Guest commentary: Inequality gap widens with low wages
“I mean, we suck,” U.S. Labor Secretary Thomas Perez said in October at a Bloomberg News breakfast, speaking on minimum wage. “We really do.”
Vail Resorts recently notified employees via email that the company is raising its minimum wage to $10 per hour. I was surprised this has received so much coverage when McDonald’s already announced that the average hourly wage for its employees at company-owned restaurants will be more than $10 per hour by the end of 2016. The fast-food giant also will help its employees with high school completion, college tuition and accrued vacation time.
But there’s a difference between the ubiquitous fast-food chain and ski resorts located in the most expensive places in the country.
As an Eagle County commissioner from 2001 to 2009, I focused on finding ways to create sustainability for residents as the separation of rich and poor grew. Issues such as affordable-housing regulations and early child care assistance were hotly debated, as some felt they weren’t a government’s job. Well, if companies aren’t supporting living wages and government shouldn’t intervene, how do you create viable communities?
I wanted to get a sense of Eagle County today, so I called Mary Cunningham, employment specialist at the Eagle County office of Colorado Workforce, who told me that a working livable wage for an Eagle County resident is $15 per hour.
Later, I spoke with a college-educated young woman employed at the Quiksilver store in Vail who earns $9 per hour. She said the only way people make a living in ski towns — where rent for a modest room runs about $650 to $900 a month — is to work two jobs or have parental support. I later spoke with a teenager who worked at Wendy’s in Eagle, about 30 miles from Vail, and discovered she was making $10.20 an hour, an increase from $9 in less than a year.
Beyond the Vail Valley, the notion of a livable wage seems to be taken more seriously. President Barack Obama has been pushing to raise the national minimum wage from $7.25 per hour to $10.10 and $12 by 2020. (Colorado’s minimum wage is $8.23.) Seattle’s citywide minimum wage rose to $11 an hour and will keep rising each year to $15 — and beyond. Considering that CEOs typically earn 270 times more than their employees, whose wages remain stagnant, the federal minimum wage really should be $22 per hour, adjusting for productivity gains and inflation.
“Raising the wage isn’t only about fairness,” said Citizens University founder and CEO Eric Liu, a former policy adviser to President Bill Clinton and one of the leaders behind Seattle’s successful minimum-wage increases. “It’s also great for the economy. When workers have more money to spend, businesses get more customers — and when businesses have more customers, they hire more workers. That’s what we figured out in Seattle.”
Since 2008, 99 percent of all new income in the United States has gone to the top 1 percent. As chairman and chief executive officer at Vail Resorts Inc., Robert Katz made $5.03 million in total compensation last year. Of this total, $822,602 was received as a salary, $262,988 was received as a bonus, $3.65 million was received in stock options, $262,988 was awarded as stock and $29,987 came from other types of compensation. In a memorandum, Katz acknowledged that minimum wage has become a political issue, adding, “Our company is not trying to make a ‘statement.’ We are simply doing what we think is right for our stakeholders — our employees, guests, communities, mountains and shareholders.”
Vail Resorts has been a publicly held company since 1997. It needs to pay wages that attract a reported 7,500 employees from competitors offering similar pay. Its stock has increased in value over the past five years from $40 per share to $108 per share, and its shareholders have enjoyed decent profits. Raising minimum wages by employers is a rational decision to lure and retain workers in a tightening labor market through greater compensation. To think that it might be in response to political pressures is ignoring the reality that publicly held companies strive to make a minimum of 10 percent profits each year in order to make Wall Street happy.
Companies typically only raise their minimum wage to attract talented labor. They don’t raise salaries as fast as their profits rise or executive bonuses increase. Most major companies avoid paying taxes and get government assistance though legislation. It’s a pay-low, give-less, make-more formula for success.
U.S. Secretary of Labor Thomas Perez said at the Aspen Ideas Fest, “Making $12 per hour allows you just to live just above the poverty line.” If communities don’t increase the minimum wage to $15 an hour, America’s income-inequality gap will continue to widen, costing the overall economy more. Just watch what happens in the next five years as homes in Eagle, Summit and Routt counties reach record-level prices while no new affordable housing is produced. Elected officials locally, in Colorado and around the nation need to increase the minimum wage to $15 an hour so lower- and middle-income workers aren’t working two or three jobs to make ends meet.
Thomas Piketty, economist and author of last year’s groundbreaking bestselling book “Capital in the Twenty-First Century,” theorized that financial inequality in the 21st century is on the rise and accelerating at a very dangerous pace. He said it best, “Indeed, the distribution of wealth is too important an issue to be left to economists, sociologists, historians and philosophers.”
Which leaves the job to citizens of a democracy to make the change, so let’s do this, people.
Here is my podcast with Liu on how to bring minimum wage to your community: https://soundcloud.com/arnmenconi/on-citizenship-minimum-wage.
Arn Menconi is a social justice activist and former Eagle County commissioner. He can be reached at http://www.arnmenconi.com.
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