LTE: The “black hole theory” of the minimum wage

NHLN Editors Note: This is a letter to the editor from Denis Drew a blogger from Chicago who writes about income inequality facing Americans.

Physicists theorize that inside a black hole the laws of physics breakdown. When the minimum wage falls far enough below what the market would bear the laws of supply and demand breakdown.  Doubling today’s federal minimum wage should lead to a disproportionate explosion of demand for the goods of minimum to median wage paying employers.

If we cut today’s minimum to median wages in half that wouldn’t help McDonald’s or Wal-Mart, would it?  This wage cut must already have taken place when we would need to triple today’s minimum wage to catch up with doubled productivity since 1968 (almost quadruple the early 2007 minimum wage — the median wage stagnated as productivity doubled too).

Doubling today’s minimum wage to $15 an hour would add 50% to Wal-Mart’s wages but only 5% to Wal-Mart’s prices – 100% to McDonald’s wages but 33% to McDonald’s prices.  $15 an hour being today’s median wage, half the workforce would get raises percentage multiples of pass through price increases.

This win-win effect could not go on forever. At $30,000 a year consumers would buy a lot more fast food and retail items than they will at $15,000 a year – hugely pent-up demand. Going from a $30,000 year minimum wage to $40,000 would raise prices (3% at Wal-Mart; 11% at McDonald’s) but not add much to demand – though some people would have more money to spend — a wash? Somewhere in between is the edge of the black hole.

Denis Drew

Stand Up Live Better! Wal-Mart Workers Speak Out For Respect

Through out the labor community Wal-Mart is well known as one of the worst employers in the country.  They treat their employees like dirt, they pay them even less, and do even ask for healthcare.  Well now they are standing up to live better.

Together with the help of Organization United for Respect at Wal-Mart (OUR), workers are starting to make their voice known.  As some in the labor movement have said, one voice can be heard, but 10,000 voices cannot be ignored.  Organization United for Respect at Wal-Mart  recently delivered a ‘Declaration of Respect‘ to the home office (Video) in Arkansas which included:

  • Listen to us, the Associates
  • Have respect for the individual
  • Recognize freedom of association and freedom of speech
  • Fix the Open Door policy
  • Pay a minimum of $13/hour and make full-time jobs available for Associates who want them
  • Create dependable, predictable work schedules
  • Provide affordable healthcare
  • Provide every Associate with a policy manual, ensure equal enforcement of policy and no discrimination, and give every Associate equal opportunity to succeed and advance in his or her career
  • Provide wages and benefits that ensure that no Associate has to rely on government assistance.

These are not outrageous claims. These workers want to be treated with the respect and dignity that every worker deserves.  They want to be paid a living wage not minimum wage.  They want to be able afford to eat and pay their rent. They want they option to get affordable healthcare.

This declaration is only the beginning.  Wal-Mart associates in Richmond Virginia staged a ‘sit in’ prior to walking off the job. “We will not be silenced by Walmart for standing up for respect and against harassment, intimidation and retaliation,” said Mario Hammod, a worker at the Richmond Walmart.

This comes just weeks after Walmart workers walked off the job in more than a dozen states. At the same time, workers went on strike at Walmart’s largest distribution center outside of Chicago, IL and were joined by hundreds of clergy and community supporters, some of who were arrested by riot police during the peaceful protest. And earlier this fall, workers in Walmart-controlled warehouses in Southern California went on a 15-day strike that included a six-day, 50-mile pilgrimage for safe jobs.

 

 

Now that you have seen their story you can help take part in their action.  They are planning a nation wide strike of Wal-Mart workers on Black Friday. Yes the largest shopping day of the year, BLACK FRIDAY.

We need your help to spread the word.  Share this post with your friends, your family, your kids teachers, and coaches.  Make them understand what Wal-Mart is doing to their associates.  Then stand in solidarity with Wal-Mart Workers by boycotting Wal-Mart on Black Friday.  Let them know you and all your friends won’t shop at a place that does not respect their associates.

Proof That Raising The Minimum Wage Would Not Put Mom and Pop Stores Out Of Business

Many people have been talking about raising the minimum wage.  Even the NHLN posted a message called ‘In 1968 Minimum Wage Should Have Been $10 per hour, Why Is It Only $7.25 Now?“.  After that post many people commented that it would hurt businesses who are currently paying their employees minimum wage.  Now there is evidence that refutes that.

A study done by the National Employment Law Project (NELP) explained how minimum wage changes would not really hurt the companies who are paying minimum wage. They found:

  • The majority (66 percent) of low‐wage workers are not employed by small businesses, but rather by large corporations with over 100 employees;
  • The 50 largest employers of low‐wage workers have largely recovered from the recession and most are in strong financial positions:  92 percent were profitable last year; 78 percent have been profitable for the last three years; 75 percent have higher revenues now than before the recession; 73 percent have higher cash holdings; and 63 percent have higher operating margins (a measure of profitability).
  • Top executive compensation averaged $9.4 million last year at these firms, and they have returned $174.8 billion to shareholders in dividends or share buybacks over the past five years.

The changes in minimum wage laws would mostly effect large corporations.  Over 50% of people employed in minimum wage jobs working in one of these five areas:

  1. Food Services
  2. Accommodations (hotel industry)
  3. Retail Trade
  4. Arts, Entertainment, and Recreation
  5. Administrative Services

The top three worst employers are McDonalds, Yum Foods (Taco Bell, KFC, and Pizza Hut) and Walmart.  According to the study:

Each of these corporations was profitable during all of the last three fiscal years, and each of them now earns profits that are substantially higher than their pre‐recession levels.  Figure 3 shows the profit growth of these top low‐wage employers over the last four fiscal years.

 

That is not the worst of it. “Of the 50 largest employers of low-wage workers, more than 90 percent were profitable last year, and three-quarters of them are enjoying greater revenues than they did before the recession.”  Most of these large corporations have rebounded from the recession and are making very health profits yet the workers are still being oppressed.

So to all of those people who believe that private industry cannot support a higher minimum wage this report clearly shows that “the nation’s top low‐wage employers can readily afford to pay for a higher minimum wage for their lowest‐paid employees“.

NH Labor News 7/7/12: Voter ID To Pass with Signature, Is Minimum Wage Fair, Wal-Mart (the Evil Empire) and more


Gov. Lynch allows voter ID law to pass without his signature – NashuaTelegraph.com: “In a statement, Lynch said that under this new law, there are still flaws with the voter ID process.
Student ID cards will not be accepted at the polls for all elections after September 2013.
“While this bill fixes one problem with SB 289, the underlying problems with the photo ID requirements commencing in September 2013 remain,” Lynch wrote in his statement. “It is my hope that the next legislature will make it a priority to restore appropriate photo ID criteria to the law.””

More On VOTER ID Laws in PA;
Up to 750,000 could lose chance to vote without ID in Pennsylvania – Nation – The Boston Globe: “More than 750,000 Pennsylvanians may be denied a chance to vote in November unless they can come up with an acceptable form of identification, a tally released by the state suggests.

In a move lawmakers said would deter fraud at the polls, the Republican-led Legislature passed a law in March requiring voters to have a photo ID to obtain a ballot. A comparison of registration lists and state Transportation Department records showed 758,939 people don’t have either a driver’s license or an alternative state ID, the secretary of the commonwealth said.”


Is a Minimum Wage a Fair Wage?: “Sadly for the people of New Hampshire, the minimum hourly rate of pay is the lowest in all of New England. The per hour rate in New Hampshire is $7.25, which is the National minimum wage.

Want to earn more per hour? Just look to Vermont, where the rate is $8.46 or Connecticut where it is $8.25. Massachusetts’ minimum wage is $8.00, while in Maine it is only $7.50 – just twenty-five cents higher than New Hampshire’s rate.”


Is Wal-Mart Destroying America? 20 Facts About Wal-Mart That Will Absolutely Shock You | Yolohub: “#9 Wal-Mart is the largest employer in 25 different U.S. states.

#10 According to the Economic Policy Institute, trade between Wal-Mart and China resulted in the loss of 133,000 manufacturing jobs in the United States between 2001 and 2006.

#11 The CEO of Wal-Mart makes more in a single hour than a full-time Wal-Mart associate makes in an entire year.

#12 Tens of thousands of Wal-Mart employees and their children are enrolled in Medicaid and are dependent on the government for healthcare.”


Your Turn: Are Labor Unions Still Relevant? | Take Action, What Matters Today | BillMoyers.com: ““The percentage of union members in the American workforce has declined in the last 60 years from 35 to 12 percent, and labor has faced a pounding series of setbacks of which the Supreme Court’s Knox decision is just the latest. And yet, with corporations continuing to put the squeeze on employees, with joblessness and inequality rampant, now would seem  the perfect time for people to turn back to unions to fight for them against the monied interests. Why haven’t they?”

New Hampshire Labor News for Sunday 10/23/11: NH Embarrassing Legislators, Occupy NH,


Embarrassing legislators – what else is new?: “Shades of Martin Harty! Another New Hampshire politician makes the national news – and not for a particularly salutary reason. This is getting to be tiresome.

Connoisseurs of legislative foolishness surely remember Harty, a 91-year-old freshman legislator in the class of ’10. He distinguished himself when he suggested to a caller that the state’s mentally disabled – “defective people” – should be rounded up and shipped to Siberia.

This did not play well in the state or nation, and in short order Rep. Harty became plain citizen Harty from Barrington.”


This is only one quote from the long weekly summary of New Hampshire politics from the Nashua Telegraph.

Congressional candidate fined for late report: “The mortar started firing at week’s end toward Lynch’s latest education finance amendment.
National Education Association-New Hampshire President Rhonda Wesolowski said the current GOP-led Legislature can’t be trusted to be given all the reins over future education finance decisions.
“The current New Hampshire Legislature has demonstrated what we fear future legislatures would do given the provisions of this amendment: namely, shift the costs rightly borne by the state onto local towns and school districts,’’ she said in a statement.
“When this happens, children and taxpayers suffer.”


This is the Union Leaders summary of NH Politics

College board gets schooled in politics: “A busy week is shaping up in the House. Committee votes are planned on the repeal of the gay marriage law, a new voter photo-ID bill and a plan to expand gambling to allow two major casinos.

There’s also a bill saying that restaurant workers can be required to put their tips into a pool that is shared with other service workers.

Former Rep. Rip Holden, who works in the restaurant industry, is fighting the bill, SB 49.

“Somebody works hard to serve customers, and someone else decides what they earn,’’ Holden said. “Even the Soviets realized that didn’t work.”


From the union leader
Thomas Roy

Occupy NH returns to Veterans Memorial Park in Manchester | New Hampshire NEWS06: “For the second consecutive weekend, people gathered at Veterans Memorial Park as part of Occupy New Hampshire, the local version of a movement that started on Wall Street a month ago.

Some participants left the park to briefly picket outside Republican presidential candidate Mitt Romney’s headquarters several blocks away. The group stood outside holding signs while Romney thanked his campaign workers inside.

Shannon Thompson of Canterbury led the group in chanting “Thank you, Mr. Romney” and said the presidential candidate was welcome to “come down to park and participate in true democracy.”


Here is a short video from the OccupyNH.org website as they are gathering in Veterans Park and marched to Mitt Romney’s Campaign Stop.



Wal-Mart slashes health care coverages for over one million workers. Editorial by NH Labor News
http://nhlnn.blogspot.com/2011/10/wal-mart-puts-more-pressure-on.html

Wal-Mart Puts More Pressure on Struggling Workers!

By Matt Murray
for the NH Labor News
10/23/11


Photo from NYT Article

Here in Red Sox Nation we refer to the New York Yankee’s as the Evil Empire.  In the world of Labor, Wal-Mart is our Evil Empire.  It was announced on 10/22, that Wal-Mart, the nations largest employer would be making significant changes to their employee health care program.  While the changes have not been fully released the New York Times has reported on some of these changes.

The first of the three major changes is that Wal-Mart will no longer allow part time employees (emps. who work less than 24 hours per week) a health care option.

The second is that if you work between 24 and 33 hours per week would qualify for health insurance coverage.  The change is that now only employee’s and their children would be covered.  Spouses are no longer covered.

The third change is to the full time employees.  They will still qualify for health insurance, however they will be paying more per week and have significantly higher deductibles. Some of the deductibles are near $5000 per year.

In Wal-Mart’s 2012 health offerings, premiums will increase for some plans by more than 40 percent, although many of their workers pay relatively low premiums in comparison to more generous plans offered by other employers. But many Wal-Mart employees complain that their low premiums are accompanied by high deductibles that sometimes exceed 20 percent of their annual pay. (NYT)

Why is this happening? Well we all know health care costs have risen, and Wal-Mart is no exception.  Is Wal-Mart in finical trouble?  Well the fact is that Wal-Mart is the number one of the Fortune 500 companies. Last year alone they made 14.3 Billion dollars in profits.  That is operating costs for the employment of 2.1 million workers nationwide. In times of economic depression, like we are in now, people are racing into Wal-Mart stores to save ten cents on a box of pasta.  They are trying to save pennies where they can, and every penny counts right now.

So what can the Wal-Mart employee’s do about these changes?  Right now, nothing.  In my opinion the workers really only have one option, UNIONIZE!  A few years back there was a bill in the US Congress that would make it easier for workers to unionize.  It was called the Employee Free Choice Act (EFCA).  While it was supported by workers and labor unions, corporations like Wal-Mart feared it.  Wal-Mart knew that if workers unionized it would cut into their profit margins, and they would have less “flexibility” to institute changes like these on Wal-Marts employee’s.  So after months of fighting EFCA seemed to disappear after the 2010 elections.  Now with an anti-union Tea Party in Congress we are not likely to see anything like EFCA again anytime soon.

So why should the workers unionize Wal-Mart?  Unions have always fought for workers over profits. Without the protection unions provide we are likely to see more changes as Wal-Mart paves the way for Corporate America steamrolls its workers.  Combined with low pay and no benefits some Wal-Mart employee’s are force to get programs like Medicare and Medicaid to get any health coverage.  The same people in Congress who are making it hard to unionize are now also trying to take away their Medicare too.  This will cause great social problems.  Workers without health coverage are one hospital trip away from bankruptcy. So they will avoid going to the doctor knowing they can not pay for it.

Unions have always fought to ensure that every worker gets a decent pay and health coverage.  Before the Unions fought for it health care options were not even offered.  In 1997, the Teamsters went on strike agains UPS because UPS would not cover part time employee’s health care.  Now all workers at UPS receive the company funded health benefits.  With such friendly corporations like Wal-Mart it is no wonder that workers are protesting Wall Street.  We need corporations like Wal-Mart to care more about their workers and less about their stock prices!