Must Reads: Check out this photo essay in Politico Magazine by Lucian Perkins on the healthcare gap in coal country. (You also may be interested in this coming photo book by Jim Goldberg on the rich and the poor.) We also have Rep. Paul Ryan's controversial plan to overhaul federal poverty programs. Meanwhile in Politico, former Ohio Gov. Ted Strickland said he tried to live off the minimum wages for a week and could not make it. If you want to try the challenge too, check out livethewage.com. Over at the Harvard Business Review, Matt Stempak calls sharing data a form of corporate philanthropy. Last we have this report by Richard Kirsch over at the Roosevelt Institute on the future of work in America.
Let's start with this cartoon from Ben Sargent:
We have a couple of opinions on Rep. Paul Ryan's new plan on poverty (see above). Annie Lowery in New York Magazine calls the plan paternalistic, because it would require building and enacting a life plan with penalties for not following it:
First, it presupposes that the poor somehow want to be poor; that they don’t have the skills to plan and achieve and grow their way out of poverty. The truth is that many do have the skills, and what they lack are resources — say, enough money to pay for a decent daycare for your infant so you can work a full-time job, or cash to get your car fixed so you don’t have to take the bus to your overnight gig at Walmart. Ryan is not putting more resources on the table, as far as I can tell, and thus for many families he will not be addressing the root problem. Second, it isolates the poor. Middle-class families don’t need to justify and prostrate themselves for tax credits. Businesses aren’t required to submit an “action plan” to let the government know when they’ll stop sucking the oxygen provided by federal grant programs. The old don’t need to show receipts demonstrating their attendance at water aerobics in order to get Medicare. Nope, it’s just the poor who need to answer for their poverty. That strikes me as flatly wrong.
Over at Slate, Reihan Salam also says Ryan's proposal is paternalistic, but it also reflects how conservatives allow themselves to tolerate poverty programs:
When it comes to the poor, however, most conservatives lose their live-and-let-live attitude. The basic idea here is that if you’re going to get help from the taxpayers, the taxpayers should have a say in how you use it. That is why conservatives are more likely to support food stamps, which can be spent only on food, and the earned-income tax credit, which gives an income boost to low-income workers, than no-strings-attached cash, even though a simple cash payment requires far lower administrative costs. There are a few people on the right who favor no-strings-attached cash over paternalistic welfare programs, like Charles Murray, the granddaddy of American libertarians and author of a terrific, well-argued, and ultimately pretty wrongheaded book called In Our Hands, which calls for replacing all social programs with a decent-sized cash payment to all Americans. By and large, though, conservatives take a libertarian view when it comes to people who can support themselves and a paternalistic view to those who can’t.
In this depressing letter to the Atlantic, a child protective services lawyer in Connecticut explains the divide between a court run by wealthy people presiding over poor parents:
I've heard state lawyers argue that parents were neglectful simply for letting their children play on the sidewalk during the day in poor neighborhoods, or for leaving a baby unattended in a crib while taking out garbage three flights down—even though suburban parents who take garbage to the bins in their driveway are probably equally distant from a sleeping infants. Judges chide poor working mothers for leaving their children with questionable babysitters, as though childcare, money, and jobs were so plentiful that a parent could just call in sick to work without worry any time a childcare arrangement fell through. I also get the impression—although it's not something that can likely be proved with data—that judges who must look across the divides of class, race, and sometimes language, have difficulty identifying with the poor, brown families before them. Whenever I look at fact patterns in child protection cases, I find myself saying, "There, but for the grace of God, go I." I mean, raising kids is hard, right? But somehow, from the remove of the affluent suburbs, many of the (mostly white) judges I've appeared in front of, most of whom have raised children themselves, seem to struggle to find sympathy or understanding.
The Urban Institute's Zack Macdade looks at three government job ideas that could be of public benefit and lower poverty. Similarly over at the Center for American Progress, Rachel West argues three reasons why government subsidized jobs should be part of an economic mobility agenda. In a New York Times' interview, George Mason's Tyler Cowen says we should worry less about inequality and focus more on the affordability of basic necessities.
If you haven't been paying attention to the fight over Market Basket, you are missing a fascinating saga. The $4 billion New England grocery chain has been making the news for a joint worker / executive action that has brought thousands into the streets in support of reinstating CEO Arthur T. Demoulas. In CNN, Sally Kohn says the workers are fighting against the corporate greed meme:
Full-time clerks start at $12 an hour. Cashiers with experience can earn over $40,000 a year. And managers can easily make into the six figures. Keep in mind that's in a nation where the average annual salary for grocery store cashiers is $21,370 and the national minimum wage is $7.25 per hour. The company also has a generous retirement plan, matching 15% of annual salary to employee retirement funds. What's more, workers up and down the supply chain receive good bonuses throughout the year. All this and Market Basket is affordable for customers, with prices regularly 10% to 20% lower than competitors. The company is profitable in an industry known for low profit margins, and has given $500 million in dividends to the nine family shareholders over the past decade. In other words, at a time when corporate executives and wealthy investors regularly try to argue that companies cannot pay workers well and be successful in generating profits, Market Basket has been an impressive and stunning example to the contrary. Market Basket has been a good company all around -- until recently, when things changed.
Over at Esquire, Chris Faraone says if workers lose the Market Basket fight, the middle class is in trouble:
Market Basket's formula proves that executives and managers and cashiers can all profit, together. Employees get the benefits of a 15 percent profit sharing plan provided by Market Basket, while the groceries the store sells are less expensive, on average, than Walmart's. As for the register: Market Basket rang in $4.6 billion in revenue last year, and is the 127th biggest privately owned company in America... The American economy no longer exists to support a thriving middle class, or to help the weakest among us attain a livable wage for an honest day's work. It is solely in existence to add to the pile of wealth for the unchecked at the top. That's why it's gained traction in, of all places, the parking lots of a supermarket chain all throughout New England. If Arthur T. fails in his attempt to buy the company back, and the cousin who booted him sells out to a conglomerate as expected, there's a chance this grand experiment will disappear forever. It would become a bellwether for a corporate America that has created a caste for itself, where workers can only expect to be treated fairly until the rug they have made is eventually pulled out from beneath them.
At her blog, Zeynep Ton weighs in on the Market Basket and why it matters for other CEOs:
...I visited Market Basket stores and talked to employees during the last two days, I saw that they are not just fighting for their ousted CEO and his leadership and guidance. They are fighting for their values, their culture. They are fighting to remain an organization that takes care of its customers and its employees, a place where they can be proud to work. Several employees told me they worry that Market Basket will become like any other supermarket. They worry that to make a quick buck, the company will increase its prices or reduce its service or reduce employee benefits or profit-sharing — maybe all of these. These employees recognize that a “good jobs strategy” that allows companies to deliver great returns to investors by taking care of employees and offering low prices and great service to customers is a rare strategy to see in their industry. They recognize that it is a strategy worth a fight. They are right.
In the Boston Globe, Leon Neyfakh wonders whether maximizing shareholder value is bad business:
[I]t’s not just antimarket leftists who are making this point: It’s pro-business thinkers who want to see a more competitive future for American corporations. Critics like Post argue that the singleminded emphasis on profits and shareholder value—which took hold in the corporate world during the 1980s—has actually hurt corporations in a number of ways, giving their leaders the wrong kinds of incentives, gutting their future in pursuit of short-term profits, and often draining them of their real value and putting them at odds with their communities.
To take seriously the idea of a “stakeholder”-oriented corporation is to realize that firms like Market Basket, which we rely on in our daily lives and which rely on us in return, don’t have a fixed role in a capitalist society, but rather exist as tools that can serve a variety of functions. While “shareholder value” is attractive in its simplicity, a look at its track record suggests it might be an idea that has reached its sell-by date.
Meanwhile, a recent Demos report argues that Walmart would benefit from paying workers more:
According to a growing body of research on human capital management in retail, experienced employees with broad knowledge of the company are better equipped to serve customers, leading to higher sales numbers and better performance overall.6 Research from management experts at the Wharton School of Business shows that stores see an average of $10 in new revenue for every additional dollar spent on payroll.7 Better staffing practices lead to higher sales, since customers can count on stocked shelves and knowledgeable employees. Investing in front-line services would increase consumer spending at Walmart’s own stores and improve company performance.
In this Atlantic piece, Derek Thompson says companies with happy workers outperform their peers in the stock market.
Here's an idea for school reform: maybe pay teachers more. In many states, a mid-career teachers barely earn a middle class wage, according to the Center for American Progress:
Over at the Atlantic, Derek Thompson looks at the low wages of recent college grads:
More young people are grabbing debt to go to college, but they can't punch the ticket to full-fledged adulthood, because college-grad wages are growing at historically pitiful levels. In fact, the incomes of recent college grads are growing so glacially that they make the rest of the country look like we're discovering $100 bills in our coat jackets every morning.