Good Read on Income Inequality From a Billionaire

[Brad_ATX 13,654]

https://www.yahoo.com/news/unfiltered-raising-wages-doesnt-kill-jobs-just-thing-rich-people-say-poor-people-184825813.html

When Nick Hanauer was just 7, his father made sure he and his brother knew every aspect of the family business. Afterschool and summer vacation activities included doing small jobs at the family’s Seattle-based pillow and down comforter company, Pacific Coast Feather. “I’m pretty deeply acquainted with what that kind of work is and what it’s like,” says Hanauer, “but I’ve [also] worked sort of doing all kinds of jobs in a variety of companies."

Today, Hanauer is a self-made billionaire. He made his money as a serial entrepreneur and venture capitalist and has also created a broad array of companies ranging from e-commerce software to biotechnology. Hanauer’s business acumen has allowed him to become one of the wealthiest Americans — the so-called 1 percent — but it has also made him an unlikely champion of the poor and a passionate advocate for the advancement of economic equality in the U.S.

“If you’re a middle-class person and feel like the country has left you behind, that is an objective truth. That didn’t happen by accident.”

Hanauer is aware that some form of economic inequality is an essential part of a healthy economy. “That’s not in dispute,” he says. The question, however, is how much of it should exist. In the late 1970s, the richest 1 percent of Americans shared only about 8 percent of the national income. By 2007, however, that number had grown to almost 23 percent, while the income share of the bottom 50 percent had fallen from about 20 percent to about 12 percent in 2015.

“It doesn’t take a mathematical genius to see that if that trend continues, we will no longer have really a capitalist economy or a democracy,” notes Hanauer. He believes there are multiple factors contributing to the probleme: trickle-down tax policies, dwindling overtime pay and decreasing wages. “There is no excuse for any company in America to pay their workers so little that they need food stamps, and Medicaid and rent assistance,” explains Hanauer. “This is bulls***.”

“That’s not capitalism. That’s socialism for the rich.”

According to Hanauer, all businesses share the same “econo-erotic fantasy”: “My customers will all be rich and be paid a lot by their employers. My workers, sadly, will not be paid a lot, so my margins are very high. I’ll exist in this world where my workers need food stamps, sadly, but my customers are wealthy enough to both buy my stuff and pay the taxes that will fund the food stamps.” Hanauer appreciates the appeal of the fantasy, but there is one problem: “If everybody gets that deal, then you have no economy anymore.” However, Hanauer believes this crisis is a direct result of “policies enacted by governments from both the right and left.”

When President Trump signed the GOP tax bill on December 20, 2017, he touted it as the coming of “jobs, jobs, jobs.” And while Republicans have said that the bill will benefit the middle class and spark job growth by giving corporations permanent tax cuts, Hanauer says that those claims are far from the truth. “Rich people no more create jobs than farmers create tomatoes. The economy generates jobs, not rich people,” he explains. “The more money consumers have, the more jobs that are created, because people buy things and people like me are required to hire people in order to meet that demand.”

In order for those consumers to get the money needed to buy the products, they would have to have that money in the first place — which is why Hanauer believes every state should institute a $15 minimum wage, which he successfully lobbied for in the state of Washington. “The idea that raising wages kills jobs lies in the face of all common sense. If people don’t have any money, who will buy the stuff?” And even though Hanauer was one of the first investors in Amazon, he holds Jeff Bezos to the same standard he would to any CEO who runs a successful business empire. “Until we collectively raise standards so that we require Jeff Bezos to pay his workers enough to get by without food stamps, it’s not his obligation to do that unilaterally,” he says. “Certainly, that’s not what Walmart is doing, or Walgreens, or any of his competitors … and I think that’s a problem.”

The availability of overtime is another area Hanauer believes should be a key labor protection for the middle class: In 1975, more than 65 percent of salaried American workers earned time-and-a-half pay for every hour worked over the week’s allotted 40 hours. By 2013, however, only 11 percent of salaried workers qualified for overtime pay — which means employees can be made to work over 40 hours a week without getting paid their time and a half. Hanauer says this causes more jobs to be taken out of the economy and a softening of the labor market, making it harder for workers to negotiate higher wages. He explains, “If you do that 30, 40, or 50 million times across the economy, you have turned three jobs at 40 hours a week into two jobs at 60 hours a week, millions of times. That’s a way to … take 20 million jobs out of the economy.”

Ultimately, Hanauer believes people should call their elected representatives and demand policies that create wage-and-overtime increases and reject cutting taxes for wealthy corporations, “[Don’t] get conned by this trickle-down nonsense that raising wages kills jobs — It doesn’t. It’s just a thing rich people say to poor people to keep rich people rich and poor people poor.”

“It’s a lie. Don’t believe it.”

 

[Grumps 3,704]

9 hours ago, Brad_ATX said:

https://www.yahoo.com/news/unfiltered-raising-wages-doesnt-kill-jobs-just-thing-rich-people-say-poor-people-184825813.html

When Nick Hanauer was just 7, his father made sure he and his brother knew every aspect of the family business. Afterschool and summer vacation activities included doing small jobs at the family’s Seattle-based pillow and down comforter company, Pacific Coast Feather. “I’m pretty deeply acquainted with what that kind of work is and what it’s like,” says Hanauer, “but I’ve [also] worked sort of doing all kinds of jobs in a variety of companies."

 

Today, Hanauer is a self-made billionaire. He made his money as a serial entrepreneur and venture capitalist and has also created a broad array of companies ranging from e-commerce software to biotechnology. Hanauer’s business acumen has allowed him to become one of the wealthiest Americans — the so-called 1 percent — but it has also made him an unlikely champion of the poor and a passionate advocate for the advancement of economic equality in the U.S.

“If you’re a middle-class person and feel like the country has left you behind, that is an objective truth. That didn’t happen by accident.”

Hanauer is aware that some form of economic inequality is an essential part of a healthy economy. “That’s not in dispute,” he says. The question, however, is how much of it should exist. In the late 1970s, the richest 1 percent of Americans shared only about 8 percent of the national income. By 2007, however, that number had grown to almost 23 percent, while the income share of the bottom 50 percent had fallen from about 20 percent to about 12 percent in 2015.

“It doesn’t take a mathematical genius to see that if that trend continues, we will no longer have really a capitalist economy or a democracy,” notes Hanauer. He believes there are multiple factors contributing to the probleme: trickle-down tax policies, dwindling overtime pay and decreasing wages. “There is no excuse for any company in America to pay their workers so little that they need food stamps, and Medicaid and rent assistance,” explains Hanauer. “This is bulls***.”

“That’s not capitalism. That’s socialism for the rich.”

According to Hanauer, all businesses share the same “econo-erotic fantasy”: “My customers will all be rich and be paid a lot by their employers. My workers, sadly, will not be paid a lot, so my margins are very high. I’ll exist in this world where my workers need food stamps, sadly, but my customers are wealthy enough to both buy my stuff and pay the taxes that will fund the food stamps.” Hanauer appreciates the appeal of the fantasy, but there is one problem: “If everybody gets that deal, then you have no economy anymore.” However, Hanauer believes this crisis is a direct result of “policies enacted by governments from both the right and left.”

When President Trump signed the GOP tax bill on December 20, 2017, he touted it as the coming of “jobs, jobs, jobs.” And while Republicans have said that the bill will benefit the middle class and spark job growth by giving corporations permanent tax cuts, Hanauer says that those claims are far from the truth. “Rich people no more create jobs than farmers create tomatoes. The economy generates jobs, not rich people,” he explains. “The more money consumers have, the more jobs that are created, because people buy things and people like me are required to hire people in order to meet that demand.”

In order for those consumers to get the money needed to buy the products, they would have to have that money in the first place — which is why Hanauer believes every state should institute a $15 minimum wage, which he successfully lobbied for in the state of Washington. “The idea that raising wages kills jobs lies in the face of all common sense. If people don’t have any money, who will buy the stuff?” And even though Hanauer was one of the first investors in Amazon, he holds Jeff Bezos to the same standard he would to any CEO who runs a successful business empire. “Until we collectively raise standards so that we require Jeff Bezos to pay his workers enough to get by without food stamps, it’s not his obligation to do that unilaterally,” he says. “Certainly, that’s not what Walmart is doing, or Walgreens, or any of his competitors … and I think that’s a problem.”

The availability of overtime is another area Hanauer believes should be a key labor protection for the middle class: In 1975, more than 65 percent of salaried American workers earned time-and-a-half pay for every hour worked over the week’s allotted 40 hours. By 2013, however, only 11 percent of salaried workers qualified for overtime pay — which means employees can be made to work over 40 hours a week without getting paid their time and a half. Hanauer says this causes more jobs to be taken out of the economy and a softening of the labor market, making it harder for workers to negotiate higher wages. He explains, “If you do that 30, 40, or 50 million times across the economy, you have turned three jobs at 40 hours a week into two jobs at 60 hours a week, millions of times. That’s a way to … take 20 million jobs out of the economy.”

Ultimately, Hanauer believes people should call their elected representatives and demand policies that create wage-and-overtime increases and reject cutting taxes for wealthy corporations, “[Don’t] get conned by this trickle-down nonsense that raising wages kills jobs — It doesn’t. It’s just a thing rich people say to poor people to keep rich people rich and poor people poor.”

“It’s a lie. Don’t believe it.”

 

 

Great article! Thanks for sharing!

I agree with him that it has been no accident that our country has been steadily eliminating the middle class, and I agree that  it is coming from the right and from the left.

I don't understand this comment,  “Rich people no more create jobs than farmers create tomatoes. The economy generates jobs, not rich people.” Who is he saying creates tomatoes?

I appreciate his focus on poverty, not income inequality, I still think "income inequality" is a term used to distract us from the issue of poverty.

I have not thought about the effect of eliminating time-and-a-half overtime pay. I can see that being a big factor in reducing the middle class. On first thought, bringing overtime pay back make more sense than does $15 minimum wage. I still think that all jobs are not meant to provide a "living wage." Entry level jobs provide valuable experience and could be eliminated my many companies if the cost of them is too high.

Finally, with the ease of publicity today, why hasn't a company come out with higher wages as a marketing tool? Or have they and I just missed it? Would the American public pay more for groceries if they knew that the employees there were making more money? Or has our Wal-mart mentality become too ingrained?

[homersapien 11,452]

The writer is absolutely dead on.

The idea that one creates jobs by making the wealthy more wealthy (trickle down) has been one of the largest economic hoaxes ever created.

Jobs result from demand which results in employers and/or the wealthy to invest in more production (hire people) to meet that demand.

[homersapien 11,452]

3 hours ago, Grumps said:

I don't understand this comment,  “Rich people no more create jobs than farmers create tomatoes. The economy generates jobs, not rich people.” Who is he saying creates tomatoes?

I think he meant that rich people don't spontaneously create jobs.  They create jobs only in response to their need to produce more goods to sale as the market demands.

Likewise, farmers don't spontaneously "create" tomatoes, nature does.  But farmers invest in the resources and labor to produce them if there is a market that wants to buy them.  

In both cases jobs - or tomatoes - require market demand to happen.  Jobs don't just happen because rich people have money and tomatoes don't just happen simply because a farmer can plant them.

But I agree, it was a poor analogy.  The only real weakness to the piece IMO. 

[McLoofus 35,182]

On 6/9/2018 at 8:58 AM, Grumps said:

Who is he saying creates tomatoes?

Tomato seeds. 

Not a smarta** response. I think he's saying that employers nurture and allocate jobs, but that it's the economy that sows the seeds. There were tomatoes before farmers and there were jobs- "hunters", "gatherers"- before bosses. 

[DKW 86 7,441]

In context of the late 1970s, Trickle Down made sense and probably worked. In the 70s, we spent $BNs dodging taxes in tax shelters that did nothing for the economy. We flipped the game in the 1980s, and we had an economic boom that was awesome. 

The key words were IN CONTEXT. The answers that worked in the 80s do not apply now. We are not coming out of extremely high marginal tax rates and pent-up investment money.  The answers that worked back then worked for that situation. The error of the late 20th and Early 21st Century is BLINDLY trying to relive the 1980s out of context. In the 80s we did some awesome awesome things. We saw the defeat of Communism in the USSR. The Economic Boom. etc. BUT THAT WAS THEN. 

I really prefer a slower more regulated economy. I live in horror of what the new Republicans are setting us up for yet another economic bust with even higher and higher deficits. Anyone tell me that the Republicans are serious in any way about balancing the budget gets laughed out of the room.

[kevon67 2,368]

Worked for the Lowen Group RIP.....for many years.......I remember our largest competitor paid their employess what was referred to as Chinese overtime.....damn shame........In the end no matter your dedication to a company they will kick you to the curb so Joe Blow good old boy can get a company vehicle?

[triangletiger 1,599]

I think the way our economy is structured now to strive for immediate gains rather than building something sustainable for the long-term contributes to the problem.  CEOs are incentivized to maximize profits and, if the profits are not deemed good enough, fired.  And most of us 'regular folks' are depending on those companies (or the stock in those companies) performing well because the funds that comprise our 401(k)s and IRAs  and other investments.  So, in order to maximize profits, a company can either increase revenue or reduce operating costs/overhead.  A big part of that operating cost for many companies is employee wages and salaries.  Someone above used the term 'Walmart mentality' and this concept of 'get as much as you can right now for as little as possible' seems to fall in line with that