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| Welcome to Wonkbook, Wonkblog's morning policy news primer byMax Ehrenfreund (@MaxEhrenfreud). Send comments, criticism or ideas to Wonkbook at Washpost dot com. To read more by the Wonkblog team, click here. Follow us on Twitter and Facebook. |
| Taxpayers win as Wal-Mart gives workers a raise |
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There are a few reasons why Wal-Mart might be raising wages well above the federal minimum. It could be that the economy is stronger, there are fewer people looking for work, and Wal-Mart is competing with its rivals in order to keep the cash registers staffed. Another possibility is that Walmart is worried that unions will succeed in organizing if employees feel they're poorly compensated. These factors are interrelated, of course. Workers who are confident they'll be able to find another job are more willing to risk angering their bosses by organizing their colleagues.
One unexpected winner from Wal-Mart's decision: taxpayers, who chip in thousands of dollars a year in benefits for minimum-wage workers, according to a report from Democratic staff in the House of Representatives. For all the employees at a typical Wal-Mart Supercenter in Wisconsin, these costs likely total more than $900,000 annually.
These benefits are largely designed to sweeten the deal for people who are out of work and to encourage them to find a job. Now, Wal-Mart will assume more of the financial burden of making work pay, not taxpayers. So will the other retailers that will likely have to raise their wages in response, or see their workers quit for jobs at Wal-Mart.
What's in Wonkbook: 1) Wal-Mart raises wages 2) Opinions, including Krauthammer on the filibuster 3) American and British spies can listen in on cell phone conversations around the world, and more
Chart of the day: The share of unemployed workers who have been out of a job for a long time increased sharply following the financial crisis -- but it had been rising steadily for decades before that, a worrisome trend. Matthew Yglesias at Vox.
Let's hope the decision is the sign of an improving economy."The best possible news would be if Walmart’s executives made this decision not out of a desire for good press or for a squishy sense of do-gooderism, but because coldhearted business strategy compelled it. ... The world for employers is very different with a 5.7 percent unemployment rate (the January level) than it was five years ago, at 9.8 percent. Finding qualified workers is harder for employers now than it was then, and their workers are at risk of jumping ship if they don’t receive pay increases or other improvements." Neil Irwin in The New York Times.
Wal-Mart representatives note that a lack of motivation among employees is costly for the company in several ways."The retailer has realized that staff turnover was hurting its business, and it is willing to spend $1 billion this year on higher pay and more career opportunities to keep store workers in their jobs. ... A large body of research — some conducted decades ago by current Federal Reserve chairwoman Janet Yellen — suggests that raising wages leads to lower employee turnover and better customer service, which generally correlates with higher sales and lower expenses."Lauren Weber in The Wall Street Journal.
Henry Ford knew that good relations with the labor force were crucial. "As sales of his Model T boomed, Ford fretted that labour turnover and absenteeism would sap the efficiency of his assembly line production process. Paying higher wages was a way of attracting the kind of reliable workers who would keep Ford’s factories humming. ... Walmart’s move certainly took a page out of the old Henry Ford playbook. The company’s management sought to deflect criticism that it was underpaying workers — and with some success." Gary Silverman in The Financial Times.
The company could also be anticipating an increase in the federal minimum. "For its part, Wal-Mart has stayed officially neutral on a proposed federal minimum wage hike. But if the company figures a higher standard is inevitable, it might as well get out in front of it. ... Doing so voluntarily — as well as giving employees more control over scheduling, another key demand of labor groups — potentially protects Wal-Mart from a greater threat: Labor organizing." Lydia DePillis in The Washington Post.
Number of the day: 23,000. That's about how many Americans die each year due to antibiotic-resistant microbes, a figure that public health officials worry could increase enormously as two patients are dead at a hospital at the University of California, Los Angeles. "The problem is so serious that it threatens the achievements of modern medicine," the World Health Organization warned in a recent report. Jason Millman in The Washington Post.
KRUGMAN: Wisconsin Gov. Scott Walker meets with economist quacks. "Mr. Walker, in what was clearly a rite of passage into serious candidacy, spoke at a dinner at Manhattan’s “21” Club hosted by the three most prominent supply-siders: Art Laffer (he of the curve); Larry Kudlow of CNBC; and Stephen Moore, chief economist of the Heritage Foundation. Politico pointed out that Rick Perry, the former governor of Texas, attended a similar event last month. Clearly, to be a Republican contender you have to court the powerful charlatan caucus." The New York Times.
STRASSEL: The Clintons use their foundation for political ends. "With the news this week that Mrs. Clinton — the would-be occupant of the White House — is landing tens of millions from foreign governments for her shop, it’s long past time to drop the fiction that the Clinton Foundation has ever been a charity. It’s a political shop." The Wall Street Journal.
BOUIE: Jeb Bush can't escape his brother's legacy. "Yes, he’s a Bush, and yes, he’s a Republican, but Jeb Bush wants to assure voters he isn’t a Bush Republican. This is impossible. Not because of his name, but because Jeb is a mainstream Republican, and by definition this puts him a stone’s throw from his brother’s administration." Slate.
RAMPELL: Lawmakers attack Advanced Placement U.S. History as unflattering to the nation's past. "It seems strange to organize an educational system around what can’t be taught to children. But for large chunks of the country, that is exactly how public educational standards seem to be set: by demarcating and preserving blind spots rather than promoting enlightenment." The Washington Post.
GILBERT: Central bankers are providing poor forward guidance. "Forward guidance, designed to educate consumers and investors about what's coming next from the unelected guardians of their economies, remains a work in progress. If the concept was working, Fed watchers wouldn't be straining their eyes to see if the word "patient" gets dropped from the outlook, while ECB soothsayers would more easily have spotted such terms as "quantitative easing" and "sovereign debt." Bloomberg View.
Spell check interlude: The White House keeps misspelling "February." Sarah Larimer in The Washington Post.
How will Obamacare's defenders win over Chief Justice John Roberts? "One way for the Obama administration to appeal to Roberts is to offer him a way to uphold the subsidies while advancing long-term conservative legal goals, as he did in 2012 by making the Medicaid expansion optional. That's what its lawyers are effectively doing when they contend that it would violate states' rights to deny subsidies without a clear warning that they were contingent on setting up state exchanges. The federalism argument is a late addition to the strategy — the government didn't make it at the trial court level." Sahil Kapur at Talking Points Memo.
Walker is restructuring debt payments to cover a shortfall."Pushing off debt payments is one tactic that he and predecessors have used in the past. By missing the May payment, Walker will incur about $1.1 million in additional interest fees between 2015 and 2017. ... In March last year, Walker signed a $541 million tax cut for both families and businesses. At that point, Wisconsin was facing a $1 billion budget surplus through June 2015... By November last year, the administration was estimating a $132 million shortfall. In January, the non-partisan Legislative Fiscal Bureau pegged it at $283 million. The Bureau, which does research for the Wisconsin Legislature, explained that tax collections were $173 million worse than the administration’s own estimates in November." Jeff Guo in The Washington Post.
One unexpected winner from Wal-Mart's decision: taxpayers, who chip in thousands of dollars a year in benefits for minimum-wage workers, according to a report from Democratic staff in the House of Representatives. For all the employees at a typical Wal-Mart Supercenter in Wisconsin, these costs likely total more than $900,000 annually.
These benefits are largely designed to sweeten the deal for people who are out of work and to encourage them to find a job. Now, Wal-Mart will assume more of the financial burden of making work pay, not taxpayers. So will the other retailers that will likely have to raise their wages in response, or see their workers quit for jobs at Wal-Mart.
What's in Wonkbook: 1) Wal-Mart raises wages 2) Opinions, including Krauthammer on the filibuster 3) American and British spies can listen in on cell phone conversations around the world, and more
Chart of the day: The share of unemployed workers who have been out of a job for a long time increased sharply following the financial crisis -- but it had been rising steadily for decades before that, a worrisome trend. Matthew Yglesias at Vox.
1. Top story: Pigs reported flying as Wal-Mart raise wages sharply
The company will pay workers at least $10 an hour next year."The new rate is 38% higher than the current federal minimum hourly wage of $7.25. 'Wal-Mart’s move to raise their employee pay base is a sign that the labor market has already tightened,' said Joel Naroff, chief economist at Naroff Economic Advisors. 'Their action could create a floor under wages and others may need to follow in order to retain and attract workers.' " Paul Ziobro and Eric Morath in The Wall Street Journal.Let's hope the decision is the sign of an improving economy."The best possible news would be if Walmart’s executives made this decision not out of a desire for good press or for a squishy sense of do-gooderism, but because coldhearted business strategy compelled it. ... The world for employers is very different with a 5.7 percent unemployment rate (the January level) than it was five years ago, at 9.8 percent. Finding qualified workers is harder for employers now than it was then, and their workers are at risk of jumping ship if they don’t receive pay increases or other improvements." Neil Irwin in The New York Times.
Wal-Mart representatives note that a lack of motivation among employees is costly for the company in several ways."The retailer has realized that staff turnover was hurting its business, and it is willing to spend $1 billion this year on higher pay and more career opportunities to keep store workers in their jobs. ... A large body of research — some conducted decades ago by current Federal Reserve chairwoman Janet Yellen — suggests that raising wages leads to lower employee turnover and better customer service, which generally correlates with higher sales and lower expenses."Lauren Weber in The Wall Street Journal.
Henry Ford knew that good relations with the labor force were crucial. "As sales of his Model T boomed, Ford fretted that labour turnover and absenteeism would sap the efficiency of his assembly line production process. Paying higher wages was a way of attracting the kind of reliable workers who would keep Ford’s factories humming. ... Walmart’s move certainly took a page out of the old Henry Ford playbook. The company’s management sought to deflect criticism that it was underpaying workers — and with some success." Gary Silverman in The Financial Times.
The company could also be anticipating an increase in the federal minimum. "For its part, Wal-Mart has stayed officially neutral on a proposed federal minimum wage hike. But if the company figures a higher standard is inevitable, it might as well get out in front of it. ... Doing so voluntarily — as well as giving employees more control over scheduling, another key demand of labor groups — potentially protects Wal-Mart from a greater threat: Labor organizing." Lydia DePillis in The Washington Post.
Number of the day: 23,000. That's about how many Americans die each year due to antibiotic-resistant microbes, a figure that public health officials worry could increase enormously as two patients are dead at a hospital at the University of California, Los Angeles. "The problem is so serious that it threatens the achievements of modern medicine," the World Health Organization warned in a recent report. Jason Millman in The Washington Post.
2. Top opinions
KRAUTHAMMER: Republicans must abolish the filibuster to protect constitutional immigration policy. "Republicans, not the filibustering Democrats, will be blamed for shutting down DHS and jeopardizing the nation’s safety at a time of heightened international terrorism. A nice cul-de-sac. But there is a way out for the GOP. Go bold. Go nuclear. Abolish the filibuster. Pass the bill and send it to the president. I know that breaks a lot of china. But Congress is already knee-deep in fractured porcelain." The Washington Post.KRUGMAN: Wisconsin Gov. Scott Walker meets with economist quacks. "Mr. Walker, in what was clearly a rite of passage into serious candidacy, spoke at a dinner at Manhattan’s “21” Club hosted by the three most prominent supply-siders: Art Laffer (he of the curve); Larry Kudlow of CNBC; and Stephen Moore, chief economist of the Heritage Foundation. Politico pointed out that Rick Perry, the former governor of Texas, attended a similar event last month. Clearly, to be a Republican contender you have to court the powerful charlatan caucus." The New York Times.
STRASSEL: The Clintons use their foundation for political ends. "With the news this week that Mrs. Clinton — the would-be occupant of the White House — is landing tens of millions from foreign governments for her shop, it’s long past time to drop the fiction that the Clinton Foundation has ever been a charity. It’s a political shop." The Wall Street Journal.
BOUIE: Jeb Bush can't escape his brother's legacy. "Yes, he’s a Bush, and yes, he’s a Republican, but Jeb Bush wants to assure voters he isn’t a Bush Republican. This is impossible. Not because of his name, but because Jeb is a mainstream Republican, and by definition this puts him a stone’s throw from his brother’s administration." Slate.
RAMPELL: Lawmakers attack Advanced Placement U.S. History as unflattering to the nation's past. "It seems strange to organize an educational system around what can’t be taught to children. But for large chunks of the country, that is exactly how public educational standards seem to be set: by demarcating and preserving blind spots rather than promoting enlightenment." The Washington Post.
GILBERT: Central bankers are providing poor forward guidance. "Forward guidance, designed to educate consumers and investors about what's coming next from the unelected guardians of their economies, remains a work in progress. If the concept was working, Fed watchers wouldn't be straining their eyes to see if the word "patient" gets dropped from the outlook, while ECB soothsayers would more easily have spotted such terms as "quantitative easing" and "sovereign debt." Bloomberg View.
Spell check interlude: The White House keeps misspelling "February." Sarah Larimer in The Washington Post.
3. In case you missed it
American and British spies hacked a manufacturer's database, gaining the ability to listen in on cell phone conversations worldwide. "The hack was perpetrated by a joint unit consisting of operatives from the NSA and its British counterpart Government Communications Headquarters, or GCHQ. The breach, detailed in a secret 2010 GCHQ document, gave the surveillance agencies the potential to secretly monitor a large portion of the world’s cellular communications, including both voice and data. The company targeted by the intelligence agencies, Gemalto, is a multinational firm incorporated in the Netherlands that makes the chips used in mobile phones and next-generation credit cards." Jeremy Scahill and Josh Begley at The Intercept.How will Obamacare's defenders win over Chief Justice John Roberts? "One way for the Obama administration to appeal to Roberts is to offer him a way to uphold the subsidies while advancing long-term conservative legal goals, as he did in 2012 by making the Medicaid expansion optional. That's what its lawyers are effectively doing when they contend that it would violate states' rights to deny subsidies without a clear warning that they were contingent on setting up state exchanges. The federalism argument is a late addition to the strategy — the government didn't make it at the trial court level." Sahil Kapur at Talking Points Memo.
Walker is restructuring debt payments to cover a shortfall."Pushing off debt payments is one tactic that he and predecessors have used in the past. By missing the May payment, Walker will incur about $1.1 million in additional interest fees between 2015 and 2017. ... In March last year, Walker signed a $541 million tax cut for both families and businesses. At that point, Wisconsin was facing a $1 billion budget surplus through June 2015... By November last year, the administration was estimating a $132 million shortfall. In January, the non-partisan Legislative Fiscal Bureau pegged it at $283 million. The Bureau, which does research for the Wisconsin Legislature, explained that tax collections were $173 million worse than the administration’s own estimates in November." Jeff Guo in The Washington Post.
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