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America Workers Needs a Raise!
by Brian T. Lynch, MSW
The growing gap between the economy on Main Street and Wall Street, a declining standard of living, the shrinking middle class, the rise in the need for government subsidized supplemental income and social services for so many, the sense that our children won’t be better off than we are today, all of this has a common origin. They are all connected! They are all the result of wage stagnation (or suppression as I see it.)
In the period of just a few short years, beginning in 1973, employers stopped giving workers productivity raises. Since then, almost all the raises workers have received were merely inflation adjustments, not rewards for their growing productivity. All those rewards suddenly went to those at the top. The effects of this on the economy are compounded over time. Forty years of this nonsense has brought us most of the economic ills we experience today.
The fact that “growing the economy” no longer results in rising worker compensation has been lost on politicians in both political parties. In fact, almost every policy initiative to “grow the economy” has made matters worse. It has often meant slashing taxes for the wealthy (trickle down theory), granting tax breaks for big businesses, and creating tax loopholes for the “job creators” so they can do their thing. Well, their thing is to get substantially wealthier. Almost all new wealth has gone to the top while the wealthy hide more and more of their assets in tax havens. State and local governments can hardly manage to patch up the potholes on our streets because of the combination of tax breaks for businesses and subsidies for the expanding numbers of working poor families.
The Economic Policy Institute has released yet another report on why most of us are not feeling the love from the Wall Street economy. I have take liberties with their findings to condense them a bit so their impact is clearer.
The Economic Policy Institute has released yet another report on why most of us are not feeling the love from the Wall Street economy. I have take liberties with their findings to condense them a bit so their impact is clearer. For the full report, go to:
Understanding the Historic Divergence Between Productivity and a Typical Worker’s PayWhy It Matters and Why It’s Real
By Josh Bivens and Lawrence Mishel | September 2, 2015
Here is my summary of their summary of findings:
- From the end of World War II until the mid-70’s, inflation-adjusted hourly wages and benefits rose in step with increases in our growing hourly GDP, which measures our economy-wide productivity. This parity between wages and productivity created the middle class.
- Since around 1973, hourly compensation has not risen with productivity grown. In fact it almost stopped very abruptly. Net productivity grew 72% between 1973 and 2014 while inflation-adjusted hourly compensation for most of us rose just 8.7%.
- America’s Net productivity grew 1.33%annually between 1973 and 2014 while hourly worker compensation grew at just 0.20%. Since 2000, the gap between productivity and pay has risen even faster ( 21.6% from 2000 to 2014 vs. just 1.8 % rise in inflation-adjusted compensation).
- Since 2000, more than 80 % of the gap between a typical worker’s pay growth and overall net productivity growth has been driven by rising inequality. Between 1973 and 2014, rising inequality explains over two-thirds of the gap between productivity and worker compensation.
- If the hourly pay of typical American workers had kept pace with rising productivity since the 1970’s, there would have been no rise in income inequality during that period.
- Our rising productivity in recent decades provided the potential for substantial growth in wages for most American workers but this new wealth went instead to the riches segment of society.
- Policies to encourage wage growth must not only encourage productivity growth (the “we must grow our economy” argument) but also restore the link between economic growth wage compensation. Just growing the economy by itself doesn’t fix the economy for most working Americans.
Finally, economic evidence shows that the rising gap between productivity and pay is unrelated to the typical worker’s individual productivity, which has also been rising.
For the full report please go to: http://www.epi.org/publication/understanding-the-historic-divergence-between-productivity-and-a-typical-workers-pay-why-it-matters-and-why-its-real/?utm_source=Economic+Policy+Institute&utm_campaign=019280809d-EPI_News_09_04_159_4_2015&utm_medium=email&utm_term=0_e7c5826c50-019280809d-57319413#introduction-and-key-findings
Declaring War on the Poor
by Brian T. Lynch, MSW
Thom Tillis is now Senator elect from North Carolina, having beaten Democratic incumbent Kay Hagan in the 2014 election. During his campaign Tillis berated the poor and suggested that those people who can’t help being poor, like the truly disabled, should rise up and opposed welfare for the unworthy poor. What he actually said was:
“What we have to do is find a way to divide and conquer the people who are on assistance,”
North Carolina has 1.1 million poor. That’s 13.1% of its population. If these folks voted it would be hard to imagine Tillis getting elected, but Hagan and the Democrats have abandoned the poor and working class in this country as well. Now the poor are under attacks like this:
“We have to show respect for that woman who has cerebral palsy and had no choice, in her condition, that needs help and that we should help. And we need to get those folks to look down at these people who choose to get into a condition that makes them dependent on the government and say at some point, ‘You’re on your own. We may end up taking care of those babies, but we’re not going to take care of you.’ And we’ve got to start having that serious discussion.” – Thom Tillis
Watch for the U.S. Senate to put Tillis on the Health, Education, Labor and Pensions Committee to replace Kay Hagan. He is destine to become the chair of the Children and Families Sub-committee with his attitudes. His appointment would amount to a declaration of war on the poor.
So how should sensible people respond to divisive attacks like this on the poor and vulnerable? Should we begin making similar distinctions between the worthy and unworthy rich? Should we affirm those who earned their great wealth and provide social benefit but rescind all advantages given to those who use their inherited wealth to squeeze the people and their government for still more?
How we respond to these questions will define who we are as a nation.
Should Living Wage Minimums be Based on Individuals or Families?
by Brian T. Lynch, MSW
Question: In looking at the Living Wage calculator, I see that $10.83 for a single adult in Morris County, New Jersey where I live. This seems fair to me for a single person, but when you add one child to that scenario the rate jumps to $22.12 per hour. This raises a serious question. Does the Living Wage Movement suggest that wages should be adjusted according to need? [ http://livingwage.mit.edu/ ]
Answer: That’s a great question. I am not a spokesman for, or advocate of, the living wage movement as an organization. I do believe that living wages should be the minimum wage in this country. Minimum living wages should be what we pay summer college help or student interns, not full-time employees. It might also be appropriate for part-time seasonal help. It shouldn’t be what we pay permanently hired employees.
To answer your question, I researched what a living wage is in the 130 cities that have living wage laws. It turns out that their wage base is for a single employee, not including any dependents. A living wage in Manchester CT equals $15.54/hour (the highest) while it is $8.50 in Orlando FL (the lowest). It would appear that the Living Wage Movement is looking to index a minimum living wage minimum to local economies based on one adult with no dependents.
That said, the minimum wage in 1986 was $10.86/hour as opposed to its current level of $7.25/hour. If it had been indexed to inflation in 1986 the current minimum wage today would be $23.59/hour today. That clearly was intended to provide for a worker with a family. The current median family size is 2.54 persons per household. That inflation adjusted wage equals about $47,000 per year while the current median family wage is a little over $51,000 per year (and still declining, I might add).
Here’s the thing, we have only been talking about wage adjustments to keep pace with inflation. We have not been talking about raising wages to reward workers for our growing productivity. We have not been talking about sharing the wealth that workers help create so everyone keeps pace with America’s growing economy. Cost of living adjustment are important, but they shouldn’t be confused with a productivity, or merit raise.
America is $1.7 trillion richer today than it was in 1976. Our economy has doubled, yet the share of all that new wealth created by American workers in this same period of time is insignificant.
In the 1960’s my father was an appliance repairman at Sears. His salary was enough that my mother could stay home to raise my sister and me. Her role as mother to the next generation of citizens was valued. Today, a typical family of four making about $51,000 does so because both parents work. And they are only able to make ends meet because of easy access to credit to shift their financial burdens onto their future earnings.
When I speak about a living wage I am thinking about getting back to a point where one breadwinner can hold one full-time job and still raise a small family without needing government assistance to do it. That’s what we had, and that should be our goal as a country.
Minimum Wage is a Moral Question
by Brian T. Lynch, MSW
The White House put out a brief video on why we should raise the minimum wage to $10.10/hour. It is OK as far it goes, but it is still a little disappointing to me.
Click here to see the video. [ https://www.youtube.com/watch?v=PqtLQgkcUFM ]
Even the White House is looking at minimum wage law though the modern day pro-business bias that has infected all of civil government. Even though raising bottom wages creates an economic stimulus that would boost spending, increase demand for goods and services and create more jobs, this isn’t the most important aspect. The main reason to raise minimum wages is because it’s simply the right thing to do.
The question of minimum wage is actually a moral question. There is no good rationale for paying a full-time employee less than a self-sufficient wage. What is almost half of a human beings waking moments worth? What is the minimum compensation they should receive for devoting that time to enrich their employers? Why should it be less than what is required to survive with human dignity?
From a social perspective, should profitable businesses be held in high esteem as models of efficiency for paying wages so low that full-time employees require taxpayer subsidy to keep from becoming homeless or having their children taken away from them? Should we have to subsidize the labor force of wealthy corporations like Walmart? Should the federal income taxes of those who make more than minimum wage have to be used to supplement the other employees who takes out the trash at night or mow the lawn? Why should any healthy corporation be allowed to boost their profits at public expense through subsidized labor?
If small businesses or start-up company need government subsidies or tax breaks to help pay their help, let these business owners apply for government assistance rather than make their employees feel inadequate by having to beg for government assistance. No man or woman who works hard all day long should have to apply for housing assistance or SNAP or KidCare or childcare assistance or HEAP or any other government subsidy. Let the business owners apply for government aid to help pay employees the self-sufficient wages all full-time workers should have. Let the means testing process for government subsidy programs fall to the employers. Let’s get it off the backs of the working poor and eliminate the social stigma they don’t deserve. Let the minimum cost of self-sufficient labor wages be part of the cost of doing business in America.
Profits for CEO’s and share holders should not come before self-sufficient wages for laborers. Exploiting workers and taxpayers to boost profits for investors and chief executives is immoral.
Civil Service Pensions – A Marker for What We’ve Lost
In New Jersey, as in many other states with conservative Republican Governors, the state civil service pension systems are under attack. A friend of mine, who has followed Governor Chris Christie’s rhetoric in the newspapers, commented about how reasonable this sounded since the system seems to be going broke. But the story of the pension system in New Jersey is more complicated that the current political sound bites. Let me tell you a true story about how civil service pensions came to be a target for public ridicule.
But things were changing in 1979 when I began my civil service career, even though I didn’t know it at the time. Big business had begun organizing politically and started spending big bucks on lobbying government for laws and regulations more favorable to business. Industry organizations were created to raise money and coordinate anti-union marketing campaigns. Ronald Reagan came into power in 1980 and set the tone for union bashing by crushing the air traffic controllers union. Private sector wages, which up to that time always rose in to proportion to increases in hourly GDP, were frozen and have remained frozen ever since. A fear campaign and actual business tactics based on globalization made jobs less secure. Private company pension systems were intentionally dismantled by big corporations to quarterly boost profits. Profit sharing arrangements took their place initially so workers had to invest in their company for their hope of retirement income. Then Wall Street saw all this money and wanted some action. They got congress to pass the IRA laws and all that pension money went to them.
Instead of real raises, businesses only offered cost of living adjustments, which keeps up with inflation but doesn’t share the extra wealth that the growing hourly GDP created for their employers. That extra wealth went to CEO’s and wealthy stockholders, beginning the cycle of great income disparity we have today. At the same time, Reagan cut the top marginal tax rate from 70% to 28%, a windfall for the rich and a huge loss of tax revenue that the rest of us had to bear.
So while the raises, salaries and benefits I received were always sub-par compared with the private sector during the first half of my career, declining private sector wages and benefits, rather than civil service raises or improved benefits, is the reason civil service looks so good today. In fact, civil service benefits have been steadily eroding for the last 15 years but this decline is slower than the collapse of private sector benefits. Civil service salaries also have barely budged in years and actually declined when you factor in inflation. But the assault on private sector salaries and benefits makes civil service look great by comparison only.
Know this, if corporate business interests had not conspired to suppress wages in America over the last 40 years the median income for a family of four today would be over $100,000/year. Instead it is shrinking and down to $51,000/year.
My point is that people in this country who work in the private sector have to fight back to regain a fair bite of the wealth they create for their employers. Workers need to re-organize and demand their fair share of our GDP. Rather than tearing away at civil servant pensions, people should be working to recreate what has been taken from them and use civil service as the framework and model to rebuild private sector retirement security.
There are particulars about why the pension system in New Jersey is in so much financial trouble. It isn’t because it is too generous. It is in trouble because when New Jersey was flush with money during Governor Christie Whitman’s (R) term she stopped making payments. She said she did this because the stock market was booming at that time. She said the pension system was way over-funded and didn’t need more cash. By the time she finished bankrupting the state with massive tax cuts and increased credit spending, Governor James Florio (D) didn’t have the revenue to pay into the state pension system during his entire term in office. This default model became a habit with subsequent Governors. Nothing, or only fractional amounts, were paid into the retirement system for the last 20 years. Governor Chris Christie (R) refused to put money into the system a few year back, when he had the money to pay, saying he didn’t want to put money into a broken system. This is crazy talk since it was the Executive branch that broke the system in the first place by doing exactly what he was doing.
The New Jersey State Pension system is, to a lesser extent, also in trouble because it has been abused for years by politicians bumping up the salaries of their political cronies just before retirement so they get huge pensions that they didn’t deserve or contribute towards. Politician’s take advantage of the way pensions are calculated to reward their buddies.
Austerity for Dummies, Like Us
Imagine owning a small manufacturing business with 25 happy employees. After paying overhead , suppliers, employees, benefits and your Potter’s Bank business loan you have just enough to get by.
One day your suppliers find they can’t get raw materials because of artifical shortages and price spikes caused by futures speculators that work at bank. The suppliers they need to borrow money to pay for higher priced raw materials, at least until they can adjust with worker layoff and cutbacks. Potter’s Bank charges them higher interest rates because now they’re “risky” borrowers.
Your suppliers must pass along their higher costs to you, so now its your turn to cut wages, benefits and hours. Your employees grumble and can’t keep up with the workload. Production stalls, but also sales start to drop because all the affected workers are also your customers.
One day you discover you can’t pay the bank loan, so you go to Potter’s Bank to renegotiate terms. Potter tells you what he has been telling everyone:
“You’re a credit risk! Your workers make too much and the cost of their benefits is rising. Cut benefits, cut wages, layoff some of those lazy workers and you will be more efficient. Only then will I loan you the money you need. Do as I ask or Ill raise your interest rates further or foreclose on your business.”
This is the austerity trap. Bankers use their leverage to play both ends against the middle forcing both businesses and governments to be more labor efficient. It squeezes more production out of fewer workers for lower wages and benefits. It also suppresses consumption because fewer consumers are employed and those who work have less income or job security. It doesn’t matter if austerity is imposed on businesses or the public sector, the effects are the same.
Imposing austerity is like digging a hole in the economy, the more you dig the deeper the hole. It is good for bankers but bad for workers. It increases corporate profits but reduces personal incomes (except for the very rich). It shrinks the size of government but reduces support to the poor and unemployed people it creates. What ever hurts workers hurts consumers which suppresses consumption and depresses the economy, which then hurts more workers in a literally vicious cycle.
Making debt reduction a priority during a recession, rather than creating jobs and putting money back into the hands of consumers, is austerity. As the article below points out with a graph, shutting down the government and causing the government sequester to lower government spending at this time has hurt recovery. It is the wrong prescription.
In a World Without Austerity…
By Adam Hersh | October 4, 2013
http://www.americanprogress.org/issues/economy/news/2013/10/04/76305/in-a-world-without-austerity/
Thanks to the federal government shutdown, there is an absence of new U.S. job market data for September 2013. Let’s take a moment to imagine the kind of economy we might see in the United States today had we not just lived through three years of fiercely divisive politicking for fiscal austerity—sharp cuts to public services and investments, as well as cuts to taxes on America’s wealthiest people.
If federal and state governments had not adopted policies of fiscal austerity, today’s jobs report from the Department of Labor would likely be telling us, as shown in Figure 1:
- U.S. employers added more than 260,000 jobs in September.
- The unemployment rate for September fell below 6 percent.
- Since December 2010, the U.S. economy has added more than 8.2 million new jobs—or 2.4 million more than have actually been added.
Labor Day – A Day for Reflection
Labor Day. For much of the world this is a day of reflection to honor the martyrs who stood up to wealthy capitalists in the fight for dignified employment, the eight-hour workday and the five-day work week. It is a day to honor those who sacrificed their lives so that we might be home in time to eat dinner with our families and to have Saturday’s off to watch our children play baseball or soccer. It is a reminder that many of the blessings we take for granted today came at a terrible price. If we forget how we got these benefits they will slowly erode over time and history will reap itself.
Much of the world celebrates Labor Day not in August, but in May. Have you ever wondered why? Would you be surprised to learn that labor celebrations around the world commemorate events that took place in Chicago in 1816? Students of history will recognize this as the Haymarket, or May Day Massacre. Below is one account from the Encyclopedia of Chicago History via Wikipedia. http://www.encyclopedia.chicagohistory.org/pages/571.html
Haymarket and May DayLABOR UNREST, 1886 (MAP)
On May 1, 1886, Chicago unionists, reformers, socialists,anarchists, and ordinary workers combined to make the city the center of the national movement for an eight-hour day. Between April 25 and May 4, workers attended scores of meetings and paraded through the streets at least 19 times. On Saturday, May 1, 35,000 workers walked off their jobs. Tens of thousands more, both skilled and unskilled, joined them on May 3 and 4. Crowds traveled from workplace to workplace urging fellow workers to strike. Many now adopted the radical demand of eight hours’ work for ten hours’ pay. Police clashed with strikers at least a dozen times, three with shootings. At the McCormick reaper plant, a long-simmering strike erupted in violence on May 3, and police fired at strikers, killing at least two. Anarchists called a protest meeting at the West Randolph Street Haymarket, advertising it in inflammatory leaflets, one of which called for “Revenge!” The crowd gathered on the evening of May 4 on Des Plaines Street, just north of Randolph, was peaceful, and Mayor Carter H. Harrison, who attended, instructedpolice not to disturb the meeting. But when one speaker urged the dwindling crowd to “throttle” the law, 176 officers under Inspector John Bonfield marched to the meeting and ordered it to disperse. Then someone hurled a bomb at the police, killing one officer instantly. Police drew guns, firing wildly. Sixty officers were injured, and eight died; an undetermined number of the crowd were killed or wounded. The Haymarket bomb seemed to confirm the worst fears of business leaders and others anxious about the growing labor movement and radical influence in it. Mayor Harrison quickly banned meetings and processions. Police made picketing impossible and suppressed the radical press. Chicago newspapers publicized unsubstantiated police theories of anarchist conspiracies, and they published attacks on the foreign-born and calls for revenge, matching the anarchists in inflammatory language. The violence demoralized strikers, and only a few well-organized strikes continued. Police arrested hundreds of people, but never determined the identity of the bomb thrower. Amidst public clamor for revenge, however, eight anarchists, including prominent speakers and writers, were tried for murder. The partisan Judge Joseph E. Gary conducted the trial, and all 12 jurors acknowledged prejudice against the defendants. Lacking credible evidence that the defendants threw the bomb or organized the bomb throwing, prosecutors focused on their writings and speeches. The jury, instructed to adopt a conspiracy theory without legal precedent, convicted all eight. Seven were sentenced to death. The trial is now considered one of the worst miscarriages of justice in American history. Many Americans were outraged at the verdicts, but legal appeals failed. Two death sentences were commuted, but on November 11, 1887, four defendants were hanged in the Cook County jail; one committed suicide. Hundreds of thousands turned out for the funeral procession of the five dead men. In 1893, Governor John Peter Altgeld granted the three imprisoned defendants absolute pardon, citing the lack of evidence against them and the unfairness of the trial. Inspired by the American movement for a shorter workday, socialists and unionists around the world began celebrating May 1, or “May Day,” as an international workers’ holiday. In the twentieth century, the Soviet Union and other Communist countries officially adopted it. The Haymarket tragedy is remembered throughout the world in speeches, murals, and monuments. American observance was strongest in the decade before World War I. During the Cold War, many Americans saw May Day as a Communist holiday, and President Eisenhower proclaimed May 1 as “Loyalty Day” in 1955. Interest in Haymarket revived somewhat in the 1980s. A monument commemorating the “Haymarket martyrs” was erected in Waldheim Cemetery in 1893. In 1889 a statue honoring the dead police was erected in the Haymarket. Toppled by student radicals in 1969 and 1970, it was moved to the Chicago Police Academy. |
1st Qrt Report: Wages Sharply Down, Bank Profit at Record High
This is an mportant story that I want to share with readers of this blog. I encourage everyone to watch the video. Feel free to add your comments.
The Real News Network
Bank Profits Soar, Wages Suffer Sharpest Decline in 60 Years
Bill Black: The economy is recovering – unless you work for a paycheck. – June 9, 2013
JAISAL NOOR, TRNN PRODUCER: Welcome to The Real News Network. I’m Jaisal Noor in Baltimore. And welcome to the latest edition of The Black Financial and Fraud Report with Bill Black, who now joins us from Kansas City, Missouri. Bill is an associate professor of economics and law at the University of Missouri-Kansas City. He’s a white-collar criminologist and former financial regulator. And he’s the author of the book The Best Way to Rob a Bank Is to Own One.
Thank you for joining us, Bill.
BILL BLACK, ASSOC. PROF. ECONOMICS AND LAW, UMKC: Thank you.
NOOR: So, Bill, what can you tell us about this latest news from the first-quarter? Bank profits soared to record levels while wages suffered their sharpest decline since 1947.
BLACK: What it all adds up to, of course: it is a very good time and a very good country to be a plutocrat, because the rich are getting richer at a staggering rate and poor people are actually getting poorer, just like the same saying goes.
So we’ve got a series of news that it has just come in this week. One thing shows that we have the largest decline in wages. Boy, that’s a big win. And that follows–that’s for the first quarter of 2013. And that follows what was a huge quarter for income in the fourth quarter, in other words the last three months of 2012. But, of course, there’s a footnote on that. And that huge quarter at the end of last year was to beat the tax increase. So that was the massive payment of bonuses to the wealthiest Americans. So they made sure the wealthiest Americans got their money before the tax increases kicked in.
And what happened as soon as we got back to the regular economy? Well, wages haven’t simply stalled; they’ve actually gotten negative. And productivity is up, which is supposed to mean that wages are up, but wages have gone in the opposite direction. So that’s the news on the wages front.
On the bank profit front, hey, we’ve got the highest reported profits ever for the first quarter of this year. Now, the twist in all of this is that the statistics, when you look at them closely, show the banks weren’t all that profitable in their regular operations, because, of course, they’re not making all that much in the way of loans and such. They’re mostly sitting on their money.
So how did the banks report record profits, but when they were doing their day-to-day business they weren’t earning all that much in the way of super profits? And the answer to all of that is that they reversed out a whole bunch of reserves for future losses, which is the same game they played leading up to the crisis. So reserves for those massive future losses, they’ve made them lower and lower. At the end of 2006, they had gotten to the lowest level of reserves against future losses in history since the savings and loan debacle. And we all know how disastrously this ended. Well, guess what? We’re at the record low again in 2007.
And this is how the accounting works. Every dollar they take out of reserves for future losses is an additional dollar they can pay in bonuses to the top executives. So the wealthier are getting wealthier at a record rate in banking as well.
So what else is happening? Well, we have record stock market appreciation. In fact, there’s a neat headline that says that when you disregard inflation–which of course you can’t–the losses that people suffered in the Great Recession have now been made back. It took a lot of years to do it, but they’ve made it back. But, of course, there’s a footnote, and the footnote says this: well, regular people haven’t, but people who own stock have made out like bandits. They’ve had a recovery measured by $1.5 trillion, and 80 percent of that gain goes to the 20 percent of richest Americans. So, hey, stock market–great news for the wealthy.
Well, but there was also some potential good news. So housing prices have finally started to go upwards. And that’s good news for all kinds of Americans who own their homes. But, again, there’s a little hitch in all of this, ’cause it turns out that for the first time in American history, a huge portion of these gains are going to massive corporations and investment firms and hedge fund types, and they are because they’re making massive purchases of homes at distressed prices to serve as what we call in the trade vulture funds and to sell it back to regular folks when those housing prices have appreciated. So a lot of this gain in housing prices is not going to regular people; it’s going to go to the hedge fund executives, who are already the wealthiest people in the world.
And how does all of this sum it up? Well, I did a paper recently on the Nobel Prize awarded to Mr. Myerson. Dr. Myerson got this award in 2007 when the world was blowing up, and he got the award for proving that fraud couldn’t exist in the financial sector. And he proved this by assuming that fraud couldn’t exist. And his mechanism for assuming that fraud doesn’t exist is plutocracy. And indeed he says the great advantage of the market system compared to socialism is that we have billionaires, and he says that people who are not that rich, in other words, ordinary multimillionaires who are CEOs, if they act rationally–that’s his word–will loot their corporations. And so the only safe thing we can do is to make some segment of Americans billionaires–in fact, probably multibillionaires–so they can run our largest corporations and made–be made into mega-billionaires. So you get a Nobel Prize for creating a system that leads to recurrent intensifying financial crises that caused $10 billion in losses in the United States and the loss of $10 million jobs. And we are told that we’re supposed to be happy and bless the system because it creates plutocrats who have incomes in the multibillion dollars who, when there is a crisis–in the words of Myerson in another article, people who are poor should pay taxes to bail out billionaire bankers, because that will be good for the poor people. That’s the status of economics in the modern era.
NOOR: So, Bill, it would seem like the dominoes are in a row for another massive financial meltdown. Would you disagree?
BLACK: No, that’s exactly what they’re putting in place. And they’re going to make the folks wealthy on both ends, right? We’re told that they have to be made billionaires so that they can invest prudently during the expansion phase of the bubble. And as soon as they destroy the economy, we’re told that we have to bail them out and make them ever wealthier. And the way we do all of these things increases the rewards to fraud and reduces the penalty to fraud, and especially in the modern era where you can dilute with impunity under the administration’s too-big-to-prosecute-or-even-indict standard.
NOOR: And finally, Bill, where are the movements that are challenging these policies?
BLACK: Well, they’re certainly not in either of the major parties. There are, of course, progressives within the Democratic Party, and they do some things, but in truth, both parties’ leadership are heavily dependent on funding from the largest banks and from other plutocrats. You’ve just seen the the Obama administration put a Pritzker in a cabinet position where the Pritzkers have a terrible reputation. And you saw that the Republicans, who usually block anyone that Obama nominates, were more than happy to have one of those wealthy folks, who is one of their kind, in a cabinet position.
So the dissent remains on places that are not typically found in the mainstream media, the Occupy movements and such. And, you know, it’s going to be the next crisis before there’s any serious chance of serious reform.
NOOR: Thank you for joining us, Bill.
BLACK: Thank you.
NOOR: And thank you for joining us on The Real News Network.
Bio – William K. Black, author of THE BEST WAY TO ROB A BANK IS TO OWN ONE, teaches economics and law at the University of Missouri Kansas City (UMKC). He was the Executive Director of the Institute for Fraud Prevention from 2005-2007. He has taught previously at the LBJ School of Public Affairs at the University of Texas at Austin and at Santa Clara University, where he was also the distinguished scholar in residence for insurance law and a visiting scholar at the Markkula Center for Applied Ethics. Black was litigation director of the Federal Home Loan Bank Board, deputy director of the FSLIC, SVP and general counsel of the Federal Home Loan Bank of San Francisco, and senior deputy chief counsel, Office of Thrift Supervision. He was deputy director of the National Commission on Financial Institution Reform, Recovery and Enforcement. Black developed the concept of “control fraud” frauds in which the CEO or head of state uses the entity as a “weapon.” Control frauds cause greater financial losses than all other forms of property crime combined. He recently helped the World Bank develop anti-corruption initiatives and served as an expert for OFHEO in its enforcement action against Fannie Mae’s former senior management.
CLASS WARFARE – OVERVIEW OF WAGES, TAXES and WEALTH IN AMERICA
Since Reagan in 1980’s Tax Rates for the wealth were cut in half and capital gains tax (where most make their money) was cut in half again. http://j.mp/ZFFQHB
Wages and GDP rose together until wages were suppressed in the 70’s, otherwise median income today would be greater than $100K instead of $51K http://j.mp/14MoT67
The combination of wage suppression and the collapse of the upper income tax brackets is the cause of our wealth and income inequality today. http://j.mp/102YbAk and http://j.mp/10DVrLn
A majority of American’s don’t make enough money to support a robust economy because a handful of us have more money than they can spend. http://j.mp/16E3zOT
Current US policy is creating permanent income inequality. Income mobility is shrinking as income caste system forms. http://t.co/nK5uFGyCaG
We know what victory looks like in Class Warfare. It’s the formation of an income caste system where birth determines your level of success. http://j.mp/Y1HwQP
Obama’s proposed raise in min. wage from $7.20 to $9/hr would mean a person working 40hr/week at min. wage would still be below poverty line. http://j.mp/10DwY7V
If the minimum wage was raised to $18/hour the Federal Government could eliminate almost all aid to the working poor, saving tons of money. http://j.mp/10DVrLn
Every tax dollar paid to assist the working poor is a tax subsidy providing their employer a federally funded labor discount. http://j.mp/16Bml7r
God! When are we going to wake up?
Living Wage Should Be Our Minimum Demand
Here are the facts: The federal minimum wage = $7.25 /hr. President Obama wants to raise it to $9.00 /hr. The current US Poverty wage = $10.60 /hr. The current living wage rate averages $16 to $23 /hr depending on where you live. The poverty wage rate and living wage rates are based on a 40 hour work week.
Profitable companies paying workers, or their out sourced or supply chain workers, less than a living wage are financially benefitting from government aid to the working poor. We need a stable work force to be competitive. We also can’t have people starving to death in the wealthiest nation on Earth. Companies take advantage of this and let state or federal governments step in to help care for their workers. This amounts to a labor discount. Cheap labor! Corporations are padding their profits at taxpayer expense.
At least 45% of working households require some form of government subsidy to maintain their financial stability. The cumulative effect of wage suppression over the past 40 years has become a huge taxpayer drain on households making more than the median income. While almost everyone’s wages are suppressed relative to GDP, the ranks of the working poor have grown to almost half of the work force. Business profits that have not been shared with workers over the years has gone instead to the wealtiest 1% of American’s creating the huge income inequality we have today.
In effect, profitable corporations and companies are making their higher paid employees subsidize part-time workers and full-time works who make less than a living wage.
So the next time you see that cleaning lady at work, remember your employer is expecting you to subsidize her family though income taxes rather than pay her the living wage she needs just to make ends meet. Every conservative argument against raising the minimum wage is just a smoke screen for the real culpret behind unemployment and our sluggesh economy, Wage Suppression!!!
Data Driven Viewpoints 