Monday, November 05, 2007

Law Could Sicken Economy

Milwaukee Journal Sentinel columnist Gregory Stanford wants to interfere with my business. In his Sunday commentary, "Don't call in sick at some firms", he calls for a law wherein employees would have the "right to earn up to nine sick days a year, to be used for actual illnesses."

Stanford predictably tells only half of the story by sharing anecdotes about people who became sick but had to come to work anyway. But no mention of the difficulty posed to businesses when employees decide to take a day off for the hell of it, as some surely would, or do.

I don't offer sick pay at my small business. My employees understand the reality that apparently does not dawn on Gregory Stanford. Small retail businesses, and I suspect many other businesses, don't have piles of extra money to throw around.

But I do the best I can to keep my employees happy. I am as flexible as I can be with requests for time off. I offer significant discounts to employees who may wish to purchase our items. I have given bonuses and this year a few of my long time employees were given a weeks paid vacation. If someone needs more hours, I try to accomodate them.

I do all this in part because I am a swell guy, but there is more to it than that. I want to keep good employees as happy as I can, so they continue to work for me. But I am constrained by reality as are most people. I can't offer health insurance, sick days, or six figure salaries. I do the best I can by my employees.

But my best is not good enough for Gregory Stanford.

The cruel irony is that Stanford's proposed law would be harmful to the very people he purportedly seeks to help. If our legislators pass new laws that undermine my business, I would probably manage to survive. I could make no such promises to my employees.


Anonymous said...

Don't break an arm patting youself on the back. I am an employee at a small company and though i do not expect to get paid for a sick day i would like the day off with out reprecusions. Not always the case with some employers.

Anonymous said...

you also buy lunch sometimes

Denis Navratil said...

anon 9:39, you would like the day off when sick without getting hassled. I don't blame you. Why not look for an employer who will be more respectful?

Some employers are not very nice. The same is true of some employees. It is best if government stays out of it, as they can't really do anything about either problem. They can make things worse however.

Anon 11:23, you must be missing those seven course meals I prepare daily for my staff. I will never understand why you left us.

Anonymous said...

My father owned a business for 50 years in Racine, and employed up to 10 people at a time. A WWII vet, he was, by fact of that background, more a social-democrat than capitalist - since his friends died so that people could make a living in the US.

He earned as much as his workers, since he saw no master/slave relationship - anathema to his WWII experience.

Take that anecdote and smoke it.

Denis Navratil said...

anon, are you suggesting that returning soldiers, because of their service, become social democrats rather than capitalists? If so, that is one of the strangest theories that I have ever heard. Please feel free to expand on that notion.

Re your fathers business, he ran it the way he wanted to, it sounds like to me. I am glad that he was able to do so without undue interference from government. Indeed, given your fathers efforts against totalitarian (ie master/slave) regimes, we owe him a debt of gratitude. I will try to show that gratitude by working to prevent a slide towards totalitarianism in our own country.

And if that means opposing your fathers offspring, so be it.

Anonymous said...

You just don't get it...

Wage slavery IS a firm of large capital ownership runs the table...

Anonymous said...

BTW, my father was a great believer in civic responsibility...taxes to help the common good, and helping those 'left behind' by the system, were the prices we pay in a free society.

Denis Navratil said...

The very term wage slavery is an oxymoron. Slaves don't earn wages anon. Your loose use of the term slavery undermines whatever point you are trying to make.

Your father sounds like he was a generous man. That is terrific anon, it really is. He, on his own, decided that he wanted to pay his employees the same as he paid himself. Nobody forced him to be generous.

Like all acts of decency or goodness, they are only meaningful if they are voluntary.

Certainly we would be better off if people were kinder, more generous, more honest, etc... but it gets dicey when we try to force people to behave in the manner that you or I deem decent, honest or generous.

Governments compell behavior anon. Government has a monopoly on the legal use of force.

So just as the term slave wage is an oxymoron, so is the forced generosity that you would like to impose on others via government.

It won't work economically, it is divisive, and it IS slavery. Don't do it anon.

Anonymous said...

The structure called capitalism, that which Francis Fukyama placed under the umbrella term 'end of history', is the game that is played with rules and, by which ethics constrains the 'good'.

Denis Navratil said...

Capitalism is a system wherin people voluntarily exchange goods or services because they want to. They want to because each party, under no compulsion from anyone, prefers what the other guy is offering. Both are happy to make the voluntary exchange. Why is this such an evil system anon?

Now, capitalism is not a system that addresses moral issues such as how to feed the hungry, etc... but it does leave a people with more wealth in which to address such issues.

There are good people and bad people and that will be the case no matter what form of government we choose. Your social democracy or whatever you want to call it will not put an end to greed or other evils. It would however put too much power in the hands of individuals that want power over others. That is dangerous and there are innumerable examples throughout history to prove it.

Anonymous said...

...and capitalisms create a super class that owns most of whatever wealth gets 'created' is what?


Anonymous said...

For all you ideological blather, here are the economic facts of life (if you care...) on income mobility, income prediction, and future prospects...

Creating Inequality
Peter Browne
November 5, 2007

BARBARA Ehrenreich's book Nickel and Dimed is a searing account of what it's like to live on a low wage in the United States. It's also very funny, which helped guarantee it a wide readership throughout the English-speaking world. Ehrenreich went undercover to experience first-hand the working lives of cleaners, waiting staff and shop assistants, some of them working two or three jobs and all of them under the constant threat of crippling medical bills.

But one hostile reviewer accused Ehrenreich of making so basic an error that her entire case was undermined. By ignoring the fact that most poorly paid Americans are only temporarily on the bottom rung of the job market, he said, the book created a false picture of low-wage earners trapped in poverty, illness and overwork.

The image of American employees spending a few months flipping hamburgers while they save up to launch their own company is beguiling. But the data suggests that this sort of mobility is more the exception than the rule in the US. Among a group of 12 Western countries analysed in Intergenerational Transmission of Disadvantage: Mobility or Immobility Across Generations?, a new report from the OECD, four — France, the US, Italy and Britain — stood out as places where your family background plays the greatest role in influencing your adult income.

Britain came out worst, with about 50 per cent of a person's income explained by his or her parents' income. The US wasn't far behind, at 48 per cent. At the other end of the range were Denmark, Australia, Norway and Finland, where parents' incomes accounted for less than 20 per cent of their children's eventual income. It's these four countries, rather than the US, that emerge from the report as the real lands of opportunity.

What explains this great difference? In Australia's case, immigration seems to play a key role — so much so that it cancels out factors that we don't do so well on (like income inequality and early childhood education). Immigrants, especially if they're chosen for their language skills and employability, tend to be more upwardly mobile than the broader population, so Australia's overall performance reflects our relatively high intake.

But if immigration is a plus, what explains the poor performance of the US, which has a large immigration program? The statistics in the report strongly suggest that other important factors — particularly inequalities in the education system and in the distribution of income — wipe out the advantages of the US' potentially mobile group of immigrants.

This shows up very clearly in one of the report's charts, which compares how well migrant students perform at school in a range of countries. In Australia, children born elsewhere ("non-native" students) perform only a few per cent below their homegrown peers; in the US, the gap is over 30 per cent.

As the OECD report puts it, paying for education in the US brings greater benefits than paying for education in most countries, including Australia. That's another way of saying that the longer term benefits of education in the US are strongly linked to the amount a family spends on their children's schooling. In Australia, we're fortunate that the gap between the benefits of private and public education is still not a major contributor to the persistence of inequalities across generations.

That could change. The Federal Government has made no secret of the fact that it wants to encourage parents to spend more on education, and if its policies are successful, the public education system will increasingly come to resemble a safety net rather than the quality mainstream option. The signs are already there: between 1995 and 2004, the proportion of education spending contributed by government in Australia fell from 79 per cent to 73 per cent, the lowest level of any OECD country except Japan and the US.

The other reason that paying for education brings better results in the US relates to entrenched income inequality. Among the 12 countries highlighted in the OECD report, the US has the most unequal distribution of income — much worse than Denmark or Sweden and significantly worse than Australia. According to the report, in countries with highly unequal incomes, the evidence suggests that "education gives access to jobs which are more highly paid (relative to other jobs) than is the case in countries with a narrower distribution of income".

The OECD report cautions that the precise causes of low intergenerational mobility are hard to pin down. But it highlights two factors that clearly have an influence: wealth and education. Wealth, which tends to become more concentrated the greater the level of income inequality, will become an increasing problem in Australia if we continue to emulate the US in industrial relations policies and other areas. At the moment, though, we're a long way short of the inequality that exists in the US.

Education is a more immediate problem. Although our students perform very well by international standards, the Federal Government has progressively reduced its investment, particularly in government schools. Overall education spending is below the OECD average, and the share of education costs paid by households is higher.

In early childhood education, Australia spends 0.1 per cent of gross domestic product compared with the OECD average of 0.5 per cent; as a result, only 42 per cent of Australian three to four year olds are enrolled, compared with an OECD-wide average of 69 per cent. If these trends continue, we risk locking in inequality in the same way that the US has.

Ironically, it could be that the myth of the US as a land of opportunity might actually have made the problem worse. As the American researcher Isabel Sawhill writes: "When those who are relatively poor believe that they or their children will rise in status over time, they are less likely to complain about the status quo and more likely to accept the prevailing system." We need to make sure this complacency doesn't take hold in Australia.

Peter Browne is editor of Australian Policy Online at the Swinburne Institute for Social Research.

Denis Navratil said...

Hey anon, it so happens that I have read Ehrenreich's socialiat screed myself. Not only that but I wrote a book review for the Journal Times before they banned me for making too much sense and for stimulating interest in their readership. Here it is. Enjoy!

It never occurred to me to partake in the Racine Reads community reading project. But this years selection piqued my interest because it touches on many issues relevant to Racine area residents, particularly the working poor. So I picked up a copy of “Nickel and Dimed: On (Not) Getting By in America, by Barbara Ehrenreich.
The author poses as a newly divorced homemaker re-entering the work force. She takes a series of low paying jobs as a waitress, a maid, a Wall-Mart salesperson, a nursing home aid, etc...,
in Florida, Maine and Minnesota. She describes her difficulties in securing housing and adequate compensation. Her story is mildly interesting and a quick read.
Of greater interest to me is the authors transparent political agenda. Ehrenreich had previously authored “The Worst Years of Our Lives: Irreverent Notes from a Decade of Greed” and “The Mean Season: The Attack on the Welfare State”. It should therefore surprise no one that “Nickel and Dimed” is a thoroughly unbalanced attack on our semi-free market economy.
I can summarize Ehrenreich’s viewpoint in four words: workers good, employers bad. Throughout her journey, Ehrenreich consistently offers a sympathetic portrayal of low wage workers coupled with harsh assessments of management and corporations. Her solutions are predictable: subsidized housing, free child care, minimum wage hikes, publicly funded health insurance etc...In a word, socialism.
Let us move on to Ehrenreich’s more specific charges. Ehrenreich believes that the working poor are underpaid because of failures in the free market system. “Wages are not ... sensitive to market forces”, despite labor shortages, she claims. However, Ehrenreich fails to explain how businesses have successfully conspired to suppress wages. A far more plausible explanation for low wages is low ability. Even so, Ehrenreich acknowledges that the wages of the working poor are going up. It is also evident that thousands, if not millions, are willing to risk their lives to enter our country for a chance to enter our “oppressive” work force.
To gain further insight into Ehrenreich’s mindset, consider the following. One of Ehrenreich’s employers (she calls them dictators) suggested that he could double his business if he could find enough reliable workers. Her advice was “Why not just raise the pay?” She has it exactly backwards. Raising pay will not result in greater reliability. Greater reliability (and skills) will result in higher pay.
Ehrenreich also blames the free market for shortages in affordable housing. “When the rich and poor compete for housing on the open market... the rich outbid them, buy up their tenements or trailer parks and replace them with condos, McMansions, golf courses...” Again, Ehrenreich does not explain why the rich don’t build low income housing, seeing as there is unmet demand, and, presumably, opportunity for profit?
The reasons for housing shortages vary from community to community but always seem to involve infringements on the free market. Land use restrictions such as green space requirements prevent the building of densely packed low-income housing. Do we see any low income housing under construction in Caledonia?
In other communities, rent controls often result in housing shortages. Because of artificially depressed rents, a developer cannot expect to build housing profitably. The housing doesn’t get built and shortages follow.
Other regulatory factors contribute to drive up housing costs. I have personally experienced laws which force developers to hire licensed workers. While these laws are ostensibly in place to ensure the safety of the occupant, they can result in grossly inflated production costs which make efforts to supply low- income housing impossible. Ironically, these and other free market infringements, and the ensuing harm to the poor, are almost always supported by the Ehrenreich’s of the world.
I realize I have only delivered an abbreviated challenge to Ehrenreich’s pro-socialism argument. For a more comprehensive defense of free markets, I suggest reading Thomas Sowell’s Applied Economics: “Thinking Beyond Stage One” or Milton Friedman’s “Capitalism and Freedom”.
So while I have no use for Ehrenreich’s socialism, I can thank her for one thing. Until now, I didn’t realize that I, too, am a victim of an oppressive employer. My hourly pay for writing this commentary is far below even the minimum wage. Never mind that I entered into this agreement voluntarily-I can’t be expected to make sound decisions on my own behalf. I need the protection of a centralized, omniscient government. Part time writers of the world, UNITE!

Anonymous said...

I guess you disregarded the facts in this article about income mobility.

How typical of ideologues...

Screed? Like your right wing ones?