Guest Post by William Neil
"Let Us Now Praise Famous Men"
"Let Us Now Praise Famous Men"
Dear Citizens and Elected Officials:
This essay was never going to be the usual post legislative session follow-up “report” to Part I, which appeared at the end of February, and which was entitled Making Millard Tydings Proud, Economic ‘Justice’ in Annapolis. Even when I was an advocate for NJ Audubon’s legislative goals in New Jersey in the 1990’s, I had an inclination to avoid euphoria over what we had managed to achieve. That avoidance wasn’t difficult: it was usually grounded in fact, because most of the time what we really wanted, and what was desperately needed in New Jersey - a state land-use plan with regulatory teeth - was not politically attainable, due to the power of the real estate industry and the Right’s success in achieving an anti-statist and anti-regulatory iron curtain.
However, something happened along the way to Part II: a quickening of the national political pulse – on the left, at least - an outpouring of speeches, essays, studies and one powerful book (among other good ones) that seems to have swept the serious reading public off its feet. These I will name shortly, to set the broader context in which I will examine “economic justice” in Annapolis, and thereby temper my praise for its “famous men.” First though, let’s focus in some detail on what happened there between the end of February and the last day of the legislative session, Monday, April 7th, 2014.
I. The Annapolis Balancing Act: Gestures Towards the Working Poor; Estate Tax Relief for the Job Creators
On that last day of the session Maryland’s new minimum wage bill passed the House of Delegates by a vote of 87-47, bringing the state’s new minimum wage to $10.10 per hour, but not until July 1, of 2018. (Maryland thus becoming only the second state to achieve the federal goal of $10.10) This was the second vote by the House, necessitated by the fact that the Senate had made changes from the original version which the House passed way back on March 7 by an 89-46 margin. (HB 0295; SB 0331). The Senate did not pass their version until Saturday, April 5th, by a vote of 34-13. Of equal significance to me, as a reporter on the political economy, is the fact that on the same day the House first passed its minimum wage bill it also approved The Maryland Estate Tax - Unified Credit Bill – and pay attention to the comparative margin – by a whopping 119-14 tally. (HB 0739; SB 0602). The Senate voted for this bill on March 20th, the Vernal Equinox, 36-10.
To help keep these voting numbers in proper political perspective, the Democratic Party in Maryland has a 98-43 majority in the House of Delegates, more than two-to-one, and in the state Senate it is almost three-to-one, 35-12. Since Maryland Democrats and their presidentially hopeful Governor, Martin O’Malley like to portray themselves as “progressive,” these majorities indicate that they are a fair test of what the party stands for in the sense they have the numbers to pass what they want; they cannot plead “gridlock” as the Democrats can do in Washington, DC (where even there they could do better - by overthrowing the Senate filibuster rules.)
There is more detail to add from this Annapolis session, however, plenty more. Before the House passed its first version of the minimum wage bill, Delegate Heather Mizeur (D-20), a gubernatorial hopeful in the June 24th Democratic primary this year, offered an amendment which would have created a 2% annual adjustment upwards for inflation – a reasonable and important linkage, since the federal lack of one was a major factor, aside from the missing productivity gain adjustments, that allowed the federal minimum to fall so far behind its 1968 gold standard of purchasing power. Mizeur’s amendment was buried, 8-124. She did, however, for her courage, gain a $5.00 campaign contribution from me, and I don’t have many to give out, since I am a poor man in a rich man’s county.
This failed inflation adjustment for wages is not trivia, it has real practical and symbolic importance, since the adjustments made in Maryland’s estate tax bill will bring it into alignment with the federal tax law, which is linked to inflation, and will raise the current wealth exemption to $5.34 million dollars by 2019 - and those inflation adjustments kicking in in 2019 are projected to raise it to $5.9 million (according to a Forbes Magazine article from 3/20/2014). Readers should, at this point, remind themselves by repeating with me: American is not a class based society, we just reward merit. Wage earners have not accumulated enough merit to have their miserly earnings under the minimum wage law, even a rising one, linked to inflation; those who have accumulated enough wealth already to worry about estate tax thresholds have, and if we are not nice to them they will flee our state. Or so goes the conventional wisdom. And, according to some recent studies, Maryland now has the highest density of millionaires per 1,000 of population of any state in the nation.
Maryland did not change the estate tax rate it will charge on the amounts that are not shielded, it remains at 16%. Maryland also remains one of the 19 states with estate taxes in addition to the federal one, and one of only two, New Jersey being the other, which also have an inheritance tax (the rate is 10%), though its version is so riddled with loopholes that it would make Thomas Piketty weep, and keep estate and tax trust planners busy – and compensated. While Maryland brings its estate tax into exemption alignment with the current federal law, keep in mind that Congress has been lowering the federal top rate over the decades from its 77% peak in 1941 to the current rate of 40%, even as the amount exempted has also risen to that $5.34 million figure – and is linked to inflation.
There was one other bill that I was tracking closely, and which turned out to be a very easy job since early in the session it was declared that it would never even get a hearing this year: the “Earned Sick and Safe Leave Act,” HB 0968 and SB 0753. It would have mandated a week’s sick leave for employees of businesses over a certain size, as well as for other good personal reasons. Since I myself work for a Fortune 50 company here in the state that does not provide for sick leave until so many hours are accumulated ( I work 20-30 hours per week and have zero sick time after 22 months) I thought this was a pretty important matter. But a Democratic committee chairman was quoted in several press accounts saying progressives would only get their choice of one bill this year: pick and choose, either the minimum wage bill or Sick Leave…not both. Well, perhaps another year, and let’s hope that the germs the service and retail sector workers will be spreading won’t be as serious as the new MERS virus (which ironically, or maybe not, is the same abbreviation as that given to the banking industry’s Mortgage Electronic Registry System that they set up without Congressional approval prior to the great real estate bubble bursting). Is that the Progressive Democratic Party talking here, or a parent policing the cookie jar policy? In a state which houses a good portion of the federal medical research establishment, including the relevant NIH, and a branch of the CDC, one might hope they would have been invited in, or butted in, to say something about this medieval and cruel labor policy with substantial health implications. But I heard nothing about them. Not their field, I guess.
Before I go into greater detail about the minimum wage bill that did pass, with difficulty and weakening amendments, and place this session’s work on the “political economy” into a deeper national perspective, I think it is fair that my readers know my personal bias in these matters. In some ways, this is a sociological “coming out” of sorts: I come from lower middle class roots, not the working class (complex itself in its structure) or the professional upper middle class, although all my life I have looked up, not down for inspiration and role models. Yet by the work I have chosen to do, first in social services as a social worker and supervisor in the public welfare system, in a poor urban setting in Trenton, NJ, and then as an environmental lobbyist squaring off with – on nearly every issue I ever worked on– powerful business interests – my life has thrust me into matters of political economy and an acute awareness of both those below and above me in social and economic standing. Now, in my sixties, I am objectively a member of the working poor, and downwardly mobile; which, I think it is fair to say, gives a certain “edge” to my observations and positions. I have to work to make Montgomery County’s expensive ends meet; my forced early Social Security retirement check and modest NJ pension benefits (under $500 per month) leave me no choice.
I work part-time for a Fortune 50 (not 500) Corporation and will be completing two full years with them very shortly. I started at $8.50 per hour, received an 11 cent raise after the first year, and then a store-wide raise to $8.75, and finally, after a good second annual review earlier this year, a 22 cent per hour raise to $8.97. So the Maryland minimum wage bill, which starts at $8.00 per hour on Jan. 1, 2015 and rises in very slow increments each year, will not affect me until July 1 of 2017, when the wage becomes $9.25 per hour. The bill passed by the Montgomery County Council in late 2013 will arrive a little sooner, getting to $9.55 per hour by January of 2015. It will reach $11.50 per hour by 2017. The “relief” in 2018 sounds to me like a date for the next Rover landing on Mars: remote, very remote.
But dismal wages and inadequate legislative relief are only part of the broader story, and my own. I now work in a vast service and retail sector of the economy where 28 million currently struggle for under $9.89 per hour. Twenty-eight million. It is increasingly difficult to categorize that workforce in the old ways as the young and under-educated. Where I sweat we have young law school graduates unable to find legal work, and older workers, in their 60’s who have MBA’s. This is a good thing about my workplace; as many professionals know from their own work experiences, there is lots of age discrimination in corporate America but under existing power rules, it is very difficult to prove in court. At my place of employment, we also have a fragmented and diverse work force made up of immigrants from Asia, Indonesia, Nepal, the Philippines, Central and South America, India, Pakistan and the Sudan, Muslims, whites, Hispanics, and black Americans, Haitians, and those from various other African nations whose strikingly different English and French accents - and native tongues - flavor every conversation.
Aside from the wage problem, there is the great uncertainty of hours, especially for part time workers, but it can touch even the full timers. Workers, for the most part, do not control their hours, management does, and they flow according to the broader corporate fate, the economy, and the seasonal rhythms of retail (workers are always trying to read personal tales of “standing” in the fluctuations, which cannot be ruled out.) Unpredictable is the word. My yearly hours are managed to keep the average work week under 30, but they can go from 38 to 17 on pretty short notice. My expenses, though, are steady.
And then there is the “medical coverage.” I am 63 years old, and I have none, and haven’t had any since 2004. I have no sick days either, and at the glacial pace I might earn them, I won’t have even a couple for a few more years. So I work sick and I work hurt if I want to keep a roof over my head. I applied for the President’s ACA on the Maryland exchange, but did not qualify for a subsidy and the cheapest monthly plan was more than $300 dollars, which I cannot afford, with outrageous deductibles of between $4,000 and $6,000. I was going to sign up this spring for the more affordable company plan, but this January they announced they were dropping it entirely for part-time workers.
So did the Democratic Party, the Unions and the mediating think tanks who set (and more on the setting later) and pushed this goal actually believe I would jump up out of my chair and cheer their achievement of $10.10 per hour, with a Mars Expedition kick-in date of 2018, and also with these “features” in the Maryland law : no correction for inflation, a carve-out for certain seasonal employees, a sub-minimum wage of 85% for six months for those under 19 (teenagers, that is), keeping the traditional exemptions for those engaged in the ancient agricultural exploitations, err, work categories I meant….and those “employed by an employer who is engaged in canning, freezing, packing, or first processing of perishable or seasonal fresh fruits, vegetables, or horticultural commodities, poultry or seafood” (also categories of ancient exploitations: Cannery Row; whether current conditions in Maryland are so is subject to dispute, and Dan Costa of Economic Policy Institute suggests that employers are looking to substitute immigrant visa laborers for those who pay is already too high) and no improvement for the base “wage” of the restaurant tipped workers, frozen at $3.63 per hour – and exemptions for workers in food establishments which gross under $400,000 per year, raised from $200,000? Readers who want to peruse the final and very marked up version of what passed can take a shot at this: http://mgaleg.maryland.gov/2014RS/bills/hb/hb0295E.pdf
Deciphering that version will give you a good idea of some of what I did as an environmental lobbyist from 1988-2001, the years of my close and revealing window into how “democracy functions,” to compare with the lessons I received as an undergraduate schooled in Robert Dahl’s grand 1967 book, Pluralist Democracy in the United States: Conflict and Consent.
Still, I am not in the only “category” of working poor that this bill was aimed at. The situation for we 28 million is more complex than that, and I was not about to oppose a bill that will have very little effect on me if it is true that, as the Economic Policy Institute testifiers proclaimed, it will raise the wages of hundreds of thousands, presumably those at the very bottom, at the current $7.25 wage. Was my situation part of these claimed hundreds of thousands affected even though its provisions won’t reach me for years? Or am I part of a secret, and silent, labor “aristocracy” amidst this vast sea of 28 million, waiting to punch their tickets into the middle class? If I protested “far too little, far too late,” would I be helping to squash an improvement of about 37% percent for those in the – dare we say it – the employed “lumpenproletariet?” Had it come to that in the America I grew up in? Was I now, at $8.97 per hour and twenty hours a week with no medical coverage part of a new labor aristocracy, yet one who still remembers the old labor aristocracy of unionized industrial workers in the 1950’s and 1960’s making $25-$35 dollars per hour, with generous pensions, medical benefits and other fringes, including vacations? Vacations: what are they? Should I be grateful at $10.10, or consider myself a sucker for settling? I can say this with some firsthand certainty: the working poor whom I labor alongside of expressed no great interest in, or admiration for, the “achievement in Annapolis,” at least none I could easily detect. One whom I did have a conversation with raised an eyebrow, and his voice, as to “when that $10.10 takes effect.” When I told him “2018” he walked away rolling his eyes towards the high unpaneled ceiling. I was going to say heaven, but heaven is very hard to locate these days.
One more thing about the “labor aristocracy.” Indeed, how do the remaining members of that old 1945-1973 era aristocracy – the carpenters, plumbers, electricians, welders and other skilled tradespeople (the operating engineers and allies in the general laborers organizations too), and the now recently organized “militant” nurses, see themselves in relation to the unorganized service and retail 28 million? Brothers and sisters? Not if the reports I receive from Bill Wolfe (at wolfenotes.com) in New Jersey are representative. The leaders of many of these workers in that state have been the allies of Governor Christie even as he has ferociously gone after government worker unions, especially the teachers – and their pensions, of course. “Working class” doesn’t begin to describe the diversity here. And the salaries of the skilled trades make them middle class today, even as their cultural preferences might place them elsewhere, as the Republican Right well knows.
Before I go further into these matters, a brief refresher course is in order. I have written about the political economy, and reviewed books written about it, for seven years now, and I guess I’m up to cumulatively, the equivalent of about four volumes of 1,400 pages or so. I began following the increasing talk of raising the minimum wage about two years ago, or even further back, when economist James Galbraith came out with a call for $12.00 per hour, having abandoned all hope of enacting anything like a new New Deal of programs under the current Democratic Party’s – and the economic establishment’s worldview – not to mention that of the Republican Right. There was much talk of the link to inflation, and then economist Dean Baker did some calculations reminding us of labor’s missing share of productivity gains, which would bring the minimum wage rightly up to between $16.00 per hour and $22.00, depending on which set of conservative assumptions went into the math. Then the SEIU, which has left the AFL-CIO, began pushing for $15.00 for fast food workers. I reminded my readers that without exaggeration, economists on all parts of the political spectrum of the field had been obsessed with it – productivity – obsession is not too strong a word, and if you need current proof of that , the word has central importance in Thomas Piketty’s now famous new book, Capital in the 21st Century, with labor’s share of income and thus their wages being limited, if not governed by improvements in productivity, which in itself is a function of technological innovation and greater workforce educational levels. But there is another “governing” factor which he didn’t stress: labor needs the structural political power to insist that it get this fair share from the owners of capital, if not by direct negotiations, then through the external market adjustors like the minimum wage, where doing so would depend on their “political” power.
So to have labor’s brokers and organized labor itself settle for a link only to inflation, and to drop the whole idea of labor’s missing share of productivity gains, is a foolish and self-defeating negotiating strategy. Labor would be justified in doing so if that is the very best that could be achieved under the boundaries drawn by forces inside Congress and state legislatures, like Maryland – but even then, it should, would have to be prominently footnoted with the caveat that this is an ongoing campaign and “we shall return” year after year until labor captures its missing and fair share of those productivity gains. Am I making myself clear here? But I can find no such attachments, footnotes or statements of future intent. And that’s so even as Robert Reich had an article one day after Maryland passed the $10.10 bill, arguing that this number was inadequate and the goal should be at least $15.00 per hour. Here it is at
(The second part of this essay will be published tomorrow.)