Must Reads: The Nation Magazine has a well-written piece on what it is like to be a temporary worker for a large shipment facility used by retailers to meet holiday online shopping demand. Political anthropologist Peter Turchin, referencing past U.S. political instability periods, says "we should expect many years of political turmoil, peaking in the 2020s" given current inequality levels. This hard-hitting opinion piece by Mark Ames and Yasha Levine takes aim at Pierre Omidyar, saying on his approach to philanthropy, "what emerges is almost a caricature of neoliberal ideology, complete with the trail of destruction that ensues when that ideology is put into practice."
Fast-food workers have taken to the street in more than one hundred U.S. cities to fight for a pay increase, according to the Washington Post. Check out this Economic Policy Institute chart on what would happen if the minimum wage was boosted to over $10:
Over at the Fiscal Times, Liz Peek argues raising the minimum wage could skew companies toward more technology and less workers and says it is a mistake to push wages upward:
The retail industry is just one in which workers are at risk. It’s hard to find many jobs that are not threatened by automation, by Internet expansion or by overseas competition. That includes people working in the fast food industry — where union organizers are currently pushing for a big jump in minimum pay. They should not assume that burger joints won’t eventually automate. Last year, Momentum Machines in San Francisco previewed an apparatus that created 360 burgers an hour. Noting that the fast food industry spends $9 billion a year on wages, the company predicted a lively reception for its space- and cost-saving machine. Companies and workers successfully competing against all these forces must rely on the right combination of productivity and price. Purposefully jeopardizing workers’ livelihoods by driving wage costs higher is risky and in the end unproductive. Add to the mix uber-low interest rates, which tilts investment towards capital and away from labor, and those urging a higher minimum wage are not on the side of workers.
Over at Salon, Andrew Leonard called the use of drones and robots potentially job crushing:
It’s one thing to order a cocktail and a roast-beef sandwich from the seat-back display screen in front of you on a Virgin America flight, and be gratified when the flight attendant drops it off a few minutes later. It seems an efficient and sensible way of organizing logistics on a plane. It’s quite another to see the mass reorganization of a large physical space into something designed to minimize the necessity for human labor. Because the obvious implication is: Why stop here? If it makes economic sense to automate the food-ordering process in an airport, what point is there in having a human waiter to take your order at any dining establishment that isn’t already charging a premium for high-class flesh-and-blood service... I’ve noted before that the big difference between the current technological revolution and the Industrial Revolution is that the initial technological advances of the 18th century created jobs for unskilled workers, while today’s robot armies are increasingly replacing the jobs of unskilled workers. When the warehouse and the delivery and the waitress and taxi driver jobs are gone, where do those workers go? Will our education system be robust enough to keep them ahead of the rising technological curve?
In Reuters, Zachary Karabell had this to say:
Supporters say that a higher minimum wage will give people a better standard of living and boost consumption. Detractors argue that it will lead companies to hire fewer workers and kill job creation. One thing no one addresses, however, is that regardless of whether the government raises the minimum wage, our society can't endlessly coast with a system that includes wage stagnation for the many and soaring prosperity for the few, nor can the government snap its legislative fingers and magically produce income. Someone will pay for these increases; nothing is free... The oft-repeated warning that businesses will hire fewer workers or reduce wages is also unclear. Yes, businesses have already begun to cut hours in order to avoid paying workers various benefits, including healthcare. Under a higher minimum wage, a significant number of companies would likely trim payrolls in order to maintain profits. Yet such actions are both short-sighted and inimical to collective prosperity. They are short-sighted because you can't build a vibrant service- and consumer-oriented society with fewer and fewer people earning enough income to pay for the goods and services they need and want. They are inimical to collective prosperity because a dynamic society depends on a compact, often unwritten, that the proverbial deck will not be so unevenly stacked. That is not just true in a democratic society. In China today, one of the primary issues is the widespread revulsion against the corruption and enrichment of the elite.
As Demos blogger David Callahan notes again, it is worth repeating that recent Social Security data shows that 40 percent of American workers earn less than $20,000 per year. U-Mass professor Arindrajit Dube, writing in the New York Times, argues a "sensible federal minimum wage" along side local initiatives "can help rebuild wage standards and reduce inequality in a way that reflects our internal sense of fairness."
Check out this cartoon from Marc Murphy:
Pope Francis has officially made tackling inequality a central part of his papacy, says we should say no to "an economy of exclusion":
Just as the commandment “Thou shalt not kill” sets a clear limit in order to safeguard the value of human life, today we also have to say “thou shalt not” to an economy of exclusion and inequality. Such an economy kills. How can it be that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points? This is a case of exclusion. Can we continue to stand by when food is thrown away while people are starving? This is a case of inequality. Today everything comes under the laws of competition and the survival of the fittest, where the powerful feed upon the powerless. As a consequence, masses of people find themselves excluded and marginalized: without work, without possibilities, without any means of escape... In this context, some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system. Meanwhile, the excluded are still waiting.
Shortly after the pope threw down the inequality gauntlet, President Obama delivered a major speech saying we need to tackle inequality head on:
[I]f we’re going to take on growing inequality and try to improve upward mobility for all people, we’ve got to move beyond the false notion that this is an issue exclusively of minority concern. And we have to reject a politics that suggests any effort to address it in a meaningful way somehow pits the interests of a deserving middle class against those of an undeserving poor in search of handouts. Second, we need to dispel the myth that the goals of growing the economy and reducing inequality are necessarily in conflict, when they should actually work in concert. We know from our history that our economy grows best from the middle out, when growth is more widely shared. And we know that beyond a certain level of inequality, growth actually slows altogether.
A New York Times editorial says one thing the president should do is push to overhaul the tax code "to eliminate the absurdly generous breaks given to those at the very top." This Economic Policy Institute chart shows how government subsidies help keep millions above the poverty line:
Meanwhile, over at the conservative Manhattan Institute's E21 site, Diana Furchtgott-Roth says "the income inequality problem is overblown" based on spending figures:
President Obama bemoans inequality, but much of this concern is a problem in search of reality, caused by problems of measurement and changes in demographic patterns over the past quarter-century. Spending shows remarkable stability over the past 25 years and, if anything, a narrowing rather than an expansion of inequality.
This blog post from the Center for American Progress' Ben Olinsky and Asher Mayerson put out a new report arguing inequality and "trickle-down economic" principles are holding back the U.S. economy.
In the Washington Post, Carlos Lozada reviews two books about extreme wealth in United States, and notes "Americans dislike inequality but crave wealth — and this paradox propels our mixed feelings about the rich":
Can “giving pledges” and foundation grants sustain America’s deal with the wealthy in a time of increasing inequality and falling social mobility? In his conclusion, Dalzell worries that the belief in the generosity of the good rich leads us to “tolerate, even celebrate, the violation of some of our most cherished ideals” of fairness and egalitarianism. Perhaps the dilemma of extreme wealth and disparities in a democracy is that noblesse oblige becomes necessary. These two books show that the wealthy give much with one hand but seek to contribute far less with the other. That makes the giving they choose to do all the more critical but all the less accountable.
Henry Blodget, editor of Business Insider, had this to say on the wealthy-create-jobs argument, and contends it is an economy of customers that are the true job creators:
America's middle class has been pummeled, in part, by tax policies that reward "the 1 percent" at the expense of everyone else. It has also been pummeled by globalization and technology improvements, which are largely outside of any one country's control. The prevailing story that justifies tax cuts for America's entrepreneurs and investors is that the huge pots of gold they take home are supposed to "trickle down" to the middle class and thus benefit everyone. Unfortunately, that's not the way it actually works.
First, America's companies are currently being managed to share the least possible amount of their income with the employees who help create it. Corporate profit margins are at all-time highs, while wages are at an all-time low. Second, America's richest entrepreneurs, investors, and companies now have so much money that they can't possibly spend it all. So instead of getting pumped back into the economy, thus creating revenue and wages, this cash just remains in investment accounts.
This New Yorker piece by Benjamin Soskis looks at the brewing fight between philanthropists and New York officials over how money is distributed amongst the city's parks.
Over on his blog, Mitchell Kutney says social enterprise "as it currently stands is a missed opportunity; it has settled for entering markets, when social enterprise had the potential to transform them." This blog post from a UK-based foundation discusses the dearth of risk capital for social entrepreneurs.