Growing and strengthening west Michigan's middle class
LANSING June 19, 2015– The Economic Policy Institute (EPI) released a study this past winter on American wages. They found that between 2013 and 2014, wages for American workers continued to stagnate or fall across the wage spectrum, even for those with advanced degrees. They also noted that since 1979, productivity has gone up exponentially, while hourly wages have remained flat or declined.
But it doesn’t take a bunch of economists to tell us that we aren’t able to keep up with the rising cost of goods and services, and that we’re working harder than ever before with less to show for it. Working families feel it every day when they try to make ends meet, and too often come up short, or have to cut out luxuries that in past years would have been commonplace– like vacations or meals out.
Since the Great Recession of 2007, only two groups have bucked the trend of stagnating or falling wages: the wealthiest among us, and the lowest wage earners. The wealthiest continue to benefit from favorable tax legislation and a shrinking pool of organized labor able to negotiate higher wages for the middle class. But the lowest wage earners saw their wages rise faster than the rest of us, according to the EPI, because a number of states raised their minimum wage in recent years.
So without an ability to negotiate for higher wages (due to shrinking union membership), it seems the only way any group can see their wages increase is through legislation– either from corporate tax breaks, loopholes for the wealthy, or an increase in the minimum wage.
But now it seems the legislators in Lansing want to legislate in the opposite direction: lower wages and less money in the pockets of the middle class and working poor. Three pieces of legislation have hit the capitol floor in recent days which would actually guarantee less money in the hands of those who need it most.
1. Just this week, a bill passed out of committee in the state senate which would lower the state’s minimum wage for those under 20. Currently, the state requires employers pay their employees $8.15 an hour, but should this new bill pass, it would allow companies to pay young people $7.25 an hour– an 11% reduction in pay.
The UAW’s legislative coordinator, Tim Hughes, testified against the bill. From MLive:
“I don’t see any reason for telling somebody who can serve their country in the military or vote that they should be paid 90 cents less,” Hughes said.
Hughes also pointed to the rising cost of college tuition, saying that youth making 90 cents per hour less would add insult to injury.
So even though increasing the minimum wage through legislation has been one of the only ways many working people have seen their real income increase in the past eight years, our legislators in Lansing want to take us in the opposite direction.
2. Next up: Prevailing wage. Senate Majority Leader Arlan Meekhof (R-Grand Haven) has made it his mission since taking office to attack working families and union members. He was the driving force behind getting right-to-work passed, and now he’s got the state’s prevailing wage law in his sights.
Prevailing wage, which guarantees workers on state-funded construction projects (schools, libraries, fire stations, local roads) will receive the local wage and benefit rate, has been in place in Michigan for 50 years. Not only does this law make sure workers are paid fairly, but it helps ensure quality work is done on publicly-funded projects.
But the repeal of prevailing wage isn’t just an attack on construction workers, tradesmen and their families, it will put everyone at-risk from shoddy worksmanship. And here’s the kicker: it’s not even something that most people want. In a poll released to the Detroit News/WDIV-TV this week, 59 percent of voters DON’T want to see the prevailing wage law repealed.
The business manager for the Michigan Operating Engineers, Douglas Stockwell, recently wrote an editorial in defense of prevailing wage:
Who benefits from a repeal of Michigan’s Prevailing Wage Act? It isn’t Michigan’s communities or workers. It’s special interests like the Associated Builders and Contractors (ABC) and low-bid construction outfits that import workers from out of state. In many cases, these workers, in addition to be unskilled, are often undocumented.
Gov. Rick Snyder has bucked his party on this issue and come out in defense of prevailing wage, saying that if we allow companies to pay less on construction jobs, it will discourage young people from entering the skilled trades– something that the governor has been passionate about supporting. He has said he has “serious problems” with repealing prevailing wage, and would likely veto legislation that did so.
But the truly unfathomable part of this prevailing wage repeal: Meekhof and others who want it gone have vowed to go around the governor and the wishes of the majority of the state’s voters and seek what’s called citizen initiated legislation– basically passing a veto-proof law through petition signatures. Less than 5% of registered voters are needed to sign on to this for this to become a reality. From MLive:
The petition drive for citizen initiated legislation seeks to repeal Michigan’s prevailing wage law, which mandates union-scale wages on state-funded construction projects. The proposed bill includes an appropriation to disseminate information if the law changes, a provision that would make it immune to voter referendum.
If organizers collect 252,523 signatures [3 percent of the state’s registered voters] in a 180-day window, they’d send the citizen-initiated legislation to the Legislature, which could enact it into law without the governor’s signature.
Finally, there’s no proof that prevailing wage laws even cost taxpayers any money, so repealing Michigan’s prevailing wage isn’t even going to amount to any savings for the state– it’ll just mean less money for working families, less taxes paid by these workers, an increased likelihood of out-of-state labor and mistreated undocumented workers getting our jobs, and lower quality work being done by less-qualified workers.
3. Third, legislators in Lansing have been struggling to find a way to pay for road repairs. But now it seems Republicans have found one way to pay for them– by eliminating the Earned Income Tax Credit for lower income families.
From the Detroit News:
Democrats decried the elimination of the Earned Income Tax Credit, which would result in low-income families being unable to claim the tax credit on their income tax form — an estimated loss of $123 million.
“I haven’t heard anyone who voted against Proposal 1 say that they want us to stick it to poor people even more,” said Rep. Brandon Dillon, D-Grand Rapids. “This is plain mean.”
The House approved the bill on a narrow 57-52 vote, with six Republicans joining Democrats in opposition.
Rep. Alberta Tinsley-Talabi, D-Detroit, decried the elimination of the earned income tax credit, which amounts an average of less than $300 for a qualifying low-income family.
“Have we got any compassion for these Michigan citizens?” Tinsley-Talabi said. “When do we stop kowtowing to the corporate elite and help the least?”
Dillon noted past praise of the federal Earned Income Tax Credit by Republican President Ronald Reagan and U.S. Rep. Paul Ryan of Wisconsin, the GOP’s 2012 vice presidential nominee.
“You must view them as Marxists for supporting this,” Dillon said to Republicans on the other side of the aisle.
The Michigan Catholic Conference opposed the elimination of the EITC, which lawmakers trimmed in 2011 to balance the budget and help pay for a $1.8 billion tax cut for businesses.
“While almost every Michigander recognizes the need to finance road repairs, we are disappointed to see these funds shifted away from the working poor,” said Tom Hickson, vice president for public policy and advocacy for the Michigan Catholic Conference. “The EITC is a powerful tool that helps people transition into a more stable situation.”
Business Leaders for Michigan, a group of corporate executive and higher education leaders, also opposed the House package.
“The House road funding plan is the wrong direction for Michigan,” said Doug Rothwell, the group’s president and CEO. “Michigan needs a permanent, long-term solution to increase road repair funding without raiding the General Fund and hurting other critical priorities that are important to our economy.”
So there you have it: Wage stagnation is real, in Michigan and across the country. Yet, Michigan’s state legislature, lead by Republicans, continues to advance legislation that will further cut income for the middle class and working poor.