Like minimum wage increase, new overtime rule long overdue

July 5, 2015

Hard work should pay off. That belief is at the heart of the American dream.

It also is why the U.S. Labor Department’s plan to make more salaried workers eligible for overtime pay is good news for both workers and the overall economy.

Like an increase in the minimum wage, it is long overdue.

Since 1938, federal law has required hourly workers to be paid time-and-a-half for each hour worked beyond 40 hours per week. There is an exception for managers and professionals, who are presumed to get good pay in return for more flexibility and, often, longer work weeks.

But here’s the problem: the salary level at which that exemption kicks in has been increased only once in 40 years.

In 1975, more than 60 percent of salaried workers were eligible for overtime pay. Because of inflation, that figure has fallen to 8 percent, according to a recent analysis by the Economic Policy Institute.

As a result, salaried “managers” who earn as little as $23,660 a year often work many extra hours for no extra pay. Some end up earning less per hour than the hourly employees they manage. This happens most often in retail and service industries, such as fast food.

This antiquated threshold salary of $23,660 is below the poverty line for a family of four, which is now set at $24,250. As a result, some of these managers are eligible for public assistance, which means taxpayers are directly subsidizing business profits. That makes no sense.

President Barack Obama last year told the Labor Department to review the overtime rule. That resulted in a proposal, announced last week, to raise the salary threshold for workers exempt from overtime next year to $50,440, returning it to roughly the 1975 level, accounting for inflation.

The new rule calls for that threshold to rise over time with inflation, linking it to the 40th percentile of income, which is where it was when the Fair Labor Standards Act became law in 1938.

The White House says the rule change would increase pay for nearly 5 million workers in the first year, 56 percent of whom are women and 53 percent of whom have a college degree.

The president’s action, which does not require the approval of Congress, has drawn howls from business interests and the politicians who receive their campaign contributions and loyally push their agendas.

As with almost every regulation Obama has proposed to help average workers, expand health insurance coverage and clean up the environment, these politicians argue that it will “kill jobs” and hurt the economy. In fact, the opposite is true.

Under this rule, if businesses don’t want to pay overtime to low-salaried managers, they can hire more hourly workers at straight time. That also would give those managers more time for a second job to supplement their income or spend time with their families, as they choose.

Opponents argue that businesses can’t afford to pay workers more, that this isn’t a good time. Have you ever known them to say anything else?

The United States has had 63 straight months of job growth, with businesses creating more than 12.5 million jobs. The Labor Department reported Friday that 223,000 jobs were created in June and the unemployment level fell to a seven-year low of 5.3 percent.

But the problem is that, for nearly four decades, wages have not kept pace with improvements in worker productivity. They haven’t even come close. Middle-class pay has stagnated and been eroded by inflation.

Meanwhile, stock prices are near all-time highs. Executive compensation has soared into the stratosphere. And corporate profits have roughly doubled over the past three decades, rising from 6 percent to 12 percent of gross domestic product.

A recent study found that 90 percent of income growth since 2009 has gone to the richest 10 percent of families.

Why has recovery from an economic crash caused mostly by financial speculation been so slow and uneven? Here is a big reason: consumer spending is the largest driver of the economy, and most people don’t have much extra money to spend.

Like a minimum wage increase, this would help fix that problem and show average Americans that hard work does pay off.


Labor Day a reminder of how working people are falling behind

August 31, 2014

Each year on Labor Day, I think of Myles Horton and something he once told me.

Horton started Tennessee’s Highlander Center in 1932 and spent most of his 84 years crusading for racial, environmental and economic justice. Rosa Parks called him, “the first white man I ever trusted.” He was a mentor to the Rev. Martin Luther King Jr.

During an interview in the 1980s, I asked Horton about his focus. “Working people,” he replied. “People who work for a living rather than own for a living.”

Labor Day celebrates Americans who work for a living, which is most of us. But each year there seems to be less to celebrate. Stock markets, corporate profits and executive compensation are hitting record highs. But at the other end of the spectrum, there aren’t enough good jobs for people who want to work.

There has been a lot of political talk about job creation, but a more important issue is the quality of jobs. More and more people are working hard at full-time or several part-time jobs and still can’t earn a decent living.

The Kentucky Center for Economic Policy, a non-profit think tank in Berea, issued a report last week that offers a gloomy assessment of recent trends. The full report is at Kypolicy.org, but here are some key findings:

Kentucky is experiencing job growth, but still needs 80,800 jobs to get back to the pre-recession 2007 level and accommodate population growth since then. Nearly one in four Kentucky part-time workers say they would rather have full-time jobs.

A lack of jobs has led to a decrease in the labor force as many Kentuckians have given up looking for work. One third of Kentucky’s unemployed people have been that way for a long time.

Wages are depressed by high unemployment levels. The late 1990s, when the unemployment rate was below 4 percent, was the only time in the past 35 years when Kentucky workers’ real wages actually grew.

The inflation-adjusted median wage has fallen 8 percent since 2001, and low-wage workers’ pay has fallen by 7 percent. Much of that is because higher-paying jobs that produce goods — especially in manufacturing — have been replaced by service jobs. Many service jobs pay low wages, which have been further depressed by a $7.25 hourly minimum wage that hasn’t been raised since 2009.

What are some solutions? First, the center recommends long-needed reform in Kentucky’s 1950s-era tax code to reflect the modern economy. That would provide more revenue for the state to invest in education and infrastructure, both of which would create jobs and spur economic development.

Another good idea the center recommends is raising the minimum wage. The value of the minimum wage has been eroded by inflation to the point that it is too little for an individual, much less a family, to live on.

What is especially obscene is huge, profitable corporations that pay workers so little they are eligible for public assistance. That leaves taxpayers subsidizing the profits of companies such as Wal-Mart and McDonald’s. Raising the minimum wage would save taxpayers money.

Opponents argue, as they always have, that increasing the minimum wage costs jobs and raises prices. But evidence shows those effects are minimal. A higher minimum wage, which also pushes up pay for workers just above it, puts more money in the pockets of people who will spend it, which boosts the economy.

Conservatives argue that Kentucky could spur economic growth by enacting anti-union laws and loosening environmental regulations. But that kind of growth does more harm than good. Pollution creates health problems and lowers the state’s quality of life. Anti-union laws boost business profits at the expense of workers.

Cynically named “right to work” laws make it harder for workers to organize for higher wages and better working conditions. States that enact those laws generally have lower average wages and more poor people than those that do not.

Similarly, repealing “prevailing wage” laws would make public construction projects cheaper, but only by taking money out of the pockets of the people doing the work.

It is no accident that the decline of the middle class since the 1970s has mirrored the decline of organized labor, which had a big role in creating the middle class in the first place. More and more of this nation’s wealth is rising to the top at the expense of everyone else.

Yes, we need to create more jobs. But we need to do it in ways that will improve the fortunes of people who work for a living and not just those who own for a living.

 


Inequality will keep growing as long as big money controls politics

March 24, 2014

The gap between America’s rich and poor has been growing for nearly four decades. Many people worry about what this could mean for our economy, our society — and even the survival of our republic.

This trend is a stark reversal of the four previous decades, and it has sparked a lot of populist anger, from Occupy Wall Street on the left to the Tea Party on the right.

Consider, for example, a recent study that found incomes in Kentucky rose 19.9 percent from 1979-2007, but that 48.8 percent of that money went to the top 1 percent of earners. According to the Economic Policy Institute, that 1 percent saw their incomes rise an average of 105.1 percent, while the average income of the other 99 percent of Kentuckians grew only 11.2 percent.

Democrats have made inequality and economic opportunity their main campaign theme. Republicans are talking about it, too, but offering very different solutions for rebuilding the American middle class.

“Economic and Political Inequality in the United States” is the title of a conference March 27-28 at the University of Kentucky featuring several nationally recognized speakers. The event is free and open to the public. Details at: Debrassocialstimulus.com.

The keynote speaker is Pulitzer Prize-winning columnist Ellen Goodman, whose talk is titled “Inequality: Working Moms, Designated Daughters, and the Risks of Caregiving.” She speaks at 7:30 p.m. March 27 at Memorial Hall.

The next day, beginning at 9:30 a.m. in the Student Center’s Worsham Theater, speakers include longtime UK history professor Ron Eller and economist Dean Baker, co-director of the Center for Economic and Policy research in Washington. Topics include inequality in Appalachia and how the “culture wars” have influenced these trends.

I will be interested to hear what the speakers have to say. I will be especially interested to see if they can go beyond lamenting the problems and offer solutions that could have some chance of success in America’s increasingly toxic political environment.

For most of human history, stark inequality was the rule, contributing to both the rise and fall of countless empires. This began to change in the late 1600s with the Enlightenment, which led to creation of the representative democracies now found in most developed nations.

Representative democracy led to government-regulated capitalism and a flowering of technology and prosperity that, while uneven, was far better than anything that preceded it.

In this country, coming out of the Great Depression and World War II, it led to a dramatic narrowing of the wealth gap and an accompanying rise in economic and social opportunity and mobility that made America the envy of the world.

Wealthy industrialists realized that a prosperous middle class was needed to buy the goods they manufactured. A rising tide really did lift all boats. But research shows that America now lags many other nations in economic opportunity and mobility.

The spread of capitalism has lessened inequality in much of the world, although, as Pope Francis has consistently reminded us since assuming leadership of the Roman Catholic church a year ago, not nearly as much as it should.

While the global economy has been good for some overseas workers, it has cost many American jobs. It also has created a worldwide “race to the bottom” for labor costs, while making financial elites fabulously wealthy.

The collapse of communism seemed to show that, over the long haul, capitalism works best when it goes hand-in-hand with representative democracy. Or does it? China’s economic success since the 1980s under a ruling-class dictatorship raises some troubling questions.

Those questions are even more troubling amid the rising power of big-money influence in American politics, especially since the U.S. Supreme Court’s 2010 Citizens United ruling opened the floodgates. There seems to be a new Golden Rule: those with the gold can make the rules.

While conservatives now worry about oppressive government, liberals worry about oppressive capitalism and corporate-controlled government. The rise of inequality since the 1970s has mirrored the rising clout of big business and high finance and the decline of organized labor.

Until the balance of power shifts back toward what it was a generation ago, it is hard to imagine that the balance of wealth will, either.  


Woody Guthrie’s music still rings true on his 100th birthday

July 14, 2012

Woody Guthrie would have been 100 years old on July 14. Because the folksinger died of a neurological disease in 1967, at age 55, many people now know little about him besides his most famous song, This Land is Your Land.

It is a wonderful song that would make a good National Anthem. It is less bombastic than the unsingable Star Spangled Banner, more aspirational than America The Beautiful and less presumptuous than God Bless America.

In fact, Guthrie wrote This Land is Your Land in 1940 because he got sick of hearing Irving Berlin’s God Bless America on the radio. He disliked the song because he thought God had already blessed America with beauty and abundance, and it was every citizen’s responsibility to care for and share it.

Guthrie originally called his song God Blessed America, and the chorus ended with the words, “God blessed America for me.” After writing the song, though, Guthrie set it aside for five years. When it was finally performed, Guthrie had changed the title and had rewritten the chorus to end, “This land was made for you and me.”

As referenced in the song, Woodrow Wilson Guthrie was a rambler who roamed America — from California to the New York Island, from the redwood forest to the gulf stream waters — collecting folk tunes and writing more than 3,000 songs.

Guthrie had three wives and eight children, including folksinger Arlo Guthrie. He was mentor to other folksingers, including a young Bob Dylan, who said of Guthrie’s songs: “They had the infinite sweep of humanity in them.”

The Oklahoman became a well-known troubadour during the Great Depression, spending a lot of time with people who had been thrown into poverty by the Dust Bowl and economic collapse.

A 1939 song romanticized the gangster Charles “Pretty Boy” Floyd as a modern Robin Hood. It includes these lyrics, which still ring true:

Yes, as through this world I’ve wandered

I’ve seen lots of funny men;

Some will rob you with a six-gun,

And some with a fountain pen.

Alarmed by how unrestrained capitalism had failed so many Americans, Guthrie also feared the right-wing power then rising in fascist Spain and Nazi Germany. His guitar displayed the slogan, “This machine kills fascists.”

Like many people during the Great Depression, Guthrie held strong leftist sympathies. He wrote a folksy column, called Woody Sez, for communist labor newspapers, but lacked the interest or discipline for ideological politics.

When attacked by conservatives, Guthrie replied with a joke: “I ain’t a communist necessarily, but I been in the red all my life.” In reality, he was more of a populist troublemaker who wrote what he saw and enjoyed tweaking the rich and powerful.

Guthrie also was something of a patriot, capitalist and person of faith. He served in World War II. He wrote some of his most memorable songs — Pastures of Plenty, Roll on Columbia, Grand Coulee Dam — during a month-long government job promoting the construction of hydroelectric dams in the Pacific Northwest. He said Jesus Christ was one of the two men he most admired. (The other was humorist Will Rogers.)

It is always easier to dismiss someone because of who or what he is than to listen to what he has to say, especially when his message is uncomfortable.

Guthrie got a close-up view of how the American dream became a nightmare for many people during the Great Depression. That view shaped his vision of this nation and its promise for true greatness. His lyrics seem appropriate again today, as the rich get richer, the poor get poorer and the middle class shrinks.

While extolling America’s natural beauty, This Land is Your Land is really about how inclusiveness and the promise of shared prosperity are what make the United States special. This land is not just for the rich, but for everyone. It wasn’t just made for me, but for you, too.

The little-sung last verse — the one we were not taught in elementary school — is especially poignant as we mark the 100th anniversary of Woody Guthrie’s birth:

In the squares of the city / In the shadow of the steeple

Near the relief office / I see my people

And some are grumblin’ and some are wonderin’

If this land’s still made for you and me.

 

THIS LAND IS YOUR LAND 
words and music by Woody Guthrie 
Chorus:
This land is your land, this land is my land
From California, to the New York Island
From the redwood forest, to the gulf stream waters
This land was made for you and me

As I was walking a ribbon of highway
I saw above me an endless skyway
I saw below me a golden valley
This land was made for you and me

Chorus

I've roamed and rambled and I've followed my footsteps
To the sparkling sands of her diamond deserts
And all around me a voice was sounding
This land was made for you and me

Chorus

The sun comes shining as I was strolling
The wheat fields waving and the dust clouds rolling
The fog was lifting a voice come chanting
This land was made for you and me

Chorus

As I was walkin'  -  I saw a sign there
And that sign said - no tress passin'
But on the other side  .... it didn't say nothin!
Now that side was made for you and me!

Chorus

In the squares of the city - In the shadow of the steeple
Near the relief office - I see my people
And some are grumblin' and some are wonderin'
If this land's still made for you and me.

Chorus (2x)

©1956 (renewed 1984), 1958 (renewed 1986) and 1970 TRO-Ludlow Music, Inc. 
(BMI) Source: Arlo.net, The Official Arlo Guthrie Website.


Economic slump reflects middle-class decline

September 5, 2011

Happy Labor Day.

Chances are, if you are one of the majority of Americans who labor rather than own for a living, you aren’t feeling very happy.

This hasn’t been a good year for middle-class workers, much less for the poor. In fact, it hasn’t been a good three-plus decades.

Economic and political forces have hammered working people. Real income for the bottom 80 percent of Americans has been stagnant or falling since the late 1970s. Few paid much attention until the 2008 financial crisis, because the trends were masked by rising personal and government debt.

During these years of middle-class decline, it has been fashionable to bash labor unions. Perhaps that is because people take for granted the things unions fought to make part of the American workplace — the eight-hour work day, overtime pay, the minimum wage, unemployment insurance and safe working conditions. Unions led the fight to end child labor and discrimination against minorities and women. They played a big role in creating Social Security and other government safety-net programs.

After World War II, as much as 25 percent of the work force belonged to unions, and their contracts set standards by which many non-union workers benefited. Last year’s census showed union membership at 11.9 percent, down from 20.1 percent in 1983. America now has 14.7 million union members — roughly the same number of people now unemployed.

Unions have plenty of flaws; all institutions do. But they serve an important role in balancing the power of business. Power without balance becomes abusive. We have seen that with business, labor, government and even churches. It is no coincidence that the decline of middle-class income and security over the past three decades has followed the declining influence of organized labor.

Statistics show that all real income growth since 1979 has gone to the wealthiest 10 percent to 20 percent of Americans, with the wealthiest 1 percent gaining the most, by far. Wealth inequality is the highest it has been since the 1920s.

The deep economic hole that politicians are debating how to fill was caused mostly by financial speculation, unfunded wars of choice and irresponsible tax cuts. But you hear little talk in Washington about a crackdown on Wall Street, real tax reform or scaling back military adventurism.

That is because wealthy interests have largely taken over both political parties. Democrats still give lip service to the middle class and poor, but the GOP has become a wholly owned subsidiary of corporate America.

President Barack Obama speaks Thursday to a joint session of Congress. He will propose a plan aimed at creating jobs, reviving the economy and improving his chances for re-election. Republicans will be against whatever he proposes, because they don’t want the economy to improve anytime soon. If the economy improves, they have less chance of taking back the White House.

The Republican prescription for economic recovery is to do more of the things that wrecked the economy in the first place: less business regulation and more tax cuts. The problem with trickle-down economics is that it only makes wealth trickle up, as the past three decades have shown.

Republican leaders also want aggressive debt-cutting austerity, but only for those who can least afford it. As history has repeatedly shown, this strategy only makes a weak economy weaker.

But it all depends on your perspective. The Main Street economy where most of us live and work is stuck in neutral. But Wall Street profits, corporate cash reserves and executive compensation have never been better. Times are good for the people whose campaign contributions and lobbying have all but shut average Americans out of the political debate.

The public is angry, and Tea Party activists are the most visible reflection of that. But their misguided philosophy plays right into the hands of big business. Why else do you think billionaires are funding those Tea Party organizations?

I am usually not a pessimist, but I see little hope for recovery as long as the interests of corporate America are so divergent from those of working Americans. The economy won’t improve until average people have more money to spend. Until the middle class finds political voice to demand that things change — as organized labor did a century ago — things won’t change.


Shakertown Roundtable full of food for thought

October 26, 2009

I wrote Sunday about last week’s Shakertown Roundtable, which featured former Federal Reserve Chairman Paul Volcker and included more than 50 of Kentucky’s most influential leaders in business, government, academia and philanthropy.

Given the complexity of the topic — economic crisis and recovery — and the caliber of the panel and participants, there was a lot to discuss and think about.

Here are a few additional notes from last Thursday afternoon’s conference in one of Kentucky’s most scenic settings, Shaker Village at Pleasant Hill:

■ One executive I found insightful was Paul Varga, president and CEO of the Louisville-based liquor giant Brown-Forman Corp. In stressful times like these, he joked, “You’ll all understand why I’m happy to be in the business I’m in.”

Varga said he understood some executives’ worries about a backlash of too much taxation and regulation after a period many people think had too little. Liquor has always been an easy mark for higher taxes, he said, adding that “our industry once had the ultimate government intervention: Prohibition.”

He noted that much of the economic crisis was caused by what people did with other people’s money and an abandonment of traditionally sound business practices. Varga said future prosperity will require companies to not just achieve revenue growth, but create value.

Brown Forman — and the entire bourbon industry — has remained relatively healthy by not taking on too much debt and by searching out new markets overseas and developing spinoffs such as the Bourbon Trail initiative around distillery tourism.

■ In response to a question, Volcker said ideology and economics don’t mix well. That’s because unpredictable human behavior can have a big effect on the economy.

“It’s not a rational activity,” he said of economics, adding that this crisis showed that free markets with little regulation can lead to greed, manipulation and disaster.

■ Louisville Mayor Jerry Abramson, who is running for lieutenant governor on Gov. Steve Beshear’s re-election ticket, reminded executives who criticized government spending on the social safety net that many average Americans are hurting.

“We have real families and real children who are going through some real difficulties,” Abramson said. The nation needs to take care of them, he said, not only because it’s the right thing to do but because they are the workers who will be needed to build the future.

■ Centre College President John Roush said most aging baby boomers won’t be able to enjoy the leisurely retirement they expected because our old economy and lifestyle expectations weren’t sustainable.

“We’re not going to get to go fishing every day,” said Roush, 59, who said he likes to fish.

But Roush said he is encouraged that today’s college students have different expectations. “They have a sense of possibility and optimism,” he said.

■ University of Kentucky President Lee Todd said America needs to renew its focus on research and development, advanced manufacturing and high-quality education. Kentucky students need more math and science — and more confidence in their abilities.

With the right education and training, Kentucky students can compete with anyone, said Todd, himself the product of a small town in Hopkins County. As an example, he mentioned UK students’ strong showing last week in the international solar house design competition in Washington, D.C.

Kentucky students need to start their own businesses, not just expect to work for someone else. And the state needs to emphasize entrepreneurship and business development, not just attracting employers from elsewhere.

“Kentucky people who start companies will stay in Kentucky,” Todd said. “We’ve got to create our own jobs.”

Kentucky Educational Television videotaped the Shakertown Roundtable and will show an edited version on Nov. 23 at 8 p.m. and at other times.