would put small businesses in the red. This is disingenuous indeed, since 20 mega-companies dominate the minimum-wage world. Walmart alone employs 1.4 million minimum-wage workers; Yum Brands (Taco Bell, Pizza Hut, KFC) is in second place; and McDonald’s takes third. Overall, 60% of minimum-wage workers are employed by businesses not officially considered “small” by government standards, and of course carve-outs for really small businesses are possible, as was done with Obamacare.

    Keep in mind that not raising wages costs you money.

    Those minimum wage workers who can’t make enough and need to go on food assistance? Well, Walmart isn’t paying for those food stamps (now called SNAP), you are. The annual bill that states and the federal government foot for working families making poverty-level wages is $153 billion. A single Walmart Supercenter costs taxpayers between $904,542 and $1.75 million per year in public assistance money, and Walmart employees account for 18% of all food stamps issued. In other words, those everyday low prices at the chain are, in part, subsidized by your tax money.

    If the minimum wage goes up, will spending on food benefits programs go down? Almost certainly. But won’t stores raise prices to compensate for the extra money they will be shelling out for wages? Possibly. But don’t worry — raising the minimum wage to $15 an hour would mean a Big Mac would cost all of 17 cents more.


    Time Theft

    My retail job ended a little earlier than I had planned, because I committed time theft.

    You probably don’t even know what time theft is. It may sound like something from a sci-fi novel, but minimum-wage employers take time theft seriously. The basic idea is simple enough: if they’re paying you, you’d better be working. While the concept is not invalid per se, the way it’s used by the mega-companies reveals much about how the lowest wage workers are seen by their employers in 2016.

    The problem at my chain store was that its in-store cafe was a lot closer to my work area than the time clock where I had to punch out whenever I was going on a scheduled break. One day, when break time on my shift came around, I only had 15 minutes. So I decided to walk over to that cafe, order a cup of coffee, and then head for the place where I could punch out and sit down (on a different floor at the other end of the store).

    We’re talking an extra minute or two, no more, but in such operations every minute is tabulated and accounted for. As it happened, a manager saw me and stepped in to tell the cafe clerk to cancel my order. Then, in front of whoever happened to be around, she accused me of committing time theft — that is, of ordering on the clock. We’re talking about the time it takes to say, “Grande, milk, no sugar, please.” But no matter, and getting chastised on company time was considered part of the job, so the five minutes we stood there counted as paid work.

    At $9 an hour, my per-minute pay rate was 15 cents, which meant that I had time-stolen perhaps 30 cents. I was, that is, being nickel and dimed to death.


    Economics Is About People

    It seems wrong in a society as wealthy as ours that a person working full-time can’t get above the poverty line. It seems no less wrong that someone who is willing to work for the lowest wage legally payable must also give up so much of his or her self-respect and dignity as a kind of tariff. Holding a job should not be a test of how to manage life as one of the working poor.

    I didn’t actually get fired for my time theft. Instead, I quit on the spot. Whatever the price is for my sense of self-worth, it isn’t 30 cents. Unlike most of this country’s working poor, I could afford to make such a decision. My life didn’t depend on it. When the manager told a handful of my coworkers watching the scene to get back to work, they did. They couldn’t afford not to.




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    Do the Math: American Economy and Society

    February 16, 2016 // 34 Comments »




    When most people talk about economics there are lots of statistics, as if economics is about math. Economics is really about people. It shows who we are as a nation and tells us what we will become. In 21st century America, our hope now is that we’ll someday better people than we have become. But do the math; it’ll be a hard road.

    In its most individual definition, jobs and work earn people money. They can feed themselves and their families, live inside and all the rest.

    But at a more societal level, a broader, more fundamental level, work is more. Work can define a person, work can give purpose, make someone feel useful, engage the resources of a society, create goals. You could almost call it a soul, knowing that work saved more lives than any preacher.

    The absence of work does just the opposite. People may be saved from starving by public assistance or charity (a vital part of society, caring for one another), but without purpose, they become cynical. They turn to drugs, legal like alcohol or illegal like meth, to replace the purpose and to fill the time. Without work, people give up. Rock bottom is a poor foundation for a nation to build on.


    So here’s what is happening in our America. See if you can figure out where this all leads to.


    Manufacturing was until the late 1970s the source of unprecedented wealth, spread proportionally across the economic spectrum in America. There were super rich people, and there were poor people, but there was also a thriving middle class that accounted for a huge section of our society. Without those jobs, economic apartheid, the one percent and the 99 percent, are inevitable.

    As just one example, since the 2009 taxpayer-paid bailout, General Motors has cut high-paid workers for cheaper labor, hiring. The automaker hired around 18,000 hourly production workers, allowing the company to remove skilled trade jobs. The Center for Automotive Research says General Motors Company saves approximately $57,000 a year per worker when it replaces a skilled $32 per hour union worker with a $15 per hour less-skilled, temp or non-unionized employee. These were once the “good jobs” that sustained a growing economy. They are gone. They have been replaced with…

    Service jobs. Service jobs do not create anything. They simply move some money from one hand to another, with a larger company taking a cut and sending the cash off to another city, another state, or another country. In 2014 America, manufacturing employs 1/10 of Americans. Services accounts for nearly 90%. America’s largest single employer in 1960 was General Motors. In 2014, it is Walmart. The “occupations” that account for the most jobs now are retail salespersons, cashiers, and restaurant workers. Those jobs pay minimum wage or less (for restaurant workers who can get tips), rarely offer any benefits and are rarely full-time.

    Working for subsistence wages, supplemented with public benefits, does not create value for humans. It is a modern-day form of feudalism, or perhaps more similar to raising livestock than growing a society.

    My book, Ghosts of Tom Joad: A Story of the #99 Percentconfronts these issues head on. The book is fiction, in that it wraps the economics and societal changes of the last fifty years into the story of one family. The book is all true in that what happens to that family, and in particular the main everyman character Earl, happened to millions of American families that believed the myths of growth, hard work and a sustainable middle class even as the super wealthy were pulling the money right out of their hands in front of their eyes. Ignore the rising waters, until you feel them up to your Katrina-like lips.

    Choosing to not believe something doesn’t make it go away.

    My book is set in Ohio, but the stories in it can be taking place today anywhere in the United States outside a few pockets of affluence centered on a few major cities, or a handful of growth industries such as government and defense.

    If you want to know where the 99 percent came from, this is part of the answer. Think of it as a good story, with a conscience.




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    Posted in Economy

    Walmart (Hearts) Food Stamps

    October 16, 2014 // 1 Comment »




    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.



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    Once the American Dream

    September 23, 2014 // 3 Comments »

    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 seem illusive here on the East Coast; in New York, visiting the South Bronx, there are plenty of poor people. The sense in Midtown was that if they didn’t deserve to be poor, then, well, they were sort of naturally thrust into it as immigrants, as drug users, simply because they lived in a poor part of the city and it always would be. Kind of the natural ecology of the place.

    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 Zero

    The 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-Own

    Pawn 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 In

    Kenny 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.



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    Just Raise the Minimum Wage

    August 7, 2014 // 3 Comments »

    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.



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    How Many Miles Can You Drive on a Gallon of Blood? Our Future is Feudalism

    June 24, 2014 // 13 Comments »

    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.

    Taxpayers Foot the Bill for Low Everyday Prices

    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.

    It isn’t about more hours: The families of more than half of the fast-food workers employed 40 or more hours per week are still enrolled in public assistance. More hours at a low wage still does not equal a living wage.

    Now, if you’re a certain kind of person, just stop reading here. In a country with such abundance as America, people should not starve to death, being told on the way down to “get a job, loser.” And none of this is about the politics of left and right; it is about the politics of up and down. The answer is not to cut public assistance, the working poor be damned, let them eat cake. If you want that kind of society, go troll some other web site. The answer is for companies to pay a living wage. If they won’t do it voluntarily, then we must raise the minimum wage. It has not gone up since 2009 and it is damn well time for it to do so. In fact, we can’t afford not to.

    But Won’t Raising the Minimum Wage Raise Prices? Cost Jobs?

    Let’s tackle the easy stuff first. No business offers paying jobs as a public service. They hire people to make money. When they need more workers to make more money, they hire more. When they no longer need those workers, they lay them off. Ever heard of Christmas help? A higher minimum wage will not cause businesses to cut jobs; they can’t do that. Who’d cook the burgers?

    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.

    Welcome to Feudalism

    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.


    How Many Miles Can You Drive on a Gallon of Blood?

    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.

    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!




    BONUS: Charles Ferguson, director of the Wall Street documentary “Inside Job” wrote:

    Far from being in an era of brutal partisan warfare, as conventional wisdom holds and as watching the nightly television news might suggest, the United States is now in the grip of a political duopoly in which both parties are thoroughly complicit. They play a game: they agree to fight viciously over certain things to retain the allegiance of their respective bases, while agreeing not to fight about anything that seriously endangers the privileges of America’s new financial elites. Whether this duopoly will endure, and what to do about it, are perhaps the most important questions facing Americans. The current arrangement all but guarantees the continuing decline of the United States as a nation, and of the welfare of the bottom 90% of its citizens.




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    Target Stores Target Unions

    April 26, 2014 // 17 Comments »

    As part of my research into the New Economy for my book, Ghosts of Tom Joad, A Story of the #99Percent, I worked a series of minimum wage jobs, as now do so many Americans. The work is long and hard, socially demeaning, and damn unlikely to give one a decent life worth living; twenty-eight percent of American workers earned less than the poverty line.

    With that background in mind, this video is almost unbelievable: an anti-union Target “training” video that claims unions are actually only a business which makes money by charging dues and fees as their “product.” They say that anything a union used to do is now already in the law, so unions serve no purpose but to lower your wages through fees. It gets worse– have a look at the actual video and be scared…

    BONUS: Target also uses whacky racist training documents (“Mexicans – lower education level, some may be undocumented”).



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    Walmart Supports Raising Public Food Benefits– For Its Own Profit

    April 9, 2014 // 15 Comments »

    They say politics makes strange bedfellows. They also say poverty is just another profit opportunity, at least over at Walmart.

    Walmart supports an increase in the Supplemental Nutrition Assistance Program (SNAP, i.e., food stamps) benefits, to erase the cuts Congress voted into place last fall. Does Walmart really care more about the fate of about hungry children than does Congress? Um, not really. Walmart has instead acknowledged publicly that federal cuts to food stamps are a threat to its bottom line.

    Poverty Pays

    In its required 10K filing with the Securities and Exchange Commission (SEC) Walmart was oddly blunt about what the SNAP cuts may 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.

    According to Walmart’s Chief Financial Officer Charles Holley, the company didn’t anticipate how much cuts to such programs would affect it. Reductions to the Supplemental Nutrition Assistance Program that went into effect on November 1, 2013, ironically first day of Walmart’s fourth fiscal quarter, led to a between $1 and $36 reduction in SNAP benefits per household, or up to $460 a year. Walmart knows its customers– poor people with even less money simply can’t buy enough to keep corporate profit high.

    Follow the Money

    How much profit? While Walmart does not break out sales paid for with SNAP, it looks like big bucks.

    In a study entitled “FOOD STAMPS: Follow the Money,” researcher and public health attorney Michele Simon established:

    — In one year, nine Walmart Supercenters in Massachusetts together received more than $33 million in SNAP dollars—over 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;

    — One Walmart Supercenter in Tulsa, Oklahoma received $15.2 million while another (also in Tulsa) took in close to $9 million in SNAP spending.

    (Simon’s research also found out that bank JP Morgan Chase is also profiting heavily off the electronic bank transfer-based SNAP program. Morgan has contracts for the SNAP electronic benefits transfer services in 25 states. In Florida, Morgan Chase has a five-year contract worth about $83 million. In New York, a seven-year deal that originally paid Morgan Chase $112 million for services was recently amended to add another $14.3 million, a nice 13 percent increase.)

    All this money in play affects a lot of Americans. 2011 saw a new record enrollment in SNAP, 1 of every 7 Americans.

    Walmart Want to Keep Selling Sugary Soda as Food

    But back to Walmart. Not only does Walmart want SNAP money, it also wants to keep as many of its products SNAP-eligible as possible. The Department of Agriculture must certify an item as available for purchase with food stamps; some long-term no-no’s include alcohol, tobacco and many prepared foods. Yet the top three food vendors in terms of SNAP-money received are Coca-Cola (who makes Coca-Cola), Kraft (of highly processed foods fame), and Mars (the candy and snack food maker.) Walmart has joined those companies to lobby the Department of Agriculture, and Congress, against any measures that would restrict SNAP use to more healthy food choices.

    Since Congress has been debating the soda-food stamps question on and off since 1964, it seems unlikely Walmart and the others have much to fear.


    SNAP Funds Your Everyday Low Prices at Walmart

    As reported previously, one of the main reasons why Walmart can sell things cheap is that it gets away with paying below a living wage because you, the taxpayer, subsidize the employees’ wages. The gap between what the majority of employed people earn through the minimum wage at places like Walmart, and what they need to live a minimum life, is made up by federal and state benefits. Nearly three-quarters of enrollments in America’s major public benefits programs are from working families. They work in jobs that pay wages so low that their paychecks do not generate enough income to provide for life’s basic necessities.

    And it is not just Walmart. The cost of public assistance to families of workers in the fast-food industry alone is nearly $7 billion per year. That money, which might rightly be paid by McDonald’s and Burger King and KFC, is instead paid by the taxpayers, money lenders to a government that is far more interested in subsidizing business than in caring for the nation as a whole.

    This Land is Your Land

    America is indeed the land of opportunity; where else in the world can the collusion of government and corporate interests create both a major lobbying effort to increase food aid to America’s poor, while at the same time fleecing taxpayers so that large corporations can further monetize poverty? Exceptional, indeed.



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    Subsidizing Poverty in America

    November 4, 2013 // 6 Comments »




    Researching my upcoming book, Ghosts of Tom Joad: A Story of the #99Percent (April 2014), I learned these things:

    Most Jobs are Minimum Wage Jobs

    All those jobs being created we keep hearing about? All those people who say if you don’t like working for minimum wage, go get a better job?

    The answer: In order, the jobs that account for the most workers in the U.S. right now are retail salespeople, cashiers and restaurant workers, and janitors. All of those pay minimum wage or nearly so.

    Actually, all this talk about minimum wage is missing a big point: more Americans work for sub-minimum wage than for minimum wage. People who get tips only have to be paid $2.13 an hour. And that lousy $2.13 has not changed by law in twenty-two years due to lobbying by the restaurant business. And if a business “requires” its servers to “share” tips with the dishwashers, well, then they only need to pay the dishwashers two bucks thirteen instead of minimum wage. Owners are doing O.K., though, as you may have seen restaurant prices go up a bit in the last twenty-two years. A McDonald’s hamburger cost 15 cents twenty-two years ago.

    Cheap Stuff is Expensive

    Back to that Big Mac you’re enjoying. One reason that it is pretty cheap (and why Walmart is cheap, et al) is that those businesses get away with paying below a living wage because you, the taxpayer, subsidize the employees’ wages. The gap between what the majority of employed people earn through the minimum wage, and what they need to live a minimum life, is made up by federal and state benefits. Nearly three-quarters (73 percent) of enrollments in America’s major public benefits programs are from working families. They work in jobs that pay wages so low that their paychecks do not generate enough income to provide for life’s basic necessities.

    The number of people using food stamps (now called SNAP, or Supplemental Nutrition Assistance Program) increased by 13 percent a year, every year, from 2008 to 2012.

    The cost of public assistance to families of workers in the fast-food industry alone is nearly $7 billion per year. That money, which might rightly be paid by McDonald’s and Burger King and KFC, is instead paid by the taxpayers, money lenders to a government that is far more interested in subsidizing business than in caring for the nation as a whole.

    McDonald’s workers alone account for $1.2 billion in federal assistance used per year, every year. Just for grins, know that McDonald’s CEO Donald Thompson last year took home $13.7 million in salary, $5.46 billion in personal profits and $5.5 billion in stock. Supersize that sir? No thanks, already there.

    So Get a Job, Loser

    The rejoinder at this point is that sad as it all is, low wages mean low prices for us all. Who wants to pay more at Walmart? I mean, we work for a living.

    Leaving aside the obvious, that via taxes spent on feeding low wage workers we the taxpayers are already paying virtual higher prices, the argument is garbage. If McDonald’s doubled its employees’ salaries, a semi-livable wage of $14.50 an hour, a Big Mac would cost only 68 cents more. No, no, the low wages paid are not part of keeping prices low; they are the key to keeping profits high. Last year the top seven minimum wage employers collectively earned $7.44 billion in profits, paid $52.7 million to their highest-paid executives and distributed $7.7 billion in dividends and buybacks. You want fries with that?

    Maybe the solution is for minimum wage workers to, well, work harder, you know, pull themselves up by their bootstraps. Problem is of course that most businesses prefer to keep their lowest paid workers below full-time to avoid the costs of paying benefits; an estimated 87 percent do not receive health care through their employer. But even full-time hours, if they exist, are not enough to compensate for low wages. The families of more than half of the fast-food workers employed forty or more hours per week still need to be enrolled in public assistance programs.

    Hungry in America

    Here now in America we are reaching for a zero-sum point where wealthy people have come to believe that to gain anything requires them to take it from someone else. WalMart and the fast food giants, already awash in billions in profits, still fight even tiny increases to the minimum wage, even when it hardly would matter.

    We have people hungry in America. We have created a system where even working a full time job is not enough to take care of a family. We have created disposable workers, who matter to no one. Sad for sure, but think further, to what it all means to the future of our society. Without commitment and community, things won’t continue to work for long. In the history of the world, no one has ever washed a rented car.



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    We Were Once the American Dream

    May 9, 2013 // 11 Comments »

    We were once the American Dream, and now we’re just what happened to it. That’s the phrase that informs my research into a new book I’m working on, The People on the Bus: A Story of the #99Percent. I’m trying to trace the decline of the American Middle Class over the last forty years, and the concurrent rise of the Working Poor. The people I am writing about seem illusive here on the East Coast; in crazy New York last week, visiting the South Bronx, there are plenty of poor people. The sense in Midtown was that if they didn’t deserve to be poor, then, well, they were sort of naturally thrust into it as immigrants, as drug users, simply because they lived in a poor part of the city and it always would be. Kind of the natural ecology of the place.

    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 Zero

    The story is different when I talk about what I’m working on 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 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 twenty or thirty 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 on this trip 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-Own

    Pawn 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 twelve to fifteen 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 In

    Kenny 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 twenty 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 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 handle bars 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.

    Van Buren wrote about the New Economy and what working for minimum wage means earlier on the Huffington Post.



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    Watch the Shiny Object

    April 13, 2013 // 12 Comments »

    I fully support marriage equality. I support gun control. I support a woman’s right to choose whether to have an abortion or not. I am not this guy.

    But, I’m beginning to think politicians are distracting us. The big issues in every election now are gay marriage, guns and abortion. Say something out loud about any of those and you’ll pull a crowd, with people aggressively taking stances on each side. How many people voted for a presidential candidate based on his views on one or more of those topics while ignoring his views on drone killings, endless war in Africa and the Middle East and the destruction of personal freedom in our country? Better yet, did any voter notice that the views of the two main presidential candidates on the economy, rhetoric and Bruce Springsteen aside, differed very little in practical terms?

    Marriage equality, gun control and abortion rights are important issues—rights are rights—but mention a word about income equality and raising the minimum wage and either no one seems to care or worse, you’ll be blasted by business owners (gay and straight) calling workers lazy, while somebody who labels themselves pro-life refuses to support more food aid to children. Among the wealthy, only forty percent think the minimum wage might be too low; for the rest of us, 78 percent support a raise.

    Side Note: In 2012, the median overall pay of corporate CEOs rose eight percent, to $9.7 million. The value of CEO salaries, stock options, bonuses, and perks all rose in 2012, in most cases by double digits.

    Between 2008 and 2012, enrollment in the US government’s food stamp program rose by 70 percent. It is expected to rise again this year.

    It’s almost as if they want us to be preoccupied with some things that don’t affect their profit margins to the exclusion of others that do, a kind of modern version of Rome’s bread and circuses.

    Businesses can think about profits and seek to lower wages any way they can, but someone also needs to think about the society we live in, and the effect those business decisions have on all of us. I’ve visited the Third World, where income disparity is displayed at its worst, and it is not a place any of us want to live. But I think we better start thinking about getting used to it.




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    I am Patient Zero in our New Economy: Raise the Minimum Wage

    March 9, 2013 // 24 Comments »

    This piece originally appeared on Huffington Post

    In his State of the Union Address, the president said that the federal minimum wage should be raised to nine dollars an hour. He said also that a person holding down a full-time job should not have to live in poverty in a country like America. I could not agree more; for the last few months I’ve lived like the people the president referred to and it is not a pretty picture.

    As research for my new book, I have been working in the minimum wage economy and trying to live on the money I make. The situation is much, much worse than the president described in his Address, a tragedy for our society. Here’s what it looks like.

    Once Upon A Time

    The last time I worked for minimum wage was in a small store in my Ohio hometown, almost a right of passage in high school, pulling in about four bucks an hour stocking shelves alongside my friends. Our girlfriends ran the registers, our moms and dads shopped in the store and a good story about a date could get you a night off from the sympathetic manager. When someone graduated, the manager would hire one of the workers’ friends and the cycle continued.

    The New World

    At age 53 I expected to be quizzed about why I was looking for minimum wage work in a big box retail store. No one cared; instead, the application process included a background and credit check, along with a drug test. Any of those anonymous agencies could have vetoed my employment and I’d never even know about it. Most places that don’t pay much seem really concerned that their workers are drug-free. I’m not sure why this is, because you can be a banker or lawyer and get through the day higher than angels on a cloud. Regardless, I did what I had to in front of another person, handing him the cup. He gave me one of those universal signs of the underemployed I now recognize, a “we’re all in it, what’re ya gonna do” look, just a little upward flick of his eyes.

    After hiring I watched a video on theft. The interesting thing was that in addition to warning us about stealing candy for breaks, we were not to steal time. The store paid us for our time and so even if we snuck out for a breath of air or flipped through a magazine, we were stealing time. Would we have liked someone from the store to come to our home (or, I guess, day-rate motel room, car back seat, shelter bunk or cardboard box under a bridge) and have them do whatever the heck the store would want from us there?

    New break policy: zero to five and a half hour shift, no break. New schedule policy: all shifts reduced to five and a half hours or less. Somebody said it was illegal not to give us breaks, but what can you do, call the cops like it was a real crime? It turns out in fact that in my state employers are not required to grant breaks to anyone over age 16; in some places minimum wage workers do eight and nine hours shifts without a meal or a chance to get off their feet for a few minutes. No one gets sick leave, holidays or accrues vacation time. No health benefits.

    Eight hours on your feet is tough, but what about sixteen? At age 53 I was the third oldest minimum wage worker at the store. With one or two exceptions, everyone on the schedule worked multiple jobs, often in adjacent stores in the same strip mall. They have to: even if the store gave us 40 hours a week for a year (a big, big if, as most places cap workers at 39 hours to avoid them becoming “full time” and possibly qualifying for benefits. In my case, as work expands and contracts, I’ve been scheduled for as few as seven hours a week at one store, without notice that my hours were going to be cut), your annual income would be only about $15k, before taxes of course. The stores adapted, actually trying pretty hard to create schedules that allowed everyone to hold down their two or three jobs. It was the norm, a fact of life, something for business to adjust to.

    Who We Are

    Who are the workers? They are adults, many single moms (64% of minimum wage employees are women), a veteran from Iraq (“the Army taught me to drive a Humvee which turns out not to be a marketable skill”), another retired guy, a couple of students who alternate semesters at work with semesters at the local community college and a small handful of recent immigrants. One guy said that because the big boxer drove his small store out of business he had to take a minimum wage job, which only pays him enough so that he sort of has to buy at the big box store. They made him a greeter at the front door and told him to be enthusiastic. He was. That guy was like Patient Zero in our New Economy.

    There is no ladder up, no promotion path. Most of us were just trying to make a little money. But some people had been yelled at too many times, or were too afraid of losing their jobs. They were broke. People—and dogs—don’t get like that quickly; it has to build up on them, or tear down on them, like erosion, one thing after another nudging them deeper into it. Then one day, if the supervisor told them by mistake to hang a sign upside down, they’d do it, more afraid of contradicting the boss than making an obvious mistake. You’d see them rushing in early to stand next to the timeclock so they would not be late. One broke down in tears when she accidentally dropped something, afraid she’d get fired on the spot for it. They walk around like the floor was all stray cat tails. It is a lousy way to live as an adult, your only incentive for doing good work being they’d let you keep a job that made you hate yourself for another day.

    You had to pay attention, but not too much. It was an acquired skill. Enough time in this retail minimum economy and it was trained into you for life, but for newcomers like me it was a slow process of getting pushed back into the ground every time we had a accidental growth spurt. None of us was trying to be great, just satisfied. This was just grey bread as you felt yourself getting more and more tired each day.

    About 30 million Americans work this way, live this way, at McJobs. We pop up like Brigadoon during election cycles, often as caricatures like Joe the Plumber, or as props for an important speech. In between such appearances, about half of all single-parent families live in poverty. These situations are not unique. Wal-Mart has more than two million employees; if Wal-Mart was an army, it would be the largest military on the planet behind China. Wal-Mart is the largest overall employer in the U.S., and the biggest employer in twenty-five states.

    More than Minimum

    I did work in retail for minimum wage, both at age 16 and again at age 53. While I lived a life from teenager stocking shelves to older adult stocking shelves, the minimum wage only rose by a few bucks. The minimum wage today is $7.25—is a big latte really what an hour of my labor is worth? While the money has not changed, what has changed is who is now working these minimum wage jobs. Once upon a time they were filled with high school kids earning pocket money. In 2013, the jobs are encumbered by adults struggling to get by. Something is wrong.

    So to the president I say, yes, please, do raise the minimum wage. But how far is the proposed nine bucks an hour going to go? Are we going to do eight hours of labor for the cell phone bill? Another twelve for the groceries each week? Another twenty or thirty for a car payment? How many hours are we going to work? How many can we work? Nobody can make a real living doing these jobs. You can’t raise a family on minimum wage. And you can’t build a nation on the working poor. Maybe what we need is to spend more on education and less on war, even out the tax laws and rules just a bit, require a standard living wage instead of a minimum one. That’s not all the answer, but it is a start. The president is right that it is time for a change, but what is needed is much more than a nudge up on the minimum wage.

    Working for minimum wage, I came to know that these were real problems, with real people behind them, lives. We have to decide if all this is just about money or if it is about more, about society, about how we live, about people, about America.



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