Growers’ Group Signs the First Union Contract for Guest Workers
By STEVEN GREENHOUSE
Published: NYT, September 17, 2004
The North Carolina Growers Association, which represents 1,000 farmers, signed a union contract yesterday covering 8,500 guest workers from Mexico – a move that the association and union said was the first union contract in the nation for guest workers.
At the signing ceremony at a church in Raleigh, the Mount Olive Pickle Company, the nation’s second largest pickle company, announced that it had signed a separate contract with the union, the Farm Labor Organizing Committee, ending a five-and-a-half-year boycott campaign against the company.
The two contracts end a long, bitter dispute in which the Farm Labor Organizing Committee accused Mount Olive of using cucumber growers who mistreated their workers. In organizing a boycott that was backed by the National Council of Churches, the union said that workers employed by Mount Olive’s growers often lived in squalid housing and that one worker had died of heat prostration and another of heat prostration or exposure to pesticides.
“The company is tremendously relieved to have the boycott ended,” said Baldemar Velasquez, president of the Farm Labor Organizing Committee, which is based in Toledo, Ohio. “They were getting tired of all the negative publicity.”
Bill Bryan, Mount Olive’s president, said the boycott hardly hurt the company’s sales, except in pockets of the Midwest. But he acknowledged it was time-consuming and annoying to have to respond to questions about why his company was being boycotted.
“We have always said we would be interested in settling the boycott if we could do so with reasonable terms that we felt were appropriate for our company,” said Mr. Bryan, who asserted that the boycott was based partly on inaccurate information and unfair accusations.
The agreement with the North Carolina growers is unusual because it is the first union contract ever signed by farmers in the state, which has a history of hostility to unions, and because the contract provides for a union hiring hall in Mexico to help supply guest workers.
In a telephone interview, Mr. Velasquez hailed the agreement with the growers’ association because it gives unionized farm workers a foothold in the South and because it should encourage workers to speak up without fear of retaliation. He also praised the agreement because it provides grievance procedures and a seniority system, which he said would effectively eliminate a blacklist that prevented guest workers who complained from being rehired. Spokesmen for the growers denied that any blacklist existed.
In a scene straight out of the Soprano’s, LA’s Wilshire Grand Hotel locked out its laundry workers in the middle of contract negotiations and hired scab replacement workers, telling the members of the union, Unite Here, that they could return to their jobs only if they signed the contract the LA Hotel Employers’ Council was offering.
By Ronald D. White, LA Times Staff Writer
The contract standoff between a union and nine Los Angeles County hotels escalated Thursday after the Wilshire Grand locked out its laundry employees and quickly filled their jobs with replacement workers.
At 6 a.m., 17 members of the Unite Here union learned that they had washed and folded their last bedsheets, tablecloths and towels for the downtown Los Angeles hotel. As for the 55-year-old hotel’s laundry, it didn’t skip a beat.
“We brought in replacement workers. We had them all lined up in case this happened,” said Wilshire Grand general manager John Stoddard, one of the most vocal members of the Los Angeles Hotel Employers Council, which has handled the 7-month-old contract negotiations with the union.
The laundry workers are among more than 100 members of Local 52 of the Union of Needlestick, Industrial and Textile Employees, which recently merged with the Hotel Employees and Restaurant Employees Union, creating the union Unite Here.
The union and the hotels have been negotiating since March for a contract to cover 2,800 hotel and restaurant employees of another Unite Here group, Local 11.
The Local 11 workers on Monday gave their union the authority to strike, as did hotel unions in San Francisco and Washington. And a lawsuit was filed Thursday by some workers at two of the local hotels — the St. Regis and the Westin Century Plaza — accusing them of failing to give workers mandatory meal and rest breaks.
At the Wilshire Grand, Stoddard said he replaced the laundry workers because he couldn’t risk an expensive planned upgrade of the aging laundry operation without the assurance of a long-term contract and a reliable workforce. He said he took the action knowing that it might prompt a strike in support of laundry workers.
Cristina Vazquez, deputy administrator of Local 52 and western regional manager of Unite Here, called the ouster an illegal lockout, though she said she wasn’t asking for a strike.
“For them to do this is just outrageous,” said Vazquez, noting that her local was negotiating a separate contract for laundry workers with several of the hotels, including the Wilshire Grand, on Wednesday.
Maria Elena Durazo, president of Unite Here Local 11, said its 2,800 workers would strike if asked. The hotel is “trying to provoke a citywide dispute,” Durazo said.
One of the laundry employees, Rosa Olivares, has been on the Wilshire Grand payroll for 32 years and said she felt betrayed. “Through all of those years, I have been an excellent worker,” said Olivares, 57.
Stoddard said Olivares and the others could return to their jobs if they agreed to a new contract. He also said that their being replaced with temporary workers wouldn’t trigger an agreement forged by the nine hotels in which they each would lock out union employees if certain conditions were met.
Gary Oldman has dropped out of the next Star Wars movie.
Oldman’s spokesman explains, “Gary was excited and looking forward to working on the film. The snag is that the movie is being made without members of the Screen Actor’s Guild.”It means Gary would have been working illegally overseas. Out of respect and solidarity with the other members, he could not and would not consider violating the rules of his union.”
I imagine this will only get covered a show business and sci-fi fandom news, but it deserves broader coverage. It’s not often that we get a nice story about a high profile person taking a stand on union solidarity. This would have been a very profitable job for Oldman and he’s rich enough that he could have ignored the union. Instead, he chose his union over the money. For that, he deserves our applause.
Now that you’ve had time to digest what Mr Mulvey had to say, here’s my response.
Your writing is very cogent. Colleges don’t teach that. They serve as a superstructure for the foundation that should have been taught in grammar and high school. With only 1 year of college before the money ran out, you appear to have been given the foundation and acted as your own contractor in building the superstructure. The whys and hows of the money situation are known only to you and really don’t matter based on the product you produce. That is as American as it gets
Compliments are always welcome but not at the expense of facts.
My writing has always been ‘cogent’. What it hasn’t always been is organized, structured, or coherent. I have talent, and no, colleges can’t give anybody a talent they don’t have going in, but that’s not what they’re for. Schools teach skills; that’s all they can do but it’s bloody important.
I’ll tell you what’s ‘as American as it gets’–the fact that because I couldn’t afford to go to college to acquire those skills, it took me 30 years of trial and error to acquire them on my own, and that as a result I’m not writing for a living today.
Have you ever heard of Mark Smith, the Wisconsin laborer who makes movies on a shoestring budget? Somebody did a documentary about him a few years back that had a short vogue. He was on Letterman and Leno, they showed clips from his films, and for a while he was the Flavor of the Month. Experts said that despite the rawness, poor acting (he had to use local actors and neighbors), and grainy, low-rent look from the low-tech equipment he had to use, he had a remarkable eye for framing and a real talent for telling a story. Then he spent a frustrating couple of years trying to get the same people who had praised him so highly to return his calls–an agent, a producer, a banker–anyone who could help him put together the budget for a real film.
Mark never went to college, you see, never studied film, never made the connections so vital to getting ahead (which is the other half of what college is good for). He was just an ordinary guy with a boatload of talent who came from a working-class family and went into the factories when he got out of high school. In other words, he was a novelty. People thought he was interesting and what a great human interest story but Jesus, hire him? Put a multimillion dollar film in the hands of a some factory worker from Wisconsin who doesn’t have a degree in film or at least a nodding acquaintance with Steven Spielberg’s editor’s second cousin by marriage? Uh-uh, no way.
That’s your American story: a waste of talent, maybe genius for all we know, because he was born in the wrong place and into the wrong class. So the premise you’re starting with is already seriously flawed. Education matters.
The fact is the education system in this country is broken. I offer the following: The business owner is looking for basic 9th through 11th grade high school skills as a condition of employment that his applicants simply did not possess.
That’s the part that’s not credible. You expect me to believe that–whatever Tampa’s problems may be–he can’t find a dozen high school graduates who have approproate math skills in a city that size? If you read the article, that guy isn’t a corporation with a need for hundreds of such workers, he’s got a small business with a limited but growing clientele. I just don’t buy it. There has to be something else going on there. The education system may be broken (that’s a discussion for another time) but it ain’t that broken.
There’s a girl–19 or 20–who runs the cash register at a convenience store near my house. She was a math whiz in high school–calculus, trigonometry, abstract algebra, you name it–and if you bring 5 or 6 items to the counter she can tell you the total while she’s still scanning them. But she can’t get a job using those skills because a) there aren’t a lot of jobs around here, but mostly because b) she’s black and female.
I strongly suspect that something like that is going on in Tampa–he’s getting applicants who have the skills but he’s turning them down for subsidiary reasons and blaming a low skill-level. Maybe they don’t interview well, maybe they don’t dress the way he thinks they should for an interview because they don’t have the money to dress well, maybe they don’t speak standard English well enough or have an accent he thinks will scare off his customers. Maybe they all drive cars with Kerry/Edwards bumper stickers on them and fuzzy dice hanging from the rear-view mirror. I’ve seen people turned away for a lot less. Whatever it is, I can assure you it’s NOT the skill-level.
You propose the business owner to pay for educating the perspective employees in return for a year or two of work.
I didn’t ‘propose’ it. I suggested that it was the obvious solution and wondered why it hadn’t even occured to him. Even if I accept your ‘double-dipping’ argument, what’s that got to do with the price of tomatoes? He’s supposed to be a practical businessman dealing with reality, so what’s the practical reality? That regardless of where the blame lies, he claims to be losing business because of this right now. If I was in his position, I’d pick the best of my candidates and offer to pay for night school in return for a reasonable minimum commitment, say 6 months to a year, on the job. There’s nothing remotely illegal or even questionable about such an arrangement (there’s a big trucking company, JB Hunt, I think, who’s doing something just like that because there’s a shortage of drivers), and I would not only be solving my problem, I’d be giving somebody a leg up and out of an exploitive system. If he’s refusing to do that because of some dopey ideological imperative, then he’s doing what my mother would call ‘cutting off his nose to spite his face’ and he deserves everything he gets.
I never proposed–nor would I–making my suggestion to him mandatory. I meant that it was plain common sense, good business sense, and dynamite public relations, yet–for whatever reason–as far as he’s concerned it isn’t even on the table. There’s some kind of prejudice working there.
Responsible parents want their kids to have more opportunities for choice than they had themselves. Maybe the answer is in a school voucher system which ironically is supported more by parents in poverty than by any other socio-economic group.
This is much too long a discussion to have today, as I said. The education system needs to be tackled but it’s a much longer and more complicated subject than the simple answer of ‘vouchers’ would suggest. I’ll say only a couple of things for now:
1) The public schools are operating under intense pressures parochial schools can’t even imagine in their worst nightmares, pressures which would break the parochials like a hard taco if they were ever faced with them.
2) Since the tax-cutting frenzy began, the public schools have been starved for money. The amount of money spent per-pupil is 3-4 times in private schools what it is in most public schools. Part of the reason for that is that private schools can limit their enrollment as well as cherry-pick the cream. Public schools don’t have that luxury; they have to take everybody and split the pie many more ways.
3) Of course poor parents support vouchers–it’s a way to get their kids an expensive education they couldn’t otherwise afford. But they understand something you don’t seem to: vouchers are a lottery system–a few lucky kids will get a break, the vast majority will remain in crumbling, understaffed and under-equipped schools that offer no future because they’re basically warehouses, not educational institutions. That’s no solution for any except the lucky few, and in the richest country on earth, it’s a disgrace.
Continued success in your writing.
Thanks. You, too. And please think this issue through some more. You’re leaving a lot out of your calculations.
The cost of a college education has risen dramatically in the past few years while wages have stagnanted and inflation, mild as it’s been, has eaten up most of what few gains have been made. In real dollars, a lot of us are making less now than we were twenty years ago, making paying for college for our kids a struggle at best, impossible at worst. During the Clinton years, federally-funded or backed financial aid helped close the gap, but in the past three years Bush’s tax cuts have forced that money out of the system. The National Center for Public Policy and Higher Education says the result will be to bump less affluent college students out of the system as well.
The report card evaluates states on the performance of their private and public four-year schools and community colleges in five categories, with grades ranging from A to F.
On affordability, the report card contradicts some recent studies that argue increases in financial aid have kept pace with recent tuition hikes, so real college costs have stabilized.
The report card, titled “Measuring Up 2004,” grades affordability in part by comparing net college costs with the average family income in each state. By that measure, the study claims, college is becoming less affordable in most states.
In New Hampshire, for instance, college costs amount to 32 percent of average family income compared to 23 percent a decade ago. In New Jersey and Oregon, colleges cost 34 percent of family income, compared to 24 percent and 25 percent, respectively, in 1994.
David Breneman, dean of the Curry School of Education at the University of Virginia and an adviser on the report, said the combination of higher prices and a population boom among college-age people is likely to bump students from four-year colleges to more affordable community colleges, and from community colleges out of the system.
“For at least another five to eight years we’re looking at a real denial of opportunity,” he said.
The report also claims states have made some progress over the last decade preparing students for college, as measured by such factors as the percentage of students taking advanced math and science. In West Virginia, for instance, the percentage of high schoolers taking upper level math and science courses has nearly doubled, and the percentage of eighth graders taking algebra has more than doubled to 25 percent.
But the report notes that higher education, by failing to bring more students into the system, hasn’t met its end of the bargain.
“We can no longer attribute all of our college access and quality problems to the failure of public schools,” said Patrick Callan, the center’s president. “The fact is, high schools have improved over these last 10 years and we haven’t seen commensurate higher education gains.”
I’m glad to see Lynne Gobbell’s story getting some coverage in the mainstream news media. As of this morning Google shows 89 sources running it (most are just running the short AP version, but a few have more detailed coverage). This is the kind of story that we should all have printed out and ready to hand to our coworkers and kin who are concerned about Kerry’s “character.”
Here’s a short summary. Lynne Gobbell was a line worker who put in 50-60 hours a week at an Enviromate insulation factory near Moulton, Ala. Last Thursday she showed up for work with a Kerry-Edwards bumper sticker in the rear window of her Chevy Lumina. The owner of Enviromate is a bankrupcy lawyer named Phil Geddes, an enthusiastic Bush supporter who has included pro-Bush flyers in his employees’ pay envelopes. After a break she was approached by her supervisor who passed on an order from Geddes to remove the bumper sticker or be fired. She confronted Geddes and exchanged hot words. A few minutes later her supervisor told her to leave wit the words, “I reckon you’re fired. You could either work for him or John Kerry.”
The story got some local coverage, but little else from the mainstream media. But the bloggers got hold of the story and spread it far and wide. By Tuesday Geddes–who was being called a massive pile of elephant dung by bloggers in all fifty states, the District of Columbia, and several foreign countries– was being driven to distraction by calls for comment. He sent a subordinate to apologize and offer Gobbell her job back. Gobbell said she wanted a guarantee that she wouldn’t be re-fired after the heat was off Geddes. While waiting for his answer, she got a call from John Kerry. Timothy Noah of Slate got hold of her a few minutes later and got the details: “He was telling me how proud he was that I stood up.He’d read the part where Phil said I could either work for him or work for John Kerry. He said, ‘you let him know you’re working for me as of today.’” The Democratic National Committee called her later Tuesday to work out the terms of her new job.
No doubt the Republican slime machine will kick into action later today. They’ll find co-workers to testify that Gobbell was a troublemaker, bad worker, and had terrible taste in music. At the same time the right wing punditocracy will swing into action tut-tutting that Kerry would take advantage of this poor woman (the right thing to do, they will tell us, would have been to leave her unemployed and at the mercy of an employer who thinks he’s a feudal master). Well, they are all wrong. Gobbell took her knocks for Kerry, it’s only right that he should repay her for her loyalty.
This is real character. It’s also a symbol of what we are fighting for in this election. Why do companies and employers like that still exist in the 21st century? This is why unions and an administration that is friendly toward them are still relevant.
It doesn’t look like the old chattel slavery model. In fact, it works even better–for the owner. It’s called ‘contract slavery’ and it’s happening all over the world, including here in the US.
By TOM THOMPSON
For most of us the word slavery conveys images from the 18th and 19th centuries.
Tragically, however, slavery hasn’t disappeared; it’s just taken on a new, modern form.
Because of the clandestine nature of modern slavery, it is impossible to determine precise numbers. Both Anti-Slavery International and Free the Slaves have documented more than 30million slaves alive today, more than all of the people stolen in the time of the trans-Atlantic trade!
What matters most now is less color, tribe, or religion, but, weakness, gullibility, and deprivation.
Slaves are working mostly in simple, non-technological, traditional work. They are hidden among the population of domestic servants working in Great Britain. In the United States, Mexican farm workers have been found to be working simply as field slaves.
Enslaved Thai and Philippine women have been freed from brothels in New York, Los Angeles, and, yes, even Seattle. Slaves work in mining, jewelry making, and in cloth and carpet factories. Slaves clear forests, and work in a variety of small factories throughout the world. Child brick-industry slaves are all too common in South Asia.
How can this be?
One of the striking features of globalization in the rural areas of Africa, Asia, and Latin America is how easily traditional families have been shattered by the forced shift from subsistence to cash-crop agriculture and government policies that suppress farm income in favor of cheap, often imported, food for cities.
Poverty has soared as incomes have plummeted. Then, too, corrupt and undemocratic political elites have focused on economic growth and commercial opportunity, too often for their own benefit, and have paid little attention to sustainable livelihoods for the rural poor.
Public understanding of modern slavery is often confused with reports of low-wage workers in substandard working conditions. However, modern-day slaves differ from these workers because they are, in fact, imprisoned, threatened, beaten and shackled.
In the past slavery meant one person legally owning another person. Today there is no place in the world that allows legal ownership of human beings. In many cases, however, non-ownership turns out to be in the interest of the slaveholder, who now enjoys all of the benefits of slavery without any responsibilities. Thus, modern slavery is not typically chattel slavery, where a person is born, captured, or sold into permanent servitude.
It is debt slavery that is most common today. A person pledges to work against a loan of money, but the length and nature of the work are not defined and the loan may never get paid off, the debt sometimes passed down for generations.
Contract slavery, the most rapidly growing type of slavery today, shows how modern labor relations are used to hide slavery’s basic brutality. Contracts are offered that guarantee employment, but when workers are taken to their place of work they find themselves enslaved. If legal questions are raised, the contract can be produced, but the reality is that too often the “contract worker” is threatened and paid little or nothing.
Government corruption, and often collusion, plus the threefold increase in the world’s population since World War II, have led to literally a glut in potential slaves. Slaves have simply become so cheap that they are not seen as a capital investment.
In this way the new slavery mimics the world economy in a shift away from ownership and fixed asset management. The new slavery simply appropriates the economic value of individuals while keeping them under violent control — but without asserting ownership or accepting responsibility for their survival. There’s no easy profit in infants, the ill or the elderly, who become disposable.
The direct value of slave labor in the world economy may be small, but the indirect value can be significant. Thanks to the global economy, slave-produced products move smoothly around the globe.
One industrial example, well documented by Kevin Bales, author of “Disposable People,” is the slave-produced charcoal that is crucial to making steel in Brazil. Much of that steel is used in the cars, car parts and other metal products that Brazil exports. Slavery lowers production costs, and raises profits.
An agricultural example includes the use of slave labor on cocoa plantations in West Africa, or in the sugar fields of the Dominican Republic, to supply the raw materials for chocolate products enjoyed all over the planet.
Most of us don’t want to believe that slavery still exists. But it does, and one of the first tasks is to admit our ignorance.
Tom Thompson, an economist, is a consultant for several human rights organizations.
I should be shocked. I’m not. Somehow the whole idea fits into modern corporate methodology like a hooker fits into the Republican Convention–with surprising ease and hardly a raised eyebrow. It’s the logical extension of policies and practices they’ve been following for years and, in their deepest dreams, the place they’d like us to wind up.
They’ll tell us it’s ‘for our own good’, that we’re lucky to have work at all, that they’re looking after us, that they have our best interests at heart–and then they won’t bother to tell us anything because their power over us will be so complete they won’t have to talk to us except to issue orders backed by brute force. It’s a dark vision but it’s a vision they embrace–all things are justifiable in the name of Profit, and inhumanity becomes just another way to lower expenses.
And why not? We’re one measly step above animals, aren’t we? It’s not as if we could boast their finer feelings for expensive cigars and the romance of bulging stock portfolios. Besides, there’s millions of us. We breed like rabbits, right? They use us up, throw us away, buy a few more of us. Simple, cost-effective. And, as we know from history, there’s always somebody willing to separate himself from the herd by his willingness to wield the lash. It’s a fine and perfect world where there’s a place for everyone and everyone knows his place. It’s paradise.
Thirteen thousand years they’ve been at it, give or take. These guys never quit.
Pension Benefit Guaranty Corp is trying hard to live up to its name. In the story Trenches has been following about the airline industry threatening to renege on its pension obligations as hard times and exceptionally poor management practices shove the carriers one after the other into bankruptcy, PBGC has emerged as both a whistle-blower and a champion of its trust. It could have sat back, as the S&L guarantors did, and evolved strategies aimed at protecting itself at the expense of the pensioners, letting the govt pick up what was left of the pieces–or not. Instead, PBGC is taking an active role, asking Congress to give it the power to put liens on airline assets in order to safeguard the interests of pensioners.
Pension Agency Seeks More Power
Federal Insurer Wants to Put Liens on Companies in Bankruptcy
By Albert B. Crenshaw
Washington Post Staff Writer
Wednesday, September 15, 2004; Page E03
The government’s pension insurer said yesterday that it wants the authority to place liens on the assets of companies in bankruptcy such as US Airways when those companies do not make required payments to their pension plans.
US Airways told a bankruptcy court in Alexandria on Monday that it doesn’t plan to make a $110 million payment due today to pension plans covering its mechanics and flight attendants. The airline said its pension obligations total $531 million over the next five years.
In July, United Airlines refused to make a $72.4 million payment to four of its pension plans, and said it would not make $500 million in payments due this year.
The government agency, the Pension Benefit Guaranty Corp., argues that the failure to make required payments is illegal but that it lacks power to do anything about it under bankruptcy law. Yesterday it said it should have authority to place liens against the corporate assets of a bankrupt company so that the amount of the missed payment can be preserved for the pension plan participants. It already has such power over companies not in bankruptcy.
Such authority would require a change in the law.
“Failure to act will increase the risk that participants will lose promised benefits and that the pension insurance program will suffer larger losses. We need to make clear that pension contributions are required whether a company is in bankruptcy or not,” Executive Director Bradley D. Belt said in a written statement yesterday.
The agency also wants companies to be required to notify pension plan participants within 30 days of a bankruptcy filing of the plan’s funded status and of legal limits on the agency’s guarantees, which in some cases are substantially less that the pension promised to an employee under the plan.
A federal judge in New York ruled in 1991 that the PBGC has no priority over other creditors in bankruptcy and that the PBGC cannot compel bankrupt companies to make payments required by pension law. PBGC officials said at the time that the ruling created a dangerous situation for the agency. Legislation was introduced to overturn that ruling but never passed.
If only more corporations had PBGC’s sense of honor, loyalty, and responsibility.
Unfortunately, the corporate-owned Congress is unlikely even to consider such a request, let alone pass the appropriate legislation, and tens of thousands may lose their pensions behind this mess. The next time somebody touts de-regulation to you, you might mention the disaster it had on the airline industry. Corporate honchos are like 2-yr-olds with ADD–they’re incapable of seeing past their own greed or the day-after-tomorrow and have to have a minder to keep them from jamming their hands into electric outlets because they have this fantasy it will make them super-charged like Batman. De-regulation is strictly for adults, and as both the airline and energy industries have shown, today’s corporate decision-makers–with rare exceptions like PBGC–aren’t ready for the responsibility.
An editorial in today’s NYT nails what one part of Bush’s ‘Ownership Society’ actually means: the elimination of taxes on the wealthy and shifting the burden to anyone who lives off wages rather than investments. It’s a direct strike at what’s left of the middle-class and, as usual, he’s lying about it.
Taxes for an Ownership Society
Published: September 15, 2004
When President Bush talks about an “ownership society,” hold on to your wallet. The slogan, like “compassionate conservative” before it, is sufficiently vague to mean many things to many people, and the few details that Mr. Bush has provided – bolstered home ownership and new tax-sheltered savings plans – seem innocuous enough. But in tax terms, “ownership society” means only one thing: the further reduction, if not the elimination, of taxes on savings and investments, including taxes on dividends and on capital gains on stocks, bonds and real estate. That, in turn, means – by definition – a shift in the tax burden onto wages and salary – or, put more simply, a wage tax.
The regressive results would be appalling. The richest 1 percent of Americans earn just about one-tenth of total wages and salary, but almost half of all income from savings and investments – income that would be largely, perhaps entirely, untaxed in an “ownership society.” In contrast, taxable wages and salary make up almost all of the income of most Americans.
The Bush camp has been floating the idea that what the president is getting at is a consumption tax. But the administration is not talking about a true consumption tax, which would apply to spending regardless of where the money comes from – from your paycheck, cashing in your stocks and bonds, selling your house, or borrowing. It is, in effect, talking about a tax on wages.
Properly understood, a consumption tax is intended to increase national savings by making it relatively more attractive to save than to spend. The main argument against it is that it hits hardest at low-income and middle-income families, who tend to spend most of what they earn. But as Peter Orszag, an economist at the Brookings Institution, pointed out in a recent speech at Georgetown University, Mr. Bush’s de facto wage tax would be the worst of all worlds: it would have all the regressive aspects of a consumption tax and none of its potential for increasing national savings.
When Mr. Bush talks about new tax-favored savings accounts, he never mentions that most people don’t even take advantage of existing plans. They won’t be turned into owners by new tax breaks for interest, dividends and capital gains. To turn Americans into owners requires a strong economy in which the people who work for a living share in the benefits of economic growth.
A good place to start would be to tackle the obstacles to sustained growth that currently exist, like spiraling health care costs, dependence on foreign oil and the administration’s mania for unaffordable tax cuts – in short, to reverse, not intensify, the trends in the current economy.
In the past nearly three years of economic recovery, the distribution of economic growth has become more skewed than at any other time in modern memory. Currently, 47 percent of growth is flowing to corporate profits, by far the largest share during any of the other eight post-World War II recoveries. Fifteen percent goes to wages and salary, the smallest share of economic growth in more than 50 years. To make matters worse, the share of compensation that is devoted to health and pension benefits is far larger during this recovery than any other, representing a further squeeze on the wages and salaries of ordinary Americans. In 2004, take-home pay as a share of the economy dropped to its lowest level since the government started keeping records in 1929.
All of this would make the drive for a wage tax laughable, if only it were a joke. And yet, when he says “ownership society,” a wage tax is exactly what Mr. Bush is driving at.