Sanders Is Fighting to Raise the Wages for Most Black and Latino Workers

By Stephanie Luce, Associate Professor, CUNY, and Mark Paul, Research associate at The Cook Center on Social Equity at Duke University, and economics instructor at the University of Massachusetts-Amherst

Cross-posted at Huffington Post. 

Corporate profits are booming, and U.S. workers remain some of the most productive in the world. Yet tens of millions of workers still earn hourly wages that fall below the federal poverty line. These unjust wages are particularly hitting workers of color. But a simple policy change can fix this — a $15 minimum wage. This would boost income for over half of black workers and 59 percent of Latino workers. But is this a change we can afford?

Put in a historical context, the federal minimum, currently at $7.25, is far below its historic peak and nowhere close to a living wage. In fact, if the minimum wage rose in step with inflation and average labor productivity since 1968, it would currently be $26 an hour.

Workers across the country have been calling for a minimum wage of $15 per hour. Two decades ago, mainstream economists warned that raising the minimum wage would force employers to lay-off workers, but slowly that consensus has shifted. In the past twenty years, over 140 cities and counties have passed living wage ordinances, and dozens of states have raised their state minimum wage. In the last three years alone, more than 30 cities and counties have set citywide minimum wages. This has allowed economists to test their theories, and the results show it is possible to raise the minimum wage and not see job loss. Indeed, higher minimum wages have led to positive outcomes for workers, employers, and communities.

The evidence that minimum wage increases are necessary and beneficial piles up. Now, the debate is more often centered on “how high to raise the wage, and how fast.” It’s time for a federal strategy. Only one candidate — Bernie Sanders — has endorsed the call for a $15 federal minimum wage by 2020 through the Pay Workers a Living Wage Act. Hillary Clinton backs a modest $12 wage, while some Republicans have called to lower or even eliminate the minimum wage altogether.

The research we have available to date suggests that a $15 minimum wage is economically feasibly. Political will stands in the way of lifting incomes for the majority of working families–Sanders’ plan is different. Hundreds of economists have already backed Senator Sanders’ plan on the $15 minimum wage. Even fast-food restaurants, which rely heavily on low-wage labor, would be able to absorb the wage increase without cutting jobs. Other countries have also shown that minimum wages can rise without resulting in the predicted job loss. Germany just implemented its first-ever minimum wage in 2015, and contrary to some fears, employment went up, not down. Similarly, the UK established The UK and Australia have minimum wages significantly higher than the US.

More importantly, a $15 wage would have major impacts on workers and communities. A study by the Political Economy Research Institute estimates that over 64 million workers would benefit if we raised the wage to $15 by 2020. This includes 47 million who would directly benefit from the raise, and another 17 who are earning just above $15 and would likely get a “ripple effect” These 64.7 million people comprise a major portion of the entire labor force (43.5%).

Critics say raising the minimum wage won’t solve poverty, and they are right. The minimum wage is only one tool in a larger set of useful policies that are necessary for addressing racial disparities and building an inclusive economy, ranging from better health care, to stronger enforcement, and a federal job guarantee for those locked out of paid employment altogether.

Raising the minimum wage doesn’t just benefit workers. Research shows that when minimum wages are raised, employers experience lower turnover and absenteeism and higher productivity. Workers are able to pay off debt, start savings accounts, and invest in education and training.

States with higher minimum wages have had stronger job growth in the past few years. When low-wage workers are paid more, they tend to spend most of their earnings, increasing aggregate demand, which can lead to an additional boost in job growth.

In a moment when people are standing up for their rights to a living wage, and asserting that Black Lives Matter, the $15 minimum wage makes sense.

Bernie Slanders: How the Democratic Party Establishment Suffocates Progressive Change

By Thomas I. Palley, Independent Economist Washington, D.C.

Cross-posted at the author’s blog, thomaspalley.com.  An earlier version of this appeared at Social Europe.

The Democratic Party establishment has recently found itself discomforted by Senator Bernie Sanders’ campaign to return the party to its modern roots of New Deal social democracy. The establishment’s response has included a complex coupling of elite media and elite economics opinion aimed at promoting an image of Sanders as an unelectable extremist with unrealistic economic policies.

The response provides a case study showing how the Party suffocates progressive change. Every progressive knows about the opposition and tactics of the Republican Party. Less understood are the opposition and tactics of the Democratic Party establishment. Speaking metaphorically, that establishment is a far lesser evil, but it may also be a far greater obstacle to progressive change.

The elite media’s response was captured in a snapshot report by Fairness and Accuracy In Reporting (FAIR) showing that the Washington Post ran 16 major negative stories on Sanders in 16 hours, prior to the Michigan primary. The headlines were particularly hostile, and since only 40 percent of the public reads past the headline, that is as important as the substance of the story.

Economic policy has been the fulcrum of Sanders’ campaign, and the response of elite opinion has been exemplified by Paul Krugman of The New York Times.

For years, Krugman has mockingly used the term “very serious people” to attack Republicans opposed to President Obama’s policies. Now, he unironically revokes the credentials of all who do not support Clinton  by declaring: “every serious progressive policy expert on either health care or financial reform who has weighed in on the primary seems to lean Hillary.”

Regarding Sanders’ opposition to neoliberal trade agreements, Krugman writes “In this, as in many other things, Sanders currently benefits from the luxury of irresponsibility: he’s never been anywhere close to the levers of power, so he could take principled-sounding but arguably feckless stances in a way that Clinton couldn’t and can’t.”

The slamming of Sanders has also been joined by a gang of past Democratic appointee Chairs of the Council of Economic Advisers. In an open letter co-addressed to Senator Sanders, Messrs. Kruger, Goolsbee, Romer and Tyson mauled a favorable empirical assessment of Sander’s economic program conducted by Professor Gerald Friedman.  Without any detailed independent assessment, they simply declared the assessment unsupported by the “economic evidence”.

Messrs. Kruger et al. were then joined by Justin Wolfers, via one of his regular New York Times opinion pieces. His accusation was the beneficial effects of fiscal stimulus would disappear once full employment was reached and the stimulus withdrawn.

Wolfers is co-editor of the prestigious Brookings Papers on Economic Activity. Ironically, a recent issue contained an article by elite Democratic economists Larry Summers and Brad DeLong invoking a similar mechanism as Professor Friedman. Summers and DeLong argued a large negative temporary demand shock can permanently lower output: Friedman simply reversed that and argued a large positive temporary stimulus can permanently raise output and growth.

There is legitimate room for intellectual difference. What is so stunning is the tone of the critique and the fact it sought to diminish an important policy (fiscal stimulus) just because Sanders was using it to his political advantage.

Given their elite professional standing and easy access to elite media, these attacks quickly ramified throughout the mainstream media, illustrating how the elite media – elite opinion nexus works.

The slamming of Sanders reflects an enduring status quo defense mechanism which usually begins with insinuations of extremism, then mixes in charges of lack of qualification and realism, and ends with assertions of un-electability. It is applied in both political and public intellectual life.

The extremism gambit explains the persistent linking of Sanders and Trump. Whereas Trump is an egotistical demagogue and businessman with a disreputable business history, Sanders is a thoughtful social democrat with a long history of public service through high electoral office.

The un-electability charge pivots off the extremism insinuation as follows. Americans will not elect extremists; Sanders is an extremist; ergo, Sanders is unelectable.

As with the extremism insinuation, the un-electability charge lacks foundation. Polls show Sanders beating all the potential Republican nominees, and beating Trump handily.

The third charge is lack of qualification. The reality is Sanders has a fifty year history of political involvement, worked his way through the political ranks serving people, was Mayor of Vermont’s largest city, then Vermont’s representative in Congress where he co-founded the Congressional Progressive Caucus, and after that became a Senator for Vermont. That seems to be exactly the career and CV a President should have.

Lastly, Sanders has been dismissed as selling unrealistic pipe dreams. Social Security would be a pipe dream if we did not already have it; so would Medicare and public education too. There is a lesson in that. Pipe dreams are the stuff of change.

Rather than an excess of pipe dreams, our current dismal condition is the product of fear of dreaming. The Democratic Party establishment persistently strives to downsize economic and political expectations. Senator Sanders aims to upsize them, which is why he has been viewed as such a threat.

November will be a time for Democratic voters to come together to stop whoever the Republicans nominate. In the meantime, there is a big lesson to be learned.

Today, the status quo defense mechanism has been used to tarnish Bernie Sanders: tomorrow it will, once again, be used to rule out progressive policy personnel and options.

Progressives must surface the obstruction posed by the Democratic Party establishment. Primaries are prime time to do that, which means there is good reason for Sanders’ campaign to continue.