68 Cents More for a Living Wage

Non-managerial fast-food workers are among the lowest paid in the country with a median wage of $8.94 per hour.  University of Kansas research assistant Arnobio Morelix discovered that McDonald's spends only 17 percent of revenue on salaries and benefits.  So increasing revenue by the same percent--which amounts to 68 cents on a $3.99 Big Mac--would allow McDonald's to double their employees' pay.

Update (July 31):  The Huffington Post article linked above has been updated to correct an erroneous analysis. Individual franchises spend around one-third of revenue on wages.  Not all of such an increase would necessarily be passed on to customers, so profits would be lower. Dueling opinions suggest that either McDonald's could easily afford it or that any increase would drive away customers.

But suppose the 17 percent increase were implemented.  Will 68 cents really push that many customers out the door?  And wouldn't a 50 percent raise still amount to at least a somewhat more livable wage?

Update (August 1):  Henry Blodget suggests that McDonald's could increase employees' pay without raising prices and just make less profit.  Huh?

McDonald's restaurant employees would, finally, rise above the poverty line.  And their extra spending money would quickly be spent on other products and services, thus helping the whole economy.

Update (August 2):  David Sirota mentions studies that claim a higher minimum wage would lead to very modest price increases. One concluded that $15 per hour wages would only increase the price of a Big Mac by 22 cents.  Daniel Gross asks, "What Happens When Fast Food Actually Pays"?

Update (September 3):  A Los Angles Times editorial draws the connection between demands for a higher minimum wage and the lack of economic mobility.

Update (September 11):  Steven Rosenfeld contrasts employment practices at three restaurant chains.

Update (October 15):  Two reports quantify the public cost for low wage fast food employment. The families of fast food workers are twice as likely to be enrolled in public assistance programs at a total cost of $7 billion.  And McDonald's tops the list with $1.2 billion to their employees.

Update (October 17):  A chart from the Berkley report shows how workers in various industries depend on public assistance.

Update (October 28):  Given that some industries get massive public subsidies to support their employees, receiving assistance and working aren't mutually exclusive.  And then this Fox News graphic just outright distorts the scale to make the comparison wildly misleading.

Top Ten Economic Problems

Moira Herbst runs down ten reasons for a lackluster recovery.

Problem 1: wages are falling

Problem 2: the middle class is losing ground and getting hollowed out

Problem 3: McJobs are taking over

Problem 4: capital is hammering labor

Problem 5: unemployment is twice what they say

Problem 6: America is going part-time – and not for fun

Problem 7: workers aren't working

Problem 8: union wages are harder to come by. Much

Problem 9: the cost of college is skyrocketing

Problem 10: inequality is getting worse

Update (July 30):  A report from the National Employment Law Project shows how the loss of employment in mid-wage occupations has deepened inequality.  President Obama touts a job creator like Amazon, but warehouse jobs are often temporary and at $11 per hour, hardly amount to a middle-class income.

Update (August 25):  Economics professors David Autor and David Dorn describe how technology is creating a polarized work force.

Update (December 11):  More from Autor and Dorn about how service sector jobs are replacing skilled labor.

Update (May 3, 2014):  Another view of the changing labor market.

Economic Insecurity

A survey shows that nearly 80 percent of adults in the United States face some form of economic insecurity by age sixty.  The forms of insecurity are defined as unemployment, receiving a year or more of government assistance, or having an income below 150 percent of the poverty level.

It seems like this would include someone like me when I stopped out of school and had a very low income. It's not clear how many recent college graduates might experience poverty.  But the survey also indicates that the risk of poverty has increased in recent years for those aged 35 to 55.

Update (July 31):  This post makes the point that among the new poor are a number of college students who are homeless.  I should make it clear that I've been quite fortunate--that period of low income was never without family support, I was never homeless, and it amounted to a rather temporary situation.

I think that 80 percent figure (76 percent for whites, 90 percent for non-whites) does seem astounding to me.  I suppose a somewhat "ideal" experience would be to face that insecurity while young and then never again.  But that may not be the most common experience.

Update (August 21):  In a follow-up to the survey above, data is presented on the lifetime probability of living one year at the US Census defined poverty level.

The overall figure is 51 percent by age 75.  The biggest jump seems to happen between ages 25 and 35.

Update (March 19, 2016):  Thomas Hirschl and Mark Rank developed a calculator to estimate the chances of falling into poverty based on race, education, marital status, and age. More than half of Americans will experience poverty at some point in their working lives.

Update (December 18, 2018):  HUD reports that 553,000 people were homeless on a single night in January, an increase of 0.3 percent from 2017 and the second year of increase.

The Cost of Climate Change

An article in Nature argues that released methane from melting permafrost in the Arctic could cost the world economy US$60 trillion over several decades.  That compares to a current global economy of about US$70 trillion.  Poorer countries would bear most of the cost in the form of floods, drought, and health expenses.

Also, a study in Nature Geoscience says that the East Antarctic ice sheet has experienced previous melting at a time when the atmospheric carbon dioxide concentration was similar to now. That occurred 2.6 to 5.3 million years ago when global temperatures were 2 to 3 degrees Celsius warmer and sea levels were 66 feet higher.

Update (September 4, 2015):  A Citibank report projects savings of $1.8 trillion by 2040 by investing in low carbon energy. But global GDP will be many trillions lower by doing nothing.

HNWI Rebound

Good news for the 12 million people world wide with US$1,000,000 or more of investable assets--after declining in 2011, total assets grew by 10 percent in 2012 to US$46.2 trillion.  The 2013 World Wealth Report also shows that the top 1 percent of High Net Worth Individuals (already less than 0.2 percent of world population) own over one-third of that wealth.

Find out where you rank in the United States or in the world either by income or by net wealth.

Update (August 12):  Could the rich have too much money?

Update (October 9):  Somewhat different statistics on global wealth from Credit Suisse.

Update (October 17):  Another chart from Credit Suisse shows how the United States leads the world with Ultra High Net Worth Individuals.

Update (November 22):  More signs the rich have too much money and how that wealth distorts democracy.  Also, how a land value tax could help simplify the tax code by ending the free ride for the one percent.

From Anxiety to Anguish

While mass protests in some countries have brought down governments, the Occupy Wall Street movement in the United States highlighted issues like inequality for a time, but now seems to have faded.  There remain plenty of reasons to be outraged, but Americans, on the whole, tend to be politically passive.  Richard Eskow notes that difficulties faced in isolation tend to turn the anger inward leading to a sense of learned helplessness.  Michael Learner has written about what he calls "surplus powerlessness".  There is the Marxist theory of alienation.  Edward Herman and Noam Chomsky explain how power is maintained through the manufacturing of consent.  Chomsky gives credit to the ideas of Alex Carey whose posthumously published book is titled Taking the Risk out of Democracy.

There are a number of ideas for helping us to understand what is going on and for learning how to take political action.  But it is an enormous project.  It's hard to feel up to the task within our daily routines.

I recently read Robert Jensen's Arguing for our Lives.  Jensen seeks to promote critical thinking around economic and ecological issues.  He writes

We are most anxious when we cannot find a way to make sense of what's happening, and when we feel as if there is nothing we can do to change our circumstances.

And so understanding is a start toward overcoming this anxiety.  He says our best hope is to transform that anxiety into anguish.   It's not that we should now be unhappy all the time--Jensen says anguish is more of a deeper grief over our collective condition.  He mentions wondering whether humans are an evolutionary dead-end (which appeals to my cynical side).  And yet we still have choices and hard work to do.

But I will suggest that whatever that work is, it should be done out of anguish. Anguish is not something to run from, but something to embrace.  When we are stuck in anxiety we find it hard to act, to do what is needed to move forward. Embracing the anguish of our age allows us to make clear choices about the path on which we want to move forward, even if the destination is unknown and the journey uncertain.

Not many people want to think about things like climate change or inequality (our book club never met).  It is depressing and we all know how many distractions our consumer culture serves up to help us avoid facing a pervasive anxiety.  I'm not sure how a great number of people can move from anxiety to anguish, but perhaps thinking about some ways to do that is a place to start.

Update (December 11):  Global warming is having an effect on the mental well-being of indigenous people and will likely touch most of us in a similar way.  The new type of sadness has been called "solastalgia"--homesickness when you are still at home (after so many changes from how it used to be).

Update (December 20):  The anguish of a poet.

Taxes and Inequality

There's a lot more in this study by the Economic Policy Institute about rising income inequality, but the contrast in tax rate trends for different income groups seems most striking.

The top one percent has benefited most from lower tax rates and the effect seems clear.

Poverty Maps

The Urban Institute uses Census data to map out the distribution of poverty by ethnicity in major metropolitan areas of the United States.  Poverty rates seem to be generally higher since 1980 and with a larger population, then the absolute number of people in poverty is much higher.  The distribution is also spreading out to the suburbs.

But the federal poverty line doesn't truly reflect the cost of living.  The Economic Policy Institute has a budget calculator to determine the cost of living in 615 US cities.

Purposeful Dysfunction

For a significant faction of the Republican caucus, compromise is not an option.  They would rather accomplish nothing than compromise.

And the battle isn't over when a bill does pass and gets signed into law.  Republican senators pressured the National Football League to not participate in a campaign to inform Americans about how to sign up for health insurance.  Why?

The more dysfunctional the health care law is, the more Republicans can claim to have been right about it all along.  It's the same strategy that is at work in GOP efforts to underfund the financial reform law or a host of federal agencies:  render government ineffective by not giving it adequate resources to do its job, then argue for more cuts on the grounds that government is ineffective.

Update (July 10):  Greg Sargent points out that the refusal of Republicans to compromise means they are willing to harm people and do damage to the United States to get what they want.

Update (July 12):  An editorial about the Republican refusal to govern and Eugene Robinson writes about the party of "no".  From the New York Times:

[T]he extremists who dominate the Republican majority in the House of Representatives made it clear how little interest they have in the future prosperity of their country, or its reputation for fairness and decency.

Update (July 21):  Mark Sumner calls the Republican strategy sabotage.

Update (July 26):  Eugene Robinson says split government--along with Republican obstruction--may be the new normal.

Update (August 1):  Paul Krugman reminds us "that the madness of the GOP is the central issue of our time".

Update (August 16):  Alex Seitz-Wald on the false equivalence of the far right and far left.  One side actually rejects the importance of governing.

Update (September 27):  Michael Tomasky foresees the end of the Republicans as people start to realize the GOP is not just the party of obstruction, but rather of destruction.

Update (October 2):  The Washington Post editorializes that the House Republican leadership has failed to serve the country.  A minority of assholes gets to decide to shut down the federal government.

Update (October 12):  David Frum describes seven ways Republicans are hurting their party. Amanda Marcotte argues that the magical thinking of the Christian right cause them to worry more about imaginary threats such as Obamacare rather than very real threats such as a government default.

Update (February 15, 2014):  Kim Messick views the essential current political conflict as between the Republicans who accept "modernism" and the Republicans who reject "reality-based" thinking.

Update (February 16, 2014):  Fareed Zakaria makes the case that Republican obstructionism alone is to blame for scuttling immigration reform.

Update (October 22, 2014):  Simon Maloy reiterates the fact that the Republicans are the obstacle to getting anything done in Washington, D.C.