Minimum Wage and the Economics of Poverty

Monday, May 05, 2014

For our series Strapped: A Look at Poverty in America, Robert Reich discusses the economics of poverty, the debate over raising the minimum wage, and how the recession has affected the poorest Americans. He’ll also talk about how growing income inequality is connected to poverty, and a recent report that the American middle class is no longer the wealthiest middle class in the world and what that change means. Professor Reich is Chancellor’s Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies and was Secretary of Labor in the Clinton administration. He has written 13 books—his latest is Beyond Outrage—and the film "Inequality for All."


Robert Reich

Comments [22]


The number of people living on fixed incomes is also rising, and they will strike back. YOu could end up with an "age war".

May. 06 2014 09:46 AM

>Amy from Manhattan
>Having people work as full-time freelancers is also illegal under tax law.

Unless I misunderstand that statement, that's not the case: so far as I know, a firm may work you full-time under contract for a day/week/month/year for up to (I believe) two years without endangering your lowered status, and longer if they've can come up with successive fiddles...I knew someone, recently, employed for five years as the 'employee' of an agency that took half she made, the giant firm involved had an exclusive deal with her agency (which limited the number of hours she could claim, but not how many she had to work if she were to keep her job). Yes, of course, she could have found something else, if she had the time and the energy and the hope this gig killed-off in her, or weren't in dire straits absent a job (even as she suffered from Industrial Disease with one).

Really, they have the power, they know it, our fear and anxiety is their weapon, and 'Catch 22 says that they can do to us anything we can't stop them from doing' and they've spent decades convincing us that there's nothing we can do.

May. 06 2014 08:45 AM
Gerald Fnord

I was wondering if Mr Reich thought that our current system of property rights could long survive, modulo extremely authoritarian measures, if too many had too little property for those rights to protect.

I won't be coy---I think not, and I'll put my reason in terms excessively black-and-white enough for even an 'Austrian' (the fringe economic faith, not the nationality) to understand: even if propertarianist absolutism were in the general long-term interest, if it doesn't appear to be working for enough people it will fall, either by their hands or by the hands of the armed men you set to protect those rights and yourselves.

If you want capitalism to survive, take a small (but not an homeopathically so) dose of socialism...unless you believe that since twenty aspirin will kill you, two will as well and won't even help your headache beforehand.

May. 06 2014 08:25 AM
Jen from United States

We don't have an international outsourcing but aren't immigrants filling those minimal wage jobs?

May. 05 2014 01:38 PM
Amy from Manhattan

Having people work as full-time freelancers is also illegal under tax law.

May. 05 2014 01:37 PM

The sum of wages and social services may be higher than $10 per hour. Paying workers $10 per hour may push them over the qualification limit.

This Reich guy is a wolf in sheep's clothes.

May. 05 2014 01:37 PM
Michael from long beach,ny

The Feds solution to our economic problems was to drop interest rates extremely low.that combined with the idea that economic resurgence is consumer driven .seems there is a disconnect since consumer credit card and personal loan rates seem very high.could your guest comment?

May. 05 2014 01:36 PM
Brock from Manhattan

Where will the money come from to pay for the increased wages?

May. 05 2014 01:36 PM

Ask him about NAFTA which administration he worked for pushed through.

May. 05 2014 01:33 PM

Just as the top basketball and football players make astronomical salaries so do CEOs of international companies who "play" in every market in the world. But regular workers cannot move from country to country as can top CEOs or soccer players.

May. 05 2014 01:31 PM
Avi from Brooklyn

Questions for Robert Reich:

Those opposed to raising the minimum wage tend to favor cutting taxes for wealthier individuals. Does enriching capital earners have a greater multiplicative effect on the economy than enriching wage earners?

May. 05 2014 01:31 PM

CEO's are paid so much more today because all businesses are international or multinational businesses doing much if not most of their business across the world. And because these companies have revenues and profits from all over the world and not just from the US, the competition in good CEOs has driven the price of a good CEO through the roof. Again, it is supply and demand for the best CEOs.

May. 05 2014 01:29 PM
Brock from Manhattan

What does CEO is pay have to do with the price of a hamburger? Yes, they have found a way to make that hamburger AFFORDABLE! What happens if the price has to go up due to increased wages?

May. 05 2014 01:29 PM
Catherine from New York

Good one, Leonard, re museum(s)no one can get to.

May. 05 2014 01:29 PM

Obviously to do well today you need be a professor and a prolific book scribbler so that you can score gigs on TV and radio talk shows. Everything today is show biz.

May. 05 2014 01:25 PM
abbey from si

could mr.reich discuss a couple of topics that might be opportunities not yet fully utilized here in this country to help raise standards?

1. profit sharing/ESOP - employee shared owned programs - allowing workers to own their labor as capitol essentially

2. how to find investors who will invest for the longer term in such enterprises. Angel investors are one thing, but those willing to see the longer terms benefits of profit sharing still seem a rare breed.

May. 05 2014 01:20 PM
Irv from Poverty Row

Why would anyone want to listen to this person?
When the Clinton administration removed the restrictions on Wall St., it caused the economic collapse of 2008.
In one of his interviews, he said the safest place to put your money was in the stock market, and I wound up losing my life savings there in the 1980s.
Why he's even employed after helping destroy the economy is beyond belief.

May. 05 2014 01:18 PM

Here we go again, with this neo-bolshevik nonsense. The reality is that poverty is the NORM and has been since hunter-gatherer bands turned into civilizations.

The reality is that the post WWII years were ABNORMAL because poverty is normal and the anomaly of the postwar period was only thanks to having destroyed our competition during WWII. Once Europe and Asia recovered and threw off the shackles of socialism and communism, that flattened wages as their vast labor forces were unshackled to vigorously compete. In addition, billions of women came into the work force to continue to depress wages.
Personally I'm surprised we are doing as well as we are relatively speaking. And that is because the AMerican economy is flexible and has begun to respond to the challenge, albeit technical education needs to be improved rapidly.

May. 05 2014 01:11 PM
Brock from Manhattan

How does the fact that someone earns more cause others to earn less? Or is this just all propaganda meant to anger people?

May. 05 2014 01:10 PM

Republicans should embrace higher minimum wages as the least intrusive government remedy for poverty, healthcare and broken families. A living wage would catapult these families out of governmental programs into the private sector.

May. 05 2014 01:08 PM
kenneth sullivan from Brooklyn,NY

I haven't read Mayor deblasio's plans for affordable housing yet, and I certainly support fast-food workers struggles for a $15 minimum wage, but it's unrealistic to think you can find an affordable apartment in NYC on such wages. Also, how about a minimum benefits package?

May. 05 2014 01:07 PM
Joe Mirsky from Pompton Lakes, NJ

Minimum Wage
"It is not good that the mass of our people should be forced to live a hand-to-mouth existence. There is no incentive in work that produces nothing for the future. The saving ability of our people must not be curtailed.”
— The Literary Digest, January 8, 1910, quoting “a Cincinnati dispatch to the New York American” by Alexander MacDonald, president of Standard Oil of Kentucky and a millionaire.

May. 05 2014 10:39 AM

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