Daily Digest - February 14: America Loses When Cable Giants Play Monopoly

Feb 14, 2014Rachel Goldfarb

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There will not be a new Daily Digest on Monday, February 17, in observance of Presidents' Day. The Daily Digest will return on Tuesday, February 18.

Comcast's Time Warner Deal Is Bad for America (Bloomberg Businessweek)

Click here to receive the Daily Digest via email.

There will not be a new Daily Digest on Monday, February 17, in observance of Presidents' Day. The Daily Digest will return on Tuesday, February 18.

Comcast's Time Warner Deal Is Bad for America (Bloomberg Businessweek)

A Comcast-Time Warner Cable monopoly won't just limit choice for consumers, says Roosevelt Institute Fellow Susan Crawford. The combined company will have no reason to upgrade infrastructure.

Just How Much Do Republicans Hate Unions? (TAP)

Volkswagen seems to be supportive of a union at its Chattanooga, TN plant. That means the GOP pushback is just about opposing organized labor in general, writes Paul Waldman.

It's Time to Kill the Debt Limit (The Daily Beast)

Jamelle Bouie says that the easiest way to stop the cycle of debt ceiling crises of the past few years would be to abolish it altogether, since it's a pointless and redundant concept anyway.

Should We Place A Tax On All College Graduates? (Forbes)

Josh Freedman considers this alternative model of funding for public higher education. He quotes Roosevelt Institute Fellow Mike Konczal to express concern about whether such taxes would lead to class-segregated schools.

How Credit-Card Debt Can Help the Poor (NYT)

Since good credit affects so many aspects of life in the U.S., Shaila Dewan writes that special loans that build credit alongside savings could make a big difference.

New on Next New Deal

Conservatives Concerned About the CBO and the Dignity of Work Should Consider a Higher Minimum Wage

Roosevelt Institute Fellow Mike Konczal suggests that a higher minimum wage could solve Republican concerns about people who choose to work less due to the Affordable Care Act and means-tested programs.

A New Medicare Penalty Puts the Focus on Community Health

Anisha Hegde, Roosevelt Institute | Campus Network Senior Fellow for Health Care, says that expanding community health resources and workers will help patients and reduce costs in the health care system.

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Conservatives Concerned About the CBO and the Dignity of Work Should Consider a Higher Minimum Wage

Feb 13, 2014Mike Konczal

It’s a shame that Ron Unz’s conservative case for a higher minimum wage gets caught up in the debate over immigration politics, because the arguments are broader and more fascinating, and incredibly important to have as part of the debate. This is especially true in light of last week’s CBO report, which has sent conservatives running to the barricades over the impact of Obamacare on waged work in this country. The conservative case for a minimum wage would address the two main concerns the right has displayed on this topic.

Broadly speaking, as summarized by Josh Barro here, there are two separate elements of the conservative take on Obamacare and the CBO’s findings. The first is that it allows people to break “job lock” and leave the labor market. This means there are fewer people working, which concerns conservatives because, as Ross Douthat put it, paid wage labor is “essential to dignity, mobility and social equality,” and they “see its decline as something to be fiercely resisted.” [1]

The second is that, because of the subsidies that are given to low-wage workers, these workers face a higher marginal tax rate. If there are subsidies for low-wage workers, as those workers make more money those subsidies are phased out. The fact that they are losing money while earning more money, or that a higher income means a smaller subsidy, functions like a tax. And this means that workers will work a bit less. Liberals in general don’t like this (though they do like that both effects will increase wages, as well they should), but understand it is going to be part of any type of means-tested income support.

Where does the minimum wage come in?

To address the first complaint, it’s important to keep in mind that the “dignity of work” isn’t a static concept, but tied directly to the conditions of work itself. If you ask the people striking against their low-wage job right now, you’ll find that things like working unpaid hours or erratic scheduling are also part of their complaints. As a result of these conditions, the work is socially tagged as undignified, degrading, erratic, and unpredictable. [2]

So driving the wages straight up can help counteract this. As Ron Unz writes, “consider the impact of a sharp rise in the minimum wage, sufficient to remove the taint of poverty overhanging so many of our lower-tier jobs.” This would, in turn, make lower-tier service jobs more attractive from a social perspective, increasing the level of dignity for those who hold them. This would in turn make people much more likely to seek out and hold said jobs. As I’ve argued elsewhere, by reducing vacancies, encouraging job searches and tightening the low-wage labor market, a higher minimum wage would also de facto give low-wage workers more power in the workplace, which would help reduce the petty tyrannies that come with low-wage work.

The second issue comes from effective marginal tax rates, or the burden low-wage workers face as income support is phased out. And the common bipartisan alternative to the minimum wage, increasing the earned-income tax credit (EITC), doubles down on this. There are ways to manage it and make the effective tax rate have less of a bite. But it’s essential to the DNA of means-tested income support that it’ll eventually phase out, and as a result impose some higher marginal tax rate. Conservatives who support a higher earned-income tax credit play into this as well.

The minimum wage, however, poses no such higher effective tax rate. If you work more hours at the minimum wage, there’s no effective tax because the minimum wage doesn't phase out. So if the slight effect of higher effective tax rates of Obamacare is driving you up the wall, perhaps now is a good time to consider this positive side of the minimum wage.

Additional:

I’ve seen many people point out that there’s an administrative simplicity and cost-effectiveness to the minimum wage over the EITC, amplifying the case for them to act as complements to each other instead of substitutes. But I had no idea that, according to the IRS and Treasury, the EITC’s improper payment rate is between 21 and 25 percent. This includes overpayments as well as underpayments.

That simply doesn’t happen with the minimum wage. And if you are a conservative who wants to “simplify” government, or if bringing the impact of government as close as possible to those who need help - say directly in the workplace rather than in the complicated and confusing tax code administered by a faraway IRS - is important to your subsidiarity view of policy, a bigger role for the minimum wage is essential.

[1] This will sound snarky, but I genuinely mean it: I want to see a conservative take on Nickel and Dimed, where maids cleaning bathrooms experience “social equality” with the people paying them.

[2] Remember that Dave Chappelle comedy skit about the person who gets a fast food job to impress his community, and finds that it isn’t quite as dignified as he thought?

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It’s a shame that Ron Unz’s conservative case for a higher minimum wage gets caught up in the debate over immigration politics, because the arguments are broader and more fascinating, and incredibly important to have as part of the debate. This is especially true in light of last week’s CBO report, which has sent conservatives running to the barricades over the impact of Obamacare on waged work in this country. The conservative case for a minimum wage would address the two main concerns the right has displayed on this topic.

Broadly speaking, as summarized by Josh Barro here, there are two separate elements of the conservative take on Obamacare and the CBO’s findings. The first is that it allows people to break “job lock” and leave the labor market. This means there are fewer people working, which concerns conservatives because, as Ross Douthat put it, paid wage labor is “essential to dignity, mobility and social equality,” and they “see its decline as something to be fiercely resisted.” [1]

The second is that, because of the subsidies that are given to low-wage workers, these workers face a higher marginal tax rate. If there are subsidies for low-wage workers, as those workers make more money those subsidies are phased out. The fact that they are losing money while earning more money, or that a higher income means a smaller subsidy, functions like a tax. And this means that workers will work a bit less. Liberals in general don’t like this (though they do like that both effects will increase wages, as well they should), but understand it is going to be part of any type of means-tested income support.

Where does the minimum wage come in?

To address the first complaint, it’s important to keep in mind that the “dignity of work” isn’t a static concept, but tied directly to the conditions of work itself. If you ask the people striking against their low-wage job right now, you’ll find that things like working unpaid hours or erratic scheduling are also part of their complaints. As a result of these conditions, the work is socially tagged as undignified, degrading, erratic, and unpredictable. [2]

So driving the wages straight up can help counteract this. As Ron Unz writes, “consider the impact of a sharp rise in the minimum wage, sufficient to remove the taint of poverty overhanging so many of our lower-tier jobs.” This would, in turn, make lower-tier service jobs more attractive from a social perspective, increasing the level of dignity for those who hold them. This would in turn make people much more likely to seek out and hold said jobs. As I’ve argued elsewhere, by reducing vacancies, encouraging job searches and tightening the low-wage labor market, a higher minimum wage would also de facto give low-wage workers more power in the workplace, which would help reduce the petty tyrannies that come with low-wage work.

The second issue comes from effective marginal tax rates, or the burden low-wage workers face as income support is phased out. And the common bipartisan alternative to the minimum wage, increasing the earned-income tax credit (EITC), doubles down on this. There are ways to manage it and make the effective tax rate have less of a bite. But it’s essential to the DNA of means-tested income support that it’ll eventually phase out, and as a result impose some higher marginal tax rate. Conservatives who support a higher earned-income tax credit play into this as well.

The minimum wage, however, poses no such higher effective tax rate. If you work more hours at the minimum wage, there’s no effective tax because the minimum wage doesn't phase out. So if the slight effect of higher effective tax rates of Obamacare is driving you up the wall, perhaps now is a good time to consider this positive side of the minimum wage.

Additional:

I’ve seen many people point out that there’s an administrative simplicity and cost-effectiveness to the minimum wage over the EITC, amplifying the case for them to act as complements to each other instead of substitutes. But I had no idea that, according to the IRS and Treasury, the EITC’s improper payment rate is between 21 and 25 percent. This includes overpayments as well as underpayments.

That simply doesn’t happen with the minimum wage. And if you are a conservative who wants to “simplify” government, or if bringing the impact of government as close as possible to those who need help - say directly in the workplace rather than in the complicated and confusing tax code administered by a faraway IRS - is important to your subsidiarity view of policy, a bigger role for the minimum wage is essential.

[1] This will sound snarky, but I genuinely mean it: I want to see a conservative take on Nickel and Dimed, where maids cleaning bathrooms experience “social equality” with the people paying them.

[2] Remember that Dave Chappelle comedy skit about the person who gets a fast food job to impress his community, and finds that it isn’t quite as dignified as he thought?

Follow or contact the Rortybomb blog:

  

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Daily Digest - February 12: Higher Pay Won't Hurt Workers

Feb 12, 2014Rachel Goldfarb

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Who Would Benefit From a Minimum Wage Hike? (Your Call Radio)

The aggregate effects of a minimum wage increase wouldn't lead to job losses, says Roosevelt Institute Fellow Mike Konczal, and it's the easiest way to boost our economy.

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Who Would Benefit From a Minimum Wage Hike? (Your Call Radio)

The aggregate effects of a minimum wage increase wouldn't lead to job losses, says Roosevelt Institute Fellow Mike Konczal, and it's the easiest way to boost our economy.

Now That Boehner Has Backed Down, Let's Fix The Debt Ceiling For Good (TNR)

Since the House GOP has approved a clean debt limit increase, Eric Posner argues it's time to pass legislation that would end this game of chicken over the national debt forever.

Yellen Sets a Familiar Direction for the Fed (NYT)

Binyamin Appelbaum reports that the new Fed chair's testimony to the House Financial Services Committee emphasized that many policies will remain the same under her leadership.

What Do the Jobless Do When the Benefits End? (WaPo)

Ylan Mui interviews people about how they're getting by, and since none of her subjects have full-time work, the GOP theory that benefits keep people from taking jobs seems unlikely.

Why Democrats Will Win on Unemployment Insurance (The Atlantic)

Sarah Mimms writes that the Democrats will come out on top whether they get an extension on unemployment insurance or not. No extension? Then there's the campaign message for 2014.

Responsible Contractors Only: How to Ensure Obama’s Minimum Wage Order Is Enforced (PolicyShop)

Building a "responsible contractor" enforcement mechanism into his executive order will help the president to ensure workers actually get the raise he called for, writes Amy Traub.

Anatomy of a Hunger Crisis (MSNBC)

New York City's food pantries are already unable to handle the needs of the city's hungry, according to Ned Resnikoff, and the president has just signed another round of cuts to food stamps.

New on Next New Deal

The Three Big Questions Janet Yellen Should Answer in Today's Testimony

With the new Fed chair delivering her first testimony to Congress this week, Roosevelt Institute Fellow Mike Konczal lays out what we need to know about her views on the taper, financial reform, and unemployment.

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Daily Digest - February 11: Raising Wages from Coast to Coast

Feb 11, 2014Rachel Goldfarb

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The Minimum Wage Fight: From San Francisco to de Blasio’s New York (Reuters)

Mayor de Blasio and others should learn from San Francisco's example when it comes to lifting standards for low-wage workers, write Ken Jacobs and Michael Reich.

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The Minimum Wage Fight: From San Francisco to de Blasio’s New York (Reuters)

Mayor de Blasio and others should learn from San Francisco's example when it comes to lifting standards for low-wage workers, write Ken Jacobs and Michael Reich.

Horrible Bosses (TAP)

Paul Waldman writes that some employers are blaming the President and his health care policies for benefit cuts and stagnant wages. But workers should know: their bosses are lying.

Labor Battle at Kellogg Plant in Memphis Drags On (NYT)

As the lockout approaches four months, Steven Greenhouse says these workers are determined not to accept a contract that could replace them all with "casuals," or lower-paid temps.

New York AG To Put Heat On Banks for Foreclosed Properties (WSJ)

Eric Schneiderman wants to require banks to take better care of so-called "zombie properties" they've foreclosed on, reports Andrew R. Johnson, and his proposed bill would reduce neighborhood blight.

Obama's Partly to Blame for the Postal Service's Backward Ways (TNR)

Progressive reform, including postal banking, is in reach for the USPS, says David Dayen, if only the president would step up and fill the five empty seats on its Board of Governors.

Support the Student Loan Borrower Bill of Rights (Blog of the Century)

Jill Silos-Rooney says Senator Warren's proposal bets that college grads who have fewer struggles with debt will be better for the economy than government profits on student loans.

House GOP Rolls Dice on Debt Limit (Politico)

Jake Sherman and Ginger Gibson report on the GOP's plan to pass a debt ceiling increase by tying it to fixing military benefit cuts. That probably won't sway Democrats from a clean bill.

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Daily Digest - February 10: When the Personal Becomes Political

Feb 10, 2014Rachel Goldfarb

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Turning Personal Tragedy Into Activism (Melissa Harris-Perry)

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Turning Personal Tragedy Into Activism (Melissa Harris-Perry)

Roosevelt Institute Fellow Dorian Warren discusses how tragedies like the deaths of Trayvon Martin and Jordan Davis have pushed so many to take part in activism. He uses the public pressure to cancel George Zimmerman's celebrity boxing match as a prime example.

Sex Workers' Rights are Just Workers Rights (WaPo)

Roosevelt Institute Fellow Mike Konczal considers the policy arguments on sex work presented in Melissa Gira Grant's new book, Playing the Whore. He sees the need to conceptualize sex work as labor as the most important takeaway, regardless of individual opinions on that labor.

Liberals Should Question Obama’s ‘Opportunity Agenda’ (AJAM)

Mike Konczal argues that shifting the discussion from inequality to opportunity could leave out key items on the progressive agenda. If opportunity isn't defined beyond legal equality of opportunity, or if acceptable policy outcomes aren't made clear, the progressive agenda won't advance.

The Case for a Higher Minimum Wage (NYT)

The New York Times editorial board calls for an increased minimum wage, emphasizing its purpose in reducing power imbalances between workers and employers. The accompanying interactive graphic from Jeremy Ashkenas and Bill Marsh shows the insufficiency of $7.25 per hour.

January Jobs Report: Hard to Read (MoJo)

Erika Eichelberger says that the jobs report released on Friday is hard to interpret. Unemployment is at its lowest point in five years, and the labor force participation rate increased slightly, but that could change without an extension of unemployment benefits from Congress.

The Spectacular Myth of Obama's Part-Time America—in 5 Graphs (The Atlantic)

Derek Thompson pulls data on part-time job growth, part-time workers as a share of the labor force, and part-time work for non-economic reasons to demonstrate just how wrong certain slices of the financial media are when they insist that the president is creating a part-time economy.

Obamacare: It's a Net Gain for the Economy (LA Times)

Jonathan Gruber writes that the Congressional Budget Office report shows that the Affordable Care Act in fact creates a more efficient job market in the U.S., by allowing people leave jobs when they want to and increasing job mobility.

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Daily Digest - February 6: Putting the Brakes on the High-Tech Economy

Feb 6, 2014Rachel Goldfarb

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Cable Cabal Tries to Block Future in Kansas (Bloomberg View)

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Cable Cabal Tries to Block Future in Kansas (Bloomberg View)

Roosevelt Institute Fellow Susan Crawford explains why a proposed law barring municipal fiber-optic networks in Kansas, like similar bills passed in 19 other states, would put the U.S. further behind on building the infrastructure needed for high-tech industries of the future.

Breaking: Union Rule Despised by Right-Wingers Now Roaring Back to Life (Salon)

Josh Eidelson reports on the return of a rule requiring speedier union elections, quoting Roosevelt Institute Fellow Dorian Warren to point out that the rule isn't exactly radical. But employers are unhappy, because it allows less time to convince employees to reject organized labor.

  • Roosevelt Take: Bryce Covert interviewed Dorian about his research on workplace anti-union campaigns and the original version of this National Labor Relations Board rule from 2011.

On Jobs, Conservatives are Completely Full of It (WaPo)

Ryan Cooper calls out Republicans for distorting the Congressional Budget Office's prediction that Obamacare will lead to people choosing to work less. Reducing labor supply will decrease unemployment and raise wages, and the GOP hasn't offered many alternatives.

A Report’s Real Message: It Wasn’t About Health Care (NYT)

Jared Bernstein asks why it seems that the only thing anyone is talking about after the release of the CBO's "Budget and Economic Outlook" report is health care, when the report is really a warning about our disturbingly slow economic growth.

What to Watch on Jobs Day: Yes, We Should Still Be Worried About the Labor Force Participation Rate (Working Economics)

Heidi Shierholz writes that beating December's job growth is a low bar for the January jobs report, which will come out Friday morning. She's more concerned about the potential drop in the labor force participation rate due to the end of extended unemployment insurance.

Is This the End of America’s Debt Ceiling Wars? (Quartz)

Tim Fernholz suggests that with Republicans unable to agree on a demand in this round of debt ceiling battles, it's possible that they've just ceded the war. He thinks it's likely that there will just be a clean debt ceiling increase in the coming weeks.

Bipartisanship is Ruining America (The Daily Beast)

Jamelle Bouie points to the new farm bill as an example of everything that can go wrong with bipartisan governance. Hundreds of thousands of families will face painful food stamp cuts, and it isn't even clear who they can vote for or against for a better outcome.

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Daily Digest - February 5: What the CBO Really Said About Health Care Reform

Feb 5, 2014Rachel Goldfarb

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‘Obamacare Bailout’ Does Not Exist, Confirms Government; House Republicans Demand Its Repeal Anyway (NY Mag)

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‘Obamacare Bailout’ Does Not Exist, Confirms Government; House Republicans Demand Its Repeal Anyway (NY Mag)

Jonathan Chait writes that the GOP insists that an Affordable Care Act provision that taxes and reimburses insurers based on the health of their customers must be another big government bailout, but the Congressional Budget Office and Roosevelt Institute Fellow Mike Konczal's definition of bailouts contradict them.

Obamacare Is Not a Job Killer (TNR)

Jonathan Cohn notes that while the CBO's analysis shows the Affordable Care Act will cause a decrease in labor output, that is actually a good thing. The reduction in hours won't be due to fewer jobs, but will primarily be people who are choosing to work less, retire earlier, or start their own businesses.

Can Marriage Cure Poverty? (NYT)

Annie Lowrey writes that Republicans like Marco Rubio have it backwards when they suggest that pushing marriage would solve all other social ills. In fact, she says, it's poverty that is getting in the way of stable, lasting marriages.

Congress Passes $8.7 Billion Food Stamp Cut (MSNBC)

Ned Resnikoff reports that the Senate has joined the House in passing a version of the Farm Bill that makes significant cuts to food stamps. The president is expected to sign this bill, which will cut about $90 a month in benefits for 850,000 households.

AOL is Leading the Way to Make 401(k)s Worse for Everyone (WaPo)

Jia Lynn Yang explains that by changing 401(k) matches to lump sums at the end of each year, AOL punishes employees who leave their job mid-year. That saves the company plenty of money, and if implemented more broadly, would be a major financial loss for workers.

New on Next New Deal

In 'Nuestro Texas,' A Call for Human Rights in Reproductive Health Care

Roosevelt Institute Fellow Andrea Flynn looks at a new report on access to reproductive health care in the Rio Grande Valley. New laws have turned circumstances in that region so dire that according to international standards, its a human rights violation.

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The Rise of 'Insourcing' Gives Internet Companies a New Way to Exploit Workers

Jan 30, 2014Lydia Bowers

Services like Uber and Taskrabbit may offer convenience to their customers, but they don't provide essential protections to their workers.

Services like Uber and Taskrabbit may offer convenience to their customers, but they don't provide essential protections to their workers.

It’s about time we talked about pay. The disparity between the top and bottom wage-earners combined with the inability for most minimum-wage workers to earn a livable income is one of the largest causes of economic stagnation and social justice concern of our time. I couldn’t be more thrilled that it appears we are making moves to raise the national minimum wage to be more in line with a living wage. This raise would have a direct impact on the 3.6 million workers with wages at or below the federal minimum and would have far-reaching positive consequences for our economy and society.

But there is a new, fast-growing class of low-wage workers that would not see the benefit of this decision. These new “insourced” workers are individuals who contract with large Internet-based companies like Uber and Taskrabbit to perform services here in the United States, either at a rate set by the larger company or in a free-for-all bidding war. As contractors, these workers receive very little protection in terms of minimum wage laws or unions, let alone benefits or insurance for the work they do. And their ranks are growing fast.

Taskrabbit, founded in 2008, outsources household errands and skilled tasks so you can find time to do what you love, according to its website.  Members of the site, or “taskrabbits,” place bids to perform services for “task posters.” Need your laundry done or someone to paint your apartment? Post it on Taskrabbit.

While this may at first seem like a modern-day update of the community bulletin board for odd jobs, it is in fact a much more insidious shift in how individuals find work, as many who are unemployed due to the recession turn to the website as a primary form of income. With little in the way of health insurance or other protections in work environments that are frequently dangerous (painting, carpentry, factory packing, and bike delivery) and a stream of work that is impossible to guarantee or even estimate, taskrabbits have it rough. Add that to the “lowest bidder almost always wins” formula for Taskrabbit services and the workers in this emerging industry face a bleak picture for economic stability. I briefly worked as a taskrabbit in 2013 as a way to gain additional income, and while it was a fun side-gig for someone employed full-time, I can’t imagine sporadic $15 delivery tasks becoming a viable way to support myself. But this is the emerging reality for many Americans.

Car service giant Uber is also part of this new group of employers. An article published last week in the New York Times , while focusing on Uber’s legal troubles, also outlined the lack of protection or support for its drivers. Uber maintains its drivers are “partners” – or freelancers – who typically drive their own vehicles. The insurance Uber is required to carry only take effect if an Uber driver is found legally at fault for an accident, and many personal insurance polices do not cover commercial activity. “If another driver is liable, the passenger would have to rely on that other driver’s insurance, assuming there is any.” And while Uber’s supply/demand pricing allows drivers to make significant cash during peak times, one driver estimated that he’s worse off than he was without it. “Peter Ashlock drove a cab in San Francisco for 10 years in the 1970s and early ’80s, bringing home about $500 a week. Two years ago he started driving for Uber. After gas and the company’s commission — usually 20 percent — he makes about $1,000 a week. Factor in inflation, and he has lost ground.” There is no union or wage protection in this line of work, giving Uber drivers no avenue to advocate for themselves.

And perhaps more alarmingly, Uber is making strides, at least in New York City, to replace the cab-driving industry, which has a strong union presence. While many taxi drivers in New York still struggle to earn a living wage, their union power gives them the ability to fight for fare increases, as they did in 2012. If we allow Internet companies with insourcing practices and no accountability to replace long-standing industries with organized worker power, low-wage workers will only suffer.

What can be done? Potential responses to this problem include regulating and mandating fair employment practices for these emerging companies or extending minimum wage protection to abstract “partner” employees. Cities in particular could lead the way in regulating these businesses, which would benefit their citizens by ensuring living wages and compassionate employer practices, and strengthen their economies. Whatever the answer, we must address it now. These companies are growing fast: Uber is believed to be growing at a faster pace than eBay in the '90s, and is now valued at $3.4 billion. We can’t let insourced workers be the modern-day agricultural and domestic workers, who were originally excluded from National Labor Relations Act protections and still fight to this day for many rights guaranteed to other workers. In short, while we debate a living wage on the national stage, we have to consider how to address the emergence of the unprotected, underpaid, exploited insourced workers. 

Lydia Bowers is the Roosevelt Institute | Campus Network's National Operations Strategist.

Photo via ThinkStock.

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Daily Digest - January 30: How Do We Make the Economy Work Again?

Jan 30, 2014Rachel Goldfarb

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Left Jab Radio (Sirius XM)

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Left Jab Radio (Sirius XM)

Jon Aberman and Mark Walsh speak with Roosevelt Institute Senior Fellow and Director of the Bernard L. Schwartz Rediscovering Government Initiative Jeff Madrick about technological innovation that doesn't lead to productivity increases, the jobs emergency, and how to make the U.S. economy more competitive.

Republicans Just Won the Food Stamp War (MoJo)

Erika Eichelberger writes that as the Senate plans to pass the current House version of the Farm Bill, which cuts $9 billion from SNAP, it's clear that the Democrats lost this fight. These cuts will mean that about a million families will receive $90 less per month.

Port Authority Demands Airlines Raise Worker Wages (NY Daily News)

Dan Friedman, Kenneth Lovett, and Rich Schapiro report that following a week-long campaign pushing for higher wages for airport workers, the executive director of the Port Authority has mandated a $9-per-hour wage for workers at LaGuardia and JFK airports.

Outsiders, Not Auto Plant, Battle U.A.W. in Tennessee (NYT)

Steven Greenhouse looks at the opposition to unionization efforts at the Volkswagen plant in Chattanooga, Tennessee. National groups like the Center for Worker Freedom are pouring vast amounts of money into this fight, even though some think Volkswagen is open to the union.

Fed Stays the Course on Stimulus Reduction (WaPo)

Ylan Q. Mui writes that the Federal Reserve will continue to scale back its bond-buying program by about $10 billion in February. She notes that this is despite some concerns about weak job growth, as the December jobs report showed the nation added only 74,000 jobs.

New on Next New Deal

Roosevelt Reacts: What Worked and What Didn't in the 2014 State of the Union

Roosevelt Institute Fellows and Network members respond to the State of the Union: what they liked, what was missing, and how the president should proceed from here.

State of the Union 2014: Obama Offers Action, Not Apologies

Roosevelt Institute Senior Fellow Jeff Madrick praises the president for focusing on the changes that can be made rather than the year's mistakes. He's also glad to see Obama taking Congress to task for making progress impossible due to gridlock.

The State of the Union Then and Now: Raising the Minimum Wage is Still a Good Idea

Roosevelt Institute Senior Fellow and Hyde Park Resident Historian David Woolner notes that the president's call for a higher minimum wage mirrors President Franklin D. Roosevelt's 1938 State of the Union, which used similar arguments to call for the creation of the minimum wage.

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The State of the Union Then and Now: Raising the Minimum Wage is Still a Good Idea

Jan 29, 2014David B. Woolner

Decades after FDR called for a national minimum wage, the debate continues -- and his arguments for it still ring true.

Decades after FDR called for a national minimum wage, the debate continues -- and his arguments for it still ring true.

We have not only seen minimum wage and maximum hour provisions prove their worth economically and socially under government auspices in 1933, 1934 and 1935, but the people of this country, by an overwhelming vote, are in favor of having the Congress—this Congress—put a floor below which industrial wages shall not fall, and a ceiling beyond which the hours of industrial labor shall not rise. – Franklin D. Roosevelt, State of the Union Address, January 3, 1938

In calling for an increase in the minimum wage in his State of the Union address, President Obama may have unwittingly echoed Franklin D. Roosevelt. For it was in the sixth year of FDR’s presidency, in the annual message to Congress that FDR delivered on January 3, 1938, that Roosevelt reiterated his increasingly vehement call for the passage of the Fair Labor Standards Act—the very law that would establish the national minimum wage.

In proposing the legislation, FDR used many of the same arguments that President Obama used to counter the conservative opposition that insisted—much as the conservative right does today—that the federal government has no business trying to increase the purchasing power of the average worker, and that the enactment of a national minimum wage law would hurt business and increase unemployment. Opposition in the largely non-union and racially segregated South—where there was a huge differential between the wages of white and black workers—was especially intense, and thanks to the actions of Southern Democrats in both the House and Senate, who had joined with conservative Republicans in the formation of an anti-New Deal coalition, passage of the Fair Labor Standards Act was not going to be easy.

To counter these arguments, FDR appealed, as he often did, to the moral sensibilities of the American people, insisting that government had “a final responsibility for the well-being of its citizenship” and this included enacting “legislation to end starvation wages and intolerable hours.” Furthermore, there were sound economic reasons to pass wage and hours legislation. In an earlier address on the subject, using language that is especially relevant to President Obama’s call for an increase in overseas exports, FDR observed that:

American industry has searched the outside world to find new markets—but it can create on its very doorstep the biggest and most permanent market it has ever seen… A few more dollars a week in wages, a better distribution of jobs with a shorter working day will almost overnight make millions of our lowest-paid workers actual buyers of billions of dollars of industrial and farm products. That increased volume of sales ought to lessen other cost of production so much that even a considerable increase in labor costs can be absorbed without imposing higher prices on the consumer. I am a firm believer in fully adequate pay for all labor. But right now I am most greatly concerned in increasing the pay of the lowest-paid labor—those who are our most numerous consuming group but who today do not make enough to maintain a decent standard of living or to buy the food, and the clothes and the other articles necessary to keep our factories and farms fully running.

Interestingly, a group of over 600 economists, including seven Nobel laureates, recently issued an open letter calling on President Obama and the congressional leadership in both parties to raise the minimum wage, arguing, as FDR did, that “the weight of evidence” shows that an increase in the minimum wage will “have little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market.”

It seems incredible that we should still be locked in the same debate about the moral and economic impact of an increase in the minimum wage more than three-quarters of a century later, at a time when even the McDonald’s Corporation had to admit after its own internal analysis that its minimum-wage workers could not survive on what they were receiving without the addition of a second job.

In 1938, Franklin Roosevelt argued that if we want to move “resolutely to extend the frontiers of social progress, we must… ever bear in mind that our objective is to improve and not to impair the standard of living of those who are now undernourished, poorly clad and ill-housed.” The Fair Labor Standards Act, which was signed into law on June 25, 1938, has helped improve the lives of millions of American workers—especially those at the bottom rung of the income scale—through its recognition of need to establish a minimum wage and through the provision that provides time and a half for overtime work. But in order for the law to be effective and have meaning, the minimum wage must keep up with the cost of living, and, as President Obama noted in last night’s address, the real wage of the average American worker has been in decline for decades when adjusted for inflation.

If Congress is serious about improving and not impairing the lives of the millions of working poor in this country, then it is high time to heed the president’s call to “give America a raise” and increase the minimum wage. To fail to do so would be yet another example of the callous indifference—most recently exemplified by the failure of Congress to extend long-term unemployment benefits—that those in positions of wealth and power have shown for the plight of the millions of Americans who struggle day by day to get by on wages that force even those working full-time to live a life of poverty. Indeed, the inability or unwillingness of this Congress to act on behalf of the most vulnerable in our society brings to mind the words of the late Pete Seeger, who died this week, when he sang, “which side are you boys, which side are you on?”

David B. Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute. 

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