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Posts Tagged ‘Trickle-Down Economics’



They (Republicans) didn’t start thinking of the old common fellow till just as they started out on the election tour. The money was all appropriated for the top in the hopes that it would trickle down to the needy. Mr. Hoover was an engineer. He knew that water trickled down. Put it uphill and let it go and it will reach the dryest little spot. But he didn’t know that money trickled up. Give it to the people at the bottom and the people at the top will have it before night anyhow. But it will at least have passed through the poor fellow’s hands.

–Will Rogers, Newspaper Article 1932



I wasn’t going to comment on this today but listening to the arguments in recent days from GOP politicians has pricked a nerve. The current federal minimum wage for non-exempt employees (like farm workers and tipped employees) is $7.25 per hour. It has been at that level since being 2007 though in fact it didn’t become a reality for workers until July of 2009. 

There is a movement to include a raise to the minimum wage in the current Covid Relief bill with the rationale that the people most affected by the pandemic have been low income workers who are, even in good times, struggling to get by. Work stoppages and interruptions therefore have a greater impact on their lives. 

I am not here to argue whether the minimum wage should be raised in this bill. That’s a whole different argument that is more about politics than the well being of the American worker or small business owner.

For my part, I think it should be raised no matter how it comes about. There are plenty of reasons.

First of all, the effective minimum wage— the dollar amount the lowest wage earners in every business everywhere in this country currently make per hour–is right around $12/hour. That is the level that employers have discovered is the minimum they must pay to attract sufficient workers for their businesses. Even in the states where they have not raised the minimum wage at the state level from $7.25, the effective wage is closer to this $12 figure.

This fight to suppress the wage is actually just performance art that plays to the biases and fears of the GOP base and props up the myth of trickle-down economics.

Yesterday, a proposal was unveiled by Republican senators Mitt Romney and Tom Cotton that would raise the fed minimum rate to $10/hr over the course of four years. Four years. To illustrate how disingenuous this proposal is, you only have to look at Senator Cotton’s home state of Arkansas. where the current minimum wage is $11 per hour.

I am not well versed on the economy of Arkansas but I don’t believe it is the economic engine driving this nation. If a worker in Little Rock deserves $11/hr at a minimum, why should a worker in the same position in city or town in another state earn less? Or maybe Sen. Cotton wants to cut some of his constituents income?

Maybe that’s Arkansas Exceptionalism.

Then, also yesterday, GOP Senator John Thune from South Dakota, speaking against raising the minimum, unveiled a personal anecdote that he felt illustrated how the raise was not necessary. He said that when he was a kid he worked at a restaurant starting at $1/hr and worked his way up to making $6/hr as a cook. He said that raising the rate now would cripple small businesses.

Well, his argument makes the opposite point.

He’s 60 years old so he was working as a kid in the mid to late 1970’s in that restaurant. In that time period the federal minimum wage was $2.30/hr so, let me tell you, $6/hr was big bucks. I worked in the late 1970’s in an A&P factory and worked my way up to a skilled position as a candy cook where I was making $6.35/hr. I was able to make a house and car payment on that income at that time. 

That $6/hr that Thune was earning then was a living wage at that time, one that would be worth approximately $25/ hour today. If his employer in that restaurant was paying a kid, as he termed himself, the equivalent of $25 in the 1970’s, then $15/hr should not be a problem now. 

Another example of how ludicrous Thune’s argument is is to simply look at the income of a US Senator in 1977. It was $44,600 per year. The salary for a US Senator is currently $174,000 per year. By my calculations, that’s roughly four times what it was in 1977.

That $6 from the 1970s doesn’t look the same in 2021, does it? I am sure Sen. Thune wouldn’t be too pleased working for that 44K today in the same job. If his income deserves to go up simply because of cyclical inflation over time, why shouldn’t a worker on the lower end of the spectrum deserve the same?

Part of the problem that we’re facing is forty plus years of having the GOP shove supply-side economics down our throats. Supply-side is a cleaned up way of saying trickle-down. which is the idea of giving most of the financial assistance and tax breaks to those folks at the top of the financial pyramid who own businesses and employ workers with the hope that all this cash will flow down to all the less affluent folks below. It was first called trickle-down — as a derogatory term– by the great humorist Will Rogers who spoke of it in newspaper article he wrote in 1932. The excerpt at the top sums it up perfectly.

Money is not water. It does not flow down. Money flows up. Low wage earners more than likely will spend any extra income and, as he says, it will end up in the hands of those at the top soon enough.

But that money passing through the hands of people who need it and will spend it will build up the economy and enrich small business owners. After all, most small business owners need customers with cash to spend and the more people with available income to spend, the better it is for them.

And for folks who make more than the minimum wage who complain that someone making $15/hr somehow diminishes their own oncome and status, perhaps they should be asking themselves why their incomes have been stagnant for so long, why they are working much harder for what seems like less money. Their income, or lack of it, is actually directly tied to keeping the minimum wage low. The low wages of others justifies their own low wages.

Higher minimum wages would ultimately result in higher wages for most wage earners. It would also raise the self esteem of those who work these jobs. Knowing that they might be able to actually live a life beyond scrimping for every small bit every day on poverty level wages is a life changer.

But we still battle the specter of trickle-down economics. It has been yelled at us by the GOP for so long that there are generations of working class citizens who have absorbed this fantastical concept that the rich will somehow benevolently pass the wealth down as fact. The GOP has used this create division. A working class voter is angrier about the occasional welfare queen, that racist concoction of the GOP, getting a few bucks here and there than they are about corporate bigwigs raiding the country’s coffers on a regular basis.

Many have bought into this charade, never knowing a life that was any different. I have lived most of my life in this system but remember a time when there was more income equality. It’s funny but most of the angry people on the right want to return to what they perceive was a better time in the past and many cite the booming 1950s. But they do this without realizing that was a time when there was much greater income equality, with a true middle class, more government spending on infrastructure, and more taxation of the wealthiest among us.

And you know what? There were still plenty of wealthy folks then. Maybe they didn’t have three or four yachts. Maybe only one or two. But they were still rich.

And you know why? Because money flows up.

Repeat that again and again. Then do it again until it is burned into your brain.

Money flows up.

Listen to Will Rogers. The wealthy still end up getting all the money in the end but we all benefit along the way with a better standard of living and more opportunities for a greater number of people to escape poverty and every negative aspect that comes with it.

Let’s get rid of this trickle-down madness, okay? 

I could say a lot more but I have went on too long this morning. Sorry for the length of this rant. Even so, I know that I missed a lot of points that I wanted to make ( such as that areas with the lowest effective minimum incomes tend to be those that struggle most economically overall which bleeds out into that area in the form of lower levels of education, higher levels of poverty, higher crime, and on and on) and didn’t address every argument or maybe even make the points I thought I made. This is all off the top of a jumbled brain so please keep that in mind.

Have a good day, okay?

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