Social Justice

Windy City Defiance

2006-08-09T10:04:00.000-05:00

The minimum wage is still a hot topic on the national and local level. A bill recently passed the House of Representatives to raise the minimum wage, but a closer review indicates major problems with this long sought victory. Indeed, no victory at all can be claimed when the wage increases simultaneously denies minimum wages for tip-earning workers (in the 7 states that allow this), alters small business medical benefit policies arguably for the worse, and (at least in theory) begins to challenge the trend since 1996 to enact higher state and local wages that have made the federal minimum wage irrelevant for workers in many states (non-federal minimum wages previously dicussed in this blog here).

And still my home town of Chicago may be pushing the envelope straight off the table. On July 26, the City Council voted to require "big-box retailers" (stores of 90,000 square feet or more) to pay employees at least $10/hour and $3/hour in benefits by 2010. Mayor Daley was adamently against such an outcome, but the Council's vote (34-14) prevailed by a veto-proof margin. (Mayor Daley has never vetoed a bill, but could do so in theory for any provision that prevails by 34 Council votes or less.)

At the risk of some readers rolling their eyes, I have to repeat a Sun Times quote of the bill's sponsor, Alderman Joe Moore: "Our job is not to safeguard proits for the world's wealthiest corporations. Our job is to look out for our constituents." Of course Daley and opponents of the bill would argue that this will hurt Chicago's constituents, but poor results with good intentions would be a refreshing change from good results with poor intentions or the equally common poor results with poor intentions.

In reality, we don't know where this will lead. Wal-Mart and Target have vocally opposed the bill with threats to cancel expansion plans (about 5 planned stores for Wal-Mart and 2 for Target), and now Lowe's has announced a hold on plans to open to additional stores in the city. Some of the stores planned by these companies were to serve as anchors for shopping developments with projects ranging over $110 million. As stated about the bill in general, it remains to be seen what will happen to these projects.

Wake Up!

2006-07-27T17:31:00.000-05:00

What is this American Dream? I hear it used all the time and it seems to mean something different each time it is used. I suppose that's fine in the sense that it is supposed to be a "dream" -- something personal to each person. Like snowflakes, no two dreams are alike.

But a dream is really a fantasy and this is how I see the American Dream. Close your eyes and imagine a world that does not exist as you see it, and likely never will. The way the "American Dream" is frequently used, it would best be described as the American Fantasy. You're as likely to see a street paved with gold in America as you are to go from the shipping docks to the executive suite. Horatio Alger's rags to riches stories fit this category. More on this American Fantasy later.

Others view the American Dream as an aspiration. This is something to strive for that is attainable but difficult. Maybe you hope to get that promotion where you'll have your own office and be able to afford that house in the burbs. In other words, these people want to move up one notch. Maybe they hope to have that "middle class lifestyle" that originally was the hope of the American Dream. (Unfortunately, this is less and less considered to be a respectable goal or lifestyle.) To some, moving up one notch is making the American Dream come true. But it's not a dream -- here we have the American Aspiration. With a combination of luck and hard work, anyone can achieve that smaller aspiration.

Still others "dream" of even less. I saw a commercial yesterday for a new show of TLC about migrant workers. The "host" said that these workers (who toil all day in the heat at some of the worst jobs possible) are living the American Dream. If they are dreaming they may in fact wish to wake up. This is not the American Dream in the same sense as the American Fantasy. Here we have the American Life. You can work hard and probably be paid what you expect for any given job. The police will probably protect you. A bank will let you invest the money however you like if you accumulate enough. And you get to enjoy the "freedoms" of this nation. All that migrant worker wants is to make money today while he can and then hope he can make more tomorrow. There is no hope for rising in the ranks and becoming the farm owner, or one day driving a Mercedes. This is quite simply the American Life. And as the host says, they are living it.

But most hold onto the first option mentioned here. People dream in this fantasy world -- increasingly detached from the way America truly operates -- and yet have no idea that they are dreaming. The world of fantasy and the concept of reality blur. Is this "American Dream" really an American Fantasy? Yes, and I'll explain that more in my next post. And, assuming it is a fantasy, why can't people start to realize that the American Dream is grounded in nothing more than tradition? Well, I have answered this to an extent in discussing myths and realities towards welfare recipients. Many of the same concepts hold true here as well as some new ones.

Robert Rank spent 10 years investigating welfare on a policy and invididual level before writing Living on the Edge. In the end, he gave us his subtitle: The Realities of Welfare in America. This is a great place to start when examining the American Dream. Horatio Alger didn't write books about the middle class teacher who wanted to be a rich banker. The American Dream, as it has been used for the past century (and more), is focused on the poor becoming middle class or now, I'd argue, the poor becoming rich. So the dreams of welfare recipients, and the realities of how those dreams pan out, is a good place to examine whether this is a complete fantasy after all. More next time.

The American Dream (Initiative)

2006-07-25T10:38:00.000-05:00

Horatio Alger is dead, and I have argued that his dream (fantasy?) also died long ago. Some of you may have noticed Hillary Rodham Clinton's newest project in the news lately: The American Dream Initiative with the Democratic Leadership Council.

This is further evidence that it is finally becoming painfully obvious that the American Dream just doesn't exist. For one, evidence suggests that social mobility is a massive exaggeration in this country. For another, what happened to the benefits? Getting to the middle class just isn't the same anymore. Middle class families are faced with dual-income pressures like never before, as well as pressures to buy houses in areas with excellent schools, and a myriad of other expenses once never even considered (for instance, see Elizabeth Warren's discussion in The Two Income Trap and Juliet B. Schor's Overspent American). Needless to say, during this same period we are working longer hours, earning stagnant wages, and finding that our money buys less and less when everything from gasoline to health care to college just continues to take a bigger chunk out of our pay checks (for example, see Juliet B. Schor's earlier book, The Overworked American and Teresa Sullivan's The Fragile Middle Class).

Let us also not forget the psychological problems that result from these pressures, decreased purchasing power of our middle class dollars, etc. Indeed, reports on the middle class psyche continue to indicate that it is not a secure place to be in society. This supposedly "core" aspect of our culture is always wanting more and always worried about ending up with less (Barbara Ehrenreich's Fear of Falling is a good place to start on that second point).

So with the American Dream Initiative, too little too late is nonetheless a welcome addition to a country in denial. I am somewhat bothered by the clear emphasis on college. By pushing college as the paith to the middle class lifestyle, the Initiative seems be avoiding the true problem. The true problem is that the middle class today just isn't a great place to be. Some of it is monetary; some of it is psychological. But to emphasize college loses sight of reality--a college degree just doesn't really matter anymore. To use an image from Schor, standing up in a crowd doesn't provide a better view once everyone stands up (the Initiative seeks an America where as many people go to college as possible). For many, many people, college is a waste of money. I'm not saying people shouldn't go to college, but we have to remember to work on what happens when they get out.

The other pillars? 1) save for retirement, 2) workers equipped with the tools of management (yikes, talk about an uneasy managerial class! 3) build wealth and own a home, and 4) afford health insurance. I commend the initiative for raising problems up to a more visible place in American politics, but honestly believe this is a very effective game plan. The main problem, however, rests in what happens between the ears of many Americans: trying to get ahead is not the answer to any problem any working American faces. More on this another time....

Bye Bye Wage Hike

2006-07-19T11:02:00.000-05:00

I previously posted about a strong Democratic push to block any Congressional pay raise until Congress agreed to raise the federal minimum wage from its 1997 freeze at $5.15/hour. Well, that didn't happen. Congress got their pay increase and the federal minimum wage remains at $5.15/hour--just as it approaches a 51-year low in buying power. The federal minimum wage may be symbolic more than anything, but it is quite a symbol. It identifies the lowest level of pay we, as a nation, believe a worker deserves. In the richest nation in the world, a person who works full-time all year can barely make ends meet. The lowest paid workers live in states represented by individuals earning $171,800 per year. A full-time minimum wage worker (at the federal level) can hope to earn under $11,000 per year. So if that worker chooses to work two jobs for a combined 80 hour week, he can hope to earn under $21,500 without a day of vacation.

Those who cry out "In $5.15 we trust" claim that increases will upset our free market economy and cause a drop in employment. Others scream out that we're debating about high school kids who work in malls and drive their parents BMWs to work. Thankfully, social commentators like Barbara Ehrenreich (Nickel & Dimed author) continue to quietly point out the flaws in those arguments. You can check out Ehrenreich's most recent post on minimum wages in her blog here. Previous increases in the minimum wage at the federal and state levels have not shown the negative employment effects cited. And certainly, some minimum wage jobs are filled by high school kids, but research indicates that this convenient stereotype only applies to about 20 percent of minimum wage workers.

I don't think I've ever discussed minimum wage in this blog without at least mentioning the Earned Income Tax Credit and similar programs, I want to point that out here again. Certainly, no discussion of minimum wages can be fair and honest without pointing out that programs like the EITC has increased the amount of money in our lowest wage workers' pockets at the end of the day. But such increases are not enough to compensate for the loss in buying power of the minimum wage, the programs are not utilized by a decent portion of the eligible population, and they are considered a hand out rather than truly "earned income" by many recipients.

It is worth noting the continued momentum at the state level previously discussed. I've noted that the federal minimum wage is symbolic more than anything for the majority of minimum wage workers in this country. So while I do find it significant that the federal minimum wage remains stagnant (and I find Congressional justifications disturbingly telling), minimum wages are actually rising throughout the country. Montana and Nevada will consider a raise in November. Momentum is on the rise in Ohio, Arizona, Missouri and Colorado to get a ballot initiative together. And other states are moving ahead with further increases in Pennsylvania, Maryland, North Carolina and West Virginia. As I previously mentioned, recent increases were seen in Arkansas and Michigan (a tribute to ballot initiatives pressuring the legislature). Delaware, Maine, Rhode Island and Massachussets will soon join Arkansas and Michigan.

To conclude, it is my belief that the lowest wage workers should be paid at a level where a full-time worker can afford basic necessities without having to work 80 hours weeks or stand in line at a food pantry. But what truly bothers me is the offensiveness of this omnipresent $5.15 figure. The minimum wage should be a livable wage, or should not exist at all. I don't see the point in keeping the wage at $5.15/hour. Abolish it or update it--but keeping it stagnant is patronizing.

Barriers to Medicaid

2006-07-14T09:37:00.000-05:00

Taking a break from my earlier subject, I wanted to just mention a development in Medicaid that many may now be familiar with. On July 1st, a new Medicaid rule took effect that required proof of citizenship by all Medicaid recipients.

Advocates for the new rule, such as Representative Charles Norwood Jr. from Georgia, point to "the outright theft of Medicaid benefits by illegal aliens" and hope this rule will preserve Medicaid for our citizens. Reports by mayor, advocates for the poor and the elderly, and articles from papers such as the Washington Post, however, argued that this idea is a lot worse than it sounds. In fact, millions of current Medicaid recipients may find it difficult or impossible to comply with the rule.

In the past, most individuals could simply sign a statement as proof of their citizenship. Now, a homeless person must present a birth certificate or passport. The same is required of elderly African Americans born in the South where birth certificates were apparently not consistently provided. And lest we forget the mentally disabled who may not have access to any documentation whatsoever, yet alone official documents proving citizenship.

Advocates of Medicaid recipients filed suit in federal district court on June 29 challenging the new rule's constitutionality. Perhaps in response to the critics, or in an attempt to pre-empt a hearing by the federal court that very next day, the White House announced exemptions to the rule for certain individuals. Now approximately 8 million recipients will not be required to provide additional proof of citizenship. Medicaid administrators claim the exemption is intended to apply to the same groups mentioned above as those who may find complying most difficult.

Yet the lawsuit remains pending. The Administration made its announcement in time for the July 7 hearing, and an attorney for the plaintiffs put the new exemption in perspective:

We are pleased that the administration will spare 8 million citizens from the harm caused by this law. While the plaintiffs are thrilled that new regulations protect some of the most vulnerable Americans, we are not out of the woods yet. There are still 40 million Americans who must comply with this law or face loss of coverage. This includes disaster victims, the homeless, the mentally disabled, and foster children.

The next hearing is coming up on July 28. I write on this issue for obvious reasons--Medicaid is fundamental to the poorest and most vulnerable individuals. Our representatives pursued this legislation under the Debt Reduction Act. I only want to point this out. You can come to your own conclusions.

Drawing the Line

2006-07-05T10:28:00.000-05:00

I think it is important to explore the determination of poverty in America as it is directly related to how we view (and determine) assistance to low-income families. I previously asked: how much is enough? That question has not been answered, nor has it been fully explored. A related question is: how little do you need to be considered poor? I firmly believe these questions must be answered before we can talk much more about wages (including the minimum wage) and public assistance for low-income workers (including the EITC). Some of the ways these are all related (for better or worse) should become clear over the next few posts and I will briefly introduce the relationship before concluding this post. Here, I'm just giving a brief intro that I hope isn't too painful.

Two figures are relevant today in determining who is poor in America (from an official standpoint): the poverty thresholds and the poverty guidelines. The most concise explanation of these and their differences is here. In summary, the threshold is used by the Census to determine "who is poor" each year, while the guidelines are a simplification of the threshold used for administrative purposes of various federal programs.

The initial poverty threshold set the "line" at $3,000 in the early 1960s. Adjusting for inflation, the original $3,000 in 1962 dollars is $18,039 in 2004 dollars. That falls between the 2005 poverty guidelines for a family of three ($16,090) and a family of four ($19,350). In 1969, the poverty threshold was indexed to the Consumer Price Index.

But are the methods for arriving at these numbers accurate? In other words, is this really the best way to determine poverty? Some argue that housing and health care take up a larger percentage of income today then in the past. Recently, gas prices clearly hit home for poor families more than ever. Another criticism is that these numbers are applied across the board to families living anywehre except Alaska and Hawaii. And still other criticisms abound. Don't we care more about who is in the family rather than just how many people? The "poverty line" is the same for a single mother of two as it is for a married, dual-income couple with one child (a similar criticism I'd make about the minimum wage, and one of the more intelligent and effective aspects of the EITC). Particular criticism has been directed to the Census' release of its latest report on February 14, 2006. Particulars here will have to wait.

One of the ways federal and state agencies have handled the inadequacy of the poverty figures is in relaxing the eligibility requirements of certain programs. Often, the poverty guidelines are used as a reference, with program eligibility set at 125%, 185%, etc. This is easy to see in Colorado, using the website referenced earlier. The eligility requirement for the Colorado Indigent Care program is 185% of the 2005 (federal) Poverty Guidelines for a family of four. This is for a program specifically targeted at imporverished individuals!

More generally, the Colorado Fiscal Policy Institute's Self-Sufficiency Standard for Colorado estimates that the poverty level, in reality, is two or three times higher than the federal guidelines. CFP estimates that a single-parent with an infant or preschool-age child required $44,000 merely for "basic budget needs" in 2005. This is rather dramatic, really. The minimum wage for a single mother in Colorado should then be about $21/hour. That number could drop with an effectively implemented federal and state EITC, an entire exemption from state and federal income taxes, and other state assistance to preserve income otherwise allocated for food, housing, child care, etc. Playing with these numbers very briefly in my imaginary world, the minimum wage for a single mother with a young child in Colorado should really be set at about $15/hour. These are controversial points, with little grounding in reality, but I am throwing them out there to point out (or begin to point out) the relationship between poverty determinations, our nation's lowest legal wages, and state assistance targeted at working individuals (like the EITC).

And Colorado is just one example. Some could argue that the guideline is going to be an average of sorts, resulting in a low "line" for states with higher costs of living and a high "line" for states with lower costs of living. But I'll attempt to show that this is a flawed argument on many levels.

I'll end there for today.

New Look

2006-06-30T15:32:00.000-05:00

Same blog -- new look.

I received enough complaints about the black (both for reading difficulty and solemn intimidation) that I thought I'd try something a bit brighter. I tried to keep the look very simple and clean like before.

One of the only substantive differences here is the addition of the DONATE area on the right sidebar. For now, it just sports your humble blogger's favorite charity (Second Harvest), but may soon feature additional charities or have a single charity rotated on a monthly basis. We'll see. Of course, I do not get anything from you clicking through my link, and I have no personal or financial connection with Second Harvest.

Feel free to suggest anything new or point out charities that might be appropriate for featuring on this blog. You can always post comments here or write me at socialjusticeblog@gmail.com.

Wage Hike

2006-06-30T10:53:00.000-05:00

The minimum wage is is the news on many levels lately. Yesterday, Massachusetts raised its minimum wage to $8.00. I found this personally interesting because it brings Massachusetts up to nearly the highest minimum in the country, and because Massachusetts was the first state to deviate from the federal minimum (way back when).

Additionally, New Jersey's minimum is set to increase from $6.75/hour to $7.15/hour on October 1, 2006. New York's minimum will experience the same hike, but effective January 1, 2007. Also on January 1, 2007, Hawaii's minimum will jump from $6.75 to $7.25, and Connecticut up to $7.65.

As a reminder, the minimum wage is frequently set at the state level. (A nice map is available from the Department of Labor here.) You see three possibilities:

1) the state has no minimum wage law so the federal minimum wage ($5.15/hr) controls;

2) the state has a minimum wage but it is the same as the federal or indexed to the federal so you'll see the same wage but it's technically a state law (this has been easy of late because the federal minimum has not changed since 1997); or

3) the state maintains a minimum wage higher than the federal minimum (this could be either a fixed amount or, as is the case in a handful of states, indexed to increase with inflation).

The only thing a state can't do is maintain a lower wage than the federal minimum. (Okay, Kansas actually does maintain a lower minimum wage at the generous level of $2.65/hour, but it is irrelevant as the federal minimum supersedes any lower state minimum.)

And at the national level, things are getting heated. The Democrats have vowed to block any Congressional pay raise until Congress agrees to increase the minimum wage. Congressional pay is set to increase by $3,300 on January 1, 2007. While the federal minimum wage has not increase beyond $5.15/hour since 1997, Congressional pay has increased over $31,000/year since 1997. I can't say I find this parallel as significant as the Democrats make it out to be, but the Democrats clearly believe the argument amounts to a nice sound bite, and I'm in favor of anything that raises wages.

POVERTY WAGES

As CNN points out in the article referenced above, the federal minimum leaves a family of three $6,000 below the poverty level with a full-time worker earning merely $10,700/year. Unfortunately, even the Democrats' proposed increase would leave a family of three about $1,700 below the poverty line. (And anyone familiar with my view of the poverty line knows I join those who consider it an antiquated number out of touch with reality.)

All that being said, the EITC (at the federal and some state levels) more than makes up for the difference. Thus, (excuse the sarcasm) we can celebrate that a full-time worker, with tax advantages, has finally breached the (probably inaccurate) poverty line.

LARGER SIGNIFICANCE

If the Democrats have their way, the federal minimum will increase in 70-cent increments until it reaches $7.25/hour on January 1, 2009. As mentioned above, many states already maintain minimum wages higher than the federal minimum. Yet even with the first 70-cent increase to $5.85/hour, 26 states will be faced with a federal minimum higher than the minimum in effect the day before. Naturally, then, this increase and additional 70-cent increases through 2009 can be expected to correspond with even larger increases in many states.

Enough

2006-06-28T17:50:00.000-05:00

Just how much is enough to live on in America? We've discussed the minimum wage in this blog in numerous posts over the last 6 months (such as here). One could certainly be forgiven for thinking that the minimum wage is set so that a worker making the minimum wage and working full time all year would earn enough to have the bare minimum (that is, three meals a day, adequate clothing, adequate shelter). A more complex but realistic approach would take into account all social programs available to such a person (including the Earned Income Tax Credit). Thus, if a person receives $3000 he could logically afford to earn $3000 less in wages that year.

But really, what is the minimum amount a person needs in America? Of course, that question has many correct answers as a man in Bentonville needs less to afford food, clothes and shelter than a man in New York City. We could use an average cost of living -- say, the "Peoria" cost of living.

Then there's family size. Adults must be able to provide for their children if the state does not provide the child with his or her basic necessities. Take a couple with two children. If both parents are expected to work, we could set their minimum wage at the amount necessary to pay for the family's food, shelter and clothing (keeping in mind all relevant state assistance). But we'd also need to add the expense of child care for two children. In the alternative, one parent could work and the other stay home. Then we could remove the cost for childcare and set the minimum wage at the amount needed to support a spouse and two children.

Of course the minimum wage does not consider such particulars. If Target pays two people the minimum wage in Illinois, the company does not care whether one person is a teenager living with his parents and the other is a single mother of two. But these are important issues to consider in concluding the appropriate level for the minimum wage. I will add that the EITC referenced above DOES attempt to take such particulars into account. A single individual with no children may receive almost nothing from the EITC, while a single mother of two might receive a couple thousand dollars a year. The precise amounts can easily be concluded but for this dicussion they are irrelevant.

The minimum wage has not increased in nearly a decade. According to research conducted by the Economic Policy Institute (EPI), the buying power of the minimum wage is now considered to be at a 51 year low. Even since the last minimum wage increase in 1997, the buying power of $5.15 has dropped about 20 percent. (As implied above, programs like the EITC have picked up some of that slack, but how much is left in that gap?) One thought is that all wages have fallen at the lower income bracket. But this is not the reality. Fifty years ago the minimum wage was about 50 percent of the average nonsupervisory worker's wage. Today it's about 31 percent. I probably need not mention that incomes for the highest paid workers continue to increase.

An essential question to any discussion of the minimum wage, EITC, etc., is: how much is enough? I'll end the present post here but I plan to consider these issues in greater detail over the next few posts.

(I assure you the posts will not be as few and far between as they have been of late. For anyone who has noticed, thanks for your patience.)

The Rising Costs of SAT Tutoring

2006-06-15T13:30:00.000-05:00

I could dedicate an entire post to the racial and economic bias found in standardized tests across the board. The SAT is no less an offender than any. As one commentator states:

The SAT has been shown to be both culterally and statistically biased against Affiran Americans, Hispanic Americans, and Asian Americans (Roy O. Freedle, Correcting the SAT's Ethnic and Social-Class Bias: A Method for Reestimating SAT Scores).

Besides the arguable racial bias is the SAT and other standardized tests, here is yet another reason why affirmative action is necessary at colleges across America: tutoring costs. The prevelance and cost of SAT/ACT tutoring has steadily increased over the years--and expecially with last year's introduction of the "new SAT" (see, for instance, here, here, and here). Now, however, the best tutoring appears not only to be a difficult expense for middle class and working class families, but an rather an impossibility. There are some indications, for instance, that the better SAT tutoring in Manhattan can cost nearly $25,000! More common are programs like Kaplan which can now cost nearly $1,000 for the SAT, and private tutoring at a less prestigious level, which still frequently costs over $100 per hour.

The point to all this is simple and I'll end it here, wealthy Americans appear to be paying more and more for tutoring on college entrance exams and it looks like the trend will continue. With stagnant wages in middle and lower class America, it leaves the better programs out of the average American's grasp. Maybe that's not surprising to anyone; maybe it is something to keep in mind when considering affirmative action at colleges across the country.

Say Hello Again After 2010

2006-06-12T10:41:00.000-05:00

The estate tax, previously discussed in this blog here, made headlines again last week. As many of you are aware, estate tax opponents (most notably President Bush and many leading Republicans) sought permanent repeal of the tax (which declines until fully repealed in 2010 but returns in full in 2011). The opponents failed after the bill to repeal the tax passed in the House but failed in the Senate.

As previously discussed, the tax was put forward by opponents as costly to many Americans and to our economy. This is a questionable position at best, and costs in reduced tax collection was estimated at $700 billion to $1 trillion every decade once the effects are fully felt (this comes from a study by the Joint Committee on Taxation).

A lot of people have always found this heated debate amusing. There's something sadly humorous about Republican presidents pointing to American farmers as the victims of the estate tax--then when the bluff is called they cannot point to a single farm that was lost to the tax. There's something oddly funny about a debate where nearly all Americans seem to have picked a side, yet 99 percent will never see its effect. We're talking now of a tax that doesn't even touch the estates of married households until they top $4 million at death. (I particularly like the way a Seattle paper puts this all in perspective. Discussing the tax in the state of Washington, the article estimates that the tax is literally felt by a mere 210 families. The amount lost in tax from those 210 families is enough to fund education for every other family in Washington state.) There's something funny about a debate bankrolled on one side by some of the wealthiest Americans (real estate moguls, retail giants, etc.) and bankrolled on the other side by even richer Americans (Bill Gates Sr. and others).

And I can't help but find it amusing that in some ways estate tax opponents have been equally met with so success and failure. Just look at an article today out of Arizona where a Scottsdale man discusses how his 92 year old father, after a lifetime of hard work as a house painter, just barely missed the estate tax cut-off. (Here, we see that Roger Dellinger, like many average Americans, is sucked into the propaganda--for I doubt that his father died anywhere near the top 1 percent of our nations wealthiest individuals.) And then the opponents have equally met failure, as it looks now like we will say hello again to the "death tax" in 2011.

Finally, the Democrats must be complimented on a rarely skilled naming effort when the countered the "death tax" with the "Paris Hilton tax." Apparently America's farmers don't have much sympathy for Paris Hilton--even after a couple seasons of The Simple Life.

Myths and Realities (IV)

2006-06-07T22:01:00.000-05:00

All in all--and contrary to the conventional stereotype--the overwhelming consensus among [welfare] recipients was that working in the labor force constitutes an important and essential part of being an adult....

--Mark R. Rank, Living on the Edge: The Realities of Welfare in America.

As Mark Rank points out, a major stereotype towards welfare recipients is that they would rather not work. In other words, that recipients have no incentive to work if they recieve welfare benefits. I find this logic appealing because it makes sense. If I didn't have to work I probably wouldn't. And yet the empirical and anecdotal evidence indicates the opposite for welfare recipients. Let's look deeper.

One reason the stereotype is popular goes to a related stereotype of recipients: that they are lazy. (I discussed that in a previous post here.) With this stereotype, we're left with the image of welfare recipients as good old American couch potatoes, getting up only to pull the welfare checks out of the mailbox. That stereotype then interlinks with another: that recipients are dishonest. Here, the view goes, recipients are more likely to go out and sell food stamps for money (this is illegal) or forge AFDC documents than they are to get a job.

Yet the evidence mentioned above indicates that most welfare recipients want to work. Does that mean the stereotypes are wrong--that welfare recipients are not lazy or dishonest? Not necessarily. I hope that at least gives mild pause to those of you who think I type with my left hand.

The old stick or carrot debate understands that a person might take a step in a certain direction because he is pushed or because he is pulled. Welfare recipients may not be drawn to work so much as they are pushed from welfare. At the very least, the possibility must be considered. Indeed, I've repeatedly discussed how miserable an experience welfare appears to be. Rank talks about this in Living on the Edge, as does David Shipler in The Working Poor, Loretta Schwartz-Nobel in Growing Up Empty, and, to a lesser extent, William Julius Wison in The Truly Disadvantaged. However, to say welfare recipients only work because welfare is a pain in the butt is like saying I don't kill because jail would be pretty miserable.

Another alternative is that people work because they are greedy. Such a theory is seen in some of the interviews in books mentioned above. In other words welfare is fine for those who don't mind never eating out and buying clothes only when absolutely necessary. Authors like Juliet B. Schor in The Overspent American argue that out culture applies ever-increasing pressure to spend. Even with credit cards and bankruptcy, you eventually have to make money to spend money, and such pressures may explain the appeal of working.

And on the other hand welfare certainly pushes some away. Mark Rank discusses at length the stigma and lack of privacy associated with welfare programs. Guilt, peer pressure, and a decreased sense of worth pressure many to leave welfare as quickly as possible. And some programs require so many disclosures so frequently, that people feel they have no privacy from the state. And those who don't care about the privacy may nonetheless find the constant disclosures and documentation requirements demeaning.

So why are so many people on welfare? Easy question to write; tough question to answer. Sometimes there are not enough jobs. Sometimes people in need of work are not qualified for the jobs available. If a factory closes, 100 nearby available jobs may still leave a person unemployed if he cannot successfully be retrained.

Sometimes employment is not the issue--but rather compensation. Low wages can leave a person in need of supplemental income. The popular book Nickel and Dimed indicates just how hard it is to survive on minimum wage jobs--or anything low wage at all. Barabra Ehrenreich's findings are only supported by David Shipler in The Working Poor, and many other authors. The same is true for jobs with inconsistent compensation. (Illegal immigrant) strawberry pickers in Eric Schlosser's Reefer Madness are not the only manual laborers to find themselves in seasonal work. Welfare benefits are needed to fill the gaps when you don't make enough all the time or don't make enough some of the time.

And then there are all the other potential explanations. I will not go into them here but suggest possibilities like injury and disability. If I fall and find myself on crutches tomorrow, I can still work. I have a desk job and I can have pretty much any injury not associated with my brain and still keep my job (and my paycheck). But Ehrenreich's jobs in Nickel and Dimed, for instance, are far different (and yet ever so common). She couldn't work as a waitress with a broken leg, or clean rooms at the hotel if she was stuck to a bed for two weeks. The differences between white and blue collar jobs are many, but often the many small differences matter a great deal when it comes down to how much you take home each week.

For these, and many other reasons to be discussed later, welfare is necessary for many on a temporary or permanent basis.

A Rare Plug

2006-06-01T10:01:00.000-05:00

I've never plugged a charity or organization on this blog and have no plans to do so in the future, but here goes a rare plug for Second Harvest. I've believed strongly in Second Harvest since I was a teenager and I believe in it even stronger now. I recently made another periodic donation and I hope to donate one week's pre-tax salary to the organization each year in the future.

Second Harvest has an intersting history and I can forward on some suggested reading to anyone intrigued, but today it stands strong as the #1 organization working against hunger. (And we're not talking policy here--their work fits on the tines of a fork).

Beyond being massive, the organization is extremely efficient. This has always been an area of pride to Second Harvest and no less so today. Charity Navigator rates Second Harvest's efficiency as nearly perfect (39.81 on a scale of 40). The CEO does earn over $335,000 a year, and that disturbs me slightly, but it is not out of line from other super-efficient charities.

And while Second Harvest seeks to help every American in need of food assistance, a special emphasis is made to help children through schools and elsewhere. In researching for this blog over the past few months, I have read about many gaps in assistance programs. One example points to school lunches (and breakfast programs) that work great on school days. But problems occur on weekends and over breaks. Second Harvest addresses that problem with its Backpack Program. Such attention to detail is what we need regardless of the scope a policy or organization seeks to address--because every tiny gap matters to millions of people.

Yet another important aspect of Second Harvest is its focus not only on quantity (though quantity matters) but also quality. As cheap as I find produce at my local grocery store, Americans in every book and article I've read on hunger complain about the cost of fresh fruits and vegetables. Second Harvest's Fresh Food Initiative address that problem by trying to get produce into the hands of the hungry. As the website indicates, they were able to put 311 millions pounds of produce into those hands in 2005 alone.

Check it and please keep it in mind. Second Harvest helps where help is needed day in and day out. They are able to leverage every dollar donated to help put food in a hungry American's stomach.

There's the plug. Thanks for listening.

Myths and Realities (III)

2006-05-30T21:05:00.000-05:00

"Americans don’t like to talk about poverty. We don’t like to believe that the wealthiest nation in the world has families without the resources to afford basic necessities, such as decent housing and sufficient food, or basic services, such as medical and dental care and quality child care. But American poverty is a reality."
--National Center for Children in Poverty (NCCP)

I discussed this concept in a prior post. So by now it is clear that I view many of the popular views on welfare to be convenient. But, of course, convenience is not necessary a sign that they are wrong. In this case, though, I firmly believe they ARE wrong. Often I see public perceptions are incorrect simply because they oversimplify the truth. This isn't to say that the public is stupid, but to realistically admit that can can't all have a deep and current understanding of a wide range of issues. That task would amount to a full time job in and of itself. Here, though, in the arena of social justice, I see the public perceptions as wrong not because they fail to grasp the "whole" truth, but because they are flat wrong--180 degress off from reality.

There is no question that finding reality here is a bit like trying to hold an egg yoke and I inherently have some bias like everyone else--including every commentator and researcher I quote. And on the other hand there's no question that a soccer mom is a less accurate source for welfare fertility rates than a seemingly respectable empirical study. All this is really an introduction to the third part of the discussion on myths and realities: the nitty gritty.

We have to talk about fertility rates amongst welfare recipients, reasons women on welfare have children, and how the welfare system treats those children. Hand in hand is the public perception of welfare mothers. Who are they? Why are they giving birth? And how does America treat the mothers and the children? There is also the policy side. Which policies do Americans generally believe to be effective? And which policies actually are effective? The same must be discussed regarding social mobilization, employment (even at the bottom, stagnant level), the elderly, the disabled and injured, the length of time one spends on welfare (and why), and onwards. This isn't just welfare but poverty in America. Many significant perceptions are dead wrong. I promise this is the last introduction to much needed specifics.

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On a personal note, the postings have been rather sporadic lately, and I thank you for your patience with me. I would like to comment on some feedback that I found disturbing. Some people have commented that this blog is "over their head" and I really want to minimize that feeling as much as I can. Not knowing what the EITC means or how it works makes you nothing short of normal. And that is probably one of the better known terms and concepts discussed in the realm of social justice.

Please feel free to use two methods to ask me and other readers anything at all, no matter how basic:

1) post comments -- so few people post even when many speak with me verbally. This blog allows readers to post in the comment section using your real name and email or anonymously; and

2) feel free to email me directly at: socialjusticeblog@gmail.com (always displayed at the very bottom of the page).

To the extent that the comments are long, boring, dense, etc., these are things I continue to struggle with when trying to handle confusing and complex concepts in a few paragraphs a person may glance at over lunch. All I can say now is that I know it needs work.

Myths and Realities (II)

2006-05-25T10:17:00.000-05:00

Later posts will discuss more myths and posit additional realities, for a study on public perception of welfare recipients suggests not only that we are off, but that we are completely off in many of our popular views. In other words, where the public may generally believe that welfare recipients have too many children--and some believe that welfare recipients have more children to get more benefits--the evidence to be discussed later indicates that welfare recipients have less children then the general public, and share the same concerns about pregnancy and additional children as everyone else.

The same appears to be true across the board. And where the occasional stigma may prove true, it should be accompanied in understanding by the true cause. If it were found that welfare recipients were more likely to get divorced then the general public, the finding could lead to a stigma that welfare recipients cared less about maintaining a family structure. That view would help justify the downward mental gaze fixed on a single mother when one thinks that her situation, while unfortunate, was avoidable. But the truth may lie behind a different door. Alternatively, I could propose the possibility that welfare recipients have more stress and less positive outlets than the general public--thereby leading to a higher divorce rate.

So there we have set out some future discussions on stigma where the majority are flat wrong and the minority are misunderstood. I was pretty surprised to find that as well and don't blame skeptical readers. More to come. But first I want to expand on the last post. There, I discussed some of the reasons it is important to look at myths and realities behind welfare and welfare recipients. Here, I want to set forth some reasons why false stigmas are readily perpetuated throughout the public and the government. At first I thought that such a discussion should come at the end--after looking at which views are right and which are wrong--but I came to the conclusion that the utility of such ideas should be on one's mind when considering whether stigmas are true or false.

For the record, references to studies below often come from a well done book called Living on the Edge: The Realities of Welfare in America, by Mark Rank. As one commentator points out, the stigma surrounding welfare programs often plays a functional role in rationing scarce resources, recruiting and maintaining a labor force, and preventing "deviant" behavior (Loewenberg 1981).

Someone using the Britain's NHS would understand the way that subtle and not so subtle discomforts can be used to achieve a desired result. If it takes a really long time to get a test done people will be less likely to request the test. If, as I once heard a Harvard MPH professor posture, the waiting rooms are made uncomfortable (hard seats, no reading materials, hot room, etc.) people will be more likely to think twice before seeing a doctor. Thus, stigmas and discomforts surrounding the welfare system help make the experience unpleasant enough so that the system is utilized only by those who need help so badly they are willing to deal with the consequences.

I would also point to similarities in bankruptcy. While the vast majority of debtors are honest people in need of help, the bankruptcy system is stigmatized through emphasizing the few dishonest debtors. This helps make people feel guilty about pursuing a discharge of their financial obligations. It adds a powerful, intangible consequence to filing. Some reports indicate that nearly twice the number of individuals who file bankruptcy would benefit from filing. Why doesn't the other half file? No one knows, but the point here is that a review of the numbers is not enough. One's financial situation may be improved after filing, but the stigmas surrounding bankruptcy surely add an intangible disincentive that keeps some of that 50 percent out of the courts.

To add an even more extreme analogy, consider prison. The idea of incarceration alone is not pleasant. Even the threat of being locked in my apartment with an abundance of food for two years would be enough to serve as a deterrent for me. But when one really considers prison as a deterrent, the thought of assault and rape come to mind above the true, official punishment of confinement. Here, you can see with prison just how unmotivated the government might be to curb resultant consequences. The rumors and realities associated with life in prison just make the thought of being there that much worse--and the deterrent that much more effective.

Thus, the stigmas surrounding welfare help maintain the system as one of last resort, and reinforce the view amongst even its participants that the system should be used--if at all--for the shortest period possible. As another commentator states: "Afraid that handouts will encourage dependency, assistance programs stigmatize those who receive benefits to prevent them from asking for more, and to make it clear to others that there is an emotional price to pay" (Goodban 1985).

A state government could easily justify plastering signs warning against welfare fraud and employing armed guards at welfare offices as a means of ensuring safety and proper use of the system. But in reality, a culture is created that makes welfare recipients anxious and embarressed while applying for benefits. A person may then hesitate to return. In fairness, Mark Rank notes that he observed welfare intake workers to be sensitive to applicants' unease.

Examples of reinforced stigmas abound, but need not be discussed here. The point is simple: the stigmas surrounding welfare, no matter how false, are an integral part of the welfare system as we know it. The stigmas and the policies must be changed together.

Myths and Realities

2006-05-17T09:48:00.000-05:00

It has been a bit since my last post. There, I discussed some of the common stigmas attributed to welfare recipients (and often to low-income individuals and families regardless of public assistance). Somewhat ironically, I wrote the last post in reaction to a comment I felt needed further discussion. Yet after the post I have received many comments (though almost none formally through the blog) from people who disagree with me. People either believe that the stereotypes I raised up as myths really were realities, or perhaps simply disagree with my analysis. It has kept me thinking and researching ever since. And thus, the taste of this topic remains and must be chewed on a bit more.

This isn't really a true follow-up post here, for my need to read up on this subject more has been part of the delay and continues. Rather, I thought I might take this opportunity to emphasize the importance of the topic. When it comes to something like hunger, I am well aware of how far I am to the left. I'd be the first to advocate that no American should ever go hungry regardless of his personal decisions. The argument is instantly made more palatable when considering children--for how can we let children go hungry as punishment for their parents' actions? This is no more American than making children pay for parental debts.

Let's go back to the more extreme argument: that an adult capable of earning money chooses not to work. Many (probably most) people would disagree with me and say that if he chooses to sit around all day, his resultant hungry is nobody's problem but his own. If he is ill and absolutely cannot work, then most people would advocate state assistance at least to the level of providing basic food and shelter. And now we are back on topic. For it is a question of cause that brings about a significant difference in attitude towards the problem and solution to this man's hunger. This is described further in the book Lives on the Line: American Families and the Struggle to Make Ends Meet, by Martha Shirk, Neil Bennett and J. Lawrence Aber. As one summary indicates:

The authors describe how public attitudes toward the poor directly affect the way we address the problem of poverty in our country. For example, if Americans believe that causes of poverty are beyond the control of the poor, and that families are actually held back from financial independence because of existing social structures, then we are more likely to address poverty through public policies and programs. If we blame the poor for their circumstances, believing that poverty is rooted in their mistakes or character flaws, then we are more likely to dismiss their plight entirely.

In addition, I would argue that the plight may not be dismissed entirely but the reaction changes. If we believe that welfare recipients are predisposed to cheat, lie and steal, we would create a system with many of the attributes seen today--welfare offices filled with warnings regarding welfare fraud, frequent walk-throughs in waiting rooms by armed security officers, news stories focused on welfare abuse, ubiquitious reports of case workers treating welfare recipients with cold suspicion, and official forms and policies focused on preventing abuse. Here we see a mentality that is more troubled by one ineligible person receiving benefits than by one eligible person not receiving benefits.

Thus, for most people, why a person is poor, hungry or homeless matters a great deal. And to me, it matters in the sense that policies are created based on such views. Therefore, the policies can only be effectively adjusted if the attitudes underlying the policy choices are reconsidered. Turning the light on in the closet may effectively keep a child feeling safe from monsters, but if the monsters are not the real reason the child can't sleep at night, getting a brighter light and cracking the door open wider provides a no more effective solution. All you're doing is wasting energy and making yourself feel better because you tried.

Lazy, dishonest, and immoral

2006-05-09T15:32:00.000-05:00

A comment on my recent post on the immigrant boycott oddly enough shifted directions to discuss welfare recipients. The comment particularly bothered me because it hit directly on a few common (mis)perceptions surrounding welfare recipients—namely that they are lazy and dishonest. I responded to the comment before but want to expand on it slightly here. (And just to be clear before I begin, I’m using the word “welfare” really to refer to all social services related to welfare: WIC, EITC, food stamps, disability benefits, etc.)

One unfortunately common belief surrounding welfare recipients is that they are lazy. That is to say that they are “disposed to idleness” to steal a dictionary definition. The difference between being on welfare and not, under such a belief, is work-ethic and a desire to be independent rather than dependent. Another belief equally unfortunate is a sense that welfare recipients are dishonest. This belief stems somewhat from the first in that a person who is already trying to get as much as he can for as little work as possible might not hesitate to cheat the system. Indeed, the belief is based on the fundamental sense that the system is already being cheated by the welfare recipient for he has not lived up to his end of the bargain in society—that all able-bodies work and contribute. Thus, why should we not worry that a welfare recipient will list 4 children when she only has 2, or will under-represent income to stay eligible for food stamps? Taken to an even more dramatic level, it could be said that such individuals are immoral as they lack fundamental values (a sense of right from wrong).

I have commented before that these theories are also utilized without hesitation because they make sense to us. It simply makes sense that lazy people should be poorer than harder working people. The same could be said with honest versus dishonest—short term gains aside, the logic would provide that you eventually get what’s coming to you. And further, we often define who we are by who we are not. Welfare recipients don’t just have less in their bank account, they are different people with a different moral compass and a different sense of values. Or so the argument and logic goes….

If you haven’t gathered already, I strongly disagree with this logic for reasons not the least of which includes its simplicity. Poverty is an extremely complex problem. If it wasn’t, we probably wouldn’t have millions of people in America in 2006 unsure when they will eat again. We wouldn’t need massive lobbying campaigns to get wages a level where a man doesn’t have to spend half a day’s pay to take his wife to the movies. Sometimes complex problems have simple explanations. I don’t believe poverty is one of them.

But forget what I believe. An article I previously discussed from the Texas Psychologist states that:

[P]erceptions of the poor tend to reflect attitudes and stereotypes that attribute poverty to personal failings rather than socioeconomic structures or systems.... Stereotyped beliefs about low-income people are widespread and serve to maintain negative attitudes and attributions such that there is a “distancing from the poor” by those in the middle and upper classes.... Reasons for these findings have been attributed to people having a high just world belief--a belief that the world is a just place, and that people get what they deserve.... Others have suggested Americans favor the use of individualistic/internal attributions to explain poverty because it implies an element of individual control.

I want to just add one point before I close: the media. Normal, honest people do not make good news stories. As author Joel Best states in More Damned Lies and Statistics: How Numbers Confuse Public Issues:

Examples compel when they have emotional power, when they frighten or disturb us. But atypical examples usually distort our understanding of a social problem; when we concentrate on the dramatic exception, we tend to overlook the more common, more typical--but more mundane--cases.

Much more exciting is the individual arrested for committing welfare fraud, or the woman who is caught after years of collecting food stamps for a long-diseased husband. But this is the closest most upper-class people get to the welfare office and many social services in general, and the perfect prey for the media. I would like to say that empirical evidence strongly supports my belief that welfare fraud is ridiculously exaggerated, but I cannot. The numbers are all over the place on this subject.

The whole point of this post is to emphasize the need for educated people to look deeper.

Poverty and Mental Health

2006-05-04T11:03:00.000-05:00

Causation and correlation are often confused, and no less so in the arena of social justice. Why, for instance, is a single black or hispanic mother 40 percent likely to be poor? This is a very complicated question, and answering it requires reviewing many factors that may simply be related or may actually contribute to the poverty.

As the Texas Psychologist recently pointed out the Winter 2006 edition, "persons with lower socioeconomic status (SES) have consistently been found to have higher rates of psychiatric disorders...." The magazine points out two competing explanations for the above observation: (1) "stressors involved in being poor are believed to result in increased levels of mental disorders," or (2) "those with mental illnesses lose status and move to the poorest and lowest levels of society because they are unable to function effectively within higher levels and because of the stigma associated with mental illness."

Yet looking at children, as the magazine points out, indicates that "children in households at or below poverty level had a higher proportion of mental and emotional disabilities than any other socioeconomic group...." Thus, while the mental and emotional disabilities will adversely affect their lives to varying degrees as they age, the state of affairs for poor children supports a view that poverty causes or increases mental and emotional disabilities.

I also want to at least touch upon the significance of higher rates of psychiatric disorders on the poor. For one, this state of affairs only further perpetuates the stigma American society places on the poor. With the added stigma of mental illnes, the poor become not just resented and looked down upon, but also something to fear for they are more likely to be unstable and unpredictable. Of course, this only leads to further social segregation. And for another, high rates of psychiatric disorders makes it more likely that the poor will stay poor and become even poorer. Reports have indicated that psychiatric disorders add to the already heavy burden of poverty, thus leading to more lost work days, limitations on daily activities, and lost opportunities and benefits within our otherwise prosperous society.

Indeed, social mobility can only be stagnated by psychiatric disorders. The same is not necessarily true for the wealthy. Money buys proper care and helps ensure that problems can be isolated--never mixed with additional stressors like homelessness, food insecurity, etc. The American Psychological Association seems increasingly aware of the dangers associated with the improperly treated disorders amongst the poor. Unfortunately, little is understood or advocated outside of the professionals.

Boycott

2006-05-01T15:33:00.000-05:00

I have to share my "favorite" quote with you on today's boycott. Retired Army colonel Jack Culberson said, at a rally in Pensacola, Florida:

You should send all of the 13 million aliens home, then you take all of the welfare recipients who are taking a free check and make them do those jobs. It's as simple as that.

I have to thank Mr. Culberson for epitomising American ignorance regarding immigrant workers and welfare recipients. Mr. Culberson apparently advocates two points: 1) send illegal immigrants back to their country of origin, and 2) make welfare recipients do the jobs of the immigrants.

All that I want to emphasize here is how common the impulse is to join Mr. Culberson in pointing the finger at those who are least to blame. Enough with the stick often used to point and then punish. We need to rethink how to use the carrot. Make it more appealing for an employer to hire a low-income American over an illegal immigrant and there's little doubt who he'd pick. Similarly, the welfare recipient is often ready and able to work if doing so makes economic sense. Sure, we could cut all state assistance, but that is not American. At least a basic level of social services must be provided, and therefore the option of cut them entirely is unrealistic. Already, welfare recipients face an unbelievably annoying, frustrating and dignity evaporating process dealing with multiple agencies practically designed to make their lives even more difficult. The only alternative then is to make working more appealing.

After thinking about it a moment, I like Mr. Culberson's effort (so he gets an "A" in something). Maybe he and others who believe so strongly that immigrants should not be here illegally and welfare recipients should get off the couch, can think of productive, realistic solutions. I'll give him a start: how do you get a greyhound to race around a track? It's not by hitting it on the ass with a stick. That would just get him to run. We he goes from there nobody could know.

Gingivitis

2006-04-28T13:50:00.000-05:00

In writing this blog and pursuing my general curiosity regarding social issues, I have tried to familiarize myself with theories on social programs, taxes, etc. across the political spectrum. An immediately obvious problem with such an endeavor is that few politicians, lobbyists, or policy advocates at think tanks and elsewhere actually say what they mean. And when they do, statements are usually comprised of half-truths and twisted words. Infrequent are the times we start with a problem and work towards a solution and common are the instances when we seek alternative results through proposed "solutions" or invent the problem once we have the goal in mind.

As others have pointed out, Listerine effectively combats gingivitis, but gingivitis never seemed to be much of a problem until Pfizer needed a better way to market a new product. And with that we have the unfortunately eternal problem in understanding policy proposals, theories, concerns and solutions by anyone who might have an interest in the outcome (no matter how tangential or hidden). The question will always remain: is this just the next gingivitis?

To take this blog's most recent example we can use the estate tax. The goal of the Republican party and anyone Republican or not advocating repeal of the estate tax is simple: convince as many Americans as you can that they should be worried about a gum disease called gingivitis. Once you convince them that they should be worried, show them that you have the solution. It's easy actually, just gargle twice a day for 30 seconds and stand up for what is morally right--and the gum disease will go away. Informing people that only the ultra-rich are at risk of gingivitis is not a compelling argument. That information should be avoided.

The average American needs to feel that he is at risk. We're talking the farmer, the small business owner, the upwardly mobile professional, the middle class family who still hasn't given up on the "American dream," the old who will see it faster and the young who will see it eventually. Inform people of the advantages to a healthy mouth. We want people to have healthy mouths. Then they can be productive members of society and be able to enjoy the lives they've worked so heard to earn. If you don't use Listerine the entire American economy will suffer (and that's not to mention the whole moral issue).

So am I saying gingivitis doesn't exist? No, but what if I told you that only the wealthiest 2% of Americans will even be at risk of gingivitis? Then you'd know that Listerine is still a pretty good mouthwash, but saying that gingivitis targets small business owners, farmers, or even rich Americans may not even be dignified by a response from the American Dental Association.

The Moral Highground

2006-04-25T09:10:00.000-05:00

Morals assertions always strain consensus and the area of taxation is no exception. The Bush administration (along with many other Republicans) has made it clear that the estate tax is a moral issue. David Cay Johnston gives a nice overview of the Republican viewpoint in his book Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Rich--and Cheat Everybody Else (you can probably guess where he comes out from the subtitle). Discussions surrounding the estate tax are simply not necessary under the viewpoint that moral issues need not be debated with spreadsheets but with a simple belief in right from wrong.

Okay, but that leaves us nowhere closer to understanding the best path among three choices: (1) keep the estate tax, (2) eliminate the estate tax or (3) rework the estate tax. I don't disagree that the estate tax (or "death tax") is a moral issue. It is morally reprehensible to remove a burden from the rich and shift it downward on everybody else. The money lost from estate tax revenue must come from somewhere unless we are prepared to reduce spending by an equal amount. Combine the estate tax reversal proposals with further cuts on taxation of the ultra-rich and soon the giant sucking sound takes on a totally new meaning for the bottom 98 percent of the income distribution. Tax proposals based on morals alone should dictate a course that leaves those who can afford it least paying the least. There is nothing morally responsible about keeping money in a family with fancy sports cars and vacation homes after death if a single penny of that lost taxation comes from someone working far harder for far fewer spoils.

Republicans are usually pretty good at naming things, and in a headline reading society such a skill is sadly important. But the death tax? I actually find the Paris Hilton tax far more clever. This country is supposed to be a meritocracy. Clearly, all efforts to keep money in the hands of the ultra-rich as each generation passes on advocates an aritocracy. Perhaps we just need patriots with a better understanding of history. Needless to say, dead people don't need money.

In truth, the best public relations move by those seeking to eliminate the estate tax is confusion. Advocates of estate tax repeal capitalize on confusion over who is going to be hit by the tax. In reality, most people will never even come close. Johnston discusses an early Republican strategy to make the public believe that the estate tax takes farms away from families. I guess the thought of Lassie sleeping on a bench in Penn Station is just too much to swallow. But the strategy soon became rediculous when it was clear that no farm in America could be identified as falling to such a result. What do we call that? It's not an eggageration if it's a flat out lie. The estate tax is absolutely irrelevant to all but the richest 2 percent of Americans. And that figure is most likely over-inclusive.

The richest of the rich will remain extremely rich regardless and Paris Hilton will never have to get a job no matter who wins this "moral" battle. All we really have here is morbid trickery.

Baby Steps

2006-04-18T10:37:00.000-05:00

Some of my recent posts, the present one included, seem much less grounded in facts and theories and more so words soaked in my own philosophical ramblings. Indulge me in one more.

I try to keep up with various blogs, websites, and publications of groups focused (directly or indirectly) on overlapping issues of social justice. Of course basic logic and a cursory reading of my posts indicates that hunger tops the list. A less cursory review, but still supported by basic logic, is that separating hunger from other major issues instantly makes any further analysis uncredible. I admit, I was suprised to see RESULTS' 2006 campaign on how to end hunger not even mention hunger or anything related to food. The second highest priority listed is healthcare. Yet I need not chart too deeply into that area for we all can understand that health costs relate to food the minute you choose between spending a dollar on bread or medicine. And that's just the beginning. Housing is also on RESULTS' short list and is equally understandable. You know the landlord is coming for next month's rent with the same regularity as your kid asking for his next meal.

And at the same time none of that seems to matter as much as making sure people eat. Yes, the thought of concentrating all efforts on hunger alone would receive my father's admonishment as being penny wise and dollar foolish. But with a penny and an empty stomach your choices are limited. We need to focus on both, of course, but how can we better focus on hunger? The logistics need work--there's no question. I commend the work of food banks (both wonderful national organizations like Second Harvest and all the tiny grassroots groups I'll never know of), volunteers, and government support (which is sometimes silly and sometimes brilliant). But the system is flawed in ways both large and small. I don't have the space to go into detail here but suffice it to say that a little creativity could lend itself to more effective and efficient distribution of the ever so needed food to the ever so needy.

The above is relatively obvious, but only part of what must be pushed forward as the first step among many. Awareness is the other half. I hear the cynics already, but there is no doubt in my mind of the vital role UNDERSTANDING takes in hunger activism. First I long for a truly credible account of hunger in America. One day I'm just going to have to figure this out myself because few reports on hunger leave a reader with much confidence. And second, that more accurate knowledge can be conveyed to the public. I mentioned the cynics above for many believe that you care or you don't. But what if this is based on a false belief of the situation? If hunger exists at levels anywhere near some reports, then the general public may turn away from the belief that we're an over-eating, couch-planted MTV-watching society and towards thoughts hunger, starvation, and struggle down the street and around the corner. Hunger should be understood as it exists in America, and then it should be thrown at us staining everything we see and touch so that we understand it is part of our country. What you do from there is another question.

Charles II

2006-04-13T10:11:00.000-05:00

Yes, Charles is back! I previously wrote about Charles here. Charles, as a quick introduction (or reminder) is an elderly man I met around lunch one day in downtown Houston. He was probably the first homeless person I bothered to talk to for more than a moment or bothered to help with anything more than coldly exchanging cash for guilt.

I saw Charles again last weekend. Interestingly, I was well outside downtown Houston this time. Charles was over on the University of Houston campus, just outside of the McDonalds by the baseball fields. I walked by him and he asked me if I could help him out. He looked familiar but I didn't really think anything of it. Charles was trying to sell me a ring and/or a necklace for an allegedly substantial discount.

It suddenly dawned on me that this man was CHARLES! I asked his name and we know what he said. Ironically, Charles had absolutely no recollection of me. My last interaction with him left him essentially in tears and me with a somewhat life-changing memory. I tried to job his memory, sure that he was just uncomfortable and couldn't place me at the moment. This never happened. Charles had absolutely no memory of our interaction.

I'll admit this was not my first reaction, but this result is really how it should be. I helped Charles simply to help Charles. This was not about me and it wasn't about my guilt -- which could have been eliminated with a five dollar bill. And the extra money I gave him at the time was also very much for the moment. I hoped it would keep food in his stomach for a week or two, but I hardly taught him how to fish. It was good to see Charles again. For just a second, while I stood there, it felt like there was more at work than just me and just Charles. I hope to see him again.

On a personal note:

I apologize to anyone who has noticed the lack of recent posts. Thank you all for your continued support. Without a hint of vanity, I can say that it gives me great pleasure and great hope to see that this blog has received 1800 hits since its inception 3 1/2 months ago. My last comment regarding visits to this site goes back to the end of February. Since then the site's been getting over 17 hits per day. Let's face it, this is not a sexy topic, and there's lots out there on the internet to combat any desire for procrastination. In short, it is wonderful to see some interest in the topics discussed here.

Thank you,

JML

A Court Unlike Any Other

2006-04-06T09:05:00.000-05:00

I left off the last post on the importance of public opinion in wage "reform" so to speak. (I just wrote and erased a few ways to put this and none seem quite appropriate. This is not really about reform in the sense that many believe our wages are appropriate at all levels--though curiously many times not their own.)

Yet I do not want to put forth an overly passive view of public opinion on wages in this country. As indicated previously in this blog, minimum wage is a topic of serious concern for many individuals and advocacy groups. The ability for states to raise their own minimum wages above the $5.15 per hour federal level has pushed all focus down to the states. ACORN still pushes for increases at the federal level and I certainly believe it is symbolic of our values, yet the practical arguments are better divided in 50. There are many reasons why it may be more appropriate for these decisions to be determined by the states. One such reason is the ability to tailor the lowest wages to the cost of living a bit better. At the very least, a poor worker in California can be happy to receive more than one in Arkansas--only appropriate when cutting the monthly rent check.

Groups on all sides have attempted to utilize the state-specific forum. Sometimes it is difficult to determine who has the advantage when the debate is narrowed, but overall, I would have to side with those advocating wage increases. If for no other reason, the larger the audience, the easier it always seems to be maintaining the status quo.

I discussed the ballot proposal in Michigan previously -- ultimately leading to the passage of a bill by the Michigan legislature. Now Arkansas, among others, sees momentum moving towards a wage increase. Arkansas is one of still many states using the federal minimum (though to be technically correct, some states have enacted their own minimum wages but they are identical to the federal minimum). A recent piece out of Little Rock discusses the group Arkansans Fighting to Save Our Jobs. The awkwardly named group calls a proposal to raise the minimum wage to $6.25 (representing the first increase in nearly 10 years) a "job-killer." Is it? In fairness, the answer is not entirely clear, but I can say with confidence that arguments against wage increases of this sort simply don't add up. More to come on such arguments....

Minimus, Not De Minimis

2006-04-03T16:10:00.000-05:00

It is difficult to leave the issue of minimum wage, or really wages in general. Indeed, looking back over many of my posts, this blog could easily be titled Wages in America, or hopefully a more clever derivative . Wages from the minimum to the maximum, and everywhere in between, provide a foundation for many issues of social justice. I have only begun my tax discussions here, but it is immediately clear now that these will nearly all topics will be grounded in wages (compensation/benefits/etc.). And to discuss the minimum wage with any accuracy requires looking at all other social benefits provided to or available to our poorest workers: federal and state EITCs, WIC, food stamps, unemployment, etc.

Psychologically, wages represent to many of us a fundamental human characteristic: we always want more. Rumor has it that when John D. Rockefeller was once asked how much money a man needed to be happy, he stated: $5,000 more than he has (this comes out to about $111,000 today). The equivalent would be hearing Bill Gates in an interview saying: $100,000 more than he already has – it speaks to human nature or misaligned priorities, or both. But it nonetheless speaks to want many of us want—we want to make more money and keep more of what we make (higher salaries, lower taxes, and so forth).

From a social standpoint, wages can indicate value. I see myself treated differently when I am in a suit and tie compared to sweatpants and a t-shirt, or when I drive up in a fancy car versus a cheap rental. When you have more money people tend to believe you are more honest, more responsible. I see those who make great sums of money act with a sense of entitlement that “allows” them to treat others as though their own time is more valuable. Often this opposite seems more true with a moment’s reflection.

Wages can also indicate the presence or absence of social justice. In a recent article out of Israel, for example, the author suggests that no one in Israel should earn more than 1 million shekels per month (or just under $2.6 million a year), stating that, “this norm is inappropriate. It stands in opposition to most Israelis’ natural sense of justice.” Do our values in America (“as Americans”) differ from a country like Israel that, while tiny, has thrived on innovation like few others? If so, can we rest on the believe that our innovative and economically powerful country has excelled on a history of free market principles, or must these sometimes be reevaluated? There is clearly no tolerance for large companies cheating their workers. Juries have come down hard on companies like Wal-Mart when found guilty of not paying overtime, companies like Starbucks who manipulate the exceptions to white-collar exceptions, and others. In doing so, we draw a line that says, no matter how much we support aggressive, creative strategies and business operations, we do not tolerate THAT.

But a courtroom is not the appropriate venue for most issues of this nature, and the repeatedly successful suits indicate, if nothing else, their failure to correct the problem. A minor sting and a verdict most beneficial to the plaintiffs’ attorney is not a victory worthy of celebration. Far more powerful and generally appropriate is public opinion. We’ll leave off there for a day or two….

Meeechigan

2006-03-29T11:47:00.000-06:00

Michigan passed a minimum wage increase yesterday when Gov. Jennifer Granholm signed the bill into law. The state's current wage sits at the federal minimum of $5.15 per hour -- where it has been stuck for the past NINE YEARS. Now, it will increase on October 1, 2006 to $6.95, then $7.15 on July 1, 2007, and $7.40 on July 1, 2008. In just over a year, the lowest legally paid worker in Michigan will earn an additional $4,160 assuming 40 hours per week with no vacation.

I wanted to write on this for a couple reasons. First of all, this bill came about apparently out of fear that a ballot proposal was about to pass. The ballot proposal sought a slightly lower minimum wage in the immediate future, but differed in two significant areas. For one, it tied the minimum wage to inflation, assuring that the wage would increase every year with inflation without fail. For another, it placed this guarantee in the state constitution, making it far more difficult to ever repeal such a measure.

The second reason I wanted to discuss Michigan's new law is to point to the power of ballot initiatives. Groups that seem tiny in the shadow of powerful lobbying efforts actually can help bring about a better wage for our poorest legal workers. In the future I will point out a growing trend and momentum I see in various other states to raise minimum wages (and a growing religious-based movement in support of increased wages), but here I just want to applaud the efforts of groups like ACORN who help push the "minimum wage" into what we can all agree is more of a "living wage" as ACORN calls its campaigns.

Finally, I want to bring this all back into perspective. It is disappointing in some respects to see the that bill passed in Michigan over the ballot proposal. In truth, I firmly believe that the wages for the poorest workers must be indexed to inflation. It is fundamental to the values of this country that anyone who works hard should be able to afford all the basic necessities of life. This is what injects such solid logic into the "living wage" campaigns mentioned above. But to sustain a wage at a basic, needs-based level, it must be indexed to float up with the costs of those goods.

Critics of such proposals validly point to programs like the Earned Income Tax Credit that help offset stagnant wages. However, this is not enough. Many people eligible for the EITC are unaware of the program or mistakenly believe they are not eligible. Further, the lowest wages are not enough even with the EITC, food stamps, WIC (special supplement for women, infants and children), etc. And perhaps most importantly to both the employees (and I wish more employers), there is the morale issue. EITC and other programs or not, a person does not want to sit at the same position in a factor for five years and never see her paycheck change while her rent increases and gas prices rise.

Overall, though, the new law in Michigan is a positive sign for the working poor.

By George

2006-03-27T11:08:00.000-06:00

George Will wrote a piece about three weeks ago on John Edwards' views on poverty. I've read reactions to it around the internet since then and want to comment on it briefly here.

Will claims Edwards views poverty under a 1930s paradigm. The dated views at issue are that Edwards may believe the poor "simply" lack housing, transportation, training, food, proper education, etc. I put "simply" in quotes because it is a convenient attack on grassroots views to make them seem basic and oversimplified, rather than sophisticated and well-crafted. I have yet to see where Edwards gives a list of a few basic needs as the panacea for poverty. The problem here appears to be the view (by Edwards and others -- your author included) that poverty is due to a person's circumstances. The "correct" answer, according to Will and many others, is that poverty is behavior-driven. In other words, people are poor because the are not punctual, lack proper hygiene, have no sense of industriousness, and no respect for deferred gratification. Well, nice to see our theories have moved from the simple to the complex....

Something really bothers me about Will writing this as he views the lives of our country's poor through a glass of cabernet. Will's "paradigm" is held up to be the evolved approach to fighting poverty. But what of it? Poverty is increasing, middle and low-end wages are stagnant at best. And these numbers come from evaluating Americans under a poverty level that increasingly lacks credibility for its failure to properly account for the cost of living.

In many ways, the America of 2006 is a different country then the America of 1930. Even if it failed at the time (and I would argue it did not) a 1930s paradigm may work wonders in a 2006 environment. The point I want to emphasize here is quite basic. What we have been doing of late is not particularly effective at best (and a pathetic shell game at worst). Young leaders who question the entrenched paradigms of the day should not be brushed aside as poorly read, but supported as a fresh face to a serious problem: why at least 10 percent of our wealthy country lacks the basic necessitites for a civilized life. Edwards may be wrong but it is time to try something new.

Payday!

2006-03-24T09:20:00.000-06:00

Many people seem to think there's nothing more fun than ripping off unsophisticated people. You see this with rent-to-own companies, you see it (though perhaps a bit less today) with H&R Block, and you certainly see it with payday loans (among other subprime lending initiatives). A good overview of payday loans is found on the Federal Trade Commission's website here. This is the example the FTC provides:

A cash advance loan secured by a personal check - such as a payday loan - is very expensive credit. Let's say you write a personal check for $115 to borrow $100 for up to 14 days. The check casher or payday lender agrees to hold the check until your next payday. At that time, depending on the particular plan, the lender deposits the check, you redeem the check by paying the $115 in cash, or you roll-over the check by paying a fee to extend the loan for another two weeks. In this example, the cost of the initial loan is a $15 finance charge and 391 percent APR. If you roll-over the loan three times, the finance charge would climb to $60 to borrow $100.

State regulations on payday loans vary, from Florida (with a limited amount that may be borrowed, a limited term, set percentage fees, and a cost per $100 of only $15) to Missouri (where the cost per $100 can reach $75 for an astonishing 1,980% effective 14-day APR) to Wisconsin (that doesn't impose any regulations whatsoever). Most loans range from only $200-$300, but anyone who needs $200 that badly is going to feel the sting of a $30 fee.

The justification for such high rates is, of course, high risk (high default rates). The validity of this claim is unclear. It is easy to think that a guy desperately in need of $100 is less likely to repay the loan then someone who plans ahead and applies for a loan, but the actual default rates are unclear. There is some evidence to indicate that default rates are extremely high--the FDIC thinks the charge-off ratios may be as high as 83 percent--while many critics (i.e. here, here and here) claim that screaming DEFAULT! is a hollow justification, with default rates not much higher then other subprime lending areas or even conventional lending.

A few things bother me in particular about payday lending. For one, we need more regulation. The customers here are usually unsophisticated, poor, and lacking the time and resources to shop around for better alternatives. In other words, they are prime pickings for abuse by lenders. The state must regulate activities to protect these people. If the regulations are too burdensome then we'll see it in the market. Right now we're far away from that type of a concern with the industry's continual growth and even more so recently with internet payday lending.

We also need to encourage more reputable lenders to locate in less appealing areas. My clinic studied payday lending a bit during my third year of law school, and one pattern became obvious: payday lenders locate around bus stops and in strip malls by other businesses in low-income areas (brand name financial institutions do not). The same problem exists with check cashing services and the like. People get off the bus and use what is in front of them, or next to the grocery store in the mall by their house. You'll also notice that check cashing and payday lending stores are open when they need to be. The banks are open when they want to be. Obviously, national banks are not going to rush to lend money to anyone typically using a payday loan, but other advantages to having the institutions around readily come to mind, including providing the means for more fiscal responsibility, etc.

Finally, I hope people who never use payday loans become increasingly informed about payday lending and the role major financial institutions play in the game (an ever increasing role). Such institutions should not be able to operate abusive subsidiaries with impunity. As one sophisticated business man said to me once: "If I was the head of a major bank and I knew I could make a killing off huge rates on payday loans, I wouldn't do it. It's just immoral." Maybe it is; maybe it isn't. I'd be happy if everyone could at least make an informed judgment.

Wholesome Food

2006-03-22T09:40:00.000-06:00

Slate ran an article on Friday examining "the dark secrets of the organic-food movement" with its main focus on Whole Foods. For many well known reasons, Whole Foods is generally a model company by this blog's standards. As the article describes, the Austin based company has been extremely profitable as it has expanded from Austin across the country. Yet it adheres to what Chairman John Mackey states:

There's no inherent reason why business cannot be ethical, socially responsible, and profitable.

In pursuing that mantra, the company's "minimum wage" is $13.15 per hour--and comes standard with all the benefits an hourly worker could want. Perhaps most interesting (at least to me) is that Mackey's 2005 salary was only $342,000 -- that's only 12 to 14 times (depending on your math) the lowest paid employee. As I'll mention in a second, the article goes on to compare Whole Foods to Wal-Mart. For comparison here, Scott's reported $8.7 million in 2005 amounts to at least 932 times the federal minimum wage. In 2004, his compensation may have been as high as 2,000 times the minimum wage. (Of course, Mackey does get to live in Austin and Scott has to live in Bentonville.) For perspective, Abe Foxman, Director of the Anti-Defamation League (a charity whose work I respect highly) earns about $425,000 per year in total compensation. Apparently it is better to head a 501(c)(3) than a highly profitable corporation.

But back to the article. The author, Field Maloney, takes steps to debunk some of the "myths" behind organic foods. Certainly, much of what Whole Foods claims can be spun in its favor or back in the other direction. There are of course advantages and disadvantages to organic foods, to buying local v. international, etc. As one comment below the article on Slate.com points out, my favorite thing about Whole Foods is that it is honest. You can see where the produce is from and buy it or don't buy it. There's no deception there. The produce looks good because it is high quality, not because it is covered in wax and spritzed with water like a sports car commercial. My local Randalls claims it sells the freshest produce. If this were true the majority of the country would probably move to an all-meat diet. Whole Foods sells itself like anyone else. But articles like this in Slate are important because people who can affort do shop at Whole Foods may need to infuse a bit of skepticism into their love affair with organic foods and it's main pusher.

This brings us to the final point: people who can afford to shop at Whole Foods. Most of us can't. Items there are frequently 2, 3, 4 times more expensive than at conventional grocery stores. But here comes Sam Walton's ghost. Wal-Mart is apparently expanding its organic foods. As the world's biggest grocer it's a point worthy of more than a footnote. The Slate article finds this comforting in fear that Whole Foods just enforces elitism in what amounts to a Saks with edibles. Any steps towards bringing healthier, less processed food to those otherwise buying TV dinners or Big Macs is a step in the right direction. Soon you won't need to drive a Volvo to eat well.

Luck of the Irish

2006-03-17T14:31:00.000-06:00

In the spirit of Saint Patrick’s Day I walked to work thinking about Irish-Americans in our country today.  I also thought about the previous conditions in Ireland, present-day Ireland after finding some success in a more globalized world, and then just generally about immigrants in America.  I am not familiar enough with issues specifically impacting the lives of immigrants to write about it yet.  I do hope to get a guest blogger on here soon to help share his experiences and those of his peers.

I thought I’d leave you with a game for today in the spirit of an international “holiday.”  The game comes from Oxfam, a group I previously criticized (here) with respect to some of its publications from America.  While Oxfam’s game tries hard and is built on a rather unique approach, the game is ultimately pointless.  You can check it out here.

I don’t want to ruin the surprise, but I feel the need to comment that Oxfam will never get anywhere by pushing a blanket view that the world is divided into rich and poor, with the rich getting everything their way and the poor never getting “a good bounce” so to speak.  Life is just not that simple.  And if life really is as simple as Oxfam suggests, then the explanation should be straightforward enough that the organization need not leave it entirely to our imaginations.  One thing is certain—to focus on an over-simplified problem is to assure failure in seeking its solution.

Rather, the problem and the solution are far more complex, and the world is not so black and white as to leave us with a globe looking like a zebra with a bad paint job.  Ireland may be a clue of this reality.  In the most general terms, Ireland used to be poorer and is now less poor.  No doubt the country is not rich, but it is richer than before.  And yet the European Union may have helped alter the relative concepts of rich and poor.  Once amongst the poorest countries in the EU, Ireland looks far more “middle-class” relative to newer member states, and will only solidify its middle ground with further additions to the Union in years to come.

Check out the game here while you dream of green beer.

Regressive pricing and taxation

2006-03-15T16:35:00.000-06:00

American companies are hardly strangers to success and hefty profits.  But large profits are not always acceptable without criticism.  Exxon’s record-breaking profits in 2005 have been put under the microscope--but to little avail.  Dennis Hastert, House Speaker and congressman from my home state of Illinois said: “Oil and gas companies are enjoying record profits.  That is fine.  This is America.”  Yet if America has enjoyed unprecedented commercial success for decades, any record-breaking profit today should be looked at with suspicion.  A critical eye can only help maintain the integrity of our markets.

So why isn’t it fine, then, as Mr. Hastert says?  For one, gas prices are regressive.  Sure, all sales taxes and price increases on basic goods are regressive—they hit the poor disproportionately hard.  But gas, for many, is nothing short of a basic necessity, and it is also priced and taxed in sometimes unique ways.  If the price of other basic goods, like eggs or instance, increased at the same rate, people could just not buy eggs for a while.  At a more extreme example, it is one thing for William Sonoma or DaimlerChrysler’s Mercedes division to make record-profits.  But here you have companies that made over $9 billion in profits in one quarter providing what is a lifeline to many working-class Americans.  Exxon’s 2005 revenues exceeded Saudi Arabia’s GDP.  No matter how you slice it, these oil companies charged what they did at the pump because they could.  People needed gas, everyone paid up, and it hurt the poorest the hardest.

Much talk went to whether the oil companies should be taxed for price-gouging.  This seems somewhat appropriate if you consider the taxes your average American pays for gas.  In Hastert’s home state, for instance, Illinois levies a 19 cent per gallon tax on gasoline—as the excise tax alone.  Add to that 11 cents per gallon in other applicable state taxes and over 18 cents per gallon in federal taxes to get 48.4 cents per gallon.  In an earlier post (here), I mentioned how poor mothers sometimes don’t have as little as $14 early in the month to join a food allocation program.  The tax alone on about 29 gallons of gas amounts to $14 each month (29 gallons being about 2 to 3 trips to the pump each month).

This leaves me with one distinct impression: if the people who can afford it least pay out day after day for hefty state and federal taxes on gas, the “people” who can afford it most (companies making record-breaking profits) should be paying out when it finally becomes obvious why the prices are as high as we’ve seen.

One final point about regressive taxes for now.  Gas taxes are especially regressive because they are established as a set amount per gallon, rather then a percentage of the sale price.  This means that a wealthy man buying premium gasoline pays the same tax as someone buying economy gasoline.  It’s regressive.  Another particularly regressive tax is seen on cigarettes.  Like gasoline, cigarettes are taxed by the item rather than the price.  Illinois’ excise tax on cigarette’s for example, is just short of a dollar per pack.  Some states tax as much as $2 or more per pack.  Prices on cigarettes can vary quite a bit, and certain brands are disproportionately purchased by lower-class individuals.  When you tax at such a high rate per item, you are left with a tax that may be as high as 50 or even 100 percent of the sales price.  When the percentage drops dramatically for more expensive brands, you have a prime example of a regressive tax.  It’s tough to challenge taxes on items like cigarettes (frequently but inappropriately known as “sin taxes”) but the effects on the poor cannot be lost.  Regressive taxation should be eradicated where possible.

Where is the Finish Line?

2006-03-12T23:47:00.000-06:00

Watching "Wal-Mart: the High Cost of Low Price" last night made me think of the "race to the bottom" concept. Somewhat publicized was Wal-Mart's CEO, Lee Scott, speaking before the U.S. Mayors Conference last month, most notably about healthcare. Healthcare costs are rising every year for the company, and it fears any backlash as people across the economic and political spectrums become increasingly frustrated with the company's reliance on state assistance. Indeed, It is somewhat amazing that Wal-Mart's employees (well over a million) often rely on state funded health and income assistance. If Wal-Mart cannot pay its workers enough to sustain merely an above-poverty lifestyle, then who can?

It is amazing to just think about this "race to the bottom" for a moment. If Wal-Mart had its way, every American (we can stick to America for now) would shop at Wal-Mart. And by "shop" I mean every American would get his car serviced at Wal-Mart, his photos developed, his prescription drugs filled, his shoes, groceries, gas, and more, or at least something on that list. In the process, Wal-Marts continue to be built across America (yes, even in NYC). As the stores are built, more people are employed at Wal-Mart and more businesses around those stores go out of business -- that is, any business that sells anything Wal-Mart sells. Wal-Mart would squeeze every fraction of every cent in the process of providing a good or service from start to finish, including labor costs.

Wal-Mart's goal throughout all this? To keep prices down, efficiency up, and it's stock price healthy. But for what purpose? Wal-Mart creates its own customers. The movie mentioned above shows what most probably already know -- that Wal-Mart employees spend their paychecks on a shopping cart full of Wal-Mart goods. Outside of Wal-Mart employees, the people now out of work in those towns or with jobs, but finding their old stores closed, cannot afford to shop anywhere else, if anywhere else exists. John Stewart jokes about a woman who seems surprised to find out that people work overtime and don't get paid all over the country in Wal-Mart stores. He basically says: You're surprised?! You just bought a sweater for 87 cents!

You cannot speed down the road with your eyes shut and not expect to hit something. At some point in the future a revised edition of Daniel Litvin's "Empires of Profit" will hit the bookshelves, and Wal-Mart will be discussed alongside companies like British East India Company and United Fruit.

As an aside, the movie is definitely worth seeing. While it has some serious flaws, including such sad attempts to jerk tears that I could virtually feel Robert Greenwald's finger poking my eyes, it is filled with interviews of current and former Wal-Mart employees from random "Associates" to suits sitting in Bentonville. You will be amazed at what you hear.

Delphi Spinning-Off and Out of Control

2006-03-09T19:22:00.000-06:00

General Motors and Detroit’s industries liked to think of themselves as pioneers of the American middle class. Jobs created by industries such as the auto industry allowed people to buy cars, take out a mortgage on a house (and eventually own it), send their kids to college, and go out to a decent restaurant once in a while. Employees of General Motors like to think of themselves (through the creation of the UAW), as pioneers of workers’ rights. This dates back to the “Great Flint Sit Down Strike” in 1937 (richly described in Michael Moore’s Roger & Me).

So it is only appropriate—or perhaps perfectly ironic—a high-profile modern day struggle regarding worker compensation surrounds Delphi Corporation (a spin-off of GM from 1999). Delphi filed bankruptcy early last October. What I want to focus on here is wages. Delphi claims that it simply cannot function paying $27 per hour to its workers (the UAW contract rate). Such a wage provides the average worker with a $56,000 a year gross income. One would think $56,000 a year is a good “salary” – and $12,800 above the current median family income. Delphi’s workers don’t seem thrilled with the wage:

Workers explain the $27 per hour wage is barely enough for them to have a minimum standard of living, consisting of a place to live, food and some other expenses such as occasionally eating at a restaurant. With taxes taken out of their salaries, workers end up with less than $50,000 a year. Given the high prices of housing and food in the U.S., this leaves little left over for other expenses. Only by working overtime, up to 12 hours a day and up to 7 days a week, do union workers at Delphi say they manage to have enough money for a vacation and education for their children.

Delphi complains that benefits effectively add $49 PER HOUR to the cost of each worker. That’s right, Delphi believes it spends $76 per hour on labor, not $27. The company first announced that it would seek a reduction to $12.50 an hour for actual pay – which would reduce the total hourly expenses from $76 per hour to $35 per hour. When Delphi first came to the table, however, they offered $9. It is probably understandable that its workers were up in arms. One day 35,000 people are making almost $1100 a week, and the CEO comes to the table proposing that workers reduce that to $360 per week.

Some workers will nonetheless find such an offer a relief as Delphi not only intends to slash wages for all workers, but to also cut the majority of its domestic workforce—adding to its already 185,000 person strong foreign workforce.

I mentioned that some of the workers are pissed. Interestingly, many comments you’ll read from workers discusses executive bonuses. I previously discussed about how GM’s CEO, for instance, plans to halve his salary in the midst of wage cuts across the board. Workers at Delphi do not see similar strategies between GM’s Richard Wagoner and their own Steve Miller. Miller is treated much more like Wagoner’s predecessor Roger Smith.

So what’s the point of all this? People who are firmly anti-union know where to point the finger. Others may blame management at Delphi or even GM when you look at their interactions since the spin-off. I think this is far too complicated to be answered in a little blog post. Though one thing remains to be seen—how successful Delphi is at using the chapter 11 vehicle to accomplish its goals. We saw United Airlines (UAL) drop pension obligations. Delphi wants to strip union contracts. The legality of certain efforts under the Bankruptcy Code are not always clear. We can discuss that at another time. But even more important are the ethical questions raised by these initiatives. I’ll close with the words of one Delphi employee:

The large corporations such as Delphi, GM, Ford, and Chrysler which lost money according to budget and have never made profit, still hide millions in black accounts due to creative bookkeeping. For example, I worked in a trades area where we would be issued a twenty hour job that takes only two hours to complete. When finished I would be issued another job. The assembly line would be charged the full estimated twenty hours of service into hidden black accounts and would also be written off in taxes as maintenance...Delphi can show any loss it chooses and executive's bonuses surely do not justify a bankruptcy. To plan, implement, execute, and deliberately use bankruptcy as a tool in business for greater profit should be reason for investigation. The sticker price on an automobile clearly shows wages, benefits and bonuses for GM and Delphi. The bankruptcy should be thrown out of court and any company owned by another should not be allowed to use bankruptcy as a business tool; but instead have to settle thru collective bargaining.

This is the testimony of Randall Musielak from Frankenmuth, Michigan. I hope he is one of the 10,000 or so likely to keep their jobs.

Minimum Wage on the Ballot

2006-03-08T11:29:00.000-06:00

I have mixed feelings about the minimum wage—partly because I’m concerned with putting the most effort possible in realizable and truly helpful initiatives—and the minimum wage may not top the list of wage reforms in either category.  Or it might.  Regardless, as states consider changes to their state minimum wage (remember, states can have a minimum wage higher than the federal minimum), people should be aware that the issue is presently before their state congress or their fellow citizens.

I doubt anyone visiting this blog is from Nevada, but if you are, I want to make you aware that the constitutional amendment to raise the minimum wage is set for its second vote in 2006—with two votes required for a constitutional amendment.  According the Ted Kennedy’s new website, the first vote passed by 68%.  (Absent an increase the state minimum wage will remain at the federal level.)

Additional initiatives have yet to hit the ballot but currently gather signatures in hopes of getting there include:

Arizona
Michigan
Ohio
Missouri

States waiting for approval to gather signatures include:

Arkansas
Montana

And states at the early stages of only considering a ballot initiative include:

Colorado
Oklahoma
North Dakota
South Dakota

If you’re curious about where your state’s minimum wage currently stands, the Department of Labor’s figures for 2006 can be found here.  A few hyperlinks above give a sense as to the local and national coverage these initiatives (or potential initiatives) have received thus far.

You Look a Little Green

2006-03-06T11:57:00.000-06:00

I met a homeless man on Friday on my way to work named Green (who spoke with the same articulation as Red – as Malcolm X was once known).  Green believed that we’re going to experience a large social change in the next 6 to 8 years (I asked about the numbers he chose and did not fully understand the answer).  In Green’s words, “America is blessed.”  But we are to rich of a country, Green told me, to have breadlines in Michigan three blocks long.  I agreed that life was not fair for a lot of poor individuals, but Green corrected me, pointing out that it is also not fair for the middle class or working class.  This leaves the rich.  For the rich life is surely more than fair in Green’s mind, though the “fairness” is gained on the backs of everyone else.  An article I’m about to discuss quotes Adam Smith from The Wealth of Nations: “No society can surely be flourishing and happy, of which the greater part of the members are poor and miserable.”  If Green is right—and I’m afraid he is not as far off as many believe—then we do not live in a flourishing and happy society.  Rather, we live in a society where a highly visible minority dominates virtually every arena.

But beyond the wealthy’s massively disproportionate influence on political and economic issues, the wealthy control the dreams and expectations of the middle- and lower-classes.  The exotic destinations on the covers of magazines in the doctor’s office are destinations only the wealthy can afford to see in person.  The clothes displayed in magazines and storefront windows will never be worn on middle- or lower-class shoulders.  This is a cultural influence, a cultural control.  The wealthy control the middle- and lower-classes by showing them what they could have if they only moved “up”—and reminding them that it is possible.  (A reminder I don’t personally contend is inaccurate, just about as statistically likely as telling all high school basketball players that if they work hard enough they can be in he NBA.)

But Green seems to believe things have changed, and I agree.  The problem stems in the concerns held most urgently by middle- and lower-class Americans.  The concerns have changed to more frequently focus on making a mortgage payment, or paying off that hospital bill so they can avoid bankruptcy, or finding another job after their factory closed and they have no other skills, of keeping food on the table while their husbands are in Iraq, or finding a second job because ends just don’t seem to meet anymore.  Every time a middle- or lower-class American thinks about these types of concerns first, s/he falls further outside of our visible minority’s grasp.  More and more, I sense that American society is drifting towards frustration.  The numbers may not show it.  Unemployment rates may seem low, for instance—yet those numbers don’t indicate how many people work two jobs today because one won’t pay the bills.

The articles I intended to discuss here (but will save for next time to please my length critics) discusses “working class” American’s frustrations.  Hourly workers in America are another sign of this shift mentioned above.  But that’s a discussion for Wednesday.

Let me just end in reiterating Green’s forecast.  This country will undergo a significant social change in the next 6 to 8 years.   Maybe this change will be through politics, maybe through laws, maybe through violence.  Green has his ear to the ground and that’s what he predicts.

Robert Rector

2006-03-02T22:46:00.000-06:00

Robert Rector, a "leading" welfare expert from the Heritage Foundation is in serious need of a reality check. In one of Rector's more recent papers ("Teenage Sexual Abstinence and Academic Achievement"), he states that "teens who abstain from sex are less likely...to have children out-of-wedlock...." Yes, approach these does seem to work for everyone but Mary. What amazes me is the vacuum in which he seems to live. His "data" indicates that "[t]eaching abstinence is not only popular; it also makes sense." No one seems able to teach the better (condoms) and best (abstinence). We don't live in a black and white world but Rector writes as though it's news to him.

In a slightly older paper entitled "Understanding Poverty and Economic Inequality in the United States," Rector discusses a variety of issues relevant to this blog. The poor we discuss here, however, should know that most Americans are far better off today than a few generations ago. I somehow wonder if it is comforting to know that 50 years ago you would have only had a two-bedroom house with no porch if you can't put food on the table TODAY. Turning to the future, Rector tells us that "[t]he best news is that remaining poverty can readily be reduced further, particularly among children." Nice -- let's hear how. "[T]he typical poor family with children is supported by only 800 hours of work each year: That amounts to 16 hours of work per week. If work in each family were raised to 2,000 hours per year--the equivalent of one adult working 40 hours per week throughout the year--nearly 75 percent of poor children would be lifted out of poverty." Rector suggests turning welfare around to "really require work." So the solution to poverty is for people to work more.

Perhaps Rector could consider WHY people don't work more if that's all it takes. One reason is that there aren't enough jobs in certain areas of the country and the poor are the least mobile sector of society. Another reason is that--as Rector readily admits--mothers frequently raise children without the help of the father. Requiring a mother to leave her children is never going to be the answer for welfare reform. If women knew their children were safe and it didn't cost the entire pay check to secure that safe environment, more women would surely work. Another reason is that employers of workers at the lowest wages tend to avoid employing a person for 40 hours per week. Doing so makes the person a full-time worker and may mean the difference between providing health insurance and not. What about the size of the wages? Every hour of work for a single mother is an hour away from her children. Raising the wages would make every hour count that much more without requiring a single mother to barely see her children just to make ends meet.

Or perhaps we're just using the wrong tool. The stick has been tried, has it not? Perhaps we can try the carrot. Why do we need to "require" work when all signs indicate that most people on welfare don't want to be on welfare! How about encouraging work with a government subsidized wage--say, 20 percent for wages $6 and below sliding downward from there to maybe 5 percent for wages normally at $8/hour. Work a job at $6/hour and the government will give you another $1.20/hour for every hour worked. Give tax deductions to businesses that supplement child care costs for low-wage workers. I could keep going, but it's a simple start.

Oh, and did I mention that Rector believes that adjusting for taxes and net benefits indicates that the top fifth of American society is barely more than 4x richer than the bottom fifth? Right.....Bob, stop staring at the numbers to make them look good and stick your head out the window.

You could fry an egg out here

2006-02-28T21:08:00.000-06:00

Yes, the sidewalk is hot. The View From the Sidewalk, that is. It's a relatively new blog written by a homeless man in Greensboro, North Carolina. The blog has gained attention from a wide range of bloggers as well as the media as far away as Europe. I consider it worth reading and wanted to pass it on to you. Of course, with a blog about one man's personal experience, you have to tag it: anecdotal.

I understand that researchers don't jump with excitement at anecdotal evidence. Newton would have reached a lower level of fame if all he had a was a great story about this apple that hit him on the head. Yet we also learn the faults of research and statistics. Torture a statistic enough and it will say nearly anything you want. Read about research and you're at most a couple steps from the "truth"--if there is such a thing. Where does that leave us? Well I was disappointed to see that my computer's dictionary actually claims that "anecdotal" not only means a personal account (as I thought) but adds that it is not necessarily true or reliable BECAUSE it is based on personal accounts rather than facts or research. My favorite philosopher, Alan Watts, said that you cannot understand a rat by putting it on a table and cutting it open. What it truly "is" to be a rat is no more the sum of its parts than the answer to poverty is the discovery of the right statistics or the results of the right research.

Barbara Ehrenreich somewhat ironically defends anecdotal accounts before Nickel and Dimed was brushed aside by some as "merely anecdotal." I promote the View From the Sidewalk because anecdotal accounts are absolutely necessary to understanding the problems at the lowest income levels in American society. The good news is that poor people are not rats. You don't have to study them to understand their problems and ways to fix those problems. Luckily, you can just ask.

God and the Devil

2006-02-26T20:05:00.000-06:00

God and the Devil. Good and evil. No discussion of the lower-class or working poor can be complete without considering religion. Countless personal accounts in book and articles on poor Americans, as well as my more limited personal experience, makes it obvious that religion is a powerful factor in their lives. My personal views on religion are irrelevant here. What I care about in this context and plan to discuss here is the impact religious concepts have on the lives of poor Americans.

Of course we have all seen the athlete praise Jesus when he wins a championship game. He'll often admit that his team played great and usually praise his opponents, but it is Jesus who he seems convinced brought the victory. (That's beyond my area of expertise.) I have never heard the Devil mentioned by the losing team. But the poorest people in America often do see the Devil at work. Many poor individuals discuss drugs and alcohol as the work of the Devil. A drug problem comes from the Devil. A drug problem especially difficult to "kick" is the fault of a tricky Devil. And the ability to get off drugs and back into a more meaningful lifestyle is the work of God. Progression and advancement in that lifestyle often seems to be His work as well.

What I find most interesting is how infrequently I hear such logic amongst the successful. A lawyer plagued with alcoholism rarely seems to fault the Devil. And a CEO commenting on a record year rarely passes credit on to God. Surely the CEO's success is not so unlike the success of a minimum wage worker in breaking a drug habit or getting a promotion at work. Surely the rich lawyer's alcoholism is as much or little to blame on the Devil as the poor woman's drug addiction. Yet we see a massive difference in the way the two individuals think and speak about their problems and successes. I generalize, but fear the truth is not too far off.

Let's start with the Devil. What troubles me here is that the Devil takes the blame for something more likely found in this world. The problems of the poor are not necessarily caused by the Devil, but also not necessarily caused by themselves. If the Devil takes the blame then society and government can act with impunity. Everything is simplified in the present post, but the underlying point remains: people are more likely to blame the Devil then the government for a problem. This troubles me no less when I think of the frustrated, poor worker coming home and hitting his wife or child. He would more accurately smack the target of his frustration if he hit an elected official or a rich business person. If the Devil is to blame, then let's recognize that he works through mechanisms in place in this world.

More troublesome is the praise attributed to God or Jesus. Religious organizations are responsible for so much social assistance and their social benefit cannot be over-emphasized. Much of the time the religious influence is subtle. Alcoholics Anonymous is not immediately considered religious--yet it is. The YMCA's meaning is becoming about as little known as GEICO's. Social commentators loudly voice concerns over lack of empowerment amongst the working poor. Attributing everything positive to an act of God does nothing for empowerment. A tornado and a job promotion cannot be viewed as the same. God's influence need not be diminished in the minds of the poor by pushing a view that God alone does not bring about positive outcomes in our lives.

An old religion professor of mine taught that there are three ways to view the Bible. One is to view man writing the text with alone--basically like any other book. Another is to view man writing with God whispering in man's ear. We don't know exactly what man hears. Maybe it's dictation, maybe it's commentary that man summarizes. Either way, it's interpretation. And finally you have man writing the text with God's hand guiding man's. To believe that God is responsible for every positive change in life is to take the last in interpretation of the Bible and apply it across the board. Yet the last interpretation is the least popular when considered in the biblical context. More common is the view that God whispers in man's ear. God may be speaking to us but it is still our hand. We can still color outside the lines if we choose.

People trying to overcome drug addictions--especially at low income levels, and those seeking to move above the bottom rungs of society, are amongst our most delicate individuals. To mindlessly push religous concepts of the Devil for all evil and God for all good is to push a cult on the vulnerable. Its truth is unrelated to its power to influence. It therefore must be used with caution and balance.

And for the rich, we forget our roots. The media discusses crime like it is as much part of our days as breakfast, lunch and dinner. I am not a religious person but most Americans are. I have previously mentioned the concept in Buddhism that every individual must be treated as though he or she may be the Buddha. In other words, you never know when a high powered individual just happens to look homeless that day. You treat the man in the suit the same as the homeless man in crutches, because how we appear in this life is irrelevant. And Rabbi Hillel reiterates this concept in saying "Love thy neighbor like thy self; all the rest is commentary." Christian commentators have seized upon this statement as well -- though sometimes adding "Love God, love thy neighbor; all the rest is commentary." I'm young, but I think I can confidently say that we have lost this belief in society. Or perhaps what we have lost is the true concept of neighbor. The biblical definition of neighbor is actually anyone in need of your help or kindness.

Whether you believe in God and the Devil or not, one thing remains certain: the fortunes of man are not constant. Some men are "blessed" with more fortunate periods (or lives) than others. Yet we truthfully never know when our luck will change. I have come to believe that we must go back to an ancient concept and help our neighbors. Forget the guy who lives next to you. What is meant here is helping those who lack the luck and support system you may have through perhaps no "fault" of your own. What if every wealthy American sponsored one poor American? Not enough? How about one poor American family? Asked what they want to do when they grow up, a shocking number of poor American children I've read about state some profession where they can help others. One child who goes to bed hungry hopes to become a lawyer so she can help needy people. A boy who will continue to grow up poor wants to own a company so he can give homeless people money. This represents something I was amazed when I first read about, and continue to be impressed when I see it in accounts of poor Americans: poor people want to help other poor people. This is leverage. You help one poor person and that person will help another, and he another. I'd urge religious organizations and religious Americans to remember what truly matters. Succeed at work or school, but if you go to bed without having helped someone in need you've accomplished nothing. As I said, I'm not religious, but my existentialist take on all this will have to wait for another day.

On a general note:

In the future I plan to start covering concepts more comprehensively before moving on to another issue. The first topic I plan to consider in depth is tax. Sometimes I meet law students who claim they LOVE tax. I think they are insane. They may know this depending on my facial expression. Yet tax law, as boring as it may be to the vast majority of humanity, is extremely important in social policy. So get excited -- or at least pretend.

[On a personal note, I want to thank my readers as this blog has now received over 1,000 (non-unique) hits since its inception on December 31, 2005. Please continue to comment and remember that you can email me about the blog at socialjusticeblog@gmail.com. And thank you Tom for your constructive comments. I plan to post more frequently and keep the posts shorter in the future.]

Fixed Costs (Part II)

2006-02-23T08:25:00.000-06:00

In a previous post on fixed costs (here), I discussed the obvious concept that a few large monthly expenses make all other cost saving attempts irrelevant on a budget (i.e. eating oatmeal everyday isn't going to help if your mortgage or rent payments consume 50 percent of your pre-tax income).

But David Shipler's unfortunately mediocre book, The Working Poor: Invisible in America, reminded me that for many people, the squeeze to make the budget work does not involve pasta or oatmeal, but skipping a meals. To use Shipler's words, you can't negotiate your utility payments (true, for the most part) and your rent is going to be due in full every month without rest. The same is true of a babysitter or day care center, car payments, and other basic goods. Food is among the most flexible costs.

I see this all the time in bankruptcy. A person filing bankruptcy has to complete a "schedule" of his current monthly income and another of his expenses. The expenses include rent or mortgage payments (fixed), real estate tax and propety insurance (fixed), car payments (fixed), car insurance (fixed), alimony/maintenance/child support, if necessary (fixed), life and health insurance (fixed). Almost in conscious recognition of the unique nature of the only non-fixed costs, the form boxes off: home maintenance, food, clothing, laundry/dry cleaning, additional medical expenses, recreation, charity, and additional transportation costs. Failure to spend enough on home maintenance can actually have significant health consequences, but that's a discussion for another day.

Someone filing bankruptcy usually has to guess how much money they spend on food -- there's usually no opportunity to keep track for a few months and then average it out. The schedules always have to show that you make at least as much as you spend. We're not including credit card payments or anything here. And for certain types of bankruptcy filers you have to also show that you can afford to make additional payments towards your past debts on top of the expenses listed (i.e. the gap between income and expenses must be even greater). So how is this done? Well, if you quote the wrong amount for your monthly mortgage payment you're lying. If you under-estimate the amount you spend on food you're exaggerating or engaging in wishful thinking (or lying, but no one can know). So you make the numbers work by saying you only spend $200/month on food for you and your two children. It's possible -- as long as you can eat for about 75 cents per meal.

Okay, enough about what you can do with a pen and paper. What does this mean in real life? People cannot eat three meals a day for 75 cents each. Instead, it's more likely that you'd eat one meal a day for $2.25. That means your children go to school without breakfast, and you skip lunch. And where can you eat for dinner on $2.25? Most likely fast food restaurants.

The point of all this not about bankruptcy petitions, but about fixed costs. Food is not a fixed cost. You cannot skip a month's rent payment but you can skip a day of food. This discussion is not a criticism of any particular policy -- rather simply pointing out the obvious reality for some of the people in this country who have to make hard financial choices. It is not always about whether to cancel the cable or stop going to the movies, but about whether to go to bed hungry or be evicted.

Sliding Down

2006-02-21T09:35:00.000-06:00

Much of the discussion in this blog criticizes the status quo -- calling for large and small social adjustments to better the lives of the lower middle-class and lower-class. Maybe we can start with something more reasonable: maintaining the status quo.

The importance of this idea on wages is discussed in this week's Economic Policy Institute's snapshot. There, the EPI writes on an often discussed topic: the decline of the purchasing power for low-wage workers. The reason for this is simple -- the minimum wage is not tied to inflation, and wages above the minimum wage logically float relative to the minimum. The minimum wage has not increased since 1997. It should be noted from the outset, however, that states may choose to raise the minimum wage in that state, as California and various other states have chosen to do. Nonetheless, most states use the federal minimum wage, and I would argue that it maintains a symbolic function even if (as I hope will be the case) more states choose to leave the federal minimum wage in their rearview mirror.

Considering inflation, the minimum wage has lost about $1.12 of purchasing power since 1997. This adds up pretty quickly. Every visit to the grocery store, every utility bill, every medical expense, now requires a few extra hours of work a month here, another few extra hours of work there. Minimum wage workers are clearly among the least mobile in society. If you don't like the pay you're getting at $5.15 an hour you are probably not in a position to move to another state with a higher minimum wage, or find a higher paying job in your home area fast enough to make it feasible. So what do you do? Now that $5.15 an hour buys less, your sole choice seems to be work more hours -- get a second job, get a third job. The EPI estimates that 700,000 minimum wages earners are single mothers with minor children. Americans need to get over the overwhelming sense that the minimum wage only impacts high school kids working in the mall. Every year, the minimum wage will continue to decrease. As that continues, 700,000 (and sure to only increase) single mothers leave their minor children for more hours each day to work -- as this is their only choice to make $5.15 buy basic necessities.

In another post, I'll discuss related policies such as the family cap which freezes welfare benefits when additional children are born. There, we can discuss what this means in general. Here, let me just point out that in many cases the family cap means that many single mothers are leaving more children at home for even MORE hours each day.

This nation's economy has prospered at record levels while increasing the minimum wage. I've heard every argument out there for why we should not only leave the minimum wage untouched, but actually abolish it all together. If market forces would push the wage higher we wouldn't have 700,000 mothers making the minumum wage. And the lowest wages cannot be allowed to slide backwards. Using the EPI's numbers, a minimum wage earner working an 80 HOUR WEEK lives at the poverty line. (Note that this seems to assume a $5.15/hour wage and, as stated above, some states use a higher minimum). There is no solid justification for the federal government's refusal to tie the minimum wage to inflation.

I will add that I strongly object to any attempt to tie the minimum wage to anything but inflation. Using a benchmark such as the poverty line allows manipulation and creates poor incentives for relevant government agencies. (In another post I'll discuss why the poverty line departs from reality even today -- why would any administration want to help the American people suddenly discover just how many additional poor people live in this country?).

But I began the post by calling for preservation of the status quo. In the end, however, I have trouble with this result. To wish for the status quo alone is to go to bed at night hoping that at least 700,000 single mothers working 80 hour weeks can reach the poverty line. Such a wish is shameful.

Always low prices. Always.

2006-02-17T10:57:00.000-06:00

A recent New York Times story discusses an internal website used by Wal-Mart’s CEO and other top executives to communicate with store managers.  The story itself, not to mention the underlying posts viewable through Wal-Mart Watch, is extremely fascinating.  The story focuses on comments made by Wal-Mart CEO H. Lee Scott to managers of various Wal-Mart stores.  Managers ask questions, Scott replies, and so forth.

We all know Wal-Mart is massive.  The number of stores operated from Bentonville, Arkansas is numbing, with literally thousands of stores including traditional Wal-Marts, “Supercenters” and Sam’s Club—each inhabiting a square block.  Then comes the company’s impact on the marketplace.  Wal-Mart’s influence in various sectors (i.e. roughly a quarter of all movies sold are sold at Wal-Mart) is stunning.  Many are familiar with stories of rap and hip-hop albums that go to market with the original version, and then send Wal-Mart a screened version knowing that the original will not receive any orders from Bentonville.

The internal website discussed in the article is called Lee’s Garage—clearly after H. Lee Scott.  The chummy name of the website discussed in the New York Times article seeks to call back images of Scott working in a gas station pumping fuel, notably juxtaposed by his current $17 million compensation package and discussions on the website of his private meetings with British royalty.  Though this has always been the odd irony of success at Wal-Mart.  Many are familiar with the stories of founder Sam Walton’s wealth, such as when he drove around in an old pickup truck even when he was the wealthiest man in America.  But the irony continues with stories of businessmen who visit the Bentonville headquarters, surprised that a company with sales in the billions maintains offices so Spartan.  Or the company’s stubbornness to maintain its headquarters in Bentonville—where just viewing a few photos makes you quickly wonder whether Scott’s $17 million package is a luxury or a necessity to bring talent to company headquarters (though Scott himself rose within the giant’s ranks).

But controversy and press usually focuses on the employees.  Wal-Mart calls them “associates” even though I sense that the word does more harm than good in being laughable.  Scott claims that the media loves negative stories.  I couldn’t agree more—though Scott must know such a claim does little to question a story’s validity.  Further, Wal-Mart is not merely demonized in the papers.  The company paid massive sums when caught avoiding overtime payments.  More recently, a jury found Wal-Mart in violation of more labor laws when the company failed to provide 116,000 California workers meal breaks.

Scott claims to visit at least one store each week, and to drop in on meetings unannounced to keep managers from filtering content when he is present.  Such tactics seem well reasoned, but they only further call into question the root of the labor problems.  Wal-Mart has always pointed the finger at individual managers for breaking the law even while Bentonville does nothing but assure full compliance as official company policy.  (Downstairs Kenneth Lay and Jeffrey Skilling are trying the same tactic with Andy Fastow.)  Yet Scott’s management techniques imply that he is on top of things.  How can 116,000 workers in California be denied lawful meal breaks without anyone in Bentonville knowing?  The sheer numbers in some of these class-action suits imply that either Bentonville knows, or Bentonville does not want to know.

I’ll end this post with one point to flush out the last allegation.  Wal-Mart presses everything down.  Prices must come down, costs must come down, expenses for every tiny piece and step must come down.  Bentonville can apply pressure throughout the system with tactical precision.  Rather than finding ways to cut labor costs, Bentonville can press managers to cut costs, look only at the numbers submitted, and then claim ignorance when class-action suits show just how the manager got those numbers down.  If Wal-Mart is too large to know what it happening to its employees around the world, the company must continue to suffer massive judgments, poor publicity, and stagnation in the face of flourishing competitors.  Scott is not fooling anyone, and his attempts to make the case for Bentonville seem only to further its demise by proving that a company so utterly obsessed with detail cannot realistically be oblivious to so many blatant labor violations.

The Deserving Poor

2006-02-14T22:29:00.000-06:00

In David K. Shipler's book, The Working Poor: Invisible in America, he briefly discusses the concept of the "deserving poor" as a term used in evaluating the actions and choices made by poor people who may be eligible for benefits. Clearly the concept and related concerns overlap with the general (mis)conception that many poor people are lazy. I think this idea of the lazy poor needs to be addressed before the "deserving poor" is discussed.

Obviously some poor people are lazy, just as are some middle-class and upper-class people. But are poor people generally lazy? Do we, as a society, need to prod the poor towards work like cows on a field? (The comparison is purposely offensive as I believe our general concepts and terms are offensive in barely more subtle ways.) The answer to these questions is: NO. Poor people and low-income individuals are perhaps on the complete opposite end of the spectrum. These ideas are certainly somewhat new to me, but hundreds of accounts of people at the bottom of society's income spread indicate that 1) the poorest Americans (or illegals) tend to work the absolute hardest jobs for the longest hours, and 2) poor Americans are extremely proud.

Think for a moment about the jobs a poor American is likely to perform: cleaning, farming, labor, etc. The jobs require tasks far harder on the body then any desk job or any white collar job forgetting the desk. So much can be said about the difficulty of these jobs, and I believe I've previously mentioned Eric Schlosser's powerful account of California strawberry pickers in Reefer Madness (the title refers to one of three separate reports). So much can also be said about the added vulnerability of physical jobs--as in the ease of working regardless of physical injury when you need only think and speak then when you need not think but must continually lift, push, pull, and bend. But conversations are better left for another post. The point here, is that lazy people might sit at a computer and trade stocks, or watch sports games and write about them, or play golf during the work day, or make phone calls from a comfortable chair. Lazy people do not clean toilets all day, lift hundreds of boxes in a few hours, or stand over a hot burner flipping burgers in a uniform. The jobs performed by the working poor are not filled but the bottom economic segment of society simply because no one else wants to work for so little pay, but also because no one wants to do those jobs.

My second point goes to pride. The argument that welfare benefits discourage work has always seemed off to me, but my reasons have changed. At first it seemed illogical simply because this country is not known for its generous benefits. A poor individual in England may be able to obtain a decent lifestyle with only state benefits, but such is not the case on this side of the Atlantic. The evidence strongly indicates that American welfare benefits do not provide enough support to allow a family to put a roof over its head and food on the table without working. Indeed, the evidence indicates that working two jobs and using some state support is insufficient for basic necessities. So why would a poor person work if he could get welfare? For one, because he has to in order to survive. But my view has changed -- or rather expanded since having this thought. Account after account of poor workers in this country indicates that low-income Americans are an extremely proud bunch. I would go so far as to say stubbornly proud. Take bankruptcy where some indications show that only about 1/3 of people file bankruptcy of those who would benefit from a filing. Why don't more people file? Stigma would certainly be up there on the list of reasons. But what of welfare? Poor Americans do not always jump at the opportunity to claim a Women Infant and Children (WIC) supplement, or stuff their pockets with food stamps, or cash a social security disabilities check. Many accounts of low-income Americans indicate that a man might prefer getting a third job to taking state assistance. Or a woman may prefer to feed her children and barely eat herself over showing her face at a food shelter or getting in line for food stamps.

So are most poor Americans lazy? Quite the opposite seems more likely when they work the most difficult jobs for the lowest pay and are frequently too proud to take the state assistance for which they may be entitled.

Now we're back to the concept of the "deserving poor" -- and both its definition and truth. The deserving poor really seem to be the poor I have described above. Far easier may be identifying the undeserving poor -- or those who are lazy and prefer not to work. Those who are poor because of reasons outside of their control. I've already discussed what bothers me about the concept of the lazy poor, so let me end by mentioning what bothers me about the deserving poor. The concept's weakness is in proponent's failure to apply to concept across America's class spectrum. Anyone discussing the deserving poor must surely be open to discussing the deserving rich. The expansion is avoided, of course, but why? I'll use the Greek rhetorical circle and end where I began: with Shipler's words. To discuss who deserves what is to expose the "mockery of chance"--a fascinating thought.

[Please note that I've added an email address at the very bottom of the page. Feel free to email me directly at: socialjusticeblog@gmail.com.]

A Cut Above

2006-02-09T10:25:00.000-06:00

I discussed executive compensation in a couple previous posts, most notably here.  Something interesting has occurred recently in Detroit that is worth discussing.  Both Ford and GM plan to take significant steps in reducing costs.  Ford announced in late January that it would cut up to 30,000 jobs across 14 factories.  GM also plans to cut 30,000 jobs across 12 facilities.  General Motors, however, also recently announced that it will make significant cuts to executive compensation and its stock dividend, among other steps.  As the New York Times reports:

“General Motors, under pressure to show its blue-collar workers that investors and executives are also prepared to give up something in order to help overcome the company’s deepest losses in more than a decade, said Tuesday that it would reduce pay for top executives and cut its stock dividend by half.”

GM’s CEO, Rick Wagoner, loses $1.1 million in salary as the words come out of his mouth.  He’s still left with a $1.1 million for 2005, so you may not see him in the Michigan social services offices just yet, but it is a sacrifice of significant symbolism.  The CEO may nonetheless receive lucrative stock options, but none have been announced, and the company claims Wagoner will not get a bonus for 2005.  Beyond Wagoner, GM’s three vice chairmen will each take a 30 percent pay cut.  The executive vice president and the general counsel will see a 10 percent cut.  None of GM’s global executives will receive traditionally allocated annual and long-term cash bonuses.  Finally, the board halved its own compensation and non-employee directors announced that they will forgo all cash compensation for 2005.

All this adds up to one truthful statement from Wagoner: “Everybody’s got a piece of it.”

GM and Ford seem to have created the comparison in cuts.  Both companies plan to cut about the same number of jobs, and over roughly the same number of facilities.  But GM will also make cuts at the top.  The cuts by GM are not simply symbolic, but indeed responsible and necessary.  The move stands in sharp contrast to the cliché image of the CEO cutting jobs and benefits to low-level employees, and in return being rewarded with a fat bonus and further job security for himself.

The actual amount of the money here is insignificant to analysts looking at the mammoth company’s future, but analysts never seem especially impressed by intangible positive externalities.  I have little doubt sharing in the loss and sacrifice of turnaround efforts (probably no matter how small) has a lasting effect on the way a company approaches its operations and treats its employees.

GM should be applauded.

The Moral Buoy

2006-02-06T23:33:00.000-06:00

I know I have quoted the Two-Income Trap before (by Harvard bankruptcy law professor Elizabeth Warren and her daughter, Amelia Warren Tyagi). The book makes some excellent points but I nonetheless find myself struggling to agree with many of the finer points. In short, the endorsement by Dr. Phil on the cover is not the book's only problem. The book does raise some very interesting points and it attempts to deal with middle-class issues, as suggested by the subtitle: Why Middle-Class Parents Are Going Broke. After reading the book, "parents" is probably the wrong word, but it is "middle-class" that I focus on here.

This post is not about the recent changes to the bankruptcy laws, but there is little question that anti-consumer provisions were furthered in the new Act based on perceptions that the bankruptcy system suffers from abuse. That is to say, people are filing bankruptcy as a first resort to avoid responsibility for their debts, rather than as a last resort as it is more likely intended. General opponents of consumer bankruptcy could argue that we need to revise the system to keep people from avoiding their financial responsibilities. Proponents of consumer bankruptcy could similiarly argue that the system's integrity is at risk if we do not strongly police dishonesty and misuse of the system. Underlying both viewpoints is the misconception of the "immoral debtor"--to use Warren's term. I have little doubt that those intimately familiar with consumer bankruptcy would agree that the dishonest debtor (using "debtor" as defined under the Bankruptcy Code) is a rare breed. And when a debtor is found to have acted dishonestly in the bankruptcy filing, you can't help but be reminded of the person who steals to eat. The lies are used simply to keep a home, or to generally confirm a chapter 13 plan with "dishonest" optimism that three people can eat for a month on $100. On the stand, when pressed, they admit that this is in fact not true, and therefore they admit to a lie.

But why does this myth flourish if it is so weakly grounded in truth? Warren seems to decide that it persists because it makes us feel better, safer. I might add that it just seems to make sense to most people. It makes "us" feel better in the sense that it makes the middle-class American feel more secure believing that the causes of bankruptcy (read: financial disaster) are due to poor morals rather than poor luck. This concept fits in perfectly with Barbara Ehrenreich's logic in Fear of Falling: The Inner Life of the Middle Class. In The Two-Income Trap, Warren writes:

There is nothing glamorous or mysterious about the events that conspire to drive families into financial ruin. They are remarkably common, ordinary—and painful….[T]he list vibrates in harmony with the worries that keep them awake at night. What will happen if Grandma’s forgetfulness is actually Alzheimer’s? What if my husband’s company goes under?

The possibility that a family—our family—faces a rapidly growing chance of disaster is too painful to think about, especially if there seems to be little way to avoid it. The Myth of the Immoral Debtor nourishes the unspoken idea that families who have lost their financial footing are a tainted group, some “other” who are different from the rest of us….The myth supports a comforting illusion that the rest of us are safely distanced from financial collapse….

Unfortunately, the statistics and obvious reality indicate that the primary causes for filing bankruptcy are entirely out of our control. Such an understanding may make life feel more like a constant airplane ride, but it is certainly closer to the truth.

Pro se what?

2006-02-02T23:47:00.000-06:00

How proper for lawyers to use a term for the unrepresented litigant that the unrepresented litigant rarely understands. If you have a lawyer you're represented, or you have counsel. But come to court without a lawyer and you're pro se. Of course this is a relatively minor point, but I want to point out that from the moment the unrepresented litigant gets exposed to the judicial system, he is faced with systems practically designed to confuse him.

The unreprested litigant deserves equal access to justice in a manner he can understand. Yes, law is a specialized field, and we wouldn't want to make it so easy for people to use the court system that lawyers became less necessary, right? But seriously, we can do better. As lawyers and as a society, we can do better to make the judicial system more understandable and less intimidating to the indigent litigant, and the unrepresented litigant. We can and should focus first on where the unrepresented litigant is most likely to be exposed to the judicial system. I'm going to leave out traffic court for now, as the unrepresented party seems to be in the vast majority there rather than the minority elsewhere. No pun intended. We can forget small claims court for now due to the same reasons.

Unrepresented litigants most commonly find themselves in bankruptcy court and family court. The primary difference here is that bankruptcy courts are a division of the United States District Courts and thereby always federal. Family courts are state courts. While bankruptcy courts are federal, the different bankruptcy courts often have a tremendous amount of flexibility in how they operate and the rules they follow, and even individual judges can often make significant adjustments in that courtroom alone. Family courts obviously vary by state, and often contine to vary throughout each state. My familiarity with the particulars of family law is limited. If others can add to that aspect of the discussion your comments are appreciated. But even with local flexibility, changes are possible and perhaps even more effective at a centralized level (the U.S. Supreme Court for bankruptcy courts and each state's highest court for family courts).

There are many viable ideas when considering how to make courts more friendly to unrepresented litigants. The concept is hardly new. Various committees around the country and legal authors have discussed the issue. I have also seen small positive changes in the particular bankruptcy court I am most familiar with, and read about much more dramatic changes in Florida's family courts. These changes should be commended, but also watched to see what honestly works and what does not.

Sometimes the attitude of court staff alone drastically changes the way an unrepresented litigant feels. The stories I hear from unrepresented litigants (not complaining but merely relaying what they were told) ranges from surprising to shocking. Personnel in clerks offices throughout the country should be trained to treat the unrepresented litigant with equal respect as any attorney. If a person in a clerks office does not know the answer to a litigant's question, he should tell the litigant exactly that or find additional help. Unrepresented litigants with the wrong information and far worse off and vague or unintentionally false information can cause a tremendous amount of stress and later complications for the litigants. Moving from the clerks office to chambers, I'd simply encourage a more uniform education for both law clerks and judges regarding the difficulties pro se litigants face, and how we can appropriate help without worrying we will fall dangerously into giving legal advice. Many individual judges already do this, and that is surely as effective for those chambers as any more uniform system. But what of all the judges who don't?

Clearly, forms and procedures are the next area causing problems for pro se litigants. As I said before, Florida has taken steps to make life easier on family court pro se litigants. One example lies in forms as discussed here. In general, though, forms and notices are sadly confusing to the untrained eye. As mentioned above as a comment directed at the legal community: we can do better. There is no reason we cannot make it clear what a form or notice means in plain English. I could go so far here as to suggest that we roughly determine the average education level or reading level of the unrepresented litigant in family and bankruptcy courts, and create forms and notices specifically with that number in mind.

A much more difficult and expensive change lies in the very court structures themselves. The approach of the new Constitutional Court of South African is interesting in terms of the building design:

The building is noted for its transparency and entrancing volumes. In contrast to most courts, it is welcoming rather than forbidding, filled with sparkle and warmth. It has no marble cladding or wood panelling, but has come to be admired for its graceful proportions.

This is a good point and one that I, for one, never considered. The idea of user-friendly buildings unintimidating to the average person should be kept in mind as future buildings are created to house our federal and state courts.

So much more can be discussed, but I can end this particular post here. The very word "pro se" should be tossed out the window and replaced with a term that makes sense in plain English -- a word that, when a person is asked in open court "are you ____?" he or she can understand the question and answer yes or no. Then, once we toss out the word we can begin adjusting the rest of the system.

Risky Ride

2006-01-31T12:15:00.000-06:00

It is probably no surprise to anyone reading this that simple answers appeal to everyone.  We identify a problem and we seek to identify a solution.  This blog has continually pointed out—along with many social commentators—that the problems facing the lower income levels in America are not easily solved.  When the problems are intertwined it is only natural that the solutions would be the same.  Unfortunately, we’re not faced with a ball of yarn that can be easily unraveled by pulling on the loose end.  Many knots delay our progress along the way.  Nonetheless, this is all a long-winded introduction to what I want to discuss today: cars.

Besides living expenses, a car is where most Americans spend the next largest chunk of change.  This is the case for the upper-middle class and the workers with the country’s lowest wages.  Some advocates of increased social mobility point to the car as the missing piece of the puzzle for the working poor.  (See, for instance, here and here.)

Of course, there are significant problems working poor individuals face with car ownership or even leasing.  Those with poor credit and lacking capital for a down payment can face exorbitant interest rates leading to debt on a run-down used car often at the same price as a nicer, brand new car.  I know I put some readers to sleep with my last post, so I won’t get too technical in discussing bankruptcy-related issues here, but suffice it to say that the changes to the bankruptcy laws included a change relevant here that should be briefly discussed.

Say an individual owns a car worth $5,000 (book value) but owes $8,000 to the car lender.  Normally, that $8,000 is an under-secured claim, but nonetheless secured by the car.  Under the old law (pre-October 17, 2005), that person could file for bankruptcy under chapter 13 and alter the nature of the debt.  The chapter 13 would allow the person to owe only the value of the car ($5,000) as a secured debt and render the remaining debt ($3,000 here) unsecured.  The effect was that the person still had to pay the $5,000 or lose the car, but paid only a portion of the $3,000—in the same way that the person would pay a portion of his credit card debt.  If the person had a 10% distribution in bankruptcy he paid $300 so the car debt drops from $8,000 to $5,300.

The new law changes this result.  No longer can the over-secured portion of the car debt be “stripped” from the total.  Car lenders evidently thought this would help them get more money for those cars.  I join others in believing the end result is more likely a decrease in chapter 13 filings for debtors in such a situation, and many of the cars simply being surrendered (returned in satisfaction of the remaining debt) by those who still choose to file.

The advocates of car ownership for low-wage workers cited above seek to remedy the problems stemming from undesirable loans by offering low-interest loans (presumably through government assistance).  But owning a car is not like owning a house.  Cars (at least the cars we’re realistically discussing here) don’t appreciate, nor do they retain their value.  This is known.  What remains unknown is whether the used cars driven by our poorest workers will run without problems.  The studies the same advocates rely upon indicate that workers with cars make more money each week and work more weeks each year.  Car ownership apparently also has an empowering effect—though so does increased earning capacity in general.  Yet a car adds a dimension of risk not properly considered in these reports.  Older cars are known to break down, sometimes requiring them to be towed.  Many workers at this level have little or no savings.  All of a sudden such a worker can be faced with having to purchase a $500 part, paying for the tow, paying for labor to install the part, and all the while missing work (and therefore hourly pay).  What if the car breaks down entirely or to an extent the worker simply cannot afford to fix?  Now the worker must get to the old job without a car—perhaps easily accomplished but perhaps not.

To me, such a risk is the same as having to take your child into the emergency room, or having your spouse miss two weeks of pay after losing one job and before starting another.  Many authors have noticed, after interviewing poor workers, that something as small as a few days without pay or one more bill tips the already sensitive balance between daily survival and disaster.  Suddenly the rent is impossibly late, grocery money is tighter than ever, and so on.

What helps poor workers survive and potentially rise from poverty is not adding risk and expense, but reducing fixed costs, reducing the risk of unexpected costs, and promoting the mentality and logistics for fiscal responsibility.

[On a personal note, thank you to those who have continued to give me constructive criticism about the blog.  It is very much an experiment in progress and will hopefully improve over time.]

Bankruptcy and Consumer Protection

2006-01-26T14:25:00.000-06:00

As many of you know, some of the bankruptcy laws underwent moderate to significant revision recently (the vast majority of the changes took effect Oct. 17, 2005). Bankruptcy is a personal interest of mine both from a social standpoint and from a professional standpoint. For now, however, I'd just like to defer to a bankruptcy judge out of Austin, TX in his recent opinion dealing with a provision added on Oct. 17 when the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 took effect. Judge Monroe's opinion makes a strong and interesting statement--made all the stronger from the pen of a federal judge.

Judge Monroe's opinion is also discussed in a blog that frequently adds intelligent discussion to BAPCPA-related issues. I'm pasting the text of his opinion below. For those intested in the cite, it's 2005 WL 3627817 (Bankr. W.D. Tex. Dec. 22, 2005).

United States Bankruptcy Court,W.D. Texas,Austin Division.
In re: Guillermo Alfonso SOSA Melba Nelly Sosa, Debtor(s).

MEMORANDUM OPINION

FRANK R. MONROE, Bankruptcy Judge.

On December 20, 2005 at 10:00 a.m., the Court held a Show Cause hearing as to why this case should not be dismissed for failure of the Debtors to file a Certificate of Credit Counseling. The Debtors appeared pro se but had copies of pleadings which had been filed that morning by James R. Chapman, Jr., the proposed attorney for the Debtors. Such pleadings included a Response to the Court's Order to Show Cause. Additionally, the Debtors answered questions of the Court at the hearing.

This is core proceeding under 28 U.S.C. § 157 as it is a matter both arising under Title 11 and in a case under Title 11. As such, the Court has the jurisdiction to enter a final order in this matter pursuant to 28 U.S.C. § 1334(a) and (b), 28 U.S.C. § 157(a) and (b)(1), 28 U.S.C. § 151, and the Standing Order of Reference from the United States District Court for the Western District of Texas of all bankruptcy matters.

Statement of Law

The Congress of the United States of America passed and the President of the United States of America signed into law the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (the “Act”). It became fully effective on October 17, 2005. Those responsible for the passing of the Act did all in their power to avoid the proffered input from sitting United States Bankruptcy Judges, various professors of bankruptcy law at distinguished universities, and many professional associations filled with the best of the bankruptcy lawyers in the country as to the perceived flaws in the Act. This is because the parties pushing the passage of the Act had their own agenda. It was apparently an agenda to make more money off the backs of the consumers in this country. It is not surprising, therefore, that the Act has been highly criticized across the country. In this writer's opinion, to call the Act a “consumer protection” Act is the grossest of misnomers.

One of the more absurd provisions of the new Act makes an individual ineligible for relief under the Bankruptcy Code unless such individual, “has, during the 180-day period preceding the date of filing of the petition by such individual, received from an approved nonprofit budget and credit counseling agency described in § 111(a) an individual or group briefing (including a briefing conducted by telephone or on the Internet) that outlined the opportunities for available credit counseling and assisted such individual in performing a related budget analysis.” See 11 U.S.C. § 109(h)(1). No doubt this is a truly exhaustive budget analysis.

An individual who does not receive such counseling can only receive an exemption from such requirement if such debtor “submits to the court a certification that-(i) describes exigent circumstances that merit a waiver of the requirements of paragraph (1); (ii) states that the debtor requested credit counseling services from an approved nonprofit budget and credit counseling agency, but was unable to obtain the services referred to in paragraph (1) during the 5-day period beginning on the date on which the debtor made that request; and (iii) is satisfactory to the court.” See 11 U.S.C. § 109(h)(3)(A). In the event such waiver is granted, the debtor must complete such counseling within 30 days after the petition date. See 11 U.S.C. § 109(h)(3)(B).

Simply stated, if a debtor does not request the required credit counseling services from an approved nonprofit budget and credit counseling service before the petition is filed, that person is ineligible to be a debtor no matter how dire the circumstances the person finds themselves in at that moment.

This Court views this requirement as inane. However, it is a clear and unambiguous provision obviously designed by Congress to protect consumers.

Facts of this Case

In this case the Debtors admit they did not seek or request the required credit counseling services from an approved nonprofit budget and credit counseling agency before filing their case even though they talked to Mr. Chapman by telephone prior to filing and he rightfully advised them to do so. Instead they filed this Chapter 13 case on December 6, 2005, “as an emergency measure to stop foreclosure on their homestead.” See Debtors' Response to Court's Order to Show Cause. The Debtors responded to the Court's question as to why they waited so long to file their case by stating that they had been working with the mortgage company to determine the exact amount that was owed but that the lien holder had refused to accept payment at the last moment and that was what necessitated the emergency filing of bankruptcy.

Mr. Sosa has now undergone his credit counseling on Friday, December 16, 2005 and filed a Certificate. No certificate has been filed by Mrs. Sosa.

Decision

One Debtor has now substantially complied with the intent of the Act by undergoing the required credit counseling. One has not but still could within the time limit if a waiver could be granted. However, because the Debtors did not request such counseling before they filed their case, Congress says they are ineligible for relief under the Act. Can any rational human being make a cogent argument that this makes any sense at all?

But let's not stop there. If the Debtors' case is dismissed and they re-file a new case within the next year, it may be that some creditor will take the position that the new case should be presumed to be filed not in good faith. See 11 U.S.C. § 362(c)(3)(C). Section 362 further states that if subsection (c)(3)(C) applies, then the stay in that second case will only be good for thirty days unless the debtor (i) files a motion, (ii) obtains a hearing and ruling by the Court within such thirty-day period and (iii) proves by clear and convincing evidence that the second case was filed in good faith. It should be obvious to the reader at this point how truly concerned Congress is for the individual consumers of this country. Apparently, it is not the individual consumers of this country that make the donations to the members of Congress that allow them to be elected and re-elected and re-elected and re-elected.

The Court's hands are tied. The statute is clear and unambiguous. The Debtors violated the provision of the statute outlined above and are ineligible to be Debtors in this case. It must, therefore, be dismissed.

An Order of even date will be entered herewith. Congress must surely be pleased.

Thanks, Judge Monroe.

Look down before you look up

2006-01-24T12:37:00.000-06:00

A previous post entitled "International vs. Domestic" briefly discussed my wish that we first looked to helping people in America before helping those in countries like Africa. I think I failed to articulate what I really meant. There is no question that poverty and hunger in Africa is absolutely tragic. The same can be said for other areas of extreme poverty. But what really bothers me is how we in America believe that hunger and extreme poverty are problems found across borders and oceans. They are not. We have these same problems around the corner, down the street, or a few train stops away.

A passionate British organization called Oxfam now has a division in America. I find their approach to hunger advocacy and fasting interesting, but the same lurking ignorance highly disturbing. In advocating fasting campaigns Oxfam provides a planning guide you can download from the website here. Listen to some of the quotes given to help advocate the importance of fasting.

This is what Brittany Hansen said while attending Loyola Marymount in L.A.: "I did not choose to be born as an American into a country where food is so abundant that obesity, rather than hunger, is an issue. The [Oxfam] Hunger Banquet caused me to think a great deal. I felt moved to help those in need...particularly those who did not choose to be born into poverty...." Apparently Oxfam and Ms. Hansen think that hungery, poor Americans chose that over a better life.

Stephen Land, a lawyer in New York City who apparently had participated in their fasting program for over 30 years said this: "...I know that whatever I'm being asked to give up is stuff I would spend completely frivolously, because here in this country, we have vastly more than we need." This would be a rather interesting perspective to the thousands of American children who nearly fail school for failure to eat in the morning.

Oxfam and those advocating for the hungry and extremely poor people around the world have no doubt chosen an honorable cause. But to pursue that cause in a way that further perpetuates silence and ignorance regarding hunger in our own backyard is frankly irresponsible and self-destructive to the very cause they seek to promote.

Full Employment

2006-01-22T20:10:00.000-06:00

I had lunch the other day with a friend of mine who happens to be very conservative in most of his views. I mentioned to him how surprised I have been to learn about widespread hunger in America. He did a double-take and I had to repeat my point: “There are literally millions of Americans hungry every day.” He slapped his hand on the table in nearly spastic shock.

What he said is quite simple: 1) there are no starving Americans, and 2) this country is at full employment. Something didn’t seem right to me at the time, but I was too distracted trying to keep an open mind in front of a friend I was quickly realizing shared few of my values. Now I’d like to touch on his points.

ONE: There are no starving Americans.

This point has been discussed previously in this blog, and I plan to continue discussing the point. My concern is that I cannot seem to get an accurate sense of how widespread American hunger is in 2006. You find a good number from a reputable source only to see that it’s 20 years old. Disbelievers will simply point to changes made at all levels of government to rectify the situation. But I’m working on getting some accurate sense no matter how long it takes. Let’s go to argument #2 now because it inherently disproves #1 to the extent necessary here.

TWO: This country is at full employment.

That’s irrelevant to the issue of hunger. The simple fact is that every living American could work two jobs and we would still have hungry citizens. Let’s leave discussion of Wal-Mart, the minimum wage, etc. for this discussion because it only adds smoke to the scene. Instead, let’s talk about the United States military. Here I’m talking about American citizens, living in America, and obviously employed. There’s a little known secret Loretta Schwartz-Nobel helps uncover in Growing Up Empty: enlisted men and their families go hungry all over this country every single day. This isn’t coming from Schwartz-Nobel’s research, but from informal interviews conducted with people who help feed our hungry soldiers and their families. A group in San Diego called Military Parish Visitors claims to have fed 10,000 active-duty military families in 1999. Three factors largely determine whether an active-duty family goes hungry: 1) whether the soldier is married, 2) whether the soldier has children, and 3) where the soldier is stationed. We can discuss this at length another time. Here, I just want to use the military to point out that it is likely that every military base in the United States has thousands of starving soldiers and families living on or near the base.

Assuming for a moment that the husband is enlisted and the wife stays home with her two children (usually very young children as we’re talking about very young soldiers), the husband is given money for food. No money is provided for the wife and children. Sure, the wife could work—especially if we’re at full employment (i.e. the moment she actively seeks work she’ll get it). But then who takes care of the children? Often it appears that childcare costs equal roughly the pay she can expect at a job. So she can either stay home and breastfeed her children or go to work, leave her children with someone else, and end the day financially at pretty much the same place.

In fact, these people are SO poor that they don’t have $14. That’s right—in one example relevant to the families helped by Military Parish Visitors, families can join a program called SHARE where they pay $14/month and work two hours in exchange for a significant amount of food each month. The director of Military Parish Visitors tells of the one problem: many of the young enlisted men do not have $14 early in the month when it is due.

Why don’t we hear more about this? Well it’s complicated but it appears that enlisted men and women and their families are too proud to admit that they are soldiers but can’t afford to feed their kids, and of course, the military has a distinct interest in keeping things the way they are and discouraging the young enlisted men from questioning the establishment.

Let me then take a step back for a second and add that there is generally no relationship between employment and homelessness. Obviously homelessness is poverty in its utter extreme, but this also means that homeless people are logically amongst the least likely to have a consistent food supply. America has a couple hundred thousand homeless people at the moment, and perhaps 100,000 homeless children. Commentators have pointed out that as unemployment has gone up and down (even to historic lows), homelessness continues to increase. Thus, as I said above, employment levels and homelessness appear entirely unrelated.

There is also an increasingly odd relationship between employment and food assistance. Welfare to Work legislation obviously aims to get someone who is dependent on food stamps, for instance, to become dependent on a paycheck instead. But to push this goal the legislation "rewards" work by cutting off benefits like food stamps. So much misplaced energy goes to preventing fraud, that the moment a family has a working member the state can stop allowing the family to have the stamps. But there are huge problems with this result. Some are so obvious I can't believe I'm going to write them, but think about it for a moment with me. Maybe the husband's goal is to get two or even three jobs to properly support his family. You usually can't go out and find three jobs that will hire you and let you start working at the same time. So maybe you get one job and then work on the next one or two. But that one job does not give you enough money for food. Realistically, he's probably working 30 hours/week which is a typical amount for a low-wage job. Technically he's employed and my friend loves to see that he is part of America's full employment statistic. The government also loves this because now that he has a job he apparently doesn't need the stamps. This is obviously wrong. Often times two jobs are not enough with low wages. Thus, until the husband can get a second job, the family is worse off with one job and no stamps than with no job and stamps. Of course, some of the legislation's effects don't leave people with that option for long, but the point cannot be lost. Work is not a panacea.

In short: plenty of Americans of all ages are starving, full employment is irrelevant, and I’m not having hunger discussions over a meal anymore.

Charles

2006-01-19T22:47:00.000-06:00

I met a homeless man today -- I really met him, unlike any other interaction I have had with a homeless person in the past. The funny thing is, when I started this blog I figured I'd have to go out there and meet some homeless people to see how they live, what caused them to be homeless, etc. That's not how this happened. Instead, I was just walking to lunch by myself down one of the main streets in downtown Houston. A homeless man on the corner asks me for some money. He looks pretty old and in bad shape -- at least I can see that he's on crutches and if he's in half as bad a shape as the crutches he's having a good day. I only had $1, plus some $20 bills. So I gave him the $1.

I felt a bit bad, so I made a somewhat passing comment that I was going to buy some lunch but I'd be back this way probably with change. It was a line that just rolled off my tongue without meaning. I suppose I've spit up lines like that before to help from swallowing the guilt that I know is coming. But this man asked where I was going to get food. No homeless person has ever asked me that. I said I didn't know but if he wanted something I'd bring it back. He pointed to a convenience store down the block and said he could get something there. I offered to go there and bring something back back but he instantly said he'd come with. Now he looks homeless and he's on crutches that no one needing crutches should ever be using. I am in my suit and tie. Walking down that block with him was a pathetic growth experience on my part, for it made me realize that I'd happily walk to that store with Ken Lay, but I was extremely self-conscious to be seen walking with this man. Yet you quickly get over that when you talk to the person.

His name is Charles. He never thought he'd be homeless. He asked me for food because he hadn't eaten in a day and a half. He never thought he'd be homeless but "they" cut his check off recently. I asked why, and was given as honest an answer as possible: he was caught committing check fraud. He said it in a way that wasn't apologetic but wasn't careless. The pause asked for follow-up and Charles said he just couldn't live on what he was getting. Now we were at the convenience store. Charles draws extra attention because one of his crutches doesn't have the rubber bottom. So we're talking about metal on concrete--or tile in the store. He ordered some fried chicken and was sworn at in Spanish by the woman behind the counter for not being clearer at first that he wanted fries with his chicken. So some fried chicken, french fries, an orange juice and two pastries later we left.

The worst part of the entire experience was how Charles wouldn't stop thanking me. I said the first thing that came to mind in an effort to make him stop without myself sounding like an idiot: "Charles, you don't have to keep thanking me. If the situation was reversed you'd do the same." He never thanked me again until I handed him a $20 with the food and said goodbye. $30 in food and cash just made a crippled, homeless man's day and it made me pause about as much as ordering a round of drinks at a bar I'd typically frequent.

When I was in college I studied Buddhism along with a few other religions for my major. I remember my favorite concept in Buddhism was that the Buddha can be reincarnated as anything or anyone. He might be a bird, or a CEO, or a salmon, or a homeless man. And because you never know, you have to treat everyone (and I suppose everything) like he might be the Buddha. Rabbi Hillel would agree. Five years after graduation I finally realized what I learned.

I hope you don't mind that I've shared this experience with you.

Fixed Costs

2006-01-19T00:45:00.000-06:00

Sorry, that's not a very sexy title. I had some ideas but opted for boring over stupid. Anyway, at least it is accurate.

In reading books on middle-class Americans and academic literature on this or that problem for working Americans (of all classes) with their respective solutions, one thing astonishes me: few people remember that it’s all about the fixed costs. As David Bach stresses in the Automatic Millionaire: what matters is not how much you EARN, but how much you SPEND. This is a very basic concept. Thus, as the authors of The Two Income Trap point out at length, having two income-earners is not the answer to financial security. The Two Income Trap quotes a particularly stupid paragraph from the book, She Works/He Works: How Two-Income Families are Happier, Healthier, and Better-Off -- but it provides a good example of how many authors miss the real issue. This is the quote:

“Because they have two full incomes that help buffer them against the terrible wrenches of a changing economy, they do not feel the gut-wrenching vulnerability of standing at the edge of a pecipice, ready at any second to topple off the cliff if a company downsizes or relocates….The duel earner family offers economic stability, protection against financial disaster.”

OK—but are we not missing the obvious questions? For instance, does this hypothetical couple already spend both spouses’ salary? If so, then how is the second income a safety net? If anything, it is a liability, for it has brought them accustomed to a lifestyle simply unsustainable without two income-earners. As is evident when you look at the numbers (and as I have seen many times now in watching bankruptcy proceedings), nothing matters more than your home and your car. If one spouse is laid off you cannot simply eat oatmeal to still be able to pay the bills. And for those people who take it easy on car payments, share a car, etc., that means the mortgage payment is the ONLY thing that matters.

Take the hypothetical, middle of the road family used in one discussion from The Two Income Trap. (Why start my own example when I can build on a Harvard law professor's hypothetical?) This example uses year 2000 dollars, but if you want, you can quickly adjust the numbers using this: http://www.westegg.com/inflation/. The family is well above the median income level in America with a $67,800 combined income for husband and wife. We'll assume the family has two children. The family's fixed costs include a home in a relatively attractive area (for their income level) and two non-luxury cars (among other expenses). These fixed costs add up to 75 percent of the couple’s monthly income. That leaves the family with 1,412.50/month BEFORE taxes. Good luck saving away for a medical emergency or the husband’s company downsizing with that amount. First you’ll have to remove taxes (in this example they are taxed at 33 percent), then food, utilities, insurance, and everything else a couple with two children spends money on besides cars and a house.

Rather than just guess, I'm going to use the IRS National Standards for Allowable Living Expenses. These are national numbers based on gross monthly income, and again, we're using numbers for a family of four. We calculated that the family's gross monthly income equals $1,412.50. That means the family should be expected to spend, each month, $526 on food, $44 on housekeeping supplies, $170 on apparel and services, $43 on personal care products and services, and $188 on "miscellaneous" expenses -- for a total of $971. That leaves $441.50. No where in there is car insurance (let's say $75 for each of them), utilities (we'll guess $100/month), cable/cell phone/internet (a low number would be $200). But we've now hit $450 in the expenses not considered in the IRS guidelines, and we were only left with $441.50. I don't want to get lost in the numbers -- the point is that it all comes back to what we're working with: 25 PERCENT of the couple's income. They don't need to make more money to live absolutely fine -- they need to spend less on the cars and the house.

Get a cheaper house? The mortgage in this example is $9000/year (or $750/month). It is difficult to argue that such an amount is unreasonably high for a dual-income family with children. Maybe their car payments could be reduced? Well they are not dirt cheap, that is for sure. The hypothetical couple has two cars with monthly payments on each car at $333.33. Is that unrealistic? I’m not sure because it is difficult to predict without a sense of their credit. Is that nonetheless ridiculous? Well I would say yes considering they spend only $83/month more for their mortgage than their cars. Assume the couple spends less on their cars -- as is probably more realistic -- and they are now left with some extra cash to spend on the things we never thought of (preschool, car repairs, etc.).

So now the family can perhaps live within its means and spend about as much as it makes each month. This is the perfect world for such a family. According to She Works/He Works the family is better off with two income earners. Because both the husband and wife work the book argues that this family has a safety net -- they can protect against financial disaster. How? Where? That is simply not going to happen. The Two Income Trap makes a far more intelligent argument by pointing out that in the one-income family it's the non-working spouse who provides the safety net. You buy a house and finance your cars under the assumption that you make one spouse's salary. If that spouse is fired or a something else happens, the other spouse is the safety net.

This leaves us back at David Bach’s mantra: it only matters how much you spend, not how much you make. Millions of Americans surely face this situation. The temporary second job has been replaced the wife temporarily entering the workforce from decades ago. The permanent second job has likely replaced the wife permanently entering the workforce.

So if it matters how much the family spends, why can’t they spend LESS? That seems easy, but is in fact an enormously complicated question, and goes to the heart of the worsening middle class dilemma—a discussion for another day.

The unrelenting struggle

2006-01-16T20:55:00.000-06:00

Today we commemorate Martin Luther King, Jr., and our discussion naturally turns squarely to race issues in America. Or does it? Well, that remains to be seen at the end of the day. As the massage therapist says when rubbing your foot to help relieve your neck—everything is connected. Race is solidly intertwined with poverty, low-income workers, urban decay, and so on. Race is also noticeably absent from much of politics. It took a long time for many major cities to elect their first black mayor. The Senate is dominated by rich, white men, the House is not much better, the Supreme Court is increasingly looking like the list of authors in a great books class, and conventional wisdom on the presidential barrier points first to a woman before a person of color.

I some respects, it is responsible and necessary that many social commentators put forth faces of white Americans to show hunger, poverty, and personify other social ills. This is often in an effort to represent a less one-sided face of American poverty. At the same time, sometimes I have the feeling we are over-compensating for the often inaccurate perception that poor Americans are black and Latino. Many problems facing the poor white family overlap with those challenging the poor black family—but many do not. The differences cannot be ignored. Of course, many differences are increasingly celebrated, and I was lucky to see the Bud Billiken parade years ago on Chicago’s south side, and Houston’s MLK parade this afternoon. But our cultures frequently feel no closer than England is to Africa. As Cornel West points out in Race Matters (written in the early 1990s), the vast majority of white suburbanites live in towns with less than a 1 percent black population. To me, such a comment is hugely significant.

I am Jewish, and have often heard and stated that we, as a group, comprise less than 2 percent of the American population. Those unfamiliar with this statistic frequently seem shocked that the number could be so small. Yet in many suburbs of America’s largest cities, blacks comprise an even smaller percentage. Nearly everyone I know grew up in such a suburb. How can we be expected to know what issues are really facing contemporary black Americans? If it’s not visible from the train window, off the interstate, on the news, or somewhere else that passes effortlessly before our eyes, we never see how many black Americans live. We can then discuss jobs, housing, welfare and other social issues in the abstract. West is rightly hard on liberals and conservatives alike. And the media just gives us what we want to hear in a pretty, good looking package. George Will could just as well be writing in a sterile bubble. Even West has to go out of his way to return to areas rife with black poverty.

Days like to today remind me that we need to take a more realistic, comprehensive approach to problems of race (and poverty) in this country. Everything looks relatively nice and neat to most of us—just as to the mother who cracks her child’s door to ensure that he’s cleaned up his toys. But we need to check under the bed, lift up the carpet, and look in the closet. The longer we wait the more we’ll find there. As West says in the introduction to Race Matters: “we are on a slippery slope toward economic strife, social turmoil, and cultural chaos. If we go down, we go down together….The paradox of race in America is that our common destiny is more pronounced and imperiled precisely when our divisions are deeper.” Our schools are still largely segregated. Blacks earn less than their white counterparts. Black men are disproportionately stopped by police officers, charged with crimes, and incarcerated. Poor black women are urged to have fewer children without proper sex-education or contraception. And Cornel West, a professor at some of the most prestigious universities, finds himself ignored by ten consecutive available cabs in New York City. He has reached the pinnacle of professional success and yet he is left feeling like the kid no one wants to pick in gym class. White Americans never seem to remember how blacks are truly treated here, and black Americans are never given the opportunity to forget.

The fact that American race-relations show marked improvement is as dangerous as it is helpful to black Americans. Peaking in the room and seeing the floor clean may only mean that we’ve pushed the mess out of sight. But in the end, we may find that the CEO in his shiny skyscraper and the black child in an urban ghetto are no less connected than the foot from the neck.

I’ll leave my closing to the words of a man who retained unwavering optimism until his last breath:

“I have the audacity to believe that peoples everywhere can have three meals a day for their bodies, education and culture for their minds, and dignity, equality, and freedom for their spirits. I believe that what self-centered men have torn down, men other-centered can build up.”

--Martin Luther King, Jr. (Nobel Peace Prize acceptance speech on December 10, 1964 in Oslo, Norway)

Welfare to Work

2006-01-12T02:19:00.000-06:00

How many people have heard that welfare creates a disincentive to work? In fact, no respectable study shows any such effect. It was quite surprising to me when I first discovered this, but it makes sense. Perhaps people believe that welfare creates a disincentive to work because it seems like human nature to only work if you need money. But it equally seems a part of human nature to want to be good at something, to want to feel useful, to want to feel like you have a purpose. Even if that purpose is to show up at 9 a.m. for work, there's a difference knowing that someone is expecting you. (Some make convincing arguments that these very reasons are the primary motivations behind young, poor women having children. Now an unemployed woman who does not excel at school and has little to look forward to has a reason she's needed. Maybe a boss isn't expecting her tomorrow morning, but her baby certainly will be needing her.)

Equally interesting welfare statistics are the ones we don't hear so much about. In Growing Up Empty, Loretta Schwartz-Nobel points out major university and non-profit research indicating links between welfare and violence. Familes on welfare are three-times more likely to experience domestic violence than other families. Poor women face it the worst. Studies of various areas of poverty around the country indicate that 60 percent of poor women have been severely assaulted by a male partner. Over a third of the same women have had their lives threatened. Maybe we all expected that poor people lived in dangerous areas. But this is INSIDE their homes. Think about that the next time you feel safer alarming your house.

And there's more. Let's say someone writes me a comment tomorrow pointing to rock solid evidence that people on welfare are less likely to work--or maybe you just don't believe me. Well why are they less likely to work? We discuss welfare as though it creates a disincentive--in other words receiving welfare CAUSES one to be less inclined to work. Maybe they're really just related. We've already discussed a woman's circumstances at home. More likely than not, she is currently being abused, has been abused, or lives in fear of abuse. Of welfare women abused in the past, nearly 1/3 are forever left with a physical handicap or other serious problems (including mental or emotional). Could that be why they are less likely to go to work? Still more, what does it take to GET to work? Schwartz-Nobel actually visited Marks, Mississippi, made famous by Martin Luther King, Jr. immediately before his death. In Marks, one job apparently requires you to stand in tubs of water and skin catfish. The other job requires you to travel by public bus a substantial distance to a casino. That's it--just those two. What if you want to find a job and feel useful but there just aren't any? What if you can't stand in water all day?

The title of this post--"Welfare to Work"--obviously represents a political effort to discourage welfare and encourage work. The very name of this program seeks to reinforce what we THINK we already know: that you're more inclined to work if you aren't on welfare. This appears to be false, though it does sound darn good. As a solution to the problems of the poor, it is also easy, cheap, and very clean. Groups like Business Interface, Inc. (the new www.welfaretowork.org) take a much harder, more realistic approach to the same problem.

This post is simply to open the discussion on welfare. Citations, references and statistics to come.

The higher you climb...

2006-01-11T01:22:00.000-06:00

One problem with a blog on social justice is that are so many different issues to discuss and many are very complex. There's the continual dilemma of whether to fully consider a topic or keep up a variety. Here, I'm continuing on my discussion of compensation but I promise to stop for a while after this one....

I previously mentioned the highest paid CEO in America: Terry Semel of Yahoo, who earned just over $230 million in 2004. Overall, the CEOs of the 500 largest American companies earned $5.1 billion in 2004. Forgetting the sheer magnitude of this number, consider simply the trend of CEO compensation. From 2003 to 2004, these 500 CEOs earned a 54 percent increase in pay. The top paid CEO is also indicative of the trend at the top—the top paid CEO in 2003 earned $148 million. Thus the difference at the top is one of $82 million, but perhaps we should talk about it this way: it was an increase of 1,822 median income families (about a 7,000 person town). Lawyers like Bob Stucker (who I've mentioned previously and intend to represent only an example) will always find new ways to mask executive compensation, but increases of such a scale cannot be hidden at any hourly rate.

But in their defense, a 54 percent is not the norm. The comparable group of 500 in 2003 increased compensation by 8 percent from 2002. And in 2002 their compensation actually decreased 35 percent. Even after my previous discussion of “compensation” as a less misleading word than salary, compensation, etc., there are still ways to keep the top man happy while making it look kosher to everyone else. Many CEOs made up for lost compensation through other means, like significant increases in stock options. And while Semel’s $230 million may seem insane, Computer Associates CEO Charles Wang made $650 million in 2000 (almost entirely from vested stock options). I guess it’s good to be the king. Even the CEOs of large charities routinely make $300,000 to $500,000/year (Abe Foxman, for instance, brings home over $424,000/year).

Using 2004 dollars, the median family income in America did not increase one dollar between 2003 and 2004. Now I really am trying to be balanced here. Of course minimum wage is only one factor at the end of the day to many of America’s poor—especially the working poor. We have to consider the Earned Income Tax Credit (EITC), food stamps, and other programs. If the wages remain constant but the EITC increases across the board, then it somewhat moots the point. So let’s put it in perspective with one additional statistic: at the same time, (2003 to 2004) the demand at food pantries rose 17 percent in many cities, and consumer debt reached an all time high. Is that latter a result of a excessive consumer culture? We will discuss that another day, but I don’t believe so. If there’s one thing that lower-middle class and working poor spend more it’s the mortgage payment (not the fancy TV).

To some extent, the absurdity of all the numbers above is comforting. Elements of this trend are simply not sustainable. As I discussed with a close friend the other night, most people already know that the top 1 percent of America holds a massively disproportionate amount of wealth. There’s no news flash here. But consider the upward trend in executive pay relative to your average American. It is frightening. The majority of America is worse off every year and a small group of political and economic elite just get a larger slice of the pie. Market forces at work or a disaster waiting to happen?

I talk to people about this type of problem and they ask: so what are you going to do about it. Well for now, nothing. But thinking and talking about these issues is a good step at this point. As Milton Friedman points out in his 1982 preface to Capitalism and Freedom, talking about change helps us keep our options open when circumstances make change possible and necessary. When the change becomes necessary, it is the ideas that are “lying around” that become critical. It is our responsibility to develop alternatives to existing, inferior policies, and to keep those ideas “alive and available until the politically impossible becomes the politically inevitable.” I don’t often quote Milton Friedman, but he was a proponent for change, and he held strong, patient views on precisely how to effectuate those changes. I hope we can do the same.

What's in a Word?

2006-01-08T15:42:00.000-06:00

I left something out in my last post that should be discussed when raising the concept of awareness (and especially relevant because I also took this idea from Ehrenreich). Ehrenreich never fails to quickly point out if a word is "suspicious" but easily overlooked when used in casual conversation. And thus, the point of the present post is to raise awareness that words often have meanings we never intended.

We already know when this is painfully obvious in politics. Take the "insurgents" in Iraq--or are they 'freedom fighters"? It is certainly a lot harder to hate them when the name suggests that they are fighting for a basic right. But it's just a name. The same guy uses the same bomb and kills the same number of Marines regardless of what you call him.

Abortion is another clear example. Obviously, when two people disagree they usually hold opposing views. One person might be for marijuana legalization and another might be for retaining the status quo on drug laws. Yet taking opposing views is harder when someone claims they are "pro-life"--for anyone who disagrees with that person's view of abortion must be anti-life or pro-death, or something similar. And the person who supports the viewpoint known as "pro-choice" puts his opponents in a similar dillema. Even worse is a "partial-birth abortion"--which could just have easily been termed a late-term abortion. But the two terms illicit different responses. I, for one, can't say "partial-birth abortion" without smiling--for I know how hard a group of "pro-lifers" worked to get me to use that word.

Ehrenreich subtly urges the same awareness over far less controverial words and concepts. (My examples are frequently my own, so don't blame her if they are bad.) Take words like "profession" versus "job". (I'm leaving the periods outside the quotes for this discussion even though it is grammatically incorrect.) How about "career"? The dictionary on my Mac tells me that a career is: "an occupation undertaken for a significant period of a person's life and with opportunities for progress." Is that what you thought? So the guy at Subway who never intends to leave is engaged in a "career". He can certainly get raises, become an assistant manager, etc. But the words are not used this way. An executive at a bank is engaged in a career, while the bank teller is working at a job. The lines seem less clear than implied in conversation.

Why do we call people who work as hard as they can and try to make as much money as possible "ambitious"? Aren't people like that "greedy" -- "having an intense and selfish desire" for money? But what are they after anyway? I could say "money" and "power". They might say "wealth" and "professional success". With that job, do they just get "benefits" like the janitor, or do they also get "perks"? Next time you hear someone use this word while holding his head high, remember that it is a "special right or privilege" but also historically "a thing that has served its primary use and is then given to a subordinate or employee as a customary right."

So this all raises the question of why we bother changing words or the meaning of words. Sometimes this seems to make a word sterile. It may be more respectable to seek wealth over money--to seek "wealth" and just so happen to become "rich". Another reason may be that it reinforces the class systems. Ehrenreich implies that you can talk to your friend over a cappuccino and discuss your "compensation". Construction works don't get "compensation"--they get "wages". Just as they don't get "perks"--only "benefits".

But I'll argue with Ehrenreich on this point. To some extent, we need these words. When we keep the words the same it allows the rich and powerful to evade true comparisons. If we only discussed salary, for example, then CEOs would seem to make far less than they actually bring home each year, for CEOs receive deferred compensation, stock options, etc.. When you have lawyers like Bob Stucker out there you need words like compensation that will encompass anything that ultimately gives an executive more money. Some calculations even include large expense accounts in an executive's comensation because it may be yet another way to game the system. Interestingly, www.charitynavigator.com does this. Perhaps it has become a way for CEOs of charities and NPOs to make the same amount of money in salary, spend less of it on the things they need, and therefore walk out at the end of the day with more. I'm not sure what portion, if any, of Abe Foxman's $424,000/year from the Anti-Defamation League includes an expense account. The same could be said for a word like "needy". In some respects, "needy" is sterile, for it brings forth a picture far less disturbing than words like "starving". But "needy" can help fight back misleading statistics. With "needy" there is no difference between starving and malnourished, between people who don't have a roof over their head and kids who don't have proper textbooks. Needy lets us pool together basic necessities and say that THESE people have unfulfilled basic needs. It's much harder to spin "needy" then it is "hunger".

In sum, what's in a word? Well, sometimes a lot. Some words reinforce elitism (regardless of intention). Other words sterilize actions and qualities that are otherwise frowned upon (even by the very people doing them). Still other words allow expansive meanings to fight back spin and hair-splitting. If you hear a word that makes you think about any of this, I'd love to hear about it.

Homework

2006-01-05T22:37:00.000-06:00

Some people who know me and have read this blog commented that it may be too far to the left. I aim to put forth a balanced view in an effort to understand where the truth lies (often somewhere in the middle). I am hoping it is only the topics I've chosen so far that have left this taste -- to be remedied in time. But this made me think of sharing something I've thought about recently. It is homework, I suppose.

This idea comes from a comment in (I believe the penultimate chapter of) Barbara Ehrenreich's Fear of Falling. She is now best known for Nickel and Dimed. Ehrenreich doesn't phrase it exactly this way but it is the same idea. The concept is brilliantly simple: open your eyes and think about what is in front of you. What I mean is, if you are sitting on your porch and you see a perfectly pruned bush, think about how it came to look that way. Who pruned it? How much do they get paid? Where do they live? When you're at the grocery store and you pick up a carton of berries, just think about how the berries got there. Someone had to pick them. Someone had to drive them to the store in a truck. Someone had to take them off the truck and put them out on the shelf right there in front of you. How about a diamond ring? A wood table? A clean public restroom? Your McDonalds french fries?

But the concept doesn't apply only to object. How about the woman behind the counter at McDonalds, or the janitor that drops in to empty your garbage, or your waitress at the deli? My homework here is to just think about their lives for a second. Do they have kids? How much do they earn? How far would that money really go? How tired is she when she has to stop being a waitress and start her second (or third) job as a mother that night?

Whether your views are on the left, the right, the fancy diagonals that we keep creating and renaming, it does not matter. Statistics and academic arguments have their place, but they all come back to the people and things right before your eyes. I have ignored so much. Starting tonight I'm going to pay more attention.

International v. Domestic

2006-01-03T09:46:00.000-06:00

I cannot argue that international issues are not important, or that they are not sometimes of ultimate importance.  Nonetheless, it seems foolish for a country to ignore domestic issues in favor of international issues.  How can we discuss America’s involvement in fighting hunger in Africa, for instance, when highly respected physicians have repeatedly cried out that millions of Americans die from starvation every year?  (More on this another time, but it’s true and it keeps me up at night.)

Perhaps we can learn from our efforts and strategies internationally when working domestically.  This could include education and awareness, policy initiatives, and a variety of other avenues.  Just touching on education for today, take one of the more prestigious international education programs: the Fulbright Commission.  The Commission quotes its founder stating:

The Fulbright Commission aims to bring a little more knowledge, a little more reason, and a little more compassion into world affairs and thereby increase the chance that nations will learn at last to live in peace and friendship.

I don’t think we can change the world overnight, but what if, every single day, we can add a little more knowledge, a little more reason, and a little more compassion into domestic affairs.  A little more knowledge about the struggles and predicaments of poor and middle class America, a little more reason to our policies and news coverage, and a little more compassion to our stereotypes and prejudices.

Class Is In Session

2006-01-02T16:58:00.000-06:00

When I talk to people about social stratification, we often have to pause and make sure we’re on the same page.  How are the classes defined?  To ensure that we're comparing apples to apples, we'll have to get technical for a second and into the numbers.  Obviously someone who makes $10,000/year is in the lower class (and deemed part of America’s working poor) and someone who makes $500,000/year is in the upper class.  But where exactly do we draw the line?  In other words, where does the middle class begin and end?  Not everyone agrees, so let me first discuss some different views and then make it clear what I mean when I write lower, middle or upper class in this blog.

Starting with the straight dictionary definition, the lower class is often described synonymously with the working class.  To me, this is problematic in that it does not seem inclusive of the homeless or the unemployed.  Nonetheless, the working class is the group of Americans who earn wages (rather than salaries), and are frequently employed in manual or industrial work.  We can all agree that the lower class is at the bottom.  No one is below.  Moving to the middle class the dictionaries essentially state that they are in between the lower and upper, and include Americans frequently employed as professional or business workers.  Now this seems overly inclusive.  A lawyer, banker or doctor is a professional in the traditional sense of the word, but certainly many individuals of each category make far too much money to remain in our “middle class” description.  A more accurate sense of “professional” might include social workers, teachers, pilots, architects, engineers, accountants, middle management, etc. (some commentators call the latter groups “pink collar” workers).  Then the dictionaries define the upper class unsurprisingly as the group with the highest social status—and the word “aristocrat” usually pops up somewhere.

The dictionary definitions would imply that we determine class largely by occupation.  To see a breakdown amongst industries we can turn to the U.S. Census Bureau.  The most recent statistics cover 2004 (and imply that the Census workers may have forgotten to drop by the penthouses and affluent suburbs).  The industry with the highest average pay is Management of companies and enterprises at $56,073/year.  So these would be the richest professional or business workers in the dictionary definition of middle class.  Break it down even more to occupation and lawyers top out at $71,868/year.  In the lower class we have, among others, Agriculture, forestry, fishing and hunting at $25,434/year and Accommodation and food services at $21,234/year.

The average American household earned $44,684 in 2004 (household includes anyone living there ages 15 and above).  But it is clearly difficult to piece out the classes using this logic when you move toward the middle of the earning spectrum.

Leaving the dictionary definition, we can look, to other calculations by the Census Bureau for guidance.  The Census Bureau also breaks income across the country into fifths, with a separate calculation for the top five percent of income earners.  Using the most recent data (2003), the Bureau calculates that the lowest fifth of the country earned up to $17,983.  This is clearly the lower class and includes the poorest of the poor.  The second fifth earned $17,984 to $33,999.  We could arguably consider this fifth to be the upper lower class or the lower middle class.  It seems that the second fifth must be split and overlap on either side.  A teacher earning $33,000/year is unlikely to be considered lower class.  The third fifth (or middle fifth) earned $34,000 to $54,439.  This is squarely in the middle class.  The fourth fifth and fifth fifth (or highest fifth, to avoid a tongue twister) earn $54,440 to $86,859 and $86,860 to $154,119 respectively.  These both seem to fit accurately in the middle class definition, with the highest earners arguably deemed the “upper middle class”.  Then we have the top five percent income earning American households for 2003, earning $154,120 and above.  The highest paid worker in America?  That would be Terry Semel as CEO of Yahoo.  Semel brought home over $230 million in 2004.  Thus, from $154,120 through Terry Semel, we seem to have identified the upper class.

Moving briefly to the private sector, the Drum Major Institute, a public policy think tank, believes that the middle class is conventionally known as those families earning between $25,000 and $100,000/year.  The American people may disagree, and polling data on who actually defines himself as “middle class” is interesting, but only further adds to the confusion.

For purposes of the discussions on this site, I will essentially be using the Drum Major Institute’s figures:

Lower class = >$25,000/year
Middle class = $25,000 - $100,000/year
Upper class = <$100,000/year.

One further term needs definition: poverty.  Two terms are used to discuss poverty lines: poverty threshold and poverty guidelines.  The poverty guidelines, issued by the Department of Health and Human Services, is the more commonly used calculation, and the one I will be using here.  Just note that anytime the term “poverty threshold” is used, it is likely to differ from HHS’s poverty guidelines.  Additionally, I will only be using the HHS guidelines for the continental U.S. here—Alaska and Hawaii differ.

According to HHS, an individual is “poor” if he earns less than $9,570/year.  A family unit is considered poor if the total combined income is less than $12,830/year with two people, $16,090 with three people, $19,350 with four people, etc.  (Just add $3,260 for each additional person to calculate any larger family unit.)  For now, we can ignore the potential problem that some families with many children may be deemed “poor” by HHS’s guidelines while still considered “middle class” by the Drum Major Institute’s class definitions.

Okay, now that we took care of that I hope we can avoid numbers for a while and talk policy.

Horatio Alger is Dead

2006-01-01T03:32:00.000-06:00

Horatio Alger is dead. In fact, Horatio Alger died 1898, but his fame and popularity stems from a simple concept most Americans regard with patriotic pride: the belief that we live in the land of opportunity. Our British cousins have their royalty, lords and dukes. India has its caste system. But in America, anyone can become President, CEO, or at least a millionaire. In fact, this idea of American social mobility is a fallacy of remarkable proportions. American society is already far less mobile than it has been from the country’s inception. The most pessimistic evidence lists the United States among the less mobile first world societies (behind Canada and many European countries). But even conservative estimates indicate that a person has less than a 1 in 3 chance of moving up a class. At the lower end of the spectrum (bottom quarter), a person’s odds of moving up to the top quarter are roughly 1 in 10. Indeed, it is difficult even for a lower class individual to rise to the ranks of the lower middle class.

But is this a one-sided viewpoint? While someone can easily find studies showing that the sky may not be falling like I’ve stated, it is important to note that even those studies (indicating that social mobility remains relatively unchanged) paint a far less mobile America then most Americans imagine. Take a commonly cited study, for example, of 6,273 families across racial lines. When looking at these families over two generations, the economists found that only 6% of the poorest fifth ever made it to the top fifth. I’m not an economist, but those seem like pretty bad odds. In another study over two generations (again, a study that showed only a subtle decline in social mobility), economists found that a son or daughter in the 1990s was about 40% likely to remain in the same income bracket as his or her parents.

Such a conclusion might be shocking and difficult to swallow for most people. For if this is true, then the rich are rich not due to “winning” in a system of meritocracy, and the poor are not poor simply because they never bothered to make something of themselves. The Ivy Leagues are filled with legacies. The University of Michigan gives admissions preference to applicants with college-educated parents. How many non-first generation Americans do you know who became the first person in their family to go to college? How many college educated Americans do you know whose kids never graduated college?

But let’s slow down. Alger, a highly prolific author in the mid-19th Century, reinforced the American dream through characters like Ragged Dick and Tattered Tom. These were cheap, popular books detailing redundant rags-to-riches stories. Alger’s fame is carried on even today as a symbol of American social mobility. Unfortunately, his exaggerations in the late 1800s are somewhat ridiculous in today’s society. Nonetheless, I should point out that the Horatio Alger Association (of Distinguished Americans, Inc.) seeks to educate America’s youth about the limitless possibilities available to them through the free-enterprise system. Recipients of the annual Horatio Alger Award include such representative success stories as Gordon Moore (co-founder of Intel), Colin Powell (Chairman of the Joint Chiefs of Staff and Secretary of State), Sam Walton (at one time the richest man in America), Ronald Reagan (actor and former President) and Oprah Winfrey (at one time expected to be the first black billionaire – she passed the mark but wasn’t the first).

I am not saying that the American Dream doesn’t exist. We surely live in a society where more doors are open to more people than in many countries. The first sign of our openness is seen in the faces of Americans. We can picture a Japanese citizen, an Egyptian, or a Swede, but what about an American? Clearly our history as a melting pot makes such a caricature nearly impossible. As (former National Security Advisor) Zbigniew Brzezinski points out, America is unique in that anyone can become an American. But it is essential that society keep some perspective on just how many streets are still paved with gold. For most people, the American Dream will forever remain a dream. And most Americans will awake to a harsh reality: hard work won’t get you anywhere.

Losing the concept of meritocracy is no easier for the rich than the poor. Now the young corporate attorney has to wonder how much he really has earned, and how much of his success really has nothing to do with him, as an individual. Consider obesity. While this has not always been the case, being “fit” is something of a status symbol. Obesity is therefore a mark of shame. And the fit can relish knowing that they control their body image based on what they eat and their physical routine. The obese (disproportionately lower class) are gastronomical gluttons, or lazy individuals. Lay off the doughnuts and get off the couch, and you can look as good as anyone out there. But obesity research increasingly shows that this is flawed logic. In fact, a great deal of obesity has absolutely nothing to do with a person’s lifestyle. Many obese people are genetically fat, and that’s just the way the cookie crumbles. This is like much of poverty. No matter how much a lower class man works or how hard he tries, he is just as likely to remain poor as the obese man drinking Slim-Fast shakes is to remain fat. Why is this an especially troubling thought? Because it means the poor man deserves your scorn for his poverty as little as the rich deserve our respect for their success. But this is a complicated issue, and needs to be considered further.

One final thought:

Somewhat ironically, I currently reside is the self-proclaimed City of Opportunity: Houston, Texas. Proud Houstonians assure me that this city truly runs as a meritocracy. I never raised the issue that America as a whole is supposed to be a meritocracy. But maybe Houston is the City of Opportunity for the same reason America WAS the land of opportunity: it is young. Houston may be the fourth largest American city, but it has not been at the top of the list that long. Surely, a city cannot grow by 700 to 800% in one generation without a fair amount of opportunity. But as Houston becomes ever more established, its opportunities for social mobility will likely decrease.

Welcome

2005-12-31T23:44:00.000-06:00

The purpose of this blog is not to convince you of something. Some readers may agree with me—others may not. All that is important is that people consider the relevant issues. These topics should be talked about, written about, and deeply considered. This is not a place for rhetoric. I canceled my subscription to The Nation years ago because it read like a group of liberals patting each other on the back and having a collective chuckle. (And if you've ever seen Katrina vanden Heuvel speak on television or in person, you might agree that she sounds like a wind-up doll of rhetoric.) Listening to a heated debate amongst my educated colleagues is about as unpredictable as watching someone hitting a tennis ball against a wall. Pragmatic answers do not stem from quick conclusions or sound bites, but from their underlying rationale. If you see something that sounds like rhetoric below, please call me out on it. The comments on this site are open to all users. You do not need to register to post a comment.

So what do I mean by social justice? To me, this is where the rubber hits the road for our collective social conscience. Social conscience is perhaps a more familiar term. It entails an individual’s concern for societal injustice. But the concept seems too introverted and academic for what I plan to discuss in this blog. Thus, social justice (or injustice) entails how our society treats people. How do people of all income levels live? Why are people where they are in our social stratification? I truly believe that such inquiries are the responsibility of every American—from Donald Trump to the homeless guy down the block. Here, I hope to consider these issues in old and new ways.