Income Inequality Symposium: “False trickle-down economics”

(Previous post on the symposium is here.)

Venture capitalist Nick Hanauer was the keynote speaker of the Income Inequality Symposium. His speech consisted mostly of decrying “false trickle-down economics”—namely, the concept that if minimum wages are increased, employment will drop. According to him, “rich people and businesses don’t create jobs;” consumers are the real job creators.

He (and several successive panelists) raised a point that has been in circulation nationally: If the minimum wage had tracked productivity since 1978 it would be more than $20 now. (Dick wrote about why this doesn’t make sense here.)

Hanauer also said that businesses need to be compelled to pay workers more by fear of prison (through a minimum wage), or they’d pay much less. Hanauer did let the audience down a bit by saying he thinks the minimum wage increase needs to be done in steps, and that it should include total compensation.

The first panel, “What is income inequality and why should we be concerned?” was kicked off with a presentation by Lori Pfingst of the Washington State Budget and Policy Center. Like Hanauer, she talked about the divide between productivity and compensation. She also talked about how “we have the most upside down and broken tax system in the country.”

Dorian Warren, a political scientist from Columbia University, said that the minimum wage has not kept up with changing conditions (he made no recognition of the fact that Washington already has the nation’s highest minimum, and it is indexed to inflation). He said that political systems “are almost solely responsive to the very wealthy,” so “income and wealth inequalities are directly related to political inequality.” Later he said that we’ve heard the same arguments against the minimum wage for hundreds of years, and that we heard them in regards to child labor laws. Warren also said, “EITC and food stamps subsidize Walmart. The Waltons continue to get rich—inherited by the way, they didn’t earn that money.” (Adam Ozimek of Modeled Behavior writes about why this isn’t a “real economic argument” here.)

This panel had a third speaker, Toni Foulkes, an alder from Chicago and a former ACORN activist (which she announced to applause). She mostly said that low minimum wages increase crime.

There are other viewpoints on inequality. For example, it might have been informative for the audience to have heard Scott Winship of the Manhattan Institute (and recently of the Brookings Institution).

The second panel, “What is a ‘living wage’ in Seattle?” included Josh Bivens of the Economic Policy Institute and Jill Reese of the Alliance for a Just Society who have done some research on the topic. The panel also included Jesse Inman, who works at the Downtown Emergency Service Center; Martina Phelps, who works at McDonald’s; and Jian Hua, who works at the Westin Hotel. These last three are low-wage workers who talked about what an increase in the minimum would mean for them. Inman said most of his co-workers can’t afford to live in Seattle (he does). Hua said that she actually earns $15.86 currently—the implication was that it is because she is unionized. Phelps said that she has been working at McDonald’s for 7 months and has a two hour commute because she can’t afford to live closer to her job.

More to follow.