Prevailing Wage: And the Sell Out That Just Happened.

Usually things can be easily grasped if you avoid the details and look at a broader picture…  Of course, I’m not saying never look at details… That would be silly…  But I’m saying that if you approach all situations from the bottom up, you really don’t have a clue unless you luckily enough to reach the summit and look down…  It is like climbing a mountain… If you just walk uphill… you may get there… or you may hit a wall that cannot be climbed… But looking at a satellite photo of the mountain first, you can easily track a general path, then deal with the details discovered on the ground when you get there….

What politics all comes back to, is what I first heard while making the rounds with my dad. That old man on the porch who said between cigar puffs…. “Kid… politics is about who gets the money and who controls it…”

That held for my county then, for our counties now, for our state, and federal too… Understanding  that politics is all about money, makes one understand ahead of time what will pass legislature in any given session, and what will not…

There are many ways to divide the pie…  one can base it on color of skin which has been tried in our history.  One can base it on gender, which has been tried in our history… One can base it on land ownership which as been tried in our history…  But over the course of time, each of those distinctions have fallen.  And good riddance.

Now, thanks to mass media, there is a new distinction… Between those who can buy ads to threaten lawmakers, and those who can’t…  (For simplicity more than accuracy, we will from henceforth, call them the 1% versus the 99%…..)

If one looks at the 1%’s slice of pie, prevailing wage bites into it… They have to pay a higher wage than what they could find in cheaper labor…  I mean who could not be against prevailing wage if it meant you had to pay more money which you could, if the trend were gone, keep to yourself?    So these guys do have motive, one that is dear to each and all of our hearts. Keeping their money.

But even rich people know that an argument saying:  make these people suffer more so I can become EVEN richer does not hold water in any forum.  In fact that argument is the kiss of death… So instead they find a third party to portray as victim… which is the government…  Their argument:  our government is paying more than it has to which is a waste catches more flies especially during hard times….

There are some mis-truths here that need pointing out…

One is that doing away with prevailing wage does not cut cost for government…  It does nothing like that at all in our system of bids …. Our government asks for bids, and it chooses one…. Most often there is only one bid.  That bidder gets what they ask… And with prevailing-wage-principles now gone, the owners pocket that extra incremental which was previously blamed on Prevailing Wage…

So whereas on paper one can anticipate all the labor being used on government contracts and take several dollars off every total and call that a potential savings…. it does not show how other mysterious costs will bite into and suck out those alleged savings, funneling the money over to the 1%’s bank accounts.

In other words, there will be no savings because the 1% will steal them… WE THE PEOPLE will still pay $65 million for a construction job, but instead of 53% going to wages which get spent in our state, now only 43% goes to that place… Losing prevailing wage takes money like a giant vacuum cleaner right out of Delaware’s economy… Instead of funding projects to benefit people working, we are funding the same projects to benefit those who take the money immediately right out of the state’s economy which quickly gets locked up and we will never see it again…..

Bottom line of losing prevailing wage?… A.) No money is ever saved by our government.  B.) Our Delaware local economy suffers net loss. C.) The top 1% grows 10% richer with every project the state funds….

In very surprising language from a very Conservative Pope, (Pope Francis’s predecessor)  Pope Benedict lays it out very clearly…

Today, budgetary policies, with cuts in social spending often made under pressure from international financial institutions, can leave citizens powerless in the face of old and new risks; such powerlessness is increased by the lack of effective protection on the part of workers’ associations. Through the combination of social and economic change, trade union organizations experience greater difficulty in carrying out their task of representing the interests of workers, partly because Governments, for reasons of economic utility, often limit the freedom or the negotiating capacity of labour unions. Hence traditional networks of solidarity have more and more obstacles to overcome. The repeated calls issued within the Church’s social doctrine, beginning with Rerum Novarum[60], for the promotion of workers’ associations that can defend their rights must therefore be honoured today even more than in the past…

Hence, by degrees it has come to pass that working men have been surrendered, isolated and helpless, to the hardheartedness of employers and the greed of unchecked competition. The mischief has been increased by rapacious usury, which, although more than once condemned by the Church, is nevertheless, under a different guise, but with like injustice, still practiced by covetous and grasping men. To this must be added that the hiring of labor and the conduct of trade are concentrated in the hands of comparatively few; so that a small number of very rich men have been able to lay upon the teeming masses of the laboring poor a yoke little better than that of slavery itself. 

So, if you read the above you can plainly see  we have a head of the largest Christian denomination the Roman Catholic Church, calling for the continuance of policies like Prevailing Wage, and endorsing it…. “What God has brought together; let no man cut asunder.”

What just happened June 30th, was that the total economic pie of Delaware, the one that gets divided up between the haves and have-nots, just got a little smidgen taken from the Have-Nots and  added to the side of the Haves which already own over 50% of the pie .

• A.) No money gets saved by the Government.
• B.) Less money now filters through our grocery stores, our restaurants, our small businesses, our handyman our landscapers, our repair shops, or our mechanics….
• C.) The noose for 99% of us becomes tighter by another notch, which with a one way slit knot, can never be undone except by cutting away the noose altogether..

The good news is that some form of prevailing wage still stands for larger contracts.   The bad news is that we have less pie than we did a week ago, to feed all 1 million of us living today in what once were the three former counties of Pennsylvania….

But the effects of reducing prevailing wage can be countered by a government and local economy…. If we would just create an excessive tax on the top one percent while giving them the option to write off everything they spent on capital investment that year…. they themselves would have the incentive to pay more and government would not have to step in and support wages with a minimum floor… Pictorially, If the top 1% had to continuously give back the slices of pie they continuously stole from us, they would stop stealing, is basically the point of taxing excessively those only in the top tier.

Or, if we could again legally protect every American worker from being fired if they stopped workage as long as their work stoppage was linked to getting higher wages, then those wages would increase through bargaining under that threat, and laws supporting prevailing wages would no longer be necessary…

But since 1980 we have cut back on those two forms of balance so until they are restored, today’s current political climate which is controlled by the owners of excessive money , demands the necessity of continuing prevailing wage just to keep all wages higher, both private and public, since all wages have to compete for labor against the highest one on the market…

But it is ultimately our failure as a state to jump-start massive local investment by levying huge taxes on all monies the top one percent won’t spend on local capital improvements here within our state’s boundaries,  that causes us to have to defend the concept of prevailing wage.. We NEED prevailing wage just for the simple reason that all of its well-spent money comes straight to us… to all of us in the local economy when those receiving it in their paychecks, spend it!… Without prevailing wage,  it’s the Caymen Island bank accounts which swell with yours and my money…………  instead of our local economy.

Prevailing Wage like every thing in politics… is only about who gets to get their hands on the money….. Why shouldn’t it be you?  There is no reason.  Just that you didn’t ask for it; You didn’t defend your rights to it; you elected people paid for by the other side… Your lack of having enough money today comes down to your own damn fault….

Isn’t it time you did something about it?

Why You Can’t Make Ends Meet

You should be making $18,000 more a year right now.  And would, except for the inequality put in place  beginning with the trickle down policies of Ronald Reagan… now more appropriately called “tinkle” down economics… 

The bottom get pissed on.

The heavy line shows where you would be if the average rate of growth from across the years ’79 to ’10 were applied evenly.  The lighter line shows the reality….

99% of us are all earning an average of $18,000 less than we should be…  So how does this break down?

Average household incomes grew by 53.4 percent from 1979 to 2007. But that didn’t break down equally:

• The bottom fifth of households saw their income go up by 29.2 percent, well below the 53.4 percent average.
• Income for the middle fifth of households grew by a measly 19.7 percent.
• But how did people a little higher up, but not at the very top, do? A little better, but still below average: households between the 81st and 90th percentiles—so in the bottom half of the top fifth of the income ladder—had just 39.1 percent income growth. Again, well below that average of 53.4.
• So how far up do you have to go before you hit the average? The 91st to the 95th percentile almost got there, with 53 percent average growth. But they fell just short. Households between the 96th and 99th percentile seriously exceeded 53.4 percent, though. They had average income growth of 78.1 percent.
• That’s nothing compared to the top 1 percent, though: Their income grew by 244.7 percent, close to five times the average.

It is clear that most of the overall income gains from 1979 to 2007 bypassed the vast majority of American households. As such, their living standards are lower than they would be had these gains been shared more broadly.

Ways To Share More Broadly.

A.  Raise the Minimum Wage:  $10.10 is a start.  

B.  Organize More (and throw out ineffective current bosses) Unions. Override All State Laws Outlawing Unions.

C.  Reduce Wage Theft:  charging workers for uniforms, drinks, food, supplies. Cheating on overtime.

D. Tax the top 1% appropriately…  Include Capital Gains as income. Tax Corporations at the same rate as individuals. Raise the top marginal percents to these levels…

• Over $1 billion in income…  tax rate of 60%
• $500 million to $1 billion in income  = 55%
• $100 million to $500 million in income  = 50%
• $50 million to $100 million in income =  45%
• All the rest: no change….  

On top of this, allow all money put into capital improvements, to be deducted dollar for dollar. (Capital improvements require building things).  The rational is that if you put that money into capital improvements, you are improving this nation as much as if you were directly paying taxes to it.  Perhaps more so.

This can be done, but it must be done with a Democratic Executive, and over 60 Democrats in the Senate (or change the filibuster rules), and a fully Democratic House.  That is what has to happen for any change.  If it doesn’t happen then Americans rightly get what they deserve for being stupid.  Because we all know that Republicans are quite happy with the very fact that you ARE making $18,000 less than you should and quite happy that they are the ones receiving it, not you……. 

It wasn’t supposed to go that way. And it shouldn’t go that way….. 

 

 

 

 

 

Minimum Wage: Two Options

From the CBO, we have it outlined like this… If we raise minimum wage to 10.10, we lose 500,000 jobs.  If we raise it to $9.00 we lose 100,000 jobs…

Is it better to work and receive more money, or is it better to have more people working for less, but at least they are working….

Great question.  There were 3.3 million people making minimum wage in 2013…. The wage will jump from $7.25 to $10.10 or jump from $7.25 to $9.00.   The first is an increase of  $2.85; the second is an increase of $1.75…  The impact of that increase on 3.3 million people are as follows.

3.3 million X  $2.85  =  $9.405 million/hour increased purchasing power

3.3 million x  $1.75  =   $5.775 million/hour increased purchasing power

3.3 million X $0 (no change)  =  $0.00   No change; same as it every was.

But wait.  Job losses are bound to occur.  If we take the CBO’s estimate, we get the first minus 500,000; the second minus 100,000.

(3.3 million  -500,000) X  $2.85  =  $ 7.98  million/hour economic benefit

(3.3 million  -100,000) X  $1.75  =   $ 5.60  million/hour economic benefit

(3.3 million- 0)  X $ 0 (no change)  =  $0.00 no change from the past

There you go… We get more economic push by going with the $10.10 number despite the possible loss of jobs.  .We got an answer.  Gee. What was so hard about that?

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Appendix:

Someone  else brought up the idea that those people put out of work, have a negative influence upon the equation… To be honest prior to their mentioning it, at first, I really hadn’t thought about it. It never occurred to me, because mathematically they would be zeros. Interesting, huh? How the brain works?  My focus was on how much positivity a minimum wage increase would generate…  And because of my positivity I have trouble accepting that there is a negative influence for letting those people go. But just in case there is, let me put it down here as well since someone brought up the fact that those leaving the work force would be decreasing the total pool of potential earnings by their future estimated earnings with which had they been previously working.   Which in this case,  would be the minimum wage rate… applied at both the levels of 500,000 and 100,000….

((3.3 million  -500,000) X  $2.85)  – (500,000 X  $7.25)  =  $ 4.355  million/hour economic benefit

((3.3 million  -100,000) X  $1.75)  – (100,000 X  $7.25)  =   $ 4.875  million/hour economic benefit

(3.3 million- 0)  X $ 0 (no change)  =  $0.00 no change from the past….

That changes the impact. There are several problems with this last model. One, is that its total, is a theoretical rate representing everyone working per hour.  Those being laid off can’t really be a negative against this because everyone who is still working, IS making that much… This is the net increase amount which will be  reported, earned, and taxed. Secondly, if you are out of work you are making zero dollars, and not an actual negative amount which challenges whether the principle is sound to deduct a cost away from the benefit when making  this particular comparison.  One could do so, if one was expostulating a potential benefit which would have to be benchmarked against full employment, and not against the incremental amounts.  For example if we had access to the number of hours worked at minimum wage in this country over a set time period, we could actually make that comparison by plugging in these two rates..

As it stands we can already compare these totals to the status quo, and there is a definite positive bump in economic activity…  Plus, if those temporarily laid-off people get other jobs, ones that actually pay more than minimum wage, then they are off the chart, and that negative is not there at all.  The underlying assumption for there to be an existing negative, is that these people losing their jobs, immediately and forever stop contributing to the economy…

Therefore probably the best comparison to achieve that would be painted like this…

3.3 million X  $2.85  =  $9.405 million/hour increased purchasing power –  (.5 million X 7.250  =  $9.405 –  $3.625  =  $5.78)

3.3 million x  $1.75  =   $5.775 million/hour increased purchasing power  – (.1 million X 7.250  =    $5.775 –  $0.725  =  $5.05 )

3.3 million X $0 (no change)  =  $0.00   No change; same as it every was.

That probably is the best description since it contrasts against the potential possibility of earnings.

But as policy this shows Delaware’s Tom Carper to be very wrong when he was quoted as saying that the lower amount of increase would be best for this country…

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