U.S. Economics and the Poor

by Richard Cummings

Many of Americans are complaining about their low wages. City residents are complaining about the number of homeless living on their streets for lack of affordable housing.[18]. According to an article in the New York Times, wages should be rising.[8]. Approximately 19 states have said they will begin or already have, increased their minimum wage.[8]. However, we are talking about minimum wage and not a general all-around increase in wages above the minimum. This has another meaning. It indicates there is a dramatic shift between the rich and poor. Americans are left confused with President Trump's indicators which say everything is good and rosy, and yet, the poor are barely surviving.

Economist has been trying to figure out what is happening inside the U.S. economy. Charts show the economy should be in a good place with low unemployment and an increase in available jobs.[12]. The world stock markets are increasing and the global economy is growing.[4]. Something is wrong and the best economist is struggling to figure it out. In the meantime, employees are suffering from a lack of enough income to cover living expenses. Working a minimum wage job is just not working out for families.[8]. The gap between rich and poor has increased.[9].

Its good guess employees would be happier if they believed they were getting paid what they were worth. Perhaps there would be an increase in productivity and charts showing greater economic world success. Several, superficial reasons point to a communication gap between workers, and they're bosses, lack of feeling valued, increase in worry about job security, no room for advancement, micromanagement, and others.[3].

I discovered another answer:

"having money from economic growth flow to poor people rather than the rich feeds into a lift in the rate of economic growth and lower unemployment. Conversely, as income inequality increases, the potential for economic growth is constrained."[15].

Certainly economic growth is not going anywhere. Economist should take a close look at where the money is flowing. According to some economist, wealth is going to shareholders and executives of corporations, keeping workers salaries at a non-growth state and staying low.

Some economist are calling fowl on corporations using "the Shareholder Value Theory." This means "containing wages and benefits have becomme key elements" of corporate strategy. Shareholders and executives were being highly rewarded. Holding worker salaries as low as possible is a key to securing short-term quarterly profits, executive bonuses and rising share prices. "But there was a cost: stagnant wages through downsizing and layoffs, and widening income inequality."[4].

Bosses, C.E.O.'s who believe the economic system is doomed and believe it is helpless to even try to figure it out are suggesting to high school students to learn other skills such as truck driving, plumbing, construction, and other low paying jobs.[4]. Blame has even been placed on Opioid use, "welfare, and inadequate parking spaces, and a falling birthrate, and mass incarceration.[4]. Nothing is mentioned about the problem of income disparity.

"there were 14 states (and Washington, DC) that saw their homeless populations rise from 2007 to 2017. North Dakota fared worse than any other state, with a rise in homelessness of 71.2%. South Dakota and Wyoming both also posted increases of more than 60%."

Some states recorded little change and even a few recorded a decrease in homeless but no reason was given.[16]. This means more Americans, adults, and children, are suffering. Being homeless does not mean you are jobless, just unable to afford the cost of living with stagnant wages. Economists are aware of the homeless but do not understand it or know how to decrease it. Its understood studies are being done on how to improve our economy and try to figure out what is going on.

The Fed chairman might also look at the many management studies that have denounced shareholder Value Theory. Vinci Group Chairman and CEO Xavier Huillard called it “totally idiotic.” Alibaba CEO Jack Ma said that “customers are number one; employees are number two and shareholders are number three.” Paul Polman, CEO of Unilever, denounced shareholder value thinking as “a cult.” Marc Benioff, chairman and CEO of Salesforce, has declared it to be “wrong.[4].

According to the AFL-CIO, the one and only way to resolve the dilemma, through organizing workers into unions. This would give employees a belief of being more powerful in communicating with their employer. It would give them a "collective voice" easing not only the employee but also his family. It would be an effective way to negotiate higher salaries and eventually give them a better life.[5].

Successful Corporations today believe they know the answer to the looming problem of the economy and increasing employee wages. Their answer to the current economic problem is pointing out businesses need to make a shift in their methods of management, denouncing the use of the shareholder value theory.

"Firms have failed to make the paradigm shift in management that would generate the growth and profits that would enable them to pay higher wages. We know how to do this. Firms like Apple and Samsung offer devices that can be tailored to meet the individual wants and whims of hundreds of millions of users. Amazon has demonstrated what can be accomplished when customer value is pursued ahead of short-term profits: it’s not just the world’s biggest retailer—it’s bigger than all the other retailers put together."[4].

For most workers around the world, wages have stagnated. Economists need to work harder to develop new business theories which are going to work before we suffer another downturn. The lack of economic growth despite decline unemployment rates and job growth will remain a mystery. The only answer is the one I have been hearing, which is we will have to have another economic downturn to create change. I don't invite this to occur because it will affect the poor and increase the number of homeless.

References

1. Live Science. "What Is Communism?" Dhar,2014. https://www.livescience.com/42980-what-is-communism.html

2. United States Department Of Labor. " Characteristics of minimum wage workers, 2017" Written 2018 https://www.bls.gov/opub/reports/minimum-wage/2017/home.htm

3. National Business Research Institute. '10 THINGS EMPLOYEES DISLIKE MOST ABOUT THEIR EMPLOYERS". Retrieved 2019. https://www.nbrii.com/employee-survey-white-papers/10-things-employees-dislike-most-about-their-employers/

4. The Guardian."It’s not wage rises that are a problem for the economy – it’s the lack of them" Frank, 2018. https://www.theguardian.com/commentisfree/2018/jul/12/wage-rises-problem-economy--vacant-jobs-unfilled-threatens-economy.

5. AFL-CIO -"There’s a Pretty Clear Solution to This Problem for Low-Wage Workers" Quinell, 2016.https://aflcio.org/2016/3/31/theres-pretty-clear-solution-problem-low-wage-workers.

6. The Economist. "How a living wage is calculated". 2015. https://www.economist.com/the-economist-explains/2015/05/20/how-a-living-wage-is-calculated.

7. Forbes. "How To Fix Stagnant Wages: Dump The World's Dumbest Idea." Denning. 2018. https://www.forbes.com/sites/stevedenning/2018/07/26/how-to-fix-stagnant-wages-dump-the-worlds-dumbest-idea/#b4c8d131abc1.

8. USA Today. " From California to New York, states are raising minimum wages in 2019 for 17 million workers." Herron, 2018. https://www.usatoday.com/story/money/2018/12/27/minimum-wage-2019-which-states-increasing-next-year/2377035002/

9. Economic Policy Institute. " Over 5 million workers will have higher pay on January 1 thanks to state minimum wage increases." Cooper, 2018. https://www.epi.org/blog/over-5-million-workers-will-have-higher-pay-on-january-1-thanks-to-state-minimum-wage-increases/

10. United States Department of Labor. "Bearu Labor Of Statistics." Retreived 2019. https://www.bls.gov/

11. The New York Times. " You Never Know When a Recession Will Sneak Up on You." Goolsbee, 2019. https://www.nytimes.com/2019/03/15/business/recession-shutdown-trade-war.html

12. Governing. "The Widening Cost-of-Living Gap". Maciag, 2018. https://www.governing.com/topics/urban/gov-cost-of-living-regions.html

13. Investorpedia. "The Difference Between Communism and Socialism". Updated 2018. https://www.investopedia.com/video/play/difference-between-communism-and-socialism/

14. The Economist. "The gap between poor and rich neighbourhoods is growing." C.K., 2018. https://www.economist.com/democracy-in-america/2018/11/13/the-gap-between-poor-and-rich-neighbourhoods-is-growing.

15. The Guardian. "Economic growth more likely when wealth distributed to poor instead of rich". Koukoulas, 2017. https://www.theguardian.com/business/2015/jun/04/better-economic-growth-when-wealth-distributed-to-poor-instead-of-rich

16. Business Insider. " How the homeless population in every state has changed over the past 10 years." Gal, 2018. https://www.businessinsider.com/homeless-population-usa-states-2018-11

17. Investopedia. "Which Income Class Are You?". Frankenfield, 2019. https://www.investopedia.com/financial-edge/0912/which-income-class-are-you.aspx

18.Family Promise. "Homelessness/Poverty Fact Sheet".Retrieved 2019. https://familypromise.org/homelessness-fact-sheet/

19. Market Watch. " The gap between rich and poor has increased the most in this U.S. state ". Passey. 2018. https://www.marketwatch.com/story/the-gap-between-rich-and-poor-has-increased-the-most-in-this-us-state-2018-03-06