Fluid Imagination“[R]esounding evidence” shows that…corporate profits accounted for about 53% of inflation during last year’s second and third quarters. Profits drove just 11% of price growth in the 40 years prior to the pandemic.
— Half of recent US inflation due to high corporate profits, report finds, The Guardian
The majority of American sports leagues limit what they pay their players. The NFL, NHL, and MLS have “hard caps” that teams cannot go over, while the NBA’s “soft cap” penalizes teams that exceed it.
Major League Baseball doesn’t have a salary cap, which is why we see such obscene payrolls in baseball. The Los Angeles Dodgers, for example, had a total payroll of $260 million in 2022, which means they spent more money on their 40-player roster this year than the entire state of Vermont did on special-education ($213 million).
Freddie Freeman received a team-high $27 million from the Dogers in 2022.
Even with its hard cap, the NFL had a total payroll of about $6 billion. To put that in relative terms, the NFL’s payroll was higher than or comparable to the 2021 annual spending of four states: Delaware; South Dakota; Vermont; and New Hampshire. There are 1,696 players in the NFL; 1.3 million people live in New Hampshire.
Of course, if NFL owners are spending that much money on players, how much more must they be making on the backs of those players?
The most profitable team in the NFL, the Dallas Cowboys, have an operating income of over $280 million. They’re also the most valuable team at $8 billion. If Jerry Jones, the Cowboys owner, sold today, he would be able support the entire state of Delaware and still have about $4 billion left over to open the “Whites Only” high-school of his youthful dreams.
Salary caps in sports are intended to ensure parity across the league. No offense against Green Bay, Wisconsin, but without a salary cap, there’s no way a city of just over 100,000 people could generate enough revenue to compete for players against bigger markets such as Los Angeles, New York City, Philadelphia, or Chicago. Thankfully, as a result of the salary cap, no one can predict what will happen on any given Sunday and a small city like Green Bay can afford the highest paid player in the NFL.
But let’s go back to Jerry Jones. According to Bloomberg, the Cowboy’s owner was worth roughly $11.5 billion in Dec. 2022. That’s a $2.5 billion dollar increase from a year earlier. Mr. Jones’ income in 2022 was more than 165,271 times the median U.S. household income.
According to Forbes, Mr. Jones isn’t even in the top 40 richest people in America.
Elon Musk lost more money per minute in 2022 than nearly three median American households earn in a year.
Elon Musk, the richest person in the United States according to Bloomberg, lost $107 billion in 2022 (he actually lost $4 billion just in the hours it took me to write this article!).
Don’t feel too bad for him though; Mr. Musk is still doing fine with a valuation of $164 billion (as of this moment, anyway).
If we try to put Mr. Musk’s loss in more relatively down-to-earth terms, his wealth decreased $203,442 per minute, every minute, this year. His minute-by-minute loss was almost 300% of the median U.S. household income — in other words, Mr. Musk lost more money every minute than the combined yearly income of nearly three median American households.
Guatam Adani, the third-richest person on Earth, had the highest year-to-date change in 2022 when he increased his fortunes by $48.7 billion. Mr. Adani owns the largest port operator in India, as well as the largest closely-held thermal coal producer and largest coal trader. His yearly increase was over a million times greater than the median U.S. household income.
Mr. Adani is an Indian industrialist, however, so we should compare his income to his fellow citizens, the median of whom makes less than US $3,400 a year.
Compared to his countrymen, Guatam Adani made 14 million times what the median Indian household made in 2022.
These numbers make no sense. I don’t care what Mr. Adani or Mr. Musk bring to the table, they are not (as individuals) worthy of their wealth. As Representative Ocasio-Cortez (D-NY) has argued, every billionaire is a policy failure.
Rep. Ocasio-Cortez tried to address that failure by proposing (in the press, not in the Congress) a 70% marginal tax rate on incomes above $10 million. Millionaires would send the feds ¢70 of every dollar they earn above $10 million (while still paying 10% on their first $19,400; 12% between $19,401 and $78,950, etc., all the way up through the various tax brackets).
No one ever makes a billion dollars. You take a billion dollars.
Rep. Ocasio-Cortez, 2020
If Mr. Adani paid taxes in the United States under Rep. Ocasio-Cortez’s plan, he would still have taken home roughly $14 billion of the $48 billion he made this year. That’s more than the state budgets of Vermont, South Dakota, and Wyoming combined.
The $34 billion the government received from this one individual could cover the expenditures of 20 different states.
Mr. Musk complained of having to pay the world’s largest tax bill in 2021 when he (reportedly) sent the federal government $11 billion.
I’m all for the richest man in America paying the highest tax bill ever, but like those sports-team owners carrying those obscene payrolls — if that’s what he paid taxes, how much richer must he actually be?
I’m a fan of Rep. Ocasio-Cortez, but I don’t agree with a 70% marginal tax rate. It institutes a soft cap. The nation needs a hard cap.
Between the day the U.S. formally entered a lockdown (March 18, 2020) and the day the U.S. passed one million deaths due to COVID-19 (May 4, 2022), U.S. billionaires increased their worth (as a group) by $1.71 trillion.
Seriously: you can’t even imagine a trillion.
In June 2022, the left-leaning (but factual) Institute for Policy Studies reported that the wage gap between CEOs and median US workers jumped to 670-to-1 (49 of the 300 firms they studied had ratios of over 1,000-to-1). For every $1 a median worker made, a CEO brought home upwards of $670. Only six of the firms studied had pay gaps of less than 100-to-1.
In another report, the Institute demonstrated how several states (and countries) actually have laws on the books to help these billionaires “avoid federal taxation, cheating the U.S. out of revenue with which it could combat poverty or invest in infrastructure.”
More than half of the states mentioned in the report have regressive tax policies, cutting taxes on the wealthy and forcing the poor to pay taxes on a disproportionate share of their income. The poorest 20% of households in South Dakota, for example, pay about 11.2% of their income in taxes, while the top 1% of South Dakotans paid about 2.5%.
The richest of the rich not only have more money than they need but actively conspire to keep what they have despite what our democratic republic requires of them.
These selfish assholes don’t deserve to keep the 30% that Rep. Ocasio-Cortez allows them.
There’s no reason to allow billionaires to exist. Hell, there’s barely a reason to allow millionaires to exist. If an individual can’t satisfy their needs and wants on $1 million a year, then those needs and wants are probably immoral.
I’m willing to grant that a million dollar limit is a radical suggestion in capitalist America, so I’ll judiciously allow our top earners a maximum income of $10 million a year. They’ll just have to send ¢70 of every dollar over $1 million to the feds, and once they hit $10 million, every extra $1 is now ours.
If the US implemented such a drastic (but reasonable) policy, it would be normal to wonder what would happen to the country’s revenues. They wouldn’t include, for example, an $11 billion check from Mr. Musk.
But you also have to wonder how it would affect the country’s outlays. 40% of the 300 firms studied by the Institute for Policy Studies received federal contracts in 2021 totalling over $30 billion. Some of that $30 billion went to the outlandish salaries and bonuses of those firms executives.
Just like in the professional sports leagues, the intent of a national salary cap is to spread the wealth.
According to Salary.com, Walmart Inc.’s CEO made over $21 million in 2021, its CEO of Sam’s Club made over $12 million, and both its CEO of Walmart US and its Global CTO made over $11 million each. Its median (median!) employee pay, however, was only $20,942; half of all of its workers made less than that. Walmart’s CEO made $1,078 for every $1 its median (median!) worker made.
Walmart paid its CEO $1,150 for every $1 it paid to the bottom 10% of its associates.
If $11 million of the $21 million Walmart paid to its CEO would be sent directly to the feds, plus $6.3 million of the $9 million between $1 million and $10 million, it wouldn’t make sense for Walmart or its CEO to agree to his contract. Instead, the company would (hopefully) divert those millions back to the lower half of its other 2.3 million employees (more than half of whom, remember, make less than $20,000 a year).
You can think of this as a new form of trickle-down economics. Trickle-down economics (a.k.a., supply-side economics) posits that allowing the rich to keep their money will lead them to invest in their workers and research and development, creating new jobs — in other words, the wealth of the rich should trickle down to the average American.
Unfortunately, trickle down economics underestimated the power of greed. It also forgot that things only trickle down after they fill up a limited container; otherwise, they just keep growing.
In my version of trickle down economics, the maximum limit is $10 million, with money pouring out faster and faster as soon as it breaks $1 million. Extend this idea to corporate profits in general, and all of sudden, the nation itself, and all of its workers, will become as successful as the NFL.
Robert Reich served as President Clinton’s Secretary of Labor from 1993 to 1997. He advised President Obama as a member of his economic transition team, and he forcefully endorsed Senator Sanders’ candidacy for the Democratic nomination in 2016.
He is also a well-loved professor, a prolific writer, and a dedicated explainer of the economy.
Start here.
I’m trying to figure out how I feel about the Fight for $15. Unthinkingly, I am for it. I would rather fight for a minimum wage that is connected to an index, preferably one that provides an honest measurement of what it costs to live a fruitful life in contemporary American society, but if $15 is that number for now, then yes, of course, I support the Fight for $15.
But I have also read critiques by small business owners, political appointees, and media elites who point to [The Minimum Wage Study’s finding](https://www.seattletimes.com/opinion/lessons-from-a-wage-experiment/) that Seattle’s decision to increase their minimum wage first to $13 in 2011 and then to $15 in 2016 “led to the elimination of more than 5,000 low-wage jobs” throughout the city.
The study continues, “In percentage terms, the loss of jobs was significantly larger than the gain in hourly wages. As a result, while some low-wage workers may have earned more, we estimate that the net earnings per low-wage job in Seattle fell by an average of $125 per month. For low-wage workers, this is a substantial loss.”
The study has not concluded. The researchers, a multi-disciplinary team from Washington University, will continue to watch what happens as the state’s minimum wage slowly increases to match Seattle’s. But they “expect this decline [in the gap between the state’s and city’s minimum wages will] mitigate, but not eliminate, the job and earnings losses in Seattle.”
In other words, due to its decision to increase the minimum wage to $15, the city of Seattle, in both the short and long term, saw (and will probably see) a net loss in its economy, both in terms of jobs and in terms of dollars earned.
[These are the facts](https://evans.uw.edu/policy-impact/minimum-wage-study).
In response, the researchers argue, “Just because one social experiment appears to be yielding disappointing effects to date is no reason to stop experimenting. Seattle, the state of Washington, and the nation face many challenging, long-standing social problems. Only by trying new ideas and carefully assessing their impacts can we hope to improve the social well-being of the nation.”
The question is whether we, as progressives, can accept those facts, and if so, how do we adjust our approach to them? Do we see a net decrease in jobs and dollars and say, “Oh well, let’s not raise the minimum wage to $15,” or should we say instead, “There are other reasons to raise the minimum wage”?
The economy of the future is the economy of the gig, the economy of the hustle, where money is exchanged not for time spent, but for passion put forward. Not everyone can get rich, but lots of people will earn their way.
The minimum wage increase is not for them. It’s not meant to make things easier on them. It’s a burden to them, a weight they have to carry, and they shouldn’t take it on unless they know they can handle it.
Of course an artificial raise to the minimum wage results in a net job loss! It forces hustlers to adjust to the reality of living in a moral world where people ought not to hustle people out of their time.
A minimum wage is not an economic policy; it’s a moral one. Yes, it bridles an economy, but only to stop it from running roughshod over anyone who might be underfoot. It’s a speed limit, a nod to safety and dignity, that tells the hustler to keep on hustling, but only as long as they don’t take advantage of anyone.
If you are a small business owner who cannot afford to pay a fair and reasonable cost for the labor of your employees, then you ought not to have all of those employees. The people on your staff have, literally, more rewarding things to do with their time, whether it be planting a garden, spending time with their children, or attending classes to improve their self-worth.
Yes, jobs will go away. Yes, dollars will go away. But the decisions we make with our lives have to be about more than our dollars and our jobs. They have to be about dignity and an honest reckoning of what’s at stake.
A person’s time is worth more than what the market can get for it, and a minimum wage indexed to an honest measurement of what it costs to live a fruitful life in contemporary American society helps put a dollar figure to that amount. Maybe that’s $15; maybe it’s something else. But whatever it is, I think it’s worth fighting for.
—
The economy of the future is also the economy of the robot.
I am currently working with a student — in a very minimal way — to help them create a piece of software that will automate much of my current job. This is not a robot being built to replace me. It is being built to assist me, to reduce the length of time between the asking of a question and the discovering of an answer, when I do very little that a computer is not better suited to do.
The idea is that the existence of this robot will allow me and other educators to spend more time on creative problem-solving and less time on fact checking. If we are successful, this robot will reduce the amount of staff required by my employer — or at the very least, it will free several of us up to do more creative things in our jobs; without question, it will reduce the number of individual tasks that need to be carried out on any given day, and in that way, reduce the amount of labor that is required.
Ideally, of course, those who are currently laboring will see an increase not only in their efficiency, but in their product (i.e., more time focused on teaching and less time on fact finding will result in a much improved student), but this is only in an ideal world. The new robot will need to be maintained, and that will require its own concentration of labor, and so my student and I must compare whether we gain or lose in the implementation of a task for the robot to achieve.
But this is as it should be, which is why if a robot can replace you, you ought to be the one designing it, and if you aren’t able to do that, you ought to learn what else you bring the table, because someday soon, that robot will replace you.
The Fight for $15 won’t stop that, and so we need to do more. We need to help individuals discover what else they can bring to the table, or better yet, help them learn to build a brand new table and offer it for sale at the local market (metaphorically speaking, of course; robots have been building our tables for a long time now).
The Governor of Vermont and the Commissioner of the Vermont Department of Labor recently argued that, due to the findings of the Minimum Wage Study, Vermont should not increase its minimum wage to $15, and should instead invest “in workforce development, training and education” to help “workers get the skills and credentials they need to fill the hundreds of jobs that are open that pay well above minimum wage.”
While I disagree about the part on the minimum wage, I don’t disagree that we should invest in workforce development, training, and education, but I also agree with the researchers in the study, who argue for policies that include “additional funding for pre-K child education and care, K-12 and higher education, apprenticeship programs, earned income tax credits, and tax reform.”
These solutions have positive effects in both the short- and long-term. They provide a safety net for those with low to medium incomes (earned income tax credits are the third largest social welfare program in the United States, after Medicaid and the Supplemental Nutrition Assistance Program), training for those who want better paying work, and investments in education to prepare both adults and children for the current and future economies.
I’ll be interested to see when Governot Scott, a fiscally-conservative governor, openly supports a specific bill that calls for an increase in the state’s investment in those areas.