Politico: "The Pitchforks are Coming for Us Plutocrats"

[PhDeac]

The thing about us businesspeople is that we love our customers rich and our employees poor. So for as long as there has been capitalism, capitalists have said the same thing about any effort to raise wages. We’ve had 75 years of complaints from big business—when the minimum wage was instituted, when women had to be paid equitable amounts, when child labor laws were created. Every time the capitalists said exactly the same thing in the same way: We’re all going to go bankrupt. I’ll have to close. I’ll have to lay everyone off. It hasn’t happened. In fact, the data show that when workers are better treated, business gets better. The naysayers are just wrong.
Most of you probably think that the $15 minimum wage in Seattle is an insane departure from rational policy that puts our economy at great risk. But in Seattle, our current minimum wage of $9.32 is already nearly 30 percent higher than the federal minimum wage. And has it ruined our economy yet? Well, trickle-downers, look at the data here: The two cities in the nation with the highest rate of job growth by small businesses are San Francisco and Seattle. Guess which cities have the highest minimum wage? San Francisco and Seattle. The fastest-growing big city in America? Seattle. Fifteen dollars isn’t a risky untried policy for us. It’s doubling down on the strategy that’s already allowing our city to kick your city’s ass.


Read more: http://www.politico.com/magazine/st...us-plutocrats-108014_Page2.html#ixzz3686aoyEc

 

[2&2 Slider To Leyritz]

The thing about us businesspeople is that we love our customers rich and our employees poor. So for as long as there has been capitalism, capitalists have said the same thing about any effort to raise wages. We’ve had 75 years of complaints from big business—when the minimum wage was instituted, when women had to be paid equitable amounts, when child labor laws were created. Every time the capitalists said exactly the same thing in the same way: We’re all going to go bankrupt. I’ll have to close. I’ll have to lay everyone off. It hasn’t happened. In fact, the data show that when workers are better treated, business gets better. The naysayers are just wrong.Most of you probably think that the $15 minimum wage in Seattle is an insane departure from rational policy that puts our economy at great risk. But in Seattle, our current minimum wage of $9.32 is already nearly 30 percent higher than the federal minimum wage. And has it ruined our economy yet? Well, trickle-downers, look at the data here: The two cities in the nation with the highest rate of job growth by small businesses are San Francisco and Seattle. Guess which cities have the highest minimum wage? San Francisco and Seattle. The fastest-growing big city in America? Seattle. Fifteen dollars isn’t a risky untried policy for us. It’s doubling down on the strategy that’s already allowing our city to kick your city’s ass.


Read more: http://www.politico.com/magazine/st...us-plutocrats-108014_Page2.html#ixzz3686aoyEc

Uhh, except that is completely wrong as to certain enormous industries. Yeah, fucking Starbucks can do that because you can't outsource necessary local service labor. But in bulk manufacturing industries where a specific location is not necessary (textiles, auto manufacturing, etc.), competitors undercutting our labor rates completely destroyed the domestic industries. Ask Detroit how well raising labor rates (whether through laws or just dumb corporate decisions) worked.

 

[myDeaconmyhand]

That's a vast oversimplification about the Detroit economy and mostly unrelated to the minimum wage. IMO if bulk unskilled manufacturing is depressing nationwide wages in our country than it probably doesnt belong in our economy anymore.

 

[beatrix]

Read more: http://www.politico.com/magazine/st...us-plutocrats-108014_Page2.html#ixzz3686aoyEc

Interesting commentary - thanks for posting. I like the part where he says a) capitalism rocks and b) we can lever this to put a bullet in the head of big government.

 

[2&2 Slider To Leyritz]

That's a vast oversimplification about the Detroit economy and mostly unrelated to the minimum wage. IMO if bulk unskilled manufacturing is depressing nationwide wages in our country than it probably doesnt belong in our economy anymore.

Maybe in a vacuum, but do you take that position even if there are no other jobs to take its place? It goes back to the question of whether an underpaid job is better than no job. Illegal immigrants usually know from experience that the correct answer is yes. Those on the government dole usually know from experience that the correct answer is no.

 

[myDeaconmyhand]

1. Go fuck yourself.
2. Yes, I still take that position. We shouldn't suppress the wage rate in the U.S. below a fair living wage in order to save inefficient and outdated manufacturing industry in the U.S. Those jobs belong in other countries where the cost of living is lower.

 

[2&2 Slider To Leyritz]

How is it "suppresing the wage rate" if that lowered wage is what the market requires for a company to stay in business? That isn't suppressing the wage rate, that is the correct wage rate.
And so I take it that you're cool with constant large unemployment numbers? Or have you just decided to say fuck it and hang up the hammer and sickle flag next to BKF?

 

[WakeandBake]

How is it "suppresing the wage rate" if that lowered wage is what the market requires for a company to stay in business? That isn't suppressing the wage rate, that is the correct wage rate.
And so I take it that you're cool with constant large unemployment numbers? Or have you just decided to say fuck it and hang up the hammer and sickle flag next to BKF?

Stay in business or produce ever-increasing profits?

 

[myDeaconmyhand]

How is it "suppresing the wage rate" if that lowered wage is what the market requires for a company to stay in business? That isn't suppressing the wage rate, that is the correct wage rate.
And so I take it that you're cool with constant large unemployment numbers? Or have you just decided to say fuck it and hang up the hammer and sickle flag next to BKF?

This isn't a laissez faire economy, if a company can't afford labor costs than it must adapt or go out of business. Industry will collude to suppress wages and the government must prevent it.The cost of living isnt going down, or even flatlining. Your black & white, sensationalist government vs industry stance is weak, as your tenious Detroit example shows. Detroits economic downfall included a shortsighted monolithic labor union, the maturation of the Asian auto industry, and an entire city state completely dependent upon world dominance in a single industry.

 

[myDeaconmyhand]

If supporting a baseline living wage that's tied to inflation makes me a communist, then im a fucking communist - no doubt.

 

[Deadbolt]

How many of those manufacturing jobs were minimum wage jobs? Not many, I wouldn't think.

 

[2&2 Slider To Leyritz]

Stay in business or produce ever-increasing profits?

In the industries I was mentioning (textiles and auto), one generally went out of business and the other needed Obama to circumvent the normal bankruptcy laws to save it, so it was defintiely stay in business.

 

[2&2 Slider To Leyritz]

How many of those manufacturing jobs were minimum wage jobs? Not many, I wouldn't think.

I think a good amount of the mill jobs were, but for sake of discussion it is the same stratification argument. As the minimum wage increases, that bumps into the other lower wage tier, which generally have to be increased accordingly.

 

[RJKarl]

How is it "suppresing the wage rate" if that lowered wage is what the market requires for a company to stay in business? That isn't suppressing the wage rate, that is the correct wage rate.
And so I take it that you're cool with constant large unemployment numbers? Or have you just decided to say fuck it and hang up the hammer and sickle flag next to BKF?

Hey, let's pay people double what they get in Bangladesh and Cambodia. That would be being nice to them. While we're at let's get rid of overtime, OSHA and child labor laws.

 

[2&2 Slider To Leyritz]

This isn't a laissez faire economy, if a company can't afford labor costs than it must adapt or go out of business. Industry will collude to suppress wages and the government must prevent it.The cost of living isnt going down, or even flatlining. Your black & white, sensationalist government vs industry stance is weak, as your tenious Detroit example shows. Detroits economic downfall included a shortsighted monolithic labor union (that argued the same points you are making), the maturation of the Asian auto industry (which was able to operate without the dead weight of Detroit's labor mistakes), and an entire city state completely dependent upon world dominance in a single industry (why wouldn't they, as they were capitalizing off of the dumbass decisions).

Your position is fine, so long as you are comfortable with the unemployment and lack of security that results. If we shift to a complete service economy, which is the direction we are decidely headed, then we are at the complete economic mercy of the developing nations. Our manufacturing was undercut over the span of a few decades; it won't be long before all of our services that can be handled remotely start to be undercut as well (you already start to see it in the tech sectors).

 

[RJKarl]

The only way to stem that is to pay people less in the US than in developing nations. After all buildings, utilities, safety and other costs of doings are higher in the US. Rather paying $60-100/month they pay in Bangladesh, let's pay our people $50/month and tell them to be happy they have a job.

Or better yet let's go back to slavery, indentured servitude and company towns. We could have companies build shanty towns and company stores that create debt for the workers that they have to pay off by working for free.

 

[Deacon923]

Your position is fine, so long as you are comfortable with the unemployment and lack of security that results. If we shift to a complete service economy, which is the direction we are decidely headed, then we are at the complete economic mercy of the developing nations. Our manufacturing was undercut over the span of a few decades; it won't be long before all of our services that can be handled remotely start to be undercut as well (you already start to see it in the tech sectors).

This whole post is nonsense.

The US manufacturing sector dwarfs all developing nations except for China, which has a population 3x ours and is at the tail end of a half century of catch-up growth. http://en.wikipedia.org/wiki/List_of_countries_by_GDP_sector_composition (hint: sort the list by the "industry" column). The next "developing" country that it is even in the top 20 is Brazil with a manufacturing sector 1/5 the size of the US. Saying that the US is becoming a "service economy" at the mercy of developing countries for manufactured goods betrays a deep misunderstanding of the actual situation.

The real problem is not manufacturing capability - which is and will continue to be extremely robust in the US - it's unskilled jobs. China has raised its standard of living to the point that Chinese labor + transportation costs is starting to lose its shine compared with US domestic manufacturing, at least with some goods. Other Asian countries are still in the catch-up phase. Nonetheless, due to advances in automation, most of those unskilled jobs will never be replaced. The only place left for unskilled people to work is the service sector. While there is some room for automation to replace people in some service jobs, most unskilled services just can't be outsourced.

 

[2&2 Slider To Leyritz]

This whole post is nonsense.

The US manufacturing sector dwarfs all developing nations except for China, which has a population 3x ours and is at the tail end of a half century of catch-up growth. http://en.wikipedia.org/wiki/List_of_countries_by_GDP_sector_composition (hint: sort the list by the "industry" column). The next "developing" country that it is even in the top 20 is Brazil with a manufacturing sector 1/5 the size of the US. Saying that the US is becoming a "service economy" at the mercy of developing countries for manufactured goods betrays a deep misunderstanding of the actual situation.

The real problem is not manufacturing capability - which is and will continue to be extremely robust in the US - it's unskilled jobs. China has raised its standard of living to the point that Chinese labor + transportation costs is starting to lose its shine compared with US domestic manufacturing, at least with some goods. Other Asian countries are still in the catch-up phase. Nonetheless, due to advances in automation, most of those unskilled jobs will never be replaced. The only place left for unskilled people to work is the service sector. While there is some room for automation to replace people in some service jobs, most unskilled services just can't be outsourced.

Sorry, I wasn't clear with that sentence, I meant at the mercy of developing countries with respect for the services that we are offering in a service economy. My prediction is that we will soon (next 10 to 25 years) begin to lose service jobs to developing countries the same way we previously lost manufacturing jobs, as we begin to price ourselves out of the market. Similar to how tech support jobs have gone overseas, I believe we will soon see investment, engineering, accounting, biotech, certain healthcare, and similar jobs begin to head overseas as those countries begin to produce equivalent service providers at much lower wages, combined with advanced technology that minimizes the need for physical proximity. Yeah, we'll still have the fast food sector and WalMart, but I think we're going to lose a lot of the mid-level service jobs that our economy has been steering towards over the past 20 years or so.
So bringing it back to the original discussion, MDMH said that he doesn't care that we lost manufacturing jobs because those jobs are outdated and can't support the American lifestyle. My point is that I think we will soon start to lose American-lifestyle service jobs in the same fashion. Then what are we left with? Lawyers and fry-guys?

 

[Deacon923]

For outsourcing to work, you have to have a foreign country that (a) has workers and technology and a legal infrastructure capable of handling the work; and (b) doing so at a price cheaper than US workers can provide. Your post sort of assumes that because this happened to certain industries in the past 30 years, it will continue to happen to other industries in the next 30 years. I don't think that's a safe assumption.

The last 30 years witnessed a massive catch-up acceleration of third-world economies, mainly Asian. Some of them have now begun to catch up to US standards of living and labor costs, namely the biggest (China) so that they are starting to no longer be cheaper than US workers when transport costs and distance costs are taken into account.

There is still plenty of catch-up left to do in Asia, but some experts think the bulk of it is behind us or starting to pass. The next big catch up will be if Africa ever remotely gets its $%(# together, but that continent has been taking one step forward and two steps back for a long time. Once most of Asia is caught up to near-US standards, the conditions for outsourcing will no longer be met, or at least will be much different than the conditions prevailing over the last 30 years.

Also remember that Asian countries "outsource" to the US as well - they depend on us for high-tech manufactured goods, capital, management expertise, etc. It's a two-way street, and will become more so as their economies modernize and their politics improve.

 

[myDeaconmyhand]

1.Raising the minimum wage does not/will not shift the entire pay scale up as much as you think.
2. The UAW was never bargaining for a raise in minimum wage that I know of and the bargaining power it gained during Detroit's heydey will most likely never be matched by another private industry labor union.
1. Our manufacturing was cut by Çhina, a country with a greater population than ours, who entered into their own industrial revolution 60 years after we did, with much greater technology and efficiency than ours had, and with basically zero environmental regulations to hinder them. Trying to simply blame our loss of manufacturing on rising wages in the U.S. is preposterous. You keep bringing up Detroit, but were not talking about labor unions, were talking about a government mandated minimum wage, a minimum wage that becomes more and more arbitrary the longer it remains static and the further it falls below the cost of living wage.