The net effect of making a big deal of consensual and peaceful but illegal business transactions is that such transactions are made more difficult to carry out and even those perfectly content to have entered into them are prevented from doing so in the future.
It’s my first thought when I see that, yet again, Make the Road by Walking has organized a march down Knickerbocker to “shame” and point out businesses who do not pay at least minimum wage to all employees, or overtime pay. They pay special attention to the Associated supermarket on Knickerbocker and Starr, where, to quote the Brooklyn Eagle, “some employees are not paid any wages at all.”
Think about that last bit. Why would anyone work for free? How could a business compel people to do something that seems so unprofitable at face value? They can’t, but no questioning or critical thinking from the likes of our local media — they just repeat whatever a random activist type tells them. According to a friend who is a very close neighbor of the Associated, as he understands it, undocumented immigrants ask to bag groceries for tips. Baggers are not a job for which the store would otherwise hire — the cashiers do it. Obviously, an undocumented person cannot be on the books. So they are allowed to take their own initiative and bag groceries for customers who may or may not tip them. This is not exploitation — it’s practically charity.
In a neighborhood full of immigrant families (I don’t mean immigrants from Iowa), goods have to be cheap, which means cutting costs. If that means paying below minimum wage to keep your store running and profitable, then if the risks of punishment are low, that’s what you do. If the authorities catch wind, the risk goes up, as well as prices. Opportunities for immigrant workers lessen. When you pay $7.15/hr for a job that used to cost $3.50, you are eliminating a job — and of course, the guy making twice as much will now have to do as much as two people. The person who loses their job — the undocumented one, if the management is going to choose — starves.
I hardly see a gain, here, except to another major sponsor of the Despierta, Bushwick! campaign: the Retail, Wholesale and Department Store Union, whose competition is eviscerated if the campaign has its desired effect.
Congratulations, Make the Road, in removing opportunities for Bushwick’s struggling undocumented families.
Mario December 18th, 2007 at 5:31 pm
As usual, the effect of regulation of wages (and even working conditions) is to deprive the less productive or undocumented of opportunities to support themselves. It also, as Jeremy points out, serves the interests of the already established larger firms and those workers who are already in the system. This is not “equal opportunity” or concern for the poor. I suggest that ideas like those espoused by Make the Road by Walking are the result of magical thinking. Making noise will increase the wellbeing of the poor because it will somehow “coerce” those who are fat with wealth to share. Sort of like Santa Claus, I guess.
andrew December 19th, 2007 at 2:33 pm
Okay, we have a serious disagreement. First of all, the workers who worked for no wages did not work for free, they worked for tips. The owner of the Associated admitted as much to the New York Times. The author’s assumptions were just plain wrong.
On the conceptual point, the whole purpose of regulation – minimum wages, health and safety requirements, whatever – is that when people have vastly different amounts of power they often do not strike fair deals. The results are that people get hurt on the job, or treated like virtual slaves. If you think people can defend themselves against powerful, poisoning and polluting corporations without any government support, you should volunteer for the right-wing libertarians.
While the bloggers on this page seem to think that Make the Road New York indulges in “magical thinking” or are “random activist types” – the bottom line is that we have a long and rock-solid track record of improving the lives of thousands of people in Bushwick and around the city. We have catalyzed public policy changes that have lead to public investments of hundreds of millions of new dollars in housing code enforcement, lead-based paint abatement, adult literacy classes and translation and interpretation services. We have won over $3 million dollars for illegally treated workers, and have not lead to the closing of a single business.
Thousands of immigrant families have come together at MRNY. They ain’t hating on a blog, they’re making a difference for the better.
Ray December 19th, 2007 at 2:49 pm
Just because Jeremy exposed your group for what it is doesn’t make it hating. I’d liken it more to plain old journalism.
laura December 20th, 2007 at 2:55 am
“It’s practically charity!” What an interesting way to look at it. It’s funny because when I first began coming to this blog I noticed the underlying racism and misunderstanding that the author has regarding the non-hipster residents of Bushwick. I tried to ignore it but it’s just reiterated time and time again, now especially by his attempt at teaching people how to cook “latino style”. I’ve lived in Bushwick my entire life and it’s people like the author who make it an unsafe place. The way you write about things is condescending and obnoxious. In an “ok part of Bushwick, near the only cool or interesting things this neighborhood has to offer”. what a joke. if you don’t like it, leave, and please leave the rent controlled apts to people who actually need them.
Jeremy December 20th, 2007 at 11:38 am
Andrew, I get that the workers were working for tips, I was just taking the article’s author to task for either forgetting to mention it or honestly thinking that anyone would work for free, as if there was a bagging slavery ring here in Bushwick.
I understand the purpose of regulation. What you don’t seem to understand is the effect of regulation, which, in this case, is to remove paying jobs from the far lower end of the pay scale, thus eliminating employment opportunities for people with the least skills.
As for “powerful, poisoning, and polluting corporations” – let me know when you take on Monsanto. Until then, you’re bullying the owners of individual non-chain stores. You may not have closed down any businesses, but you have certainly made business in Bushwick less profitable and therefore less likely to take place in a neighborhood that really needs it. All of this ignores that corporations derive their power from the state. I mean, Wal-Mart has no trouble paying far above minimum wage, and despite propaganda to the contrary, do. Mom and pop stores do have trouble. Corporations are the ones who lobby for massive regulation, because they can afford it, and nobody else can. Suits them just fine.
I applaud your literacy, translation, and interpretation services. But the fact is, “hundreds of millions” of dollars in tax money would not have to be spent if housing were a profitable endeavor in Bushwick. What a gigantic waste of money for a problem that in every other city in the country takes care of itself.
Your too-common swipe that I’m “hating on a blog” instead of “doing something” is made in frustration and I realize that. When I criticize the war on Iraq, pro-war people tell me that I can’t talk about it because I’m not in the military. That’s also out of frustration, and makes an equal amount of sense as your comment.
Jeremy December 20th, 2007 at 11:43 am
Laura, I forgive you for understanding jack shit about economics. I also forgive you for having no common sense and being so sensitive to racism as to see it around every corner even where there is none. I forgive you, once more, for misquoting me on the apartment on Starr, even though the post is right there for your to cut and paste from. I suppose I forgive you, too, for assuming that just because someone reads this blog they don’t need a cheap apartment.
Jimmy Legs December 20th, 2007 at 12:11 pm
Looks like the city is trying to crack down on Knickerbocker, largely based on tips from MTRBW:
http://www.nytimes.com/2007/12/20/nyregion/20labor.html?_r=1&oref=slogin
is the idea here that small businesses that underpay people will be forced to pay the same number of employees minimum wage? assuming they’re not actually sitting on a huge pile of money, where would they get the extra money? of course i think people should be paid a reasonable wage but the article cites hundreds of thousands of dollars that should have been paid. will businesses have to pay this back? i don’t think the local ecomony could handle it.
Jeremy December 20th, 2007 at 12:16 pm
That’s a major point — grocery stores typically run on razor-thin profit margins.
laura December 20th, 2007 at 1:43 pm
I hear what you’re saying Jeremy and perhaps I am overly sensitive to racism, which I don’t necessarily see as a bad thing. I constantly analyze what’s going on in this neighborhood and sometimes I get fed up with everything. I do not proclaim to know anything about economics and I know I misquoted you (didn’t feel like scrolling back mid-reply). I guess what angers me is your style of writing, I think that sometimes it puts down the neighborhood which we all love so much. Several times I have been offended by things you say but I continue to read your blog because you do a great amount of research on the area and do include interesting information. Point blank: sometimes you sound a little uppity.
Camilo Sexto December 20th, 2007 at 4:51 pm
Hi, I’m one of the pesky do-gooders at Make the Road New York–and I’m delighted to argue about the economics of minimum wage enforcement on this blog.
If history teaches us anything, it’s that every modest ratcheting up of the hourly wage will provoke much keening and wailing (some of it very soulful) about millions of businesses going belly-up and general economic apocalypse. But just as the Factory Acts didn’t destroy the Manchester cotton mills in the 1830s, a little (and it’s only a little) enforcement of minimum wage law doesn’t seem to be destroying Bushwick’s retail economy now.
For more than five years Make the Road has been using a combination of lawsuits and organizing to force the stores of Knickerbocker Avenue to obey the law on minimum wage and overtime. Now look around Knickerbocker Avenue. See lots of boarded-up storefronts? Errr, not….really… Where’s the trail of destruction? Who you gonna believe, neoclassical economic dogma, or your lyin’ eyes?
So how does the enforcement of minimum wage laws actually affect local businesses? According to one set of propositions, increased wages in Bushwick would mean that more people have more money to spend in the stores, so the stores get more money. It’s also true that the increased wage payments will cut into the annual profits that the owners of these stores take home will be lower. Forgive me if I don’t find this second scenario to be a sin against nature.
Some folks fret that enforcement of minimum wage and overtime law will discourage small businesses from starting up in Bushwick. So is that the solution to the neighborhood’s problems– more fast-food restaurants and maybe another Footlocker? I don’t think so. This is not an autarkic neighborhood that can merrily sustain itself with lots of little shops. Keeping wages at sub-minimum levels in order to attract more dollar stores is not sound economic policy for Bushwick, most of whose residents leave the neighorhood for work.
Plenty of economists would read all of the above and say ay papi estás loco. But then lots of other economists would tell me no, es el Jeremy ese el que está loco, tu tienes toda la razón. The airtight syllogisms of neoclassical economics, and other ideologies, don’t always hold up so well in the real world. Fact is, there is no longer a consensus among economists as to whether raising minimum wage really hurts job creation for unskilled workers. And the economists who support minimum wage enforcement (and even, gulp, increases) aren’t just beardy heretics at the New School. They are folks like Alan Blinder, former vice-chairman of the Federal Reserve, now at Princeton. Robert Solow, Nobel laureate at MIT’s economics department. And young bucks like Alan Krueger, also at Princeton. That notorious cell of Marxist subversion, the Princeton econ department. Plenty of these generally conservative economists think the truism that minimum wage hikes = fewer low-wage jobs is kind of an hysterical myth. See below:
https://www.utexas.edu/research/cshr/pa393k/Minimum_wage_materials/epi_minimum_wage_2006.pdf
I gotta get back to work. But I would like to give Jeremy a sincere year-end salute for running a fine blog, also for his day-job at the excellent Antiwar.com. For someone who uses “activist” as a term of abuse, his own activist career is exemplary, and I hope we opponents of the permanent warfare state can make some badly needed gains next year. If we do, Antiwar.com will no doubt be a big part of our success. Peace, freedom, prosperity y por favor, un mínimo de justicia for 2008!
Mario December 21st, 2007 at 1:26 pm
Camilo Sexto raises some excellent points. But I think it is not necessary to deal with all of them to shed light on the Bushwick situation. Almost every economist would agree that a minimum wage (imposed by unions or government) could raise wages without causing unemployment in a company-town situation — that is, where there is only one, or practically one, employer. This helps offset the “monopoly” power of the employer. In general, however, there is competition for labor services, even for the unskilled. The reason economists do not generally talk of “bargaining power” is because competition substitutes for that. And it doesn’t take many potential employers to generate competition if they do not enter into collusive agreements with each other.
Now let’s deal with unskilled workers in a Bushwick-type situation. Suppose a minumum wage is imposed. What is the effect? Well, some workers will in fact benefit! They will get higher wages. But some people will pay. First, it is possible that the employed will find their hours cut. Second, the least skilled — least productive — of the unskilled may lose their jobs. Usually, these will be young people, the partially disabled, etc. This unemployment will delay their acquisition of skills. Third, even if no one lost his or her job, small business might have to raise their prices or go out of business (read: Goodbye to Mom and Pop operations so beloved by some Bushwick residents). These businesses have razor-thin profit margins and the people who run them are the working-class entrepreneurs we should really praise. If they raise their prices then both “rich” and poor alike pay for the subsidy to the workers who remain employed. The overall point is: Someone pays — there is no free lunch. And in the Bushwick case there are precious few rich to pay.
In the larger picture, why is it that some studies show a rise in the federal minimum wage is not accompanied by a rise in unemployment? Lots of reasons — the state minimums are sometimes already higher than the federal so nothing really happens, researchers may focus on number of employees and not hours worked,researchers may focus only on some subset of the workers, like soome women or other adults who may be the more skilled or reliable of the unskilled who do not lose their jobs, etc.
One other reason that some economists do not oppose minimum wages is because they are paternalistic. They think it is “preferable” that really low wage jobs go out of existence and that those who cannot get jobs at the minimum wage should be supported by the state. This is a value judgment, but a dumb one. Why? Because being on the dole does not let you aquire skills or good work habits or self-respect. So you start from nowhere and end up nowhere.
Jeremy is right.