The report calculated that 643 billionaires in the US had racked up $845bn (£642bn) in collective wealth gains since 18 March, when lockdowns began across the US and much of the rest of the world. The collective wealth of the billionaire class increased from $2.95tn to $3.8tn. That works out to gains of $141bn a month, or $4.7bn a day.
Over the same period, more than 197,000 Americans have died from coronavirus and more than 50m Americans have lost their jobs.
Robert Reich, who served as US labour secretary under President Clinton, said “American capitalism is off the rails” and a “wealth tax” was urgently needed to help redress the yawning inequality gap.
“Jeff Bezos could give every Amazon employee $105,000 and still be as rich as he was before the pandemic. If that doesn’t convince you we need a wealth tax, I’m not sure what will.”
This topic is far too important for factual articles. The only way to truly understand it is with intuition, ideas I learned in elementary economics, and zingers from Atlas Shrugged .
MW used to be where you started. It was what you maybe made as a part time job while living at home, or for a short time starting out, or maybe a second job to pick up some extra bit of income.
It didn’t matter that MW wasn’t a living wage, because most people weren’t trying to live on it. Even people with just a HS diploma could find work that could pay for a comfortable lifestyle for their family.
Now, MW jobs are what are available. Either other opportunities need to open up for those without advanced education, or MW needs to increase to something that people can actually live on.
And yeah, the idea that different people have different needs is something that needs to be taken into account, but it shouldn’t be used as an argument to end the discussion.
If everybody somehow got a PhD, then those would be worth in the job market what a high school diploma was in the 60’s. The economy still needs a large number of people doing the jobs that pay poorly; getting everybody more degrees won’t change that.
If everyone had a PhD, then everyone would have far more skills and knowledge than they would with a HS diploma, and would be far more productive.
If the economy needs a large number of people that work jobs that do not pay a living wage, then the economy is not serving the people very well at all.
No it wouldn’t, and that’s not my point, as I didn’t say that we should get everyone a PhD or other degree at all.
Whoever wrote this is being deliberately deceitful. March 18 is not an arbitrary date, it is very close to the bottom of the panic drop that Covid 18 caused. If he had started a month earlier when the market was at all time highs before the crash, most billionaires would have very little increase in personal wealth.
Bezos’s wealth is in unrealized capital gains. The only way to tax it, is either to force him to give stock to the government or force him to sell it. A law that would force people to sell their stock every time it went up would be a disaster for the market, unless the government is going to send checks out to rich people when stocks go down. This would be a disaster for the stock market, a disaster for the real estate market, and a disaster for any other kind of market.
I am not an economist, so I don’t have the deep knowledge of theory and mathematical formulae to support what I’m saying but my simplistic understanding of the subject leads me to conclude that minimum wages are meant to protect exploitation. A wage floor is like the ability to collectively bargain in that regard.
But I am less sold on the idea that a ‘living wage’ is, by itself, an effective lever to lift people out of poverty and into the middle classes. I am not at all against a minimum wage or against raising it from time to time, but only as a way of stopping exploitation of entry-level workers who are trying to gain a foothold in the economy.
In fact, wage increase of any kind, whether created artificially as a result of governmental policy or as a result of severe labor shortages do not necessarily guarantee that wages of ‘livable’ in the longer term, and we’ve seen proof of that these past few years, in which we’ve seen wage growth but not necessarily a great amount of new purchasing power.
Only if you count only those making exactly the federal MW.
If they are making their state’s MW, then they are not part of that 2%
If they are making $.01 over MW, they are not part of that 2%
When talking about MW increases, it is a much better idea to talk about who is making less than the proposed increase, rather than those who are making exactly the fed MW, or else you get into misleading ideas like that only 2% are working jobs that would be affected by MW increases.
Robert Reich is a solid economist, and unlike some experts, I like the fact that he can calibrate his views. I don’t always agree with Reich’s choice of candidates and the direction of the democratic party, but even so, I respect his intellect and accept he has a knowledge of econ that’s superior to most people’s.
Yes, but nearly half are making less than what the proposed new MW would be.
Yes, I am being a bit generalistic, in saying that jobs that are around MW are MW jobs. Would you really say that a job that pays $0.01 over MW isn’t a MW job? If so, I will try to adjust my language to accommodate your need for pedantry and nitpicking.
Jobs that pay less than $15 an hour are the vast majority of those out there for people without a college degree, and quite a number of those with.
I would be against raising to $15 overnight.
But over the course of a few years, as every MW increase has always been, I’d have no problem keeping up with it. As it is, only employees that are still in training get less than that anyway.
If nothing else, it would give me an excuse to raise my prices. My clientele are primarily in the 1%, and many of them (not all of them) are very price sensitive.
When I raised my small dog prices from $55 to $58 a few years ago, I got a bunch of pushback, and lost not a small number of clients.
If I was able to say, “Sorry, they raised MW, so I just have to raise my prices”, they’d understand. They don’t understand that my costs go up every year even without a MW raise.
This is where the posts farther above about spending and inflation don’t make sense (never mind that they were about spending by the wrong group.) Not that I’m convinced raising the MW would necessarily lead to inflation. But the classic argument is that employers need to raise prices to make up for increased labor costs.
Of course that’s only one possible option. Employers can respond by:
raising prices
decreasing employment, e.g. by increasing productivity through technology (Starbucks app) or other practices (fast casual bus-your-own table, self checkout, bag your own groceries you lazy git, etc.)
eating it
If I had to guess, I’d say we would see a combination of all three. Although (3) is tough in a low-margin business, and (2) can affect employment detrimentally. Whether (1) is significant or not is for someone who thinks it is to argue. And if it is significant, it would still need to be shown that we should care. I.e., it may not affect the population of interest that much. For example, while restaurants have high labor costs, people with low income spend much less on food away from home. Whereas (direct) labor is a smaller share of grocery costs.
That’s not to say there couldn’t be some demand-driven price increases. I’m sure your dog food suppliers would be happy to make more food if people wanted to buy more of it. But for a city with policies that hinder increases in housing density, I would expect more money for rent to mostly result in higher rent.
There are second order effects which must be considered. For instance, a MW increase might make Starbucks coffee practical for more people to buy. If their business increases, which probably wouldn’t require more hiring, the contribution of fixed costs to the prices of each cup of coffee decreases and profits increase. More than the MW increase? Maybe, maybe not, but the owner would not have to eat the full cost even without increased automation.
Ditto economies of scale for manufactured products. Ditto occupancy at restaurants once we’re allowed to go back to them.
None of these things happen when one company raises wages, but they are more likely when all do.
