Robert Reich Says Wages to come out of profits...

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  1. profile image0
    Sophia Angeliqueposted 10 years ago

    Robert Reich is a past secretary of labor. He writes awesome books - although I do disagree with some of his stuff. He is an economist, and yes, he truly gets it!

    Anyway, to quote from the article below:
    "That means wage gains are likely to come out of profits -- which, in turn, would affect the return to shareholders and the total compensation of top executives. That wouldn't be such a bad thing."

    I've been saying for a long time that it's the only way forward and I talk about this kind of skewered capitalism in my blog, "Capitalism and YOU."

    Here's another quote from the article.
    "According to a recent report by the National Employment Law Project, most low-wage workers are employed by large corporations that have been enjoying healthy profits. Three-quarters of these employers (the fifty biggest employers of low-wage workers) are raking in higher revenues now than they did before the recession."

    "America is becoming more unequal by the day. So wouldn't it be sensible to encourage unionization at fast-food and big-box retailers?"

    Yup, absolutely. Although some wouldn't believe it, having lived in the third world where the biggest indication of third world status is the divide between the very rich and the very poor, America is well on its way to becoming a third world country.

    Anyway you can read this article.

    And, no, I don't hate America. Hate is too much of a negative emotion and would skewer my health and sanity, and that's not something I would do to myself.

    I do, however, think that it's way past time that Americans became aware of these things, and I consider that part of my duty as a citizen. As my late father said to us, "When those that cannot speak for themselves are suffering, then it's your job to speak up for them."

    As a writer, yes, that's precisely it.


    1. Tom Koecke profile image60
      Tom Koeckeposted 10 years agoin reply to this

      I posed a philosophical question to someone the other day: if a full-time employee at Walmart qualifies for food stamps and medical assistance, are we, as taxpayers, subsidizing the employees' food and health care, or are we subsidizing the Waltons' wealth?

      Too many people are looking at the employee as a drain on tax revenues while at the same time contending the Waltons pay enough, or too much, in taxes. They offer no real solution except that the employee should be left to starve to death unless he or she dies of untreated illness first.

      1. profile image0
        Sophia Angeliqueposted 10 years agoin reply to this

        Taxes are subsidizing the wage slavery pay that corporations are paying to workers. This is what is making them so excessively rich. I've written about this in my Capitalism and YOU blog. Take a look at how much money makes through the wage slavery they indulge in in China.

      2. wilderness profile image96
        wildernessposted 10 years agoin reply to this

        Fully agree that our tax base is subsidizing Walmart's profits.  Is the answer to form new laws setting wages for all jobs or something else?

        If, for instance, we stopped giving food stamps to employees with jobs, will those employees starve to death or will they look for other work that will feed them?  If they leave, whether from dying from starvation or voluntarily, who will Walmart hire to replace them?  Would anyone work a job that they know will not feed them other than as part time work to supplement a job that will?

        What if we supply welfare or unemployment until a person could find a $15 job (or whatever we think is necessary to live on)?  What would Walmart wages do then?  If we did that for 5 years and stopped the program what would those wages do at that point?  Fall back to what they were?  Maintain that "living wage" level?

        While I can't advocate letting people starve, there are options to legislating what a company pays.  The free enterprise system is a powerful thing and actually can work if it is left alone to do so.  It can, of course, also result in slave labor so there needs to be at least some control, but not nearly as much as many think.

        1. Repairguy47 profile image59
          Repairguy47posted 10 years agoin reply to this

          Last week the county commissioners in which I live, Travis County, Texas (the most liberal county in the state) voted that any business wanting tax breaks for bringing a company to the county would have to pay its employees at least 11 dollars an hour. The fastest growing county in Texas is Williamson county just north of Austin, I predict a boom for Williamson county. You can enjoy all of the nightlife of Austin and live 10 miles away, Travis county commissioners can kiss their tax base goodbye!

  2. psycheskinner profile image82
    psycheskinnerposted 10 years ago

    Every cost could be said to 'come out of profits'.  I find that statement somewhat meaningless.

    1. profile image0
      Sophia Angeliqueposted 10 years agoin reply to this

      I think what he means is that people have been so brainwashed that profit is the holy grail and that they mustn't be touched, that it is absolutely horrifying that a corporation won't be able to increase the price of the goods in order to meet the increased labor pay.

      If you read the about the actions of some hard core business men, that's exactly what they did when Obama became president. They were scared of increased costs, didn't want them to come out of profits, so they cut down the working hours of current employees and hired new ones so that they could get out of payroll taxes. They were absolutely adamanet that those extra costs wouldn't come out of profits.

  3. psycheskinner profile image82
    psycheskinnerposted 10 years ago

    Well, one does have to accommodate increased costs in some way. If they do it by abusing workers I really hope that will not benefit them in the long term, because they lose customers. But I may be over-estimating the ethical qualities of the consumer base

    1. profile image0
      Sophia Angeliqueposted 10 years agoin reply to this

      Yes, you are. Americans are, above all, consumers. That's why they are only 2% of the world's population but consume many times more than that. Can't remember the exact figures and don't want ot google them right now.

  4. peoplepower73 profile image90
    peoplepower73posted 10 years ago

    I watched a piece on 60 minutes last night about how insurance run hospitals, like Health Management Associates is gaming the system.  It is demanding that its doctors order tests that are not necessary for emergency room patients that are covered by Medicare and Medicaid.  If the doctors and administrators don't follow their demands, they are fired.

    It made me think, there are two ways to look at health care in this country and we get screwed in either way.  We as tax payers pay into the government. The government in turn funds Medicare and Medicaid.  The insurance companies order tests that are not required so they can increase their bottom line, but that money comes from the tax payers.

    The other way is if they privatize health care, the insurance companies can run rampant and increase premiums without any regulations and again we pay for it.  They win in both cases and we are exploited.  I don't think that was meant about free market enterprise and true capitalism.

    Here is the link to the 60 minute segment.

    1. profile image0
      Sophia Angeliqueposted 10 years agoin reply to this

      People Power. That really explains something.

      I once went to the emergency hospital and they insisted on giving me pregnancy tests. When I objected they told me that they had people in there who were obviously very much pregnant and they were in denial.

      My daughter was rushed to emergency twice, and both times they insisted on giving her pregnancy tests. She told them both times that she was a virgin. She was. The first time they didn't believe that she wasn't pregnant so they tested her again and charged her for two tests (quite a few hundred). The second time, I was there and I made one helluve scene, It took about 30 minutes to convince the doctor that my daughter was not pregnant and that she was there because she fainted and didn't come out of it (she was unconscious for about 15 or 30 minutes on both occasions). She has a rare condition in which shock or pain makes her unconscious. Can't remember the name of it.

      In any event, if it's the insurance companies that are insisting on this, it certainly makes sense.

      1. psycheskinner profile image82
        psycheskinnerposted 10 years agoin reply to this

        Legally they should not be able to insist on any test-- let alone charge for it

        1. profile image0
          Sophia Angeliqueposted 10 years agoin reply to this

          Well, it appears that they most certainly are. They must make millions out of doing tests that have absolutely nothing to do with the reason that one is coming to emergency.

          1. peoplepower73 profile image90
            peoplepower73posted 10 years agoin reply to this

            So sorry to hear about your experience.  But just think of the money that could be saved if this type of fraud was stopped and these people were brought to justice.  The Obama administration needs to hear about this type of fraud.  They could probably gain huge savings in the cost of health care.

            1. profile image0
              Sophia Angeliqueposted 10 years agoin reply to this

              There was an enormous fraud stopped last year for medicare. All the principles involved were upper middle class businessmen like doctors as well as middle class people like nurses, etc.  Here's the link.

     … d-20120503

              1. peoplepower73 profile image90
                peoplepower73posted 10 years agoin reply to this

                Excellent...Hooray for our side.  I just reported the 60 Minutes piece to Health and Human Services as Fraud.  We shall see what happens.

                1. profile image0
                  Sophia Angeliqueposted 10 years agoin reply to this

                  I'm curious. I've had an amazing realization. The reason I keep bringing political issues to the forefront is that I think that they are unethical, i.e. not for the common or greater good.

                  Do you think that politics should be about the greater or common good?

                  I honestly always thought that was what democracy was supposed to be about.

                  1. peoplepower73 profile image90
                    peoplepower73posted 10 years agoin reply to this

                    Politics should be about the greater good, but we no longer have a democracy that is representation by the people.  It's representation by big money interests. 

                    Every two years someone in congress is up for re-election.  They are constantly looking for campaign funding. And the big money interests via lobbyist provide that funding.  The congressman becomes beholden to the big money and will make laws, decisions and influence that are not in the best interest or greater good of the people, but in the best interest of those who have funded their campaigns.

                    If you call a congressman with an issue and at the same time a person with big campaign money calls, who do you think the congressman will talk to?

  5. Repairguy47 profile image59
    Repairguy47posted 10 years ago

    Robert Reich is an idiot.

    1. profile image0
      Sophia Angeliqueposted 10 years agoin reply to this

      See Me-Tarzan post.

    2. GNelson profile image61
      GNelsonposted 10 years agoin reply to this

      Then we should all be idiots.

  6. psycheskinner profile image82
    psycheskinnerposted 10 years ago

    You can find and contribute to a PAC that represents some key issues--it does have an effect. As does contacting someone for whom you are a constituent, especially in person or by phone

  7. rebekahELLE profile image85
    rebekahELLEposted 10 years ago

    I think this article is relevant to the discussion.  I found it on my FB feed over the weekend, and read it in its entirety.   Major businesses are outsourcing a lot of manual labor to local temp agencies.  If the worker gets hurt or slows down on the job, that's it.  The temp agency is forced to replace the worker.
    Businesses like Walmart, Amazon, Costco are outsourcing these warehouse jobs.  I don't shop at these places.  I've recently decided to buy as local as possible and support small businesses.   The New Blue Collar: Temporary  Work, Lasting Poverty and the American Warehouse

    1. profile image0
      Sophia Angeliqueposted 10 years agoin reply to this

      RebekahELLE. Um, got that wrong. Rewring this. I read that particular article on G+ last year. Yes, it's exactly what it's about. The question for me why this is considered ethical.

      1. rebekahELLE profile image85
        rebekahELLEposted 10 years agoin reply to this

        I didn't even look at the date.  I think the article is getting a new round of exposure, which it should, especially at this time of year, when these workers are working so hard.  I don't think it is ethical, it may be legal, but it's certainly not ethical, in my opinion.  The more this kind of corporate behavior is exposed, the more people can be aware of their lack of business ethics and make their own decision as where to spend their money.

        1. profile image0
          Sophia Angeliqueposted 10 years agoin reply to this

          RebekahELLE, I think this is what I've been struggling with for ages. You're right. It's legal, but the fact that it's legal doesn't make it ethical, i.e. for the greater good.

          I have this friend who owns a very successful business and he keeps saying to me that if he can get staff to work for him for $8 per hour (even if they have a university degree), then that is what he will pay because that's what the shareholders will want because they make more profits. And I keep saying to him that when people are really desperate, they will do anything, and just because they're desperate doesn't mean that they are happy to work for that amount, or that it's for the greater good.

          We seem to go around in circles, and it frustrates me no end because I still haven't been able to find the  kernal of what I'm trying to say in that respect.

  8. brimancandy profile image79
    brimancandyposted 10 years ago

    Having worked for a major corporation with over 150 locations,and over 50,000 employees I would say that whomever this economist is, he is either being duped by misleading information from corporate America, or is tried to put a new face on the economy.

    Having been to many corporate meetings, making cuts to the workforce and putting caps on union salaries has saved the company money, and boosted their profit. And, as someone else mentioned, finding ways to eliminate higher paid long term workers, with minimum wage part-time workers has become something that a lot of companies are doing. Which is why their profits are so high, not to mention the tax breaks, and other ways they have found to make money.

    Almost every report says the opposite. Employers are cutting hours, laying off workers, getting employees to take drastic pay cuts, and making more of their employees pay for their own healthcare, which is saving them millions. Yet they continue to do the same work with less and less workers.
    It's always cut-cut-cut, and put more dollars in the bank, or give the executives more money.

    So how this person sees a wage increase is beyond me.

    1. profile image0
      Sophia Angeliqueposted 10 years agoin reply to this

      brimancandy, I'm confused about what you're saying.

      Robert Reich says that because restaurants can't outsource their wait staff from China (the clients, after all, have to be served in America), if all the workers start actively refusing to work, the companies who employ them either have to close their doors or raise the wage of the wait staff, cooks, and other people working in restaurants.

      Yes, of course, corporations are doing exactly what you are saying.

      The point is this. How ethical is it to put profit above people's well being?

      1. brimancandy profile image79
        brimancandyposted 10 years agoin reply to this

        Refusing to work is not going to stop a restaurant from operating. They well just call in their management team to do the work, or keep the business open banking that there will still be employees who will come to work. Take Burger King for example.

        I went to one in a resort town in Michigan on the 4th of July. You would expect them to be fully staffed, as there are hundreds of thousands of people in that town on that weekend, and it is the busiest time of their summer season.

        Walked in the door to find at least 100 people standing waiting to order their food, and a line of cars in the drive through going out the door, out of the parking lot, and as far as you could see down the road. With only a single manager and a counter person working. People waiting 45 minutes to an hour for their food.

        I have also been in a McDonalds where there was only one employee doing everything, and that was not only a one time thing at that location, it was every day, because that particular McDonalds was in a Meijer store, and was managed by Meijer. (I was not surprised) That location closed.

        But those businesses will assume they can do business, as long as just one person shows up for work, they will be open. I worked for all 3 companies, so I know how they operate, and that is why they make so much money. Because they care less about customer service, and more about their bottom line. And, always trying to find a way to automate a job, so they can have one less employee. Especially Meijer. The company who always complained about Walmart's business practices and outsourcing jobs, as the outsourced a lot of their corporate business to india.

        I should state in Fairness to Burger King, Meijer, and McDonalds. That they are not bad companies. Meijer is a solid company that unfortunately promotes bad decision making with the management of it's stores, as a lot of store level management sees other Meijer stores as a competitor. As in, lets not do what's good for the company as a whole. I want my store to have the lowest labor, the lowest costs. I want to be number one. I could care less what the other 150 stores are doing. They see it is a competition to be the best, and the employees do twice the work and are burnt out.

        With McDonald's and Burger King. They are at the mercy of the franchise owner. You don't even have to know what I'm talking about, all you have to do is go to one. One will be ornate, with cool office furniture, and well decorated, and others seem like the baths in Chicago, who have not seen new furniture, decorations or cleanliness in decades. With employees leaning on the counter asking...Yeah..what do ya want. You've probably heard this before. I don't go to that's so ghetto!

        So, for an economist to see a bright side in that is a surprise.

        1. profile image0
          Sophia Angeliqueposted 10 years agoin reply to this

          I think tha's an excellent idea. Let them call in their management team. Let their management team run it for the rest of the restaurant's life. At least that way, wait staff will be better paid. When people rise up against injustice - and wage slavery is radical injustice - people will only take so muchl.

  9. Wayne Brown profile image83
    Wayne Brownposted 10 years ago

    Is this suppose to be some kind of epiphany on Reich's part?  Wage increases have always come out of profits...where else would a company get them?  In a competitive market, they cannot come from the consumer because the price increase will not stick.  The money does not magically appear and when it does come off the bottom line there is absolutely no guarantee that the income of the company for the coming year will be as great as it was for the past year nor is there any guarantee that market share will increase.  Walmart is cited time and again as being poor pay and benefits yet their bottom line net profit is under 4 percentage points and they have to increase sales by more than 1% to gain a tenth of a percent in net profit growth.  At the same time, McDonald's logs a double digit bottom line but I do not see anyone protesting outside their business.  ~WB


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