Category: economic justice

Minimum wage and trickling down: I don’t understand why those benefits don’t trickle

Lisa Schweitzer

So I have been reading various and sundry critiques of minimum wage laws, and I have questions, and in particular, questions about the ideology driving the suppositions. Now, I am a mere, lowly planner who has only taken four classes in labor economics (including one offered at the PhD level), so I understand that I could never ever possibly understand the super-hard economics at the basis of These Things. So please, explain what you can to me, Internet, but using only small words.

The basic idea is that wage floors leave some people willing to worker lower wages out in the cold, as the wage floor forces employers to offer a minimum wage, and at that wage, the employer simply won’t hire an additional person, or they will let people go, because they do not value the additional labor at the price the wage floor sets.

This means that POOR PEOPLE SUFFER DAMN YOU because employers have absolutely positively no way of ever ever paying people slightly more except by screwing labor…even though corporate entities’ top managers and CEO are making eleventy billion dollars a year and the margin fits easily into many of the bonuses we routinely see handed out. I can credit the concern that a small business owner with a small number of employees can’t swing it, but there are plenty of corporate employers in these metro markets whose objections that they could never, ever pay their low-wage labor slightly more strike me as utterly disingenuous and self-serving. Take adjuncts: universities could pay them more; it’s just that labor oversupply means universities don’t *have* to. So they don’t, and they use their money for other stuff, like obscene salaries for administrators.

But that’s actually not my question.

Why don’t benefits from minimum wage laws trickle? We are supposed to believe that putting gigantically large sums of money in the hands of a few people (capital) trickle, trickle away down to us all…but putting marginally more dollars in the hands of a large number people has no trickle down potential at all, none whatsoever, supposedly. But don’t those minimum wage workers go out and buy things and generate more economic activity, so that employers will have more demand for labor, thereby potentially offering new, higher paid opportunities for other low-wage workers? Why isn’t that trickling?

According to this same school of economics, when wealthy people get made better off, the benefits trickle down! When a billionaire buys a private jet, it helps us all. It’s like magical rainbow snow–those benefits just trickle upon us from on high, and everybody should be ever so grateful. (Pukes, narrowly missing the keyboard). But if you make a larger group of poor people marginally better off, there’s no trickling. None! Impossible! That money just gets sucked into Democritus’ void, never to return to anybody in any form. Poor people buy things, and some save money, so it’s not like the move means absolutely positively no new capital investment is possible. Poor people can and do save. When they put money in banks, banks aggregate and use that capital, so…

So increased incomes to rich people are inherently good (because trickle, trickle, trickle), but increases in wealth to poor people is meaningless, according to the “pain and suffering school” of minimum wage writing. Somehow, the dollars know whose hands they are in, and they just won’t act the same for a large number of poor people the way they will for a small number of vastly wealthy people.

Why USC should support employee (and student) transit use based on both justice and self-interest

Lisa Schweitzer2 Comments

I’m a little rushed this morning, so forgive any typos.

So why, exactly, should USC support employee and student transit? As I grumpily posted the other day, the cost my monthly transit pass went from $36 to $100 over the last few years, and this last jump came because USC Transportation Services cancelled entirely its transit subsidy, and that’s what set me off. No subsidy is a bad idea.

This is bad corporate policy. It’s entirely understandable from a dollars and cents standpoint: USC does unit-based budgeting (meh), and as a result, Transportation Services gets rather stuck with these kinds of programs. If you have great big parking structures sitting half empty most of the day, you’d much, much rather direct people to use those, since you are stuck with them anyway, than be using the revenues from parking to subsidize transit use. This is why USC as a whole should step up and help Transportation Services run the program.

Why? There are both justice and self-interested reasons for doing so. One of my brilliant students on Twitter noted that the increase alone from $36 to $100 a month is about 5% of total monthly wages for somebody making minimum wage. It’s a big pay cut for a low-wage person who depends on transit.

Ok, yes, those workers do not necessarily need to buy a monthly pass, so they go back to paying the base fare. But paying per ride is more expensive per ride than having a pass, and the pass enables mobility for a whole bunch of other purposes besides work. Metro is pretty affordable when it comes to fares, but they are getting less so, and low-wage workers in Los Angeles–and USC has many of them— exist in a hard whipsaw between housing costs, car ownership costs, transit mobility costs, and stagnant wages.

As a university interested in community and sustainability, USC should be trying to make that easier, not harder.

People like me can well afford $100, and I would actually be willing to pay full freight (and a bit more) if it meant that USC offered discounted passes to employees making less than the regional median income.

The self-interested part: those great big, useless parking structures are a huge opportunity cost. They are parking structures on a campus where space is the coin of the realm and we could fill any dorm space or married student housing space, like, tomorrow, with high-value uses that generate real, actual rents.

Yes, we can charge for parking, but…what do you suppose has a higher return: housing on campus or parking on campus?

Blam! Unit-based budgeting again. Transportation services doesn’t get to develop housing. So…parking has no opportunity costs for them. But for USC, the opportunity costs are huge.

This is why most urban/downtown universities subsidize their transit commuters. If we keep you out of your car, we can scale back on the amount of precious campus space given over to less economically productive uses, like parking.

It is out of step with the practices of major urban universities throughout the US. NYU, for example, offers roughly 50 to 60 percent subsidy, depending on the system pass. Harvard’s subsidy in Boston is 50 percent . MIT has the same deal. Yale offers its faculty and employees $130 a month in transit pass. UCLA offers a FlashPass through Santa Monica BBB for $33 (a significant discount as that is per quarter rather than monthly!). Stanford offers Eco-Pricing at 50 percent subsidy. Berkeley, ditto.

I know, our parking gets full on football days, but look, nobody is going to stop going to Trojan football games just because they have to park one train stop away. Do you see what people pay for those tickets? There is puh-lenty of parking along the Expo Line. Tailgaters should be taking transit anyway.

It’s harder to say that USC should just brass up for undergraduate transit passes. But it would be so good for them and for us. It would be so super if we could negotiate a good rate with Metro and students were willing to assess themselves a fee for it. But students and parents are already so stretched, and that’s hard, but…if you get young people riding transit, it’s soooooooo good for them, and it’s very good for transit, and it can make them into lifelong supporters, if not lifelong patrons, of transit services.

Sustainability: If you are housing cars instead of housing people, you are doing it wrong.

USC just ended its transit subsidy program, and the cost of my bus pass went from $30 to $100

Lisa Schweitzer7 Comments

My employer, USC, decided to eliminate their alternative commuter program, and as a result, the cost of my pass is jumping to $100 a month from roughly $30, and I can’t justify that cost every month when I look at how often I commute to campus.

To say that I am disappointed in USC would be an understatement. We are either the largest or the 2nd largest employer in Los Angeles County, and we have an obligation to help lead the region to better, more sustainable solutions for mobility. Our alternative commuting program was a success; many of us used it.

It also won a host of awards, which USC continues to display on its website.

They responded to the deluge of emails they got in response to the decision by putting up this “bureaucratic blah blah blah” page which basically says:

“The elimination of the subsidy was carefully considered and compared with other available alternatives.”

Well, ok, what are those alternatives? I’m listening. Why are those alternatives not explained? Why were those alternative programs not in place before you stopped the transit program? What does the university get out of this deal? Oh, wait, Transportation Services gets to keep $$$$ from parking rather than spend them subsidizing transit use. The USC decentralized and draconian budget process bears part of this blame: I suspect that Transportation Services leadership saw the $$$ and saved itself staff rather than continue a program that is good for the university but not in the financial interests of Transportation Services.

I do understand, but it’s still incredibly bad policy. It makes USC look like jerks, and USC doesn’t need that kind of help.

The reason for the “blah blah” is that there are no alternatives: this is just a pay cut for anybody at USC who has a disability that prevents them from driving and the university’s lowest wage workers. The real alternative is: those who can drive will do so, and those who can’t will eat the pay cut.

There is nothing about this move that makes sense for any aspect of the University other than Transportation Services. It’s bad for the employees, and it’s embarrassment for USC as a whole whose leaders have talked endlessly–and I think they are sincere–about sustainability. But it’s typical, head-in-clouds, lofty sustainability without the pragmatic follow-up that programs like this provide, largely because few people actually understand how important transit is to economic justice and sustainability.

Being a transit and sustainability expert here is frustrating, to say the least.

Coates and the case for reparations

Lisa Schweitzer

Ta-Nehisi Coates published an excellent explanation of the case for reparations to African Americans in the Atlantic. Here is the original article, which is excellent, except for the quote from Deuteronomy (read the quote from Locke instead) and here is a link to Coates discussing the contribution with Bill Moyers.

Something more than moral pressure calls America to reparations. We cannot escape our history. All of our solutions to the great problems of health care, education, housing, and economic inequality are troubled by what must go unspoken. “The reason black people are so far behind now is not because of now,” Clyde Ross told me. “It’s because of then.” In the early 2000s, Charles Ogletree went to Tulsa, Oklahoma, to meet with the survivors of the 1921 race riot that had devastated “Black Wall Street.” The past was not the past to them. “It was amazing seeing these black women and men who were crippled, blind, in wheelchairs,” Ogletree told me. “I had no idea who they were and why they wanted to see me. They said, ‘We want you to represent us in this lawsuit.’ ”

For instances above, there is no real principled objection. I doubt we’ll ever manage to pull ourselves together enough to pay reparations for slavery; there are too many people in America whose families came long after slavery ended, and it’s too easy for people to get sidetracked on–as they have in the comments–the distance between those wrongs and contemporary conditions. But there are survivors and families that remember the many wrongs committed against African Americans that Coates outlines; we aren’t taking about paying money to the 5th generation removed of former slaves. In these instances, we still have people alive and their children who themselves lived through sharecropping, the slave labor of southern prisons, and property seizure; and we still have people alive who participated in those wrongs. There’s no principle of justice that denies them compensation for the real economic loss that these wrongs inflicted.

Blair Kelley over at the Root has collected a nice set of links to prior research on reparations, as well. He finishes with:

After all, how might we account for the cost of the scars Callie House wore on her back, the price of the terror of a lynched son or the value of a mortgage never granted? How could we begin to calculate the costs?

Actually, Randall Robinson attempted to get there with his book, published in 2001 but still in print, called The Debt. The point of reparations is that we can’t ever really compensate for the terror of a lynched son, and we know that. If we were just trying to cover economic loss, the gesture would be compensation–not reparation. The point of reparation is to acknowledge the wrongs have both a social and economic aspect, and that you aren’t walking away from either by a) flinging a check at somebody’s feet and walking off or b) apologizing and walking off…but sticking around, facing the wrong, and trying to recover.