Sunday, April 7, 2013

[REPEAT] Open letter to Oakland mayor Jean Quan -- the only law that can end gun violence [REPEAT]

Open letter to Oakland mayor Jean Quan:
The only legislation that can realistically end gun violence in Oakland – and Chicago – is a labor law: doubling the minimum wage to $30,000/yr.  The Crips and the Bloods could not whip a decent paying Ronald McDonald.

Crackpot?  More than doubling the federal minimum wage from $7.25/hr to $15/hr ($600/wk) would cause less than 4% direct inflation:
$3.87/hr (half/average raise)  X  2080 hours (full work year) = $8,049/yr  X  70 million workers (half the workforce -- $15/hr is today’s median wage) = $563.4 billion.  (3.5 million workers at the minimum wage would get a full $16,020 raise may be left out to simplify eighth-grade math.)  Divide $563.4 billion by a $15.8 trillion GDP and we get 3.6% direct inflation (not counting leap frog pushups which may not add up to that much – LBJ’s median wage was only 25% higher than his minimum – high minimum wages often approach median level in other economies).

Oakland won’t educate its way out of poverty and crime.  Catch 22: political scientist Martin Sanchez-Jankowski, from neighboring UC Berkeley -- who spent nine years in five poor New York and Los Angeles neighborhoods (and ten years before that researching street gangs) -- explains in his 2008 book Cracks in the Pavement that ghetto schools don't work mostly because students (and teachers!) don't expect anything decent awaiting them in the labor market, and so think it hopeless to make the effort.

In 1956 majority leader LBJ steered an $8.50/hr ($1/hr nominally) minimum wage bill through the US Senate.  In 1968 (hourly increments and retail workers added in years between) president LBJ piloted a minimum wage of $10.50/hr ($1.60/hr nominally) into law -- per capita income having expanded 25% in the dozen years intervening.

Per capita income has doubled in the two generations since 1968.

There would be a dismal gap even between a minimum wage of  $15/hr, or $30,000/yr and a reality-based minimum needs (poverty) level for a family of three – and even between a median wage 25% higher of $18.75/hr, or $37,500/yr. 

A realistic poverty line for a family of three is $45,476 in 2012 dollars according to the 2001 Ms. Foundation book Raise the Floor (table 3-2 on p.44 -- includes $8,786 medical insurance cost).  Raise totals up from a comprehensive list of expenses, including taxes to get its figure.  (Raise provides extensive explanations for its minimum needs parameters in Appendix B, citing Solutions for Progress -- allots $3,000 to yearly medical expenses even if the family has insurance.)
$19,090, supposedly covers the minimum needs for a family of three under the 1955 era federal formula.  Both the Ms. and government formulas calculate about $6 per person/per day for food – the ancient federal methodology multiplies the cost of food three times and leaves it at that.  Which is why you won’t see the federal measure quoted much anywhere except as a formula multiple (2X, 3X, 4X).A wage even 50% higher than today’s median, of $22.75/hr or  $45,000/yr, would barely support a family of three.

"Since 1973 [note: the last year national income gains were shared across-the-board], productivity has grown roughly 80 percent while median hourly compensation improved by roughly 11 percent.”  Something more elemental than “raising the floor” needs to be prescribe.   

Anyone can work up a list ruses by which the average American’s interests are being hung out to dry these days.  I was just going to say the only thing not foisted upon us so far is foreign firms buying up local water rights and charging them back to us triple.

Then I remembered Chicago leasing its parking meter system for 75 years for $1.15 billion:


Up the road from Oakland City Hall – up College Avenue – on the UC of Berkeley campus labors as progressive a progressive economics faculty as anyone should wish.  They could you tell you, Madam Mayor, and tell everyone else at the same time [this essay may hopefully edge them in the latter direction] about a species of labor legislation that can potentially re-write the American social contract front to back, economic to political.
Legislation that has been tried and tested over half a century in the first world (Germany, France) moving to the second and third worlds (Argentina, Indonesia) as well as right next door (French Canada).  Legislation bringing to Americans a labor market setup devised – not by Karl Marx – but by post WW II German and other continental industrialists – not to empower labor -- but to stifle union wage races-to-the-top that would divert money from industrial bases rebuilding.  (England did not take this path which is why it fell behind – which I’m pretty sure I read in Berkeley’s, Barry Eichengreen’s 2008 The European Economy Since 1945.)

Europe's fabled welfare state was offered as a compensation for labor price moderation. Magic bullet: legally mandated, sector-wide collective bargaining – wherein everyone working the same category of job (e.g., retail clerk) in the same geographic locale (where applicable) works under one common contract with all employers – thwarts the race-to-the-bottom just as surely – just the right barraging balance.

The late David Broder, dean of the Washington press corps, said that, when he came to D.C. 50 years ago, all the lobbyists were union – which meant: naturally balanced campaign financing, someone minding the store on the average person’s interests, all backed by the majority of voters -- perfect democracy.

Your friendly economics faculty up the avenue can tell you all about all of this – but you’ll have to ask.

Denis Drew
Chicago  (sometimes Berkeley)

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