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Low Minimum Wage Killing the Middle Class

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Excerpted from Thom Hartmann's newest book, Screwed; The Undeclared War Against the Middle Class -- And What We Can Do About It
You can't be middle class if you earn the minimum wage in America today. The American dream and the American reality have collided. In America we have always said that if you work hard and play by the rules, you can take care of yourself and your family. But the minimum wage is just $5.15 per hour. With a forty-- hour workweek, that comes to a gross income of $9,888 per year. Nobody can support a family, own a home, buy health insurance, or retire decently on $9,888 per year! What's more, 30 million Americans-- one in four U.S. workers-- make less than $9 per hour, or just $17,280 a year. That's not a living wage either. The U.S. Census Bureau's statistics for 2004 show the official poverty rate at 12.7 percent of the population, which put the number of people officially living in poverty in the United States at 37 million. For a family of four, the poverty threshold was listed as $19,307. If the head of that family of four were a single mother working full-- time for the government-- mandated minimum wage, she couldn't even rise above the government's own definition of poverty. Becoming middle class in America today is like scaling a cliff. Most middle-- class Americans are clinging to the edge with their fingernails, trying not to fall. In the 1950s middle-- class families could live comfortably if just one parent worked. Today more than 60 percent of mothers with children under six are in the workforce. Not only do both parents work but often at least one of those parents works two or more jobs. Middle Class at Eighty Hours per Week In a 2005 article in the Chicago Tribune, reporters Stephen Franklin and Barbara Rose introduce us to Muyiwa Jaiyeola. Jaiyeola, who is thirty-- three years old, works a forty-- hour week as a salesman at a Sears store, then works another twenty hours in the stockroom of a Gap store in downtown Chicago. When Jaiyeola pulled two all-- night shifts at his stockroom job in late August, he was able to sleep only two hours in the afternoon, then two more in the morning before going back to his sales job. He hoped to nap during his break in the middle of the night. Jaiyeola is not hoping to get rich-- he's just trying to pay his bills. Working two jobs at this wage level is what it takes to be middle class these days. And he's not alone. According to Franklin and Rose:
Nearly 7.6 million Americans straddle two or more jobs and must find time to work, sleep and live somewhat contorted lives in a very full 24 hours. According to a 2001 U.S. Labor Department survey, most workplace moonlighters do it because they want or need extra money to pay bills . . . Those who specifically need the extra work to pay bills are most often women who take care of their families, and divorced, widowed or separated workers.
For a quarter of the American workforce, not only is the American dream not a reality, no part of it is. Low wages are being paid not only to entry-- level workers at places like Wal-- Mart and McDonald's but also to adults like Jaiyeola who have work experience. The people being forced to work two jobs to make a living are the heartbeat of our society. They are child-- care workers and nursing-- home workers, janitors and security guards, salespeople and stockers. They often have the most hazardous jobs, the late-- night jobs-- the jobs that rarely include benefits. Americans have traditionally believed in an economy where those who make a contribution are rewarded. A man like Jaiyeola should be able to work eight hours at Sears and then go home. Low Prices, Low Paycheck Cons argue that we have to choose between having high wages and having low prices. They are wrong. Take the case of Wal-- Mart. According to the United Food and Commercial Workers union (UFCW), Wal-- Mart could pay each employee a dollar more per hour if the company increased its prices by a half penny per dollar. For example, a $2 pair of socks would then cost $2.01. This minimal increase would add up to $1,800 annually for each employee. I wouldn't mind paying more for a pair of socks if it meant that my fellow Americans would be able to pay for good health care. That would save me money because right now Wal-- Mart ˜s uninsured employees run up hundreds of thousands of dollars in bills at emergency treatment centers when their problems often could have been solved more cheaply and with better results had they been caught earlier at a doctor's office. And I wouldn't mind paying one cent more for a pair of socks if it meant that parents could be home at night and on the weekends spending quality time with their kids. That's a real family value. Here's what all this talk about wages really comes down to: would you rather pay 10 percent more at Wal-- Mart and get 30 percent more in your paycheck, or would you rather have lower prices and an even lower paycheck? That's the real choice: we ˜re either spiraling up into a strong middle class, or we ˜re spiraling down toward serfdom. Looking at the arc of U.S. history, we discover we've been on a downward spiral ever since Ronald Reagan declared war on working people in 1981. Companies cut prices and then cut wages so they can still turn a hefty profit. Folks whose wages have been cut can't afford to shop at midrange stores like Macy's, so they have to buy at "low-- wage" discount stores like Wal-- Mart. That drives more midrange stores out of business and increases pressure on discount stores to send their prices even lower. To compensate for lower prices, they lower wages so they can still turn a hefty profit. On and on it goes-- until the people working those jobs are no longer middle class and have to work two or three jobs to survive. Our choice is not between low prices at Wal-- Mart and high prices at Wal-- Mart. It's between low prices at Wal-- Mart with lousy paychecks and no protection for labor, and the prices Wal-- Mart had when Sam Walton ran the company and nearly everything was made in the United States and people had good union jobs and decent paychecks. The choice is ultimately about whether we want to have a middle class in this country. The Real Jobs/Salary Equation Rush Limbaugh tells his listeners that if we raise the minimum wage, small businesses will go under and the country will lose jobs. History tells us that that is nonsense. The reality is that every time the minimum wage gets raised, employment goes up. For example, when Santa Fe, New Mexico, voted to raise the minimum wage to $9.50, the cons screamed that the economy would go south. It didn't. According to living-- wage advocates Monsignor Jerome Martinez and City Councilor David Coss, the number of recipients of Temporary Aid to Needy Families has fallen 9.7 percent since the wage increase, while in the state as a whole it had gone down only 0.6 percent. Further, they write in
We have gained jobs. According to a Sept. 22 report from the New Mexico Department of Labor, 1,400 jobs have been added to the Santa Fe work force since the living wage came into effect. This 2.3 percent rate of job growth is a little more than the state ˜s 2.1 percent job growth rate during this same period. Santa Fe ˜s 2.3 percent growth rate is very high, as the state ˜s job growth, at 2.1 percent, ranked 12th highest in the country. The hospitality industry in Santa Fe did even better, adding 300 jobs, a 3.2 percent growth rate. The unemployment rate in Santa Fe in August was 3.8 percent, down from 4.1 percent a year ago. The Santa Fe rate is much better than the state as a whole, which had 5.3 percent unemployment last month.
America has the money. It's just a question of how we use it. A caller to my radio program once offered a good example. He was arguing against raising wages. He posed a problem of an investor who would like to develop property. He asked me, "Would it be better to pay ten carpenters $20 per hour and build one building, or pay twenty carpenters $10 per hour and build two buildings?" Wouldn't it be better for the economy, he said, to employ more people? The question my caller missed was this: do you want to have a middle class in the community in which you are building? That is, do you want there to be people who can afford to live in your building and shop at the stores you may develop? If the answer is yes, you better pay a living wage and build one building. 431 Times the Rest of Us Let's turn this question around the other way. Let's ask the cons: would it be better to pay ten executives $100,000 per year and invest the rest of the company's profits in the company and its workers and shareholders; or would it be better to pay ten executives $1 million per year and claim you'd gotten the best leadership money could buy? The nation's top executives now make an average of $11.8 million per year-- each. That's just their salary; it doesn't count bonuses, perks, stock options, and so forth. For example, the Washington Post tells us in a June 27, 2005, story that many top executives get whatever they ask for. The article cites several examples, among them the case of a health-- care executive:
Coventry Health Care Inc., an HMO company, gave chairman and former chief executive Allen F. Wise a deal that includes as much as $12,000 for legal, tax and financial planning, an unspecified automobile allowance, 75 hours of personal airplane use and a "tax equalization bonus" to ensure that those other benefits entail "no net cost to him," according to a regulatory filing.
Why do executives making $11 million per year need an automobile allowance? Can't they pay for their own financial planning? Even some executives are starting to feel uncomfortable about all this excess. The Post interviewed William W. George, former chief executive of Medtronic Inc. and a member of the boards of such companies as Goldman Sachs and Exxon Mobil, who expressed concern about high executive salaries: "Executives make a lot of money," he told the Post, "so they ought to be able to pay for those things themselves. . . . How far do you want to go? Groceries?" Executives' pay is now 431 times what their employees make on average ($27,460). United for a Fair Economy writes in its Executive Excess 2005 report: "If the minimum wage had risen as fast as CEO pay since 1990, the lowest paid workers in the U.S. would be earning $23.03 an hour today, not $5.15 an hour." Our economy has plenty of money, but the money is going to the corporatocracy, to the richest among us, instead of to the millions of people who-- as Abraham Lincoln pointed out-- actually make the country work. A living wage would be a first step toward equalizing this balance and resecuring an American middle class. But a living wage is just a starting point. Even people making a "living wage" often must work two jobs. To support a middle class in this country, we need universal single-- payer health-- care coverage. We need to strengthen Social Security, not weaken it. We need to offer a free, high-- quality public education. And one of the best ways we get all that for American workers is by supporting unions.
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Thom Hartmann is a Project Censored Award-winning New York Times best-selling author, and host of a nationally syndicated daily progressive talk program on the Air America Radio Network, live noon-3 PM ET. His most recent books are "The Last Hours of Ancient Sunlight," "Unequal Protection: The Rise of Corporate Dominance and the Theft of Human Rights," "We The People," "What Would Jefferson Do?," "Screwed: The Undeclared War Against the Middle (more...)

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