Tuesday, April 5, 2016

Minimum Wage Widens the Gap

There's a lot of consternation about California (and New York) raising the minimum wage level over the next 6 years to $15 an hour. Some predict doomsday for the state's economy, others applaud that the state is leading the way to a livable wage for the lowest tier of the economy.

How all of this plays out, of course, is all speculation at this point. This is the single largest pay increase for the working poor, likely in history.

California's minimum wage increase is state wide immediately, tiered to business size. New York City will mandate $15 an hour for firms with 11 or more employees by 2019, and all others employers by 2020. Businesses in New York suburbs will be required to meet the minimum by 2022.

According to the Wall Street Journal, there were 53.6 million workers in the U.S. paid less than $15 an hour in 2015, including nine million in New York and California.

That nine million represents about 41% of workers in California and 38% of those in New York, excluding those who are self-employed, says the WSJ.

Economists are mixed in their reactions to this move.

Some think the blunt approach of dictating an entire state to a higher minimum wage ignores the economic realities of geography - San Francisco and Los Angeles, for example, have much higher costs of living than, say Fresno or Bakersfield.

Others say jobs will migrate out of the state, or that employers will get even stingier in their use of labor, or that automation and robotics development will escalate.

Some feel that it's about time to elevate the living standards of the lowest rung of the wage ladder, while others believe all that will actually occur is that the cost of living will simply rise to the next median, creating just another wage gap perpetuating the cycle.

Regardless of whether you believe in free market control over wages, or whether more governmental control is necessary, workers' compensation insurance companies will reap big premium increases, and claims indemnity payments will see rapid escalation as disability indexes upwards along with state average weekly wages.

But one indemnity element will become acutely painful: the economic disparity between those impacted long term by a work injury and those who are able to return to work quickly will become even more significant.

The WorkCompCentral report, Uncompensated Worker, demonstrates that those on long term disability wander closer and closer to the poverty line - many people who incur long term permanent disability lose not only their jobs, but any sense of financial security.

Research shows the path to poverty is exacerbated by a work injury that produces long term disability, and workers' compensation permanent disability indemnity benefits fail miserably to cover that gap.

Temporary disability indemnity rates will raise to meet the income elevation because in both California and New York it is indexed to the states' average weekly wages as determined by each state's formula.

But compensation for permanent disability isn't.

Which sets up the next big political fight, ergo "reform." Labor will push to close the gap between permanent disability indemnity and the "living wage," business will object to raising PD - and the question is going to be what each side will give up to get their requested part of the bargain.

New York Republicans had already tried to tie a "reform" of that state's work comp system to the minimum wage increase. 

That obviously didn't work. They'll try again.

1 comment:

  1. My My! What we discover as we FOLLOW THE MONEY!

    Too many injured workers end up without medical care, dead broke, and prematurely dead. Some 'Grand Bargain' huh? Will it make the agenda for the (secret) National Discussion?


    Did you see the WSJ piece on legal fees, a while back:

    "Legal Fees Cross New Mark: $1,500 an Hour"
    Billing rates for partners at elite corporate law firms keep rising, despite low inflation, weak demand


    This all brings to mind a little movie quote, doesn't it?


    "....Why? Because while the truncheon may be used in lieu of conversation, words will always retain their power.

    Words offer the means to meaning, and for those who will listen, the enunciation of truth.

    And the truth is, there is something terribly wrong with this country, isn't there?

    Cruelty and injustice, intolerance and oppression. And where once you had the freedom to object, to think and speak as you saw fit, you now have censors and systems of surveillance coercing your conformity and soliciting your submission.

    How did this happen? Who's to blame? Well certainly there are those more responsible than others, and they will be held accountable, but again truth be told, if you're looking for the guilty, you need only look into a mirror. I know why you did it. I know you were afraid. Who wouldn't be?..."

    #Blog4Freedom because we still can. We Are The Media Now.

    It's time to restore civil rights and human rights to injured workers now, wouldn't you agree?