Josh Harkinson

Josh Harkinson

Reporter

Born in Texas and based in San Francisco, Josh covers tech, labor, drug policy, and the environment. PGP public key.

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As Cities Raise Their Minimum Wage, Where's the Economic Collapse the Right Predicted?

| Thu Apr. 16, 2015 9:45 AM EDT
The Fight for 15 protest in New York City Fast Food Forward

Fast-food cooks and cashiers demanding a $15 minimum wage walked off the job in 236 cities yesterday in what organizers called the largest mobilization of low-wage workers ever. The tax-day protest, known as Fight 4/15 (or #Fightfor15 on Twitter), caused some backlash on the Right:

Conservatives have long portrayed minimum-wage increases as a harbingers of economic doom, but their fears simply haven't played out. San Francisco, Santa Fe, and Washington, DC, were among the first major cities to raise their minimum wages to substantially above state and national averages. The Center for Economic and Policy Research found that the increases had little effect on employment rates in traditionally low-wage sectors of their economies:

Economists with the Institute for Research on Labor and Employment at the University of California-Berkeley have found similar results in studies of the six other cities that have raised their minimum wages in the past decade, and in the 21 states with higher base pay than the federal minimum. Businesses, they found, absorbed the costs through lower job turnover, small price increases, and higher productivity.

It's the taxpayers who ultimately pick up the tab for low wages, because the government subsidizes the working poor.

Obviously, there's a limit to how high you can raise the minimum wage without harming the economy, but evidence suggests we're nowhere close to that tipping point. The ratio between the United States' minimum wage and its median wage has been slipping for years—it's now far lower than in the rest of the developed world. Even after San Francisco increases its minimum wage to $15 next year, it will still amount to just 46 percent of the median wage, putting the city well within the normal historical range.

The bigger threat to the economy may come from not raising the minimum wage. Even Wall Street analysts agree that our ever-widening income inequality threatens to dampen economic growth. And according to a new study by the UC-Berkeley Labor Center, it's the taxpayers who ultimately pick up the tab for low wages, because the federal government subsidizes the working poor through social-service programs to the tune of $153 billion a year.

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This Chart Shows How State Taxes Screw You

| Mon Apr. 13, 2015 9:25 AM EDT

A lot of people think the federal tax code should be more progressive, but it looks downright socialist compared to the typical state tax code. A chart released last week by Citizens for Tax Justice puts it in context, showing how the wealthy typically pay lower state tax rates:

Citizens for Tax Justice

This problem isn't limited to conservative states: According to a recent report by the Institute on Taxation and Economic Policy (ITEP), every state places a higher effective tax rate on the poor than it does on the rich. In fact, several of the nation's most politically progressive states count among the worst when it comes to shoveling the tax burden onto low-income people and the middle class.

The nation's most regressive tax code belongs to Washington, a state that was ranked by The Hill last year as the bluest in the country based on its voting patterns and Democratic dominance. The poorest 20 percent of Washingtonians pay an effective state tax rate of 16.8 percent, while the wealthiest 1 percent effectively pay just 2.4 percent of their income in taxes.

There's a clear explanation for that: Washington has no income tax and thus heavily relies on a sales tax that disproportionately affects the poor. What's harder to grasp is why Washington's liberals put up with it.

Structural conditions help explain why regressive taxes endure in Washington and many other states. Some states require supermajorities to raise taxes or have constitutions that mandate a flat tax. In Washington's case, voters approved a personal income tax in 1932 by a two to one margin but were overruled the following year by the state Supreme Court, which decided that a constitutionally mandated 1 percent cap on property taxes also applied to income. An income tax bill passed by the state legislature a few years later was likewise struck down.

But the courts, weirdly, are no longer the biggest obstacle to a fairer tax code in Washington; over the years, they've gradually overturned most of the legal precedents that had been used to invalidate an income tax, and most experts believe such a tax would become law today if passed. The bigger problem is voters. In 2010, Washingtonians rejected by a whopping 30-point margin a proposal to establish an income tax that would only have applied to people earning more than $200,000 a year.

How do you square this with California, where, just two years later, a similar tax hike on the wealthy easily sailed through? Or with Oregon, Washington's political cousin, which has long had a progressive income tax?

I asked John Burbank, the executive director of the Seattle-based Economic Opportunity Institute and an architect of Washington's failed 2010 income tax measure, why he thought the measure had failed to pass. At first, he cited the off-year election and opposition scare tactics. But when pressed, he offered a third explanation that I think makes more sense: "There is almost like a cultural prohibition that exists."

In other words people, liberal or conservative, who live in states with low or no income taxes get used to paying little. They may differ on protecting the environment, legalizing weed, or raising the minimum wage, but when you start to mess with the system on which they've built their personal finances, they get scared and balk. This is why changing the tax code is so hard, even in states where people may in their hearts believe it's the right thing to do.

Walmart Gave Workers a Raise—But It's Not Enough to Keep Them off the Dole

| Wed Apr. 1, 2015 6:20 AM EDT
A Black Friday protest at a Walmart store in Chicago

A typical Walmart Supercenter costs taxpayers more than $900,000 a year in public assistance doled out to its low-wage workers. This fact, published in a congressional report in 2013, galvanized labor protests at Walmart stores across the country last year, leading the retail giant to announce in February that it would give some 500,000 workers a raise. (Today, McDonald's announced a similar increase). And that's something. But according to a report released today by Americans for Tax Fairness, Walmart's pay is still far too low to wean many "associates" from federal subsidies such as food stamps and Section 8 housing.

Under Walmart's new plan, full-time associates who've completed a six-month training program will earn at least $10 an hour next year. Many Walmart workers, however, are involuntary part-timers, and nearly half of the associates turn over each year. But workers who qualify for the $10 base wage by working at least 34 hours a week, which Walmart considers "full time," would still earn only $17,680 a year—well below the cutoff for many federal assistance programs, especially if a worker has children.

Americans for Tax Fairness

The four Walton heirs, who are collectively worth $144.7 billion, are Walmart's largest stockholders and constitute the nation's wealthiest family. If they wanted to stop enriching themselves at the expense of taxpayers, they could pay their workers at least $15 an hour for a 40-hour workweek. According to Americans for Tax Fairness, this would have cost Walmart about $10.8 billion in 2014, or about half of the increase in the Waltons' net worth that year.

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