Saturday, March 16, 2019

Weekend reading - a new direction is possible in Wisconsin

It's a busy time in my world, so I wanted to forward to you a couple of recent articles from progressive policy wonks, who were both coming up with proposals that can improve this state's economic future.

The first is from professors Jeffrey Sommers and Michael Rosen, who say it's well past time to raise the minimum wage in Wisconsin, and use their column to rebut many of the arguments against doing so.
But, “Won’t many small businesses relying on cheap labor expire without it?” No, because their competition will have to pay the same wage they are paying when the minimum wage is raised. Take wages out of competition and firms will be forced to compete on quality, innovation and service. Of course, some workers may be exempted, as some are now with the minimum wage.

But, “Hey, I currently make $15 an hour, so why should burger-flippers make more than me?” First, no one should work full time and live in poverty. Second, these folks work really hard. And, finally, the minimum wage is a floor that lifts up all low-wage workers’ pay. If the minimum wage were eventually raised (in steps) to $15, your pay would almost certainly rise above $15 an hour. Your self-respect should not be dependent on making a few dollars more than someone cleaning an office building or emptying bed pans (honorable, needed, and hard jobs). Remember, you are going to get a raise too!
At least you would think so, because there is going to need to be a sizable premium above minimum wage if businesses are going to retain the talent that they have. The "divide and conquer" crowd doesn't want people to think that, and to be resentful of people just below them on the wage scale. But in a time of sub-4% unemployment, it's the employers that are the beggars, and if the higher minimum wage was combined with Medicare for All, those employers would have more funding available to pay salary since they don't have to think about offering health care benefits.

Sommers and Rosen continue to knock down the arguments against a higher minimum wage, pointing out that it is good for the economy and even employers if we pay more for quality work.
But, “How can America compete against other countries if its wages go up?” The United States used to have the world’s highest minimum wage for developed countries (some countries set this by law, others let unions set them). Know where we are now? Dead last for developed countries. Has this made the U.S. more competitive? No, it just means there are more people living in misery requiring public support. Inequality has soared to unprecedented levels. The U.S.’ minimum wage, currently at 1950-inflation-adjusted levels, forces people to go deeply into debt to buy the goods and services our economy makes. That makes the billionaires on Wall Street richer, but Main Street poorer. It also makes our economy more liable to financial busts.

But, “Won’t the price of my Big Mac go up?” Sure, prices will rise a few cents. But c’mon, don’t be a chiseler! Aren’t you willing to pay a little more so people who work hard and their children don’t live in poverty? We understand that even parts of the middle class are struggling. But remember, if the minimum wage increases, even many middle-class workers will see their wages rise...

But, “Don’t all employers want low wages?” No. Many employers want to pay more because when they do employees become more efficient at their jobs and quit less often. That saves companies money! Why don’t they pay more, then? There’s a limit to how much more you can pay than your competition. Costco, for example, is the biggest lobbyist in the United States for raising the minimum wage. They want to pay people even more, but are blocked by bottom-feeding businesses like Walmart that pay low wages and rely on government to cover part of their wage bill through social programs.

I also wanted to mention that the Wisconsin Budget Project recently released "A Blueprint for Stronger Growth and Shared Prosperity." Here the main ideas.
#1 Invest in healthy and well-educated workers and communities

#2: Make work pay and uplift working families

#3: Strengthen Wisconsin’s infrastructure and communities

#4: Close tax loopholes that favor big corporations and the well-connected.
Some of the items the Budget Project wants are included in Governor Evers' budget, including indexing of the Homestead Credit, an expansion of the Earned Income Tax Credit, expanding Medicaid under the Affordable Care Act, increased investments in K-12 education and child care, and more broadband Internet in rural communities.

But the Budget Project also asks for a few things that weren't in Evers' budget, including a requirement for employers to offer paid family and sick leave, and a few other items.
Limit the practice of suspending driver licenses for low-income Wisconsinites who are unable pay fines and forfeitures: End suspensions for offenses unrelated to driving, waive reinstatement fees, allow and encourage judges to use alternative sanctions, and authorize the issuance of occupational licenses.

Take a strong stand against wage theft and wage discrimination: Enact and enforce a strong wage theft prevention law similar to the ones enacted in California and Maryland in recent years.

Limit the Foxconn subsidies to the minimum that we are contractually obligated to pay: Protect state taxpayers from the bloated cost of potential Foxconn subsidies by being sure that the contract is not amended or reinterpreted in ways that would allow the foreign corporation to get huge cash subsidies even if it continues to fail to meet the contract’s terms.
Restore the alternative minimum tax: Reinstate this tax to ensure that all high-income Wisconsinites pay at least a modest amount of income tax.
What both these articles show is that a different way is possible in Wisconsin if our political leaders choose it, and if the people elect politicians that will do it. We do not need to bow down to Lord Business and settle for the lesser outcomes that we have today.

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