Thursday, February 9, 2012

The Sudden Death of the Living Wage : Mitt Romney Flip-Flop 1/3

by Nomad

Romney’s Double Back Flip

Last week Republican front-runner, Mitt Romney somehow managed to flip-flop from the frying pan into the political fire when he told reporters that he didn't fret about the poor because of the social safety net. He explained to a CNN reporter:
“I'm not concerned about the very poor. We have a safety net there. If it needs repair, I'll fix it.”
President as handy-man?
Naturally, like every politician who finds himself in a pickle, he blamed the media for taking his statement out of context. Like his “corporations are people too” remark, Romney once again seemed unable to hear how out of touch he actually sounds. Until everybody else notices. Coming from one of the richest candidates in American history, it gave the (probably accurate) impression that he has no real understanding or sensitivity for the poor. After all, how much more 1% can Mitt Romney be? How can a person like that really represent all of the people?

But then, in order to rectify the gaffe, Romney immediately followed that up with a new problematic statement which had his corporate backers falling out of their cushy chairs. By Wednesday he underlined his commitment to address the problems of the poor by mentioning his support for automatic increases in the federal minimum wage to keep pace with inflation. 
"I haven't changed my thoughts on that," the former Massachusetts governor told reporters aboard his chartered campaign plane, referring to a stand he has held for a decade.
You could almost hear the gasp of a million CEOs and the moan and groan of a thousand Republican Party elites. In that one sentence he confirmed the Right Wing’s darkest suspicions about this candidate. Namely, he is not committed to their agenda after all. Good God, he might even be a moderate, which is next door to a liberal, which is just around the corner from a socialist which is on the same street as a Communist!

Romney’s gaffe has underlined one of the problems facing the Republican party, namely, its inability to deal with poverty except through finger-wagging and starvation. In order to win support, Romney has had to appeal to pro-business groups like the National Federation of Independent Business and the US Chamber of Commerce, both of which reject the idea of any sort of raise in the minimum wage. They have long argued that increased wages are detrimental to economic growth. Both sides of the debate can point to numerous studies to support their respective claims. and economists disagree about the effects of a higher minimum wage on growth and job creation.

A Wage for Living

The birth of the minimum wage law- a landmark of its day- was an agonizing one for President Franklin Roosevelt and it very nearly didn’t occur at all.. After a protracted battle the Supreme court, the president finally succeeded in getting a watered version of his proposal on his desk.. As one source tells us:
In its final form, the act applied to industries whose combined employment represented only about one-fifth of the labor force. In these industries, it banned oppressive child labor and set the minimum hourly wage at 25 cents, and the maximum workweek at 44 hours.
He told the public that America should be able to give "all our able-bodied working men and women a fair day's pay for a fair day's work."

It was hardly what one would call a success story for the president. In order to gain approval in both houses of Congress, numerous compromises, amendments, exemptions and narrowed coverage limits had been added to the original draft. The result was that, in its final form, the act wasn't much of an improvement in the conditions of the working man.  
Congress passed the Fair Labor Standards Act (FLSA) in 1938 and has voted for raises since, but has never linked it to inflation. Over the years Congress revised the FLSA several times, broadening the coverage to include retail establishments in 1961, hospitals, nursing homes, schools and colleges and laundries in 1966 as well as domestic, state and local government workers in 1974. 

The value of the minimum wage and the types of workers it covered have always been widely debated. Despite unwavering public support for regular increases to the federal minimum wage, employer lobbyists, particularly from low-wage industries like restaurants and hotels, have been loud and unyielding opponents. Although the real value of the minimum wage (the value adjusted for inflation) rose consistently from 1938 to 1968, the trend has been reversed ever since. By the end of the 1980s, under a more conservative political climate, the real value had been in decline until 2007.

One thing that many politicians seem unwilling to admit is that minimum wage is actually below the minimum for most people. In many areas of the country, the cost of living (which includes housing, utilities, food, health costs and the bare necessities) exceeds the minimum wage limits and these wage standards only represent the needs of an individual, not those of a family. A minimum wage is merely the amount a money need to survive with the essential items. Often a minimum wage is set so low that it requires some kind of borrowing, like purchases on credit. It may require that the head of the household take on multiple forms of employment or that both parents work.
A minimum wage is not, therefore, a living wage.
To understand the difference, it’s important to remember that a minimum wage is the lowest wage that employers may legally pay to workers and conversely, it’s the lowest rate that a worker can sell his labor. The entire law is designed to represent the employer's interests and not the worker's. (Ideally for the employers, of course, would be a minimum wage set at zero but the Emancipation Proclamation has poo-pooed that idea.) Whether or not a worker (and his dependents) can actually survive on the specified minimum wage is another matter.

For a closer look at a comparison between the living wage and the minimum wage, and to find out what is required to make a living wage in your community, I invite you to visit the Living Wage Calculator.

If we take a random area, Beaufort County, North Carolina. Since the latest increase in the minimum wage, the figures actually look good for a single adult. The minimum wage is $7.25 and that's well above the poverty level at $5.04 and the living wage is $7.14. All very good except when you add a child to equation, the living wage requirement suddenly jumps to $13.98

Another example, Indianapolis: again, minimum wage is $7.25 and the poverty level is $5.04. However, the living wage is $8.06 an hour and with one child, that increases to $15.53.

Finally, a major metropolitan area, Boston. There, the situation is intolerable even without a child. Minimum wage is higher than the federal limit at $8.00 an hour and the poverty level is a mere $5.04. That’s a fairly promising start but then look at the living wage. $12.17. That’s how much you must make an hour in order to live with even the barest essentials. With a child in your lap and you suddenly find you’ll need $20.75 an hour, just to make ends meet. It’s no surprise, then, that people are making use of their credit cards and working two and sometime three jobs. If that becomes impossible, then the only recourse is to become a dependent on the government. 

That’s the safety net that Mitt Romney regales. It's important to remember all this the next time you hear a conservative politician complaining about "class warfare."  There may be class warfare in the America, but it's not the poor who are waging it.

Presentation by Trudi Renwick, Senior Economist, Fiscal Policy Institute
The Invisible Poor
To learn the truth behind American poverty, The Working Poor: Invisible in America, by a former New York Times reporter and a Pulitzer Prize winner, David Shipler, is a “must read.” He examines the problem, not of the unemployed, the so-called welfare queens, the parasites of the free-market economy, but of the gainfully employed labor force who are simply unable to survive on their wages. Moreover, these low-wage jobs that he discusses often don’t provide health insurance coverage, and past medical bills (due to the lack of insurance) often mean low-income families have a substantial debt burden. For the working poor, it's not about saving for a rainy day. Every day is rainy. It's more about just keeping your head above water.
Shipler explains:
Business executives have the skill but certainly not the will to compress salary differentials by raising the bottom and making sacrifices at the top. Revised tax structures could induce such policy. Government has the skill to legislate a big boost in the minimum wage, but it lacks the political will, largely because most low-income Americans don’t vote their interests or don’t vote at all, and can’t compete with private industry’s sophisticated lobbying and campaign contributions. Furthermore, the minimum wage is a blunt instrument, and the skill to use it is not perfected.

One idea for making the tool more refined is to set different minimums for different parts of the country based on regional costs of living. Another approach is the “living wage” law…. We have learned other ways to address the discrepancy between what people can earn in the market and what they need for comfortable living.
As Ralph Waldo Emerson said, discontent is the want of self-reliance. How can one be genuinely self-reliant without being able to afford the bare essentials of subsistence? How can a citizen be fairly represented in government when Congress is (or appears to be) beholden special interests and the demands of the 1%? Above all, it is important that everybody understands that the right to a fair and sustaining wage is a  problem of values.

Not merely because it revolves around the quality of existence or the standard of living but because a fair wage is the key to dignity. And when you rob a person of their dignity, the denial of a life-sustaining wage becomes more than an ethical or even an economic problem,  but a hazard for all of society because a population without dignity, reduced to form of discontented slavery, is an invitation to revolution and to catastrophe.

 In the next post in this series, we will be taking a brief look at that history of the idea of the living wage and what its opponents say about it. 

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