Economics

It’s Time for (Civic) Action

Since we founded Civic Ventures in 2015, lots of people have enjoyed our writings and podcasts. We’ve attracted a loyal audience that’s interested in furthering a progressive, policy-focused agenda. Many of you have gotten in touch over the last two years and asked us how you can help, what you can do with all this newfound knowledge. Sometimes we’d ask you to publicly support secure scheduling, say, or to help debunk some trickle-downers’ bullshit excuse for why the minimum wage should be eliminated. But we were largely happy to spend our time thinking deeply about policy and working behind the scenes to enact change.

Obviously, the election of Donald Trump has changed everything. We can’t just organize and obsess over the future of policy anymore. You know it as well as we do; this isn’t a time to just sit back and read, or to listen to a podcast. The age of passivity ended on November 8th, 2016. People still want to inform themselves, but they also want to take action. You can’t choose one; you have to do both.

Qq1jjVMhThat’s why we’re proud to announce the debut of Civic Action, a new results-oriented partner organization of Civic Ventures. Civic Action is outward-facing and, as the name indicates, action-oriented. If you’re looking for public officials to call, or causes to take up, or information about where to best focus your energy, you’ll want to sign up for our email blasts, or follow us on Facebook and/or Twitter.

For the first few months, we’re going to be figuring out how to make Civic Action the most effective, efficient organizing tool that it can be, but we know what we want it to do. We want to direct people to causes where they can make a substantial difference. We hope to make a big difference in elections by highlighting good work and supporting stellar candidates. We want to continue our efforts to educate people on how the economy really works.

And we want to continue the discussion about what America can be. Resistance is not enough; you also need to rebuild. We have to provide an alternative vision, spotlight the people who are doing positive work, and plan how to recommit to the American Dream for generations to come.

These are confusing times. A person could spend all day every day calling representatives and signing petitions and sharing links. We expect Civic Action to be a signal in the midst of all this noise, a way to direct your energy and make a difference in the world. I hope you’ll follow Civic Action (email, Twitter, Facebook) and let me know what you think.

Is This What Trumponomics Looks Like?

Those eyes, man. They follow you everywhere.

Those eyes, man. They follow you everywhere.

It’s becoming clear in the first week of his presidency that Donald Trump has been telling us exactly who he is for a year and a half now. He did intend to build that wall, unlike what many of his supporters claimed during the 2016 presidential campaign. He really does believe that wealth has direct correlation to intelligence, that the amount of money you have is a perfect indication of your IQ, which is why he has claimed that his cabinet — without question the wealthiest in American history — has “by far, the highest IQ of any cabinet ever.” And he believes that if you cut taxes and regulations, and if you suppress the income of workers, the economy will grow.

 Axios published highlights from a teleprompter-free speech that Trump delivered to a closed-press fundraiser last week, including this snippet where he says exactly that to a room full of wealthy Republican donors:

We’re going to cut your taxes. We’re going to get rid of the regulations that are strangling the economy. [Applause.] … I know the biggest businessmen and the small ones that love me and voted for me, and I love them. … Almost every single person that I ask was more excited about the regulations being cut than the taxes, which is surprising. [Applause.] So, we’re going to do that.

This is not a new philosophy; it’s one that conservatives have been espousing since the days of Ronald Reagan. Regular readers will know that it’s called trickle-down economics, and it’s based on the idea that if you suppress wages for the working class, cut taxes for the wealthy, and slash regulations for business, those wealthy Americans will supposedly then create jobs, that their wealth will trickle down to the poorest Americans. The problem with this economic philosophy, of course, is that it doesn’t work. Democratic presidents create more jobs, for the simple reason that when workers have more money through increased wages, they have more money to spend in their communities. The super-rich tend to sit on their money, keeping it locked up outside the economy, and everyone suffers.

But there’s something especially troubling about Donald Trump’s brand of trickle down economics. In the past, conservatives have generally promoted their trickle-down agenda on behalf of the wealthiest Americans. But Trump’s cabinet is made up of some of the wealthiest Americans — many of whom don’t have any government experience at all — and they’re being placed in charge of the cabinet posts that directly affect them.

I wonder if we’re witnessing the birth of a new stage of trickle down economics. Because when the lawmakers themselves profit from the laws that they pass and strike down and ignore, you’ve passed a simple proxy agreement between politician and power broker. You’ve gone directly into looting territory.

President Trump’s strategy so far seems to be to produce so many moving parts that it’s impossible for anyone to keep track. Are you outraged about the gag orders on the EPA and the USDA? Are you upset about his calls to revive torture? Mad about the wall? Angry that he’s whining about voter fraud and his inauguration attendance? Horrified that he threatened martial law in Chicago? I bet you are. But are you equally mad about all those things? That’s impossible. So your attentions are scattered. And while resisters try to figure out which horror they should focus their energies on, in the background Trump is freezing regulations and raising costs for middle-class home owners by roughly ten bucks a week.

If trickle down economics is entering a full-on looting phase, that can only be bad news for the economy. Because looting doesn’t end organically. You only stop looting at the point when your arms are too full to carry anything else or when the forces of law and order are re-established. The best thing we can do at this early date is to identify what’s going on, and make a lot of noise, and try to keep track of everything that’s happening, so that one day we’ll be able to rebuild what we’re losing.

Study Finds Millennials Earn 20 Percent Less Than Boomers Did at the Same Age

worstgeneration

Josh Boak and Carrie Antlfinger at the Associated Press reported on a new study about generational earning this morning:

With a median household income of $40,581, millennials earn 20 percent less than boomers did at the same stage of life, despite being better educated, according to a new analysis of Federal Reserve data by the advocacy group Young Invincibles. …Education does help boost incomes. But the median college-educated millennial with student debt is only earning slightly more than a baby boomer without a degree did in 1989.

This is important stuff. When we talk about inequality, it’s important to remember that we’re not just talking about a disparity in earnings from the top one percent to the other 99 percent. We’re also talking about a disparity between generations, an income gap that grows over time. It is part of the reason why, though President Obama’s policies did begin to shrink the traditional measures of inequality (link PDF), many Americans don’t feel as though the economy is improving.

This report should serve as a warning to Democrats in the midterm elections and the 2020 presidential election: just because you’re not young enough to feel this inequality, you should understand that it exists. This is a big reason why Senator Bernie Sanders enjoyed the success that he did during the 2016 Democratic primary: he was speaking to a serious problem that most candidates, and most media outlets, didn’t even recognize was a problem.

I realize that I’m not delivering some new insight here. Lots of people—including my colleagues at this here blog—have written extensively about student debt and other economic damages delivered exclusively onto millennials. But this new study is another solid piece of proof that inequality comes in a multitude of varieties, and Democrats need to be able to recognize and address all of them. The future of the party—and the future of this country—is at stake.

When It Comes to Economics, Incoming Labor Secretary Andrew Puzder Is a Raging Elitist

“Hello, yes, how many senses of accomplishment do the chili cheese fries cost?”

“Hello, yes, how many senses of accomplishment do the chili cheese fries cost?”

A particularly damning quote from Donald Trump’s nominee for Secretary of Labor, Andrew Puzder, is making the rounds again. Puzder, in his role as CEO of the Carl’s Jr fast food chain, published an editorial in the Wall Street Journal in 2014 against the idea of raising the overtime threshold:

…Workers who aspire to climb the management ladder strive for the opportunity to move from hourly-wage, crew-level positions to salaried management positions with performance-based incentives. What they lose in overtime pay they gain in the stature and sense of accomplishment that comes from being a salaried manager. This is hardly oppressive. To the contrary, it can be very lucrative for those willing to invest the time and energy, which explains why so many crew employees aspire to be managers.

Of course, we came very close to raising the overtime threshold last year, until an Obama-appointed judge from Texas shot it down and the incoming Trump administration — with Puzder in charge of the Department of Labor — crushed the hope of a lawsuit to save the threshold.

Here at Civic Ventures, we have made no secret of our efforts to promote overtime. Civic Ventures founder Nick Hanauer published a very influential piece in Politico back in 2014 about overtime, and then Hanauer and former Labor Secretary Robert Reich co-authored a piece for the New York Times explaining why overtime was so essential to America’s financial success in the 1950s, and why we sorely need to increase the threshold:

Today, if you’re salaried and earn more than $23,600 dollars a year, you don’t automatically qualify for overtime: That means every extra hour you work, you work free. Under the new proposed rules, everyone earning a salary of $50,440 a year or less would be eligible to collect time-and-a-half pay for every hour worked over 40 hours a week.

Reich and Hanauer call increasing the overtime threshold “a minimum wage hike for the middle class,” and that’s about right. It ensures either that workers are compensated for their time, or that workers don’t have to work more than 40 hours per week. Either way, the economy benefits because people either have more money to spend in their communities, or more time to be active members of their communities. These are real results that would happen immediately, as soon as the overtime threshold was raised.

But Puzder instead decided to fight policy with platitude. I’m going to repeat what he said because it’s so impossibly dumb that only through repetition can we understand Puzder’s worldview. Again, this is a CEO talking about his own employees: “What they lose in overtime pay they gain in the stature and sense of accomplishment that comes from being a salaried manager.”

You can’t eat a sense of accomplishment. Stature doesn’t pay the rent. It is frustrating that while Trump boosters complain about elitist progressives, a member of Trump’s prospective billionaire’s cabinet — a cabinet that will likely be wealthier than more than a third of all American households combined — is telling American workers that they are not worthy of payment for hours worked. At around the same time Puzder wrote those words, he was earning 291 times more annually than the minimum-wage employees at his restaurant, according to Forbes.

It’s pretty clear that unless he’s visited by three particularly convincing spirits on Christmas Eve, Secretary Puzder isn’t going to entertain raising the overtime threshold. This is because he knows that the money workers could be earning has, in his mind, a higher purpose: it could be funneled directly into his bank account and the bank accounts of people just like him. It’s pretty clear that Puzder believes he deserves the money more than his employees.

See, Puzder considers himself to be a job creator, even when he openly lusts after the idea of automating his restaurants so he doesn’t have to pay human beings to do work. What he doesn’t realize is that if every Puzder out there — every fast food CEO in America — were to automate their restaurants, their profits would plummet, because nobody would make enough money to frequent the restaurants. Robots don’t eat burgers.

No, it’s Puzder’s employees who spend the money that keep his restaurants open. And if he paid his employees what they deserve, they’d likely spend even more money there. But Puzder doesn’t care about details like that. He’s got his, and his friends have theirs, and everyone else? Eh. Puzder says let them eat their sense of accomplishment

My Dentist, the Free Market, and Moral Cavities

teeth-1652976_1920

When my dentist handed me a teeth-whitening pamphlet before I had even reclined in the dental chair, I thought of Michael Sandel.

Not because the Harvard professor has particularly memorable choppers, but because Sandel has spent a considerable amount of time questioning pursuits like this. Specifically, highlighting the drawbacks of a society where market values infect all areas of our life.

“Today,” Sandel writes, “the logic of buying and selling no longer applies to material goods alone. It increasingly governs the whole of life.”

My experience with the dentist is a perfect example. There is something deeply troubling about medical professionals treating patients, first and foremost, as consumers. This runs counter to the very promise made in The Dentist’s Pledge, the dental version of the Hippocratic Oath, whose first point reads:

…Let each come to me safe in the knowledge that their total health and well-being is my first consideration.

Yet, in that dentist’s office, dentistry’s primary responsibility had been displaced by profit motive. The norms of the profession have been commercialized—health isn’t the primary goal anymore; rather, making money drives all decisions.

While “economists often assume that markets are inert: that they do not affect the goods they exchange,” this assumption is naive. Market values are some of the most powerful forces on earth. They most certainly reconfigure priorities, and to my mind, they often do so in suboptimal and intangible ways, as dentistry proves.

When there is no respite from being sold something, people are forced to doubt the true motivations behind everything. Intent, from politicians to the dentist, becomes questioned. That’s an undesirable way to live.

Furthermore, in a market society, “where everything is for sale, life is harder for those of modest means.” Inequality is exacerbated, as money becomes the “sole value on which all choices are based.”

And in 2017, that reality hits too close to home for most Americans—the majority of whom have less than $1,000 in savings.

When you perceive the world through this lens, you begin to understand why both political parties endlessly spoke about the economy being rigged against “normal” Americans.

They were attempting to explain to voters why they were feeling so discontent. Trump blamed it on a variety of people and forces which were largely imagined or disingenuous. Clinton awkwardly admonished Wall Street and greedy politicians for the state of things.

Yet, looking back on 2016, Bernie Sanders was the only candidate who seemed to understand that part of our economic anxiety came from a world where everything is for sale. He persistently delineated where markets belong and where they do not. In fact, his “socialism” was in many ways just a repudiation of a society governed by market values. And it turns out that the majority of Americans agreed with his policies that severed the connection between profit motive and “services”—namely, health care.

Progressives (and conservatives) dismiss the effects of a market society at their own peril. They can point to a successful stock market all they like and argue that GDP growth is sensational, but these expressions of economic success do not directly affect most Americans (53% of whom don’t have any money in the stock market, including retirement accounts).

To level with the American people, politicians need to ask Americans, do we want to live in a society where everything is for sale? Is this innate? Or is this a choice? And if it’s a choice, how do we correct this? How can we stop letting the market have the final say on every good and service?

These are not easy questions to answer. I don’t pretend to make it seem that way. But it is important we analyze our societal assumptions. Otherwise, we will be obliged to pay doctors for benefits like unhurried appointments and 24/7 access. Oh wait, that already happens.

The Biggest Problem for Seattle Restaurants in 2017? Too Much Competition.

Does downtown Seattle look like the restaurant-free hellhole promised by minimum wage skeptics three years ago?

Does downtown Seattle look like the restaurant-free hellhole promised by minimum wage skeptics three years ago?

On January 1st, the minimum wage for some, but not all, Seattle workers increased to $15 per hour. Seattlish explains the ins and outs of the law, but the gist is that large employers (defined as businesses that employ more than 500 people nationwide) who don’t provide health insurance for their employees are up to $15. Other large employers are at $13.50, and small employers range from $11 to $13 per hour, depending on the benefits they provide.

And so where are we now? Well, before the minimum wage became law, restaurant owner Tom Douglas estimated that “we would lose maybe a quarter of the restaurants in town.” Now, as Working Washington noted, Douglas has done an about face. The Puget Sound Business Journal interviewed Douglas about the competition he’s facing as a Seattle restaurateur staring down a new year. Douglas replied, “Almost 400 restaurants have opened in the last year. It is a challenge.”

Huh. So which is it? Will increasing the minimum wage kill a quarter of all restaurants, or does Seattle have way too many restaurants since raising the minimum wage? Douglas, who has previously recanted his opposition to the $15 minimum wage, seems to be entirely on the other side of the fence now: the minimum wage isn’t a problem for restaurants, he’s saying, aggressive competition is the problem.

Of course, some folks can promote two opposing ideas at the exact same time. Over the holiday break, conservative talk radio KIRO’s websitepublished a story about the closure of Louisa’s Café on Eastlake. Louisa’s owner, Alcena Plum, is asked about her business’s closure.

“I don’t want to put this all on the minimum wage,” Plum told KIRO, “but it was definitely a factor.” But another factor that Plum says led to the decline of her business is “the huge labor shortage for kitchen staff in this city.” The article says when she placed help-wanted ads, she would get “zero response.”

Again: which is it? Are you having trouble because of the minimum wage, or are you having trouble because of too much competition? Clearly, someone must be hiring; why isn’t everyone having the same trouble with the minimum wage? The piece ends with Plum arguing that people who own multiple restaurants (like Douglas) and businesses with wealthy backers will thrive, but that restaurants “like mine won’t survive this.”

I’ve eaten many times at Louisa’s, and I always enjoyed it — especially the cinnamon buns. But Plum’s last comment there reminds me of the owner of a closing Capitol Hill Z Pizza franchise, who famously warned that she had “no idea where” her employees would “find jobs, because if I’m cutting hours, I imagine everyone is across the board.”

The truth is, there are plenty of other dining options near Louisa’s old space. On the same block, you’ll find the venerable 14 Carrot Café for breakfast and lunch options and Pazzo’s for Italian lunch and dinner. I’ve eaten at, and can vouch for, both restaurants. I haven’t been to Pomodoro, the Italian restaurant across the street, but it’s got wonderful reviews on Yelp. On the next block over, you’ll find Mammoth, a fancy new-ish sandwich shop with a loyal following. None of these are chain restaurants, and many of them have been around for longer than Louisa’s. (The 14 Carrot is 40 years old this year, and Pomodoro is over two decades old.)

I’m not pointing this out to make light of Plum. It’s never easy to close a business, and Louisa’s was absolutely a neighborhood gem. But the trickle-down crowd are using Louisa’s as a symbol of failure for all of Seattle’s minimum wage increase, and that’s a painfully dumb leap to make. You’d have to be a real jackass to claim cause and effect based on a single data point — especially when that data point is from a city like Seattle, with a low unemployment rate, a high number of food service workers, and a high restaurant opening rate.

As I’ve told you time and again, the trickle-down crowd is desperate to tie minimum wage increases to economic devastation. (Why wouldn’t they, after all? If they don’t have to pay employees more, they get to keep that money for themselves.) And they’re getting more and more desperate as time passes, because reality reflects that their position is wrong. The minimum wage is increasing in 21 states in 2017 because Americans are finally realizing that when workers make more money, they’ll spend that money in their local communities.

The fact is that businesses close all the time, for a variety of reasons. Seattle’s rent is ridiculously high. People are moving here at a ridiculously fast pace. And when the next recession hits — which will likely happen sooner than later, given our incoming presidential administration — every business will have to take some cuts.

But let’s not transform our (justified) sadness over one restaurant’s closure into an irrational fear of the minimum wage. The fact is that many more Seattleites are doing better now than they were before we raised the minimum wage. In fact, given that minimum-wage employees are spending their increased paychecks, we’re doing even better than we would be if we hadn’t raised the wage. Anyone who claims otherwise is either manipulating the numbers in an unsavory way or doesn’t have a clear understanding of what’s really happening in Seattle.

Kansas Proves That Trickle Down Economics Doesn’t Work

The actual state flag of Kansas.

The actual state flag of Kansas.

I interrupt your long week of freaking out over weird poll results—seriously, you can stop reading the news right now—to highlight this very important Los Angeles Times piece by Michael Hiltzik. As you probably know, Governor Sam Brownback’s leadership in Kansas is the most straightforward example of trickle down economics that we have in the United States right now. Brownback and a supermajority of conservative state legislators have done everything in their considerable power to enact into law the three main pillars of trickle down economics, which I will recount for you right here:

  1. Tax cuts for the rich.
  2. Deregulation for the powerful.
  3. Wage suppression for everyone else.

Brownback immediately cut the income tax for the wealthiest Kansans and passed “business-friendly” laws like exempting pass-through business income from taxes.

The thinking with trickle down economics is that when government redistributes the wealth to the top one percent, that money trickles down—ugh, that image—to everyone else. This is why Republicans refer to really rich people as “job creators.” No other state has gone this far in the effort to create a trickle down economy; Kansas is in uncharted waters, here.

So how’s it going? Hiltzik says the state’s income tax collection has fallen by more than 20 percent, and even the Brownback administration’s own financial report…

…painted a “doom and gloom scenario” in which the gross state product had declined from 2014 through 2015, and that growth in personal income, nonfarm employment and private industry wages all trailed the region and the country as a whole. Sales tax collections were up, but that’s because Brownback enacted two sales tax increases to compensate for his other tax cuts. The general effect was to burden the middle class and poor with costs that wealthier Kansans escape.

Huh. So it looks to me that when you take money from the middle class and give it to the richest people in your economy, the richest people tend to keep that money. Who would’ve thought?

Seriously, look at the map at the top of Hiltzik’s story and tell me everything in Kansas is fine.  It’s got the worst economy in the nation—far worse than all its neighboring states. The results of Brownback’s trickle-down experiment are coming in sooner than anyone could’ve expected.

Meanwhile, states with economies that grow from the middle out are thriving. Washington state, birthplace of the $15 minimum wage and hopefully soon to adopt a statewide minimum wage of $13.50, is booming. So why we should believe conservatives when they say that the minimum wage is a job-killer and the wealthy are job creators? Governor Brownback’s Kansas conclusively proves them wrong.

WHYY Duped by Fake Research Director at Fake Think Tank Citing Fake Poll

No one takes the Employment Policies Institute seriously

I grew up in Philadelphia, so I’ve got a ton of respect for WHYY, the local NPR and PBS affiliate (perhaps best known nationally as home to Terry Gross’ award-winning Fresh Air). Which is why I was so sorely disappointed to see WHYY’s “Newsworks” website give op-ed space to fake-think-tank anti-minimum wage shill Michael Saltsman: “Op-ed: Raising minimium wage won’t flip the Senate.”

I mean, for chrissakes, why not just print a goddamn press release?

Saltsman claims to be the research director at the mendaciously-named Employment Policies Institute, which likes to describe itself as a “non-profit think tank” while in fact being neither. Indeed, Saltsman’s faux-think-tank is actually just one of several profitable front groups run out of the DC-offices of lobbying and PR firm Berman and Company. And if the editors at WHYY think I’m exaggerating, they might want to listen to this 2014 interview with Terry Gross, in which the New York Times‘ Eric Lipton explains how this scam works:

LIPTON: Yeah, I was – you know, set up an interview with the research director. I got the address of his office. I went to the eighth floor of the building on Vermont Avenue, like four blocks from the White House. The elevator opens, and it’s Berman and Company. And I go in and, you know, there’s a bunch of awards on the wall, advertising awards, public relations awards that Berman and Company has won for its work, you know, doing ad campaigns on behalf of various industry groups.

And so I didn’t see any evidence at all that there was an Employment Policies Institute office. And in fact when I started to interview the people there, they explained that there are no employees at the Employment Policies Institute and that all the staff there works for Berman and Company, and then they sometimes are just detailed to the various think-tanks and various consumer groups that he operates out of his office.

And he bills them, sort of like a law firm would bill various clients.

Wow. What a great scam. And it has been from the Employment Policies Institute’s start. (Note: I refuse to refer to the organization by its three-letter abbreviation, EPI, because it was obviously named to sow confusion with the real EPI, the pre-existing and pro-minimum wage Economic Policy Institute. Hell, not-EPI even apes EPI’s favicon, causing me to repeatedly click on the wrong browser tab.)

A Tale of Two EPIs

What a bunch of shameless trolls.

Legally, not-EPI is registered as a tax-exempt 501c3 (or, illegally one might reasonably argue), so it doesn’t have to report the names of its funders—though it’s safe to assume its money mostly comes from the restaurant, accommodations, and retail industries. As for how it spends its money: “more than half” of its multi-million dollar budget is paid to for-profit Berman and Company for staffing and operations, an “atypical” arrangement that prompted Charity Navigator to issue a “Donor Advisory.”

For WHYY to allow Saltsman to misrepresent himself as a “research director” at an “institute” is just out-and-out irresponsible. He’s a PR flack, period. And as for the content of Saltsman’s op-ed, well, that’s just as bullshitty as its author.

Saltsman argues that Republicans shouldn’t run away from their longstanding opposition to the minimum wage, based on the thesis that opposing the minimum wage didn’t hurt them 2014. Oh please. First, even without Trump tearing apart the fragile Republican coalition, 2016 was always going to be an entirely different electorate than 2014; Democrats simply turn out in far greater numbers during presidential elections than they do during the midterms. Second, there has been an undeniable and dramatic shift in public opinion over the past couple years in favor of substantially raising the minimum wage.

Those are just facts. There’s no disputing them. Which perhaps explains why Saltsman felt forced to resort to inventing a poll:

This matters. My organization used Google’s consumer survey tool to survey 500 Pennsylvanians who plan to vote this fall. Over 40 percent of respondents said they were no more or less likely to vote for a candidate based on their opposition to minimum wage.

Well, if his PR firm conducted an online poll, I guess we should just take his word for it. It’s almost as ridiculous as his anecdotal citation of a single business closure in booming Brooklyn as evidence that a higher minimum wage is wreaking havoc on the New York economy.

I can sum up Saltsman’s “research” in six words: No data. No methodology. No credibility.

Saltsman is nothing more than a fake “research director” at a fake “institute” citing a fake “poll.” WHYY and other media outlets should be ashamed for allowing him to present himself as anything other than what he really is: a paid spokesperson for the hospitality and retail industries.