South Carolina Raising Wages Summit

by Rick Patelunas

south carolina

The last of four Raising Wages summits sponsored by the AFL-CIO was held at the International Longshoreman’s Hall in Charleston, South Carolina on February 6th.  Previous summits were held in Iowa, Nevada and New Hampshire, but South Carolina might present the environment most hostile to raising wages.  South Carolina is one of only five states without a minimum wage; it is a right-to-work state and Governor Nikki Haley said:

“We discourage any company that has unions from wanting to come to South Carolina because we don’t want to taint the water . . .[W]e educate different companies coming in from outside to understand that’s not what we want to do in South Carolina; and if they’re interested in that, we’re not where they need to come.”

That’s the same Governor Haley who delivered the Republican response to President Obama’s State of the Union address in January.  She is also responsible for the infamous “It’s a great day in South Carolina” phase that state workers are forced to say when they answer the phone.  Speakers at the Raising Wages summit tell a different story.

Charleston Mayor John Tecklenberg explained how his office is wrestling with the falling wages in the city at the same time housing costs continue to climb.  Using the Massachusetts Institute of Technology living wage calculator, the Mayor found that $11.60 an hour was needed for a living wage in Charleston.  With no state minimum wage, the federal minimum wage of $7.25 prevails.

On the legislative front, State Senator Marlon Kimpson talked about two bills he sponsored in the state legislature:  one to raise the minimum wage to $15 per hour and one to provide paid sick leave to workers.  It’s an uphill battle with the Koch brothers behind some of the opposition in the state, but workers need to be respected with a livable wage and paid sick leave.

At the federal level, Congressman Jim Clyburn spoke of his support for a livable wage of $15 per hour.  He also recognized that everyone should do what they can at the local level and if $10.50 is all that’s possible in South Carolina, South Carolina needs to work for that.

Chris Kromm, Executive Director of the Institute for Southern Studies provided examples of South Carolina’s “low road” approach to economic development.  For instance, the $1,020 Billion incentive package the state put together to attract Boeing to North Charleston.  A handout from Mr. Kromm reports that the State newspaper “estimated that the price tag for incentive deals for just four companies – BMW, Boeing, Bridgestone and Michelin – totaled $800 million, or about $100,000 for each of the 8,000 jobs created.”

It’s interesting to find BMW in the list of incentives given Governor Haley’s anti-union polemics and policies.  From the BMW website:  “In accordance with the regulations contained in the German co-determination Act, BMW AG’s Supervisory Board shall comprise ten shareholder representatives . . . and ten employee representatives.”  Those ten employee representatives are the union.  That’s the law in Germany and it’s not simply for show — the Supervisory Board has final veto power of whether plants open or close.

Eight hundred million dollars is more than a price tag.  It’s $800 of taxpayer money that is not used elsewhere.  Politicians made a decision to use that money for business incentives rather than investing in the people of South Carolina.  Consider the plight of two Raising Wages panelists.   After ten years as a fast food worker, Rachel Nelson toils for $9.00 an hour with shifts lasting twelve hours with no breaks.  That’s above the minimum wage, but it is not a livable wage.  Likewise, Amy Reece is a child care worker who considers leaving the job she loves because her pay may be above the minimum wage, but it is not a livable wage.  Both are fighting for $15 an hour and the chance to unionize.

At a time when South Carolina’s education system, health and quality of life rankings are routinely at the bottom of the country, incentives to lure businesses to low wage, no union “havens” have another cost.  It’s corporate welfare.  Corporations keep the profits from paying low wages and leave taxpayers the responsibility of helping the underpaid.  Days before the Raising Wages summit, the Economic Policy Institute released a report showing how raising the minimum wage to $12.00 an hour would save billions of taxpayer dollars by 2020.

  • Among workers in the bottom three wage deciles, every $1 increase in hourly wages reduces the likelihood of receiving means-tested public assistance by 3.1 percentage points. This means that the number of workers receiving public assistance could be reduced by 1 million people with a wage increase of just $1.17 an hour, on average, among the lowest-paid 30 percent of workers. These workers would see higher incomes, even as they no longer received public assistance.
  • For every $1 that wages rise among workers in the bottom three wage deciles, spending on government assistance programs falls by roughly $5.2 billion. This estimate is conservative, as it does not include the value of Medicaid benefits.
  • Raising the federal minimum wage to $12 per hour by 2020 would reduce means-tested public assistance spending by $17 billion annually. These savings could fund a variety of improvements to government anti-poverty tools, such as expanding the Earned Income Tax Credit (EITC) to childless adults, or provide funding for new education initiatives, such as improving access to preschool for children from low- and moderate-income families.

Governor Haley’s anti-worker, anti-union, anti-minimum wage, anti-government policies are not particular to her or South Carolina.  At the Republican forum on poverty in South Carolina three weeks before the Raising Wages summit, six Republican Presidential candidates shared their remedies for poverty.  Governor Christie called teachers unions the single most destructive force in education.  Ben Carson called the US progressive tax system socialism that doesn’t work in America.  Senator Rubio dismissed raising the minimum wage because it would make people more expensive than machines.

On the Democratic side, both Secretary Clinton and Senator Sanders favor raising the minimum wage, support unions and advocate raising taxes on the wealthy.  Their plans are different, but understanding the problems and the way towards solving them stands in stark contrast to Republican policies.

Our economic situation did not just happen.  It is not the working of some free market.  It is the result of government decisions and policies that have rigged the system against workers for forty years.  A number of the speakers called for the need to change the rules and the upcoming primaries and elections are an opportunity to begin the change.  Hold politicians accountable.  Ask them what they’ve done, what they’re doing and what they will do.

The Raising Wages summit provided a road map listing policies that can begin to turn things around for workers:

  • Restore Freedom of Association
  • Restore and Strengthen Labor Standards
  • Ensure Full Employment
  • Reform the Global Economy
  • Reform Wall Street
  • Increase Productivity Growth to Allow for Higher Wage Growth.

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