Saturday, February 10, 2007

End poverty in 30 years: said John Edwards a few months back. Better to return 40 years back, to when....

End poverty in 30 years: said John Edwards a few months back. Better to return 40 years back, to when....
....L.B.J's, 1968, federal minimum wage of $9.50/hr (adjusted);
....and income was distributed fairly enough to end poverty overnight were the same pattern applied to 2006's doubled average income.

Happy paydays played through 1973, following which 12%* of overall income shifted from below 90 percentile to above 5 percentile earners -- pumping top-5 share from 20% to 32% -- depleting bottom-90 share from 69% to 57%.

Practical repercussions: a quarter of today's jobs pay below L.B.J.'s (and Europe's) minimum wage -- middle and upper middle family income grew half as fast as average income from 1973 to 2001 (30% compared to 60%) -- today's real poverty line may be as high 25% (imagine if the media would report that; the official federal line having been adjusted for the price of food only for the last 50 years**).

For happy paydays to be here again, top 5 percentile incomes will need to give back a third of their swollen 32% share -- but the next to last 4 percentile would only have to yield a sixth of their 15% share (by slower growth alone?).

The next to last 9/10 of 1% must learn to live without two-fifths of their bloated 10% share -- the last 1/10 of 1% need to return to earth without three-quarters of their bulging 7.5% share [percentages rounded].
The first step to a fair and balanced labor market could be a minimum wage adjustment that, as much as practicable, catches up with 38 years of lost time on both inflation and growth. Adjusting the 1968 minimum for inflation and GROWTH would yield $19.00/hr ($9.50/hr X 200% average income growth).

Eighth-grade arithmetic can demonstrate that a less cosmic $12.50/hr minimum wage should add less than 4% to the cost to GDP output. ***

My guess: a $9/hr minimum wage (today's 25 percentile wage) would cost incomes somewhere above 50 percentile more than they gained -- with about 2% inflation and wages above the new minimum pushed up.

My guess, again: a $12.50/hr minimum wage (today's 40 percentile wage) would cost incomes somewhere above 60 percentile more than they gained -- with 4% direct inflation.

Today's federal minimum wage earner has to work one hour to pay for a $5.00 fast food meal -- if he could afford it. A $9.00/hr minimum wage earner would need to work only 40 minutes for a more expensive, $6.25 meal (fast food has one-third labor costs) -- thus did McDonalds expand coast to coast while paying almost double today's minimum wage in 1968; at half today's average income, yet.

60-90 percentile income earners can only reset their earnings by resetting their bargaining power via coast-to-coast unionization -- which can be spurred via an eighth-grade math educational effort (above) -- which should hurry the necessary legal changes (see below).

Hopefully American labor can be sold on something called sector-wide labor agreements (most extensively used in Germany; also known as de-facto minimum wages): where all workers performing the same tasks in the same geographic area work under a single collective bargaining contract -- even for different employers. This would mark the end of the race to the bottom and to (contractless) scabs.
It is possibly arguable that today's federal unionizing setup violates First Amendment protected freedom of assembly -- the legally mandated unionizing process being needlessly prejudicial to organizing labor (commercial assembling?): logical, but not necessarily promising.

What organized labor probably needs is a constitutional amendment to clarify the -- inalienable -- right to organize, in the image of the Fourteenth Amendment. The Fourteenth Amendment supposedly clarified the full equality of the slaves freed by the Thirteenth Amendment (only to have the Supreme Court putrefy that into separate but equal) and enabled Congress to write laws in defense of civil rights.

A "Right to Organize Amendment" would prohibit unjustified legislative obstacles being placed in the path of union organizing. An enabling clause could empower Congress give Congress unquestioned authority to write laws to maximize the usefulness of collective bargaining; for example, mandating (German style) sector-wide labor agreements.

Just proposing a "right to organize" amendment could cause productive aftershocks.... would wake up working folks to the notion they always should have been perfectly free to organize all along -- that today's run the management gauntlet deal was not handed down from the mountaintop;
....which reminder should supercharge heavy pressure for federal card check legislation (w/o management's OK)....
....which could quickly add the 50% of the American workforce who state they would prefer to be unionized to the 10% who happily are unionized -- overnight.

[ * -- info and source of 12% income shift measure NEAR BOTTOM of blogger comments]

[ ** The federal poverty level was set in 1965 (using a 1955 formula) at three times the cost of an emergency diet (which diet doesn't even permit canned beans, only dried), before taxes yet -- meaning the poverty line has been adjusted for the price of food only for 50 years. Today's real poverty line could be more like 25% (officially reported at 12.4%). Republicans could argue that things like food stamps -- they opposed -- would bring it down to 20%; still 5% more than in L.B.J.'s era. IMAGINE THE CHANGE IN POLITICAL CLIMATE IF THE MEDIA WOULD JUST REPORT THIS ONE STAT!!! For a current bare needs income breakdown, see Raise the Floor, p. 44-47, tables 2-3,2-4,2-5,2-6.]

[ *** $12.50/hr = $7.50/hr more than today's federal minimum wage = $7,500 AVERAGE adjustment (1000 hours). Currently 54 million workers earn below $12.50/hr + 6 million at federal minimum wage ("who get two average raises") = 60 million average adjustments = $450 billion divided by $12 trillion GDP = 3.75% added cost of GDP output. ]
PS. Another federal stat quirk is the Census family income survey practice "top-coding", of not reporting family income above $1 million -- which, pre-1973, had a rationale -- but today hides most of the income share that has shifted from bottom 90 percentile to top 1 percentile.

1 comment:

Kristen said...

You write very well.