The Economy and Society Benefit When Poor Families Have More to Spend

by Brian T. Lynch, MSW

Enhancing the human dignity of employment is an obvious, self-evident social benefit of raising minimum wages. It is both empowering and ennobling when breadwinners are able to provide for the needs of their family on their own, without government or extended family supports. This is reason enough to enact a living wage law. The minimum fair exchange for a full-weeks work ought to be a self-sufficient minimum wage. The burden for this minimum standard of living should rightly be on employers and not on the taxpayers who currently help support full-time low wage earners.

Corporations and business owners enjoy the benefits of government-subsidized labor and don’t want to give it up. Most of their arguments opposing higher wage standards rely on business-friendly economists whose academic theories and scholarly studies plum the detrimental impacts on businesses from higher labor costs. It is current practice to treat workers as a labor commodity separate from workers and their families as consumers and social beings with basic human needs. It is also current practice to take a business view of the economy without consideration of the broader context of the overall social economy within which commerce operates. All this results in flawed and biased arguments against self-sufficient minimum wages.

The overall beneficial impacts of increasing the purchasing power among poor families are rarely studied. Now a major new study has found that the ripple effects when direct, substantial cash assistance is given to poor families have, “… large positive spillovers on non-recipient households and firms, and minimal price inflation. The researchers in this large-scale experiment in Kenya estimated that a direct cash payment of $1,000 US dollars to poor families within randomly selected communities resulted in a local fiscal multiplier of 2.6 times within the local communities.

In addition to measured improvements in the welfare of the children and families who received an infusion of cash, the experiment reinforced the relationship between income and increased consumption to the benefits of both businesses and the families who did not receive cash payments. Here is an excerpt from the study:

“A large-scale cash transfer program in rural Kenya led to sharp increases in the consumption expenditures of treated households, and extensive broader effects on the local economy, including large revenue gains for local firms (that line up in magnitude with household consumption gains), as well as similar increases in consumption expenditures for untreated and treated households approximately a year and a half after the initial transfers. Local firms do not show meaningful increases in investment, and there is minimal local price inflation, with quite precisely estimated effects of far less than 1% on average across a wide range of goods.” [snip]... The consumption expenditures of untreated households and firms rise substantially in areas receiving large cash transfers…”

The infusion of cash payments to poor families in the study did not come from employers, and the economy of Kenya is very different than the economy here in the US. Directly extrapolating the results isn’t possible. Nevertheless, these findings are hopeful. The high fiscal multiplier stimulus effect on local businesses from increased consumption by poor families appear to mirrored results found here within states and municipalities that have raised minimum wage standards. While the burden of cash transfers from higher minimum wages is on businesses, the literature I’ve seen so far suggests there is still a positive fiscal multiplier within the business community coupled with little increase in unemployment and negligible increases in inflation.

A broader look at the spillover effects of increased base wages might show similarly positive results for the business economy and those workers who are already self-sufficient wage earners. Future studies of communities where the wage base is improved should also look at the wellbeing and overall welfare of children living in low wage households as well as the social wellbeing of the wage earners themselves.

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Further Reading

Debunking the Myth That It's Your Fault You're Poorhttps://aseyeseesit.blogspot.com/2015/09/debunking-myth-that-its-your-fault.html

Myth Busting Data RE: Minimum Wage Increaseshttps://aseyeseesit.blogspot.com/2012/09/myth-busting-data-re-minimum-wage.html

Making the Case for a Living Wage  https://aseyeseesit.blogspot.com/2012/07/making-case-for-living-wage.html

NPR -

Researchers Find A Remarkable Ripple Effect When You Give Cash To Poor Families

 https://www.npr.org/sections/goatsandsoda/2019/12/02/781152563/researchers-find-a-remarkable-ripple-effect-when-you-give-cash-to-poor-families

Warren vs. Sanders is at the Core of Who Democrats Are

by Brian T. Lynch, MSW

In an excellent article written by Benjamin Studebaker, he clarifies the significant distinctions between Senator Elizabeth Warren and Senator Bernie Sanders. To do this, he also traces the ways that the Democratic Party has evolved over the past several decades. His description of that evolution is perfectly aligned with the recent findings of Thomas Picketty’s scientific study of voting data over the last fifty years. In essence, both Studebaker and Picketty find that the Democratic Party increasingly ignores the poor and working-class in service to the growing influence of the wealthy elite, who left-leaning on social issues but pro-corporate and conservative on fiscal issues.









                 Above: Graphic depictions from Studebaker's article. A similar graph shows Biden supporting both the professional class and the 1%. 

I will not attempt to summarize the Studebaker or Picketty articles further here. Instead, I have provided links to them below and encourage you to read them. I only offer here a few personal reaction from what they have to say.

For me, Studebaker’s article raised profound personal questions I hadn’t thought about, beginning with the question, whose interests do I want the Democratic Party to address? How inclusive am I really when it comes to getting the attention I want? When times are good, and I am comfortable with my prospects, it is easy to promote the welfare of those less fortunate. But when even those with considerably more resources than me are feeling squeezed by the economy, egalitarian notions start to fade.

All this raises the idea that if we don’t limit the attention directed at the poor and working-class, will we get less attention then we deserve? But then, isn’t this the very question that the wealthiest 1% of voters are asking? Is the self-interests of middle-class voters just as toxic to the poor and less fortunate?

These are questions everyone should be asking themselves. We should be searching our soul and asking who should the Democratic Party stand for if not for everyone? Listen carefully to what the Democratic Presidential candidates propose and who they are proposing it for. Are they speaking for everyone, or only for those in the professional class who are feeling the pinch?

For me, the answer always come back to my belief that we are all deserving. The Democratic Party, indeed the whole of all governments, should fairly represent everyone’s needs. No one should be excluded or ignored.

The Main Difference Between Warren and Sanders

by Benjamin Studebaker

https://benjaminstudebaker.com/2019/08/07/the-main-difference-between-warren-and-sanders/?fbclid=IwAR1wXTx3m7RXworl6dg7wjjSBu-g77ARFKwq5ElXTm3R5oh2pQhEGkVHc-Y

Data Analysis Shows a Dem Centrist Candidate Loses

https://aseyeseesit.blogspot.com/2019/06/americans-new-political-landscape-as.html

And this can be contrasted with an article posted here in February of 2016 about Bernie vs. Hillary in which the battle to define the heart of the Democratic Party was getting underway.

https://aseyeseesit.blogspot.com/2016/02/bernie-vs-hillary-clearest-distinction.html 

Image credit: https://dnyuz.com/2019/07/30/bernie-sanders-and-elizabeth-warren-take-on-all-comers/

BORDER SECURITY THREAT ASSESSMENT: Do Facts Reveal a Border

by Brian T. Lynch, MSW

The government is shut down as I write. If you happen to read this blog post after today, it will be the longest federal government shutdown in United States' history. The reason for it is a claim by the President that there is a national crisis at the border. The President says we aren't safe and the crisis can't be resolved without five-billion-dollars to build a section of wall. 

IS THERE A CRISIS AT THE BORDER? Or is our President having a temper tantrum as some have suggested?

Let us start to answer that with statistics that President Trump’s own administration presents about border security. 

Per data in Donald Trump's Executive Order 13789, the # of non-citizens federally convicted of terrorists in 15yrs 2mo time = 244 terrorists, (16 per yr.). That's 44% of the total terrorists. The other 295 (55%) are US citizens 1/2 of which (8.5/yr.) were foreign-born. https://www.justice.gov/opa/press-release/file/1026436/download 

PLEASE NOTE: As of NOW, if you try to VERIFY the URL and link above you will get this message instead of the document:

Continuing with the report: 

In this same 182-month period, 1,716 US aliens, or 113 per year, were removed from the country for being a national security threat. In contrast, there are 1,300,000 domestic violence attacks per year or 11,504 attacks for every alien ejected for being a security risk.

The Executive Order also says there are 25 honor killings each year, but there are also over 1,000 domestic violence deaths of intimate partners per year in the US. Honor killings are 2.5% of that total.

AND THIS is directly from the Executive Order: In the fiscal year 2017, DHS had 2,554 encounters with individuals on the terrorist watchlist traveling to the United States. Of those encounters, 335 were attempting to enter by land, 2,170 by air, and 49 by sea.

That is just 13% of all terrorist watchlist persons traveling by land from either from Canada or the Mexico border.

Since 2010, the last 8 years, there have been 46 terrorist attacks in the US resulting in 106 dead and 527 injured (Boston bombing nearly half the injuries): 20 attacks by Islamic extremists, 16 by rightwing extremists, 5 by 4 by mental illness and 1 by a leftwing extremist. (The author from a list of terrorist attacks on Wikipedia)

Border crossers rape and murder at lower rates than the general population. Or to flip that around, they are more law-abiding than our citizens. Here is a summary of an actual scholarly report:

In the context of crime, victimization, and immigration in the United States, research shows that people are afraid of immigrants because they think immigrants are a threat to their safety and engage in many violent and property crimes. However, quantitative research has consistently shown that being foreign-born is negatively associated with crime overall and is not significantly associated with committing either violent or property crime. If an undocumented immigrant is arrested for a criminal offense, it tends to be for a misdemeanor.

Researchers suggest that undocumented immigrants may be less likely to engage in serious criminal offending behavior because they seek to earn money and not to draw attention to themselves. Additionally, immigrants who have access to social services are less likely to engage in crime than those who live in communities where such access is not available.

In regard to victimization, immigrants are more likely to be victims of crime. Foreign-born victims of crime may not report their victimization because of fears that they will experience negative consequences if they contact the police. Recently, concern about immigration and victimization has turned to refugees who are at risk of harm from traffickers, who warehouse them, threaten them, and physically abuse them with impunity. More research is needed on the relationship among immigration, offending, and victimization. The United States and other nations that focus on border security may be misplacing their efforts during global crises that result in forced migrations. Poverty and war, among other social conditions that would “encourage” a person to leave their homeland in search of a better life, should be addressed by governments when enforcing immigration laws.

http://oxfordre.com/.../97801.../acrefore-9780190264079-e-93

Here are a few data charts that are helpful in identifying whether or not there is a present crisis at the border:






OXFORDRE.COM

Immigration and Crime - Oxford Research Encyclopedia of…

Immigration and Crime - Oxford Research Encyclopedia of Criminology


And here is another study ABSTRACT: 

Research has shown little support for the enduring proposition that increases in immigration are associated with increases in crime. Although classical criminological and neoclassical economic theories would predict immigration to increase crime, most empirical research shows quite the opposite. We investigate the immigration-crime relationship among metropolitan areas over a 40-year period from 1970 to 2010. Our goal is to describe the ongoing and changing association between immigration and a broad range of violent and property crimes. Our results indicate that immigration is consistently linked to decreases in violent (e.g., murder) and property (e.g., burglary) crime throughout the time period.https://www.tandfonline.com/.../10.../15377938.2016.1261057

TANDFONLINE.COM

A 2018 study published in Criminology analyzed population-level crime rates from all 50 states from 1990 to 2014 and found that the relationship between immigration and crime is "generally negative." "Increases in the undocumented immigrant population within states are associated with significant decreases in the prevalence of violence," study author Michael Light writes.https://psmag.com/.../research-tells-us-that-immigration...

PSMAG.COM

A 2015 study found that, in the same period, the immigration population more than tripled in the United States; from 1990 to 2013, the violent crime rate decreased by 48 percent, according to Federal Bureau of Investigation data. (ibid)

Here is a screenshot of a graph by the Pew Research Center from a FactCheck.org Website

https://www.factcheck.org/2018/06/illegal-immigration-statistics/

And here below are a few more charts from a U.S. Customs and Border Security Report that were also published by FactCheck.org :

Notice in the above bar graph dating all the way back to 1961 that the total number of border crossings the year 2000 and has significantly declined since.  The total number of border crossings in 2018 (last year) is 76% below the number in 2000.

While the total number of people crossing the U.S. border is down 76% from the year 2000, the number of family detentions is up. 

Notice that the number of unaccompanied children crossing the border peeked in 2014 and dropped the following year. The number rose again in Barack Obama's last year in office then dropped again since President Trump took office. Last year (2018) the rate of unaccompanied minors crossing the border was about 37% lower than in 2014. 

SUMMARY: From every scholarly study and government information source, the most objective rendering of facts do not support the claim that there is an immigration crisis at our border. And in fact, the data show such a low rate of crimes committed by immigrants that the more immigrants a community has, the lower the crime rate. 

As to why our President is claiming a border crisis and shutting down the government to get his wall build? Who besides him really knows why. What the facts show is that there is no border crisis and no need to disrupt the government and the lives of millions of people affected by the shutdown. 

Inequality on a Global Scale (literally)

The cartoon below is from the great editorial cartoonist Stuart Carlson. It highlights with humor a very serious global economic condition, growing wealth inequality.

http://www.gocomics.com/stuartcarlson/2014/06/20#.U9Zns_ldXfJ (Go and enjoy his other cartoons.)


Allow me to breakdown the math for you. These figures work out to an average of $486 per poor person vs. $20 billion per rich person. This is not a measure of income but a measure of wealth, or capital.

Another important math fact from this illustration: If you have $20 billion in capital and earn an average return on investments of 4% a year, and if you lavishly spend $1 million per month on your lifestyle, at the end of 50 years you will still have $140 billion left for your children to inherit. That's right, if you have seven children they would each get close to the 20 billion that you started out with.

This is the crisis of capital that we face. This fact is among the findings of economist Thomas Piketty in his recent book, Capital in the Twenty-First Century. Within just a few generations almost all the wealth on the planet will be handed down from parents to children. Almost no new fortunes will be made through the earnings of those who have to work for a living. We will effectively return to a feudal system even here in the United States and abroad. The phenomenon is global. The quicker national and global population stabilize or decline the faster wealth will concentrate among the wealthy.

All we have to do to return to a feudal society is... do nothing.

Someone on facebook asked me, "Is it really the zero-sum game that these breakdowns of wealth distribution always seem to imply?"  Good question! Is it the case that the growing wealth of the wealthy must come at the expense of growing poverty Or, doesn't the growth of capital lift all ships?

When you look at national and global income-to-capital averages you see what looks like fairly stable ratios. Growing capital wealth and growth in income seem to balance. But look a littler closer and you see that more of the population falls into poverty as the value of capital grows at compounded rates. So yes, there is more national income, but there is an ever larger percentage of income coming from capital investments and going to the wealthy.  As capital becomes the main source of income, the real earnings of wage earners stretches and collapses at the lower end of the economic scale.  For the middle class, it is like being caught between the gravitational fields of two black holes... one created by poverty and  the other by capital wealth