Monday, November 20, 2006

Social Program with a Future: Big win for L. A. working poor. . .

David Shipler's The Working Poor: Invisible in America (New York: Alfred A. Knopf 2004) provides incredible insight into the lives of low-income working people in the United States today. Shipler's book and his research are the most important on the subject in the past 40 years. Central Dallas Ministries enjoyed having him as our guest speaker at our annual Urban Ministries Prayer Event two years ago.

Listen to Shipler's jarring testimony:

"Most of the people I write about in this book do not have the luxury of rage. They are caught in exhausting struggles. Their wages do not lift them far enough from poverty to improve their lives, and their lives, in turn hold them back. The term by which they are usually described, 'working poor,' should be an oxymoron. Nobody who works hard should be poor in America (p. ix).

"Workers at the edge of poverty are essential to America's prosperity, but their well-being is not treated as an integral part of the whole. Instead, the forgotten wage a daily struggle to keep themselves from falling over the cliff. It is time to be ashamed" (p. 300).

Shipler would be proud of the Los Angeles City Council.

The legislative body approved a living wage ordinance for the 3,500 hotel workers employed in the Gateway Improvement District near L. A. International Airport. Eleven of the 14- member City Council voted recently to extend the city's 1997 living wage law to 3,500 workers in the LAX hospitality industry.

The groundbreaking vote makes Los Angeles the largest city in the country to require employers that don't do business directly with the city to pay their workers a living wage.

This extension of the living wage ordinance will affect 13 hotels on Century Boulevard. The law will increase wages for workers to $9.39 per hour with health benefits and $10.64 per hour without health benefits.

In addition, the council passed a worker retention ordinance that insures hotel employees will be able to keep their jobs 90 days after a hotel changes ownership. City lawmakers also enacted rules requiring hotels to give service charges imposed on banquet guests to servers.

The Los Angeles Times reported that current average earnings for Century Boulevard hotel workers is 20% lower than those in downtown hotels and 22 percent lower than in East San Fernando Valley and Burbank hotels. Low wages at Century Boulevard hotels contribute to poverty in the nearby communities of Lennox, Inglewood and Hawthorne, where a large number of these workers live.

Local news media report that in the last two years occupancy rates at Century Boulevard hotels has increased 16 percent -- the highest in L.A. County. The hotels are doing very well.

"Today's historic vote is a win-win for everyone," said Councilman Bill Rosendahl. "The living wage for the hotel workers is a matter of social justice, as well as a matter of good business sense. Treating workers fairly and improving working conditions will benefit hotels and drive economic activity along Century Boulevard. Today's vote will help all boats rise together."

I agree with the Councilman. And, I applaud the hard work of Council member Janice Hahn, one of the driving forces behind the new regulations.

I'm not sure who it was who first said it, but I agree completely with the familiar line, "The very best program of social uplift possible is a job that pays a living wage!"

Like I said, David Shipler should be very pleased.

12 comments:

Anonymous said...

Quite a contrast, Larry, in your two recent posts about city council actions. In one, the city council in Farmers Branch spends their precious time to make decisions that actually hurt tax-paying residents in their city. In Los Angeles, attentive city council members ask this simple quesion: "should the working really be poor?" and then take action to help make it easier for the working to not be poor.

Thanks for bringing this to our attention. I hope that other city councils in many cities will take actions similar to that taken in Los Angeles.

Randy Mayeux
Dallas, Texas

Justin said...

Will be interesting to see what happens in that area when new wages take effect.

Will it bring in more skilled workers, leaving the poor without jobs?

Will the hotels fire employees in order to keep the same profit margins?

The problem with these type of legislative manuevers is this; you cannot force people to be good. You cannot force altruism. Wages are set by a number of things, among them are cost benefit analysis, number of people who are willing to work for less, the amount of jobs present at a given time, etc. Wages are set by these factors, and businesses that set their wages too low will have either no one who wants to work for them, or they will have people who have little or no bargaining power (mostly illegal immigrants).

Regardless of surveys touting success of minimum wage hikes in Florida, most economists agree that raising the minimum wage hurts small businesses and the working poor the hardest. I don't know if you've seen, but Chicago passed an anti walmart law, requiring them to have higher wages and benefits for part time employees, and so walmart just isn't going to build any stores there. They aren't a charity (though they give a ton to charity) but their presence is a boon to the poor, offering decent paying jobs to those with few job skills and also offering a place to by goods much cheaper than the inner city grocery stores typical of large urban areas. (I went in one recently whose ramen noodles were ON SALE for 1.39 a box. they are 18 cents at wal mart)

I don't know what the answer is, but I'm pretty sure its not arbitrarily setting wages. No one ever answers my questions about this. If 10 dollars is good, why not twenty, or 40? The reason is, those implementing these policies know that what they are doing is affecting businesses in an adverse way, and were they to do it on a large scale, massive job loss would occur. The market is a science, and many policy makers don't understand it (or write laws to appease constituencies).

Maybe instead of trying to mess with the market, we shoudl spend out time trying toeducate and motivate citizens who missed out on it (for whatever reason) so that they can get out of poverty. I'm not saying pull themselves up by their bootstraps, but help them figure out how to be successful in our system. It is possible for most people. Some people need guidance and direction though for reasons beyond their control. And for those who are incapable of working, we step in and help them have a decent life. But trying to take something that is a science and manipulate it to fit your morals probably isn't going to work. We have to do EVERYTHING possible within the existing framework because no one has come up with a system that works better than capitalism (at this point) in that it can feed as many people as capitalism can, and create decent living conditions, even for those in poverty in this country. How many people in Africa would love to make 5.15 an hour and live in a crappy apartment? I imagine most if not all would prefer that to the slums of niarobi and the shantis and raw sewage/

Anonymous said...

Why do I feel like deja vu is about to hit? It seems like maybe this argument was discussed once before... maybe... but probably only once... I'm sure it hasn't been a recurring argument...

Justin said...

I'm sorry I write this ridiculously long comments. I just haven't gotten any good answers on this from anyone, besides the FL study. I've read it and I can tell you the reason FLs economy did well was that it was all ready hauling to begin with . Wages were increasing without the government intervention. The only places that wages don't increase is where you have lots of workers and no jobs (mostly poor rural areas). And minimum wage in that case, actually impedes people from getting work. A company might could hire some more people for less than 5.15 an hour, but its not worth it at the higher wage, so people who want to work can't. That's sad.

Anonymous said...

Justin, sometimes government steps in to insure that the powerful are not unduly taking advantage of the powerless, in this case labor! This is not charity. This is a clear example of equity in view of escalating profits. The reason why the gap continues to grow between rich and poor is that no one is minding the store any more in America! If the economy was "hauling" in Florida, why did citizens via govt have to step in? Fairness, equity, justice!

Bravo to the LA City Council!

Anonymous said...

Agreed with previous anonymous:

I am big business and I am making good profits. If I can continue to make more and more profits without giving my workers payraiser, tell me why am I going to give it to them. Capitalism may be the best system we have, but it doesn't work for everybody.

Sure, my high up employees get raises, because they're like me and I want to keep them employed. But who cares about the bottom wrong. I don't know them, and I just don't give a crap about their lives, as long as mine is good.

Justin, tell me how you know all these things about what the economy will and will not do. Are you an economist? What is your degree in?

Todd said...

One doesn't have to be an economist to understand the effects of increasing the minimum wage for small businesses. In order to maintain their profit margin they will have to decrease employees or increase the cost of their product - both of which is bad for the economy.

Also, an increase in the minimum wage, while noble in spirit, does little more than increase the rate of inflation. If more money is out there, the price of products increases to match the supply.

"Treating workers fairly and improving working conditions will benefit hotels and drive economic activity along Century Boulevard." - Original Post

While I don't doubt the core truth of this statement, if it were absolutely true, hotels would have done this on their own long ago.

"Sure, my high up employees get raises, because they're like me and I want to keep them employed. But who cares about the bottom wrong. I don't know them, and I just don't give a crap about their lives, as long as mine is good." - Anonymous

So by increasing wages you're ensuring that big bad business man will start caring about his employees? If anything it will make him disdain them more.

Todd said...

One doesn't have to be an economist to understand the effects of increasing the minimum wage for small businesses. In order to maintain their profit margin they will have to decrease employees or increase the cost of their product - both of which is bad for the economy.

Also, an increase in the minimum wage, while noble in spirit, does little more than increase the rate of inflation. If more money is out there, the price of products increases to match the supply.

"Treating workers fairly and improving working conditions will benefit hotels and drive economic activity along Century Boulevard." - Original Post

While I don't doubt the core truth of this statement, if it were absolutely true, hotels would have done this on their own long ago.

"Sure, my high up employees get raises, because they're like me and I want to keep them employed. But who cares about the bottom wrong. I don't know them, and I just don't give a crap about their lives, as long as mine is good." - Anonymous

So by increasing wages you're ensuring that big bad business man will start caring about his employees? If anything it will make him disdain them more.

Justin said...

I'm not an economist, but I've read enough to have a basic understanding of it. I feel like more people need a basic understanding of it. Maybe it should be required in high school. Supply and demand is pretty important in understanding how our world works, don't you think?

"the government steps in to protect the powerless"

That statement is wraught with irony. The most powerful entity in this country is the government, and they oppress plenty of people. Somehow they are to be lauded for exerting their power over citizens who are just trying to earn a living. Businessmen are people too, and government regulations cause small businesses to fold or never be started all the time.

Citizens in FL didn't have to step in. The economy was bringing people up on its own. If we need the government to raise wages, because companies are too evil to do it themselves, why does anyone make more than minimum wage? Why can't I find a minimum wage job here in nashville? Fast food employees start, with no experience, at 6.50 an hour or more. Kroger is hiring starting at 8.15 with no experience and with benefits part time. No government intercession? Why are they giving people higher wages?

I'll tell you why. Its competition. There is low unemployment in Nashville because the evil big businesses are booming and hiring people left and right. This causes a shortage of labor. Evil big businesses have to have people doing certain tasks. Kroger can't make money without bag boys and cashiers. So how do they get them when there is a shortage of labor? They raise wages until they find people that will work for a price. Kroger would go out of business if they onlyhired people for 5.15 an hour. No one would work for that, they would go elsewhere, where a business is paying more for their work.

I'm not an economist, but one of my good friends is getting his masters in it, and another good friend had an economics minor, and my father was a student of economics as well. I'm curious by nature, and I've read my fair share of articles and books on the subject. I'm by no means and expert, but I understand enough toknow that these policies don't help the poor. They make us feel good, but the best they do is give companies a new minimum to pay, discouraging raises for other employees who were deserving of them.

I'd like someone with a degree in economics to correct me if I'm wrong anywhere. I'd like to hear a response to my points. I never hear them here. I just hear tired responses and questions that I've answered before. I am game for someone to convince me otherwise. I have not seen evidence to do so.

btw, is there a reason that few who respond to me leave their names. Its hard to have serious debate with anonymous numbers 1 2 etc

Anonymous said...

The reason I bring up the economist point is because I've seen you (Justin) ridicule people on here for having a different point of view and no economics degree. If you're going to challenge other people's credentials, I simply want to know what yours are...

And yes, people on here have been addressing your arguments on here for months, but you always seem to disappear from the conversation when you run out of steam.

I think people assume the effect of raising the minimum wage has more of an effect than it really does. What percentage of costs does a company spend on labor? And on that labor, how much would a small percentage change affect the costs. We're talking a percentage of a percentage -- which is not that big of a number.

And all of that extra money given to those people in poverty has a multiplier effect on the economy, because poor people spend it immediately on their living expenses. The money goes right back into the economy, negating most, if any, loss. So, no negative effect, but a positive effect for those who have little food, healthcare, or shelter. That's economics!

Todd, it would be nice if bosses cared about their employees, and you're right, forcing them to pay won't make them feel any better, but at least those employees can have something to actually live on.

Justin said...

The extra money added to the economy doesn't necessarily help the economy. In many cases (and like I said, the bigger the increase in minimum wage, the worse it is) cause inflation. When a significant portion of the country gets an increase in their wages, the increase in money floating around causes the price of goods to increase. I won't explain it any more in depth, cause I'm sure you understand inflation.

I didn't mean to disappear for a while. Got busy at work and now I'm back home for the week.

Anonymous said...

Then why did Bush push through tax cuts? Is he an idiot? Everyone knows money stimulates the economy...