This is not to say that all minimum wage increases kill jobs. A rational minimum wage increase, especially if it were predictable giving businesses time to plan for it, could potentially provide employees with some extra cash without triggering costs high enough to compel the businesses to fundamentally change its labor practices.

President Trump – Labor Secretary Nominee
Andrew Pulitzer

Yes, this is a quote directly from the former CEO of Carl’s Jr. and Donald Trump’s first pick for Secretary of Labor. And this is also a quote that precisely summarizes my beliefs on increasing the minimum wage.

Why I Wanted to Read “No Capitalist Comeback”

This is one of the reasons why I checked this book out from the public library. I guess I’m a Socialist if I like to read books from the public library… but that’s another blog post. Unlike others I know that seem to only read and accept writings by those from the same ideological mindset, I like to understand what those that don’t share my same view are thinking and saying. After all, the best way to come to an understanding and find a solution is to seek first to understand.

“If men were angels, no government would be necessary.”

James Madison

In Favor of Family Leave 

Pudzer again shows that he is not a staunch Conservative, which may be one reason Trump never came to his aid and abandoned his nomination rather quickly when he stated his belief that there should be paid family leave and other pro-family legislation to aid working families.

Pudzer stated that he had a desire to implement the Presidents (well, actually Ivanka Trump’s) paid family leave act and said that he believed that, “if it was done with the sensitivity toward the reality is a business it would be possible to enact paid family leave in a way that wouldn’t discourage hiring and job creation.”

The Role of the Government in Capitalism – Personal Commentary
If Capitalism is based on self-interest and business owners having a profit motive you have to take into consideration the fact that human beings are by nature greedy and will take as much as they can. This means someone needs to step in to create protections for workers that don’t have as much bargaining power. 

The quote by James Madison early in this says it more eloquently than me, “If men were angels, no government would be necessary.” But we know that this is not the case, and as corporations have accumulated more power and political clout, it has become necessary for the government to step in, regulate and stand up for the common man. The reduced role of unions in modern society, evidenced by a lessened role of unions over the past 60 years, has destabilized our labor markets and created an unfair advantage for large companies.

This is why we need labor laws that include safe work environments, minimum ages for when children can begin to work, limits on the number of hours worked per week, and minimums on how much workers can be paid!

If we didn’t have the government stepping in to set these minimums, based on societal norms and beliefs, corporations would push these limits to their maximum in an effort to increase shareholder and personal wealth!

I firmly believe that Capitalism is the best economic system ever created and that every business and business owner should be allowed to make a fair profit… We need to redefine what fair profit means… Let’s not forget that these are public companies that should be serving a public good.

Should executives of public companies be paid millions of dollars while they pay their employees minimum wage????

No!

Should we allow corporations to get millions of dollars in tax breaks on purchasing corporate jets when they don’t allow or pay their employees to have paid time off?

No!

Is it right that an employee can’t take paid time off to take a sick child or relative to a doctors appointment and possibly fired?

No!


The American Two-Tier Labor Market – Personal Commentary
It’s come to the point in America where we have two economic systems… One that is for salaried, college-educated workers… And the other for minimum-wage, non-college educated workers.

Yes, it’s true you can move from a minimum wage job to a salaried position where you have health care benefits, retirement benefits, and paid time off … And that should be encouraged and celebrated!

However, when you’re working a minimum wage job, paying for childcare, paying for public transportation, and not getting paid when you have to take your sick grandmother to the doctor for her chemotherapy… It’s almost impossible to make that happen.

If you break down the day of a Texas minimum wage worker and start with needing to ride a bus to work you can see where several problems exist. This bus ride costs them about an hour of pay even before they have started working. If they work at McDonald’s or Carl’s Jr. and choose to have lunch at their own restaurant and pay the same amount of consumer would… That would be another hour of their pay. If their child has to have childcare after school that would be another two hours of their pay. And then they have to get home somehow and that eats up another hour of their pay. At this point… There is no incentive to work… And this is the greatest challenge that we face today… wages are so low that there is no incentive for working. 

Now that we are having the discussion of minimum-wage we also need to be looking at the entire welfare system and making sure that when you do get the better paying job that you’re not immediately losing all support and having it be a penalty for working… We need to take a look at the earned income tax credit (EITC) that provides a decrease in taxes as you increase your earnings up to a certain level so it encouraged people to work for a living and to try to move up to that second tier of economic status that I discussed earlier.

And back to the notes on the book …

1938 Fair Labor Standards Act (FLSA)
The Fair Labor Standards Act, enacted by Franklin Delano Roosevelt, as a reaction to the increased power of corporations, created many of the labor laws we somewhat take for granted today. The FSLA provided for a minimum wage, 40 hour work week, overtime pay, and prohibiting oppressive child labor.

Puzder correctly points out that unions lost influence during this time because they soon found out that the government was able to negotiate wage increases and enact better labor conditions better than they were able to negotiate as a collective. And he is right, it’s the governments’ role to use their legislative powers and leverage to set minimum labor standards.  Unions and individual workers shouldn’t have to fight major corporations to obtain the labor protections they are entitled to.

Also, as some jobs got increasingly technical and relied more on individual accomplishment, the need for a collective bargaining power rested with the individual vs a collective approach to negotiating wages. However, in low-paying, unskilled jobs, it is still increasingly important to demonstrate collective power and unions still play a vital role in negotiating wages and benefits.

The Uberization and Freelance Economy – Personal Commentary
As the number of freelancers, part-time, and gig-economy jobs proliferate, we are heading towards a retirement and health care crisis. The Republicans have done everything in their power to destroy the Affordable Care Act and in doing so reduced the ability of those without company sponsored health insurance to have quality and affordable insurance plans. Freelancers and those that work part-time gig type jobs are also not able to access the same type of 401 (k) that many workers at many larger companies have. Yes, someone that freelances can open an IRA account but the tax-deductible limits are paltry compared to the benefits that a 401(k). 

In addition, without Federal protections, these workers are left to fend for themselves and in many cases have to sign employment contracts stating that they can’t form a union or collective bargain.

Puzder is For Rational Minimum Wage Increases
This is not to say that all minimum wage increases kill jobs. A rational minimum wage increase, especially if it were predictable giving businesses time to plan for it, could potentially provide employees with some extra cash without triggering costs high enough to compel the businesses to fundamentally change its labor practices. 

Andrew Pudzer

Minimum Wage Laws Best Suited to a Local Index
Any such increase should also be adjusted to local conditions, which is why I believe the minimum wage is best dealt with at the state or municipal level.  The problem with the national or federal minimum wage is that the wage appropriate for New York, San Francisco or Seattle will be too high for Birmingham, Fresno or Cleveland. The federal minimum wage must be at a level that most economically distressed areas can bear or will further damage areas most in need of help.

Closing Comment
While I agree with Puzder’s comments about the minimum wage being localized and indexed to local conditions, I don’t believe it’s best left to the state governments to set the absolute minimum. The Federal Government’s role is to facilitate interstate commerce and to make the exchange of good across state lines as easy and fair as possible. If we have a situation as we do with international trade and in countries we don’t have trade agreements with, they can pay a starvation wage and produce low-cost goods which distort the labor and free market system by undervaluing the actual cost of human labor and creating good that are sold far below market values. While it may be great for the consumer at Walmart to purchase these inexpensive goods, its immoral to pay a starvation wage in any country (let alone the United States).



Indexing the Minimum Wage to Regional Factors and the CPI
I’ll be the first to agree that the minimum wage as its currently constructed isn’t perfect. The minimum wage must be first raised at the Federal level and then indexed to a regional cost of living index. Everyone agrees that the wages in Seattle shouldn’t be the same as those in Little Rock. After the minimum wage is raised, it needs to be indexed to the consumer price index (CPI) so that we don’t have to continue to have this argument about raising the minimum wage every 10 years after the going rate loses it’s purchasing power due to inflation. Today, the minimum wage should be $10 or more if it was indexed to inflation after its last increase. We should then let companies know that over the next few years it will rise to a $15 Federal level with a regional index based on local conditions and indexed to the CPI from there.

Economist Believe in the Multiplier Effect Not Share Buy Backs
Almost every reasonable Economist will tell you that putting more money in the hands of the working class (and not a one-time stimulus check like President Obama made the mistake of doing during the last financial crisis) creates a multiplier effect and will create a more significant economic stimulus than providing corporate tax breaks. The majority of money repatriated to the United States in the recent tax bill has gone into stock buybacks and less into investments. We were sold a lie when Republican lawmakers said that we needed to bring offshore money back to the United States so it could be invested in American factories and capital investments. For most companies, the best investment, and one that is made for mostly for the enrichment of shareholders and corporate executives is to invest in share buybacks. Share buybacks increase the share price and directly increases the wealth of shareholders and company executives. It also enriches Congress as they are not banned from owning individual stocks and reap the rewards of inflated stock prices. Stock buybacks are short-term and don’t grow the economy, unlike the real capital investments the tax law was supposed to encourage. 

Providing tax breaks to corporations has resulted in billions of dollars of buybacks and has meant we missed an opportunity to increase capital investment and raise the minimum wage. It’s a conservative fallacy that companies can’t afford to increase the minimum wage and will need to increase consumer prices. Increasing consumer prices is #1 lie that Conservatives tell when they want to scare the public from backing rational minimum wage increase. The truth of the matter is that companies can afford to pay higher wages but they would rather be greedy and invest in purchasing their own shares and enriching themselves and their investors.


The Real Heroes of the Economy
I’ve said for the past few years that we should have raised the minimum wage at the same time we lowered the corporate tax rate and really given the economy a shot in the arm. I agree with President Trump’s goal of a 4 – 5% annual increase in GDP but we can’t get there until we start to put more money into the hands of the working class… the real heroes of our economy. It’s time we close the gap on our two-tier economic system and provide similar advantages to the working class as the ruling class already has. Paid time off, sick pay, family leave, and the ability to support their families by paying an honest wage for hard work. By not paying a fair wage for a hard days work, we are not only discouraging work, but are relegating minimum wage workers to a different set of rules when we should be rewarding their hard work as they make our food, clean our houses, and care for our children. After all, they deserve as good of a life as you and I have.. and it’s time we celebrate the real heroes of the economy, the working class.

And don’t forget, these aren’t my words…. They are the authors:
This is not to say that all minimum wage increases kill jobs. A rational minimum wage increase, especially if it were predictable giving businesses time to plan for it, could potentially provide employees with some extra cash without triggering costs high enough to compel the businesses to fundamentally change its labor practices. 

Andrew Pudzer

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