Walmart

Chris Powell: What is a 'living wage' amidst social disintegration?

MANCHESTER, Conn.

For more evidence that Connecticut's economy has passed the tipping point and is locked into reverse, consider the legislation recently reported favorably by two General Assembly committees to penalize large employers $1 for every hour worked by every employee who isn't paid at least $15 per hour.

As with recent proposals to raise minimum wages throughout the country, the premise of this legislation is that every full-time job should pay a “living wage,” a wage large enough to support a family -- that people should not be paid more or less in relation to the value produced by their labor, the method traditionally used in a market economy, but paid according to their need, as determined by government.

But the legislation doesn't define necessary terms. How big a family exactly and at what stage of life? Exactly what living conditions -- what sort of dwelling, cars, amenities? And who is to decide these variables to make a master assessment of need? What state government agency is equipped for that, or will one have to be created some place between the Office of Early Childhood and the Permanent Commission on the Status of Women?

Advocates of the legislation claim that big companies that don't pay their employees at least $15 per hour are being subsidized by the various income supports and welfare stipends given by the government to the working poor. The advocates say the dollar-per-hour tax on such companies will recover some of government's expense.

But the level of welfare benefits is a matter of the discretion of government itself, not employers. That government now considers even cellphone service to be a necessity and has begun providing it as a welfare benefit suggests that such benefits are highly arguable. That people merely want rather than need cellphones hardly establishes that a large employer is bad or underpaying them.

Further, there does not seem to be any mechanism in the legislation to prevent companies from recovering the new tax by reducing wages, transferring the tax from companies to their employees and actually worsening the circumstances of the working poor. But then the legislation may be meant mainly to improve the financial circumstances of state government itself so that it may blithely continue to pay salary and benefit increases to its own employees and those of local government even as the state budget deficit grows.

Judging from the examples cited by the wage legislation's advocates, the essential problem here seems to be that tens of thousands of unmarried, uneducated and largely unskilled women with several children, often by different fathers who are not contributing to the support of their offspring, cannot survive in Connecticut without government subsidies in the only sort of work available to them, low-skilled jobs in food service and other retailing.

The governor and legislators refuse to note this social disintegration and its facilitation by welfare policy. They also refuse to note that, because of the state's comprehensive policy of social promotion in education, two-thirds of Connecticut's high school seniors and public college freshmen have not mastered high school math and half have not mastered high school English but have been given high school diplomas anyway and sent into the workforce grossly unprepared for anything but similar low-skilled employment.

So instead state government will blame McDonald's and Walmart.

Connecticut's policies lately have given it the reputation as the most pro-labor and anti-business state even as the state's economic and population declines have continued into a third decade. Connecticut now excels at giving things away but it is hard to find any business willing to locate or expand here to produce something without a direct cash subsidy from state government.

Of course correlation is not causation but a little curiosity might be in order, if only as an academic exercise for warning other states about what not to do.

Chris Powell is managing editor of the Journal Inquirer, in Manchester, Conn.

Llewellyn King: The individual as microbusiness

 

The genius of Uber is dumbfounding. I’m not talking about what it pays its drivers (not enough), whether it’s putting taxis out of business (it is). I’m talking about the sheer brilliance of unleashing the value stored in the family car. Likewise, Airbnb which isn’t denting the hotels, but is causing tax collectors to go apoplectic.

These Internet companies are unleashing the value that families have had hidden in their driveways and spare bedrooms.What’s next? Your guess is as good as mine. If your guess is right, there are folk over at Google who’d like to talk to you.

Airbnb (which connects people looking for accommodation with those offering it in their homes) may be a tad more exciting than Uber (which puts private car owners in the transportation business) because it is catering to a specific traveler market. Hotels have become so unpredictable in their opportunistic pricing that private travelers are happy to leave them to business travelers who are less price-sensitive.

Then there’s GrubHub, which offers free online ordering from thousands of delivery and takeout restaurants. It may well be the next big thing in the market.

These are three examples of how the Internet, which giveth and taketh away, is reordering the economy. They’re beacons for how the economy might replace the jobs that are being lost to computers. They also offer extra income or full employment for people who don’t have marketable educations: driving a car and keeping a pretty home don’t require college degrees in science.

The nature of work is changing, and one of the consequences is that more of us are becoming self-employed: private contractors.

The Internet enables a large number of artisan skills to be marketed. I’ve just found an online advertisement for a dressmaker. Long before Walmart and “Project Runway,” dressmakers abounded. Women would ask their neighborhood dressmaker to “run up something” for a special occasion or whatever. Mass retailing, plus the difficulty of marketing beyond word-of-mouth, pretty well ended that, but it may come back. Now you may live in Atlanta, but you can order a bridal gown from an Etsy dressmaker in Seattle.

The Red Truck Bakery & Market, housed in an old gas station in Warrenton, Va., sends its Meyer Lemon and other goodies across the country. Artisanal baking meets the Internet.

Years ago, a friend of mine developed a knit teddy bear. It was a beautiful thing; tactile, safe for small children. I don’t recall whether my friend had gotten around to naming her stuffed bruin, but he was a darling -- although I don’t know why stuffed bears have to be male.

Anyway the said unnamed, unsexed, stuffed bear didn’t make it into many young arms because of marketing. The big retailers didn’t want it. Things are very competitive in Bear Land, and Paddington Bear and company don’t want other teddy bears crashing their picnic on the store shelves.

That was more than 30 years ago. Today, Bear X could be sold on the Internet. Now I’d wager the big chain retailers would come begging -- offering the little thing a whole shelf for itself.

The miracle of today is that it could happen differently. The concomitant fact is that we’re going to need more cottage industry and more self-employed contractors because the jobs of yesterday are disappearing, and the companies are less and less inclined to hire permanent staff.

Years ago, the jewelry business moved offshore; now it’s moved to American homes. It’s possible for a creative person to make jewelry at home and sell it online.

A new age of self-employment is at hand. Recently, I’ve worked with two inspiring millennials. One is a gifted and filmmaker, and the other a computer wizard. Both are making a living, and neither has given any serious thought to getting a job in the conventional way.

It’s not the age of small business, but microbusiness: the individual with something to sell, whether it's artisanal furniture or a skill. The millennials seem to know this instinctively, the rest of us are learning it.

Want to hire a veteran journalist who works from home? Call me.

Llewellyn King (lking@kingpublishing.com) is executive producer and host of "White House Chronicle" on PBS.  He is a long-time  entrepreneur, publisher, editor, writer and international business consultant.

 

 

Marjorie E. Wood: Port strike mirrors organized labor's early days

Port truckers in California walked off the job in November to protest their dismal working conditions. Required to lease trucks while paying insurance and maintenance costs, drivers often earn less than minimum wage.The strike came just days after big box retailers, manufacturers, and other supply chain stakeholders sent President Obama a letter warning that labor disputes could cause “a full shutdown of every West coast port.”Spearheaded by the National Retail Federation — whose members include large corporate retailers  such as WalMart — the letter stated that a shutdown would be “catastrophic,” costing the economy up to $2 billion a day. Over a hundred business associations who signed the letter requested “immediate action” by the federal government to prevent such losses. Though a shutdown did not happen, tensions remain as port truckers, dockworkers, and other workers step up their demands to be treated fairly during the peak holiday season.

This isn’t the first time in our nation’s history that a transportation strike has made big business anxious. In 1877, when thousands of railroad workers went on strike in a dozen American cities, businessmen pleaded with then-President Rutherford B. Hayes to intervene.

Businessmen had reason to worry. At the height of the 1877 strikes, more than half the freight on the nation’s railways stopped running.

Circumstances leading to the railroad strikes were not unlike our own today. Unregulated economic growth after the Civil War concentrated wealth in a few hands. Labor conditions deteriorated as big business sought ever greater profits. The first Gilded Age was born.

Then, as now, transportation workers held the strongest hand in demanding higher wages and better conditions. Unlike other workers, they could disrupt business as usual everywhere.

The railroad strikes showed how powerful workers could be when they united. Workers across all industries responded in solidarity when business and government tried to put down the railroad strikes.

After 1877, labor unions grew and more strikes ensued. Ultimately, this led to passage of the Fair Labor Standards Act, the bedrock of modern employment rights.

Over a hundred years later, port truck drivers are denied the very same employment rights that workers in the first Gilded Age fought so hard to achieve. In the last year, port truckers have gone on multiple strikes protesting their misclassified status as “independent contractors.” Nearly 70 percent of port truckers are denied protections and benefits due to misclassification, according to the National Employment Law Project

Port trucking was a secure, middle-class occupation until Congress first deregulated the trucking industry in 1980. Now, most port truckers lack basic labor rights, such as workers’ compensation, overtime pay, and even a guaranteed minimum wage.

Port truckers aren’t the only workers in this boat. They’re also an essential link in a supply chain that ends with low-wage retail workers at Walmart. If port truckers wage a protracted strike, it could reverberate throughout the entire national economy.

While their plight hasn’t commanded the widespread attention that the 19th century rail strikes did back then, port workers just might be the key to restoring basic labor rights for all Americans.

Marjorie E. Wood, a columnist for OtherWords.org, where this piece originated, is a senior economic-policy associate at the Institute for Policy Studies (IPS-dc.org) and the managing editor of Inequality.org.

 

Chris Powell: Low prices vs . high pay

 

By CHRIS POWELL

MANCHESTER, Conn.
Money manager, cable television commentator and former Connecticut U.S. Senate 
candidate Peter Schiff undertook a cute stunt the other day to counter the 
clamor for a higher minimum wage and the clamor against big, bad Walmart. 

With a video camera recording him, Schiff walked around the parking lot of a 
Walmart store purporting to represent a group he called “15 for 15” that seeks 
to persuade Walmart to put a 15 percent surcharge on its prices to pay for 
raising the minimum wage of its employees to $15 per hour. Instead of "Low 
Prices Every Day," Schiff said, Walmart could change its motto to "High Wages 
Every Day." 

But as he surely anticipated, Schiff found no shoppers interested in paying 
higher prices to underwrite higher wages for Walmart employees. The shoppers who 
talked with Schiff said they felt pressed financially themselves. 

That is, Walmart isn't Neiman Marcus or even Sears. Rather, Walmart is where 
people shop to save money, and Walmart stores are busiest in the hours after 
welfare and Food Stamp debit cards get recharged by government agencies. 

If many Walmart employees aren't earning much, many Walmart shoppers aren't 
earning much more, and many aren't making anything at all beyond what they get 
in government stipends. 

If Walmart is too profitable for some tastes, it's still subject to the same 
labor and tax rules covering all other companies, and of course nobody has to 
shop there. Indeed, complaints about the supposed greed of corporations, their 
cutting labor costs and moving from high- to low-tax jurisdictions, are only 
reflections of human nature and individual interest. 

Shoppers want low prices just as stock investors want high prices, and while 
most people are ready to tell others what to do with their money, they are not 
so ready to be told themselves. 

* * * 

Now the thought police are prosecuting thought crime in America. Because he 
remarked in a magazine interview that he considers homosexuality sinful and "not 
logical," the A&E television network has suspended an actor in the program "Duck 
Dynasty." 

So are people really once again to be disqualified from employment on account of 
their mere opinions and politics, as they were during the Red Scares of the 
1920s and 1950s? 

Homosexuals long were a persecuted minority, but now that society is becoming 
more libertarian, what entitles those who are gaining dominance in opinion to 
persecute those who disagree? 

Must the price of political incorrectness include even denial of a chance to 
work and make a living? Do the opinions of actors really matter that much? 

It's not as if this particular actor is oppressing anyone or advocating 
oppression. All he did was express his opinion -- an opinion shared more or less 
by the recent bishops of Rome, whom no one proposed to fire or suspend though 
many disagreed with them. 

Power corrupts and the political left has become just as totalitarian as the 
political right used to be. 

* * * 

But big media always get a pass from the political left. The other day 
Connecticut U.S. Sen. Richard Blumenthal, a Democrat, was trivializing his 
office again for a little publicity, stuck in his habit from 20 years as state 
attorney general, urging the manufacturers of the Red Bull and Rockstar 
caffeine-loaded beverages to remove their product emblems from children's toys. 

Meanwhile mass shootings by the deranged, like the one a year ago in Newtown, 
are proliferating, likely inspired in part by the prurient gunplay pervading 
television, movies, and video games. But political criticism of that stuff has 
faded to almost nothing. 

Instead, Republicans are defending the constitutional right of any psychopath to 
own military weapons, and Democrats are getting too much campaign money from 
Hollywood to notice its poisoning of the culture. No, what worries Blumenthal is 
the caffeine industry. 

Chris Powell is managing editor of the Journal Inquirer in Manchester, Conn.

Of class and charity

   

By ROBERT WHITCOMB

Philanthropic contributions by very rich people get a lot of attention. An example around here is Thomas Ryan, a former head of CVS who recently gave $15 million to the University of Rhode Island for a brain-science center to be named after his parents.

Besides the satisfactions of giving per se and the plaudits of the general public, gifts are sometimes meant to show other rich people how successful the givers are. This explains why so much new money rushes into already very rich “nonprofit” institutions, such as Ivy League colleges and big art museums. Wouldn’t giving a pile to, say, a community college serving poor people do more for society than adding yet more to Harvard’s $31 billion endowment?

And this is not the age of the anonymous contribution. Of course, nonprofits, besides appealing to altruism and ego, know that publicizing the names of the donors may encourage an arms race of giving by other rich people.

Anyway, URI alumnus Ryan commendably gave to a local and grossly underfunded public institution. A few years back, the arena at URI was named after him as a result of gifts by him and CVS. In his last 14 months as CEO, he made $124 million, reported Dow Jones. Of course, if the very rich paid a tad more in taxes, then public institutions could more often build such public facilities out of public money and not always be selling “naming opportunities.”

Large public companies’ senior execs have rarely been romantic altruists. But there’s no doubt that they have adjusted their missions, and sense of civic duty, in the past 30 or so years via tax and other legal changes engineered by their lobbyists.

Most of these companies used to consider themselves as having a fairly wide range of stakeholders — not just senior executives and other big shareholders but nonexecutive employees and the communities within which the companies operated. The idea was that the long-term success of the companies would depend on addressing the welfare of all constituencies.

Now the aim above all is to maximize and speed compensation for senior execs, on which, because of lobbyists’ success in creating tax dodges, many pay remarkably little tax, considering their wealth. Investment gains via stock options, etc., are much tax-favored over wages. (The quickest way to maximize their personal profits is to lay off and/or cut the compensation of lower-level employees.) This explains in part, along with globalization, computerization, automation and the loss of local ownership in many places — laying off your neighbors is tough — explains some of the woes of the middle class the past 30 years or so.

Then there’s American feudalism. The Walton family has a fortune of about $100 billion. They have so much money, in part, because their company pays their employees so little. Some Walmart stores have food drives for impoverished Walmart employees.

The holders of current and future dynastic wealth arrange through tricky trusts (including the creative use of charities) and other perfectly legal mechanisms to pay remarkably little or no estate or gift taxes and thus help ensure the self-perpetuation of power and wealth for their heirs. Readers should read about the wonders of “donor-advised funds” for charities — also a cash cow for financial firms because of the fees — and “charitable lead annuity trusts,” used to boost dynastic wealth by avoiding taxes.

The usual structure for these things is the "foundation,'' which can sometimes be more of  creature for perpetuating private dynastic wealth and power than a device for good works.

Some more reasons that the government is broke.

Among other benefits, this dynastic wealth gives favored families access to the fanciest schools with the best-connected faculty and students, which, in turn, reinforces the vast advantage that the lucky heirs already have. Thus there’s less social mobility in America than in most of its developed world competitors.

The public might want to at least consider whether society would be better off if the very rich shared a tad more of their wealth further upstream rather than through the charities they create to do good works, glorify their names and/or avoid paying taxes that pay for public services such as URI.

***

A good thing about this sometimes gray, sometimes golden time of the year is that you don’t have to weed for a while and it cleans out the mosquitoes. No wonder farmers tend to like November and December. They get a rest. Too bad the holidays have to ruin it.

***

Everyone understandably bemoans Rhode Island’s jobless rate of 9.2 percent. But bear in mind that the state’s tininess and industrial history skew those numbers. If you spun off eastern Connecticut, parts of Berkshire County, Mass., or upstate New York into separate states, they’d have similar rates. Still, Rhode Island should have done a lot more to capitalize on its location, ports and fabulous design community.

Robert Whitcomb (rwhitcomb4@cox.net; rwhitcomb51@gmail.com; newenglanddiary.com) is a former editor of The Providence Journal's Commentary pages, where this column started, and a Providence-based editor and writer.