Wednesday, February 3, 2016

Re: "The costs of inequality: When a fair shake isn’t" by Alivin Powell

Re: “Inequality, it’s not just about wealth, it’s about power. It isn’t just that somebody has some yachts, it’s the effect on democracy. For me, the big issue is the power problem. … I think we’re in a really scary place.”
— Marshall Ganz

We can trace poor education in ghetto schools down to low pay in the low skill (entry level, e.g., retail clerk) job market. We can trace crime (especially homicides -- e.g., Chicago's daily shoot-em-ups) down low pay in the low skill job market.

Berkeley professor Martín Sánchez-Jankowski learned that ghetto schools don't work because students (and teachers!) didn't see anything remunerative enough waiting for them in the job market to make any extra effort -- while spending nine years on the streets of five poverty stricken neighborhoods in NYC and LA.

100,000 out of my guesstimate 200,000 Chicago, gang-age minority males are in street gangs. My assumption -- based on my and my fellow co-workers parallel experience (below)-- because the kind of jobs easily available pay about half a grown man minimally needs to earn to live like an adult (even with another adult): only about $400 a week.

Noto Bene: Back when Lydon Johnson was president -- and per capita income was only half of today's ($15,000 v. $30,000) the federal minimum wage was $440 a week! !!!

My old (especially "old" -- I'm 71) Chicago taxi drivers "gang" used to make about twice what I guess these guys make today. That was before the fare dropped off 50 cents a mile, while 40% more cabs were added, opened unlimited limos and build subways to both airports. Unlike the former lease system (60/40 split) ALL the fare shortfall now comes out of the drivers' ends.

The money is obviously there for the drivers -- it was there before. $15 an hour is there (without waiting 5 years to sneak up on it) for high labor costs businesses like fast food (uniquely 33%). $20 an hour should be there for 10-15% labor costs businesses. Was before in supermarkets -- before Walmart two-tiered their contracts. Is definitely there for very high skilled regional airline pilots who are making $500 a week hoping to move up to the "big time" while living on food stamps!

The money is there because the consumer has it (two generations after the minimum wage was $11 -- something about economic growth) and is willing to pay it. But, the only way employees can test consumers' willingness to pay (other than a minimum wage at the very bottom) is collective bargaining with the employer (with one eye on how far to push the consumer -- just like when you set the minimum wage).

There's not even that much money involved: about 5% of income shift will pay for $15 min wage -- maybe 10% (pure guess) to get most low skill jobs more in the range of $20 (collective bargaining will keep a sharp eye on the consumer here). Remember, per capita income typically grows 20% over 10 years -- along with the free gifts of technology -- so the consumer will get it back. That is, if the top 1% stops bleeding off all the growth; high labor density (AND ONLY HIGH UNION DENSITY!) will take care of that -- by hook or by crook.

At one time we had high union density and everything worked fine. The legal mechanism even then didn't say too much more than that if management stole it had to give some of the money back -- meaning if they fired organizers and joiners they had to re-hire. As such labor union law as sort of on the honor system, but because of social consensus it somehow worked ...

... which consensus has long since disappeared and taken the whole nation's economic and political health down system with it.

Union busting is much more pernicious than labor union racketeering. Racketeering only bleeds some of what you've got. Busting steals it all (including your political sinews) before you get it -- but busting is done by the upstanding natural leaders of the community, so we just don't seem to catch on.

To approach perfect competition the monopsony condition of the labor market (one buyer) must be balanced off by the monopoly of a labor union (one seller) -- only way for half the means of production (the labor half) to test the willingness of the (ultimate) consumer to pay.

Management can claim there are many monopsonists in the labor market (therefore many buyers) but that just prevents on super monopsonist from paying computer programmers as much (as little) as burger flippers. That sets up what we have in the US -- what I call a subsistence-plus labor market where labor's price is set according to what it has to offer compared to other labor -- rather than what the consumer market is willing to pay.

The perfectly competitive market is exactly what labor needs -- as long as you know exactly what a perfectly competitive labor market really means.

Any other form of market warping and muscling is quite rightly heavily penalized (try to take a movie in the movies and tell them you were only kidding -- see you in a couple of years). Forget Congressional help for now. Progressive states are beginning to understand that they can set their own labor standards that add but not subtract (federal preemption) from federal law (just as with local minimum wages).

To restore American economic and political health, progressive states can make union busting a felony -- automatically invoking RICO for persistent abusers (which can deter "playing at" union busting -- 33 states have their own RICO statutes).

In Maryland for just one instance Democrats have a 33-17 edge in the State Senate and a 91-50 edge in the House. WA, OR, CA, IL, NY, anybody listening?

No comments: