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Est. April 5, 2002
June 02, 2016 - Issue 656

Forbes Economic Columnist
Could Not Be More Wrong
On the Minimum Wage


"What Trump was saying is the same thing
that Right Wing politicians, pundits, and
economists have been saying for years that,
to be competitive, we need to lower wages,
cut benefits, and eliminate things like health
insurance and pensions. And, that’s what
corporations big and small have been busy
doing for the past 30 years."

There are some comments made about workers and unions and the minimum wage that cry out for refutation, and that’s the case of a Forbes magazine contributor whose recent column teased, “A Little Secret Labor Advocates Won’t Tell About ‘Living Minimum Wage.’”

Of course, he was preaching to the choir, but Panos Mourdoukoutas, chair of the Department of Economics at LIU Post in New York, doesn’t know a thing about the lives of working men and women, especially when he declares that “Big Labor and Big government inflate the cost of living.” According to him, they conspire about the cost of living to make a living wage higher than necessary…at least, higher than the federal minimum wage, which stands at $7.25 an hour.

Right now, the several-years-old fight for a $15 minimum wage in many places around the country is a case in point for Mourdoukoutas, who obviously believes that a minimum wage is not all that important. Many “conservatives” believe that there should not be a minimum wage at all. On the GOP primary stump, the presumptive nominee for that party, Donald Trump, said that wages are too high in the U.S. and that makes the country less competitive in the global economy.

What Trump was saying is the same thing that Right Wing politicians, pundits, and economists have been saying for years that, to be competitive, we need to lower wages, cut benefits, and eliminate things like health insurance and pensions. And, that’s what corporations big and small have been busy doing for the past 30 years. The program of the 1 percent has been so effective that even a few voices from Corporate America have expressed fear that the middle class is disappearing and they fear the destructive effect that disappearance will have on the economy overall.

But what he says indicates that he sees some kind of conspiracy between “big labor” and government. His use of the term to describe the union movement is the first clue that he doesn’t know what he’s talking about. In case he missed the latter half of the 20th Century, the full frontal attack on workers and their unions by Corporate America that started right after World War II reduced the “union density” of the nation (the percentage of workers who were in unions) from about 34 percent, to the current 11 percent, with only about 6 percent of workers in unions in private sector employment today.

Where is the “big” in big labor? When discussing economics or world trade or the “global economy” the term labor union is rarely heard. Workers do not become an issue in any of these important discussions that affect the lives of everyday Americans. A large part of blame for that can be laid at the feet of the CEOs of big corporations and the millionaires and billionaires, whose pocket change pays for innumerable Right Wing think tanks, magazines, newspapers, television networks and TV stations, and movies.

Also, the money from these billions of dollars has worked its way into the institutions of higher learning, both public and private. They have great influence at that level of education, by donating to a college or university (maybe, even creating a new department) and, possibly, having a hand in naming a chair of the department. We like to think of academia as having a free flow of ideas and debate, but this kind of corruption has a profound effect on the “product” of the institution, the young students, who graduate and enter the real world with a skewed view of reality.

The cost of higher education has risen so sharply and costs so much that the entire U.S. system is a scandal, with student debt making headlines every day and many of them are working a low-wage job or two, until something “opens up” in their field. If they are lucky, they might find work in their field, along with tens of thousands of dollars in education debt to pay off, some for 20 years or more. In many institutions it is the power of money that directs the formation of the minds of young people. What the powerful in American society want is a pliant workforce and all of their efforts have been aimed toward that end, and they seem to be achieving their goals.

As chair of an economics department, Mourdoukoutas should have a better grasp of the way things work in Congress and the other legislative bodies in the country. When he says that big labor and government have plotted to raise the cost of living so that a higher minimum wage would be justified, he nearly admits that he has no idea how the power of money influences government action. Workers and their unions do not have the money. For example, he should examine how many union officials or leaders are appointed to positions in presidential cabinets or as agency heads. If he did, he would find few, if any.

If he examined the structure of our government and how it functions in the real world, he would see that the revolving door in government is between Corporate America and government. Workers are not welcome and won’t be found there. What the revolving door has done over decades is to ensure that the corporations’ wishes are carried out by government, mostly to their benefit and that of most big businesses. After all, too often the players in this drama are from the same economic class and they are just protecting the wealth and power of themselves and other members of their class.

As for artificially raising the cost of living by collusion between government and unions, that is a ridiculous concept. Cutting across the combined analyses of liberal and conservative economists, it would seem that the cost of living index would be a little difficult to manipulate so blatantly. It just isn’t done. However, the depression of wages is something that can be done and it is accomplished by the actions of governments and corporate agents and lobbyists (that revolving door) to an impressive extent. It is they who are acting in collusion with great regularity, throughout every legislative session. Nobody calls it collusion, because it is done, or not done, in open session. All of the dirty work is done out of view of the people.

Thus, they have managed to keep the federal minimum wage at a level that requires two or three of those jobs to maintain even a modest household, which, to the rich, is a minor problem, since it is only wage workers who are so negatively affected. If the federal minimum wage had kept up with inflation and productivity over the past two or three decades, it would be about three times the current $7.25 an hour, so by that measure, the $15 an hour minimum wage campaign would not only be in the ball park, but would be a little low if we are to call the U.S. a nation of equity and equality.

Unfortunately, we cannot call it a nation of equity and equality (or opportunity, for that matter), especially since the chasm between the richest 1 percent and the other 99 percent is so great. Such a great disparity, if allowed to continue, is enough to cause economic and social collapse.

He claims most notably that local taxes are inflated by high wages paid to unionized local service providers. For Mourdoukoutas, the cost of living and local taxes are driven up by such things as “high wages paid to unionized local service providers like school teachers, community college faculty and administrators, police officers, and so on.” These costs are negotiated at the bargaining table, not in some closet where deals are made in secret. Only the big boys can do it that way, keeping in mind that it’s mostly big white boys that are in on the game.

As for the influence of money in the game of politics, it should be noted that the U.S. Chamber of Commerce, in the 2014 election cycle, spent $120 million on lobbying, according to Quartz, the online news site. That’s probably more than all the unions spent on that year’s election campaign combined. And, Quartz added, in addition, the Chamber spent another $35 million “on independent campaign expenditures and “$450,475 in direct contributions—all on behalf of the GOP.”

That’s real money and that’s real power. Workers are not invited to the game and that’s why Mourdoukoutas’ notion of collusion between unions and government is just plain silly. He should know that. After all, he is the chairman of an economics department of a university. But, he was writing that opinion in Forbes magazine, read by thousands of people who think as he does. He’s right about one thing: the cost of living has everything to do with politics. Even a sixth grader can understand who wields the power in that realm, and it isn’t workers and it isn’t labor unions.

He needs to go back and analyze the method of determining the cost of living, once again. While he is at it, he should try to live on a low wage job for about a month, so that he can understand what cost of living really means and why a $15 minimum wage is just not adequate for human families. Columnist, John Funiciello, is a long-time former newspaper reporter and labor organizer, who lives in the Mohawk Valley of New York State. In addition to labor work, he is organizing family farmers as they struggle to stay on the land under enormous pressure from factory food producers and land developers. Contact Mr. Funiciello and BC.




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