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PERI co-director Robert Pollin says the living-wage movement is building momentum as hundreds of thousands are expected to rally on Wednesday

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PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I’m Paul Jay, and welcome to another segment of the Pollin Report, with Bob Pollin. And Bob joins us now from Amherst, Massachusetts. Hi, Bob. ROBERT POLLIN, CO-DIRECTOR, POLITICAL ECONOMY RESEARCH INSTITUTE: Hi, Paul. Thanks very much for having me on. JAY: So just to remind everyone, Bob is co-founder and co-director of the PERI Institute there, and one of the things the PERI Institute has been working on a great deal is the issue of minimum wage. So what’s new on that front, Bob? POLLIN: Well, there’s a big action that’s going to take place the middle of next week, April 15th, in which the movement, the Fight for 15, the fight for a $15 minimum wage nationally has organized protests all around the country. And they expect, and I expect, that these protests will be very widespread. We’re looking at hundreds of thousands of people participating in the protests. These protests to date have been quite successful in moving the needle around minimum wages. We have, as you know, we have a $15 minimum wage in place in Seattle. We have $13, I think $13.25 in Chicago. They’re debating a $15 minimum wage in Los Angeles. Other cities are also taking action. So the movements have been very powerful. They have forced employers, some of the most notorious employers, to raise wages. McDonald’s announced last month that they were raising their own, voluntarily raising their own minimum wage in the stores, at the outlets that, at the outlets the corporation itself runs. McDonald’s, they’re raising it to $9, and next year $10. Target has done the same thing. Wal-Mart has done more or less the same thing. They’re not doing these, these corporations are not taking these actions just to be nice. They’re taking them because they’re being forced to by the strength of this movement. JAY: Is it also, are they afraid of unionization? POLLIN: Well of course that’s part of it. I mean, the point is, they think they’re about to lose control of these labor issues, and so they want to quell it by making small gestures. But raising the minimum to $9 is hardly adequate. I mean, there’s 29 — the federal government minimum wage is, you know, is $7.25 still. There’s 29 states in the country, more than half, that have higher statewide minimum wages, and many of them have a $9 minimum wage already. California already has a $9 minimum wage. Oregon, Washington, Vermont already have minimum wages above $9. Massachusetts, my own state, is at $9. So that’s where the actions by the companies are obviously minimal recognition of the need of workers to get higher wages. JAY: And it’s really minimal, because as we’ve discussed on The Real News before, I think with you and some of your colleagues, in fact the majority of people that work at McDonald’s are not students, which is sort of the impression that’s given. There’s a large percentage that actually are the single income earner for families. POLLIN: Right. I mean, the range of wages around the minimum wage, we’re looking at something like 85-90%, are people that are on their career trajectory. These are real job trajectories. It’s not part-time jobs just to finish up school. It’s people who are contributing 50% or more to their overall family income. So these are the livelihoods on which people depend. So when we talk about the rise of inequality in the country and doing something to support the 99% and raising living standards and reducing inequality, the most effective single tool that we have to work with at the moment is to raise the minimum wage, and to raise it to something decent. A $15 minimum wage is what I would call minimally decent. JAY: And you and Jeannette Wicks-Lim did a study that showed, according to the study, that not only is this a minimum for people to live on but it’s also doable for the industry without such dire consequences. POLLIN: Right. So we took the example of just the fast food industry. We looked at the evidence on the fast food industry itself, and the wages that people are getting paid now. And then we said, what if you moved to a $15 minimum wage? Would it cause layoffs, massive layoffs, in the fast food industry? And the answer that we found is that the fast food industry could raise everybody over four years to a $15 minimum wage without having to face any kind of employment losses, layoffs. And we also found, whether this is right or wrong, that they could do this even without cutting their own profits. That’s where we are, that there is a cushion there. Now yes, we’re going to see some modest price increases in the fast food industry, and we’re going to see gains in productivity through turnovers going down, absenteeism going down. They become better jobs, so people want to stay on the job. And that’s how you’re able to pay for the jump to a $15 minimum wage, even in the fast food industry. JAY: And if there is a little lowering of profit, that’s not sacrilegious. POLLIN: Of course not. I’m not saying that there shouldn’t be. But I’m saying that what our calculations show — and our calculations have been reviewed by people who are quite serious and prominent. For example, a leading economist at the Federal Reserve Bank of Chicago, Daniel Aaronson. And so our results are sound. And what they show is that yes, the fast food industry, which has the highest concentration of low-wage workers, even the fast food industry could go up to a $15 minimum wage without having to face layoffs or profit reductions. You may want to say there should be profit reductions, but they can get there without profit reductions. JAY: Right. And is there evidence that the protests have affected sales? Have people stopped, during at least times of protest, buying burgers? POLLIN: Well, I don’t think, I don’t think that they have to any significant degree. We know, for example, that McDonald’s as the biggest fast food giant has experienced loss of sales. Their reputation has been damaged by the protests to the extent that they are now responding, as is Wal-Mart, by saying oh, well, yes. I mean, we know that what happened last year at Wal-Mart was that Wal-Mart started creating support systems for, like, holiday Christmas time, for people that were, that had low incomes. And those included a lot of their own employees. So Wal-Mart was creating ways to support their own employees through charity when they wouldn’t pay them through wages. So they got– JAY: And we know a lot of Wal-Mart employees and I suppose other people in the fast food industry also rely on food stamps, which is another way they get support. POLLIN: Yeah. So this is what Wal-Mart was trying to help people to get food stamps, trying to help them get their tax credit, try to help them through pure charity, instead of paying a higher wage. Instead of paying a decent wage. And you know, what really is a decent wage? Well, you know, a very good resource from the Economic Policy Institute tries to set decent wage standards for communities. I was just looking at the figure for my own, close-by community in Springfield. If you look at the figures for Springfield, what we’re looking at is a single parent with one child, the Economic Policy Institute calculates should be earning about $28 an hour in order to cover all the necessities in a reasonable way. It’s not an inflated family budget, it’s a reasonable family budget. That’s $28 an hour. So that’s how far we are, even with a $15 minimum wage, we’re not close. JAY: And you’ve made this point before, but I think it should be made again. If you look, if you go back to what it is, 1971, 1972 minimum wage and correct it for inflation, what would it be? POLLIN: Okay, if you correct the 1968 federal minimum wage for inflation, today is around $11. That wage, the 1968 wage for a 16-year-old walking into McDonald’s, today would get $11 if they were back in 1968. Now, you also have to take account that average productivity in the economy has gone up since 1968, actually by 135%. So if you actually corrected only for inflation, and if you said workers can get raises penny-for-penny with productivity, but not faster than productivity, if you made those two corrections for inflation and average productivity the minimum wage, the federal minimum wage in the United States today would be $26 an hour. JAY: And that difference is part of what’s going into the pockets of people that are betting on derivatives because they have nowhere else to invest. That’s why there’s such enormous inequality. POLLIN: That has contributed to inequality and financial instability. Because if you keep workers’ wages down, when workers’ wages do not rise with productivity, well, that means that the income is there. And if it’s not going to workers, it’s going up to the top. So what you have is the enormous rise in inequality which has created enormous pools of funds that are available for financial speculation. So it has contributed to financial instability. JAY: And people don’t have enough money to buy stuff, which essentially leads to stagnation in the economy. POLLIN: That’s where we are. That’s where we are. So that’s why these protests next Wednesday are very important as part of the momentum in raising consciousness to fight for a decent minimum wage standard throughout the country. JAY: All right, thanks for joining us, Bob. POLLIN: Okay, thanks very much for having me, Paul. JAY: And thank you for joining us on The Real News Network.


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Robert Pollin

Robert Pollin is Professor of Economics at the University of Massachusetts in Amherst. He is the founding co-Director of the Political Economy Research Institute (PERI). His research centers on macroeconomics, conditions for low-wage workers in the US and globally, the analysis of financial markets, and the economics of building a clean-energy economy in the US. His latest book is Back to Full Employment. Other books include: A Measure of Fairness: the Economics of Living Wages and Minimum Wages in the United States, and Contours of Descent: US Economic Fractures and the Landscape of Global Austerity.