Radical ideas to raise wages?

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Image courtesy of the Center for Economic and Policy Research.

I found this interview with economist Dean Baker very interesting. I agree with him that in some cases, a tighter job market can increase pay, it just hasn’t happened yet in Sioux Falls. I think that the work ethic, people holding multiple jobs, high productivity and the wealthy and corporate interests hoarding their profits has contributed to the fact that wages haven’t increased ‘YET’ in Sioux Falls. Workers are starting to become ‘wise’ to the fact that their employers are doing better after the recession and I think if the minimum wage increase passes in November, you will see other sectors raising their wages also;

Baker: This is one of the main points that Jared and I wanted to emphasize in writing this book. For large segments of the workforce, their ability to get pay increases, to share in the benefits of economic growth, really depends on having a tight labor market. And what really opened our eyes on this was our experience in the late 1990s. Jared and I were both working here in Washington at the Economic Policy Institute. At that point, they thought around six percent unemployment was the best we could do. We got down to four and half percent, and then four percent as a year-round average. And then we saw real wage growth up and down the income ladder — even people at the bottom end of the labor force were actually seeing good real wage growth during that period. And the basic story was that in a tight labor market, there was an increase in demand for people to work as checkout clerks at Wal-Mart, or to work at McDonald’s. When there’s tight demand for those people then they’re in a position to actually get wage increases, and that’s what we saw in the late ’90s.

We’ve done a lot of work on this, and you can’t make that result go away. So in this sense, it’s not just the unemployed, or even the underemployed — underemployment is a big deal as well, because a lot of people at the bottom also don’t get as many hours as they want — but it’s also about people who do have a job getting more pay because they’re in a position to bid up their wages.

When you have tight labor markets, Wal-Mart’s going to have to pay people $15 dollars an hour. It’s not a question of them just being nice guys or anything. If they want workers, they’ll have to pay them $15 bucks an hour.

He also brings up the fact that many people are so happy to just have a job, that they will work for crumbs without complaining for a pay increase;

Holland: A few weeks ago, Ezra Klein wrote that inequality isn’t the defining economic issue of our time. He said underemployment and unemployment were, and that launched a big debate. So was that a false choice, if I understand what you’re saying now?

Baker: On my own blog I said it missed the issue to make them separate points, because a big chunk of the story with inequality is the fact that you have so much unemployment. And, again, the reason why people are working at Wal-Mart for $7.25 an hour is because they don’t have alternative employment.

It’s really kind of a striking — if you go back and look from ’38, when we first created the national minimum wage, the Fair Labor Standard Act, until 1968, the minimum wage actually tracked toward activity growth. It didn’t just increase with inflation. Workers at the bottom were getting their share of productivity growth, so they were sharing in the gains of growth over those three decades. If the minimum wage had continued to keep pace with productivity growth from ’68, when it was at its purchasing power peak, until the present, it’d be about $17 dollars an hour today. And it’s not that I think we could raise the minimum wage to $17 dollars per hour tomorrow and not effect employment. Of course it would. But the point is that we had an economy that could support jobs that paid the equivalent of $17 dollars an hour for the person working as a checkout clerk at Wal-Mart.

So you can have a much higher wage economy, and a big part of that story is having low rates of unemployment.

He also brings up a curious, radical approach, to increasing wages and spending by those wage earners-work less hours;

The last point is hugely important. We can control the number of hours people work. The thing people should realize is that the story of unemployment is actually a story of us being too rich. That sounds strange to people, because we know we have an awful lot of people who aren’t too rich and don’t have enough money. But the point is that we’re producing the things that we’re consuming. People for the most part have housing, they have food, they have medical care, and we still have somewhere around 10 percent of the workforce unemployed, underemployed, [or] out of the labor force altogether.

So, in effect, what’s happened is, because we’re so productive, we end up with a situation where we don’t have enough work for people. Rather than that being a source of poverty for those people who are unemployed or underemployed, wouldn’t it be much better if we all just worked fewer hours?

Now, it’s not that easy to get from here to there, but the comparison that we make in the book — and I think it’s worth people keeping in mind — is that if you look at Western Europe — Germany, France, the Netherlands, Denmark, pick a country in that list — they work about 20 percent fewer hours than we do in the United States on average. And if you just snapped your fingers and said, ‘okay, we all work 20 percent fewer hours, it would result in 20 percent more jobs.

Now, in the real world, it will never be that simple, but that’s more or less what we’re talking about. So, to my view, a great way of dealing with unemployment is encouraging people to work fewer hours. It’s a great way to increase employment, and also make people’s lives better. People value having paid vacation, they value having paid sick days when they’re not feeling well or they have a family member who’s not feeling well. They like paid family leave when they have newborn kids or an elderly family member they have to care for. So that’s a really good way to try to deal with the problem of not having enough jobs.

I like this last suggestion the most. I know after I changed my part-time job last month (I work half the part-time hours I did before, make just as much money at my new part-time job, and have my weekends entirely off) that I am happier, less stressed, not as tired, and way more creative. Imagine that, working less would actually help the economy, or at least make happier Americans.

What was I telling you about the false hope of low unemployment?

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nslp

“This sure beats the heck out of the Ramen noodles and cardboard sandwich I had for dinner last night.”

While Mayor Huether likes to brag about Building Permits and Low Unemployment, our cafeterias in our schools are turning into The Banquet;

Almost half the children in elementary school in Sioux Falls signed up for free or reduced lunch last year, an alarming jump of 5 percentage points and about double the rate of suburban districts.

(In 2012 there was approximately 23,000 students in SF. You are basically looking at about 11,000 students getting free or reduced lunches).

That can’t be right!? We have low unemployment and developers building like crazy. The fact is, that while businesses in our community are enjoying climbing out of this recession, they are not passing that good fortune unto their employees;

“It does seem like we’re seeing more million dollar-plus houses, and seeing more pressure on The Banquet, St. Francis House, rental housing assistance,” Nesiba said. “They’re growing simultaneously. It’s an interesting contradiction.”

Come on Professor Nesiba, don’t you believe in ‘trickle down economics’? If all these peeps in Sioux Falls are making so much money, shouldn’t it be coming our way? And here’s the kicker, stats I have been searching for;

For school board members, the increase in poverty figures shines a light on low wages in the region. South Dakota Division of Labor statistics show that half the workforce in the four-county Sioux Falls Metropolitan Area earns less than $15 an hour — about $31,000 per year.

Now think about that. It is about what I earn in a year. I’m single, have no debt (car paid for) and after refinancing my house, I pay about half for my mortgage compared to what friends of mine pay for rent for a two bedroom apartment. I invest about $200 a month, save about $200 a month and spend about $200 a month on entertainment (vices). Now take that wage and support a family of three on it. It’s ludicrous, and virtually impossible, especially with how high rent is in Sioux Falls;

The availability of affordable housing probably contributes to the poverty gap between the city and the suburbs, Nesiba said. Young people and families just starting out are more likely to live in the city, Nesiba said. “There is still a shortage of affordable housing in Sioux Falls, but there are more lower-income families that end up living here rather than in Tea, Brandon or in Lincoln County, because the jobs are here,” Nesiba added. “We have a very low unemployment rate, but there are so many people that are working lower-wage jobs, and a higher number of people working two or more jobs.”

This is why I have said over and over again, that I only support TIF’s for affordable housing, and smaller apartment owners that want to fix up their units. When we hand out TIF’s to luxury hotels, retail giants and condos, not only are we sending a bad message, we are taking money out of the county and school district’s coffers. You know, the guys who educate and protect our community.

Sioux Falls, and South Dakota is run amuck in corporate welfare, that not only takes away from public services, it offers NO accountability to the ones receiving it (a promise of better paying jobs – NOT more jobs). But when you have a former subprime credit card huckster running the city and Pierre looking more like Watergate every day, what do you expect?

Out of work? Ironic Johnny doesn’t care (H/T- Helga)

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This is the 8th time the Republicant’s have blocked a vote.  Big of them. Thune must be saying screw you to all the people who have been looking for a job for months and months and have found nothing.  I gather everyone in SoDak is employed and Thune and the others just don’t give a shit about anyone else.

And they say they are sick of the partisanship. They are indeed the party of NO.

Republicans kill Senate jobless aid measure

By ANDREW TAYLOR (AP) – 1 hour ago

WASHINGTON — Republicans in the Senate have defeated an election-year bill to continue weekly jobless benefits for millions of long-term unemployed workers.

The 57-41 loss was a major blow for President Barack Obama and Democrats. They needed three more votes — for a total of 60 — to stop a GOP filibuster.

The rejected bill would also have provided billions of dollars in new aid, protecting the jobs of tens of thousands of state and local government workers as the country begins to emerge from the worst recession in seven decades.

Democrats have been trying to advance the measure for months as an insurance policy against a double-dip recession.

Despite another round of cuts to the measure aimed at pacifying GOP deficit concerns, not a single Republican broke with party leaders determined to kill the measure for adding more than $30 billion to the deficit.

Unemployment rising in Sioux Falls? No surprise.

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I said it all along, just because the recession hit us late doesn’t mean it will leave early, in fact, I think it will take Sioux Falls longer to recover, just like in the 1990’s. But don’t take my word on it, just listen to Augustana economics professor Nesiba;

He said that one of the problems particular to Sioux Falls is not so much unemployment – which tends to be lower than in many parts of the country – but “persistently low wages.“

This has been a problem for a long, long time. Even when times are good, it seems business finds a way to keep wages low here.

“There are plenty of people in Sioux Falls that have multiple jobs,” Nesiba said. “Women with school-aged children here have high labor force participation rates. It isn’t because this is such a great place to work. It’s because two or three incomes are needed to get by.”

I can’t even remember in the 18 years I have lived in Sioux Falls that I did not have at least two jobs, at one time I even had four. For someone who is single, there really is no reason I should have to have two jobs to get by.

With a U.S. population of 300 million and a labor supply of about 150 million people, a 10 percent national unemployment rate means you have 15 million people out of work, Nesiba says.

“If you add in discouraged workers who have dropped off unemployment rolls or those who want more work, you get a number like 16 percent unemployment,” he said. “That’s a lot of people we need to put back to work.”

Those are the secret numbers that neither Washington, Pierre or SF City Hall want you to know about.

Nesiba said that even if the country could add 200,000 or 300,000 jobs per month – a rate not seen for a long time – a high unemployment rate is probable for years to come.

“I fear we’re going to have high and persistent unemployment for some time,” he said. “The advantage in South Dakota, and Sioux Falls in particular, is that we have lower unemployment than the rest of the nation. But the question is, how do we create higher living wages and jobs for middle-class people? I don’t see the leadership at the state or city level for that.“

That’s because the State’s and Sioux Falls’ motto has always been, “Business first, citizens second.” They are all bought and paid for. Just look at Pat Costello’s donor list. I hope Sioux Falls residents wake up and elect an honest fiscally conservative mayor and council for once.

Assmunch of the week, Senator Bunning (R-Ken)

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[youtube]http://www.youtube.com/watch?v=YM3gZ0hCKP8&feature=player_embedded[/youtube]

I object!

Sen. Jim Bunning continues to object to extending unemployment benefits. On Monday, the Kentucky Republican once again prevented a vote on a bill that would extend eligibility for enhanced unemployment benefits and subsidized health insurance for laid-off workers by 30 days.

If Congress fails to pass an extension, the National Employment Law Project estimates that 1.2 million people will lose their benefits in March. Bunning’s action could cause thousands of people to miss their unemployment checks starting this week, though it’s likely that Congress will pass an extension within the next two weeks that will retroactively cover their losses.

The video of him telling the reporter to get off his elevator is comical (see above). His baseball career below.

[youtube]http://www.youtube.com/watch?v=Alz5d1L0Ggs&feature=player_embedded[/youtube]