Minimum Wage

While the wage gap is a major issue, there is a secondary issue that needs addressed as well – minimum wage.  Much has been made of the current minimum wage and the need to adjust it.  Current federal wage is $7.25/hr and there is a major push to raise it to $15/hr.  However, such an increase is not something that can reasonably happen quickly.  A move to $15/hr is more than twice the current rate.  Doing that in one massive jump would seriously harm many small businesses and in turn harm many low income Americans.  At the same time, we do need to raise the minimum wage.  The current wage is way too low, especially for working class American adults.

A single mom shouldn’t have to work 3 jobs to put food on the table for herself and her kids.  A family of 4 shouldn’t have to send dad to two jobs and mom to one to live a decent life.  I know I’m simplifying a bit, but the reality is we don’t have to look too hard or too far to find a situation similar to those above.  Yes, there are some people who just don’t want to work hard, or at all.  But, there are a lot of Americans who would love the opportunity to work hard for 40 hours each week and be able to provide for their family.  They’ll do anything to provide for their family, including working multiple jobs.  Maybe we should change the minimum wage so that a hard-working family of 4 can afford a home, clothes, and food on the income from just two parents working one job each without needing government assistance.  It’s not a crazy idea.

For a prime example of how a business should run, look at Gravity Payments in Seattle, Washington.  Several years ago the CEO, Dan Price, decided to cut his salary to $70000 and increase the minimum salary to $70000.  The Today Show ran this piece last year highlighting the changes in the company.  Among the key takeaways – happier employees who don’t leave the company, employees buying more expensive homes closer to work to shorten the drive time (more time with family just might = happier employee), and employees having the child they didn’t think they could afford.  Price’s move to $70k wasn’t pulled out of whole cloth.  That figure represents the average cost of living for a middle class family in Seattle.  After some initial blowback (his brother sued him) and a few prominent departures, the company is actually succeeding beyond Price’s expectations.  Profits didn’t take the hit he thought they would.  The company has attracted key employees from other companies, including Yahoo.  Slate had a great article on why Price made his choice and the sound rationale behind it.

Now, obviously Gravity Payments requires people with certain skill sets and training.  That training does command a certain level of income in return.  Maybe not the $70000 the Price is paying, but definitely more than minimum wage.  The thing is, Price is making an important commitment to his employees – one that many companies refuse to make today.  Price is basically telling every single employee one thing – you work hard for me and you deserve a middle class lifestyle for it.

I know some of you are going to argue that minimum wage shouldn’t be a guarantee of a middle class lifestyle.  If it is, where’s the motivation to better oneself, to develop skills to get the middle class paying job.  I agree.  But, minimum wage should be able to provide a basic, albeit low, standard of living.  On top of that minimum wage should be enough that doing the things necessary to develop new skills (going back to school, taking additional training classes) doesn’t completely break the family budget.  Part of the problem right now is that too many families can’t afford for mom or dad to go to school.  It’s not because they can’t pay for the schooling since they could probably qualify for grants to pay for it.  It’s because they can’t afford to leave their 2 jobs to have time to do classes.  We need to do more than just help pay for the schooling – we need to help pay for life while going to school.

There’s one other massive way to fix the wage problem in America but the C-suite isn’t going to like it.  We need more executives like Dan Price.  We need more executives who are willing to take a smaller salary so that more employees can enjoy a bigger piece of the pie.  Republicans as far back and Ronald Reagan (and possibly farther) have tried to sell American’s on the notion of “trickle-down economics.”  NEWSFLASH: IT DOESN’T WORK!  The reason is quite simple – American culture is rife with materialism and greed.  Trickle-down economics wants us to believe that there is a point at which the C-Suite, major shareholders, and the Board of Directors will have enough money.  Their cups will be full and the overflow will cascade down to fill all of our cups like a perfectly built pyramid of champagne glasses.  There’s just one problem – the glasses at the top of the pile continually get bigger.  Sure, there might be the occasional slosh of champagne that trickles down to fill the cups 2-3 levels down, but nothing is making it all the way to the bottom.  Dan Price decided to make his glass smaller and allowed every glass in his pyramid to be filled.

There’s also some basic economic math to support this.  Take a decent sized company, say 500 employees, plus a CEO, COO, and CFO.  Assume an average salary for each C_O of $1.5M.  The company had a very good year and it is now time to discuss annual raises.  Everyone outside the C-Suite is getting a small raise (around 3%) and each C_O is looking at a $250k raise (25%).  They already made $1.5M, so there isn’t much economic activity that they are going to generate by boosting their salary to $1.75M.  Most likely that extra income is going to be invested.  Not bad, but also not a great way to boost overall economic activity.  What if we change the distribution of that $750k and give every employee an additional $1500 and the C_O’s remain at $1.5M.  There’s a lot that can happen with an extra $1500 in the pockets of most Americans.  That money is going to get spent on goods and services.  People are going to replace that old TV or update the living room furniture (finally!).  That’s going to boost revenue for thousands of companies where that extra $1500 is spent.  Sounds like a much healthier economy than seeing 3 people invest another $750k.  Go back and read that Slate article on Gravity Payments - this is almost exactly Price's rationale.

This is the key point with regards to minimum wage.  We need to raise it, period.  And the cost for raising that wage cannot be higher prices on goods and services.  It doesn’t do us any good to raise the minimum wage of a WalMart greeter if WalMart responds by raising prices.  The greeter can’t buy anything more than before the raise.  Wages need a real boost, meaning an increase greater than inflation.  That can happen when the 1% at the top of the economic food chain decide that their glasses are big enough and it’s time for everyone else to get to drink some champagne as well.

Income Inequality part 3 - The Wage Gap

               The wage gap – probably the single biggest issue in any discussion of income inequality.  And it’s not really one issue.  It’s multifaceted – gender gap, racial gap, minimum wage disparity, differences in cost of living.  There are any number of charts and data that can show these issues in various degrees.  Having said that, I think you will have a hard time arguing that we don’t have a wage problem in America.

               To start, take a look at this article from the Economic Policy Institute.  There are a few charts in the article that I find quite telling.  Start with Figure 2 on the growth of productivity and wages.  Somewhere around 1970 wages stopped growing at the same rate as productivity.  Over the last 40+ years Americans are producing more, but not really seeing wages go up as a result.  The Atlantic has this thoughtful piece to help explain why in an interview with Harvard Business School professor Jan Rivkin.  Rivkin identifies 3 major causes of the wage gap – technology and globalization, decreased investment in the commons, and the erosion of collective bargaining power. 

               Technology and globalization are both essentially focused on the same thing – cutting labor costs (or how much we have to pay our employees).  Companies routinely talk about “leveraging technology to improve profitability.”  This all sounds good because companies are really good at implying that everyone will get to share in the greater profits.  Figures 3 and 7 from EPI show the real winners – CEO’s and other executives.  This use of technology is a subtle force behind the increasing wage gap.  Employees don’t really have much ability to resist technological advances lest they look like a Luddite.  At the same time, the increased profits largely go to the people at the top.

               While technology is quiet in its influence on the wage gap, globalization is not.  Quite simply, globalization allows companies to access cheaper labor markets overseas without massive import taxes.  I am old enough to remember when NAFTA was passed.  While I certainly did not grasp the implications at the time, it’s easy to see now why Ralph Nader claimed it would be a bad deal for the American workforce.  Companies, especially Ford and GM, moved plants to Mexico almost en masse.  Now they could pay workers significantly less and not have to deal with the UAW.    In addition, they gained an additional leveraging tool to use in the next bruising fight with the UAW – take our deal or we move to Mexico.  Not exactly a win for the American worker, but a huge win for the C-suite at the top.  Globalization also allows companies to put the technically official headquarters in the most tax friendly little country without actually having to move operations anywhere.  So they get the benefits of access to the skilled U.S. labor force, but don’t have to pay the same taxes here because the company is actually located in Ireland or __________ (insert business tax friendly country here).  Don’t believe me… Medtronic, a company with operations in Indiana, did just that.  In fact, all Medtronic did was change their address.  As the article points out, none of the executives actually moved out of their offices in Minnesota.  It’s a process called inversion and governments are starting to become aware of the problem, although legislative efforts to fix it have yet to achieve much.  Without making any real changes to how the company operates, Medtronic changed their tax rate from 35% to 12.5%.  Sorry folks, but any time a company can drop their tax rate by more than 20% without making any meaningful change to how the company operates is just plain wrong.

               Rivkin’s second point is one I think many Millennials are actually quite aware of, even if we don’t put it in the same terms as Rivkin.  Millennials have been blamed for the death of Applebee’s, TGI Friday’s, BW3, and other casual dining restaurants.  As Business Insider points out, some of this is due to our move toward fast-casual places like Panera and Chipotle along with a desire to do more cooking at home.  The article isn’t wrong, but it’s missing one a key factor – investing in the local community.  It’s no wonder BI misses this point because most of the business world has stopped investing in the commons.  The business world has really moved towards this idea that shareholder equity is king and everything must be subordinate to the goal of increasing shareholder equity.  Millennials don’t care about shareholder equity because we don’t have money to invest in the market.  What we do have are friends who work at the local coffeehouse down the street, or started their own brewery/gastropub/restaurant or run the local car lot, etc.  We love our friends, so we spend our sit-down restaurant money at their place.  We buy our car from the local dealership where our buddy works.  Spending at the local places means we aren’t going to Applebee’s.  Supporting the local microbrewery means we aren’t buying Budweiser.  Millennials (at least the ones I know) are relational and communal.  We work to help those we know or those in our local community succeed.  When Renee and I go out to eat at Casa’s; Mad Anthony’s; Don Hall’s; or Spyro’s, the profits stay in Fort Wayne.  When I go eat at Applebee’s the profits are going to someone I don’t know living who knows where.  Watch the ads this November and you’ll see ads for Small Business Saturday.  SBS hasn’t been a major event all that long; it was started by American Express in 2010.  However, SBS taps into this idea that we have to invest back into our local communities.  We have to put our hard earned money into the people and businesses working hard to make our communities better.  Millennials understand this.  It’s time corporate America figured it out as well.

               While companies may not understand the need to invest in the common good anymore, you would think they would understand the importance of investing in their employees.  Sadly that is not the case as the collective bargaining rights of American workers are under attack.  Many states have passed “Right to Work” laws.  These laws prohibit union security agreements.  These agreements exist to require employees in a union shop to join the union and pay applicable membership fees.  Proponents argue that employees should not be forced to pay for union representation if they don’t want to.  The problem is that even employees who don’t pay membership fees still have access to the benefits negotiated by the union.  Obviously, opponents of “right to work” argue that allowing employees access to union negotiated benefits without requiring some form of payment is inherently unfair.  The real purpose behind the law is to squeeze the life out of unions.  When the union can no longer require payment from employees, it is cut off from the funds necessary to keep it functioning.  Unions are a vital part of a healthy economy.  They help protect workers and ensure fair pay.  I know there are people that argue the unions were given too much power and drove companies into bankruptcy (think UAW) or that unions protect bad employees (teachers’ unions in New York) and that may be true to some extent.  The problem is that the pendulum has swung too far the other way and unions are steadily having their power erode.

               The erosion of union power does nothing buy help boost the bottom line for the C-suite.  When workers can’t negotiate a fair contract; more money can go to the executives.  Here’s the problem, and it links back to Rivkin’s second point.  When workers aren’t paid fairly, they have very little money in spend beyond the essentials.  So money isn’t circulated as much as before; it’s being hoarded.  There are several economic models that show the power of money being circulated from the employer who pays the employee who spends it at the local store where that store owner uses it to buy a house and on it goes.  When the employer keeps the money it doesn’t get spent and the store owner ends up not buying a house.  Unions should be allowed to flourish and thrive because they are a necessary part of a free market flow.  If the employers pay well and treat employees fairly maybe there is no need for a union.  But when employers don’t pay well and/or treat workers poorly, unions become a very important tool to restore balance.  I’ve heard many people state that the solution to a poor-paying job is just to go find another one.  Such a statement is willfully blind to the other realities of job employment beyond the hourly wage rate – availability of other jobs, need to keep insurance, ability to move, etc.

Income Inequality part 2 - College expenses

               In part 2 of the posts on income inequality I wanted to dive deeper into the issue of college costs.  There are multiple factors in play here so it may take a little time to completely unpack, but I’ll try not to make this too long.  The first aspect to look at is the relationship between minimum wage and the average cost of one year of college.

               Let’s start with a basic premise – a graduating high school senior is able to find a job paying minimum wage upon graduation.  Before heading off to college, our student is able to work 40 hours per week for 12 weeks.  Given current tax brackets, let’s also assume that our student pays no taxes on those wages.  Using the college board data, will the student earn enough to cover college tuition for the following school year?  In 1980 minimum wage was $3.10 and the average tuition and fees at a public 4-year university was $804.  In the summer of 1980 our student earned $1488 before leaving for school – enough to cover tuition and fees with $684 left over.  In 2016 our student earned $3480 and faced an average tuition bill of $9648 at the 4-year public university – a shortage of $6168.  These figures don’t include room and board so there are going to be some added expenses to account for.

               If we use the NCES data from the last post, we can account for room and board as well.  For the 1980-81 school year the average cost (tuition, fees, room and board) at a 4-year public university was $2550, leaving our student with a $1062 deficit.  NCES data only goes up through the 05-06 school year.  In 2005, minimum wage was $5.15 and the average cost at a 4-year public institution was $12108.  In the summer of 2005 our student earned $2472, which created a $9636 deficit.  Extend that out over the typical 4 years that our student attends university and our graduate in 1984 only has a total debt of $4248.  That is less than HALF the debt our 2005 student incurs PER YEAR!  Our graduate in 2009 has a total debt of $38544.

               Clearly the numbers show an increasing need to borrow larger amounts of money to pay of college.  At the same time that college costs are skyrocketing, the need for a college degree is also going up.  Most of this data is anecdotal, but decidedly relevant.  When I graduated from college in 2005, I had friends who had no choice but to pursue additional degrees if they were going to find meaningful work within their field.  Obviously my pre-med friends were going to need more schooling.  Not so obviously – my friends going into social work.  In order to get a decent job in the social work field, they had to first get a master’s degree.  And it’s not just social work where higher level degrees are required.  Most athletic training positions now required schooling beyond a bachelor’s degree.  Nursing positions used to be available in hospitals for both LPN’s and RN’s.  Those positions only required a 2-year Associate’s Degree.  Now LPN’s can’t get jobs at anything other than nursing homes and hospitals are increasingly requiring a 4-year Bachelor’s Degree for their RN’s.  This degree inflation is only adding to the massive student loan debt.

               Piling on to the debt load – decreasing access to Pell Grants for college.  Pell Grants do not need to be repaid, so theoretically they should decrease the debt load for a college student.  NPR recently ran an article about the challenge of paying for college and the fact that summer jobs just don’t pay.  The article discusses the max amounts of Pell Grants and how they have changed in relation to the full cost (tuition, fees, room & board) of college.  For the 81-82 school year the max award was $1800 to help cover an average full cost of $2870, so the student only needed an extra $1000 to pay for the semester.  The Pell Grant covered more the 50% of the full cost.  Now the average full cost is just over $20000 and the max Pell Grant is only $5800; less than 30% of the cost.

               When I went through college, I heard a lot about credit card debt and the perils of misusing my credit card.  I learned early to pay my entire statement balance each month, but most people haven’t learned that lesson and credit card debt was, and still is, a major problem in this country.  Currently, credit card debt sits around $882 billon.  That’s a hefty figure and the credit card companies are enjoying some nice interest off that debt.  Of course, if it gets too bad, individuals can discharge that debt through the bankruptcy courts and walk away.  Understandably, credit card debt got a fair amount of coverage in the media.  That changed as the first wave of Millennials started graduating and having to pay on their debts.  Suddenly, student loan debt started to shoot up and now everyone is talking about student loan debt.  In June 2010, student loan debt surpassed credit card debt.  Depending on which calculator you look at the total current outstanding student loan debt sits around $1.4-1.5 trillion.  That debt cannot be discharged in bankruptcy.  You cannot walk away from student loan debt; it’s a millstone around the necks of millions of young Americans today.

               And it’s not all young Americans racking up this debt.  Americans in their 30’s and 40’s are going back to school as they need to re-tool their skills to remain competitive in today’s job market.  Many of these Americans have families to support and have to work jobs as a result.  They borrow funds to pay for the new degree and hope the new job (and higher income) comes through.  It doesn’t always work out that way.

               There are some things we can do the help alleviate this problem.  Mike Rowe, host of the hit show Dirty Jobs, has been talking to anyone who will listen about trade schools and other ways to find valuable employment.  There are good paying jobs that don’t require a 4-year degree.  But none of the major college ranking publications – U.S. News, Princeton Review, Forbes – give even a wink towards the trade schools.  Thanks, in part, to Mike’s efforts Forbes recently changed that and published their first ranking of trade schools.  With all the push in schools for STEM, Rowe is arguing for more trade jobs.  We all know not everyone is cut out for the academic world of a 4 year college.  That’s a good thing.  We all need plumbers, electricians, mechanics, construction workers, carpenters, etc.  These jobs don’t require a 4-year degree; they take 2 years at a trade school and then many of these careers put people on the old school apprenticeship -> journeyman -> master career path.  Along the way, they make some pretty good money.

               I don’t know what all the solutions are to this problem, so feel free to provide your own.  I do know we better start tackling it now or we are going to end up with a society where the only people who can go to college are the rich folk and we can wave goodbye to the idea of America as a land of opportunity for anyone willing to work hard.

Income Inequality part 1

This meme has been making the internet rounds as a favorite of the left, especially progressives, as a sign of just how bad the income inequality is.  Naturally, the right claims the numbers are skewed, but without any numbers to support that position.  So, I decided to take a crack at some of the numbers and see what I could find.  Admittedly, some of these numbers are much harder to measure.  What defines a “typical worker?”  Which CEO’s were used to calculate the average CEO increase?  Other numbers are a bit easier to measure.  Minimum wage, college tuition, and average new home price are pretty easy to find and measure.  One of the first posts I saw stated that the numbers were based on 2013 figures.  So, that’s where I will measure.  Below are my results:

Minimum Wage

Minimum wage in 1978 - $2.65, minimum wage in 2013 - $7.25 (no change since 2009)
 Source: Department of Labor

Inflation adjusted 1978 equivalent in 2013 - $9.76

Source: Bureau of Labor Statistics CPI Inflation Calculator

Inflation adjusted change -> (9.76-7.25)/7.25*100 = 34.62% decrease

After a few different Google searches, I could not find any reporting that supported the 5.5% decrease shown in the meme.  The problem is, my math shows the decrease to be even worse than the 5.5% shown in the meme.  Regardless, I think we can all agree that an effective decrease in the minimum wage is bad for the economy.  

College Tuition

There are two different sets of data I’ve used for this, one from the National Center for Educational Statistics and one from collegeboard.org.  Let’s start with the NCES data: 

Total tuition, room, and board at public 4 year university 78-79 school year - $2145
Total tuition, room, and board at public 4 year university 05-06 school year - $12108

Change in tuition -> (12108-2145)/2145*100 = 464%. 

That’s not inflation adjusted and nowhere close to the 1120% the meme claims.  So what does it look like when we account for inflation?  Using 1978 dollars the tuition for the 05-06 school year should be $6412.42.  That results in a change of (12108-6412.42)/6412.42*100 = 88% increase.  If we use 2005 dollars and work back to 1978, an equivalent tuition would be $4050.21.  The resulting change is (4050.21-2145)/2145*100 = 88% increase.

Here’s the data from the college board:

Average 4-yr public university tuition & fees 1980-81 = $804
Average 4-yr public university tuition & fees 2016-17 = $9648
Average 4-yr public university tuition & fees 1980-81 (2016 dollars) = $2340
Change in 4-yr public university tuition & fees = (9648-804)/804*100 = 1100% increase

Okay, so now we are a bit closer to the 1120% increase the meme claims.  The problem is that doesn’t account for inflation.  Any proper measure of the change in tuition has to account for inflation, otherwise the figures are quite misleading.  Using the college board figures and adjusting for inflation the actual change is (2340-804)/804*100 = 191% increase.  The two sets of college figures arrive at different amounts of increase and some of that is due to the timeframes used and also the data sources.  The key thing to note, though, is that college costs are increasing dramatically.

Shelter

Data for this section comes from the Census Bureau.  In January 1978 the median new home price was $52,300 and the average new home price was $58,500.  In January 2013 it was $251,500 for the median and $306,900 for the average.  (See this for an explanation of the difference between median and average)  Just doing non-inflation adjusted calculations results in increases of 380% for the median new home price and 424% for the average new home price.  That median figure is right in line with the meme, so they get some props for that.  However, as I’ve said before, you have to adjust for inflation.  Using the BLS inflation calculator, the 2013 equivalent of the 1978 median home price is $192698.  That translates to a 30% increase in median home prices.  The 2013 equivalent of the 1978 average home price is $215542, meaning a 42% increase in the average home price.

What about the other claims made by the meme?  Here’s the EPI report that is the source for the claims regarding the exorbitant rise in CEO pay and the minimal rise in the pay of the typical worker.  And here’s the article from Huffington Post on the EPI report.  As for the medical costs, that number comes from a Bloomberg article (available only to Professional subscribers) that is nicely summarized by Huffington Post (the same article is also the source of 1120% rise in college tuition).

On the whole, the point of the meme remains.  Namely, expenses have gone up while incomes have not kept up except for the top of the chain.  The problem is that there are some figures missing from the meme that leave it open to claims of exaggeration/inaccuracy.  The expenses aren’t inflation adjusted while the incomes are, so that causes some skewing.  There are two ways they could have corrected this.  Either inflation adjust the expenses, as I’ve tried to do, or, include the cumulative inflation rate from 1978 to 2013.  In case you are wondering that rate is 257.3% per the US Inflation Calculator. 

Not adjusting for inflation would change the way the income figures are reported and change the way we need to look at those numbers.  The un-adjusted change in minimum wage was an increase of 173%.  However, when we compare that against an inflation rate of 257.3%, it means that the cost of consumer goods grew 0.67 times faster than the minimum wage.  It also shows that some of the biggest expenses we face – housing, education, healthcare – grew faster than the cost of consumer goods.  So, even if our incomes kept pace with inflation, some of our most expensive purchases have still become even more expensive.  There’s a lot more to say on the subject of income inequality and wealth distribution and this post is running long, so I will save more thoughts for future posts. 

Growing Republican Tyranny

               I know the title of this post is sure to upset my right leaning friends, but I feel it is an important follow-up to my last post about who we want to be.  There is a growing trend within the Republican party to force their agenda through any means necessary or, at the very least, block every bit of governance coming from the left.  And it’s not just in Washington D.C; it’s happening at the state level as well.

               First, during the Obama administration Republicans in the Senate filibustered more nominees than were filibustered during all the previous administrations.  Now this claim has gotten much robust debate and so I turned to Politifact for help finding the truth.  In November of 2013 Harry Reid claimed that of the 168 nominees filibustered in the history of the United States, 82 of those occurred under President Obama.  As this article points out that claim is based on cloture motions filed.  Some candidates had multiple cloture motions filed, so the number is a bit misleading.  However, they don’t simply stop at calling the figures a bit misleading; Politifact went a bit deeper to see what the true numbers are.  Accounting for nominees with multiple cloture attempts, the researchers at Politifact determined that only 68 nominees had been blocked before 2009, while 79 had been blocked since 2009.  This massive increase in filibusters did nothing but slow down and weaken the ability of the government to function.  Tyranny is defined as the despotic abuse of power.  One cannot reasonably argue that President Obama’s nominees were so bad as to justify such obstruction.  The massive amount of filibustering that Republicans foisted upon President Obama was nothing short of tyranny by the minority.

               Second, Republican refusal to consider the nomination of Merrick Garland for the Supreme Court seems to clearly meet the other definition of tyranny – the arbitrary or unrestrained exercise of power.  Republicans, including Mitch McConnell has first put forth Garland’s name as a judge that could reasonably pass through the Senate.  But when push came to shove, they dishonored the institution in which they serve by flat out refusing to do their job.  It’s too bad their employers didn’t fire them for such disregard for their duties.  Their refusal to consider the nomination was completely arbitrary as there were no actual reasonable grounds not to consider the nomination.  The election year argument is weak when you consider that during the 20^th century there were 6 justices nominated and confirmed during an election year.  Clearly past Senates had no trouble doing their job.

               Finally (at least congressionally) there is the current Congress.  The Republicans running that circus have made it clear they are not going to work with Democrats on the major legislation.  The “repeal and replace” health care attempts are being done strictly through the budget reconciliation process.  A process that only needs a simple majority to pass through Congress.  In other words, they don’t need a single Democratic vote to pass it.  The AHCA doesn’t actually remove the individual mandate; it just eliminates the tax penalty if you don’t have insurance.  Removing the mandate would require a 60% majority (meaning Democrats have to vote for it).

               Now it’s not just the Republicans at the national level who are behaving tyrannically; it’s state Republicans as well.  When the city of Milwaukee passed a bill providing for paid sick leave in November 2008, Wisconsin’s Republican governor responded with a bill barring municipalities from doing just that the following May.  In fact, several states are passing legislation to ban municipalities from offering paid sick leave.  When Cleveland considered a bill raising minimum wage, Republicans in the Ohio statehouse passed a bill banning such a move.  This Slate article covers the people driving these pre-emption laws, so called because they often pre-empt efforts by municipalities to govern themselves.  And it provides several more examples of Republican states that are suppressing the rights of the citizens who live within cities in those states.  And here I thought Republicans believed that the best government was the one closest to the people.  Guess I was wrong.

               Then there’s the case of North Carolina.  Republicans in Raleigh have committed some serious and blatant violations of the basic tenets of democracy.  The 2016 gubernatorial race was a close and very contentious race between Republican incumbent Pat McCrory and Democratic challenger Roy Cooper.  Cooper won and McCrory demanded a recount.  Tight race, very heated, narrow margin of victory – I get why McCrory felt he had to fight past Election Day.  However, the real problem is the way the Republican legislature behaved after McCrory conceded the election.  They immediately moved to strip powers away from the executive branch – demanding the executive nominees be confirmed by the senate, changing the makeup of the state election board, and changing county election boards as well.  North Carolina’s constitution has some of the most strictly defined separation of powers of any of the states in the U.S.  As such, it didn’t take long for the court to rule that Republican efforts denied Governor Cooper the powers vested in the executive branch by the state constitution.  It’s hard to see where Republicans would have felt compelled to pass such measures had McCrory won re-election.  It’s also hard to see such a move as anything other than a despotic attempt to deny power to the opposing party.  Especially since the legislature is basically trying to pass the same measures, just a slight bit less aggressive.  Of course, the blatant attempts to steal power from the executive branch isn’t the only problem in North Carolina.  The disastrous HB-2 bill overrode efforts by Charlotte to pass pro-LGBTQ legislation.  HB-2 led to the ACC and NCAA moving championship games away from NC, and a host of other negative consequences.  Republicans made a token gesture of toning down the language in HB-2 without actually changing what the law did and so the ACC and NCAA came back.  In response one legislator is proposing a bill that would force UNC and NC State to withdraw from the ACC if the conference or the NCAA pull any championship games out of North Carolina again.  Nevermind that such a move would cost the schools somewhere in the neighborhood of $90 million each to do so.

               Lastly, there are the multitude of Republican states with voting issues.  For starters many states are passing very strict voter ID laws – laws that tend to favor white men (largest segment of Republican voters) and hurt minorities, women, poor voters, and elderly voters (voters more likely to vote Democratic).  In all fairness, the latest research suggests problems with the earlier study.  Despite the flaws in the research, the Vox article still does note that these laws may be still be racially discriminatory; it’s just that the effect is negligible.  Recent gerrymander issues aren’t so insignificant.  Texas, Alabama, and North Carolina have all had their most recent gerrymanders (done after the 2010 census) ruled unconstitutional for racial discrimination.  Not surprising, they're all Republican dominated legislatures.

               All of this leads me to see the Republicans as a bunch of petulant 5 year-olds throwing temper tantrums because they didn’t get what they want.  As I’ve pointed out before, we’re not all Republicans.  We all have different views and different beliefs on the entire spectrum of things political.  Republicans don’t seem to understand this point.  They seem infused with a belief that I’ll call the “divine right of the Republican Party.” Much like the old “Divine Right of Kings” that many European monarchies used to support their rule, Republicans seem to think that they have been blessed by God with governing superpowers that allow them to ignore the will of the people.  If they somehow wind up in the minority, then it’s their “duty” to obstruct any ability for the Democratic Party to govern.  If urban communities want rights outside of Republican beliefs, it’s their responsibility to pass laws denying those citizens even the right at self-determination.

               Now, I have friends who are Republicans and I certainly don’t think all Republican voters agree with the actions of Republican lawmakers.  However, the attacks upon democracy that Republicans have committed over the last several years should be a wakeup call to everyone who believes in the vision of the United States that our Founding Fathers had.  James Madison argued in Federalist Paper 51 that "the society itself will be broken into so many parts, interests, and classes of citizens, that the rights of individuals, or of the minority, will be in little danger from interested combinations of the majority."  Unfortunately, we have sadly coalesced into two groups.  Over the last 8 years, this has turned into a tug of war between the two parties.  The problem is that one group, Republicans, believe in never compromising on anything (thank you Freedom Caucus).  Until we start voting in moderates and kicking out the extremists, we are going to continue to tear ourselves apart at the seams.

Who Do We Want To Be

               As I have been contemplating various policy issues I have found myself focusing more and more on what kind of country we want to be.  What kind of nation we want our children to grow up in.  And I find myself realizing that none of the policy problems that face this country are really going to be answered until we decided what kind of nation we want to be.

               We hear a lot about red states and blue states, especially during this past year.  And we’ll probably hear more about it in 2018 and a lot more about it in 2020.  Given the narrative that seems to pit “Red America” against “Blue America” you might think this question is about which side I want to win.  It’s not.  I don’t want either side to win.  Life in the United States shouldn’t be a game where one side wins and the other side loses.  And we definitely shouldn’t be a country where there are only two sides.  Let me take a brief moment to generalize about the two sides that seem to be dominating the conversation.

               Republicans want a small federal government with most of the control vested in individual states.  However, they also want a very large military.  Republicans insist on a balanced budget, so they want to pay for the massive increases to military spending by slashing funding for public assistance, the arts, sciences, National Parks, etc.  Staying within the economic sphere, Republicans share a belief that the free-market will always provide a better solution than the government.  Earning power is strictly a function of individual initiative.  If an individual isn’t making enough money, the blame lies solely with the individual; there are no societal factors to the limited income.

               Socially speaking, Republicans prefer to little to no change to existing norms.  Changing social norms is only done slowly over a long period of time.  This leads the party to opposing increased rights for the LGBTQ community.  It also means the party tends to ignore/dismiss the disparity that exists between men/women and whites/minorities.  A strong segment of the party is dominated by white Evangelical Christianity which is currently working to move their belief system out of their private lives and into the public space.  The resulting effect is that white men keep a dominant position vis-à-vis the rest of the population.

               Democrats want a robust federal government in an effort to make things uniform for all citizens regardless of the state they live in.  While a balanced budget would be nice, it cannot be achieved at the expense of the populace.  Democrats see government spending as a way to increase the well-being of all people regardless of where they started or where they are.  While the free-market has its benefits, it must be constrained by strong government regulations lest it run out of control.  While there is some individual responsibility, Democrats place a strong emphasis on societal factors in understanding the reasons for the existing income equality.

               While these two sides have some severe opposing viewpoints, it doesn’t necessarily mean that the two sides cannot get along.  And this is where we have to start talking about who we want to be.  The current direction of the two parties is one of increasing distance and disengagement with the other side.  Republicans want nothing to do with the Democrats and vice versa.  It’s why Republicans don’t want to continue reforming health care; they want to “repeal and replace” the work of Democrats.  Democrats don’t get any points here either; they ramrodded the bill through the Senate along strict party lines 60-39.  I could also point out the ridiculous Republican opposition to Merrick Garland’s nomination and their anger that Democrats would dare oppose Neil Gorsuch.

               Of course, the most egregious example of this refusal to work across party lines comes from 2013.  At that time, a group of Republican and Democratic senators, the “Gang of Eight,” crafted legislation to address the problem of immigration in this country.  We all know the sides here, so I don’t need to expound upon the positions.  The thing is, this bill would have achieved some aims of both parties.  Democrats got the path to citizenship that they want; Republicans got an increase in border guards.  In addition, the Congressional Budget Office projected that the bill would cut the deficit and increase revenues for Social Security.  More wins for both sides.  Sadly, the bill never made it out of the Senate.  The House blatantly refused to even bring the bill to the floor for debate.  House opposition was driven in large part by members of the Tea Party wing within the Republican Party.  A group that represented roughly 10% of the House at the time.  So, in order to placate a group representing less than 10% of Congress, a bill that would have taken a comprehensive approach to repairing immigration didn’t even get the debate it deserved.  Such terrible abdication of legislative responsibility does nothing to actually help this country.

               America works best when we all work together to tackle the challenges that we face.  Under the Articles of Confederation, the states had too much power and there really wasn’t much in the way of a federal government.  The arrangement didn’t work as the states maintained their strong independence and did not unite as our Founding Fathers intended.  So they drafted the Constitution.  Of course, there was some very strong and robust debate over the Constitution.  Our founders had some very strong feelings on the subject.  That’s why John Jay, Alexander Hamilton, and James Madison worked so hard on the Federalist Papers.   It’s also why others worked on the less well know Anti-Federalist papers.  There were two very strong, and opposite, groups.  In the end, they worked together to draft the Bill of Rights – the piece that cinched the full ratification of the Constitution. 

Less than 100 years later, sides were drawn in Congress over the issue of slavery.  Compromises were necessary in order to keep the country from coming apart at the seams.  The Missouri Compromise of 1820 kept the peace by maintaining the balance between slave and free states in the Senate.  In 1850, another compromise was needed that included strengthening the Fugitive Slave Law.  There is some thought that failure to find a compromise in 1850 would have caused the Civil War to start a decade earlier.  As it was, by 1861 it was no longer possible to find compromises and war resulted.

               Imagine if today’s political climate existed in 1787.  Neither side would have budged an inch.  The Federalists would have pushed for a vote with no changes.  The Anti-Federalists would have refused to even discuss the matter until every one of their concessions had been granted.  The two sides wouldn’t have found a way to compromise and the Constitution likely wouldn’t have been ratified.  The ramifications should be rather obvious – the United States of America wouldn’t exist.

               This is the crux of the conversation we must have.  Do we want to be the people who find compromises and ways to move forward together or, do we want to be people who dig in our heels, “stand on our principles,” and refuse to compromise?

               Don’t get me wrong, there is a place for principles.  But, there’s a difference between standing on principle and insisting on a “my way or the highway” approach.  I’m all for principled leaders in office, but we also need leaders who work across party lines.  Any look at the current political landscape should make this obvious.  When looked at from a national view, neither party garnered 60% of the vote for the House of Representatives during the entire time President Obama was in office.  In fact, since President Reagan took office, neither party has held 60 seats in the Senate*, Democrats have managed a 60% House majority 3 times, and Republicans have never managed a 60% majority in the House.  The last President to gain 60% of the popular vote was President Nixon in 1972 – right before the Watergate scandal broke and he had to resign.  Even in 1984, when President Reagan won 525 of 538 electoral votes, he only won 58.8% of the popular vote.  I could keep going, but the point is that we are fairly equally divided between Democrat and Republican in our voting.  If we treat roughly half the country as the enemy, we will descend into war.  It might not be armed conflict with guns and bullets, but it will be war all the same.

               I know I’ve said this before, but if we are to tackle the challenges we face, we must answer the question of who we are as a country.  Are we truly the United States of America – united despite our different opinions, races, origins, genders, political affliations, etc?  Or are we going to throw that away and become the Untied States of America?

*Democrats held 58 seats in 2013 and 2 independents caucused with them to effectively create a 60 seat majority.

The Case for Universal Health Care

               In my previous post I laid out some of the issues with our health care system and attempted to propose a middle ground for a public option with a neutral board overseeing pricing negotiations.  In this post, I want to take the opportunity to argue for Universal Health Care.  I realize this is a strongly left position and one not often palatable to those on the right.  I may be a bit off here, but I think the biggest objections are rooted in two principles of the right:
1) General objection to any expansion of the federal government
2) General belief that the free-market will always provide better services than the government.
These two principles seem reasonable on the surface, but I think they fail under closer scrutiny.

               When it comes to health care, these two principles are intertwined and yet separate issues to be addressed.  I’ll start with the expansion of the federal government and work quickly into free-market issues.  There are several ways in which government is the primary provider of services to the public, most of them having to do with public safety and protecting the citizenry.  We all pay taxes to support our local police and sheriff departments, state police department, and the FBI.  All of these organizations are government entities designed to protect the welfare of the citizenry.  These services are considered essential to the public good.  I think most of us cringed when we read this story of a fire department deliberately watching a house burn.  It just seemed wrong.  Regardless of the issues behind it, the fire department came across as cold and callous.  The story violated our sense that the fire department is there to serve and protect us. 

               How does this relate the health care?  It comes down to viewing quality health care as a public safety issue.  Many communities in the U.S. have free vaccine clinics.  Why? Because studies show that getting vaccinated early can provide a lifetime of protection and not just for the vaccinated individuals.  There are individuals within our society who cannot get vaccines because of severe medical issues that leave them immune-compromised.  Vaccinating those who do not have a clear medical reason preventing it provides herd immunity to the vulnerable.  Visit vaccines.gov for more information.  Vaccines aren’t the only public safety aspect of health care.  Roughly 28 million Americans were uninsured at the end of 2015.  Those 28 million people have one place to go for care – the ER.  Probably the single most expensive entry point to the health care system.  And these people aren’t going for a simple case of the sniffles.  They’re going because they think it’s a heart attack or they’ve had a headache for 3 straight days that turns out to be an undiagnosed brain tumor.  These treatments are expensive and the hospital probably isn’t going to be able to collect on the full bill.  Either the hospital will settle the charges with the patient and write off the rest as a loss or the patient will file bankruptcy and the hospital will write off the uncollected balance as a loss. 

               In a free-market system, operating at a loss is simply unacceptable.  Companies must make a profit, and preferably a bigger one than last year.  (Note, it simply is not possible to continue to make larger profits year after year).  This is why hospitals (and, to a lesser extent, other companies) build in anticipated losses into the cost of their products and services.  Wal-Mart knows it is going to suffer some loss due to theft, bounced checks, food spoilage, etc.  Wal-Mart also needs to make a profit.  So, that t-shirt that cost $2 to make sells for $10.  Hospitals and the entire health care system do the same thing.  The difference is the cost.  Open heart surgery isn’t cheap.  A stay in an ICU ward for any length of time can add up real fast.  Pile on a similar mark-up in price and now that hospital visit that cost them $20k sees the patient getting billed $100k.  Yes, insurance will cover some of that, but even a typical 80/20 split leaves the patient on the hook for a $20k bill.  Sadly, most Americans don’t even have $1000 in savings, let alone $20000.  In fact, 1 in 3 Americans has no savings at all.  It’s pretty hard to pay for an unexpected stay in the hospital when you have no savings.  I don’t want to take away the need for individual responsibility, but without really understanding the reasons why Americans have little to no money saved up for emergencies, I find it hard to simply blame the problem on irresponsibility. 

               If we remove the free-market need for profit from the cost equation, imagine the change in what we pay.  In fact, change the entire dynamic to running health care as a non-profit government run charity.  In this scenario, costs are not overly inflated to cover expected losses.  Services are charges at, or just slightly above, cost.  Taking a loss because someone can’t pay isn’t a big deal because we aren’t worried about making a profit.  Assuming we use taxes to fund the health coverage (like we do for Medicare) then everyone is still paying something into the system.  The other advantage here is that consumers no longer have to play the game of trying to find an in-network provider.  Anyone who has ever had any long-term illness or needed emergency care knows the challenges in finding an in-network provider outside your normal locale.  If I’m traveling someplace, I actually check to see where in-network providers are before leaving.  Not too onerous if I’m staying in Indiana, but it gets to be a real pain if I am traveling out of state.

               In the end it really comes down to how we think about those words from the Declaration of Independence – “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and pursuit of Happiness.”  Do you consider quality, affordable health care as essential to securing our “unalienable Rights?”  If so, then that would imply that there should be a guarantee that every single American should have coverage.  Following that line of thought leads me to believe that the best way to ensure that every American has access to quality, affordable health care is through a single-payer Medicare for all type system.

               I know some will disagree with me and so I have two questions.  1) Do you believe that access to quality, affordable health care is essential to securing the Rights our Founding Fathers fought for? Why?  2) If yes, how do you propose to provide that health care for all Americans without using some form of universal health care?

Healthcare

The first topic to consider here is healthcare.  I want to start the conversation with a couple of questions that I think are key to any discussion on healthcare.

1         1)      Is healthcare a right or a privilege?

2         2)      What is the primary purpose of health insurance companies – provide insurance or make a profit?

I’ll start with the first question.  It seems that in America we are attempting to straddle the fence.  We treat it like a right by telling hospitals that they can’t ask for proof of insurance or ability to pay before treating patients.  We treat it like a privilege by telling those same people they have to pay for the treatment, even if those payments cause financial stress, even bankruptcy.  We treat it like a privilege because even people with insurance face financial ruin because insurance companies don’t cover all the costs and leave patients facing tens of thousands of dollars in medical bills.  Sure, there are non-profit health systems that have to write-off so much treatment or lose their non-profit status.  Sadly, a recent Washington Post report shows that 7 of the top 10 most profitable systems in the U.S. are non-profit, including the top 4.  Not a good sign when some of the most profitable systems are those that are supposed to be serving the communities where they operate.

               If we want to solve the healthcare crisis in American, we have to get off the fence.  This is where the 2^nd question comes in to play.  The answer is pretty straight forward – health insurance companies exist to make a profit.  At a basic level, profit is the primary goal of any company.  Without it, the company goes under.  I don’t begrudge insurance companies making a profit; they have to pay their employees, buy supplies, pay bills, etc.  But maybe profiting off of sick people isn’t who we want to be as Americans.  At least, it’s not who I want us to be.  Making a profit is simple – take in more money in premiums than the insurance company doles out paying claims.  As the baby boomers get older, their health care costs are going to rise.  Unless more people, younger people, healthier people, enter the market, premiums are naturally going to rise.  More people in the market means more people to spread the costs around.

               How do we go about compelling people to enter the health insurance market?  Make health insurance compulsory.  We do it with auto insurance, why not health insurance?  I know some will argue that driving is optional.  If you don’t want to pay for auto insurance, don’t drive.  Okay, I get that.  We still have people driving without insurance and we all get to pay for it with higher premiums.  That’s also why we have penalties for people who get caught driving without insurance.  Health care isn’t optional.  Sure, I’m pretty healthy today, but that can change at any minute.  All it takes is one nasty car accident or an auto-immune illness like MS that strikes without warning for a normal healthy young person to suddenly become a drain on the health care system.  Just like an uninsured driver, it doesn’t do any good to get insurance after the fact.  Yes, putting in protections for pre-existing conditions helps.  But no insurance company is going to pick up the tab for an event that occurred before coverage was in place.  The ER visit, major surgery, and ICU stay for the uninsured 20-something victim of a car isn’t going to be paid by the insurance company he signs up with a year later.  They might start paying for the ongoing therapy, but the $100k+ bills coming from the original accident, sorry, the patient is on his own.

               It would seem that the reasonable course is for everyone to carry health insurance to make sure a sudden catastrophic incident doesn’t bankrupt them.  Unfortunately the high premiums and higher deductibles make it so that many people feel they can’t afford insurance.  It’s a fairly well understood principle of capitalist economies that increased competition leads to lower costs and better quality.  It’s why we passed the Sherman Antitrust Act back in 1890.  Too few people controlled too much of certain industries (the Rockefellers controlling oil, Carnegie controlling steel).  And yet, 4 of the 5 largest insurers are trying to merge.  Aetna is trying to buy Humana and Anthem is trying to buy Cigna.  They all claim it’s because they just can’t make profits.  This article from Modern Healthcare would seem to suggest otherwise.  Sure there are other articles that point to declining profits for Humana, but nobody is reporting that Humana is actually losing money, just that they aren’t making as much.  Call me a bleeding heart liberal, but I’m not losing sleep over an insurance company making a few BILLION in profits.  If we want to bring more people into the health insurance marketplace, we have to increase competition.  We have to oppose the proposed mergers.  But that’s not enough.  We have to increase competition beyond the current companies. 

During the debate over the ACA there was a lot of talk about creating a public option, basically a government run insurance company to force more competition.  As with most things, a public option has it pros and cons.  Read here for a more in depth explanation of the pros and cons.  I do want to address one of the major concerns of conservatives and that is the ability of a public option to wield massive cost negotiating power.  It’s not an unfair concern.  Medicare pays significantly less than private insurance.  That’s why so many providers won’t take Medicare patients.  Here’s an attempt at a solution.  Create an independent arbitration panel that sets the reimbursement rates for the public option.  The panel would need to be completely independent of the health care system AND the administrators of the public option.  One of the challenges of a public option would be balancing the differences in costs across the country.  The fact is a bypass surgery in California does not cost the same as the same surgery in Wisconsin.  If citizens from both states are paying into the plan, are providers in both states getting the same amount?  I don’t think that will work.  Either providers in one state are getting underpaid or providers in the other state are getting overpaid.  So the board would need to set reimbursement rates on a state-by-state basis.  Do we have to adjust premiums the same way, basing the premium in part on the state the citizen lives in?  I think so.  In order to really make this work, the individual mandate has to remain in force.  The mandate is a key part of the plan Republican Mitt Romney introduced in Massachusetts and it’s an integral part of the ACA.  We need to stop viewing the mandate as a tax penalty and start viewing it like we do Social Security.  Young, healthy people buy in now so that insurance is still affordable when we they are old and sick.  I’m certainly no expert here, but take this as a starting point to try and find a solution to something we all know is a problem.

  Tell me what you think in the comments or even contact me with your own post on healthcare.

Ground Rules

As I mentioned in a recent Facebook post, the point of this blog is to open a conversation between people of different backgrounds and viewpoints.  It's my blog, but I welcome guest posts from my friends on both sides.  The problems that face this country are large and complex.  They require bipartisan solutions because we aren't all conservatives and we aren't all liberals.  Solutions require us to find common ground and compromise.  It requires us to recognize that the other side has some valid points.  It requires us to recognize that we aren't going to get everything we want.  So, this conversation needs a few basic ground rules.

1. Keep it polite.  No name-calling.  No baseless attacks.
2. Use actual facts and cite reliable sources.
3. Use the image below to help define reliable sources:

4. Try to stay within the "Mainstream" and "Skews" columns.  The comments on the various bubbles are pretty accurate.
5. Don't just debate the problem, propose solutions.  It's not enough to debate which part of the immigration problem is most important; we have to get to solutions.

I plan to address a variety of issues starting with some of the major policy issues - healthcare, immigration, gun rights, and education.  Eventually I want to get into a couple of the big cultural issues facing us - religious politics, race relations, fixing our political system .  As I mentioned above, I welcome guest posts from my friends - on both sides.  I encourage everyone to keep an open mind, propose meaningful bipartisan solutions.  If you would like to submit a guest post, email it to me.  If you don't have my email, leave a comment or shoot me a PM on Facebook.