Must Reads: You might be interested in Natasha Singer's New York Times piece on investment in "the brokers of the sharing economy" such as Uber and TaskRabbit and what it means for contingency workers. This new Demos report looks at policy actions to improve the pay of low-wage federal contract workers. Meanwhile, the Economic Policy Institute has reported on how an overhaul of overtime rules would help low-earning managerial workers. You might be interested in this excerpt in the Daily Beast from Joel Kotkin's coming book on the disappearing middle class and class conflict. [Editor's Note: There will be no post on August 30.]
EPI also has a report looking at restaurant workers and whether they make enough to make ends meet. Check out this chart:
Meanwhile over at Salon, Linda Haluska gives her take on what it's like to rely on a Walmart job:
[M]y husband and I work multiple jobs to make ends meet and take them to an occasional movie or meal out – just like my dad did for me and my sister. I am able to get extra work substitute teaching or picking up odd jobs like working at the fireworks stand. Even with these side jobs and after working at Wal-Mart for eight years, I only bring home about $400 each week. That means that each month I have to make a decision about which expenses to prioritize and ultimately I have to call one of the bill collectors to see if I can pay late or adjust the payment. When I was growing up, my dad was so proud of his work. Manufacturing was seen as the way to a higher standard of living. But that reality is gone. Today, most of my neighbors, friends and family work in service and retail jobs, and sadly, the hard reality is that Wal-Mart’s treatment of workers continues to hold our country back. Being paid less than $25,000 a year – as most Wal-Mart associates are – while the company brings in $16 billion in profits and spends millions on ads is not OK.
Over Real Clear Markets, Jefferey Dorfman has had it with people looking to structure things to provide more security in the job market, particularly for low-income workers:
The latest push to transform jobs from the sale of labor into an instrument for social justice has come in the form of calls for employers to guarantee schedules farther in advance and to conform those schedules to the lives of their workers. In this world, it would no longer matter if a restaurant is busiest at the most common lunch and dinner hours. Instead, if an employee needed to work in the afternoons to fit work between a morning of college classes and when her kids get out of school, the employer should try to accommodate her. ...Jobs are meant to be somebody selling their labor to a business which needs that labor to perform a task. The worker does this in order to get paid, believing the pay is worth more (due to what that pay could buy) than the leisure time the work replaced. Today, worker rights advocates are trying to make jobs into something that exist to serve workers. Employers are increasingly expected or required to provide a range of benefits to workers and to pay them enough to live on regardless of the value of the work performed. This will not work.
Your editor disagrees with Mr. Dorfman in this piece on Market Basket by arguing that seeing workers as a long-term value proposition rather than just widgets can be lucrative:
Market Basket offers prices lower than Walmart and pays their workers a starting wage well above the state’s minimum, as well as offering profit sharing, bonuses and a 401k plan with no union strong-arming them to do it. As Sally Kohn over at CNN notes, experienced cashiers make $40,000—nearly double the industry average—and stores charge 10 percent to 20 percent lower than their competitors. Their management structure is small, high-touch and contains long-time employees promoted from within. The $4.6 billion company took in $240 million profits in 2013, while investing in new stores (numbers currently stand at 71), and paying shareholders a healthy dividends in the last decade. Ask the big boys out there fighting against a minimum wage increase and they’ll try to sell that running a company this way will put you in the poorhouse. ...Many service workers have recently taken to the streets to fight for higher pay and better treatment. Here workers are fighting for a profitable company they value as an employer. Seems like a no brainer which is the better business scenario.
In These Times, Ajowa Nzinga Ifateyo looks at the push for more worker cooperatives via $1.2 million in grants in New York City as a means of pushing economic development:
[I]t’s not easy to create a co-op within a system that, for centuries, has celebrated profits over people and individualism over the good of the whole. All businesses need a business plan, a source of reliable funding and professionals like lawyers and accountants, but worker cooperatives face the additional challenge of learning how to operate democratically. They must figure out how to make decisions (by consensus, voting, or some other process), and then decide such questions as the rights and responsibilities of member-owners, how much money will go to workers as profits and how much will go back into operations or reserves, how to cut ties with cooperative members who do not work out, and how to handle grievances. Not to mention that the founders of worker cooperatives are often women, immigrants, low-income people and people of color, who face additional challenges. They may have internalized racism, sexism and classism, and need coaching and confidence-boosting to believe that business ownership is not only for the white, wealthy and male.
People now not only need to fear losing their job to technology, but also having technology find "new ways to sort, schedule and watch them," writes the New York Times's Anna North.
Time for an editorial cartoon with a take on the ice bucket challenge craze clipped from the New York Times:
You are probably following the unrest in Ferguson, Missouri over the shooting of an unarmed black man. The story has largely focused on issues such as racism, excessive force, abuse of power and the militarization of police departments, but it quickly became a poverty story, as author Malcolm Gay points out in TIME. In this hard hitting piece, basket star Kareem Abdul-Jabbar argues that Ferguson is really about class warfare:
This fist-shaking of everyone’s racial agenda distracts America from the larger issue that the targets of police overreaction are based less on skin color and more on an even worse Ebola-level affliction: being poor. Of course, to many in America, being a person of color is synonymous with being poor, and being poor is synonymous with being a criminal. Ironically, this misperception is true even among the poor. ...Rather than uniting to face the real foe—do-nothing politicians, legislators, and others in power—we fall into the trap of turning against each other, expending our energy battling our allies instead of our enemies...The middle class has to join the poor and whites have to join African-Americans in mass demonstrations, in ousting corrupt politicians, in boycotting exploitative businesses, in passing legislation that promotes economic equality and opportunity, and in punishing those who gamble with our financial future.
The Brookings Institution's Elizabeth Kneebone argues that Ferguson is emblematic of growing suburban poverty. Meanwhile, in this Businessweek article, Peter Coy looks at the Ferguson policing practices that has been accused of "incarcerating people for their poverty". In June, NYT's Alan Flippan reported on the hardest places to live in America and this week the NYT's David Leonhardt added an analysis of web searches by county in the United States that adds new dimension to the rising inequality discussion:
For all the ways that the differences here may simply reflect cultural preferences, however, the main lesson of the analysis is a sobering one. The rise of inequality over the last four decades has created two very different Americas, and life is a lot harder in one of them.
Do we need more presidential leader on this issue? Over at Talk Poverty, Share Our Strength's Bill Shore says yes. In this very interesting TED talk, psychologist Paul Piff discusses studies of a rigged monopoly game that shows changes in people's behavior as they become more wealthy, as well as implications for rising inequality. Watch the whole video here:
This game of Monopoly can be used as a metaphor for understanding society and its hierarchical structure, wherein some people have a lot of wealth and a lot of status, and a lot of people don't. They have a lot less wealth and a lot less status and a lot less access to valued resources. And what my colleagues and I for the last seven years have been doing is studying the effects of these kinds of hierarchies. What we've been finding across dozens of studies and thousands of participants across this country is that as a person's levels of wealth increase, their feelings of compassion and empathy go down, and their feelings of entitlement, of deservingness, and their ideology of self-interest increases. In surveys, we found that it's actually wealthier individuals who are more likely to moralize greed being good, and that the pursuit of self-interest is favorable and moral.
Meanwhile in the Wall Street Journal, William A. Galston argues that shared prosperity is a moral imperative:
We should adopt full employment as a high-priority goal of economic policy and welcome the wage increases it would generate. Because global competition will make it difficult for businesses to raise prices, higher wages would likely come out of profits, which now stand above 10% of national income—the highest since the end of World War II. This shift from profits to wages might prove problematic if businesses were short of capital for investment. But the reverse is now the case, at least for the large firms that are accumulating huge stocks of retained earnings that languish on the sidelines or are used to fund mergers and stock buybacks. And the costs of borrowing remain very low.
In this quick nod to the ice bucket challenge that is sweeping the nation (your editor has seen this being done to a friend just this week), over at Forbes, Niall McCarthy looks at how well fund raising is going:[caption id="attachment_4262" align="aligncenter" width="654"]
Statista overview of the ALS Ice Bucket Challenge by the numbers[/caption]In the Stanford Social Innovation Review, Solve's Dom Potter says we need to stop looking at the world through a profit lens:
We must move beyond the “profit proxy” as a shorthand way of determining whether a business is successful or not, and whether it is social or not...There is no shortcut to understanding how social or ethical an organization is. In fact there is real danger in believing that there is a shortcut, or that there some indicator we can use to quickly assess what a company is like on the inside. By seeking to simplify the answer to such a complex question, the unintended consequence is that people will use the one proxy—in this case, profit and what people do with it—as the only one they need to think about. What about the social impact of an organization that reinvests all of its profits back into its work, but has abhorrent employment practices and treats its staff appallingly? I could name four such organizations off the top of my head.
The One Acre Fund's Hilda Poulson and Jake Velker discuss why the financial sustainability of social enterprises matter for ensuring social impact. Over at the UK's Impact Investor site, Steve McDowell looks at eight things you need to know about impact investing. Meanwhile, Robert Rubinstein over the Huffington Post notes that the rising interest in impacting investing from top MBA students has not yet been internalized by company recruiting:
With all this supply and demand by students, why aren't the recruiters of the leading corporations and financial institutions positioning themselves as impact investing or social enterprises advocates or supporters? This is a golden opportunity with so many students wanting to either start their own social enterprises or work for companies that support these initiatives. If student and alumni interest continues to grow, demands on the financial sector (wealth managers, investment banks, asset managers, service providers) and non-financial sector will become equally large. Responding too slow and too late could impact recruitment, client retention and new clients.