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Originally published Sunday, March 16, 2014 at 8:03 PM

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With our nation’s values, giant income gap makes no sense

Soaring inequality on wealth and wages makes no sense in a nation committed to democracy and equality.


Seattle Times staff columnist

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I don't recall our constitution guaranteeing income equality. MORE
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Does anything at all about our economics make sense?

I’m sure you read that the average bonus to Wall Street workers last year was $164,530, and that those bonuses were paid while the firms they work for saw overall profits fall 30 percent.

And here, on the other side of the country, we’re struggling with the possibility of a $15-an-hour minimum wage for workers in Seattle.

A story on the bonuses last week included an assessment by the Institute for Policy Studies that the bonuses, which came to $26.7 billion, would more than double the pay of the 1.1 million full-time minimum-wage workers in the United States.

Of course, any time the question of pay for the highest earners comes up, defenders of the status quo will say: You have to pay enough to attract people to those onerous jobs. People who work hard should be compensated for their labor, at the high end anyway.

I’m not saying hedge-fund managers and laborers or clerks ought to get the same pay, but is there really justification for the vast differences in pay our economic system generates?

I don’t think so, and not just as a matter of fairness and morality, which ought to be enough grounds for addressing income and wealth inequality. As a practical matter, higher inequality has been linked to increased health and social problems.

Inequality levels, which have risen and fallen across this country’s history, are at historic highs now.

Fortunes keep growing at the top. A couple of weeks ago, Forbes Magazine came out with its annual list of the world’s richest people (our very own Bill Gates was back on top). The magazine said there are now 1,645 billionaires around the world, 268 more than last year’s list, and other sources report the number of multimillionaires has been shooting up in recent years.

But the growth at the top has happened while most people’s incomes have stagnated or declined. That’s not so good for a democracy. Is Congress going to listen to you or the billionaire Koch brothers?

Maybe you’re just worried about keeping on top of the bills, rather than tackling large political and economic questions. The pushback against rampant inequality is starting at a place that’s more concrete than political or economic theory. It’s starting with a focus on the lowest-paid workers. The quest for a higher minimum wage is the rallying point for change, and Seattle is reaching for $15 an hour.

First, Seattle city government is studying what the increase might mean for businesses and for employment.

Some businesses would have less profit, and some say they might even go under. That reminds me of one of the justifications certain Wall Street players give when they drive a company under, that they are increasing market efficiency by weeding out the weak.

Does that work at the low end of the economy too? If a business can’t pay a living wage, then maybe the invisible hand of the market is speaking and saying the business needs a new model.

An across-the board $15 minimum-wage increase is a blunt instrument. It isn’t the best tool, but political reality won’t allow more nuanced approaches to assuring working people an adequate living

What are the odds of Congress crafting a more effective role for the earned income tax credit for instance?

Day-care workers and caregivers for older people with disabilities should be paid according to the value of those services, but how much can most families afford to pay?

A more robust earned income tax credit could help workers without hurting families.

Some business models should be questioned. Franchise holders often say they’d be hurt by an increased minimum wage. Their margins are thin, but the corporations at the top of the franchise pyramid are usually quite profitable. Maybe there is a problem with the business model.

A story last week by Seattle Times reporter Lynn Thompson explored recent research on the impact of raising the wage floor, and much of the data and experiences elsewhere suggest it’s not the cataclysmic event some opponents describe.

A University of California, Berkeley, study found that an increase up to $13 an hour “has no measurable effect on employment.”

No one has studied the difference a $15 wage might make, but arguments over it are about more than economics. Championing the increase is as much a statement about who we want to be as a society as it is an economic move.

And so is President Obama’s recent announcement that he has asked for a revision of labor law to make more workers eligible for overtime pay.

The way our economy is working at the moment makes sense only if we embrace exploitation at the expense of equality. A wage increase at the bottom might put upward pressure on other wages and, probably on some prices, too, but I think we can live with paying what the goods and services we use are worth.

The 99 percent aren’t going to catch up with the filthy rich, but maybe more people will be better compensated for the work they do.

Jerry Large’s column appears Monday and Thursday. Reach him at 206-464-3346 or jlarge@seattletimes.com



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About Jerry Large

I try to write about the intersections of everyday life and big issues. I like to invite readers to think a little differently. The topics I choose represent the things in which I take an interest, and I try to deal with them the way most folks would, sometimes seriously, sometimes with a sense of humor. My column runs Mondays and Thursdays.
jlarge@seattletimes.com | 206-464-3346

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