Creeping Socialism: ACORN & the Living Wage

I have never understood the logic of the “living wage” argument, where certain organizations – like ACORN – seek to have government agencies mandate new and higher wage rates. Such people believe that higher wages must be realized and that they can only be achieved by government fiat, not by the ability of the market to efficiently incorporate wage information into the best possible outcomes over time.
More specifically, if they really believe it is possible for government to unilaterally set higher wages without any adverse economic consequences to private sector businesses or public sector operations, they sure do not think very expansively. Instead of mandating wages of $10-12/hour, why not simply legislate that everyone will earn $100,000/year? Or $150,000/year? Yet nobody does that. Could it be that they really do know there are adverse economic consequences to higher wages?
If only the living wage debate was so straightforward. But, more on that shortly.
ACORN stands for the Association of Community Organizations for Reform Now and they are a key player in the tax-eater world. In their words, “the mission of ACORN is clear, the vision remains: power through organization and direct action.” A close reading of their website will quickly clarify their socialistic politics and alignment with the more politically radical labor unions.
Steven Malanga, in his book The New New Left: How American Politics Works Today (reviewed here), has this to say about the living wage movement:

…The living wage poses a big threat to [cities] economic health because the costs and restrictions it imposes on the private sector will destroy jobs – especially low-wage jobs – and send businesses fleeing to other locales. Worse still, the living-wage movement’s agenda doesn’t end with forcing private employers to increase wages. It includes opposing privatization schemes, strong-arming companies into unionizing…
The living-wage movement got its start in mid-1990’s Baltimore…
As it spread beyond Baltimore, the living-wage movement at first purposely kept its aims narrow…
Soon, though, living-wage supporters began to win ever broader laws, covering ever more workers and businesses. Detroit’s 1998 living wage applied to any business or non-profit with a city contract or to any firm that had received $50,000 or more in economic development assistance – ranging from the Salvation Army to small manufacturers located in the city’s economic development zones. San Francisco’s law went beyond city contractors to cover workers at the city airport, on the grounds that businesses there leased land from the city; airlines, newsstands, fast-food restaurants – none was exempt…Today forty-three states have at least one municipality with living-wage legislation on the books, or proposed laws.
The movement owes much of its success to the model campaign – exportable anywhere, anytime, fast – that its proponents, above all ACORN’s national living-wage center, have created…The prospective living-wage activist can find everything he needs to know in a step-by-step manual, concocted by ACORN director of living-wage campaigns Jed Kern and Wayne State University labor economist David Reynolds.
The manual echoes the organizational theories of legendary radical Saul Alinsky. Coalition building is key. Alinsky’s modus operandi was to get diverse constituencies to support his various causes by emphasizing their shared interests…
To pull off such coalition building in practice, you need more than a manual, of course; you need money – and the movement has lots of it, thanks to the backing of leftist foundations. The Tides Foundation has given hundreds of thousands of dollars…The Ford Foundation has been another big contributor.
The coalitions the movement has assembled have included hundreds of religious groups, allowing organizers to present their economic agenda as deeply moral…Labor groups have signed on too…
Living-wage campaigns have repeatedly outflanked the business community by practicing what ACORN calls “legislative outmaneuver.” Local groups work behind the scenes for months before going public. They draft partisan economics to release timely studies on the prospective benefits of the living wage before opponents can come up with any countering data, and they try to keep any actual legislation off the table until the very last minute, so that there’s no fixed target for opponents to get a bead on…
Providing the intellectual muscle (such as it is) for the living-wage movement is a small group of Marxoid economists led by University of Massachusetts-Amherst professor Robert Pollin, a longtime board member of the Union of Radical Political Economists, founded in the 1960’s to bring Marxist economics to American universities…in 1998 he co-authored…the book that has become the movement’s bible, The Living Wage: Building a Fair Economy.
In The Living Wage, the class war rages on – and on. Businesses, assert Pollin and Luce, have grown increasingly hostile toward workers in recent years. Their sole evidence for this claim – that the unionization rate has plummeted over the last three decades – ignores the conventional explanations for union decline in the United States: more intense global competition, the shift to a service-oriented, knowledge-based economy, and more generous benefits at nonunionized companies. But never mind: to keep ravenous capitalists under control, they argue, government clearly needs to impose a national living wage on the private sector. And that’s just the beginning. Caps on profits, mandated benefits, rules to make unionization easier, massive taxation – government will manage the economy from top to bottom in The Living Wage‘s warmed-over socialism…
The complete rejection of a free-market economy by these living-wage gurus…is too much even for many liberal economists. One of the most telling critiques of The Living Wage came from self-professed liberal economist and New York Times columnist Paul Krugman. In an article archived on the “cranks” section of his website, Krugman observes that “what the living wage is really about is not living standards, or even economics, but morality. Its advocates are basically opposed to the idea that wages are a market price – determined by supply and demand.”

But then, if living-wage advocates truly understood the free market, they’d know that ultimately it is far more moral than the centrally controlled economic system they endorse…What was remarkable about the American economy during the 1990’s , when about 13 million low-skilled, low-wage immigrants arrived, is that poverty rates didn’t soar, and actually declined slightly – showing the muscularity of our economy in lifting even many of these newcomers out of poverty…
What’s most appalling about Pollin and Luce’s economic theorizing, however, is the cavalier way they talk about confiscating income from midle-income Americans to pay for their living-wage scheme…
Not only is Pollin’s national living wage wildly unfair; it wouldn’t work. Numerous studies have shown that increasing the minimum wage produces no signficant reduction in poverty levels and may even increase the number of families living in poverty by eliminating many low-wage jobs…Nor, it’s important to add, are minimum-wage earners necessarily struggling economically in the first place. About 64 percent of those receiving the minimum wage today aren’t heads of households or sole earners. Many are children still living at home or second wage earners in their family. The average annual household income of a minimum-wage worker in the United States is nearly $44,000. And, of course, almost no workers stay at the minimum for long…
…given these considerations, most economists today favor earned-income tax credits, not government-mandated wages, as a more effective way to aid the working poor…without imposing direct new costs on businesses…
Joining the radical economists on the front lines of living-wage campaigns are the unions…the threat of the living wage has become a powerful means to pressure firms to unionize. About two dozen current living-wage ordinances specifically exempt unionized companies from the legislation…
No wonder that many living-wage campaigns erupt in places where unions are fighting tough organizing battles with local businesses…
These kinds of union-tailored living-wage laws are so blatantly pro-labor that they may be illegal. When a law forces employers to choose between paying higher wages and accepting a union…it amounts to a collective-bargaining ordinance. Municipalities don’t have the legal right to supercede federal labor law and pass such legislation.
Municipal unions like living-wage laws too, for a different reason. By raising the cost of city contracts, these laws make privitization efforts less appealing and thus protect the jobs of city workers…ACORN puts it bluntly in its manual: “The Living Wage undercuts the incentive to privatize.”…
With ACORN in the lead, the living-wage movement’s next steps are clear – and potentially devastating to urban prosperity. Activists are working hard to expand the number of those covered by existing living-wage legislation…
ACORN activists have begun advocating more capacious living-wage laws that incorporate affirmative-action requirements, restrictions on employers’ use of part-time workers, mandatory vacation time, and prohibitions on using revenues from public contracts to hire law firms to resist union-organizing efforts…
As living-wage laws get broader and more expansive, supporters are also trying to offload some of the cost, increasingly burdensome to cities, onto state and federal governments…
Emboldened by their successes, living-wage advocates have gone on to help organize local coalitions to lobby for much broader left-wing economic programs, under the slogan “sustainable economics.”…
Sustainable economics covers a whole agenda of government social and fiscal policies to redistribute income and regulate business that add up to socialism by another name…includes more money for community job-training programs, laws that bolster union organizing and that require “socially responsible banking,” government investment to create “environmentally friendly” jobs – and on and on. Its agenda even leaps beyond economics to require multicultural public-school curricula, more ethnically diverse teaching staffs, and greater inclusion in curricula of topics such as workers’ rights, the history of the labor movement, and family leave laws.
Lest this grand program sound like mere pie in the sky, note that living-wage advocates in California have already succeeded in getting the state’s assembly to pass a sustainable economic plan for the greater Sacramento area. Startlingly, this plan would force growing suburban communities to share tax income with the city, and it restricts suburban growth, so that residents and businesses will find it more difficult to move just outside the city limits. Having created the policies on taxation, crime and education that propelled the middle class out of urban America in the first place, the left is now looking for a way to slow that flight by government fiat…

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John
John
14 years ago

You’ve suggested a brilliant and very, very revealing question to ask Marti Rosenberg, David Segal, Bob Walsh and all the other far left types who support living wage legislation in Rhode Island: “Why shouldn’t we set it at $25,000 per year?”
I can’t wait to watch them struggle with that one. Simplicity at its best.

klaus
klaus
14 years ago

A couple of points. The ‘free market’ is a myth trotted out to justify Social Darwinism. It has never existed. In the late 19 Century, the Senate was known as “The Millionaire’s Club.” Senators were appointed rather than elected. By controlling the Senate, business interests were able to create a favorable climate that prohibited unions, ensured high protective tariffs, and saw that gov’t paid for 60% of the railroads that were built. Not exactly a non-interventionist system, is it? Then, in the 1950s, the Interstate Highway system benefitted the auto companies at the expense of the railroads. Again, an interventionist action, not the ‘market’ rendering its rational decision. The class war is alive and well. But, somehow, it’s bad manners to point this out, unless you are part of the moneyed interest. Median income is down over the past few years, even as mean income is up. That shows that conditions are skewed towards the high end. That is, the rich get richer, while the bottom 50% sink. That sounds like a pretty fair definintion of ‘class warfare’ to me. And the shift to the non-unionized service industries from unionized manufacturing industries usually means a shift-a big one- downward in wages. People working in retail, at restaurants, or as nannies don’t make $60k a year. Stores & bars are much harder to unionize than factories since the ratio of management to employees is much less favorable to the organizers. And the creation of the American middle class after WWII was the result of an activist, interventionist gov’t. The gov’t redistributed wealth downward through programs like the GI Bill, and a favorable regulatory climate allowed the creation of unions. The combination of these things lifted millions of people into the middle class. This then created a true mass market for consumer… Read more »

klaus
klaus
14 years ago

Overthrow the teachers’ unions? That’s all we have to do? Wow, I’d like to live in your world where life is so simple. Unions are declining because the milieu in which they thrived–factories–is declining. I don’t have the percentages, but a large portion of union jobs were industrial, and the industrial base has been shrinking for the last 2 decades. Add hostile gov’t actions–PATCO–and the conditions that fostered unions don’t exist any more. Second, yes, closed shop regulations made ‘unwilling’ workers join the union. However, those same workers greatly benefitted from the union negotiations, so it was unfair not to support union activities through dues, etc. Third, yes, the unions want to take wages out of competition. But that’s what companies do every day. What happens when a Wal-Mart (the other favorite bogeyman) comes into an area? The competing stores go out of business because they can’t compete with Wal-Mart’s prices. Then, with no competion, Wal-Mart is able to drive wages down. Maybe it didn’t happen in Johnstown, or Warwick, but look at the effect it has in smaller towns. It’s no accident that Wal-Mart came to larger cities and the Northeast recently. They milked the smaller places first. A union stands between the average worker and big business. Be real-the average guy stands no chance against his/her employer. And, yes, you are free to go elsewhere, but when median wage is falling in real terms, that doesn’t leave much real choice. In any negotiation, when one side has all the power, there is no effective negotiation. Now you’re going to bring up getting retrained, etc. Let’s face it: not everyone can be a brain surgeon. And five years ago computer programming was seen as the answer. Not any more. What has happened is that the ‘star’ system (used so… Read more »

klaus
klaus
14 years ago

OK, one at a time. Middle class income did not peak coincident with max union density because it took a couple of decades for the very real union effect to work its way through the system. Wages did not go from minimal to middle class in one fell swoop. Contracts negotiated over the course of 20 years kept raising wages. OK, can’t fully address RI econ history. Not from the area. However, it seems that RI did not have the heavy industry where high union wages were prevalent. Think cars and steel. Textiles is the first stage of industrialization, and it was one of the first to flee to the south to avoid unionization. However, I can’t speak to the timing. As for teachers’ performance, you missed my point about productivity growth. An office worker can accomplish much more in 8 hrs than 20 years ago. A school day is a school day. The professions I mentioned are time-intensive; these professions are not producing widgets. Whether the unions would allow it is irrelevant, unless you can come up with a way to allow teachers to teach the same amount of info in two hours that they taught in 6 hours in 1970. That is the analogy. Windfall profits on universities. 1) Straw man; 2) see answer above. Another time-intensive situation. A class hour is a class hour. You need to speed up the receptivity of the human brain, so we can absorb more than the couple of 100 (or whatever it is) words per minute that we can now absorb. FICA is welfare? Whatever. I can’t argue with a statement like that. It’s pure ideology. But, even if it is, poverty among seniors has plummeted in the past 40 years How is that a bad thing? While you’re at it,… Read more »

John
John
14 years ago

Klaus,
Pretty obvious you’re not from these parts. If you were, you’d realize that RI has what — the second highest unionization rate in the country? Unfortunately, the outcomes we who live here observe all around us don’t match the predictions of your theory.
Also, on your point about doctors and productivity, you are way, way off base. One of the great challenges we face is to raise the productivity level of America’s health care system. For example, here in RI we are voting on a bond issue this year to finance a statewide healthcare IT system; Lifespan is at the forefront of using IT in hospitals, and over half the state’s physicians have just agreed to use electronic patient records. All of these moves are, in essence, an attempt to have RI match the dramatic improvements in efficiency and patient outcomes achieved by the Veterans Administration in their hospital system through a similar application of technology and complementary organizational changes in recent years. The idea that you cannot improve productivity in healthcare is simply wrong.

klaus
klaus
14 years ago

My “theory”? Guys, come on. Read a bit. Do some research. It’s not “theory”. When a factory worker without a college degree can make more than a teacher, or some mid-level corporate types, that’s not theory. I saw it. The wage scales I’m familiar with are out-of-date, so I can’t give you hard dollar amounts, but what the average factory worker made would have to be in the $50-$60k range today. And we’re talking about whole medium-sized cities being supported by factory wages. At one point, GM had upwards of 700,000 people on the payroll, and that’s not counting Chrysler and Ford. And Bethlehem Steel. And Boeing. And a whole lot of other places.
“Theory”?
And John, please forgive the inclusion of doctors. Yes, medical care can be made more productive, but I doubt a real physical exam takes a whole lot less time that it did 30 years ago. But regardles, take doctors out of the list, and you’re still left with a lot of time-intensive professions.
And interesting that Tom only mentioned the Dem millionaires in the Senate. Let’s see, what about…Lincoln Chafee?
And whether I’m from around here is irrelevant. Or maybe it’s a benefit. RI is a beautiful place, but it has what, 1 million people? I doubt it’s particularly representative of the country as a whole. So if you’re generalizing about the whole country from RI, I think you’re apt to draw some skewed conclusions.
And funny John should mention the VA as an example of medical efficiency. It is, pretty much, real socialized medicine. The doctors work for the gov’t.
So, we’ve got Tom saying that the rich should be taxed more, and John saying that socialized medicine offers a model of efficiency and achievement.
Interesting post.

klaus
klaus
14 years ago

OK, this is what seems to be happening: I am writing you detailed narratives, with facts and figures; in response, you pick out certain sections and try to make it appear that my entire line of reasoning is invalid based on some sort of quibble over a term. Secondly, I’m frankly astonished that you seem to believe that the effects of unionization are some sort of moonbat conspiracy theory. To this, all I can say is that you don’t have to take my word for it. Read some US History, econ history, social history, whatever history of the period. And, by “history” I mean legitimate, scholarly history, and not some popularized version written with an agenda. Better yet, go to the library, read some contemporary news accounts. Better yet, get out of RI and talk to some old-timers. They’ll tell you. Third, wages are a lagging indicator. They increase over time (see my response to John; I won’t repeat it). It took decades for wages to increase. As they did, union wages put upward pressure on other employers. In the meantime, workers with higher incomes spent more money, which distributed wealth to more people, who in turn spent more money, and so on in a virtuous cycle. It’s called “economic expansion.” Prime the pump by putting real money into the hands of a lot of people and the economy grows. That’s the fallacy of supply side: don’t matter how much you produce if no one has any money to buy it. Cross ref: see “Depression, Great.” Fourth, while I am trying to present conclusions based on evidence gleaned from what I have read, it seems like you are working from ideology. “Case closed” when discussing AFDC and all of the unwed mothers sucking off the public teat. Referring to taxes… Read more »

John
John
14 years ago

Klaus:
Take the initiative. Visit Rhode Island. We spend proportionately more than almost every other state on social welfare programs. Why? Because our benefits are the most generous (across cash assistance, subsidized daycare, free health insurance, etc) and people stay on them here longer than in any other state. Oh, yes, and because our rate of fraud is very high. The lowest estimate is $14 million annually, and our Democratic Attorney General has noted it could be much, much higher. Even if we conservatively just double it, that makes welfare fraud in RI equal to what we as a state spend each year on school books and other instructional materials. And what has all this wonderful spending brought us? Not a booming economy. Rather, we have the 4th highest tax burden in the country, and the absolute worst one if you are retired or affluent. Our Latino population is up 13%in the last four years, and they now have the lowest median income in the nation. Wonder why they’re coming here? Oh, yes, and we now rank just above Mississippi and Louisiana (but no other state) in the percent of children not living in a married couple family. And our child poverty rates are, as a result, skyrocketing. Sounds like a real paradise, doesn’t it? This is what your theories look like in the real world. Why don’t you move here and enjoy the results with the rest of us? Talk like yours is cheap, my friend.

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