Wednesday, December 24, 2008

Re: San Francisco street gangs

The Crips and the Bloods could not beat a decent paying Ronald McDonald -- and might be the first to tell you so. Up until July, last year, we literally had a 1939 federal minimum wage ($5.15/hr v. $4.65/hr in 2007 dollars but w/no tax) and we have a prohibition. Upshot: we have drug selling gangs but this time they are not Irish, Italian and Jewish, they are black and Hispanic.

Our ghettos are our Hoovervilles.

As of last year (and probably still unchanged) 25% of America's workforce earned less an hour than LBJ's 1968, $10/hr minimum wage (double the average income later).
Since 1973, 15% of overall income share has shifted from bottom 90 percentile incomes to top 3 percentile incomes -- overwhelmingly to the top 1% (which proves it is not a matter of the more educated getting more pay in a higher tech economy -- the top 3 percentile were always highly educated).

The income share cut is bigger both proportionately and absolutely as you go towards the bottom (IOW, from 90 percentile to 25 percentile there was descendingly less sharing of the growth).

Doubling the federal minimum wage to $13/hr would shift $350 billion to the bottom 40 percentile! -- adding all of 2 1/2% to the cost of GDP output (sound like a solid stimulous?) and presumably to inflation.

Last year the minimum wage was about 1/5 of the average wage ($25/hr -- the gov $17 figure is derived from a limited description and grew 20% over the last 40 years while average income grew 100%). This year it is 1/4. Obama wants to make it a big 1/3. LBJ had it up to an astonishing 2/3 in his administration -- and -- in the Eisenhower administration (1956: $8/hr) when he got it through the Senate as majority leader.
Time to bring something to the American economy a labor pricing practice that is used all over the modern OECD (not to mention second world, Argentina; not to mention the third world, Indonesia!): sector-wide labor agreements wherein everyone doing the same job in the same geographic locale works by law under a common collectively bargained agreement.

French Canada, right next door, uses a "lite" version: non-unionized firms must by law operate under contract terms worked out by unionized firms. Wal-Mart just pulled 88 big boxes out of Germany ("heavy" version) because it could not compete for German customers on skill and it could not compensate by paying lower wages and benefits.
Our Republican Senators just inadvertently pointed out the sector-wide approach over the auto bailout even -- if their version was stuck in reverse: paying organized labor the same as unorganized!

Prices are set in an unregulated labor market is all about power -- not utility. Ownership's default bargaining position is that of indispensable "last lot" seller and the default position of labor is that desperate "fire sale" seller. This is automatic; it is all about relative numbers of bargainers -- if there were 10 times as many employers as employees the power equation would work the other way 'round -- just eight grade math, no class struggle.

Unionization and an as high as practicable minimum wage are necessary to reset the bargaining position of labor as equally indispensable last lot seller. And sector-wide contracts are the only answer to the race to the bottom (as supermarket workers could appreciate).
Hell of a time getting MALE geeks to discuss the most obvious, clear, abstract answer to American labor's impoverishment: sector-wide.

Females are gatherers, scooping up and sorting from many sources -- and they seem more willing to consider complete new (to Americans) ideas too.

Males are hunters -- desperate to catch one piece of meat today -- reach some small consensus TODAY; will NOT focus their discussions on anything completely new (to us) which could take months or years to come to any common conclusion on. Also males wont entertain any new ideas while on the hunt -- new ideas are for before or after, as they interlock the minds and instinctively cooperate with the rest of the hunting group. Problem is: male geeks are ALWAYS on the hunt (even alone in the library at one in the morning).

It seems almost impossible to get male geeks to consider the most obvious answer to labor's mess: sector-wide labor agreements. Meanwhile airline and supermarket workers would kill for sector-wide legislation. While we are on the topic: if the transplant auto factories supposedly turn out better cars then Detroit they should have no problem at all making a good living paying the same wages as Detroit.

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