Economics

The Case of the Missing Middle Class Wages

Hey, where’s that rich guy running with our paychecks?

Nobody reads Politico to discover something new. Campaign staff and their consultants read Politico in order to gauge how their latest spin played out in the DC Beltway. Celebrity politicians check Politico to make sure they’re mentioned. The media reads Politico to see what the dominant narrative for the day will be.

Every so often, Politico will break some news, or publish an editorial that reframes a debate. But the day-to-day grind of Politico—its bread and butter—is regurgitating known knowns for the DC crowd. It’s the outlet for pushers of conventional wisdom to promote and bolster conventional wisdom for other pushers of conventional wisdom.

All this brings us to a story by Danny Vinik titled “The economy keeps improving. Why aren’t wages?” Here’s the nut of the problem, as Vinik sees it:

Wages have grown just 2.5 percent over the past year, only slightly higher than inflation. Since 2010, nominal wages have grown about 2.5 percent each year, while inflation has averaged 2 percent. Perhaps most concerning, as the labor market has tightened, wage growth hasn’t accelerated.

Vinik talks to some economists who have “a few theories” about why wage growth hasn’t happened, and he boils their theories down to three main hypotheses:

  1. The economy still isn’t at full employment”
  2. Workers aren’t becoming more productive”
  3. Industries are too concentrated”

Let’s just say up front here: the conventional wisdom isn’t really interested in solving this problem. The conventional wisdom is interested in paying lip service to the problem while ensuring the status quo. And so of these three theories, two are completely wrong and one barely lands a glancing blow on the real problem. So let’s talk about the wrong theories first.

Full employment” is an economic term that gets pointed to a whole lot at moments like this where unemployment stats sink to a fairly low point. Basically what Vinik is arguing here is that the market should raise wages naturally when enough workers enter the job market.

So if this theory is correct, why isn’t the Invisible Hand—hallowed be its name—raising wages? Well, mainstream economists argue, it’s because there still aren’t enough workers in the job market. How many workers need to be in the job market for wages to start climbing? Unclear! And what could coerce the Invisible Hand into action? Tax cuts are one theory that Vinik floats, and we’ll come back to that after we look at the second and third items on his list.

So moving on: are workers not productive enough? “Traditional economic theory holds that workers’ wages will rise in line with productivity growth,” Vinik writes. He says that “as they become more productive, workers become more valuable to companies and can demand a raise.” Again, presumably, the Invisible Hand—praise be unto it!—would make this happen.

Except worker productivity has risen dramatically since the 1970s, and wages have stayed flat. A 2012 study showed that the minimum wage would have hit over 21 dollars per hour in 2012, had wages and productivity stayed tied together. They did not, and our national minimum wage is still $7.25, just as it was in 2012.

So that brings us to the third and final option on Vinik’s list. Are monopolies to blame? “In a world where workers can’t simply switch to a new industry — gaining new skills takes time, for instance — workers have little power to demand a pay raise,” he warns.

Which, okay. Yes, that’s a valid point. But throughout this post, Vinik ignores the easiest explanation for all this: Workers aren’t earning more because employers aren’t paying them more.

Simple? Yes. True? Also yes. And here’s another condition that Vinik doesn’t really examine: Union membership in the United States has precipitously declined since an all-time high in the 1950s, and without that collective bargaining power, individual Americans can’t successfully negotiate for better wages. Here’s a fun fact: the word “union” doesn’t appear in the piece at all.

You know what other word doesn’t appear in the piece? “Profits.” Here’s the St. Louis Fed’s chart of after-tax corporate profits:

That money is not going to wages. No mythical Invisible Hand is sweeping down from the heavens to redirect those profits into worker paychecks. That’s where the money has gone. That’s money that should belong in the pockets of workers. Instead, it’s going toward the top one percent.

Vinik should get credit for at least asking the right questions in his piece. Even promoters of the conventional wisdom can’t ignore the fact that wages are artificially low. But the simplest explanation is right in front of them. Those wages didn’t disappear. They aren’t being withheld by a mysterious Invisible Hand. They’ve just been funneled into the top one percent.

Yet corporate interests keep urging reporters like Vinik and politicians like President Trump and Speaker Ryan to promote tax cuts for the wealthy and deregulation for corporations as solutions to this problem. This is almost exactly like asking fire departments to put out house fires with gasoline. So many of America’s current problems—the sluggish recovery, the stagnation of rural areas, the lack of revenue to fund education and other essential government funds—can be traced directly to the inequality created by the working class’s missing wages.

If we were to raise the wage and ensure that middle class policies like a decent overtime threshold were in place, those profits would go to the middle class. Those people would then spend those profits on goods and services in their community, they’d invest them in education and nonprofits, they’d start their own small businesses. Everyone would be better off.

But as long as the conventional wisdom continues to serve the interests of the wealthy at the expense of ordinary Americans, you’re not going to see the obvious truth in Politico. What happens if this situation continues—if the wealthy continue to keep a grossly disproportionate share of profits that belong to 99 percent of all Americans? The answer to that question, funnily enough, can be found in an essay written by Nick Hanauer that was published in Politico about three years ago: “The Pitchforks Are Coming…for Us Plutocrats.”

Shining a Spotlight on Washington State’s Dirty Little Secret

In so many ways, Washington state is a beacon of progressive politics to the rest of the nation. Sure, we’ve got our share of conservatives here, but for the most part we’re a pot-loving, worker-friendly, transit-happy state. We protect the environment, we encourage innovative industries, we keep our wages high, and we do our part to end gun violence. We’d be a leftie heaven on earth, except for one thing: our tax structure is an absolute mess.

In this week’s episode of our podcast The Other Washington — be sure to subscribe on iTunesStitcher, or wherever you get your podcasts—Hanna Brooks Olsen, Goldy and I investigate our state’s regressive tax structure. For Washingtonians, Goldy explains, “if you earn over $500,000 a year, you live in the lowest-taxed state in the nation. But if you earn under $20,000 a year, you live in the highest.”

As you might expect, this massive inequality causes some enormous problems. We talk about how a lack of revenue is screwing up basic state functions like education. We compare Washington to other states (we even suck when compared to libertarian New Hampshire) and we discuss what our awful tax structure might mean for our state’s future.

Special guest Misha Werschkul from the Washington State Budget and Policy Center joins Hanna to talk about how we came to be the worst state in the nation on taxes, and what solutions might look like. It’s not just a matter of rolling out an income tax: Werschkul discusses a proposal to create a capital gains tax that would only affect the wealthiest Washingtonians.

And it’s important to remember that it’s not just individuals who are suffering under our tax system. Werschkul says the tax is regressive for small businesses, too: “if you’re a small business in Washington state and you are frustrated by the business tax,” she says, “you probably have a reason to be that way because other businesses aren’t paying their fair share.” Those huge corporations enjoy lots of loopholes and advantages that middle-class business owners don’t.

This is not a partisan problem: both Democrats and Republicans have contributed to our state’s awful tax structure, and the inaction we’re seeing from both parties is only making things worse. Voters have considered changing the tax code before, but those proposals have gone down in flames. We talk about why that is, and why we might finally be ready for change.

I hope you’ll listen to the episode. It’s a great primer for anyone who wants to understand how we got to this place and why our politicians sometimes seem paralyzed when it comes to enacting big progressive ideas. In future episodes of The Other Washington, we’ll dig into more solutions and explore exciting ideas for what we can do once we finally—finally!—establish a more equitable tax structure that lives up to our reputation as one of the most progressive states in the nation.

The Top One Percent Is Sick of Your Bad Attitude, America

Things are going great for American Airlines! The company’s stock price has doubled over the last four years. Late last year, Warren Buffett’s investment group Berkshire Hathaway bet hugely on the airline industry, and they bought more American stock than any other company. As everyone knows, Buffett doesn’t invest for the short-term: he only puts his money behind businesses that he believes have a prosperous and sustainable future ahead of them.

So naturally, American’s leadership did what any smart business would do when it’s staring down a brighter future: it invested in its people. They gave their pilots a 7 percent raise, and increased pay for flight attendants. This is good thinking; even employers like Wal-Mart now understand that businesses don’t succeed unless they pay their employees a decent wage.

From a business standpoint, those raises make sense; employees who are paid decently are happier, they leave jobs less often, and they do better work. And from an economic standpoint, it works out, too. Those American employees will be able to spend that extra money in businesses in all the cities they travel to. Why would anybody be against this decision? What kind of short-sighted punk would argue against a sensible investment in the future?

Well, uh. Meet Kevin Crissey. The Los Angeles Times reports on his response to American Airlines paying its employees more:

“This is frustrating. Labor is being paid first again. Shareholders get leftovers,” Citi analyst Kevin Crissey wrote in a note to clients. Investors showed their displeasure by sending American Airlines Group Inc.’s stock down 5.2% to $43.98 on Thursday.

The arrogance of this statement is breathtaking. Airlines, simply, wouldn’t succeed without pilots and flight attendants. The planes wouldn’t fly. The customers wouldn’t board and exit the planes. Without those employees, nobody would be able to fly American. Businesses aren’t just a series of blinking lights on a computer screen on Wall Street: they are goods and services provided by people, for people.

And if you don’t serve those people—the employees and the customers—there’s no money for investors like Crissey to push around. You have to pay labor first, or there’s no business. Shareholders do, literally, get the leftovers: because they invested in the business, they get to enjoy all that profit that workers earn for the business and that customers pay into the business. This is some real cart-before-the-horse thinking.

I want to be perfectly clear, here: complaining about Crissey is not going to help anything. While expressing his frustration at workers “being paid” is horrendous behavior, Crissey does not deserve to be the subject of an internet witch hunt. Shaming him until he apologizes, as is custom on Twitter these days, would not make a whit of difference.

Crissey, and all the Wall Street bros who knocked American Airlines down a peg, aren’t the problem. Singly, they’re not powerful or important enough to be the root cause of a problem. They’re just a symptom of a larger problem in America today. They are the physical manifestation of the one percent’s growing entitlement.


Earlier this month, the email aggregation service Unroll.Me took a lot of internet fire for selling customer email information to Uber. This behavior was strictly legal and clearly well within Unroll.Me’s terms of service, but a lot of users were horrified to discover that their Lyft recepts were anonymized and sold in bulk to Uber. Users of Unroll.Me—including, full disclosure, myself—quit the service in large numbers.

The head of Unroll.Me, Jojo Hedaya, issued an apology that was crammed full of all the Silicon Valley cliches you’d expect, but nothing really changed. Unroll.Me lost the trust of a lot of its customers, but on the other hand, a lot of its customers didn’t notice or care. We’ve seen this play out before. The scandal has become old news. Some of us have learned our lessons, and it’s time to move on.

Well, uh. Meet Perri Chase. She’s the former co-founder of Unroll.Me, and she wrote a Medium post defending Hedaya, calling him “literally one of the most incredible humans I have ever met” (emphasis hers.)

Chase’s Medium post is an amazing display of techie entitlement. She huffs:

What exactly do you think is going on in your FREE gmail inbox? And honestly, anonymized and at scale why do people care? Do you really care? Are you really surprised? How exactly is this shocking?

Or maybe you just hate yourselves because you think Uber is gross but you use them anyway and “why are these tech founders such assholes” that they have to ruin your experience where you need to delete your apps?

Obviously, Unroll.Me users do care or they wouldn’t be quitting the service. It’s a known fact that people don’t read the Terms of Service. It’s not smart, but everyone does it: I do it. You, unless you’re a fastidious lawyerly type, likely do it, too. Who has the time to read all that fine print?

But Chase doesn’t care about that. The thing that bugs her is that ignorant, self-hating users dare express their unhappiness in the general direction of “my sweet, sweet friend Jojo.”

“We always cared deeply about our users and Jojo still really does,” Chase concludes. “You will just have to trust me on that.”

Okay, but why should we trust you on that? Because you’re you? Because we, the unwashed masses—your customers—aren’t qualified to know what’s good for us? Because we’re dumb enough to get upset when we discover that our data is being used in ways that we find distasteful?

Look, I worked in retail for a dozen years. I understand that the customer is not always right. Sometimes customers are flat-out wrong. But for those in power to argue that workers and customers are not only wrong, but are insolent to even request what’s rightfully theirs? That’s a new dynamic, and it’s more than a little scary.


These stories of corporate arrogance seem to be popping up more and more every day. We recently saw what happened when United denied the basic humanity of its customers. Every time we go to a mall, we see how retail chains repeatedly ignore their commitments to customer service. When we go out to eat, we see restaurant owners complain about having to pay their employees a living wage. The entitlement is staggering.

Actually, it’s more than just entitlement. It’s derangement. It’s what happens when the balance between workers and owners is thrown out of whack, and when investors forget that an economy is more than just racking up points like life is some kind of pinball game. The dismissive, holier-than-thou attitude we’re seeing from Crissey and Chase and others is what happens when you’re repeatedly told that you’re a maker and everyone else is a taker. This is what happens when income inequality balloons out of control.

Happily, we seem to be reaching a turning point in this narrative. Customers and workers on social media are expressing their outrage in numbers that are impossible to ignore. People are speaking out on the left and the right against what they rightfully see as a system that has been rigged against them. Cities and states across America are starting to raise the minimum wage to sane levels again. It’s not an easy fight, but it’s a one that’s worth fighting.

Once we tighten that yawning gap between the haves and the have-nots, we’ll see less of this embarrassing behavior from investors and employers. From all the way over there, it’s hard for some of the wealthiest Americans to even recognize our basic humanity. It’s up to us to assert our worth, to tighten that gap, and to remind the one percent that we’re not “frustrations” or self-hating ignoramuses. We all—every last one of us—deserve respect. We are all American.

If You Care About Growing the Economy from the Middle Out, This Is Required Listening

Some of the many guests from The Other Washington season one.

Tomorrow, we’re relaunching the second season of our podcast, The Other Washington, with a fantastic interview with author and progressive truth-teller Thomas Frank. Frank, the author of Listen, Liberal, believes that the Democratic Party has been hijacked by a professional class of elites, at the expense of the working class. I can’t think of a better way to kick off a new (weekly!) season of The Other Washington, and I can’t wait for you to hear it. (You can read a sample of our talk here.)

But while we wait for the second season of the podcast to arrive, I’d like to urge you to visit (or revisit) the first season of The Other Washington. “Why would I want to listen to some old political podcast,” you ask? Well, because the first season of the Other Washington was constructed to be an evergreen listen. It establishes the foundation of our beliefs at Civic Ventures, and explains why we promote the policies that we do.  The first season is a primer that says what we’re all about. The second season will put those bedrock policies into action and show how here in the other Washington  we’re moving forward while leaders over in the other other Washington — that’s Washington DC—keep pushing us back.

Here’s a rundown of our first season:

+ Read More

The Latest Poster Children for the Anti-$15 Crowd: Low-Quality Restaurants?

Some sage advice for restaurant owners in this screenshot from the Hell’s Kitchen video game.

I simply can’t respond to every single dumb trickle-down take on the $15 minimum wage. If I felt the need to write back to every jerk who took an Econ 101 class and thought it earned them a Nobel laureate in economics, I’d be writing takedowns every hour of every day, with no sleep and no breaks. My fingertips would bleed from all the typing, and I’d need to rent a helper monkey to put drops in my eyes so they wouldn’t dry out as I type.

But when I noticed that someone named Peter Heck published a piece titled “Minimum Wage Hikes are Killing the Poor” — well, how could I just ignore a title as ridiculous as that? Heck says that the “wealthy liberal city of San Francisco” is facing a “coming disaster” as it’s raising its minimum wage to $15 next year. He quotes a new working paper from Harvard Business school which, according to its abstract, finds that…

…lower quality restaurants, which are already closer to the margin of exit, are disproportionately impacted by increases to the minimum wage. Our point estimates suggest that a one dollar increase in the minimum wage leads to a 14 percent increase in the likelihood of exit for a 3.5-star restaurant (which is the median rating), but has no discernible impact for a 5-star restaurant (on a 1 to 5 star scale).

Heck then extrapolates from their abstract:

Bob’s Burgers may not be able to absorb the cost associated with paying $15 an hour for their entry level employees without coming to economic ruin. But swanky, upscale Eagle’s Nest Steakhouse, on the other hand, can simply jack up the cost of their filet by a few bucks and be okay.

In other words, the liberal minimum wage policy lets the rich get richer and the poor lose their job when the business they work for goes under.

Except that’s a really bad misreading of the study. The stars used in the study are taken from Yelp. The quality that they’re measuring is the customer experience, not the cost of the restaurants. Yelp has a second ranking, of dollar signs, to identify prices, but price didn’t really figure into the closures. In fact, the study overtly states that they found (emphasis mine) “evidence that the heterogeneous effects observed earlier are driven by quality rather than by the restaurant prices.”

So if Yelp customers rate Bob’s Burgers 4.5 stars because they like the food and the service, Bob’s Burgers will weather the minimum wage increase just fine. Some comparably rated Seattle businesses on Yelp would be Paseo, which serves no meal over $15.50; Tacos Chukis on Capitol Hill, which serves tacos for under $2 and tortas for $6.90; and Fat Ducks Deli and Bakery in the University District, which sells sandwiches for $8.95 each. (I can say from experience that all three of those restaurants, by the way, are excellent.)

And if the Eagle’s Nest Steakhouse has gotten more than a little gross over the years and customers now give it a 1.5 average star rating, under a minimum wage increase the odds increase for the Eagle’s Nest to go out of business. So even if Bob’s Burgers charges $10 for a burgers-and-fries meal deal and the Eagle’s Nest charges $75 for a steak and a side, it’s the Eagle’s Nest which, according to the study, is much more likely to go out of business.

Heck doesn’t seem to realize that he’s actually arguing against the power of the market. By opposing a decent minimum wage, he’s saying that a city should subsidize low-wage, low-quality employers by allowing them to legally exploit their workers. It’s more than a little weird to me that conservatives are now complaining about the consequences of the free market. For some reason, they hate the idea that businesses which can’t afford to pay their employees a living wage should have to close while other businesses thrive. I would hope that even conservatives like Heck would agree that low-quality employers shouldn’t be subsidized by taxpayers. When businesses pay less than a living wage, those employees often have to rely on government assistance like food stamps and rental subsidies in order to get by.

Look, opening a restaurant is risky business. Everyone knows that restaurants fail with shocking regularity. Every new location requires a confluence of many different qualities (including a good location, an inviting theme, a welcoming staff, an appealing storefront and, uh, one more thing that I can’t remember…oh, yeah — delicious food) to become a success. That’s an understood quantity for anyone opening a business.

The unfortunate truth is that there will always be losers. But by encouraging a smarter, more livable wage, we can ensure that there are more winners. Seattle, which raised the wage before San Francisco, has more eating places than at just about any other time in our history. Our unemployment nunbers are at near-record lows. If we did see the same closures of low-quality restaurants that the Harvard study found, those restaurants were quickly replaced by newer (and better!) ones. Which is exactly how capitalism is supposed to work: business owners are supposed to create new concepts, and consumers are supposed to choose between them. The concepts that don’t draw the most consumers either change into something more appealing, or they fail.

And the thing about raising the minimum wage that Heck really doesn’t get is this: when the minimum wage is increased, workers have more money, and that increases demand. It allows people to try more of their ideas out in the marketplace, and it allows consumers to decide between those ideas. Nobody ever promised that every idea would be a good one, or that every business would succeed. But Seattle’s thriving restaurant scene has proven that there’s more room for winners — among business owners, workers, and consumers — when everyone agrees to pay a living wage.

__

And I wanted to take a second to address Heck’s moronic final claim. He writes: ” If $15 is better than $10 an hour, doesn’t it stand to reason that $20 or $30 an hour is better than $15?” Heck, the poor dear, acts like this is a new concept, but it’s actually as old as the minimum wage itself. Nick Hanauer addressed this concern-trolling best in this piece in the Democracy Journal:

“If $15 is so great, why not $50 or $100?” critics sometimes mockingly ask. Well, because that would be stupid. The positive benefits of a $100 per hour minimum wage would almost certainly be overwhelmed by the costs. So no one is proposing $100; instead we are proposing $15, which is roughly halfway between what the minimum wage would be had it tracked either productivity gains ($21) or inflation ($10).

I hope that passage answers Heck’s question. I also hope he doesn’t misread it as badly as he misread that study.

United Airlines, Economic Inequality, and First-Class Privilege

Fly the horrific skies.

Fly the horrific skies.

You’ve probably by now seen the video of the doctor who was physically beaten and removed from a United flight because United wanted the seat for its employees. If you haven’t, here it is. Be warned: it’s an incredibly disturbing video:

And here’s the story, from Lucas Aulbach at the Courier-Journal:

Bridges said the man became “very upset” and said that he was a doctor who needed to see patients at a hospital in the morning. The manager told him that security would be called if he did not leave willingly, Bridges said, and the man said he was calling his lawyer. One security official came and spoke with him, and then another security officer came when he still refused. Then, she said, a third security official came on the plane and threw the passenger against the armrest before dragging him out of the plane. The man was able to get back on the plane after initially being taken off – his face was bloody and he seemed disoriented, Bridges said, and he ran to the back of the plane. Passengers asked to get off the plane as a medical crew came on to deal with the passenger, she said, and passengers were then told to go back to the gate so that officials could “tidy up” the plane before taking off.

This is a horrifying story, and it’s still unfolding on social media. I’ve noticed something about the reaction to United. People have been making jokes about the incident on Twitter. Which is okay! Jokes are part of the news cycle. They’re how we process things as a culture. And particularly in this case, the jokes are very telling. This one is a perfect example of the tone and tenor of the comedy I’ve been seeing:

Then there’s the business world’s response to the news, which is the exact opposite of everyone else’s response to the news:

And then the content mines immediately chimed in with their hot-take-clickbait. The most horrifying example of the form is this Yahoo Finance story by Ethan Wolff-Mann, headlined “How to reduce the chances of getting dragged off your United flight.” An excerpt:

In plain language under Rule 25—on page 35 if you print it out—the agreement says exactly what happens if the flight is oversold. “If there are not enough volunteers, other Passengers may be denied boarding involuntarily,” the language reads. (Of course, the deplaned man was not denied boarding, he was already boarded.) The language continues however, shining light on how these “other Passengers” are chosen. It’s not random, it’s “in accordance with UA’s boarding priority.” That means that if you have a higher fare class, have a complex itinerary, have status (e.g. gold or platinum), have checked in early, or are a frequent flier, you are less likely to be asked to take the next flight. Even if it’s just a frequent flier card that you never use, it might save you from being forcibly dragged off a plane. Any kind of priority is better than no priority, when it comes to not getting forcibly removed from a plane.

So we’ve got the jokes about air travel being a hellish dystopia for anyone not in first class. We’ve got Wall Street cashing in on the metrics while ignoring the human horror of the story. And we’ve got “helpful” news stories explaining that in order to not have this happen to you, it’s wise to exercise some sort of privilege. It should be clear to anyone who’s paying attention that this story is not about customer service. It’s about income inequality. Helaine Olen posted a very good thread on Twitter about this:

When you get down to it, like everything else in America today, this is about the haves and the have-nots. If you’re in first class, you don’t need to worry about shock troops coming and beating you until you get out of the seat that you bought. If you’re not in first class, you’re on your own. If you’re in the top one percent on Wall Street, you turn a tidy profit off the whole ordeal. This is what class warfare looks like.

I wrote about this topic last month. Visit any department store in America and you’ll see that the corporatization of America has led to a ghastly pursuit for profits over all else. Big Box retailers aren’t interested in providing customer service anymore, they’re interested in profits. This is why shopping at corporate chains has become an awful experience where you have to answer six obnoxious questions about email lists and company credit cards every time you try to check out. You won’t be arrested for refusing to sign up for a Macy’s card, but you will be treated like garbage. Only people who can afford to shop at high-end stores—or people lucky enough to live in quality economies like Seattle that support independent retailers—get to enjoy real customer service anymore.

The situation is heightened on airlines for a couple of reasons. The first, obviously, is the security state that ballooned in size after 9/11. But the other reason is deregulation. Phillip Longman and Lina Khan wrote a great piece for Washington Monthly in 2012 about what trickle-down policies like deregulation have done to the airline experience for non-wealthy passengers:

But now we find ourselves at a moment when nearly all the promises of the airline deregulators have clearly proved false. If you’re a member of the creative class who rarely does business in the nation’s industrial heartland or visits relatives there, you might not notice the magnitude of economic disruption being caused by lost airline service and skyrocketing fares. But if you are in the business of making and trading stuff beyond derivatives and concepts, you probably have to go to places like Cincinnati, Pittsburgh, Memphis, St. Louis, or Minneapolis, and you know firsthand how hard it has become to do business these days in such major heartland cities, which are increasingly cut off from each other and from the global economy.

And it’s about to get worse. Despite a wave of mergers that is fast concentrating control in the hands of three giant carriers, the industry remains essentially insolvent. Absent any coherent outcry, the directors of these private corporations remain free to respond to the crisis in the manner of an electrical utility company that, when it runs short of money, simply cuts off power to the neighborhoods of its own choosing.

The video that made its way across the internet today is what “getting worse” looks like. Here’s the thing: when you support trickle-down economic policies that put people before profits, this is what you get. Low-wage jobs, deregulation, and tax cuts for huge corporations result in a culture in which businesses enjoy a tremendous amount of power over ordinary citizens.

So what can we do about this? I wish I had easy answers for you, but it’s pretty obvious that an online petition isn’t going to resolve the United situation—especially since Wall Street views it as a net win and is rewarding United for its overbooking situation. No, it’s going to take a lot of work to put the power back in the hands of the people.

We must support middle-out policies like higher wages for everyone, higher taxes for corporations and the wealthy, and sensible regulations on business. If every American feels like they have a hand in America’s success, we’ll see less tolerance for intolerable actions like what happened on that United flight. Then, when we’ve moved the balance more toward something resembling equity, we can talk about commonsense ideas like breaking up monopolies and penalizing malicious businesses like United for harming Americans who do everything right and play by the rules.

Maybe the worst thing about that video is how completely believable it was for anyone who’s flown over the last few years. We’ve all experienced the awfulness of flying, and we recognize it as maybe the most literal manifestation of America’s current class situation: the few sit up front in comfort while the many experience more and more discomfort in the back of the plane. We lose inches of legroom, we’re charged more and more for our carry-ons, and we’re offered less and less in return. This situation isn’t going to get any better until we stand up and demand that things change. This isn’t about one airline—hell, it’s not even about air travel. It’s about class in America, and it’s time to demand our fair share.

 

Andrew Puzder Was Terrible, but He’s Not an Aberration

BYE FELICIA

Carls Jr. CEO Andrew Puzder was supposed to sit for Labor Secretary confirmation hearings tomorrow. The Trump administration repeatedly pushed the hearing back—it was originally supposed to happen over a month ago—and Puzder openly complained about how difficult the process has been.

We should have known things were getting serious when Oprah got involved: Politico reports that four Republican senators who were on the fence about Puzder received visits from representatives of the Oprah Winfrey Network. OWN staffers showed the senators a rare video of Puzder’s ex-wife “level[ing] allegations of physical abuse against him” from a decades’ old appearance on Oprah’s talk show. Politico just made that video public this morning.

And news is breaking that Puzder officially withdrew from the nomination entirely.

Screen Shot 2017-02-15 at 11.37.11 AM

This is not because of the lack of Republican Senatorial support, though that is an issue, but because—poor baby—it’s too much work:

Screen Shot 2017-02-15 at 11.37.19 AM

Good riddance. Puzder was an incredibly bad choice for Labor Secretary. In fact, he was possibly the single worst person in the country to be head of the Department of Labor. Justin Miller at the American Prospect wrote a great explainer on why Puzder is such a bad candidate, beginning with the fact that he “made more in one day ($17,192) than one of his full-time minimum wage workers would make in a year ($15,130.)”

This goes further than Puzder’s stance against the $15 minimum wage or commonsense overtime standards. At Carls Jr., Puzder has cultivated a rampant culture of sexual harassment, of dangerous workplaces, and of wage theft. Previous Labor Departments have led to Puzder’s business paying “nearly $150,000 in back pay to workers and more than $80,000 in penalties.”

I want to make no mistake about this so I’m going to restate: Puzder was quite possibly the worst Labor Secretary nominee this country has ever seen. He openly cheers on automation, saying that robots are “always polite, they always upsell, they never take a vacation, they never show up late, there’s never a slip-and-fall, or an age, sex or race discrimination case.” He does not have the worker in mind. He is firmly on the side of the CEO and against the average American.

But I have to be clear about another fact, too: Puzder is not an aberration. Now that he’s whined his way out of the confirmation process, he won’t be replaced with a polar opposite. In fact, Puzder was perfectly in line with Donald Trump’s employment policies.

I’m not talking about President Trump’s labor policies; I’m talking about his actual history as an employer. Donald Trump doesn’t pay independent contractors. He cuts corners on his employee pensions. And this week, the news broke that Trump’s organization is hiring foreign workers for his Mar-a-Lago club in Florida:

According to the Palm Beach Post, Trump won approval from the U.S. Labor Department in October to hire 64 foreign workers through the H-2B visa program, which allows eligible U.S. employers to hire foreign nationals to fill temporary jobs… Trump will pay the staff wages comparable to what he offered last year. Though some will make less than they made last year, most will get a 1 percent raise.

So these foreign workers—many of whom will have immediate access to state secrets, if last week is any indication—are getting paid very little, even though Mar-a-Lago recently doubled a significant source of its income:

Mar-a-Lago, the Palm Beach resort owned by the Trump Organization, doubled its initiation fee to $200,000 following the election of Donald Trump as president.

So the rich get richer while the poor get the shaft. That’s Donald Trump’s business philosophy. And even though Puzder didn’t get through the nomination process, that is what Trump’s going to look for in a Secretary of Labor. While today’s news that Puzder can’t stand the heat in this particular kitchen is heartening, we have to remember that the fight isn’t anywhere near over. It’s just beginning.

The Democratic Party Needs a Change in Messaging

Earlier this year, Harvard professor Michael Sandel spoke at the World Economic Forum. I happened to stumble upon his interview this weekend, and ever since watching it I’ve not been able to get it out of my head. During the Q&A, Sandel was asked to give advice to the flailing Democratic Party, which to his mind, has become far too technocratic in their political messaging.

Although the interviewer pressed him to provide bumper sticker policies like “Make America Great Again”, Sandel shrugged off this fascination with abbreviation. “Philosophers are not good at snappy slogans,” he admitted to the audience and then proceeded to show what good philosophers actually do: speak at length. During this fifteen minute back and forth, he presented four political themes which Democrats need to reassess in order to win again.

The first theme he addressed was a need for promoting a sense of national community that was directed towards “a shared common life, restoring public places, public institutions, and class mixing.” Sandel thought Democrats all too often revert to speaking only to urban, elite communities. To take away the conservative movement’s control and manipulation of patriotism, Democrats must develop their inclusive narrative in a way that leads to solidarity, not in a frame designed to end conversations, such as one which frames one side as “progressives” and the other side as deplorable “racists”.

The second theme is one we here at Civic Skunk Works spend a lot of time fretting over: the meaning and dignity of work. “Work is a way of making a living, of generating an income,” Sandel stated, “but is that its only purpose? Or does it confer meaning and identity?” We would argue (and so does Sandel) that Democrats should never, ever think of work as solely an economic concern. We know that “since many of us spend the majority of our waking hours at work, work is a major source of dignity in our lives.” To give the average American worker a sense of self-worth again, Democrats must engender a sense of “recognition and trust, as well as autonomy and self-mastery.”

Thankfully, liberals promote policies that can restore these feelings to the American public. A higher minimum wage and an increased overtime pay threshold strike me as perfect examples of recognizing the importance of all work, while new labor contracts like the Shared Security system would give economic benefits, stability and security to all. That is an effective one-two punch that Democrats should deliver over and over again.

The third theme Sandel elucidated was getting rid of our society’s obsession with meritocracy. “Meritocracy is not an alternative to inequality,” he told the audience, “it is a justification for a certain kind of inequality.” I’m so pleased that he highlighted this, as Americans all too often fall for this myth. A couple of months ago, in fact, I reviewed Thomas Friedman’s latest bookand my biggest criticism came from his faith in hard work and perseverance. I wrote:

Friedman subscribes (a little bit too much) to the myth that life is a meritocracy, where the most adaptable and hard-working win out. In fact, last week when I heard him speak at Seattle Town Hall he remarked, “sometimes no one is to blame but yourself.”

Sandel seems to agree in some ways with my argument. With his finger wagging, he pointed out that Democrats “should shift their emphasis from talking about mobility and perfecting individual opportunity, and instead talk more about solidarity and community and what that means.”

Finally, Sandel’s fourth theme was in relation to inequality and mobility. And in many ways, this connects with his meritocracy theme. He believed that the left needed to think less about mobility and speak about “creating a more equal society where the focus is not on the scramble to the top.” It’s not just economic inequality that Democrats should highlight either. Sandel argued that we need to show how economic inequality is corrosive to our civic life and our public institutions. Unfortunately, he never really developed upon that statement or provided instruction on how to effectively communicate these tensions, which made this theme come off as quite vague.

Nonetheless, I was extremely impressed with his messaging guidance. These broad themes are probably not specific enough (and a little bit too philosophically vague) for today’s focus-grouped Democratic Party. However, if leaders within the DNC listened to Sandel’s prescriptions, the left could offer a much more convincing socio-economic argument to Americans in urban and rural areas.