The Great Divergence

Economists have long said that the most consistent cause for a bottleneck in the flow of money is not the middle class or poor, but the wealthy -- especially when a case of nervousness or jitters takes hold. The wealthy (as would anyone) will in effect sit on their assets, withdraw them from use -- that is, bury their talent in the earth. That wealth (economic energy) then goes idle, unused.

Prudence or wisdom would suggest that putting more money in the hands of modest income households could help prevent such bottlenecks. Poor and middle income families spend the preponderant proportion of their income, month by month. There is a quick return to "flow." Yet America is following a path in recent years, (it got much worse under Reagan, then again under the second Bush) of what amounts to a reverse Robin Hood -- take from the poor and middle income people -- to give to the rich. And all of us will be hurt by it.

Finding her own voice
Rekha Basu

Des Moines Register

Our inexcusable wage gap is
a reflection of our morality
rekha basu U.S. workers are apparently tired of being the last ones considered when wealth is being made in America. So, across the country, people have been demonstrating for an increase in the federal minimum wage.

While the average CEO pay has climbed to over 300 times the average worker’s, those making the legal minimum of $7.25 an hour are barely squeaking by on $15,000 a year.

And they’ve gone without a legally required raise for four years.

“Between 2009 and 2012, rent has gone up 4 percent, food is 8 percent more expensive, child care costs 9 percent more, and public transportation takes a 13 percent bigger bite out of workers’ wallets,” Iowa’s Sen. Tom Harkin said in commemorating the July 24 date on which the minimum wage was last raised five years ago.

Harkin and Northern California’s Rep. George Miller, both Democrats, are among the more than 140 House and 30 Senate sponsors of the Fair Minimum Wage Act, which would raise the federal minimum, in three stages, to $10.10 by 2015. Beginning in 2016, annual increases would also be required to keep pace with the rising cost of living. Economists say it would now be $10.74 if it had kept up with inflation.

The bill would raise the minimum wage for workers who depend on tips to 70 percent of the overall minimum wage. Federal law now sets that at $2.13 an hour.

A new poll for the National Employment Law Project Action Fund finds 80 percent of Americans — including 62 percent of Republicans — support the proposed increase, and 74 percent consider it a high priority for Congress next year, according to the poll conducted by Hart Research Associates.

Tens of millions of Americans earn minimum wage. A real wake-up call on how some of the biggest and most profitable corporations take advantage of the current low rate came to light recently when a McDonald’s website intended to advise workers on how to budget their earnings inadvertently highlighted how shockingly little they are paid.

In a sample monthly budget, the company lists earnings of $1,105 a month from a first job, and $955 from a second job, for a monthly net income of $2,060. That, as the writer who exposed it on the website noted, would require a minimum-wage worker to work 74 hours a week, or nearly two full-time jobs. The monthly expenses McDonald’s lists total $1,260 — assuming $600 in rent or mortgage, a mere $20 in health insurance premiums. Heat, food, gas for the car and everything else would have to come out of the remaining $800 a month.

McDonald’s is far from alone in its attitude toward workers. Walmart encourages its employees to apply for taxpayer-funded health care.

These are adult employees with real responsibilities. For those who still insist that most minimum-wage workers are high school kids earning pocket money, the Economic Policy Institute sets the record straight, finding 88 percent nationally are over 20 years old, 36 percent are married and 28 percent have children.

The most compelling argument for raising the minimum wage is a humane one, but it’s also in the best interests of the economy, which is 70 percent consumer-driven. A family barely scraping by after working two full-time jobs isn’t going to be doing a lot of pleasure shopping. The Economic Policy Institute estimates the proposed minimum-wage increase would generate more than $32 billion in new economic activity, leading to the creation of 140,000 full-time jobs.

It’s nothing short of obscene that America’s low-wage workers are so disregarded, and then lectured about the need for better budgeting by those exploiting them. We need vigilant awareness-building and advocacy on behalf of those too busy or stressed trying to make ends meet to lobby for themselves. That should be coming from our elected officials in Congress, but too often they’re courting big business instead.

The inexcusable gap between American workers and bosses is not just an economic issue. It’s also a moral one, and voters should hold their elected officials’ feet to the fire on narrowing it.

Des Moines Register

Rekha Basu is a columnist for the Des Moines Register. Email her at

The Des Moines Register

East Meets West

Former FED Chairman Alan Greenspan weighs in (Income Inequality)

Conservative economist Alan Greenspan recently spoke out: "income inequality is where the capitalist system is most vulnerable. You can't have the capitalist system if an increasing number of people think it is unjust."

In fact, he added, "I consider income inequality the most dangerous part of what's going on in the United States."

lindy1950 - my muse Upward redistribution of income is responsible for about 43% of the projected Social Security shortfall over the next 75 years A 2011 study by the CBO found that the top earning 1 percent of households gained about 275% after federal taxes and income transfers over a period between 1979 and 2007, compared to a gain of just under 40% for the 60 percent in the middle of America's income distribution.
Paying workers better helps everyone - is it time to raise the minimum wage?

How the resurgence of a thriving middle class is essential for future

Academics and wonks and their penchant for scape-goating the Bush Tax Cuts

Bill Moyers and Company - how the income gap seems to retard economic growth

Not only ethics but self-interest - Thriving Middle Class is the key to overall prosperity

When you give to the poor you "LEND" to God (it will come back to help you, too) Proverbs 19:17

The Conscience of a Liberal : Economist Krugman on President Obama's surprising economic good luck

Salvatore Babones : Australia has $16 minimum wage (the only rich country to dodge Global Recession)

Economic "law" : helping the poor helps us all (the poor don't "stash their cash" - they return it to circulation)


President John F. Kennedy exhorts: We cannot afford to be materially rich and spiritually poor.

we need our values
We need our values still

Democrats support our veterans

Site maintained by
Robert Shepherd

Robert Shepherd
friend me (facebook)

Am I am young enough to believe in revolution?
Am I strong enough to get down on my knees and pray?

[troubadour kris kristofferson, pilgrim's progress]

thanks lindy1950
thanks des moines

Joseph Stiglitz Widening and deepening inequality is not driven by immutable economic laws, but by laws we have written ourselves. Corporate welfare increases at the same time we curtail welfare for the poor. Congress maintains subsidies for rich farmers at the same time that we cut back on food stamps for the needy. Wall Street Banks that brought on the global financial crisis got billions while a pittance went to their victims.

(Joseph Stiglitz - Economist, Nobel Prize Winner)