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MAKING CONTACT Transcript: #29-99 Making a Living: Challenging Wage Inequality Phillip Babich: This week on Making Contact- Barry Hermanson: We have a lot of people who work full time that are going to our food banks across this country to be able to make ends meet. That to me is just incomprehensible. Krishna Fells: Without more and more small businesses understanding the economic impact of not paying a minimum wage was detrimental to small business. Phillip Babich: A growing number of cities in the United States have passed living wage ordinances, legislation that requires contractors with local governments to pay their employees enough money to support their families. Such measures have met intense opposition from corporations and small businesses. But, a few businesses owners have broken ranks. On this program, you'll hear from two business owners who want to narrow the wage gap. I'm Phillip Babich, your host this week on Making Contact, an international radio program seeking to create connections between people, vital ideas, and important information. Over the past two decades, the assets of the richest 5% of the U.S. population doubled. During the same time period, real incomes for most households fell. In light of this, it's not surprising that unions and working people have been organizing for fairer pay. What may be surprising is that some individuals who are part of the elite, top five percent asset holders are also advocating for higher wages; not for themselves but for working families. United For a Fair Economy, based in Boston, has been raising awareness about widening income, wage and wealth inequality in the United States. The group coordinates action to reduce the gap. One of the organization's campaigns is known as Responsible Wealth. It's an effort by business leaders and wealthy individuals among the richest top five percent who are, in their own words, "concerned about the rise in power of large corporations and the growing gap between the rich and everyone else." On June 4, 1999, United for a Fair Economy sponsored a Responsible Wealth panel in San Francisco to discuss living wage campaigns. Chuck Collins, co-director of United for a Fair Economy, hosted the event. Chuck Collins: We have on this panel a couple of people who are business leaders who have been very active in struggles around living wage issues and minimum wage issues. And we’re going to hear from them on a perspective that we don’t hear very often, which is: why raising the floor for low wage workers is good for business. Let me just set a little bit of a context: If you were to open the newspaper today, the main story is "The Fabulous Economic Boom Across the Land." And yet, this economic boom is not lifting all boats, and in fact it’s leaving many people behind. And in fact, we are becoming two Americas, more polarized that we were just 20 years ago. We hear about one America, which is fabulously wealthy, building bigger houses, driving bigger cars, buying more things -- their prosperity is largely based on ownership of assets, and the stock market is raising the value of those assets to dizzying heights. Then there’s another America, which is not just the poor, but a growing number of the ranks of the middle class that depends on a paycheck for their economic security, whose wages have been flat or actually falling for the last 20 years, who are more likely working in temporary work without benefits, without health insurance, who have no savings, whose prospects are dimmer, who have deeper debt and working more hours. So that’s the polarization. One that we hear a lot about, one that we don’t. What does it say about the direction of this country when one of the bigger industries here in California is prison construction, and the other is the construction of gated communities. That, I think, is a symbol for this current economy. So a couple of little facts. Average weekly wages are still trying to catch up to 1973, when Richard Nixon was President. Productivity since 1973 has gone up 33%, worker productivity. If low wage workers had seen their wages go up at the same rate as their productivity, average hourly wage would be $18 and hour instead of $12 an hour. That’s $11,000 a year for an average worker. $11,000 that could be saved, that could be spent in the local economy, that could be set aside for a child’s education. That’s a lot of money that’s not going to low wage workers. The real minimum wage has fallen in value. If the real minimum wage was worth the same amount as it was in 1968, it would be about almost $8 an hour. If the minimum wage had risen at the same rate as CEO, executive CEO pay, it would be about $45 an hour. So this is why efforts to raise the minimum wage, and pass living wage ordinances are so important. Let me introduce our panel, and I’ll introduce them briefly and then introduce them a little before they speak. To my left, Krishna Fells is the chair of the Small Business Owners of Washington State Organization. She’s going to speak to you first. Then, Barry Hermanson from San Francisco. who’s owner of Hermanson Employment Services, will speak next. He is co-chair of the local living wage campaign. So first left me introduce Krishna. A year ago, in Washington State, there was a ballot question to raise the minimum wage at the state level. And Krishna and others formed Small Business Owners of Washington State, to counter the anti-minimum wage raising forces, the Association of Washington Businesses, and to form a voice for progressive businesses on this issue of living wages. She’s going to tell you more about that. But she’s been the sort of driving force there. She’s helped organize, she’s chaired that committee, she’s put out the emails alerts, and the good news is that referendum passed with business support. Please welcome from Washington State, Krishna Fells. Krishna Fells: I want to take full credit for passing the minimum wage in Washington State. It was me, me alone. I wish. I wish it could be so simple. The way it started was, I’m very active with labor. I’m a political hack. And the one thing I constantly saw was that labor was raising issues, and business was ignoring them. And labor has a tremendous amount of influence, but they couldn’t get business to hear them. I was approached by the AFL/CIO in state, the state organization, on the minimum wage issue. They said, "You’re doing a high tech business with your husband" -- and by the way our business works on the Internet building websites helping Internet marketing. We specialize in helping small business and nonprofits, believing that if they don’t learn to use this resource, they will be left out. And the haves and have nots are going to be focused in cyberspace, in our opinion -- so labor said, "If that’s your position, then why don’t you help us build a coalition of people who work in your industry, and have them help us support raising the minimum wage. Most of the high tech jobs in Washington State already pay well above minimum wage. So this is not a hardship for you." I was like, "Well I don’t mind, I’ll talk to anybody." So, that’s what I did. I went out and started talking. I said I’d be willing to form an organization, but I wouldn’t call it that until after we had 20 businesses identified, because I that if this organization only had two or three, it wasn’t very credible. We got 20 within four days, we had 100 within about eight days. Many of the businesses were from high tech, (but) not all. A lot of them were small businesses. Then we went after restaurants and bars, because the Restaurant Association was the biggest opponent of raising the minimum wage. The argument the Restaurant Association made was not unique but I’m sure it needs to be reiterated over and over, particularly here in San Francisco. Our initiative was not for only those contracted with the government, it was for everything, every one: You will pay a minimum wage of "X". Doesn’t matter who you are or what your business is. The Restaurant Association said, "Well, we should be exempt, because our workers get tips." Then the people who perform massage, and the people who perform haircutting, cosmetology, said, "Our people get tips too." And then pretty soon there were others who came in. And my argument to them was, and I love going on the road and speaking and debating these guys. You know, that’s just cost-shifting. The bottom line is, that isn’t their wage. Tips are not wage. Tips are bonus for doing a good job. They’re not part of the wage structure. If they were, then Boeing would say, "Okay, we’re going to pay four dollars an hour, and you guys tip ‘em if the plane flies right. Okay?" That doesn’t work. And that was really driving me nuts, because that’s what they were doing. The power of our initiative was that we build coalitions with all kinds of people. We didn’t build it with only businesses in the I-Five quarter, or only businesses that were high tech. We went out to everybody. We went out to businesses that had religious bases. We went out to businesses that had ethnic bases. We went out to businesses that were in one market or another. We have a timber company as part of our small business coalition...I mean, in Washington State, that’s a huge deal. Timber was very much against raising the minimum wage. When I went to the corporate world, I’m very comfortable talking to them, I’ve known them for years -- I said, "Why are you guys...why are you sitting this out?" They said, "It doesn’t affect us. We already pay minimum wage. We already provide benefits. We don’t need to be involved." "Well then, why don’t you stand up. You know, this isn’t going to hurt you at all. It’s the right thing to do." "Well, the Restaurant Association asked us not to." And the Restaurant Association is very powerful. We had to peel off restaurateurs and bars to show that it wasn’t monolithic. In process of doing that, we started showing that small business actually is in the legislative districts of those people who are elected from the state, making policy, getting paid by us. And that because a very key factor in our effort. We were able to show in your legislative district, there are seven small businesses who support the minimum wage, and they employ 4000 people, or they employ 400 people, or they employ 40 people. And that’s this many families. All of a sudden, the power shifted. And that was all done electronically. And that was all done with some media support high-lighting that -- here are these three businesses in your district, and here are the families. Would your like to come out and talk to this family that doesn’t have health insurance? They can’t put their kids into day care, and they have subsidized housing and subsidized everything else, because they don’t earn enough money. It was very, very powerful. We started showing that there was a cost shift from people paying a livable wage...we never even got to ‘livable’, mind you...from paying a minimum wage, we had the cost shift into the subsidy programs that our taxes paid. And as small businesses in Washington State, we’re taxed fairly significantly. We aren’t given all the breaks that an Intel was given, when they’re asked to relocate there. And what happens is, we end up paying that housing subsidy or that medical subsidy or that emergency room treatment, rather than having a medical plan in place. We end up paying for that. And when we started pointing those things out, we got more and more small businesses understanding that the economic impact of not paying a minimum wage was detrimental to small business. And all of a sudden we had more small businesses, not joining us in our official organization, but speaking out on this. We were able to get the downtown Seattle Rotary...which, by the way, is the single largest Rotary in the world, has 800 members...to be silent on this issue, and then to publicly say they supported raising the minimum wage. Those groups didn’t say, "Okay, by the way, we’re going to join your business association," but they worked with us in coalition on this issue. It made it so we have ways of going back and talking with them when we start talking about other issues. And that’s what we intend to do. The other thing that was really, really wonderful about what we did, was that everybody felt included. So every time we had a little win - and labor was particularly helpful with this - that, every time we had a little win...in Washington State we have little tiny towns, and you know, you have a population of 400 that decides, okay, we’re going to support this, that was a little win. Because you don’t know if those 400 are going to vote. But, for some reason decided to say this, it was everywhere. Everybody got this media, it was just, I mean, it was a rally. Everybody was cheering and stamping their feet. And this rah-rah kept the enthusiasm for those people who felt vulnerable. No one felt exposed, and no one felt they were going to put their jobs at risk or their companies at risk. And we started getting the CEOs, or the "top five" jobs in some companies speaking out in favor of raising the minimum wage. That’s why we won. We won because we organized really well. And we organized really well because we didn’t start name calling people, but rather started saying, "We share this interest." We consistently found the common ground. The last two encounters I had with the Restaurant Association were marathons. We went four days, morning, lunch, evening...morning, lunch, evening. And I got so I felt like... Russ Goodman is the spokesman for the Restaurant Association...I felt like I was married to this man, cause I was just like, every day, seeing him. And we were really, really tired. And we were in a small town, outside of Everett, which is a naval base area in Washington. We were debating, it was seven in the evening, and he got up before...I, usually I got to go first, and then he would sound stupid, because I was on the side of good and right, and he was on the bad side...he went first, and he said, "You know, I usually get up here and say all there things about why we should raise the minimum wage, and she’s going to basically tell you that I’m wrong and I’m unethical and I don’t want to do these things because I’m a bad person. And I have to tell you, I’m not a bad person, but I am wrong. We should raise the minimum wage!" (audience laughter) Phillip Babich: That was Krishna Fells, the chair of the Small Business Owners of Washington State. We'll have more from the Responsible Wealth panel in a few moments. Laura Livoti: You’re listening to Making Contact, a production of the National Radio Project. This program can now be heard across the United States and Canada, South Africa and around the world on Radio for Peace International short wave. If you want more information about the subject of this week’s program, please give us a call. It’s toll free, 800-529-5736. Call that same phone number for tape and transcript orders. Chuck Collins: This is Chuck Collins, from United for a Fare Economy, in Boston. We’ve heard that there is a growing gap between the very wealthy, and everyone else. What does wealth inequality sound like? The sound you are about to hear is a BB falling into a metal soup pot. Each BB represents $500 in net worth. (sound of one BB) If we took all the private wealth in the United States and divided it evenly among all the hundred million households, each household’s share would sound like this. (sound of BBs) That was the sound of 500 BBs, the equivalent of about a quarter of a million dollars for every household. But as you know, wealth is not evenly distributed. If we were to take the wealth of the bottom 50 million households, and average it out, here it what it would sound like. (sound of BBs) That was 10 BBs, the sound representing $5000. On the other end of the spectrum, lets listen to the average wealth of the richest one percent of households. To join the richest one percent, you need to have about 2.6 million dollars or more. Here’s what their share of wealth sounds like. (very long sound of BBs) That was the sound of wealth inequality, where the richest one percent of households has an average of 10 million dollars, and the average 50 million households on the bottom, over half the population, has an average of $5000 in net worth. Phillip Babich: Now, for more of the Responsible Wealth panel, recorded June 4, 1999. Chuck Collins: We’re going to introduce Barry Hermanson, who, as I mentioned is the founder and owner of Hermanson’s Employment Services, which is a temporary employment agency that was formed, as Barry has told us, to point out that it’s possible to pay decent wages to people in temporary work. A year ago, when Responsible Wealth had its conference in Oakland, Barry was co-leading a session on this issue of Wage Inequality. And he’s co-chair of the San Francisco living wage coalition. Please welcome Barry Hermanson. Barry Hermanson: Thank you. I started in business back in 1980. It’s interesting that you mention the temporary industry, and how people in that industry really are not able to get benefits, really do work for lower wages. I started my business with the naive belief that perhaps I could change the industry, and that I could pay people a better wage, and that somehow this would be infectious, and this would provide a change in other businesses. Well, this didn’t happen. I am successful, and have a lot of people working today, but I owe it all to the employees that are working with me. And let me just tell you how I got started. Got started in the traditional means of going into business and trying to go out and sell to the business community. And sell with the concept of saying, "I’ll pay my people a better wage than what they can make by working for my competitors, I’ll take less for myself, and because these people will want to continue working with me, they will do a better job for you, and therefore perhaps you’re going to be happier and bring more jobs to me." I did that for about a year and a half, to two years, and go virtually no business. Virtually no business. People in the business community did not understand the concept, you know, better paid workers do a better job. I took my message out on the streets, printed up a sheet that had across the top of it: Temp Workers Earn More Dollars. And I listed out the job classifications, various clerical types of jobs, and listed out my billing and pay rates. Nobody list their billing rates, nobody. I listed by billing and pay rates. And I listed out what my best estimate was of my competitors billing and pay rates. And I knew what my competitors were paying, because people coming interviewing would tell me, you know, what do you make as a secretary? And so it would be very clear, the wage differential that would be on the sheet. I went down, my favorite place was in front of 44 Montgomery, and there were a lot of temp services that had their offices in that building, and I knew people go there to get their paychecks during the day. You know, during their lunch breaks. So I would take a couple of hours out of the middle of my day and come downtown, not trying to force stuff on anybody, but just standing there, like the awake guys do, I guess. (Laughter) And it was really interesting because people would come out of the building and they’d walk by and they’d look at you like maybe you’re weird, and come people would focus on it immediately and they’d come up and want the information. Other people would walk by and they’d stop in their foot-tracks and they’d think, and you’d see the wheels spinning, and they’d come back and they’d talk. These people became my sales force. I didn’t spend any money on marketing. So that’s where the big savings was. I did take less for myself out of the billing rate, but I also wasn’t spending money on sales, which is a very expensive item in the temporary employment industry. So these people took these flyers back to their offices, and started copying them and handing them out to their coworkers. All of a sudden my phone is starting to ring, and people were saying, "I want to come work for you." And I’m saying, "Well, that’s great, but I don’t have any jobs." And people say, "Well, I’ve got a job, how about if I bring it to you?" And so they did. When they finished their work, because they’d been doing temp work for a long time, all of a sudden they had a whole list of clients that they did work for. And you know, if you do good work for somebody, and you call them up and you say, "Hey, I’m available whenever you need me. Give me a call, and I’ll go through Barry." And that’s what started to happen. And then some people decided they would not even leave their current job and they just switched. And I had to counsel them that when the job ends, you don’t want to bite the hand that feeds you at the other agency. But gradually the business built and built and built, and I have anywhere from 150 to 200 employees that are working in a given week now, in about nine different states. And I have clients that also...businesses that finally figured this out. They have people that they have identified for even senior management jobs, that because I have a lower margin, they can employ somebody and it costs them a lot less to deal with me, than if they call another temporary service. The concept of paying people a better wage does work, and I believe in my business it’s been very good. It’s the whole reason that I am still in business. I got involved in the living wage campaign because I fundamentally believe that anybody who works full time should be able to support themselves and be able to live without having to resort to any kind of public subsidy or charity. And it’s the same thing in terms of concept of starting my business. If a person has enough to live on, while they’re working, they have more choices. They can chose to live in a better place, they can afford to buy food, what a novel concept! We have a lot of people who work full time that are going to our food banks across this country. Full time workers, having to go to a food bank to be able to make ends meet. That to me is just incomprehensible. And so people can get some education, to improve themselves, and learn new skills. I mean, this is the whole thing, the American dream is to be able to improve your lot in life, to be able to move up. And what we’ve done instead is to be able...we’ve squashed those dreams by paying people such a low wage that they have to work two jobs or more. People that never get to see their families. They’re working so much and they come home and have maybe have five minutes before the kid goes to sleep. And it’s just not right. So the Living Wage Campaign in San Francisco got started as a very broad-based coalition. A lot of different community groups, religious groups, labor groups, individuals, who came together with this fundamental belief that anybody who works full time should be able to make enough to live on. There was a study that I saw last year, done by the Association of Bay Area Governments, that indicated that a single parent in San Francisco with one child needs $14.50 an hour in order to just get by. That’s a huge difference over against minimum wage. We have thousands and thousand of people who work through contracts that are with the city and county of San Francisco who are making six to seven dollars an hour. And it has been shown that if somebody makes that amount of money, it requires taxpayer assistance through rent subsidies, food programs, child support, health care, in order for that person to get by in San Francisco. So here we are, we’re giving contracts to businesses and nonprofits to provide goods and services to the city, and then we’re giving public subsidies, essentially, to the employees of those companies and nonprofits, so that we can provide these services. Now we have organizations, we have heard, that businesses will come back and say, "Well, you’re going to put us out of business, if you raise this up." I don’t think so. It is going to cost more, but we’re already paying more because of those public subsidies. And let’s instead pay the wages, and let the people decide where this is going to go. People say we’re going to cut our services. I say, how appropriate is it to be purchasing a service from someone who has to pay a poverty wage in order to provide that service. And then we as taxpayers have to pay additional. Phillip Babich: That was Barry Hermanson, co-chair of the San Francisco Living Wage Coalition. That's it for this edition of Making Contact- a look efforts to raise incomes for working families. Thanks for listening. Laura Livoti is our managing director. Peggy Law is executive director. Our production assistant is Shereen Meraji. Norman Solomon is senior advisor. Our national producer is David Barsamian. And I'm your host and managing producer Phillip Babich. If you want more information about the subject of this week’s program, call the National Radio Project at 800-529-5736. Call that same phone number for tapes and transcripts. Making Contact is a independent production. We’re committed to providing a forum for voices and opinions not often heard in the mass media. If you have suggestions for future programs, we’d like to hear from you. Our theme music is by the Charlie Hunter Trio. ‘Bye for now. |