Dayton Courage Admirable

Wages in America are quickly heading for all-time lows and there doesn’t appear to be any real relief on the way.

In 1968, the minimum wage in the United States was a $1.60 an hour.  Adjusting for inflation, the Bureau of Labor Statistics estimates that to be equivalent to $10.74 today.  This could be a bogus figure.  Government inflation numbers are customarily manipulated to make inflation appear lower.  So that $10.74 figure should, in all likelihood, be much higher.  For further validation consider that a yearly income at $10.64 equates to $21,480.  We must also consider that the U.S. Department of Health and Human Services has established the poverty level for a family of four at $23,850.  Minnesota has just raised its minimum wage from $6.25 to $8.00 with $9.00 expected by the end of this year.  The best President Obama could manage on the federal level was $10.10.  Talk about Band-Aids on bullet wounds. 

In 1960 the median income for a family of four was $6,691.  A $10,000 income was considered a very comfortable living.  The Pew Research Center has established the high end for a medium income today at $118,000.  After doing all the calculations, that $118,000 is what it would take today to provide the same purchasing power enjoyed in 1960.  The same report describes this mid-tier group as suffering its "worst decade in modern history," having fallen backward in income for the first time since the end of World War II. 

What made America the greatest country in the world for decades was an affluent middle class.  As economist Robert Reich points out; “For three decades after World War II, we created the largest middle class the world had ever seen. During those years the wages of the typical American worker doubled, just as the size of the American economy doubled.” 

Today, good paying full-time jobs are disappearing and being replaced by low paying part-time jobs.  In 2014, 76.7% of the jobs created were part time jobs.    In 2014, 76.7% of the jobs created were part time jobs.  Meanwhile the Bureau of Labor Statistics also tells us there are nine million Americans out of work making the unemployment rate 5.7%.  Like always, they fail to factor in the Economic Policy Institute’s figure of 5,760,000 “missing workers” for 2015.  When those are added, the true number of unemployed is some 15 million and the actual unemployment rate is 9%.  We certainly have learned that the only thing that’s going to turn this economy around is placing more disposable and discretionary spending in the hands of the middle class which no one seems to have any inclination to do these days. 

Enter Minnesota Governor Mark Dayton.  He has outraged both Republicans and Democrats by proposing raises for state commissioners.  These commissioners have had their salaries frozen for a decade.  

Current salary levels of these commissioners range from $58,000 to $119,000.  Under the Dayton’s proposal most would receive approximately a $30,000 increase or roughly a 3% per year increase over that decade in which they were ignored.  By today’s standards these are clearly middle-class Americans. 

Naturally there are those who will argue that these government income levels should be less because their benefit packages are so generous.  What these critics fail to bear in mind is that benefit packages do not translate into increased spendable income which the economy is desperately needs.  They also have forgotten that stronger benefit packages typically result in greater amounts of discretionary income.   The less an American must spend on health care or retirement packages and savings programs, the more spendable income they have to stimulate the economy – a lesson learned from labor unions decades ago.  Instead of making arguments that government benefits are too generous, we need to be arguing that private sector packages are too meager. 

Then there are those who will argue these increases reflect a lack of respect for all those Americans who have been denied raises for years.  To this we need to inquire about “two wrongs making a right” while pointing out that this selfish based thinking will only continue to manifest itself until we demand an end to these contemptible wage practices.  

Governor Dayton is to be admired for his Harry Truman brand of courage on this issue.  He knew full well the serious criticism he would receive but also knew it was the right thing to do – to take the lead in providing the middle class with greater spendable income while hopefully encouraging, if not beginning, a trend toward reversing all the years of ugly, greed driven wage stagnation.