Lately it's become sport to scapegoat workers for high unemployment and the sluggish economic recovery. This past weekend, while the nation observed Labor Day in recognition of America's hardworking men and women, some commentators used the holiday as a news hook to attack workers' wages and unemployment benefits.
Kevin Hassett of Bloomberg News marked the holiday by opining that "the biggest problem with the labor market right now is that wages are too high" and called for a 20 percent cut in the minimum wage to spur job growth. Minimum wage earners working full time currently make about $15,000 a year, but Hassett wants to slash their pay by almost $3,000 -- a hefty cut to a family's income, sold under the banner of economic recovery. Over the weekend, the editorial board of The Pittsburgh Tribune Review made the same argument, only more extreme. In an editorial entitled "Kill Wage Floors," they call for repealing the minimum wage altogether.
At the same time that free-market fundamentalists and their allies are taking aim at workers' wages, they are also arguing for cuts in unemployment benefits. Despite record rates of long-term unemployment, some politicians and pundits brazenly have characterized unemployed Americans as lazy and unmotivated, preferring to milk modest unemployment checks rather than further their careers.
Now, the Wall Street Journal is publishing unsubstantiated economic arguments in attempt to bolster these claims. In last week's Journal, Hoover Institute economist Robert Barro argued that "the dramatic expansion of unemployment-insurance eligibility to 99 weeks is almost certainly the culprit" for the sustained unemployment crisis. Chicago Tribune editor Steven Chapmen piled on, asserting "benefits just postpone the inevitable, depriving the economy of labor."
Barro and Chapman contend that benefits are keeping people unemployed, when the real problem is the lack of jobs. There are currently 5 job seekers for every job opening, and the economy is still missing more than 8 million jobs that vanished since 2007 and have yet to reappear. Even if the unemployed had never received a single benefit check, how could they go back to jobs that simply don't exist? The argument that workers themselves are responsible for record unemployment defies logic, but fits neatly in the extremist agenda of gutting worker protections at every turn.
While pundits are attacking workers' wages and unemployment insurance for prolonging the unemployment crisis, large corporations are busy registering record profits. The S&P 500 profit margins are estimated to have reached an incredible 9 percent in the second quarter, topping margins recorded in the 1990s. According to Commerce Department figures, corporate profits have fully rebounded and are now higher than they were before the downturn hit.
Awash in profits, CEO's are being rewarded handsomely. According to a new study by the Institute for Policy Studies, the average CEO paycheck in 2009 was twice as much as it was in the 1990s and four times as much as in the 1980s, adjusting for inflation. At the same time, although productivity has increased more than 6% since the recession began, workers' wages have stagnated.
And the future looks bleak. Corporations are holding onto money, failing to reinvest in growing their workforces and increasing production. In June the Federal Reserve reported that the nation's top 500 non-financial companies were holding more than $1.8 trillion in cash, which, by any measure, is more than they've had on hand in over half a century. Corporations are sitting on a pile of cash more than twice the size of the federal stimulus.
One of the reported reasons they are reluctant to reinvest is that demand has yet to recover. Consumer spending drives 70 percent of the economy, but with record numbers of Americans facing foreclosure, job loss and stagnant wages, demand has understandably not resurfaced.
The way out of this quagmire is to grease the wheels of the economy by putting money back into the hands of workers and the unemployed to boost their consumption, so they can encourage corporations to reinvest the billions they are holding into job creation. The very policies under attack -- decent wages for working Americans and unemployment insurance for workers who cannot find work -- can provide companies the strong markets they need to jumpstart economic growth. Together, business and workers can be partners in economic recovery.
Unemployment is high, because business demand has tanked. Most U.S. businesses sell to the American Consumer. The American Consumer is made up mostly of American workers. Without adequate pay, or jobs, demand goes down the toilet. Lowering minimum wage will only add to that circular sucking sound that's destroying our economy.
Henry Ford had it right. When asked why he paid his workers nearly twice what his competitors did, he replied with a statement to the effect of "I want my employees to be my customers, I want them to be able to afford my cars".
The American worker today is one of the most productive in the world. Can we say the same thing for management? It wasn't American Workers that decided to make risky investments for higher profits. That was managements decision. A decision that the American worker pays for, while the guilty receive billions in bonuses, funded by workers taxes no less!
The "Let them eat cake" ideology has brought down governments before. I see no reason why it can't happen again. Desperate people do desperate things. Something the pampered few in our society would do well to consider.
To me, blame is not a game. Nor is responsibility, or the duty of, say, the current administration to prosecute crimes against the Constitution. Keep saying it, and we're playing in their rhetorical frame, and we lose before we start the argument.
And what stinks is that this practice is steeped in noble historical examples of social forgiveness, such as in South Africa and in post-Pinochet Chile. In those laudable, if excruciating instances, the societal consensus was to turn the page from the years of evildoing, all in the interests of more quickly healing a crippled nation. Today's Chile especially, is a prosperous and vibrant country perhaps because of not playing the so-called 'blame-game' and looking to the past. Similarly, GOP leaders tell us President Obama is playing the blame-game when he rightly reminds voters why we're in this mess in the first place. And even if the president's intentions are mostly to steer clear of the same mistakes of the past and urge patience, certain past and presently gulity players trot out this stupid phrase to apparently great continued success.
August 30th, 1935, Revenue Act (Wealth Tax Act ) passed.
* Increased the surtax rate on individual incomes over $50,000, the estate tax on individual estates over $40,000 and graduated steeply taxes on individual incomes over $1 million until the rate was 75% in excess of $5 million.
* Decreased the small corporation tax rate to 12% while increasing the corporate tax, on incomes above $15,000 to 15%.
* Some excess profits over 10% were taxed at a 6% rate and in excess of 15% at a 12% rate.
1944 , Individual Income Tax Act passed, raises the individual maximum rate to 94 percent.
others have posted Henry Ford's ideas which helped in raising the standard of living in America but were not enough in and of themselvesto solve the dilemma
For Years a segment of society has worked at chipping away the protections that once again are shown to be necessary , the high tax brackets worked for the betterment of America as a whole the lowering of them has only systematically returned the country to pre-Great Depression conditions. The same can be said of Regulation.
economy is thay have found a way to increase their profits
without any investments in the work force or infastructure
of the corperation. If they are making a hugh profit
what reson do they have to expand or hire.
Some people are hard up against it, and once people get to that point, they start considering 'alternative revenue streams', such as property theft, burglary, muggings, dope peddling, and so forth. When people can support themselves legitimately, in reasonable fashion, usually they don't turn to such things. Nor do they form mobs.
Yeah, as far as I'm concerned, the rich people can cover their noses with their perfumed hankies when they walk by, I just hope they look out for the edge on the curbing...
as degree in electrical engineering.
I have about two more weeks to get a job or I am
on the street. Applied to over 70 different companys
and is over qualified..
Will it lead to goods and services becoming more expensive overall? Perhaps, but at least if we can start making things in the U.S. again, we will have the income to pay for them.
By the way was in senior management at a major manufacturing company for 25 years, so I do know the truth.
Proffits are up with a smaller work force.
Corperate bonuses are up with a smaller work force.
Company bank accounts are full with a smaller work force.
Where is the incentive for the corperations to increase there work force.
Here's what I think is happening. Over the past 50 years the US has been the primary driver of demand for goods in the world economy. That is starting to change now with the emergence of China as a major economy. Large companies that are sitting on cash are waiting for demand to pick up before they commit to hiring. That demand is not going to come from the US! It's going to come from places like China and India. The US consumer is tapped out and in debt for the most part. Without a job they aren't got to start buying "stuff". But when that foreign demand does start picking up watch out! All this talk about lowering the minimum wage will quickly be forgotten as producers rush to hire.
Stipulated: Corporations and small businesses do the bulk of the hiring.
Stipulated: The market can, when motivated, come up with solutions no government entity could or should.
Stipulated: The basic presumption of "trickle down" theory, namely that investors with more money have more money to spend on hiring, is sound. However, in a globalized economy, offshore hiring and currency manipulation tend to be more profitable so there's little motivation to spend on local hiring when the tax rates are lowered in advance.
Proposal: Tie the highest tiers of personal income and capital gains taxes in this country to the unemployment and underemployment rates. Set the scale so that, at the current levels, those taxes match the pre-GWB tax cut levels. If those rates go down, so to the top percentages. Get it down to 4% and they'll be below the Bush tax cut levels. If they go up, we head into Reagan-era territory. Make the changes automatic so no politicking is necessary to get those sweet lower rates, just get those unemployment and underemployment levels down.
Any corporation knows that you don't motivate workers by giving them guaranteed bonuses when they haven't done anything yet and yet we run our tax code that way. I propose that we reward them for a job well done AFTER they do it. Now tell me: how is this stupid?
Item 1: There is also public sector hiring, hence my use of the word "bulk".
Item 2: Acknowledgement that I am not proposing or desiring socialism or authoritarianism. If you do not agree that there are things that can be done in the private sector that should not be done by government, I wonder what you think of, at a minimum, the first amendment to the Constitution.
Item 3: You read everything before "however" and ignored the rest so that you could say the same thing I did yourself. Please hold back the jerking knee enough to notice that.
As far as your objections to the proposal, you're jumping all over me for ignoring the idea of a living wage while you yourself ignore that I specifically stated "underemployment" along with "unemployment". Underemployment rates are for those who are not making a living wage from a single job.
Frankly, I think you read the first stipulation, decided that I am a Hannity conservative, and ignored everything I said that didn't fit that view. I SPECIFICALLY included underemployment for the reasons you gave and I said nothing at all against workers, being one myself.
Again, I'm more than happy to have my proposal ripped to shreds, but I would appreciate the courtesy of having the actual proposal addressed rather than a modified version that ignores parts of it.
Absolutely brilliant. For all those mega-wealthy that are already aware of "nobless oblige" they would be happy to go along. For those that are in it for greed only, they are forced into going along.
I LOVE this idea!
Consumers are similarly holding cash. Massive injection of cash into consumer hands has already taken place through low interest rates and now consumers are afraid and our national savings rate has tripled to 6% while credit card debts have plummeted 14% to $825B. 7M mortgages in last 12 months have been refinanced freeing up ~$13B in annual interest payments.
So we are in a national malaise where business AND consumers are "hording". Calls for increased wages, protectionist policies are simply not aligned with freeing both consumers and business with the overhang to start to invest/spend
At a certain point, either through desperation or a feeling that the social contract has been violated, those populists will feel they no longer have any obligation to observe property rights. There are real, physical, non-economic elements that aren't being considered here. Obviously, all that would manifest as an increase in crime, then probably an increase in organized crime (a problem that will not be reduced when the economy turns around), potentially riots. Depends on how long people will stare at these symptoms gape-jawed and confused as to their cause.
And when you factor in all the austerity measures possibly to come up with regard to cutting state services, the police forces and court system will be unable to deal with this. You could end up in a world where what's yours is only what you can hold on to in the face of anarchy.
The people at the top have a vested self-interest in maintaining a standard of living for the rest of the people...they just don't seem to realize it anymore. England had the Peasants' Revolt, the rest of Europe has dealt with worse. The lack of such an event in this country's history gives people a sense they don't have to consider such possibilities.
Policies of investment in education in K12 and post-secondary, breaking down barriers to entrepreneurs and flow of capital to small business, a chance at the American dream for everyone is what will lift the country rather than kill the golden goose. We can fix the country at a small cost in comparison to the voodoo economics of current spending priorities.
If the Widget Corp is sitting on cash reserves, they are not going to hire employees to increase production just to hire employees because they have cash reserves. There must be an increase in demand for widgets in order for the company to increase production of widgets.
Your theory seems to imply that the corporations are refusing to increase production and employees, not because of lack of demand, but for the wish for more power and money. If the demand existed , they could increase production and employees and thus increase their power and wealth..
Your missing the point as usual. CEO's have quadrupled their income since the 80's. Their workers wages have stagnated. Dont you think the workers, the ones who actually make the company profitable deserve wage increases?? Oh no just the CEO. I get it. Rich get richer poor can just scfew off. Typical neocon ideology.
Where is all that money coming from? They lay people off, and the people still there have to work harder for the same wages, or even have to take a cut in pay.
And yet they complain that there is not enough demand. The people they got rid of have no money, and the people still there are too tired or too scared to go shopping.
Instead of complaining about decent wages and unemployment insurance (which helps give them the customers they need) it seems like the big companies should take a good dose of truly enlightened self-interest, and invest some of that cash in their workers.
If they keep this up, there won't be anyone left to buy their stuff.
In 1913 Henry Fords' company made more than $27 million and paid dividends of over $5 million, even though the United States was in a depression. At the time $2.50 for a ten hour day was considered a good wage. Planning for 1914 he wanted to increase efficiency. He sent in a labor expert, discussed plans in detail with his directors, and they agreed the $2.34 pay per nine hour shift should be increased. They all agreed they would pay $5.00 for an eight hour day.
He later called it “one of the finest cost-cutting moves we ever made.” It motivated his workers, gave them more disposable income, created more consumers for his product, and was great public relations too.
He also said “Our company is making enough money to do some good in the world and I’m glad to do it.”
In 1926 he said "The people who consume the bulk of goods are the people who make them. That is a fact we must never forget -- that is the secret of our prosperity."