$11/hour British Minimum Wage

The minimum wage in England is now $11.00/hr for adult workers and there has been no negative effect upon employment. More here.

Guaranteed minimum income

Just finished reading this interesting article from which I learned (among many other things) that both Richard Nixon and Martin Luther King, Jr. advocated for a guaranteed minimum income for all citizens regardless of work.

The wikipedia entry for the topic cited MLK:

In his final book Where Do We Go From Here: Chaos or Community? (1967) Martin Luther King Jr. wrote

“ I am now convinced that the simplest approach will prove to be the most effective — the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.”

from the chapter entitled "Where We Are Going"

What happened to these discussions?

Maximum wage?

Interesting conversations (and some uninsteresting ones, too) going on here about CEO pay. A few folks allude to an idea I've been discussing recently with friends - that of a maximum wage in this country. I'm not sure exactly how it would work, but it certainly would be a more radical change than raising the minimum wage and would more fully (though I franklyb don't know how effectively) address some of the problems that lead to poverty in this country. When we talk about the growing wealth disparities, we tend to focus on poverty as the problem which ignores the flip side of the phenomenon - the skyrocketing wealth among a very few.

Profile in Survival: Tracey Johnston

The last in Jordan Green's Yes! Weekly Profiles in Survival tells Tracey Johnston's story. Here is how it ends:


A minimum wage increased to $2,263 would barely put a dent in Johnston's expenses. Contemplating the surplus, she recites the various tricks for stretching a dollar to cover food and clothing costs, such as buying cases of cans of corn and a large bottle of shampoo.


That doesn't mean she doesn't want a citywide raise; she can practically taste it.


"People will probably be a lot happier and less worrisome, more relaxed," she says.


"They will feel there would be more stability. When people feel they can make more money and they don't worry about how they're going to feed their family and clothe themselves, I think they can think about family leisure and a vacation, going out of state to visit loved ones or treating their family to eat out once in awhile or go to a movie. They'll be less angry at the world."


And to modify the Bible verse: To whom much is given more can be expected.


"I believe when people are happy, they feel they have an abundance," Johnston says. "They share what they have, and they give, whether that be charity or sponsoring a camp trip, or if you feel good about your paycheck you might pay for your buddy's lunch."


Read the entire profile here.

Historical Factors Accounting for Differences in Black and White Wealth and Home Ownership

N.C. A&T State University economics professor Larry Morse has recently shared a compilation of factors which have led to the vast differences we still see between wealth and home ownership in black and white populations. I think the information has direct bearings on how a higher minimum wage in Greensboro is but one step of many toward a more just economy in this country. The article is a little long, but is full of helpful information to reshape these conversations.

Dr. Morse has generously given permission for anyone to reproduce and use this document as they see fit.

Historical Factors Accounting for Differences in Black and White Wealth and Home Ownership

Lawrence Morse

Department of Economics

NC A&T State University

This paper offers chronologies of institutional factors that have advantaged whites in the accumulation of wealth and in home ownership.

I. Institutional factors that have advantaged whites in accumulating wealth

In 2004 “Nonwhite or Hispanic” family median net worth was $24,800, and “White non-Hispanic” family median net worth was $140,700. (http://www.federalreserve.gov/pubs/oss/oss2/2004/scf2004home.html, Table 3.) Also in 2004 black household median income was $35,158, and white household median income was $56,700. (http://www.census.gov/hhes/income/histinc/incfamdet.html, Table F-5.) White family median net worth was 5.7 times black family median net worth while white household median income was 1.6 times black household median income in 2004. The very striking difference between the ratios 5.7 and 1.6 is the consequence of years of public policies and practices that have systematically advantaged whites in the accumulation of wealth. These policies and practices include:

➣ The 1848 Treaty of Guadalupe Hidalgo that ended the Mexican-American War resulted in a massive transfer of land from Mexicans to white people throughout California, Arizona, New Mexico, Nevada, Utah, parts of Colorado, and small sections of what are now Oklahoma, Kansas and Wyoming. (Lui et al. 2006)

➣ In 1849 nearly 100,000 white people were drawn to the California gold rush. The Free Soil provisions of the California state constitution allowed whites to claim and own land while banning slaves and free black people from doing so.

➣ The 1862 Homestead Act that granted whites 160 acres of land for free if they would farm it for five years. Blacks and Native Americans were not allowed to participate. (Lui 2004) An estimated 46 million Americans living today are descendants of Homestead Act beneficiaries. (Lui et al. 2006)

➣ There was a huge wave of European immigration from 1850 to 1920 and while ethnic and religious prejudices were often virulent, the prejudice against poor immigrants was different from the prejudice black people experienced in two important ways. One the prejudices against immigrants not encoded into law unlike the obstacles for people of color. The new immigrants could encourage their children to become “American” by becoming “white.” While these were wrenching choices, unlike people of color at least most of the Irish, eastern and southern European immigrants had that choice. Despite the discrimination unskilled European immigrants faced during this period they regularly displaced African Americans as workers on canals, railroads, construction and docks.

➣ The 1933 Agriculture Adjustment Administration policy that took Southern “traditions” into account by paying 4½¢ per pound of cotton not grown to the landlord who was to pay the tenant ½¢. (Dubofsky & Burwood 1990)

➣ The 1935 Social Security Act did not extend coverage to farm and domestic workers. Blacks were more than twice a likely as whites to be employed as farm or domestic workers. Twenty-two percent of white workers in covered occupations did not earn enough to qualify for benefits. The comparable figure for black workers was 42 percent. Consequently a much higher percentage of black workers than of white workers were not covered by Social Security at its outset. (Lui et al 2006) The advent of Social Security changed families' attitudes toward not only how much to save, but what savings could be used for, including being able to afford higher education for children or making a down payment on a home, a home that might be the equity needed to obtain a business loan.

➣ The originally proposed 1935 National Labor Relations Act would have reserved the closed shop for unions that did not discriminate. The final legislation did not include the restriction on non-discriminating unions to use closed shops nor a clause barring racial discrimination by unions. The southern Democrats, who had voted to keep agricultural and domestic workers out of Social Security, with the support of the AFL that was more interested in enhancing union power that reducing the discriminatory power of unions, were responsible for the changes in the final NLRA legislation. (Roediger 2005) Failing to disallow unions to engage in racial discrimination enhanced whites’ access to jobs and crafts that offered premium wages.

➣ The 1938 Fair Labor Standards Act did not apply to domestic and agricultural workers and consequently a much higher percentage of white workers enjoyed minimum wage protection and being paid time-and-a-half for certain overtime work. (Katzenelson 2005)

➣ The segregation of the armed services during World War II did not limit white soldiers’ access to training in employable skills.

➣ The 1944 GI Bill, formally known as the Servicemen’s Readjustment Act, did not mention race, but like other federal programs was locally administered and primarily assisted white veterans. The local administration resulted in white vets having greater access to vocational training. The US Employment Service, set up by the GI Bill, tended to steer white vets into jobs commensurate with their skills while typically steering black vets into jobs below their skills. While over two million vets went to college on the GI Bill, they were primarily white as black vets were denied admission to many white campuses. {While enrollment at black colleges went from 29 thousand in 1940 to 73 thousand in 1947, between 15 and 20 thousand black veteran applicants could not be admitted for lack of space.} Furthermore, white vets were approved for home and business loans at much higher rates than were black vets. Indeed of the approximately $120 billion in new housing financed by the VA and FHA by 1962, 98 percent of it went to white home owners. These white recipients are the parents of the baby boomers, and their homes are a significant portion of the $10 trillion in inheritances now being passed down to the baby-boom generation. (Lui et al. 2006)

II. Institutional factors that have advantaged whites in home ownership

Because homeownership is the prime vehicle for wealth accumulation, factors that advantaged whites in the accumulation of home equity merit their own chronology. A smaller percentage of blacks own their own homes and have substantially less wealth or net worth than do whites. Nonetheless home equity is more important to black households that it is to white households. Black households’ equity in their homes is 62.5% of their assets, while home equity is 43.3% of white households’ assets (Oliver & Shapiro, 1995). Family wealth is an important determinant in the across-generations amassing of wealth, starting a business and so forth. Home ownership is importantly related to the creation of business wealth, for homes often serve as collateral when entrepreneurs borrow to start a business. Wealth also has telling effects on educational outcomes. Conley (1999) found that household wealth has a larger impact on various measures of children’s educational outcomes than does household income. Also Shapiro (2004) found that modest financial assistance from parents allowed white families to make down payments on homes. Such financial support advantaged white households in two ways: in being able to buy homes in neighborhoods with “better” public schools; and being able to make larger down payments that kept “points” from being added to the mortgage rate. The latter saved such white families thousands of dollars over the lives of their mortgages.

v The 1933 Home Owners Loan Corporation, created to help home owners and stabilize banks, gave none of its approximately one million loans to black home owners allowing a higher proportion of black home owners to lose their homes during the remainder of the Depression. (Liu et al. 2006) The HOLC created detailed neighborhood maps that, among other things, took into account the neighborhood’s racial composition as well as its likelihood of racial infiltration.

v The Federal Housing Administration, established in 1934, was not explicitly a white program, but realtors and hostile white neighbors kept families of color out of white neighborhoods and the FHA condoned redlining practices initiated by the HOLC which precluded loans in predominantly black neighborhoods.

v The HOLC and subsequently the FHA created strong preferential options for whites as planners, builders and lenders were encouraged to promote racially and class homogeneous neighborhoods. (Roediger 2005) Up though the 1940’s FHA manuals and practices channeled funds to white neighborhoods and collaborated with blockbusters. The policies disproportionately concentrated blacks into substandard houses. In 1948 the Supreme Court ruled against restrictive covenants and yet the FHA continued to push for them as conditions for loans. President Kennedy’s 1960 Order 11063 mandated federal agencies to oppose discrimination in federally-supported housing. The FHA did not communicate the Order to local offices. Indeed of the approximately $120 billion in new housing financed by the VA and FHA by 1962, 98 percent of it went to white home owners. These white recipients are the parents of the baby boomers, and their homes are a significant portion of the $10 trillion in inheritances now being passed down to the baby-boom generation. (Lui et al. 2006)

v The 1968 Fair Housing Act authorized HUD to investigate complaints yet HUD had no enforcement power and could only refer cases to the attorney general. (Lipsitz 1998)

v The 1974 Equal Credit Opportunity Act prohibited discrimination in real estate lending and required banks to record the racial identity of applicants rejected and accepted for home loans. While the 1974 Act had the appearance of ending racial discrimination in real estate lending, it is worth noting that the banks refused to collect the data, by race, on rejected and accepted applicants. In 1976 ten civil rights groups filed a suit to have the court order the FDIC and the Home Loan Bank Board to obey the 1974 law requiring the banks to keep and report the race data. In 1981 the FDIC ceased keeping race records when the court order ran out. President Reagan used the Paperwork Reduction Act to stop HUD from gathering data on the racial identities of participants in housing programs. (Lipsitz 1998)

REFERENCES

Boston, Thomas, 2005. “Black Patronage of Black-Owned Businesses and Black Employment” in African Americans in the U.S. Economy. Ceclilia Courad, John Whitehead, Patrick Mason and James Stewart, editors, Rowman & Littlefields Publishers, Lanham MD. 373-7.

Brimmer, Andrew. 1997. “The Economic Cost of Discrimination” in A Different Vision: Race and Public Policy. Boston. Thomas, editor. Routledge. New York: 1-13.

Conley, Dalton. 1999. Being Black. Living in the Red: Race. Wealth. and Social Policy in America. University of California Press. Berkeley. CA.

Dubofsky, Melvin and Burwood, Stephen, editors. 1990. Women and Minorities during the Great Depression. Garland Publishing, New York.

Katzenelson, Ira. 2005. When Affirmative Action Was White. W.W.Norton. New York.

Lipsitz, George, 1998. The Positive Investment in Whiteness: How White People Profit from Identity Politics. Temple University Press, Philadelphia.

Lui, Meizhu. 2004. “Doubly Divided: The Racial Wealth Gap,” in The Wealth Inequality Reader. Edited by Dollars & Sense and United for a Fair Economy. Dollars & Sense, Economic Affairs Bureau, Boston: 42-49.

Lui, M., Robles, B., Leonar-Wright, B., Brewer, R. and Adamson, R. 2006 The Color of Wealth: The Story Behind the U.S. Racial Wealth Divide. The New Press. New York.

Oliver, Melvin and Shapiro, Thomas. 1995. Black Wealth/White Wealth. Routledge. New York.

Roediger, David. 2005. Working Toward Whiteness. Basic Books. New York.

Shapiro, Thomas. 2004. The Hidden Cost Being African-American. Oxford University Press, New York.

Weems, Robert E. Jr., 2005. “Bling-Bling and Other Recent Trends in African American Consumerism” in African Americans in the U.S. Economy. Courad et al. editors, Rowman & Littlefields Publishers, Lanham MD. 252-7.

Another challenge: enforcing a minimum wage

So far in this campaign, I've received a handful of emails (some published, some not) from people with information alleging that our state is ineffective in its enforcement of wage and labor laws. Former employees of the state's Department of Labor, Wage and Hour have written to say that allegations of employers paying less than minimum wage are often followed up with no more than a letter to the employer. These emails coupled with this article recently published by the Associated Press lead me to think that we need not only to work on raising the minimum wage, but also to spend some time making sure that the state enforces these laws.

Nadasen: Federal minimum wage hike is a good start, but not enough

Check out a good op-ed by Premilla Nadasen in which she evaluates the new federal minimum wage hike. Some highlights:

Opponents of raising the minimum wage -- such as Sen. Tom Coburn, R-Okla. -- erroneously suggest that the primary beneficiaries of a minimum-wage hike are teenagers living at home with their parents.

The reality is that 80 percent of those who would benefit from an increase in the minimum wage are adults (over the age of 20), according to the Economic Policy Institute. Fifty-nine percent are women. Moreover, 1.2 million people who would see an increase in their wages are single parents with children under 18.

This is a measure that will aid the neediest American families that struggle paycheck to paycheck.

Despite its benefits, the new federal minimum wage is still far short of where we need to be. Once the increase has taken effect, a full-time employee working 40 hours a week, 52 weeks a year, will earn only $15,080 a year. This is still below the poverty threshold for a family of three -- $17,170 -- as determined by the U.S. Department of Health and Human Services.

While an improvement, the new annual federal minimum wage is hardly enough to cover the costs of basic necessities, such as housing, health care, child care and rapidly rising food and energy costs.

If our elected officials want families to work and be self-supporting, then they need to ensure that work pays enough for a basic standard of living.

See the entire article here.

Nannies and the Minimum Wage

An interesting conversation is going on in NY state about raising the minimum wages for nannies, babysitters, in-house cooks and other domestic workers to $14/hour from the current state min wage of $7.15. What strikes me the most about the conversation (see the comments) is how similar the arguments against the domestic worker wage hike are to the arguments against the min wage effort in Greensboro.