Tuesday, August 14, 2007

Labor and Capital

Labor finds itself on the short end of the American stick these days. Many factors contribute to this hard reality for working people. No society can thrive for long without a high view of the value of labor.

That's why I really like the recent "Walk a Day in My Shoes" campaign initiated by the Services Employees International Union (SEIU). Have you seen reports about this unique effort?

Through “Walk a Day in My Shoes,” SEIU invites presidential candidates to spend a day fully engulfed in the world of a ordinary American worker both at work and at home. It is all about making sure politicians experience the real world of American labor.is like for the rest of us.

In each case the workers expose the politicians to their daily lives and struggles that often make even the most routine tasks difficult. Forced to work second jobs, they have less time to spend with their families. They return home from work and just hours later have to get their kids off to school or day care on time and make it to their next job on time.

The common worries heard during these ventures into national reality include concerns about what happens to their savings (if they have any) if they or their children contract a devastating illness. Workers are anxious about becoming a burden to their kids if they can’t save enough for retirement. Most believe that the future facing their children will be even more challenging than what they have faced and endured.

The union believes that every candidate running for president needs to understand these worries, and feel them. The workers involved and those they represent expect real results on the issues that matter to them—a paycheck that supports a family, affordable health care, a secure retirement and a better life for themselves and their families.

“Walk a Day in My Shoes” is about making sure politicians truly know what the real world is like for millions of American voters. Only candidates who participate will be considered for an endorsement by SEIU.

Senator Barack Obama walked in the shoes of home care worker Pauline Beck on August 8th.

Senator Christopher Dodd walked in the shoes of Head Start teacher Colleen Mehaffey on July 26th.

Governor Bill Richardson walked in the shoes of family services worker Mark Fitzgerald on June 7th.

Senator John Edwards walked in the shoes of nursing home worker Elaine Ellis on April 11th.

Senator Hillary Clinton walked in the shoes of Las Vegas nurse Michelle Estrada yesterday.

Senator Joseph Biden and Gov. Mike Huckabee have accepted SEIU’s challenge and will be walking soon.

I like what one great American President said about the value of labor during his "Annual Message to Congress."

"Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is superior to capital, and deserves much the higher consideration." (Abraham Lincoln, December 3, 1861 )

Ordinary workers should be respected, their voices and concerns heard, their needs and their contributions valued.



Roland said...

Just as with the ribbons that so many celebrities and politicans wear, this stunt will help no one. It will not change one thing. Do you really think these millionaires will have their lives affected by doing this? That this is not just pandering?

How about doing something useful for the common worker such as cutting their taxes...wait! You're talking about Liberals here. I forgot.

osipov said...

has a republican candidate participated in this effort??

Larry James said...

Roland, sorry you are so cynical. The point is not the politicians. The point would be the organizing work of the SEIU and the common folks who work hard everyday. Would that your instinctive move to discuss tax cuts were matched by your call for higher wages to be paid by corporate America! It is past time for people of faith to answer folks like you--we've been nice, polite and quiet for far too long.

Osipov, yes, Mike Huckabee, Governor of Arkansas (and no liberal) is set to take part and I expect others will, as well.

Jim said...

Larry, lower taxes would effectively result in higher wages. I am curious though; at what would you set the minimum wage? If raising it to $10 per hour is a good thing, why not raise it to $25 per hour? Would that work? Why or why not? Do you believe that only good comes from hikes in the minimum wage or are there other impacts?

Frank Bellizzi said...

"It will not change one thing."

I disagree. I don't know what "Walk a Day" might change. But I think it certainly can make a difference.

There are certain experiences that people have. Most of them would be filed under "Extraordinary."

These tend to color how a person thinks for a long time, often for a lifetime. I believe that anything that puts leaders in the shoes of those they would lead and serve and represent can and will make a positive differece.

jim said...

Oh, and just one more thing, Larry. I too am a person of faith, so I am puzzled by your statement that it is time for people of faith to answer people like Roland who might be opposed to increases in the minimum wage. The question of whether higher and higher increases in the minimum wage constitute a good thing is an economic question. It is not a matter or question of faith. It is simplistic to believe that those who believe wages and salaries should be determined in the marketplace hate the poor.

Anonymous said...

Larry - I, too, am a person of faith (and also a democrat with fiscal conservative and social liberal slants), and I feel, in some ways, like Roland. I wonder if these politicians would "walk in the shoes" of these people if they were not running for President. Have they ever "walked in the shoes" of these people before when the lights and cameras weren't on them? I don't want to see symbolic gestures from politicians anymore. I want to see action... and it seems to me that we have seen alot of "symbolic gestures" from both sides when they needed our vote but don't follow it up with ACTION. Yes, I am cynical with politicians because I see people like you on a daily basis living a life of ACTION.

I was disappointed to see that your response included, " ... folks like you". I take that to mean that you believe folks like me and Roland are not people of faith. But I am a person of faith. I just have a different view than you on this issue ( even though I agree with you on most other issues).

Keep up the Great work... but please don't jump to conclusions about some of your friends out here.


Larry James said...

Frank, I agree. Thanks for your input.

Jim, thanks for the posts. I actually wasn't talking about minimum wage per se. I was simply pointing out that cutting taxes--that often adversely affect the very poor--is not the only way to encourage and reward labor--our "supply side" fixation on taxes betrays many of our national interests, especially longterm. There is a reason that 5 million Americans have dropped below the poverty line in the past 6 years. In my post I was thinking more in terms of what the brother of Jesus wrote: James 5:1-6. Faith means you pay fair wages and your only concern is never your own bottom line. This is related to faith, at least as I understand faith.

Larry James said...

Dean, thanks for your post. Forgive me for stereotyping, but for the past almost 30 years there has been very little space to voice an alternative point of view regarding poverty, politics and public policy. Those days are over for me.

If you look at the voting records of the politicians involved, you will surely find somethings to be negative about, but you will also find much to applaud. Anytime anyone shines a light on working people--common laborers in this country, we are made better. Anytime anyone wants to focus on the poor, I am ready to listen. I am not making assumptions about anyone who may be out there. I am just responding to what I read here and what I believe that arises from how I spend my days. Public policy matters--the answers will never be found in charity alone. Justice must find its place in the mix. Labor is one place we need to pay attention.

Justin said...

From my point of view tax cuts don't hurt the poor, Larry. I assume you feel that the production of business continues atthe same pace regardless of tax rates... its just not true.

Businesses producem more when the weight of taxes is decreased. Sure, there is the "trickle down" effect of putting money back in the economy, but the main benefit of the poor from tax cuts is that it almost always increases revenue to the federal government. Because when production increases, so does revenue. And that extra revenue can be spent on social programs.

This is why I don't understand the democrats hating tax cuts so much. It should fill their coffers even more to redistribute wealth. But the dirty little secret is, the income tax isn't about helping anyone. Its about punishing and controlling the populace.

osipov said...

hey, republicans are the ones that invented income tax . . .

Larry James said...

Justin and all my friends who have read my post about labor and gone immediately to talking about taxes, please note: I said not one word in my post about tax cuts or tax increases--not one word. I was talking about a movement for fair wages, wages that ought to grow and procede from the benefits that you assign to tax cuts!

I believe you instant move in this direction (and it happens in many conversations here) should tell you something about your "blind spot."

Again, my post was about labor and wages.

Justin said...

I guess I wasn't responding to the post, but to comments that you made above in response to others.

I guess I too think that these type things are just stunts that the elites do to try and show that they are regular people.

I agree that we should respect those that are laborers, just as we should respect all people. But what I don't understand is how you determine a fair wage outside of the market? If artificially setting wages has no effect on the economy, why do we increase the minimum wage slowly, over a period of years? Why don't we just increase everyone's wage to 100 dollars per hour, regardless of the skill necessary to perform the task? I've yet to see an answer to that question here.

I support labor, and I support ceos. Companies can't run without either. But its important to note that most of our grandfathers and great grandfathers worked as hard and lived much harder lives in the past, and didn't complain and ask the government to make their lives more comfortable.

SeriousSummer said...

Some of our fathers and grandfathers and also greatgrandfathers fought, and some died, to establish the American union movement. Others only survived the Great Depression (including my children's greatgrandfather on one side and grandfather on the other) by the government programs established by Mr. Rooseveldt. Please remember that. Also, remember that without their efforts and sacrifice that you wouldn't have the 40 hour work week, overtime pay, social security, medical, retirement or any other type of benefits or vacation pay.

If the market were truly free, then perhaps it would be fair to let it set the floor for wages. But only the luckiest or most naive of people believe that they have equal bargaining power with the Wal-Marts of this world.

Remember, please, that a corporation is a collection of individuals given a special collective power by an act of the government. When the government fails, as it has over the last three decades, to give equal rights to collective activity to working people, than neither equal bargaining power nor a real free market exists.

Fair is fair. Give working people the same preferential treatment as corporations under the law. Or eliminate the government subsidies and preferences given to corporations. Until then, talk about a "free" market is only so much blather.

Larry James said...

Thank you, Serious Summer! A typical insightful and most eloquent comment! I doubt that some who come here will ever agree with either of us, but what you post here is simply the truth. What continues to confuse me is how it is that so many otherwise rational people can continue to argue against their own self-interest. Think it has to do with media today? Or, is it the almost universal belief that we are all part of the "upper class"?

One last note: you obviously didn't get the historical update from last week posted here in hte comments section. History flash: FDR made the Great Depression worse and his policies extended its impact rather than relieving it! :)

Justin said...

I still haven't heard why we can't make the minimum wage 100 dollars an hour. Larry and Serious Summer, maybe ya'll can answer that?

Also, I realize that we don't live in a completely Free Market. Its why I'm voting for Ron Paul. We live in a market driven by corporate welfare, and I have just as much problem with that as I do with regular welfare. Probably more of a problem actually.

Anonymous said...

Basic economics, Justin... too much of a good thing can actually be a bad thing.

Also, I find it ironic and sad... "No government! Vote for so-and-so."

You claim to be anti-government, God will save the world, no government involvement, etc. And yet, how do you go about doing it? Through government and Ron Paul. What happens when HE becomes part of government, which he already is?

If you're going to be anti-government, go crawl into a hole and suck your thumb. Just don't speak out of both sides of your mouth. That's just low...

Anonymous said...

Justin is young and naive . . . still LOTS to learn about the REAL world . . .

Larry James said...

Justin, I know, I know, you're going to talk about supply and demand and rising prices, etc. So, I won't take that bait. We don't raise minimum wage to $100 an hour mainly because no one is saying that the skills necessary to perform low-skilled jobs are worth $100 an hour. I am not denying that certain funcitons have reasonable values. For the same reasons I would object to the current trends in executive compensation.

What I am saying is that labor has the right, and I would say obligaiton, to exist, to organize and to take action for fair and livable wages for all workers. Corporate leaders will seldom, if ever, arrive at that place without the struggle and engagement with labor as a force and a power. The market, especially with so much advantage weighted toward corporations, will never be equitable without this process or, some would say, battle.

SeriousSummer said...

The shortest answer to the argument if $7.25 per hour is good, then why isn't $100 per hour better, is the Hegelian dialectical principal of the movement from quantity to quality.

In simplified terms, the idea is that at some point an increase (or decrease) in quantity surpasses a certain threshold and effects a change in quality.

So a raise in the minimum wage from $5.15 to $7.25 doesn't cause any significant change in the economic system (except for improving the life of those at the bottom), while a raise to $100 per hour for all would work a transformative change on the economic system.

Larry James said...

Serioussummer, thanks again for the insightful comment! You're on a roll today in more than one arena! I feel another deal coming down!

Justin, I'm sure you'll start an argument now about the precise point at which the quality threshold exists for the system. Based on past comments, I'd reckon that point to be anything imposed, but specifically anything above
$5.15 an hour. Right?

Justin said...

I don't think I'm starting an argument anywhere. I have been asking this question for a long time, and hadn't heard your answer.

I'm for no minimum wage, because it makes jobs more plentiful. People that are in jobs all ready making more than the minimum, will continue making that wage, and likely there will be very few professions where someone will make less than 5.15 (or 7.25 now) anyway.

And as to the anti government thing, and supporting Ron Paul. I think its faulty logic to say that since I am anti government, I shouldn't be able to support any candidate. If the candidate himself wants to transform government by a mandate from the people into a completely different beast, one that does very little and creates opportunity rather than quelching it.

I'm not here to argue, but to discuss. Too often, I believe, people make decisions because it seems like the right thing to do, but it ends up being the wrong thing. Just a small example is the government mandate to use ethanol to save the environment. Nobody thought about the fact that the massive increase in demand would cause the price of almost all food to go through the roof.

SeriousSummer said...


The facts are simply that individual workers, absent protection from collective bargaining or the government, have insufficient bargaining power to negotiate fair wages with large corporations. In those cases, unskilled wages will be driven down to subsistence levels and even skilled workers will do poorly. Here's the result of ten minutes work on the web:

From the Wall Street Journal:

"BEIJING -- McDonald's Corp. is raising wages and adopting new uniforms, stepping up efforts to burnish its image as an employer in China amid tightening labor laws and scrutiny by China's government-backed trade union.

McDonald's said it will raise wages for its restaurant crews 12% to 56% above China's minimum-wage guidelines as of Sept. 1, a move that will affect about 45,000 full-time and part-time workers, including students. Full-time workers in the large southern city of Guangzhou, for example, will see their monthly wages rise 21% to 1,072 yuan ($142)."

I make that to be $ .81 per hour. Corporations will pay as little for labor as possible, because their purpose, reason and duty is solely to make money for their stockholders.

The current minimum wage for industrial textile workers in Sri Lanka is $.20 per hour. While not all industrial textile workers earn the minimum wage, more than fifty percent of such workers earn less than the amount necessary to buy food with a caloric count sufficient to maintain their body weight.


The minimum wage for steel workers in India is $2.80 per day--but the mills actully pay only $1.40. http://www.stwr.net/content/view/1849/37/

Or see this from the July 25, 2007 issue of the Chicago Tribune for something a little closer to home:

"DAYTON, Ohio - No job lasts forever, especially a $30-an-hour assembly line job. Cheryl Seaton recognized that a long time ago, which is why she went back to college to pick up a degree that would insulate her from the economic wreckage she sensed was coming.

It didn't help. When the end neared for her auto parts assembly plant last year, Seaton, 52, walked off the loading dock, armed with a bachelor's degree. In January she began work as a mental health caseworker for a third less money.

Seaton is paid $9.45 an hour, less than what her 21-year-old daughter earns as a truck dispatcher."

Read E.P. Thompson's The Making of the English Working Class or any other respectable study of the life of industrial workers before organization. Read Barbara Ehrenreich's Nickle and Dimed.

The average yearly pay for farmworkers in Florida is between $10,000 and $12,499 per year. Farmworkers are not eligible for overtime and don't have a right to collective bargaining. http://www.ciw-online.org/images/Facts_and_Figures_07.pdf

Is it any wonder that few legal residents will do this work? If you've never done fieldwork, it's certainly an experience that you would never forget. I put up hay and picked fruit (for .75 a lug) growing up and it's back breaking work.

You said "Too often, I believe, people make decisions because it seems like the right thing to do, but it ends up being the wrong thing." Before arguing that there is no need to have a minimum wage, I hope you will do some research on the consequences.

jim said...

Larry, I note you readily admit that unskilled labor is not worth $100 per hour, but the real question is what is the best way to determine the value of any economic exchange. It is still two parties who voluntarily agree on a price in the private market. It is not the government. For all of you calling Justin young and naive, you should stop. Justin understands a very basic tenet of economics. Price ceilings and price floors do not work.

Larry, I agree with you that executive compensation seems obscene. However, here is my question regarding that. If, as you argue, labor has the right to organize collectively and enter into bargaining agreements with management, then do not stockholders have a similar right to hire professional management and pay them what they believe they are worth? In other words, if the market value of a company increases by $10 billion during a CEO's tenure, does it make any sense that stockholders might believe he should be compensated to the tune of $100 million? I don't know the answer to this -- I'm just asking.

Larry James said...

No one seems to try to answer SeriousSummer. . .maybe because he is so correct in all that he writes and reminds us of.

Jim, labor has the right in the nation to organize and bargain collectively. Pressure from labor has made this nation better. Today, we find ourselves in grave jeprody due to the weakened nature of the labor movement. The widening gap between haves and have nots in this nation constitutes a real threat to our democracy longterm. We should be concerned for labor and the interests of working people.

Regarding executive compensation, in my view shareholders share holders should take care to reward labor in a much more equitable fashion than it does today. In the past in this country executive compensation was more in line with that of labor.

jim said...

Larry said "No one seems to try to answer SeriousSummer. . .maybe because he is so correct in all that he writes and reminds us of."

With all due respect, you have not answered a single question I have put to you. For instance, when I asked if stockholders had the right to compensate their CEOs as they saw fit, you wrote they had the right to compensate labor. No one asked that (nor does anyone dispute that). You never answered what you thought the minimum wage should be and if a $10 minimum wage is a good idea why not make it $50 per hour.

Yes, to answer SeriousSummer, there is no doubt the labor movement brought about reforms in this country that workers continue to enjoy to this day. It is also true that at times organized labor has been a visciously violent movement with ties to organized crime. It is also true that some of the more highly compensated workers today are NOT union members at all. It is also true that automobiles are priced out of the reach of many because of organized labor. It is also true that General Motors may yet go bankrupt because organized labor has been so effective in shaking down GM's management in the past that it may drown in pension and retirement-related costs.

So how about it Larry; if a rise in the minimum wage is such a great thing, then why would it not be a greater thing to raise it to $50 per hour. I think it is because you and everyone else knows in their heart of hearts that the minimum wage causes unemployment and a huge rise in the minimum wage will cause even greater levels of unemployment.

SeriousSummer said...

"So how about it Larry; if a rise in the minimum wage is such a great thing, then why would it not be a greater thing to raise it to $50 per hour."

Well, Jim, if you have 2 kids that are the apple of your eye, wouldn't 200 make you 100 times happier?

If you want to eat one hamburger, wouldn't a dozen be that much better?

Why only one lovely wife? Why not 100?

One cold drink tastes good after work, but a twenty would be just that much better, wouldn't they?

Why settle for one nice dog when you could go to the pound and pick up a couple dozen?

If you have three televisiosn, or two sofas, or one kitchen table that you like, then why not get ten times as many and be that much more pleased?

Or, if you have a million, wouldn't $100 million be better? And if $100 million, then $1 billion?

A sufficiency is proper and necessary. A desire for more than is reasonable is gluttony.

Questions in this form are a specious argument that only show that the person asking them has not thought enough about the issue to intelligently discuss it. I would guess that is why people rarely bother to answer.

If you really wanted an answer, then you wouldn't ask specious questions.

A meaningful question is: "How much is too much?" About that we could disagree and discuss.

A reductio ad absurdum argument only makes sense if the item discuss is valuable to the recipient in infinite quantities. Life isn't like that. One wife, two children and a decent living are fine by me and, I believe, most of us.

So is fair pay for work.

Larry James said...

Thank you, Serious Summer for another well-reasoned reply.

To your orignial question (which I took as rhetorical and I expect I was correct on that judgment), I suppose the Boards of stockholders "have the right" to pay executives whatever they decide to pay--it is clear that they are doing that, and in companies that you and I "own," thanks to our involvement in mutural funds, 401 k plans, etc. In fact, no one ever asks me about their pay or the pay of labor in those companies.

I resisted raising the issue of greed, but, as it turns out, Serious Summer does a much better job than I would have!

There has been a lot of talk about "national values" since the election of 1980. Funny how moderation and equity never seems to make that list. All the while unchecked greed continues to grow and the gap between rich and poor grows.

Corporations "have a right" to pay whomever whatever their "whomevers" will agree to accept as pay--whether executives or labor. But there is something higher than "right." There is this matter of morality, fairness and equity.

To your criticisms of the labor movement in America, each of your objections and concerns could easily be laid as a template over the history of American corporations. As to the fate of the U. S. auto industry, many factors have been involved--highly skilled foreign competition, health insurance costs that the companies have to pay ($1,500 per unit for GM the last I heard), etc.

All of these issues are complicated, but the value basis of the arguments is something I'll keep coming back to again and again.

Larry James said...

Jim, one more thing--Japan and the European auto makers enjoy a decided advantage over their U. S. counterparts thanks to their nations' national health insurance plans, as our automakers have been pointing out for the past decade.

jim said...

Serious summer: yes or no, does the minimum wage cause unemployment? Let me put it where it isn't so specious for you. If there exists a job for which a "fair wage" is $8.50 per hour and the minimum wage goes to $10 per hour, what will happen to the $8.50 per hour job? Will it disappear? Why or why not?

SeriousSummer said...

It is not a yes or no question, because, as the rest of your comments set forth, the amount of the wage and the value of the work determine whether or not a job will continue after a raise in the minimum wage.

Let's look at your example. If, say, a farmer can make $9.25 for his crops including all costs except the labor of picking them, then he will hire a worker at $8.50 to pick them, but will not hire a worker at $10.00 to bring in the harvest (or won't plant next year at those costs--he may need to harvest this year to minimize his loss--and if enough of his costs are fixed costs, then he may have to continue to plant in future years even at a loss--see how complex it gets!). So a raise in the minimum wage will cost a job under those circumstances.

But the issue is more complex. If the crop being brought in has sufficient demand, then the price will rise to support the wage increase. Or the farmer will purchase mechanized equipment (thus creating industrial jobs). Or perhaps a more efficient farmer will instead increase his or her production--someone who can still make a profit while paying his workers $10.00 per hour.

Real word studies show that a reasonable raise in the minimum wage will cost a very small minority of minimum wage workers their jobs--but create more jobs overall. This is a real world question. Unless you are willing to do the very substantial work of studying the issue (and even then you may be wrong), it's very hard to predict whether a raise in the minimum wage to any specific level will lead to an overall gain or loss of jobs.

A few months ago I debated this issue on the McQuistion Report with, among others, Bob McTeer, a well-know conservative economist. In the end even Mr. McTeer had to admit that a raise in the minimum wage from $5.15 to $7.25 would be unlikely to have any adverse economic effect. The wage level was still low enough to maintain most every job.

Abstract theory isn't sufficient to predict real word consequences--this is where the Marxist went so wrong. Any theory, no matter how beautiful, can be spoiled by stupid facts.

The stupid facts are, whether any person likes them or not, that a raise in the minimum wage will have overall positive consequences for the economy (and the vast majority of minimum wage workers) up to a certain level, and then will have adverse effects for the economy and workers.

The key is to determine the level of maximum benefit. That's a factual inquiry to be determined by experts. Not you nor I sitting in front of our computers late at night. Not that we aren't entitled to our opinions, it's just that without knowing the particulars our opinions are worthless.

Facts on the ground are important, not abstract theory. Of course some of us, myself included, believe that morality is also important. Human dignity is worth, in my humble opinion, $10 dollars per hour. In Nepal, the standard greeting (Namaste) means I salute the god within you. I think that by paying a fair wage that we honor the image of God in which each of us is created.

Eric said...

Great discussion. I've enjoyed reading this thread. As a follower of Christ who works in the business world, I don't agree with many of SeriousSummer's arguements. However, I really respect his intellect and the style in which he presents his case. Thank you for your perspectives. You've truly broadened my thinking.

Larry James said...

Serious summer, again, nice argument. But, I must say you sound like a theologian here, rather than an attorney, a developer or a pick up basketball expert! Nice one, my friend! Namaste!

Roland said...

Larry, cutting taxes is a Govco job. Raising wages should ALWAYS be the role of business. Govco should never be in the role of determining wages.

Larry James said...

Roland, government should, can and at times must regulate wages to protect labor against the unchecked greed of corporations. Labor has had a role in that and labor must continue to organize to pressure, negotiate and insist on equity and fairness in matters related to wages. You and I will never agree due to our completely different worldviews and likely, as Serious Summer has said so well, our differing theological perspectives.

Anonymous said...

I want to know what is up with this cutesy, rhetoric-laden words like "Govco" -- it means NOTHING. But I guess it makes libertarian elitists feel smart making up these dumb names.

osipov said...

GM is edging near bankruptcy because their products are usually far inferior to "imports." What a lot of folks don't realize is that a great majority of "american-made" vehicles are assembled elsewhere. On the flip side, a lot of "foreign" vehicles have plants in the U.S. My husband and I spent 1 1/2 years looking and researching and driving various vehicles. We settled on Hyundai - a lot of vehicle for the price. Oh well, didn't mean to do a commercial, just add my two cents on GM's sad state.