Former Secretary of Labor; Democratic Challenger MA Governor
Falling wages created "working poor" even with two jobs
Until quite recently, poverty was largely confined to those who did not work--widows and children, the elderly, the disabled and seriously ill, and those who had lost their jobs. Public safety nets and private charities were created to help them.
It was rare for a full-time worker to be in poverty because, the economy generated a plethora of middle-class jobs that paid reasonably well and were inherently secure. This is no longer the case.
There are several reasons for the growth of America's working poor. First, wages at the bottom have continued to drop, adjusted for inflation. By 2013, the ranks of the working poor had swelled to forty-seven million people in the
United States, one out of every seven Americans. One-fourth of all American workers were in jobs paying below what a full-time, full-year worker needed in order to support a family of four above the federally defined poverty line.
Focus stimulus bill on minority jobs, not just white males
Robert Reich, when Obama's stimulus bill came before Congress, the former secretary of labor, now a Berkeley professor, testified to his hopes as to who should benefit and who should not: "I am concerned as
I'm sure many of you are, that these jobs not simply go to high-skilled people who are already professionals or to white male construction workers. I have nothing against white male construction workers,
I'm just saying there are other people who have needs as well." Reich got his wish. By mid-2009, unemployment among women had reached 8 percent, but among men it was 10.5 percent, the largest gap ever recorded by the Bureau of Statistics.
Among male construction workers, unemployment rose in the Great Recession to 19.7 percent, while illegal aliens held 17 percent of all construction jobs up from 10 percent in 2003.
Family-friendly workplaces can help the bottom line
Consider family-friendly workplaces. Business that help their workers fulfill their family responsibilities--policies such as flexible work schedules, help with child care, and generous leave for family and medical reasons--
reduce costly turnover and retain valued employees.
The 2nd way companies can be good citizens is by providing their workers with health care and pension benefits. Here, too, government has a role to play in setting minimum standards.
But with millions of American workers lacking both health care and pension coverage, it is clear that businesses must do more than meet the bare minimum--and it's clear that top-flight companies can, and do.
Starbucks, for example, has been widely recognized for its practice of extending full health insurance benefits and its 401(k) plan to its PART-TIME workers.
I learned about the power of consumers when I was Secretary of Labor.
After we discovered sweatshops in the garment industry--crowded, unsanitary cutting and sewing shops that weren't even paying minimum wages--we announced the names of the major-brand manufacturers, and big retailers that had contracted with them.
As a result, consumers put enormous pressure on these well-known manufactures and retailers. This in turn forced them to do a better job monitoring their contractors and subcontractors.
Companies that could assure consumers their garments weren't made in sweatshops gained a competitive advantage. Sweatshops haven't been eradicated completely, but consumer pressure has had a big impact.
Raise the minimum wage to $7 and then index to inflation
In 1993, the real monetary value of the minimum wage had eroded for years. Yet as welfare reform came closer to becoming a political certainty, the moral argument for a higher minimum wage gained credence. How could America in good conscience expect
millions of welfare recipients to work for a living if they couldn't earn enough to live on?
A sensible approach now would be to raise the minimum wage to its historic level--roughly half the median wage. That would put it at about $7 an hour.
Thereafter index it to inflation. When combined with the Earned Income Tax Credit (EITC) & food stamps, this higher minimum wage would lift a family with one full-time worker and 2 children out of poverty.
But there are limits. Raise the minimum wage
too high and you might deter employers from hiring many low-skilled workers. We don't know exactly how high the minimum wage could be raised or how far the EITC could be expanded without causing these undesirable results, so there's room to experiment.
Establish "earnings insurance" to smooth out unemployment
To protect individuals and families against volatility of the new economy, there are many possibilities short of neo-Luddite measures to block choices. One way to alleviate the sudden pressure of job loss would be to ensure that anyone who needed a job
would have one. If no jobs were currently available, public-service jobs would make up the shortfall. In addition, unemployment insurance could be replaced with earnings insurance, designed to smooth out what might otherwise be abrupt drops in income.
Say your earnings dip 50% from one year to the next. The earnings insurance would make up half the difference. If your earnings doubled from one year to the next, you would pay some percentage of the gain into the earnings insurance fund.
Such earnings insurance would help not only the poor, but also middle- and upper-income people anxious about the possibility of suddenly losing their economic footing. And such insurance would be extended to anyone, including part-time workers.
MA workers should be able to find a job at a living wage
Every able-bodied person who wants to work should be able to get a job paying enough to keep that person and his or her family out of poverty.
But too many Massachusetts workers can’t live on what they earn.
Source: Campaign web site, RobertReich.org
, Jan 25, 2002
Prodded Clinton on minimum wage & corporate welfare
Reich’s prodding of Clinton on the minimum wage, worker training, and what he calls corporate welfare alienated him from the former president. “I made his life miserable,” Reich said in an interview earlier this year on Fox News.
Source: Frank Phillips, Boston Globe on 2002 MA Gov. race, p. A1
, Nov 30, 2001
US jobs issue is low earnings, not high unemployment
The problem for most people who aren't doing particularly well isn't that they lack a job. If they inhabit the US, they're likely to be employed if they want to be. Their larger problem is that they don't earn much.
In Europe and Japan and much of the rest of the world, where wage rates are still less flexible than they are in America, workers who are not in much demand are either unemployed and living on welfare
(as in Europe) or employed in "make-work" jobs and living off the good graces of companies willing to pay them more than the market value of their services (as in Japan). Yet the salad days of generous unemployment benefits
and of corporate benevolence are coming to an end even in European countries and Japan. These other nations are gradually falling in line with the American system. Global investors and consumers are insisting on it.
Corporate ruthlessness comes from competition, not greed
It's tempting to conclude from [corporate disloyalty to location and personnel] that enterprises are becoming colder-hearted, and executives more ruthless--and to blame it on an ethic of unbridled greed that seems to have taken hold in recent years
and appears to be increasing. But this conclusion would be inaccurate. The underlying cause isn't a change in American character.
It is to be found in the increasing ease by which buyers and investors can get better deals, and the competitive pressure this imposes on all enterprises. As the pressure intensifies, institutional bonds are loosening.
Years ago, when choice was far more limited and switching more difficult, consumers and investors tended to stay put. As a result, institutional bonds were stronger. The tameness of competition allowed for an implicit social compact.
Q: Some studies say wages are down, some say they’re up, some say social mobility is no good, some say social mobility is terrific.
A: There’s no question that people are better off than they were in 1992. There are more jobs. People feel a little bit
better about their wages and their prospects. But over the long term, a major challenge is to restore not just job growth but also wage growth. Some people say that social mobility is as great than it was in the 1980’s, and that’s simply not true.
A lot of evidence points to the fact that it is harder to move upward if you are near the bottom or in the bottom 20% or 30%. [With wages], you’ve got to distinguish between average wages and median wages, because so many people at the top are doing so
well, the average is pulled up. You’ve got to look behind averages, and you’ve got to examine what’s happening to the little guy. And in fact, with regard to median wages, we see that median wages, beginning in the late 1970’s, began to decline
Wage disparity between boss & workers hurts companies
Q: Why aren’t we seeing the wage increases that we used to see in typical economic expansions?
A: Wages for Americans in the top 20% of earnings are doing quite well. If you’re in the top 5%, you are doing extremely well.
If you’re in the top 1%, you are doing better than the top 1% has done probably in 50 or 60 years. But if you’re in the bottom 20% or 30% or 40%, you’re not doing well. Also in benefits - health benefits, pension benefits.
If you’re near the bottom, your benefits are also eroding.
Q: Are CEOs making too much money?
A: It’s not good for a company in terms of its own bottom line to allow too great a gulf to open up between the compensation of the boss at the top
and everybody else. The best companies try to encourage a sense of teamwork, of common enterprise, of everybody in the same boat together. You cannot do that if the CEO is earning 140 times what the average worker in that company is earning.
Americans deserve a livable wage: raise the minimum
Q: What about the minimum wage?
A: We proposed, in January of 1995, an increase in the minimum wage, and we’ve been fighting for that for the last year and three quarters. Hopefully, we will get it because Americans at the bottom,
twelve million of them, deserve at least a livable wage.
Q: Critics say many of them will lose jobs because companies can’t afford to pay them the minimum wage.
A: The minimum wage is heading toward a forty year low if you adjust for
the real purchasing power of a dollar. Now, in 1938 this country decided we’d have a certain minimum standard in terms of no child labor, minimum wages. We’d have an absolute floor, and we also established some rudiments of health and safety at the
workplace. Now, if you believe in those minimum requirements, you’ve got to say to yourself, we’re heading to a forty-year low. We’ve got to at least make sure that people who work full-time don’t live in poverty.
Put theory into practice as Clinton's Labor Secretary
Reich was a leading candidate to head the new super-committee of that Clinton had pledged to create, now being called the National Economic Council. The position, overseeing all economic policy, was potentially a powerful one. Reich made it clear that he
had come to see that he was exactly the wrong man for the job. First, he would have to be an honest broker, filter and weigh others' opinions, and not advocate opinions of his own. He would have to present options to Clinton in a neutral manner.
He would also need to maintain low visibility, not give many interviews or appear on the TV news shows. Reich, however, loved developing and pushing his own ideas, and he loved the media spotlight just as much.
They finally settled on Labor Secretary.
It was a cabinet post in a department that had long been neglected during Republican administrations, and labor was a key Clinton political constituency. And it was where Reich could try to put some of his theories into practice.