Political Economy: Why We Need Labor

Warning: this blog entry contains graphic marxist terminology and occasional analysis. It may be unsuitable for some readers. (I am not a commie)

As elections are just around the corner, the Big Two parties have honed their messages to razor-thin quality, targeting individual voters through mailings, internet blitzkriegs, carefully scriped tv ads, phone calls, door-to-door visits, and even the occasional baby-kissing publicity moment. Candidates know their constituents as a well-defined dataset-- people have become datapoints on a marketing presentation.

We have become inputs. A candidate needs a certain number of inputs to show up at a certain time and approve of them through a formal process we call voting. This is the purpose of these organizations we call political parties, campaigns, and third-party groups who are endowed with certain rights of persuasion depending on their tax status.

Like so many things these days, at the end of a long process of organizing people and resources to produce something (e.g., oil, the George Allen vote, Charmin toilet paper), the ultimate wildcard is whether people show up to buy. Anyone who produces anything can do a million and one things to control their supply, and to let people know about it. In a direct sense, they can do nothing to control demand, save telling people the right way about what they have to offer, and why it is necessary to their lives. The most successful products are the ones that people believe are irrreplaceable. The 2004 Republican efforts to convince voters that they were the only answer to terrorism is a prime example.

But when we go home to our families, for a few fleeting hours each night, a few days a week, we are people, not consumers, not labor inputs for production. As voters, we have a duty to rise above this nonsense and vote on those terms, and not on the terms of the owners and their salesmen.

It is unfair to pick on the Republicans, though it is wickedly easy. Democrats are no less guilty of the shameless sales pitch. My fear is that these campaign promises could actually lead to bad, and damaging policies. Let's look at the minimum wage.

First of all, the ethos behind what I am writing is that of the worker, not of the owner. I want to see people better paid, with the benefits they deserve, and the overall quality of life that the richest nation in the world could afford, if we put our minds to it. This is the liberal world view-- everyone deserves a decent life. Here's why the minimum wage is merely a pittance. Democrats need to go further than throwing this bone, or we need to demand more.

1. According to the US Bureau of Labor Statistics, in 2004, "520,000 were reported as earning exactly $5.15, the prevailing Federal minimum wage, and another 1.5 million were reported earning wages below the minimum. Together, these 2.0 million workers with wages at or below the minimum made up 2.7 percent of all hourly-paid workers. " A minimum wage increase up to, say, $7.50 an hour would do nothing for the masses of people earning 8-10 dollars an hour who still don't have enough money to get by.

2. The minimum wage may cause inflation, especially if it's tied to the index of inflation. Put simply, as people have more money, it's worth less. This effect may be minimal, especially when considering the overall money in the economy, the massive floods of investment when interest rates drop accounts for orders of magnetude more money than the lowest bounds of labor payments. Nevertheless, if people start showing up at the grocery store with more dollars in their pockets, prices will go up. It's inevitable and unfortunate, especially for people at the bottom who are much more sensitive to a 1 percent price increase than people who have savings and investments.

3. The immigration debate may be about a lot of things-- cultural issues, language issues, but most fundamentally and least discussed it its impact on labor. Evidence shows that increases in immigrants has some effect on wages at the bottom, but the overall benefits to the economy outweigh this effect on a macro scale. OK, fine. But Republican reluctance to move on their constituent's gut insticts to purge our town and defend our borders is simply about the demand for cheap labor. Until we regulate employment through some sort of "right to work" ID, we'll never have control on the wages that people are paid, nor will we prevent illegal immigrants from seeking the supply of gray-market cash waiting for them in every city and town in this country. We need to put the pressure on employers to hire legally. If they all have to, then this eliminates the "well the other guy's doing it so I have to " argument, and may lead to our being able to allocate resources more fairly at the bottom.

4. The evidence does not show that minimum wage increases reduce the number of new hires. There is demand for labor-- and like politics, they can't directly control that demand. Owners need labor, the same way they need oil-fired energy, steel, eggs and flour, and everything else. OPEC ensures that the market isn't really deciding the price per barrel. If it gets more expensive, prices adjust, and we get over it. We change if we need to. Labor is the only thing that we reasonably expect to be allocated on an open, free market, except for people at the bottom of the scale. Everything else has cartels, associations, price guarantees and industry standards that ensure that the owners of that product make a profit. People at the bottom are expected to just get by and show up every day. Let them demand it more.

If the situation is to change, labor needs to organize, just like everything else has. It needs structure, legitimacy, and yes, regulation. There is no product out there without an association backing it up. What about Walmart employees? I'm not talking about unions, but I am talking about collective bargaining. We cannot remain atomized, individual inputs. We are a labor pool, just like an oil field.

Here's an idea: Labor Cartels.

How about going back to guilds-- associations of wage workers. The associations could provide training in basic computer skills, customer service, GED's, even basic math and writing where necessary. It could have strict rules about punctuality at the job sites, drug tests, continuing education, all of which would feed into a pay scale. This would improve America's work force for the owners and everyone else.

They could collectively buy health insurance, so their risks are spread across thousands, instead of a small business or a handful of individuals; like the sickness funds that supply insurance in Germany, the Netherlands, and elsewhere. The associations could also pool workers for unemployment, even worker's comp and liability insurance. This would also take these ever-growing burden off the shoulders of employers.

The associations could negotiate a going rate for their members, who would presumably be better employees, reducing turnover rates, and other major drags on labor costs. They could even organize child care and social services, negotiate with banks for small loans guaranteed on the worker's pay, and high-interest savings accounts or other investments. If it worked well, management might even contribute to their operating costs, even pay the association directly, who would in turn pay the workers.

It could be funded through private initiatives along with government grants, and depending on how ambitious it was with its offerings, might not even be that expensive.

It could be a movement from the bottom up, representing the interests of these muted millions. They could provide a much needed social network, and a series of positive incentives over a series of handouts. Such a group would be far more empowering than a dollar two more an hour. It would give people a ladder up, something to belong to, a chance to receive more than the bare minimum society is willing to offer.

Forget about what politics offers around election day.

People need to demand more.

They just need a way how.