OPINION: Fight for $15: Don't celebrate yet
Recently, the city of Los Angeles passed a minimum wage increase to $15 an hour. As I expected the peasants danced in the street, the city government called it progress and the talking heads on cable news debated. The increase, while long overdue is nowhere near anything to celebrate. The minimum wage is important if one believes that those who work should be able to eat, have a roof overhead and so on. That requires a living wage which our current minimum is not nor will $15 be in 2020 when it kicks in. Additionally, raising the minimum wage does nothing to deter major corporations from cutting hours and laying off employees in response to increased operating cost which is what they already do in the face of Obamacare.
Lastly, because all of these costs will simply be passed along in the form of price hikes the cost of living will rise essentially leaving everyone in the same place that they are now and probably worse if one cannot work full-time.
The jobs deficit
From late 2007 to 2009 the U.S. experienced its greatest recession since the great depression. It wasn’t until 2014 that the economy recovered all 8.7 million jobs lost in the recession but it still has not added the amount of jobs needed to support those who have newly entered the workforce since the recession started. Also, many of the jobs that were recovered were low wage, low skill jobs.
Why aren’t the high wage, high skill jobs coming back? There are many reasons but the simple explanation is that creating jobs is not good for business. It’s about efficiency, getting more for less and in today’s technologically advanced world marketplace it’s about cutting jobs or getting labor at the lowest costs. In short, if a computer, a robot or someone in a developing country can do the job cheap, then they will get the job.
So, where do all those displaced people go? What happens when the unemployment runs out, you can’t get back to where you were and the bills come due? You take what you can get.
In 2001 I was 18 years old and working for Home Depot making $10 an hour. I worked in an affluent bay area suburb alongside high level professionals and former business owners who went bust in the wake of the .com crash. The most notable of these people was a family law lawyer who went from a mid-six figure income in the 90’s to working in retail with us kids just to make ends meet. This is what is happening now, difference being that by 2005 many of the jobs lost came back, something that does not seem to be happening seven plus years after the last recession started.
Look at McDonald's as an indicator of the current state of the job market. According to the U.S. Census, the average age of a person employed by the golden arches was 22 in 2000. In 2014 the average age was up to 29 and a half years. And, when McDonald's had a national hiring day yahoo reported that there were lines around the block with people looking to fill the roughly 50 thousand positions offered. This is an indicator that there are not enough jobs to go around; as well as the fact that our unemployment rate stands at 5.4 percent but does not count those who are not collecting benefits. Counting these people, the total number of working age individuals who do not work is closer to 48%.
All of the above means that more people are competing for fewer jobs and because of this we can expect that fewer people will make the cut financially.
Warren Buffet, the world's third richest man-or second depending on where the Earth sits in relation to Pluto-wrote an op-ed piece this past week in the Wall Street Journal in which he uses a sports analogy to say, in short, that even if the playing field were level and everyone got the same education (none of which is the case) many would still flop.
Buffett also makes another good point which is that while it was true that hard work and hustle was enough in the industrial age, today’s economy is not built on back-breaking labor. So for many today, it is no longer true that Americans can just pull themselves up by their proverbial bootstraps and will their way to success.
The hardest hit Americans are us. According to a Jan 2015 New York Times article those households “Headed by those 30 to 44 are more likely to be lower income and less likely to be higher income”. With the cost of education going up but not income or number of jobs one can only expect that things will be worse in the next five to 10 years.
American’s need help and that help needs to be comprehensive. In his op-ed piece Buffett proposed bigger tax credits for the poor and a reform to the laws governing payouts. I say that what is needed is government action that far exceeds bigger tax returns. You can’t just raise wages. Their needs to be legislation that address high housing costs (especially in a city where being homeless is practically illegal), the disparities in educational access, corporate greed, the exodus of jobs overseas and, if the private sector cannot or will not create them, the government should provide a means by which people can earn a living for themselves.
This sounds expensive but, in fact, police, correctional facilities, drug rehab facilities and the costs of public social services provided among other costs that come with deeply impoverished populations far exceed that of providing affordable housing, jobs and living wages. Whatever we do, those who took to the streets for that $15 minimum wage as well as those in the shrinking middle class would be wise to keep pushing for more of everything and soon. Before McDonald's figures out a way for machines to cook and serve their own…whatever they allegedly make.