Guest AuthorIncome inequality hovers over our economy like the mother ship from “Independence Day.” It affects millions of individual Americans and the nation as a whole.
The problems are systemic, spread out in a web across a wide variety of industries, with interactions, causes and consequences. All you have to do is follow the threads to see that there are only a few degrees of separation from the problems to a common solution.
Here’s an example. Last year, the CEO of United Healthcare made over $12 million dollars, which is approximately $35,000 per day. By contrast, the average salary for an American worker is only $35,200 per year. That means that he makes 365 times what the average worker in this country brings home.
The Wal-Mart Corporation is owned by four of the richest people in this country, yet their employees are paid minimum wage and don’t get health benefits. They can’t afford United Healthcare insurance policies unless they’re disabled or over 65 and on Medicare.
But Wal-Mart has cut back on senior greeters and has an abysmal rate of employing the handicapped, so the health insurance company has priced itself out of the market of Wal-Mart employees.
So those of us who can afford United Healthcare policies pay more, and then Medicaid picks up the rest. Medicaid is paid by our federal and state taxes. The money the state spends to cover all of these working poor is money that could be spent education and other critical needs. The federal government could be helping out with that cost, but the state rejected the federal expansion of Medicaid in Florida that would have covered 763,890 residents — and the $50 billion in federal money over 10 years so we Floridians have to absorb that cost.
So, our kids’ education is hurt. Their nutrition of minimum-wage workers suffers, too, since they often cannot afford decent food to eat, so they buy less fresh produce and more fast food, including McDonald’s.
When people end up working for minimum wage in places like McDonald’s, they live a life of subsistence. Since many have no health insurance and no sick days, they often come to work sick. They feel trapped in their working poverty.
Because the poor have so little money, our economy as a whole suffers from the lack of consumer spending.
But there are solutions. One is in Detroit, where a place that serves fast food has an answer. “Moo Cluck Moo”, a small high-quality hamburger and chicken sandwiches restaurant in Dearborn Heights, a Detroit suburb, is paying its employees almost double the minimum wage.
In a world of minimum wage-impoverished fast food workers, they pay their employees $15 per hour. However, the burgers still cost around $5 – and the world has not come to an end.
Their employees are paying their bills and their student loans, and sending their kids to softball camp. They are happier, and it shows in their job performance. The customers appreciate it, and the local economy benefits.
So, what restaurant in Florida will follow their lead and prove the state legislators wrong who killed this session’s minimum-wage bill?
As a consumer, I’ll make the move to that pioneering establishment that supports a higher minimum wage, and I am sure that many will follow.
Moo Cluck Moo co-founder Brian Parker recognizes that his labor cost is 40 percent, and the food cost is 30 percent, yet says they are still making a profit. “I’m taking less money personally,” he said. “My question is, how much do we have to make? How big of a pile of money do CEOs have to sit on?”
My guess is that the pile doesn’t need to be 365 times higher than the pile of money their workers earn.
Gary Stein, MPH, a native Detroiter, worked for the Centers for Disease Control, landed in the Tampa Bay area to work for the State Tobacco program and is now a health advocate and activist and blogger for the Huffington Post. Column courtesy of Context Florida.
2 comments
John Alfino
June 3, 2014 at 3:14 pm
In relation to the minimum wage, there are three economic arguments that do not get enough attention. Nobel Laurent Economist Joseph Stiglitz, author of ___ The Price of Inequality: How Today’s Divided Society Endangers Our Future___ (2013), is famous for the Shapiro-Stiglitz Model, which is an efficiency wage model. The model proves that, if wages fall below a certain quantifiable point, the economy suffers. In other words, under prevailing models, raising the minimum wage today will improve the over-all efficiency of the economy.
Next, there is the economics book that everyone is reading at the moment, French economist Thomas Piketty’s __Capitalism in the 21st Century__(2014). Piketty challenges the conservative economic theory, which is most often associated with Nobel laureate economist Simon Kuznets (1901–1985). Kuznets argued that “a rising tide lifts all boats”. In other words, that the economic growth from inequality best improves the lives of those at the bottom rung of the ladder and, in Kuznets mind, income disparity is reduced over time. The debate of the moment is Piketty counter argument reaching them opposite conclusion.
Stiglitz and Piketty also argue that the present income inequality is a threat to the stability of the economy, that great wealth disparity is leading down the road to an economic depression and eventual economic collapse.
Finally, both Stiglitz and Piketty make an economic-political argument which was best made by British economists Richard G. Wilkinson and Kate Pickett in their book ___The Spirit Level: Why More Equal Societies Almost Always Do Better____ (2009). Income inequality is a threat to the stability of the Republic. As Supreme Court Justice Louis Brandeis once said, “We can either have democracy in this country or we can have great wealth concentrated in the hands of a few, but we can’t have both.”
AnnieG
June 6, 2014 at 7:51 pm
If he thinks minimum wage earners are “poor” he should know that many trying to live on SS and SSDI earn less than $1000 a month. Gives ‘fixed income’ new meaning.
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