While we were distracted, look what oozed in through the keyhole

On December 5, 2017, the Department of Labor under the guidance of the self-proclaimed populist President offered proposed regulations that would affect tipped employees. The 60 day comment period just expired, so unless the push back was convincing this proposal may become regulation. The proposal unwinds an Obama regulation which prohibits an employer from garnishing tips from workers who make at least the $7.25 minimum wage.

It should be noted that restaurant workers have a lesser minimum wage of only $2.13 which has been in place for twenty plus years. They can be paid an hourly wage this low, provided their tip income brings their total hourly pay to $7.25. As of May, 2017, the average combined wage and tip income for restaurant workers was $11.82 per hour.

In essence, the proposed regulation would allow an employer to garnish the extra tips above a total wage rate of $7.25. Now, the employer could be altruistic and reallocate this tip income to all workers, such as the cooks and buspeople (those that clean off the tables). This could also include the tipped worker who would receive a reallocated portion, but less than the direct tips garnished.

Yet, a very troubling part of the proposal is the employer could keep the tips and not reallocate them to workers. It is noted therein that the tips could be made for structural improvements or to reduce menu prices. Note, this is a low margin business, so it would not be a leap to see more than a few employers not reallocate all or any of the money. This is especially concerning within an industry where some managers exploit all and harass female workers (note read “Nickeled and Dimed in America” by Barbara Ehrenreich on working in minimum wage jobs that perpetuate poverty).

Per an article in The Washington Post (see link below), “‘There is no way to do a good face estimate and maintain the fiction that this rule isn’t terrible for workers,’ said Heidi Shierholz, who previously served as chief economist for the Labor Department, in a conference call on Thursday arranged by EPI.”

Many things concern me about this. If the employer were made to reallocate the garnished tips to other workers including the affected worker, then it would be more understandable as an employment term. A worker could then decide to work elsewhere if they felt they could make more there. It should be noted that in some cities that are phasing up to a $15.00 per hour minimum, some restaurants are going without any tipping, but that is understood beforehand and communicated to patrons.

The troubling part is the employer being able to choose to keep some or all of the money, provided the below market minimum wage is used. Help me understand how this helps those masses of people who voted for a man to make their lot in life better. Coming on the heels of other changes that have been made to favor Wall Street, such as the Tax Bill, this President does not look very much like a Main Street man.

What are your thoughts? Have you ever worked in a restaurant?

https://www.washingtonpost.com/news/posteverything/wp/2017/12/21/the-trump-administration-wants-to-let-employers-control-workers-tips-an-interview-with-heidi-shierholz/?utm_term=.ce1e8158cb54

Significant support passed laws for minimum wage increases in four states

On Tuesday, a few successful ballot initiatives were drowned out by the reporting of the Republican victories. Yet, some of the initiatives that passed are noteworthy due to their bipartisan support and magnitude of victory. In particular, four more states and one major municipality passed significant minimum wage increases beyond the federal requirement of $7.25 per hour.

– In Alaska, voters approved an increase in the minimum wage to $8.75 in 2015 with over 68% of voters favoring the increase.

– In Arkansas, 65% of voters passed an increase which will phase up to $8.50 in 2017.

– In Nebraska, 59% of voters passed an increase that will phase up to $9.00 in 2017.

– In South Dakota, 55% of voters passed an increase which will increase the minimum wage to $8.50 in January and index it with inflation.

– In San Francisco, the minimum wage will phase up to $15.00 per hour in 2018, becoming the second US city to pass a phased-in increase of that magnitude.

There are now fourteen states with increases decided in 2014 that will take the minimum wage beyond the federal minimum. I should add that Illinois received approval from voters to come back with a ballot initiative on a minimum wage increase. According to the Business Journal, 29 states have minimum wage rates higher than the federal level. These majority of states have done this due to the gridlock in Congress that has prevented them from acting on a recommendation by the President. There are two links to articles below, the first on the votes noted above, and the second which summarizes the fourteen states who passed such laws in 2014.

I have been personally advocating for an increase in the minimum wage for several years. The national living wage for one adult varies by location per an ongoing study by the Massachusetts Institute of Technology (MIT), but nationally is just over $10 per hour. This is the reason for the use of the number $10.10 per hour in several states and is consistent with what the President proposed for the new federal requirement and what he put in place for federal employees.

In my work with working homeless families, we observed that the median salary for our families was $9.00 per hour. We had several with an hourly wage over $11.00, but with a family, that cannot cover what is needed. For an adult with one child, the living wage is in the $19.00 per hour range. It should be noted that a single working mother family is the fastest growing homeless group. Many of our homeless working mothers are victims of domestic violence, divorce or having children out-of-wedlock.

The current minimum wage cannot support an adult, much less a parent. This issue has bipartisan support and several retailers have grasped the need to increase wages. I applaud these states and their voters. Now, we need Congress to take up this issue. It is not just a Democrat issue; it is an American issue.

http://www.commondreams.org/news/2014/11/05/minimum-wage-measures-pass-overwhelmingly-even-red-states

http://www.economicpolicyjournal.com/2014/11/minimum-wage-law-hikes-passed-across.html

What do these folks have in common?

The following people have something in common. Please scroll down the series of descriptions and let me know what is common for all of them. The names of have been changed to protect their confidentiality, but the stories are very real.

Anna is working as an office manager working full-time making $8.00 per hour. She has is separated due to a domestic violence situation and has two children.

Hope is working two jobs – one full-time as an Administrative Assistant making $11.75 and the other part-time as an intake specialist at a Human Services agency making $11.00 an hour. She is also separated due to a domestic violence situation and has four children.

Julie is working full-time as a CSR (Customer Service Representative) for a bank making just over $14 an hour. She is unmarried with three children.

Nina is working full-time as a CSR for a utility company making $12.25 an hour. She is unmarried with one child.

Sarina is an assistant manager at a fast food restaurant making $12 an hour. She is unmarried with three kids.

Paul is working full-time on a cleaning crew making $11.00 an hour. He is unmarried with one child.

Carrie and Michael are married with four kids. Michael was laid off and Carrie is working in hospitality at a local hotel making $9.00 an hour.

Felicia is a Certified Nursing Assistant making $9.60 an hour at a hospital. She is unmarried and has one child.

Dedrick is a full-time security guard making $9.25 an hour. He is unmarried with three children.

Cassandra is working two part-time jobs, one as an afterschool teacher assistant making $11.25 per hour and the other as a retail clerk for a discount company making $7.95 per hour. She is unmarried with two children.

Terry is working as a public school teacher assistant making $11.00 an hour. She is unmarried with one child.

I could go on, but let me ask the question. What do these folks have in common? They are all homeless. When I tell people that the homeless people the agency I volunteer with have jobs, these people do not believe me at first. How can they be working and be homeless? It takes some people time for that to sink in. In fact, 84% of the families we help are working. The median wage for those 84% is $9.00 an hour. I purposefully used higher figures to illustrate a point – you can make above the living wage for an individual, but still be homeless if you are a parent. The living wage in my area for an individual is around $10.00 an hour and for a one-parent, one-child family is around $19.00 per hour.

There are five additional things I want to mention that are important to understanding, preventing and climbing out of poverty:

  • Family size is highly correlated with poverty. We must do a better job on family planning and providing birth control means and education. For my evangelical readers, your kids are going to be tempted to have sex. Please do not preach a message of abstinence alone. Teach girls how to say no. Teach boys to treat girls as more than sex objects and that no means no. But, let them know that if they must have a sexual relationship, to use protection.
  • Education is key. While the economic downturn altered this statement with layoffs and downsizings, for the most part, the higher your education, the less likely you are to be homeless. For kids that fall off the track, getting them back in school or on a path to a GED is essential. Fortunately, the community college systems in cities and regions do a pretty good job at getting people educated and developed with new career skills.
  • Healthcare is very important. The absence of healthcare is the key reason for personal bankruptcy in the US and an important reason for homelessness. People cannot afford their employer plan and one of the kids get sick or has an issue. Or, the parent stopped taking his or her medications due to cost and the resulting physical or mental issue causes a problem for the family or on the job. Fully implementing Obamacare will help, but the states who did not expand Medicaid need to do so.
  • Minimum wage needs to at least be the living wage for an individual. The homeless we help work hard, sometimes at more than one job. People like to say that increasing the minimum wage impacts the number of jobs. To be honest, most studies do not support that contention. We need to increase the minimum wage to the living wage for an individual. These jobs perpetuate poverty (please read “Nickeled and Dimed in America” by Barbara Ehrenreich). Short of that, we need to increase it more than it is now and graduate it to a higher level. Yet, the same people who decry people on welfare, also don’t want to pay people for an honest day’s work. If we pay people better and not like an economic slave, then the economy will actually flourish more.
  • Domestic violence is real. About 30% of the people in our program have come out of an abusive relationship. So, the spouse is making due without one of the incomes (for the most part) as well as dealing with a court-ordered spouse to stay away from her and the kids. I have said this before. If you are in an abusive relationship – leave. He will not change – leave. He will move beyond verbal abuse and it will become physical – leave. For the sake of your kids – leave. You can live a more normal life. Domestic violence is about power and control. It is difficult, but please leave.

Our agency is built with a model of helping people climb a ladder out of homelessness. The past fiscal year, 91% of our families were back to self-sufficiency in 21 months.  We provide rental subsidies based on their ability to pay, but they must work with a social worker and meet certain milestones. We also offer Hope Teams to mentor the family and kids. We do not do for them what they can do for themselves, so they must have a savings plan, take classes on Bridges Out of Poverty, and achieve certain milestones.

We all need to better understand our poverty problem in America. We must do better, but it must begin with realizing how it happens and helping people climb ladders out of poverty. We cannot solve this problem by kicking them when they are down and placing ill-founded labels on them as reasons to dismiss them as undeserving. Not only is that cold-hearted, but it is harmful to our economic growth. As Gandhi said it so well, “a society’s greatness is measured in how it takes care of its less fortunate.”

It is time to raise the minimum wage

The walkout this week by restaurant workers to protest poor wages is indicative of a major problem we have in this country. We have a poverty problem in this country with far too many people living in poverty or paycheck to paycheck. As I have noted in earlier posts, the disparity between the “haves” and “have-nots” has grown wider at the same time our socio-economic class mobility has greatly diminished. Where we are born and to whom we are born are now greater indicators of success than they used to be. To compound the problem, those who are in the upper income echelons are having a more difficult time appreciating the challenges faced by those who are not. More on this later.

In Barbara Ehrenreich’s book “Nickeled and Dimed in America,” she chronicled her efforts and those of her co-workers, in trying to live on minimum or near-minimum wage jobs. Her conclusion is these jobs perpetuate poverty. She notes a variety of factors which include not being able to afford healthcare, not being able to save, poor food habits as fast food was the cheapest and most convenient food, being a slave to the work schedulers, being tied to mass transportation schedules due to gas prices, and having to work more than one job. She also noted in the restaurant jobs, people having to work when they are sick, because they needed the pay. Getting by was the best you could hope for. Getting ahead was quite difficult as you were treated like a commodity. I would add this contention is supported by Dr. Cornel West and Tavis Smiley’s book “The Rich and the Rest of Us.” A summary of the key findings in the book can be gleaned from the attached post.  https://musingsofanoldfart.wordpress.com/2012/10/20/the-rich-and-the-rest-of-us-a-must-read/

Currently, the federal minimum wage is $7.25 per hour. In some places, the state or local minimum wage is higher (Illinois, California have $8.00; Arizona is $7.47 and the city of San Francisco is $9.79, e.g.). Yet, a living wage is higher in these locations. A living wage varies by geography and is based on the cost of living to provide shelter, food, healthcare and basic necessities. Attached is a link to a MIT website that will allow you to see the calculation of living wage by area. http://livingwage.mit.edu/.

Per this MIT website, in my home county in North Carolina, a living wage is now $10.02 for a single adult and $19.68 for a one parent, one child family. In other higher cost of living areas, the living wage can be a few dollars more. As of this writing, President Obama has proposed an increase in the federal minimum wage from $7.25 to $9.00. While not enough, the increase is a tangible step forward. Per a Gallup Poll in March 2013, this proposal is supported by 70% of Americans. The result is even higher for women, Democrats, moderates, non-whites, adults who earn less than $24,000 per annum, and young adults. 2/3 of Americans who are seniors, Independents, and earners between $24,000 and $60,000 support the change. It is only beneath 67% for men, Republicans conservatives,and upper middle class earners and above.

Those who decry this change cite that we will end up with fewer jobs as a result. I have seen data on both sides of this argument. To me, there is a huge cost of turnover in retail and restaurant jobs due to lost productivity of the staff, but also of the department and store manager. The manager has to spend more time back-filling a job or making sure people are on the floor, than focusing on customer service and selling merchandise. Any measure a retail company can do to reduce this churn shows up in better productivity. Per the attached link, Costco seems to believe this, as they pay their people far more than the minimum and are doing quite well. http://money.cnn.com/2013/08/06/news/economy/costco-fast-food-strikes/index.html.

We have a problem in this country, which will only get worse, if we do not remedy it. This is a key reason I have been a staunch supporter of Obamacare. While imperfect, it does speak to the healthcare insurance needs of those who are now uninsured. And, many of those who cannot afford insurance are working in retail and restaurants. Yet, we must pay people better. Will it cause the number of jobs to go down? My guess is for some employers it might, but for many it won’t. In my consulting work with retail and restaurant employers, I have observed the employers who treat their employees as commodities will never have the productivity and customer service of those who treat their employees as key in their ability to sell products and serve customers. These latter companies work back from how can we serve the customer better.

And, when you hear someone who is doing more than fine financially state that increasing the minimum wage is a poor investment of money, please respond the better off people are, the less they will depend on those so-called hand-outs the well off seem to hate. I do not like to use the term hand-outs, as helping people survive in tough times is an appropriate investment of resources, yet for an audience that tends to use this term freely, it is an argument that might resonate. Plus, the more we all have to spend, the better off the economy will be. Let’s increase the minimum wage. It is time.

Les Miserables and Social Injustice

My wife and I have long been fans of the musical Les Miserables, so yesterday we took two of our children to see the recently released movie with Hugh Jackman as the lead character of Jean Valjean. We were not disappointed and enjoyed the movie immensely. Of course, a few people have noted some of its imperfections, yet on the whole, it is a very moving experience and fills in a few details that the play could not.

As an aside, I also enjoyed the dramatic movie made a few years ago with Liam Neeson in the role of Valjean. As for the recent musical version, I would encourage you to see it , whether you have seen the play, early dramatic movie or not. If you have seen the play, you will be even more moved by Anne Hathaway’s Fantine singing how life has killed her dreams. The music is so wonderful, sometimes the everyday tragedy  of social injustice shown in the play is overshadowed. If you have not seen the play, you will also find it enjoyable as did my teenage children.

I wanted my kids to see it for its storytelling and musical beauty, but it was also very good for them to see what poverty and injustice looks like. They have accompanied me on occasion to help with homeless families, but to see it from an omnipotent perspective like this fills in the back story and context for those in need. I mention this as Les Miserables, when translated to English means “The Miserables.” It also is reflective of a world we still live in, even in the United States with over 50,000,000 people in poverty.

There are many stories to be told in Les Miz, but to me there are three main themes of social injustice that resonate today. First, Fantine personifies the lot of many in the movie and in real life here in the US, that many live paycheck to paycheck, especially those in impoverished settings. It won’t give away too much of the story to say Fantine loses her factory job and has to turn to a life of prostitution to provide for her daughter. In the US, 47% of American workers are living paycheck to paycheck. That includes many who are beyond poverty levels, meaning even the lower middle class have just enough money to make ends meet. Those in poverty are living on a wing and a prayer trying to make ends meet, with a significant majority paying more than the needed 30% of their income for housing and utilities to maintain a reasonable standard of living. It should be noted that 40% of all homeless people in the US are mothers with children, the fastest growing segment in the US. To further illustrate this tragedy, of the homeless families the non-profit agency I volunteer with help, 89% are single parent women as head of household.

Second, another social injustice theme is the one between Valjean, an ex-convict who paid dearly for stealing a loaf of a bread and the policeman Javert (Russell Crowe in the movie) who relentlessly chases him for breaking parole. A quick sidebar, Valjean could not get a job with his “scarlet letter” of papers he had to carry with him. However, Valjean repays the kindness and decency afforded him by a priest (played by Colm Wilkinson in the movie who was the original Valjean on the London stage) by doing the right thing and treating others like he wants to be treated. The injustice is the fervent belief by Javert that a thief is always a thief and could not change. What Valjean demonstrates and later tells Javert “you are wrong and always have been wrong.” Valjean, like many, is conflicted with trying to do the right thing and taking advantage of the circumstances to hide from the law. By doing the right thing at great personal sacrifice and cost, he shows Javert you can change. He also learns the priest’s lesson of treating one another with decency and dignity. “There but by the grace of God, go I,” was not said in the movie but lived by Valjean.

Third, and most powerful, is the overwhelming discontentment by those in poverty. There are many more than just Fantine who are exposed to the extreme poverty of the streets. The movie does far more than the play ever could to show the filth and sickness brought about by living in such conditions. If you had a job, it was more about economic slavery, working a tireless, repetitive factory position. You dared not complain or you could be let go or “sacked” per the movie and replaced by another. If you did not have a job, without significant welfare help, people had to beg, borrow and steal. Or, in Fantine’s case, she first sold her possessions, her hair, her teeth and then her body as a prostitute.

Scrolling forward to today’s time, I have written two posts about Tavis Smiley and Cornel West’s book “The Rich and the Rest of Us.” This could have been the title to “Les Miserables.” One of the misconceptions noted in the Smiley/ West book about poverty, is poverty is not due to a lack of moral virtue. It is not defined by people who do not work hard. Poverty is the lack of money, period. The homeless families we help have jobs, sometimes more than one. They work hard trying to make ends meet and do the best they can. In these earlier posts, I have encouraged people to also read “Nickeled and Dimed in America” by Barbara Ehrenreich. She lived the life of minimum wage jobs in America on purpose to see if she could get by. Her major conclusion – minimum wage jobs perpetuate poverty.

If you are earning at that level, you are beholden to a life of eating cheaper poor food, the inability to afford healthcare, jobs where you are on your feet all day which affects your health and a general lack of sleep as you try to be a worker of multiple 15 – 20 hours jobs and being a parent. And, you dare not complain, as someone else can be brought in right behind you. In Les Miserables, this is why the people rebel. They “have-nots” are tired of being taken advantage by the “haves.” This is also a major lament I have with LIbertarians and many Republicans. We need some regulations to keep things fair. Otherwise, employers who tend to chase cheap labor, will always find someone cheaper to use and let you go. We need some laws to keep things fair for the worker. If you want to advocate a true Libertarian life, go read Upton Sinclair’s “The Jungle.” The Robber Barons treated people just like the “haves” do in Les Miserables.

This is all about social injustice. Unlike people who perpetuate stories about welfare queens, etc. painting many with a broad brush of a few, we need to help people in need. I am all for empowering people to succeed. I am all for giving people opportunity to succeed. Yet, they have to climb the ladder of success. There are many who are not given this opportunity and are shunned as undesirables. They are treated with disdain and without any decency. Let’s lift others up and give them a chance to succeed. Like Valjean, let’s be enablers of success for others. I believe in the words “a community’s greatness is measured by how it takes care of its less fortunate.” The less fortunate could also be termed “The Miserables” or in French, “Les Miserables.”