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View Diary: Edsall: "Capitalism vs. Democracy" (Inequality Scholar Piketty Has Published "Watershed" Book) (59 comments)

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  •  One of the big problems regarding raising minimum (0+ / 0-)

    Wages is that in many places that have a surplus of workers, hiring is done "under the table." There is no way that some employer who doesn't care if the job applicant has a Social Security card or not is going to care about paying the minimum wage.

    For people working at larger concerns, like Walmart, or whatever, that workforce will receive a bit of relief. But for it to be meaningful relief, the entire taxation situation has to be re-structured. Currently the hedge fund manager, who might be working from his own  home, rarely leaving to go out  and "commute anywhere" - that individual is paying 15% of his earnings. Meanwhile the wage slave might be paying over 18% and cannot even deduct one of the more expensive parts of his  or her life, that is, the amount paid for gas.

    •  That segment of labor is inherently limited (0+ / 0-)

      That underground economy, which includes but is not limited to employees paid 'under the table', is necessarily limited to business where their revenue stream is heavily weighted towards cash.  Diverting a portion of that cash stream on revenues that are subject to sales taxes presents a serious risk.  The IRS may not routinely audit everyone looking for that sort of shortfall, but my state's  tax bureaucracy looked over my business' books and receipts every year.  I understood from the auditor that this is routine for businesses where revenues are largely in cash.  There was nothing for them to find but they sure didn't take that for granted.  

      Then consider what happens when an employee has a workers' compensation claim.  A business owner who ignores that real risk isn't thinking clearly.  No matter how safe the owner thinks his/her operation is, there are always risks.  Carpal tunnel problems with clerical staff and puncture wounds possibly contaminated with all the contemporary scary diseases will put the spotlight on an owner that has been hiding the employee's wages.  I have sent employees to the doctor's office for those punctures, and they have gone home to tell their mate that for about the next six months they have to act as though they are infected.  Believe me, that's bad.  I cannot imagine the complications and pure shit storm that would descend on a business owner and/or manager that was hiring those people under the table.  

      Add to that, the fact that a business owner engaging in that sort of underground transaction is relying on the loyalty and discretion of people who agree to illegal acts to hide the transactions.  Really?  What's the plan when this evasion becomes public?  Those short term workers, often day laborers, on the bottom of the employment pyramid aren't the ones I would rely on to keep their mouths shut about illegality, especially if they're getting less than minimum wage.  In short, there are 'under the table' employees but there are significant impediments to expanding that segment of the labor pool.

      •  In California, (0+ / 0-)

        Many many businesses are doing things in a way that should not be allowed.

        It is not just that there are numerous people who have newly arrived to America. It is that they are often in situations where they need to be finger printed in order to have the job. This applies to occupations like nursing assistant. But the finger printing itself is usually done off campus, rather than at the hospital or nursing home. So using  relative's ID, such as their driver's license  is no problem for the immigrant. the staff doesn't really know who they have working for them.

        I imagine a lot of the small fast food outlets employ people under the table. Whenever immigration sweeps have occurred, there is always reports of the rush to the parking lots. Employers don't think in terms of workman's comp, as immigrants are too frightened of bureaucracy to do lawsuits.

        Wages reflect this. When my son first graduated from college, in the mid Nineties, in the MidWest, he was annoyed that it took a while to find work. I asked what his college friends  were doing. "They went and got jobs at McDonald's." "McDonald's?" I was incredulous. "Well Mom it pays  like $ 10.50 and hour and you get health insurance. If you work a  later shift, you can interview for a real job during the morning hours. " That was in Chicago while here in California, land of burgeoning population, you' d be paid some $ 5.25 an hour, no bennies, and heaven help you, I imagine if you ever take a sick day, you are quickly replaced with someone else from south of the border.

        Then there are also sweat shops and what not. And sweat shops are not what you would normally think of. I remember going with a friend to nail salon in San Rafael. It was staffed entirely by Vietnamese women, and I happened to be there when the owner was tossing together several sacks of cash and then leaving. I had the feeling that after hours, some of those young ladies were being put out to work at a second job, and  in a far more lucrative profession. So maybe the word should not be "sweat shop" but human slavery.

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