SHARMINI PERIES, TRNN PRODUCER: This is The Real News Network. I’m Sharmini Peries coming to you from Baltimore.
In the U.S., over 28 million workers are earn a minimum wage. They struggle to make ends meet. Fifty-five percent of these workers are women and women of color. The Fair Minimum Wage Act in the House and the Minimum Wage Fairness Act in Senate would gradually raise the federal minimum wage from $7.25 to $10.10 by 2017. Tipped wage earners currently earn only $2.13 per hour. They will also see their wages increase to just over $5 dollars, indexed to keep up with inflation. Many argue increasing the minimum wage and the tipped minimum wage are a step towards fair pay for women. Others say that this is still insufficient and will still keep majority of the families well below the poverty line for generations to come.
The current economics profession and policy at large pay very little attention to the plight of women in the economy and their complex role in society as working mothers raising the next generation of citizens.
To discuss this we have Rob Johnson joining us. He is trying to assert a more comprehensive economic analysis towards women and the economy. Rob is the director of the Economic Policy Initiative at Franklin and Eleanor Roosevelt Institute and is a regular contributor to the institute’s blog New Deal 2.0. He serves on the UN commission of experts on finance and international monetary reform.
Thank you for joining us today, Rob.
ROB JOHNSON, DIRECTOR OF ECONOMIC POLICY INITIATIVE, ROOSEVELT INSTITUTE: My pleasure.
PERIES: Rob, is a minimum wage act a good step forward for women? And is it sufficient given the role that women play in our society?
JOHNSON: I think it’s both a step forward and insufficient. I think as we look at the economy and we’re looking at the problems and the challenges that America faces, we see women both as a very large proportion of the workforce, as a very large proportion of people at the bottom of the income scale, and also, as we all cherish, as parents. And in that dual role, not only is that wage important—and people talk about inequality. This is a great way to address inequality. But we’re also talking about future generations.
I was at a breakfast recently in New York with James Heckman, the Nobel laureate at the University of Chicago. And he turned to the audience—a New York breakfast at a fancy hotel—and he said, if I could guarantee you for the next ten years a 7 percent annual return for investing, would you give money to that portfolio [incompr.]? And everybody nodded affirmatively, particularly with the 1 and 2 percent interest rates we now have in our society. He said, my portfolio managers are young women, single mothers. And with proper prenatal care, proper education between ages birth and seven, and, how do you say, proper nutrition, these will create redeeming social benefits that will last not only ten years but lifelong, saving society what he thinks can be proven something that’s equivalent to a 7 percent annual return—he said 7 to 10 percent in the conversation. So you’re talking about an investment in children, in mothers, in families, in the future, where people who are better educated, have better nutrition are people who, because their mothers receive more income now, become less of a burden on the health system, become more employed and more flexible in employment, become people who are not as readily incarcerated, not on the welfare scrolls. You don’t have to be a liberal or a conservative to see that right now our policies are penny wise, pound foolish.
PERIES: So, Rob, obviously, paying more attention to working mothers, single mothers, women of color in terms of the economic analysis, economic policy, is a good thing. Why are they being ignored?
JOHNSON: ‘Cause our politics is run, as the journalist Michael Ventura at The Austin Chronicle says, with the “oligarchy blues”, meaning there are very concentrated, very wealthy people, and this isn’t making them money. It’s not about the architecture of society; it’s about the architecture of the concentrated power. And I think that the, how do you say, dysfunctions in the environment, in inequality, in tolerated financial instability are rampant. I think the American people know that.
PERIES: Rob, so what are some of the policy development that’s going on in terms of addressing this issue, from your point of view?
JOHNSON: Well, we see this minimum wage legislation, which is not going to be taken up in the house, and I question whether in the Senate the Democrats would actually have the votes for a majority if it went to the floor. And as you know, it was stopped in a filibuster.
But I see more and more awareness, particularly among women, that they’re not being served. And I think that both parties really are going to have to respond to what is essentially the majority of the electorate and future generations and the increasing proportions of people of color. When you look at the incidence of the minimum wage and who it affects, Hispanic and black populations are disproportionately the people who would benefit from that. They are also the people who are disproportionately disenfranchised right now. But particularly the Hispanic population is growing demographically. So I think there’s what you might say a political train wreck between the oligarchs and the growing population of color that’s coming to a head.
PERIES: Rob, if you take the $10.10 minimum wage in 2017 and the role that women are playing in the economy, is this sufficient to raise a family?
JOHNSON: No, absolutely not. I’m more inclined toward the Seattle proposal, which I think is closer to $15. I think the best way to look at this is: back when inequality wasn’t considered so dreadful as people are now perceiving it to be, what was the minimum wage in relation to the average income? I believe the minimum wage has lost a tremendous amount of ground relative to the average wage over that time frame. I have done the data work myself, but I think it would be easy to verify.
JOHNSON: So if the struggle for $15 an hour, which—actually, at Johns Hopkins just recently, just a few days ago, in Baltimore, they gave $15 an hour or agreed to it in terms of people who’ve been there for 15 years or more. This is, you know, a step forward, but really insufficient. What are some of the models out there that we can draw on that really is about the well-being of, you know, ordinary citizens, well-being of low-wage earners? What are some of the models that we can look towards in trying to replicate in these kinds of situations?
JOHNSON: Well, we do see within this country some work around a so-called earned income tax credit. But as Bob Greenstein and others have shown, the earned income tax credit is largely a subsidy to employers, and you need that in combination with the minimum wage.
Looking more broadly, people will look at the Scandinavian economies, where worksharing, what you might call a parity between men and women, maternity leave and paternity leave, become part of the social policy, and we do see lots of what you might call sociological indicators that these societies are doing better with child rearing and maintaining very vibrant productivity and, how would I say, a much, much less psychologically disturbed workforce by measures that epidemiologists like Pickett and Wilkinson in their book The Spirit Level talk about. These folks measure things like incarceration rates, mental disease rates, child pregnancy rates, all kinds of incidents of crime and murder and so forth, and they show that more inequality creates these negative social side effects. In Scandinavia, we see them performing much better, and to some degree in Japan.
Another thing that I think is very important here is the question of challenging and continuing to challenge norms. Georgia Akerlof, the Nobel laureate, who’s based in Washington but historically a professor at Berkeley, and Rachel E. Kranton, who is at Duke University, have written a book called Identity Economics about so much of what we see in the jobs men take, the jobs women take, what’s considered justified pay, who’s got the power, who’s subordinate are subjective social norms. And to continue to challenge them somewhat as we have in the United States over the last 30 years I think is a sign of progress and potential.
PERIES: Rob, if there is so much economic analysis, evidence, and also models out there that tries to address inequality because it’s just not good for society, why are the Republicans and Democrats in such a struggle over such a basic issue?
JOHNSON: Because they’re both dependent on money for running their reelection campaigns, particularly as it relates to television media. Television and radio media are very, very expensive. They might as well be advertising soap as advertising political candidacy. And they pay a lot of money for that. It takes a great deal of money. I’ve seen recently that some of the conservatives have talked about raising a $500 million fund in order to be able to do super PAC flooding of different Senate races and make sure they gain control of the Senate. The scale of money means really less than 1 percent of the population determine the priorities of the people who want to be elected officials [incompr.] And that’s true at the state and local level to some degree, but at the federal level we have to be able to be on the media. In a large state like California or New York, you’re talking thirty, fifty million dollars to run for Senate. Most people don’t have that kind of means. That means a political representative has to be responsive to people with that means. It means they have to sell policy. They’re not selling policy for votes; they’re selling policy for media exposure and nomination.
PERIES: Rob, we’ll be keeping an eye on what’s happening to these acts in the House and in-Senate, and I hope you are back with us analyzing it as we follow it.
JOHNSON: My pleasure.
PERIES: And thank you for joining us on The Real News Network.