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July 4, 2017

JULY 1  AND WAGE INCREASES

July 1 kicks off the fiscal year for many units of government and is also the effective date for wage increases voted for earlier by states, counties and municipalities, and already we are hearing of “studies” that show that such increases are going to hurt small businesses whose margins are so thin that they may have to go out of business as a result. Other such “studies” predict a grim future for business generally because of such increases and will (per the “studies”) cause increased unemployment and increased social outlay for their needs.

We are familiar with these “rent a study” tactics used by think tanks and other such propaganda fronts for the Chamber of Commerce and their minions who start with conclusions and then gather “facts” to support such conclusions. One of the typically missing components (or a mention summarily dismissed of such “studies”) is the undeniable fact that increased wages increase demand for the employers’ goods and services and tend to balance out any such increased costs for labor.

There are also studies that show that savings to the employer are to be found when employees are better paid than before in terms of increased efficiency on the job, loyalty to the employer, and less turnover (which saves employers the costs of constantly training new help as old employees leave for greener pastures). Expanding demand cancels out the unemployment problem pretense and even increase employment to meet enhanced demand for the goods and services offered by such businesses. (See Seattle, where businesses and employment are prospering and expanding due to a substantial raise in the minimum wage.)

Elizabeth Warren in her new book, This Fight is our Fight, chronicles the story of a nine-year employee  of Walmart (named Gina to protect her identity from employer retaliation) who in 2015 received a notice from her employer that Walmart was set to give her a “significant raise in wages.” She thought that finally Walmart would recognize her hard work and loyalty and reward her accordingly. Later she received a letter telling her what her “significant raise” was to be 21 cents an hour. Some raise at $8.40 a week from an already slave wage base! That’s “significant?”

I suppose the Walmart plantation owners couldn’t afford to pay more, like those referenced above who are complaining that they may be going  out of business this new fiscal year due to the wage gouge, so let’s look at Walmart’s bottom line for 2015 to see.

Per Warren, “In 2015, Walmart made $14.69 billion in profits, and Walmart’s investors pocketed $10.4 billion from dividend and share repurchases – and Gina got 21 cents an hour more.” Warren rightly goes on with her observation that “This isn’t a story of shared sacrifice. It’s not a story about a company that is struggling to keep its doors open in tough times. This isn’t a small business that can’t afford generous raises. Just the opposite: this is a fabulously wealthy company making big bucks of the Ginas of the world.” (I here note that even “small businesses” can afford such a miniscule raise of 21 cents an hour given offsetting increased demand for their goods and services.)

Gina has other stories to tell, like a fellow employee who lives in a car. She brings him food, and this brings up another missing or barely mentioned point made by “rent a study” studies – what it costs the rest of us as direct contributors to Walmart’s bottom line to keep the employees of Walmart alive. Thus (per Warren) “Walmart is the largest employer in the country. More than a million and a half Americans are working to make this corporation among the most profitable in the world. Meanwhile, Gina points out that at her store, ‘almost all the young people are on food stamps,’ and it’s not just at her store. Across the country, Walmart pays such low wages that many of their employees rely on food stamps, rent assistance, Medicaid, and a mix of other government benefits, just to stay out of poverty.” Guess who is providing such help to Walmart’s employees and thus directly to Walmart’s bottom line in a stark form of corporate welfare? Hint > you and me. I thought that food stamps and other such government help to the poor (which I support) were to keep body and soul together, not to fatten corporate profits. I was wrong. The rich and corporate class has found another way to fleece us American taxpayers. Tsk!

Walmart and other hugely profitable corporations who pay slave wages to their employees constantly complain about people welfare costs through their congressional toadies but should look in the mirror – they are the ones who are on corporate welfare big time while impoverishing their employees and draining your pocketbook and mine.

Is there no end to greed and its supporting propaganda? Minimum wages amount to maximum wages for millions of people, but if we were to attempt to impose by statute a maximum income on profits you would hear loud cries of dictatorship from congressional toadies for the rich and corporate class’

Parenthetically, one might fairly ask why we effectively impose limits on wages by statute but cannot, for instance, impose an excess profits tax on corporations as we did in WW II to pay for war costs. I think our 20 trillion dollar national debt could be classified as a civil emergency and that such a tax earmarked for debt reduction is in order, given the 20,000 Dow and unprecedented corporate profits, but that is for another essay to ponder.

Demand is what makes the world go round in a market economy. More money in the hands of those who consume means heightened demand. More demand means more not less employment. The labor negatives are cancelled out by not only the labor positives but by less social costs to you and me as our costs go down since, why should you and I pay into the bottom lines of such hugely profitable corporations? Is such a system operating in the public interest, i.e., government largesse to maintain a slave wage system? Are two and two five? Of course not!

I have people who ask me why I have not darkened the door of a Walmart for the past twelve years. The foregoing explain some of the reasons. Another reason is that I am as a taxpayer (involuntarily) already paying into Walmart’s profit maw, which I resent, but will not compound the felony by being a consumer of their goods and services as well. Enough is enough!      GERALD      E

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