Tuesday, August 30, 2005

The Poor Get Forgotten Again…

It seems every time we turn around we see a new study talking about the poor in this country. Today I was on a Webcast put on by the U.S. Census Bureau. It dealt with “Poverty, Income, and Health Insurance” in the United States. The Census Bureau never ceases to amaze me with the data that they present. I, of course, would have no idea if they were pulling the wool over my eyes, but it looks good to me.

The statistics that they presented were staggering. The median household income in the United States in 2004 was a $44,400/year. Does anyone else think that is way too little to be caring for a family with, even in Wichita, let alone New York City or Los Angeles? 12.7% of the people in the United States lived in poverty in 2004. That amounts to approximately 37 million people, up only very modestly from 2003. Why is that we hear nothing but how well our economy is doing and yet over a million more people are “officially” poor from one year to the next? Does someone smell rotting fish?

37 million people exist in this country in poverty, and I would consider our measure of poverty far too laissez-faire. 37 million people is approximately the population of Argentina. Does anyone think that a country that has split the human genome, harnessed the atom and “successfully” prevented inflation for nearly twenty years, think that it is atrocious that 37 million people live in poverty in this country. And that the true number of people struggling not only month to month, or week to week, but day to day is probably far higher.

The saddest statistic is that the percentage of children in poverty is higher than the national average (17.8%). In this Webcast it was presented that 11.2% of children do not have health insurance. 18.9% of children living in poverty have no health insurance in spite of the fact that programs like Medicaid and State Childrens Health Insurance Plans (SCHIPs) are designed to cover the poor. I cannot abide people denied health coverage, I find it especially shameful when children are denied.

Poverty is a natural by-product of the economic system that we have selected for ourselves. I do not mean capitalism, you neo-con slugs! I mean a self-serving, self-centered and self-interested variety of capitalism. Until several years ago ethics classes were not part of standard business school curricula. It took the Enron and WorldCom scandals to get those classes taught.

As for corporate social responsibility, that has absolutely not caught on in this country. There is no incentive to help working people struggling to make a bit more money. Paying people a fair wage is antithetical to our profit-driven business model. I am, of course, laying down vast generalizations. Not all business owners are awful, and many truly cannot afford to pay more, particularly small business owners. But why does it always seem to fall on the little guy; the mother working multiple jobs, the father who has taken a menial laborers job because a plant was moved overseas to make a company more profitable? I don’t see a lot of out of work CEOs or executive salaries lagging?

A raise in the minimum wage or other labor friendly regulations are slammed as typical liberal, anti-business shenanigans. John Kenneth Galbraith said it best in a speech in 1998: "Who is hurt, then, by a rise in the minimum wage? I'm enough of an economist to believe that people are rational, and that therefore workers are rational when they favor a rise in minimum wages, and that certain employers are rational enough when they oppose it. Who are they? The most predatory, the most abusive, the least desirable employers in our economic system, those who thrive on low-wage shops and who use the lever of low wages to drive other businesses to the wall. If a rise in the minimum wage hurts such businesses and helps some others, in my view so much the better." We need to become better at argue that these are not anti-business but pro-employee.

Not all American businesses have taken this approach towards labor costs. If one looks historically, Henry Ford, generally considered a vicious competitor and typical capitalist businessman, the founder of the Ford Motor Company and father of assembly line manufacturing said; "There is one rule for the industrialist and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible." The $5-a-day minimum-wage scheme he voluntarily implemented in 1914, the first in the nation, came at a time when the average wage in the auto industry was $2.34 for a 9-hr. shift.

Ford not only doubled that, he also shaved an hour off the workday. This all happened before the government mandated a minimum wage. Ford, for all his personal flaws, was model of corporate social responsibility. But instead of being praised Ford was scorned by the business world. The Wall Street Journal called his actions "an Economic Crime". Henry Ford got the last laugh. The critics were shortsighted and unable to see that in lowering his "costs per car", the higher wages didn't matter — except for making it possible for more people, including his employees, to buy his cars.

Henry Ford understood a theory that has come to be known as the Labor Theory of Value. That is that paying employees a livable wage will improve morale, it will increase productivity, it will inspire "pride of ownership" in employees. After all, as John Locke pointed out, in the workplace all a worker owns is his labor.

So, how and when does it all change? It isn’t easy (it never is, is it?). People must make a conscious decision to take a stand against companies that do not practice corporate social responsible behavior. We need to not support sweatshop businesses. We need to take a stand against predatory businesses that drive down costs at the expense of worker salary and benefits. (Wal-Mart, I’m looking at YOU!) We need to decide that the lowest possible cost to us isn’t necessarily the best deal. Ironic isn’t it that so many poor people shop at Wal-Mart and yet it is Wal-Mart style businesses that are driving the cost-cutting craze that prevents poor people from getting a leg up.

It isn’t just Wal-Mart, it isn’t just their business practice of strangling suppliers to cut costs, but they are a huge part of the problem. Identify companies in your community who treat their employees well, who provide them with good benefits and a fair wage. Support those businesses and urge your friends to do so too. You might just be the mouse that roared.


Eric the Papa said...

good piece!

Blue Cross of California said...

It's unfortunate so many lack health insurance and I hope something can be done to help all those in need of health coverage and in poverty.