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Saturday, July 20

Gapers Block

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On Thursday, July 24th, 2008, the federal minimum wage was raised to $6.55 an hour.

And there was much rejoicing...

Only not really. Beyond the fact that a $6.55 an hour minimum wage is insanely low for anyone to even attempt to live on without income supports and government assistance (see Jonthan Tasini's good analysis of this here and the EPI's analysis here) is the little noticed yawn from employers about the wage hike. The last time an increase in the minimum wage was floated, the Dick Armeys and Phil Gramms of the world were out with their supply and demand curves warning of apocalyptic collapses in employment as low wage workers in the US became too expensive. I suspect that the muted reaction from the employer side has a lot to do with the reality of low wage labor in the United States. See, it's an open secret that employers in the low wage labor market routinely engage in wage theft or, to put it more bureaucratically, in violations of wage and hour standards set out by the Fair Labor Standards Act (FLSA) or other relevant laws. Wage theft occurs when employers simply do not pay the wages that their employees legally or contractually deserve. Wage theft includes overtime violations, basic hour skimming violations, misclassifying workers as independent contractors and a host of other larcenous practices. Using the milquetoast language of "wage and hour violations" obscures the reality of the situation: that the law of the land does not apply to millions of American workers, low wage or otherwise.

The Department of Labor, the agency that's supposed to enforce the FLSA and be an advocate for workers, was deservedly put on the hot seat by worker advocates, Congress and the GAO last week (and even by Lou Dobbs!) Shockingly, enforcement of wage and hour laws has not been a priority in the Bush DOL. Imagine a police department that, faced with rising crime, changed its policies to reduce the number of target investigations, reduced community policing efforts, only responded to complaints instead of acting proactively, and didn't log phone calls into its offices. This is about as an accurate a picture of the DOL's wage and hour division as one can draw from the raw numbers. At the very moment in our economic history when business models force managers to skim costs by any means necessary (see Steve Greenhouse's The Big Squeeze for a good picture of the situation), the institution charged with protecting workers' right to fair compensation has largely ceded the field to the unscrupulous, unethical and stingy.

Wage theft is a national crisis. African-American and immigrant workers in poultry plants in Mississippi report stolen wages and mafia-like harassment if they complain. Caribou Coffee baristas and Wal-Mart workers have to rely on private lawsuits and not on their duly elected government to protect them and recover lost wages and tips. Computer programmers, factory workers, white workers, black workers, young, old, citizens and non-citizens have no guarantee that their rights at work will be protected and they'll receive the (steadily decreasing) wages they've been promised in return for (continually harder and less safe) work they do. In Chicago, one worker center affiliated with Interfaith Worker Justice recovered almost $2.75 million dollars in lost wages between 2003 and 2007. That's with a staff of four that relies on donations and foundation grants. In New Orleans, community leaders describe a wild west of wage theft, in which companies receiving federal and state contracts will often pay little to no wages for arduous clean-up and rebuilding work. If this is the vision of "starting from scratch" that so many had after Katrina leveled the city, then we are building a deeply immoral society.

In Chicago, there's a lot of talk over the causes of the recent rise in crime, which mirrors national trends. Time and time again, analysts point to the lack of economic opportunity for so many in the low wage, entry level labor market, among other factors. There is no way that cities and communities can build strong sustainable neighborhoods when employers continually hack away at the economic foundations of those neighborhoods, by siphoning away the wages of those who work, with little or no consequence. We reformed welfare to promote work, we threw millions of dollars in property and income taxes to lure companies to provide jobs for local residents, and we spend millions cracking down on the undocumented who supposedly drive down wages, while we ignore the reality of wage theft and its effect on communities and workers. Lowering worker salaries through fraud and theft lowers tax receipts, hurts small businesses, and gives little incentive for those who are told to play the game, follow the rules and move up in society to do so. At least when a drug dealer runs away with your money or a pimp steals from sex workers, they're not hiding beyond platitudes of economic competitiveness or the free market.

An increase in the minimum wage or job training dollars, or any other program to help workers, will not help workers as long as wage theft remains unchecked. Without the rule of law becoming reestablished in the American workplace, the prospects for economic recovery and better standards of living for millions of workers remain dim.

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Jason / July 30, 2008 9:58 AM

Typical. Tune the heart strings instead of having an original thought. Its "employers" fault that crime in Chicago is on the rise... right.

Maybe the collective yawn is because most states have taken the matter into their own hands (as they should) by enacting their own minimums wages. Obviously, the cost of living in NY is different than WY, so the minimum should reflect that.
If employers are violating the law, they should be taken to task. But if you believe that the government should add hundreds of jobs - your own reference advocates thousands - in the attempt to recover lost wages, you are running a fool's errand. These lost wages are only significant when you aggragate them, so the real cost of recovery would be far greater than the amount recovered. It doesn't make sense to take $10 from taxpayers to recover $5, and then distribute $5 to 100 people.

If this is such a national crisis, why don't you organize a group of lawyers to file class action lawsuits against employers that are in violation. That would streamline the process and take the burden of cost into private hands instead of another increase in government spending.

Jacob / July 30, 2008 12:02 PM

Actually, Jason, lawyers do engage in dozens of class action lawsuits to recover wages. By your logic, though, we should have avoid the criminal courts and just have "wrongful death suits" for murder. (like OJ?)

Brian / July 30, 2008 12:46 PM

I would suspect that employer timecard fraud is dwarfed by employee timecard fraud, but since there aren't lucrative fees to be made from extortion--I mean lawsuits, it isn't on the radar.

I fired two people for falsifying time records [hmm, time card says 7:30 am, alarm log says you didn't come in till 9:08 am and server says you logged in at 9:12 am]. Plus thanks to a state labor board that offers lots of protection for workers and none for employers, had to pay another employee for hours she never worked. It was that or be fined $1000 on top of paying for the hours never worked.

I have never shorted anyone for work they actually did. I suspect that I'm not an exception.

Of course, the obvious: quit working for cretins who rip you off [and if you can't find a job that isn't working for crooks, get some skills!] isn't a viable solution here.

Only the government can possibly come to the rescue given its stellar record in every other field in which it becomes involved.

Jason / July 30, 2008 2:59 PM

Ok, if dozens of lawyers already go after companies... problem solved. Go get more firms to get into the racket. Take it into your own hands rather than wait for the government to do something about it.

This is not as serious as a murder trial, so don't dumb yourself down by pulling the "well, if we take your logic to its end..." argument.

Ramsin / July 31, 2008 2:26 PM


For an academic, you are very dumb. Didn't you know the world is as easy as the economic snakehandlers say it is?

You obviously have not been reading your Free Market Gospel.

See, employers are never wrong; the people in the wrong are either the government for using coercive force to redistribute the result of a perfect process (market creation of wealth), or the individual for making bad choices.

For example:

Of course, the obvious: quit working for cretins who rip you off [and if you can't find a job that isn't working for crooks, get some skills!] isn't a viable solution here.

See? So "obvious." Why are the tens-to-hundred million members of the working class who struggle to make ends meet in the richest country on Earth so bad at making choice?

Why did they choose to be conceived?

Why did they choose to be conceived by their specific parents?

Why did they choose to be born into an industrial post-manufacturing service economy?

Why did they choose to not be hunter-gatherers?

Why did they choose to be born in the town they were born in?

Why did they choose to attend the schools they attended?

Why did they choose to have not-rich, un-connected, or disinterested parents?

Why did they choose to have pressing costs to living that prevented them from pursuing higher education?

Why did they choose to make the cost of living increase while real wages declined?

Why did they choose to have productivity go up, meaning they had to work harder and have less time to pursue independent education or have a side business?

Why did they choose to have to eat to not die?

Why did they choose to have food cost money?

Why did they choose to have healthy food cost even more money?

Why did they choose to have the cost of food go up?
Why did they choose to have the cost of energy go up?

Why did they choose to not just quit a job they don't like even though they have pressing demands on their income, such as child care, debt service for the little college they may have attended, climbing energy bills, car repairs, etc.?

Why did they choose to not be naturally talented?

Why did they choose to exist in a society that requires the vast majority of people to work for a very small minority of people for the minimum amount they're willing to accept in order to maximize profits and thereby ensure the "efficiency" of wealth creation as determined by Our Lord, Thy God, the Market?

Why did they choose to make it a logical and practical impossibility that EVERYONE in an economy can just go out and "get skills" that will allow them to not be dependent on an employer, thereby making the argument that "everyone" should just do that an absurd solution to a real problem of working class dependence on a politically empowered employer class?

Why did they choose to be limited by the public transportation available to them?

Why did they choose to be limited in the social networks they contact with?

Why did they choose to ever get sick and get large medical bills?

Why did they choose for employers to outsource as much work as possible?

Don't you understand Jacob? Human creatures are born in giant vacuums with perfectly alike conditions; and then, they are perfectly rational actors, like robots. This makes "personal responsibility" an absolute, as opposed to contingent, concept, and anyway, only the working class should have personal responsibility; cartels shouldn't be meddled with except in cases of extremely gross negligence or exploitation which, of course, will be defined by them.

And, in the end, it all makes the Laffer Curve true.

Therefore, tax cuts.

See? All is for the best in the best of all possible worlds.


Jason / July 31, 2008 3:59 PM


Before I pass the proverbial box of tissues to you...

That is a pretty wide swath that you lump into the qualitative "struggling" bracket. Is it 10 million or is it 100 million?

The US census projects the number of households in the US at 111,162,000 in 2007. You are saying that anywhere from 10-90% of US households are struggling to make ends meet.

...households that fall under the poverty line range from 12-16% at any given time.

Your reasoning seems to be: life is hard, so the government should provide for anyone with a sob story.

ramsin / July 31, 2008 5:32 PM

You may want to keep those tissues to tidy up the stain; you seem to have wet your pants at the revelation that, gasp, working life is hard for most Americans. Hey, don't be so scared little guy. Take my hand, I'll walk you through it.

It is a count of individuals, not households.

So, pants wetter, if 14% of American households, or 15,000,000 households (times the average 3 people that live in it) are living at or below our very low poverty line, that is 45,000,000 individual human creatures (how abstracting of you to ignore the individual.). I know, so insignificant.

Is your contention that only the families at or below the poverty line (those mere 60,000,000) are struggling to make ends meet?

That is absurd on its face.

Obviously, people up to as high as 300% of the poverty line have trouble making ends meet; look at the negative savings rate, the debt-to-savings ratio, the lack of adequate health insurance; home foreclosures; individuals with more than one job; and on and on and on.

My reasoning only "seems to be that" because you don't understand it, or are willfully distorting it.

My reasoning is that the "individual" as a rational actor that is the underpinning of your tired libertarian idealism is non-existent because we are all born into social conditions beyond our control until well into our adolescence and in fact adulthood; and that an economy that requires laborers at the bottom therefore has a responsibility to those laborers at the bottom, exactly because they are necessary for the economy to function.

Redistribution of wealth is something that was supported by the likes of Thomas Paine and Thomas Jefferson--presumably not because they were weeping into tissues. The redistribution of wealth starts with protecting the rights of workers to bargain collectively, a mutually-agreed to collective bargaining agreement that has nothing to do with "the government" you hate so much.

But, yes, that same government, which is really just the people, has every right to manage competition.

In the future, please save your phony rugged libertarian tough guy "sob story" rhetoric for bleeding heart liberals who think the EITC will save humanity.

Jacob / July 31, 2008 5:35 PM

Jason: I'm pretty sure (and I'm not a lawyer, so I could be wrong), that civil courts don't exist to substitute for law enforcement. I don't think (and I'm trying to be non-inflammatory here) that workers in poultry plants are going to be able to:
1. find a reputable law firm
2. risk employer sanction, losing their job, etc. etc. while waiting for a suit to come to fruition
3. Deal with lawyer fees, etc.
4. when the DOL should be doing this.. and yet doesn't even long the calls that come into the wage and hour hotline. The DOL itself estimates that 100% of poultry plants are out of compliance and that the majority of growing industries in the US are over 60% non-compliant with wage and hour standards. It's a pretty gigantic problem that would "clog the courts" unnecessarily when the DOL has ALL the tools to at least make a significant dent in the problem. We're not asking for the DOL to anything but enforce the law.

Jason / August 1, 2008 9:07 AM

"But, yes, that same government, which is really just the people, has every right to manage competition."

Where is that right in the US constitution?

Oh yeah, it isn't there. Its some fabrication so that people like yourself can create self serving narratives and perpetuate your role.

Ramsin / August 1, 2008 11:45 AM

"Self-serving narratives and perpetuate your role." I love meaningless, "fashionable nonsense" that comes from the right. Of course, that sentence doesn't mean anything.

The interstate commerce clause allows the federal government to regulate inter state commerce. That seems pretty clear and has been confirmed by the Supreme Court. Any commerce that impacts commerce between the states is open to regulation.

You can oppose the interpretation of the interstate commerce clause (and welcome back things like child labor and segregated diners), but that still wouldn't solve your problem, because all rights not ennumerated in the Constitution are still available to "the people". The people have social sovereignty over all activities of the state. This is what terrifies conservatives and the radical right, that ultimately, the people can assert their control over all the activities of the state through democratic means. Even property rights, a fact we all tacitly consent to with institutions like eminent domain and emergency war powers.

Jason / August 1, 2008 12:07 PM

Regulating commerce is different than competition. Nice try though.

mike / August 1, 2008 2:26 PM

One of my friends has a saying: "In France, rich people still get rich."

Ramsin / August 1, 2008 6:31 PM

The definition of "commerce" has been disputed, but nobody would deny that competition falls under its umbrella. A broad definition of commerce is trade(this follows from the 18th/19th century definitions); are you really trying to say that competition is not an element of trade, and thereby commerce? "Nice try."


About the Author(s)

Jacob Lesniewski is a transplanted New Yorker and a graduate student at the University of Chicago. While he loves Chicago, his biggest fear is that his daughters will become Bulls fans.

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