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Building on the Enormous Purchasing Power of America's Bottom Forty Percent

By   Follow Me on Twitter     Message Jim Freeman       (Page 1 of 2 pages)     Permalink    (# of views)   10 comments

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We know who they are, that lowest economic class of Americans whose entire net worth equals that of the four daughters of Sam Walton, who founded Wal-Mart. The same scroungers Mitt Romney characterized as "takers' from society, those lazy welfare bums that cost the taxpayer (depending upon who gives you the figures) anywhere from $420 billion to $1 trillion every single year. Romney's takers are a drag on society, to hear him tell it. There don't seem to be solutions, the job market keeps getting worse and many of us have begun to wonder if he's right.

In a column from a few days ago, Bill Moyers says "more than 21 million Americans are still in need of full-time work, many of them running out of jobless benefits." According to Bill, "another 46 million Americans live at or below the poverty line and, with the exception of Romania, no developed country has a higher percent of kids in poverty than we do."

Wow! Those 67 million have families to support, many own homes they're trying desperately to keep from losing, while an average of three people apply for every available job. So it's not really 67 million. Including dependents, nearly one in three Americans is on the edge of financial collapse. Not in your neighborhood or mine, but still one in three and no relief in sight. The cost to us all is as overwhelming as the circumstances of that ever-growing underclass. Well, maybe not quite--it's one thing to grouse among your affluent buddies and quite another to depend on food stamps (46 million Americans)--but you get my drift.

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Yet, looked at from another perspective, there is a solution that would boost the economy, bring these walking-wounded into the consumer economy, trend back toward stay-at-home moms for families with children and get us off the hook for a welfare state that increasingly leads us into a class war.

We're too good for that, too compassionate and innovative a nation to settle for a social death-spiral in an America that was built and prospered on opportunity.

That solution is to triple the federal minimum wage to $21 and I can virtually hear my readers suck in their collective breath, but stay with me. This is a "what if" proposal and there are consequences to bold moves-- there always are--some of them unintended and (perhaps) inescapable as well. Let's sit down together, exhale slowly and talk about them.

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A recent study by wiser men than me claims that if Wal-Mart were to raise their lowest wage-rate to $12, it would cost the average customer an additional 47 cents every time they came to the store, while maintaining profits at current levels. $21 would likely raise that to an extra dollar with each visit and perhaps shave -% off Wal-Mart's profit. That would have reduced 2012 earnings from $15.7 billion to an even $15 billion, in what the company already calls a "down year.'

I don't doubt we could all live with that and I want Wal-Mart and all other American retailers to have "up years'--a whole string of them. This proposal will help them do it.

Expect Wal-Mart to benefit from a significant increase in sales. The broad base of their customers are among those who budget their shopping, right? With spendable income in their pockets, one in three Americans would be better able and willing to buy. A near doubling of the Wal-Mart (and similar retailers) customer-base is hard to ignore.

An absolutely uncontested benefit accrues to the company from a decline in worker turnover; welcoming rather than picketing crowds gathering in new locations, as well as pro-growth zoning boards; greatly reduced worker turnover and a huge increase in employee loyalty. Well paid staff, stay with their company and praise it as a great place to work. You won't find them on picket lines or thirsting for union representation.

Similar benefits would accrue among all former the low-wage industries; to the fast-food, automotive, consumer electronic, grocery and housing--and Wal-Mart is in all of them but the last. Finally, Wal-Mart would remove itself from their current #1 rank as the company America loves to hate. That alone solves the very bad press haunting the largest retailer on the planet.

A win-win for Wal-Mart and similar retailers, but what about migrant farm workers, guys mowing your lawn, wait-staff in restaurants, child and elderly care workers, household help and the impact a $21 minimum wage would have on hiring in general? The quick answer is that a rise in MW floats all boats. The long answer would take a library of books on the subject and is largely unknowable until we see the unintended consequences, so we're forced to leave it out of the conversation. Generally, increasing the buying power of the powerless is a very positive move under any circumstances

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Lifting 67 million Americans and their additional tens of millions of dependents from poverty and hopelessness to sustainable and promising futures is too huge a benefit and too mutually profitable for Americans or the low-wage industries to ignore. Stand aside, while the entry level to a solid middle class reasserts itself.

The effect on America's bloated and unsustainable welfare system is equally positive. There will always be a group of our fellows that cannot help themselves; those who are mentally ill or unable to sustain their lives for reasons of disability, injury or unavoidable circumstance, but we'll be better able to assist them with the enormous burden of the jobless reduced to a minimum. Conservatively, we should be able to lower those welfare costs by two thirds, saving anywhere from $280 billion to $666 billion (again, depending upon who provides the figures).

That's a break on our taxes we can all feel good about--Democrats, Republicans, Libertarians, Tea Party, Independents, Jon Stewart and Bill O'Reilly.

So that's the conversation I hope America will begin to have with itself. Raising the minimum wage incrementally will simply not do it. We're far too far behind on that as a solution and the time is now, when circumstances are untenable and getting worse. Yes, the DOW is at record highs, but we're whistling past the graveyard on the problems of a disappearing middle class and, worse yet, the traditional rung up that ladder that is already folded up and stored in the garage.

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Jim Freeman's op-ed pieces and commentaries have appeared in The New York Times, Chicago Tribune, International Herald-Tribune, CNN, The New York Review, The Jon Stewart Daily Show and a number of magazines. His thirteen published books are (more...)

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