Friday, May 29, 2015

Minimum Wage, Retirement Income

I recently received an email from an acquaintance of mine which included a petition to push our Pennsylvania legislators to consider raising the minimum wage.  As of today, the PA minimum wage, like approximately 30 other states, is the same as the federal minimum wage.  The good news is that a number of states have already raised their minimum wage, while there are still a few states with no minimum wage.  In the meantime, average pay for the top earning CEO's in America continues to rise by percentages ranging from double to 12 times to 900 times, depending on the source of the data and the time frame studied. 

In researching the above data, I also read an article from Forbes by someone claiming that CEO pay increases are exaggerated.  The article reminds us that statistics can be used to prove anything one wishes to prove, which means that perhaps the 900 times number detailed above emanates from a source trying to push the income inequality issue, while the source of increases only double in size , may be the result of a person or group trying to defend high CEO pay or show that it hasn't grown as much as is reported in the mainstream media.

So, who to believe?

One interesting fact that I uncovered in more than one place is that using all sorts of gauges and indexes, it is believed that the federal minimum wage peaked in 1968, in terms of its buying power.
I saw that statement repeated a few times, then found a chart which detailed the minimum wage every year from 1938 to 2012, then gave its worth in 2012 dollars.  Here is a link to that chart.

A quick glance at the chart, seems to say it all.  Soon after WW2, buying power for those making the lowest wage, increased steadily within the bands of that particular increase.  In other words, minimum wage increases, even after multiple years of that same rate, increased buying power with each consecutive minimum wage increase.  To put a number on it, in 2012 dollars, those making the minimum wage earned the equivalent of a rate above $8 from 1961 (peaking in 1968 at $10.34) through 1982 when the equivalent buying power fell below $8 for the first time in 2 decades.  Since then, it has never reached $8 again, falling as low as $5.91 in 2006, and averaging just below $7 in those 3 decades.  Yes, in today's dollars, our minimum wage is more than $1 an hour less than those making minimum wage in 1961; over $3 an hour less than in 1968.  Can you imagine the reaction of CEO's if they were making less money (in real dollars) now than then?  What would the Forbes author have to say about that?  Is it any wonder why retail and fast food workers are upset?

And, it is any wonder why the middle class grew by such leaps and bounds during the three decades between 1950 and 1970, because remember, this data only reflects those making minimum wage.  Those making above it realized an even bigger increase in buying power.

Personally, I do not think it a coincidence that 1980 marked the election of Ronald Reagan, and, at least in this area, the beginning of the decline of earning power of the middle class.  To those who bow their heads when mentioning President Reagan, I would remind them that the minimum wage stayed the same from 1981 through 1989, (NINE years) at $3.35.  Even more remarkably, during the great decline of the minimum wage, during the dominance of the trickle down theory of economics that permeated Reagan's terms, Bush 1, and Bush 2, in 25 years from 1981 to 2006, the minimum wage increased only 4 times, in 1990, 1991, 1996, and 1997, (all but one under Clinton) for a total of $1.80! 

What boggles me is that the business community, always first in line to protest mandatory vacations, paid sick time, paid maternity leave, and higher minimum wages, don't see that when the American consumer has less money to spend, less products and services will be purchased.  In the long run, a strong middle class makes the economy go, while conversely, a middle class struggling to make their money last to the end of the month, makes the economy stall.

Why isn't the minimum wage indexed to inflation?  Take the rate out of the hands of politicians and big business campaign donations, and make it a reflection of the needs of people to live.  And, don't forget, the definition of minimum is the least amount of a thing necessary.  Shouldn't virtually all Americans working full time earn more than the least amount?   

Perhaps some day, those with the most resources will understand that our economy is only as strong as its weakest link, and that too much money in too few hands makes America weak and vulnerable.

Speaking of vulnerable, I saw an alarming article about retirement income and the, perhaps, false belief that IRA's can replace social security and pensions.  The article suggested that for reasons linked to the declining earning power of the American worker, the amount of money necessary to invest in IRA's etc, so that one can retire with the same or similar living standard is far beyond the means of the average Joe to put aside.  Which means that for the next few generations at least, social security must still exist, and must be solvent, and that should those advocating for the privatization of social security become successful in their endeavor, it will result in millions of people running out of money far sooner than they plan because they will never be able to invest enough money, even with the additional money they would get if they did not have social security deductions.  This is not to say that a privatization of social security won't benefit many people, it is saying that it will leave far too many without a safety net.  Add to that the additional out of pocket medical costs that turning Medicare into a voucher system will create, and there is a more than a fair chance that those just entering the workforce today may not only not live as well as their parents, but may not live in retirement as well either.

Finally, of course, everyone thinks they deserve more money.  Or, at least, are OK with their salary, but think person X or person Y makes too much money.  If I were king, I would put a ceiling on salaries, perhaps creating a matrix that limits salaries within categories, industries, companies.  In other words, a CEO can earn as much as she wants, as long as her salary is no more than 30 times that of the lowest paid worker in that company.  Or, a sports star can make all the money he can get from a sponsor, but only 5 times more than the minimum salary in that sport.  Or an entertainer can make as much money on tour as they can, as long as the ticket price for a show never exceeds 5 times the average hourly salary of the town where the show is playing.  Frankly, I would prefer that people realize the necessity of this idea on their own, without laws or edicts.  But, as long as selfishness remains a more powerful force that selflessness, we might need such governors to help us maintain the core strength of our economy and our country.

Monday, May 18, 2015

Looking Forward

A few weeks ago, my wife and I spent the day with friends, walking around Peddlers Village, a local shopping area which features artisan shops, weekend special events, live music, and fattening food, in a pleasant outdoor setting.  At first, the guys accompanied the ladies into the shops, but soon we opted to stay outside and talk.  As usual, our conversation ranged from the metaphysical to sports to politics to religion.  In reality, this conversation was merely another chapter in a conversation that began almost 40 years ago, when we would shoot pool all night in his parent's basement, or I would visit him at work during his 11:00PM to 7:00AM shift.  While this recent encounter involved water only, our initial conversations were often enhanced with natural and artificial stimulants.  While my experience with the stereotypical portrayal of using such methods to delve into the deeper concepts of the universe seemed to corroborate the effectiveness of such props, it is also true that our current conversations are as deep, as reflective, as enjoyable as those from the early years, perhaps proving that artificially amplified discussions may be more an excuse to review life's mysteries than a requirement.   In other words, a need to be "not ourselves" to talk seriously.  I assume, of course, that that need is only required when we are young, as if being too serious is not a component of youth.  Also, life experiences, a missing component of those early conversations, often causes changes, sometimes profound changes, to our perspective, all too often leading to the decline of a relationship, friend or spouse, as points of view diverge.  Finally, sadly, what passes as serious debate in today's partisan environment, occasionally makes me wish that some "smoke" may be mixed into the air of the participants, or a "tab" slipped into their drinks.

As stated above, we had quickly passed into the heavier topics when my friend commented on the darkness of the times we lived in, darkness defined as the absence of awareness, consciousness, even spirituality.  It is easy to see why that opinion might exist.  The radical news outlets on each side, seem to feed on our fears, whether they be of the cataclysmic changes that climate change will bring, or the perceived Big Brother like takeover of our lives by the government.  When once "breaking news" was reserved for assassinations, tsunamis, or airplane crashes, now they are a daily occurrence, ranging from the latest Hollywood star to be arrested to whose leading on DWS to news of the latest "most evil" group of all time.   Worse, good news that effects everyone, is ignored by those whose political opinions differ from the current administration, or by those whose ratings depend on the continuation of "how bad it has become".

Also, and I can't put too fine a point on this, it seems that our current outlook in America (perhaps world-wide) is more negative than positive.  Certainly, compared to the 1950's when nothing was out of reach, no goal to lofty to aim for, no future too rosy to aspire to, there seems to be a cloud of pessimism hanging in the air, an expectation that something wicked this way comes.  If we were to take a psychological position, that negativity begets negativity, then perhaps we are reaping what we sow.  A more cyclical viewpoint might suggest that what we are experiencing today is a natural phenomenon, no more complex than that the pendulum of self-confidence, whether for an individual or a nation, must swing from high to low.  The debate then, is have we reached the nadir of optimism, are still on the downslide, or just beginning to emerge?

My reaction to my friend's assertion, was that we need to look at this on a bigger scale.  That, unlike the incredible technological breakthroughs and advances that we have witnessed in the past few decades, our spiritual evolution is on a much slower incline.  Compare our present day acceptance of people of different races, creeds, country of origin as opposed to the mainstream accepted thinking of a few centuries ago when slavery and genocide ruled the day.  So, while yes, there are still pockets of people who prefer to treat others inhumanely, the general population condemns such behavior.  While it is clear that we, as the population of planet Earth, still have a long way to go, it is also true that we have passed many milestones on our road to the lofty goals of guaranteeing the freedoms of every human and treating them as we would want to be treated. 

And then there is magazines like the Smithsonian.  In the current issue, there are a number of articles detailing the main idea of the issue, why you should be excited about the next decade.  While the details of the concepts center around science and technology, those areas of human endeavor that have always been turned to for solutions to our physical problems, I would like to think that the inspiration to develop such revolutionary devices, whether they be to improve communication, health, availability of food or even entertainment, emanates from man's innate desire to improve the lives of his fellow man.  And, it is that innate desire, which I truly believe in, that has advanced our species to the place we are today and will continue to propel us towards a time when the individual's desire for power, money and fame are balanced with the community's desire for equality, opportunity and freedom.         


Thursday, May 7, 2015

Money, the Good, the Bad and the Ugly

When I log onto my computer, the MSN website is displayed first.  I generally glance at the weather for the day, check the state of the stock market, and peruse the "hot" topics, which consist generally of fluff and sensationalism, but occasionally includes something worthwhile.  Today I noticed a blurb about GOP candidate, ex Florida Gov Jeb Bush, and the fact that during his term, state pension money was invested in a video rental company that was known for having an "adult" section in the back of its stores.  Of course, the article used the word porn to attract readers, which, while some adult videos show all forms of sexual intercourse, it is usually of the soft porn type, meant to entertain consenting adults, and generally not hard core pornography that can feature children, bestiality, or violence.

Apparently, Bush did not deny the reports, instead justifying the investment as a way to maximize returns for the Florida taxpayers.  In essence, his excuse was that any vehicle to make money was fine.  I am not a Jeb Bush fan, and, frankly, am not looking forward to a Clinton-Bush presidential election, although I expect that is how it may play out, but I felt a bit sorry for him when I glanced at the article.  (I thought we fought a war, in part, as a protest for government by way of aristocracy, and to me another Bush or Clinton in the White House, belies that fight; it would mean that since 1988, we would have someone of those families as president 24 out of 32 years!)

Unfortunately, for Jeb Bush, the base of his party, loves to inject religion into politics.  Which, of course, is the height of irony since they despise those countries which feature the Muslim religion as a main force of their government.  Oh, that's right.  I forgot that the Christian right is OK with religion in government, as long as it is the religion they follow.  Anyway, poor Jeb is taking some heat from the religious right for contributing to the corruption of Floridians morals, by investing in a company that sells/rents such videos.  My previous prediction not withstanding, it seems clear that the evangelical block of the GOP will not support Bush in the primaries, especially when candidates such as Ben Carson, Mike Huckabee and the soon to announce Rick Santorum are running.  I expect, however, that those far right candidates will split the my-religion-is-the-best-of-all-religions voters, Bush will attract the big money from donors who want to actually have a shot at winning the White House, and voila, we are back to Bush-Clinton.

By the way, is it me or did those who are so upset about the investment in that video company, skip right over those movies that have wonton violence, huge amounts of gunplay, and murder.  I guess the lesson here is that a good killing is fine, but good lovemaking corrupts our morals.   

But I digress.

The point of this post was to comment on money, investing, and how much we are willing to compromise to gain wealth at any cost.  I am serious when I say that it is not an easy decision to forego profit, returns, perhaps even future financial security, when making choices about a job, an investment, or even the course of the nation.  For instance, most of us have mutual funds as part of our portfolios, but how many actually read the prospectus for those funds before making our decisions.  Isn't it more likely, we focus on our risk tolerance, check past returns, then choose according to how much money we may earn.  We may have very strong feelings about the environment, the fossil fuel industry, the proliferation of guns, yet may be investing in those very companies through our mutual funds.  

If you are the type of person who discusses investments, ask yourself how many conversations you have had which centered around socially responsible mutual funds, as opposed to the number of conversations that focused on percentage of  returns.  Like most of us, you either have not thought about investing in mutuals that do not include defense contractors, known polluters, companies that produce most of their product overseas with child labor, or whatever social problem you might feel strongly about, or you have decided long ago that the financial security of you and your family comes first and foremost, and how the money is accumulated is secondary.

Frankly, and don't get me wrong, I am not innocent in this area.  We are all guilty of contributing to the very social ills we deplore, if we are not cognizant of how and where our money is invested.  So, while the very rich can use the excuse that they don't know where all their money is invested, after all, that is why they hire investment planners, they are still guilty of contributing to the social problems of the day, if they do not specify industries, and/or companies that should be avoided, but instead just say, get me 10%, or I will find someone who will.

And that goes doubly for where we spend our money.  When we buy the cheapest things we can, not noticing that those products are made overseas to the detriment of American jobs, when we demand $1 stores in every community, and are ignorant of the fact that cheap products are the result of cheap ingredients and poverty wages, then our righteousness concerning those companies that produce and sell those cheap products is misplaced.  It is the person in the mirror who is at fault.

It is easy to get mad at those perpetrators of scams that target grand moms with stories of grand children in trouble who need wire transfers, but what about those who have attained great wealth, not through great ideas and innovations, but through the abuse of employees and the rape of the land.  Do we have a scale that measures wealth and considers the source, or once wealthy, does it not matter how that wealth was accumulated?

But how can we possibly know how all those companies, all those wealthy people came to be rich?  Good question.  And, before the explosion of social media, I would have said, it can be tough.  But, when someone slaps their child and a million people know about it a few days later, it is clear that we have the vehicle.  The bigger question is, do our journalists, our news media outlets, our social networks, spend the time to dig into the important questions, track the dollars, so to speak.  Or, are our media giants bombarding us with information meant to distract us from the real data we need to know.  Is it coincidence that so much of our news is fluff and sensationalistic in nature, or the very distraction necessary to keep us from knowing what we should know.

Money, like all inventions of mankind, can be used for good and for bad.  And, despite what some who are devotees of capitalism might say, some money, some wealth, is accumulated, and used for very wrong reasons, to the detriment of people, not their benefit.  Now, I will admit that sometimes I go too far, mislabeling all those that are rich as someone who must have twisted the rules to their benefit, stepped on the backs of many to gain their advantage, or just paid some politician to make  legal all they do that is unethical.  There are clearly people who have used, and continue to use their wealth to help those in need.  To those philanthropists, kudos for knowing the point of wealth, that, like all tools, it should be used to advance mankind, not be accumulated for its own sake.

But, in the end, it all starts with us.  Like electing public servants that will do the will of the people, keeping our neighborhoods safe and clean, rewarding those corporations and people who do good rather than promote violence and greed, each of us has the responsibility to make conscious choices, and understand the repercussions of those choices. 

I recently heard a phrase on a movie that I know I heard before as I have seen the movie many times before, Bull Durham but didn't really hear.  The phrase was "the world was made for people who are not cursed with self awareness".  Perhaps, with a little bit of effort, we might hear someone say some day, "the world has been remade by those with self awareness".