Sunday, July 18, 2010

Cents and Responsiblity

Tom Emmer candidate for Minnesota Governor wants to sign into law a tip credit for hospitality workers.  The typical earnings of restaurant servers and related staff, at the current minimum wage and tips  is around $20,000 a year, give or take.  The way the tip credits usually work, in other states that have them is the minimum wage drops down to around $2 and some change.
 Tips are counted towards the difference in minimum wage, not on top.  Emmer is suggesting after a lot of push back, that he would like the first $20,000 in tips to be tax-free.  Which is great except that most servers don't make enough in tips for this to be a benefit for them.  Emmer is insisting he wants to see servers make more, not less. He hopes that more might come from customers tipping more, not restaurant owners paying more. 

Emmer wants the customer to pay servers. Not restaurant owners.  Except that it is the restaurant owner that hires the server.  It is the restaurant owner that has the ongoing relationship; not the customer. 

Emmer wants the restaurant owner let out of the responsibility of paying his or her employee.  He wants to shift that responsibility directly to the customer, who is under no obligation to tip.

In West Virginia, there is currently a temporary halt to blowing the top off of a mountain for coal mining, near a tiny community called Pigeonroost.  Blowing up the mountain top would make the coal inside the mountain easier to get to quickly and cheaply.  But it would also destroy not only a good part of the mountain itself; it would mean that the top of that mountain would end up in adjoining areas, polluting the water and damaging the land.  The debris from this kind of mining procedure releases all kinds of highly hazardous toxins like selenium into the surrounding land and water.  Republicans have favored allowing this kind of mining as a cheaper way to get coal out.  But the costs of the long term damage to the land, to the waterways, and to the people who live in communities like Pigeonroost are not part of those mining costs.  They don't figure into the cost of that cheap coal.  The mining company keeps the profits of selling their coal at the same price as responsible mining operations; the people of WV get left with the expense of the damage; financial expense, and the cost of damage to their health and home.

In the Upper Big Branch mining disaster there appear from the information to date to be ample indications that the mining company took short cuts and ignored safety regulations to save money.  Twenty nine miners died in the disaster at that mine.  The lives of those twenty nine miners was not figured into the cost savings of short-cutting safety in the final pricing of that cheaper-produced coal.  Miners die, families are hurt.  Upper Big Branch mine owners have pocketed the money from the short-cuts as increased profits when they sell their coal at the same price as the responsible operations.

BP cut corners on safety, and 15 people died at one of their Texas refineries.  BP appears to have operated the drilling operation on Deep Horizon as cheaply as they could even if it meant cutting corners on important safety measures - safety for the oil well itself, safety for the people who were operating the drilling.  On the Deepwater Horizon, 11 people died.  Their lives are not priced into the savings on the oil, but you can bet the expense of the clean up from the negligent, ill-considered cost cuts that endangered the drilling platform and the lives will be.  Those costs will be passed on to customers.  Those costs will be passed on to everyone who lives in areas affected by the spill.  Those costs will be passed on to all of us, because we the citizens and taxpayers will never be fully reimbursed, any more than the people affected by the Exxon Valdez were ever reimbursed.  While BP made record breaking profits, they shifted their expenses to the pockets of others.

There are mining and drilling companies that operate safely, and still make profits although less spectacular profits than BP.  Their workers don't die, aren't injured to make the owners money, and they are paid fairly.  There are restaurants which pay their servers well and still stay in business through good management, without reducing their servers to less an hour than most underage baby-sitting teenagers earn.

Republicans like to use the word responsibility.  They like the word; they don't have a good track record of matching actions and decisions to it.  Republicans have consistently favored in every possible way companies shifting the responsibility for their expenses, their costs, their risk, their liabilities, to others -- often others who can afford it the least, or who are the most vulnerable.  You won't see Tom Emmer, or other Republicans ever suggesting an owner or an executive be paid less than they are now.  That is saved for low-paid workers.

That's not just a misuse of the word, the concept of responsibility, it is an abuse of it.  And it gives new meaning to the phrase nickel and dime to death.


  1. I think that you're being a bit hard on Republicans here. Many of the problems with things have occurred under democratic administrations, with democratic legislatures and/or congresses. Ultimately, both Republican and Democrats are equally irresponsible and are equally to blame for most of our nation's problems.

  2. ToE, I don't agree they are equally responsible, but indeed BOTH are responsible.

    I say this because while many of the operations have occured during the Presidencies of Democrats, or at times Democrats held one or both houses of Congress, other than right now and from 1993-1994, the Democrats haven't held both houses since the very late 70's (if we exclude Dixie-crats, which we'd have to, they're just conservatives in Democratic clothing).

    As well, and as I'm sure you know, the Democrats are hardly cohesive in the way Republicans are. Look at the current environment as an example. The VAST majority of Democrats wanted to greatly expand Medicare or otherwise create a publicly funded system. However, due to a few holdout Democrats and a completely united Republican front in the Senate - they could not. The House passed the bill, the President would have signed it, but 2 or 3 Democrats, an independent (Lieberman) and 40 Republicans ensured it would not ever pass.

    The same can be said of many regulatory improvements over the past 30 years. Including and especially recent banking reform. In that case it was more than 2 or 3 Democrats, but not by a lot, who stood in the way. Yet, Russ Fiengold, Amy Klobuchar, and Al Franken (just to name 3) ALL wanted MUCH stronger controls, and would have gladly passed a re-implementation of Glass-Steagal.

    Now, are there some/a number of Democrats in the Senate who are for sale, absolutely, including the likes of Chris Dodd, and it's a damned shame. Yet, when I look at the ONLY Republicans willing to stand up to big business being Olympia Snow and occassionally one or two others, and the number of Democrats bowing to big business being 5 or 6, and the rest not, the ratios are completely inverted, most Dems refuse, most Republicans go along. The problem is just enough Dems go along, and too few Republicans refuse (imho) ,and so we get a nation and a government for sale and run by the companies who are supposed to be monitored by the government instead running the government.

  3. If your comment is correct, ToE, could you demonstrate any similar positions taken by Democrats, positions which are at all indicative of a party plank or policy, that show such a marked favoritism to deregulation, or to disfavor the lower paid to benefit the wealthy?

    I agree that there are problems caused by both parties. I do not think that is an acurate criticism for this specific issue. The three examples I selected were, I believe, fairly representational.

    But if you have examples, I promise to keep an open mind, and modify my current opinion accordingly.

  4. As posted elsewhere...

    All excellent points, and then there's this.

    If you cut wages for restaurantuers, it is not going to ultimately solve the profitability problem for restaurants. The reason simply is because the key to pricing and cost is competition in that market. Applebees prices to compete with Chilis and Fuddruckers, Morton's prices to compete with Jax and Manny's. Lower labor costs will drive down prices because the market is so aggressively competitive that any labor savings will be reflected on the menu (prices).

    What this means is, is you are pursuing LOWERING wages in general, or in economics speak, you are pursuing deflation, at least in the restaurant industry where labor is the chief cost.

    The prices on the menu reflect labor, food, infrastructure, utilities, etc.. priced at a point which will pay the bills based on known foottraffic AND in response to competition in the area. Restaurants operate on razor thin margins NOT because of labor expense, but because the must. They must because their competition will undercut them if they don't.

    No one is going out of business because of labor, they go out of business because their product (service, food quality, location, etc..) isn't competitive in their demographic space as compared to their peers. If labor were the driving issue in success, and/or such a prohibitive issue, successful restaurants would fail.

    Ultimately then, this is a cannard. Lowering labor costs to ownership isn't going to ensure the success of more restaurants, it is only going to result in lower wages for workers and presumably lower prices for eating out, which might sound fine, but the reality is that deflation is a catastrophic event in economic models, it results in lower real estate values (resulting in defaults on real estate) in lower overall wages (resulting in plummetting stock values) and on and on. There is nothing good in Emmer's proposal except in the very near term it would result in profits for a few restaurant owners who have the luxury of operating in a demographic where they face little competitive pressure.