RUSH: Our buddy Jim Pethokoukis at the American Enterprise Institute has a piece, “The Most Important Economic Chart in US Politics … is Kind of Misleading.” His points here is that we cannot measure income inequality the same way that we always have, as I said (quite cleverly, I might add) at the beginning of the program. America used to be that you had a mom and a dad and they got married. The mom and dad were a man and a woman, and the mom and dad after getting married and working, lived in a little apartment.
They saved their money. They improved their lot in life. They got a little house somewhere, and at some point in the house in the bedroom there was some coitus (or co-i-tus for those of you in Rio Linda), and then there little Wally came along, little Beaver, little Jayne, what have you, and you ended up with mom and dad, man and woman, healthy children, 2.2 kids, white packet fence. One income provided for all that. However, that’s not the way it is anymore.
There’s a faction out there promoting this idea that the rich are getting richer by taking all the money, and that’s what really distressed me about what the pope was said to be saying that the rich were taking all the money. The people that promote this notion, are “promoting the ‘rich getting richer by taking all the money’ explanation for middle-class income stagnation.”
The Chuck Schumers, Bill de Blasios, I don’t care, take your pick. They all claim that the middle class is stagnating because the rich are taking all the money. The rich are denying the middle class their chance to advance, because the rich are taking all their money. “But there might be more to the story. Economist Russ Roberts points out that at the same time the growth rate in family income was flattening from 1973 through 1993,” meaning it wasn’t going up as it had been since the fifties, what was happening in those 20 years?
What was happening from 1973 to 1993? Well, “(a) the divorce rate” was skyrocketing, ergo, “(b) the number of households headed by women” was skyrocketing. So the number of single-parent households was skyrocketing, and all of this was especially true among poor families. The economist, Russ “Roberts contends this had a huge impact on data showing middle-class income stagnation,” and it would make total sense.
You can’t deny, nobody can deny that that’s what was happening in that 20-year period, 1973-93. The divorce rate spiked, single-parent familyhood, mothers and fathers breaking up, trading the kids back and forth. You cannot erase that massive cultural shift from the equation where you talk about income stagnation. So that the left wants you to believe, at that point in ’73 when middle class income started to level off, that’s when the rich got evil — and then Reagan came along.
In the eighties, right in the middle of it and the rich really started stealing people’s money, really started hoarding everybody’s money. That’s not what was happening at all. It’s that the mechanism — the nuclear family, the healthy unit that produced rising tide — was being blown to smithereens, torn apart economically. “That demographic change is going to slow the average measured rate of growth, especially when those families are disproportionately created out of married families that are poorer than the average to begin with.”
So that’s the point. Trying to compare middle class income to rich income today without ignoring the cultural rot that’s taken place — maybe not rot, but the cultural changes that have taken place — you’re not comparing apples to apples anymore. But that doesn’t matter to the left, because that’s not the point. Truth is never the point. The agenda is the point, and the agenda here is that we need government equalizing these things ’cause the rich are unfair and they’re selfish.
They don’t share anything, and they don’t give anybody anything, and when they earn all the money, they hoard it, and so the government’s gotta come in and equalize things. Of course, the people on the lower end of the scale applaud that ’cause it’s a hell of a lot easier than going out and working for it, sorry to say, human nature being what it is. Which takes me to the next story.
I have been fired seven times. I’ll use myself as an example. I worked for the baseball team, as you know, the Kansas City Royals, for five years. In those five years I made the least amount of money as an adult I’d ever made, and I was older than I’d ever been. You know, when I left home at age 20 and went to Pittsburgh and radio, I was earning three times what I was six years later. This is not a criticism of anybody. It’s just things I had to learn.
Now, when I went to work for the Royals, the job I had was created. They did not have somebody in charge of what was called group sales, and the reason was that they didn’t need it. The phone was ringing. They had this great group called the Royal Lancers selling season tickets, and ticket sales were taking care of themselves largely because the team was always competitive, exciting, and winning.
Great stars that were attracting people out, so they didn’t need schlubs in the office making phone calls to local groups trying to convince them to come to the ballpark. But at some point the marketing department said, “You know what? This isn’t always gonna be the case. So let’s go get somebody and let’s get started on this.” Well, it started it like 13 grand a year because they really had never had it before, and they didn’t know what it was worth.
They didn’t pay commissions. I asked about that. They said, “Well, if we give you a commission, we gotta give George Brett a commission every time he hits a home run, ’cause that’s gonna sell tickets tomorrow. So we can’t give you a commission.” So there weren’t any. Well, it was tough, folks. I had to go out and establish my value and worth, and the fact is that I didn’t, because after five years, I got a $1,000-a-year increase. So the $13,000 became $18,000.
The percentage increase didn’t change my lifestyle at all because it barely kept up with inflation. But that’s what the job was worth to them, is the point. They weren’t paying me what they were paying ’cause they hated me or didn’t like me or resented me. It’s just what it was worth. Now, had I found a way to double attendance, I guarantee you it would have been different, and that’s the key. While I’m living there and barely eking out ’cause I’ve… It’s a long story, but I had a home I had no business having.
I couldn’t afford it and everybody said, “Don’t sell it! That’s your big investment.” So I held onto it. It was the wrong advice. But anyway, do you know what I would do? I lived in shack but it was right across the street from really great neighborhood. I’d peer across the street and drive by, and I’d wonder, “What do those people do? How did they do it? What determines who gets paid what?”
Of course there were all kinds of stereotypical answers. “Well, they were doctors and lawyers and forth,” but nobody that was trying to answer the question for me really knew what they were talking about. I didn’t figure it out personally just by virtue of living and experience. I didn’t figure it out until the mid-eighties when I finally moved to Sacramento. Well, Heritage here has a chart here that kind of details what the answer is.
I had read think tank pieces on wage increases and how they happen — and, you know, these scholars and these eggheads that put together their scholarly papers with statistics and what they’d always said was that productivity equals wage increase, no matter the job. The more you’re productive, the more you’re going to make because the more you’re productive the more you’re helping whoever you’re employed by.
You see, in that case it didn’t matter.
The productivity was irrelevant, because in the autoworkers union, there’s so many of ’em that you had to a collective bargaining agreement. They were all paid the same thing. The only way to earn more was to work overtime. You could not distinguish yourself by doing great work. You might get a promotion within the union. That was my problem with unions, but other people didn’t mind that. They liked being members, and that was cool. But when I found out — and it was quite by accident.
When I found out, when I learned that if I could insert myself directly into the income stream of the company, that I would then be paid attention to. They weren’t gonna paying attention ’cause I was a nice guy. Even if I got, you know, good ratings, there had to be something else that was tactile, something you could touch, something that had substance, meaning other than ratings are just numbers even piece of paper. It had to translate into something, in this case extra income.
I learned to call it “ratings insurance.”
The radio ratings are up and down. The vagaries of them are kind of curious, and I wanted insurance against bad rating book or two, and the insurance was, a certain amount of money that they know I’m bringing in. What Heritage has put together here is a little chart that indicates that the value of an employee to a company is what determines the salary. Not good vibes, not compassion, not a nice boss or a bad boss.
There are certain jobs in every business that are worth X no matter who does them, and if you don’t like it, you’ve got to do something else. There are some exceptions to this. Some people pay out of goodwill, but they’re so few. Some people give ridiculous bonuses. It’s extraordinary. The most thing you can count on is a job is worth X to a company on its bottom line and that’s all it’s gonna pay.
A custodial job is worth X. A sales job is worth certain base, plus commission if you can get it. The point is the way to increase your pay, or what you are paid is quite simple. You find a way to make sure that you are noticed and you are seen as a reason that company or business is earning more money. Involve yourself. Insert yourself directly in the income stream. That’s how you do it, not the minimum wage, not the government coming in and equalizing things. That’s not how it’s done.
RUSH: Now, here’s the thing, folks. There is nothing else that determines your value to a corporation or company than your ability to grow their income, bottom line, what have you. If you do that, that’s how it happens. Now, how to become the owner of the company? That’s a whole different thing, and that is an entirely different process. I’m talking about status as an employee. How do you get a raise? You don’t do it by demanding it.
You certainly don’t do it with fairness. You don’t appeal for compassion. You don’t ask the government for a raise in the minimum wage. That’s why when people are talking about a “living wage” or raising the minimum wage or equal pay, you are forcing a corporation to pay people who are not worth that much, and you are altering the true value structure that exists inside any corporation. What’s gonna happen when you start demanding a living wage is, the only way that you can enforce that…
I mean, there is no such thing.
Who gets to determine it, and where?
Where does the money come from?
It’s all impossible.
RUSH: The bottom line is this, folks: There is no law, there are no laws that can change your worth to a company. That cannot happen. There’s not a single law that can change how much you are worth or what your value is to a company, no matter how good it might feel. But you can change your worth. You can change how valuable you are where you work. It isn’t gonna work everywhere. Some people that you work for are creeps. But on balance, it’s you that changes your worth, not a law.
You can work harder, be more productivity and educated. Have passion; find out what you really love to do. It’s any number of ways that this all happens. People that work for government are not paid on their value. There isn’t any way to determine it. They’re paid on the pay schedule. In the private sector, it’s a whole different thing. But the worst thing you can do is sit around and wait for somebody to be fair, ’cause I guarantee you, nobody that you look up to and think, “Gee, I wish I could accomplish that,” did that by waiting for things to even out or be fair or what have you, you.
Here’s Paul, Virginia Beach, Virginia. Great to have you on the EIB Network. Hello.
CALLER: Hey, Rush. How are you?
RUSH: Very well, sir. Thank you.
CALLER: It’s an honor to speak to you. I have listened to you since the eighties, and myself and my family, we all think that you are certainly the way the truth and the life of where we need to go. So I thank you for that.
RUSH: Thank you, sir, very much.
CALLER: Just had a little theory on the minimum wage and the insurance and 30-hour workweek. There was a report back, oh, about a year ago that talked about the median household income, how in 2013 it went down for the first time in years. I’m sorry. In 2012. So, you know, when you talk about employers lowering the hours that people can work because they truly cannot afford the health insurance that the government is mandating that they pay for, you’re reducing for millions of people the household income that they have. That report hasn’t come out yet, so when you have a whole big segment of the population that has their hours reduced and then they’re making what they make, maybe $8 an hour or so, their household income is going to take a drastic drop in 2013. So in the State of the Union address, here comes the president saying, “We’re gonna raise the minimum wage.”
CALLER: So for the folks that…
RUSH: And, of course, the conclusion is who’s responsible for that? Obama! Obama.
RUSH: The Democrat Party. The plummeting average or mean household worth or household income is plummeting because of Obama and his policies. Exactly right, sir.
CALLER: Absolutely. So he raises the minimum wage? If he’s successful in getting the minimum wage raised, he’s gonna look like the savior. People’s wages are gonna go back up, and they’re still only gonna work 30 hours a week. So the loser in all of that are the people that have to buy food.
RUSH: But, see, that’s not how it happens. That’s how it appears that it’ll happen on paper. “Oh, we’re gonna raise the minimum wage. Oh, people’s incomes are gonna go up. Oh, it’ll compensate for being cut back to 30 hours.” The minimum wage, as it exists, is a damper on income. The minimum wage is an arbitrary value placed on all work. There’s no rhyme nor reason to it.
You are telling somebody who owns a business that the minimum you can pay is X. It doesn’t matter whether somebody’s qualified or not. So what you’re doing is you’re denying inexperienced people access to the workforce where they can start gaining experience, because at some point the minimum wage is so high you have to hold out and hire somebody that has a modicum of experience, who at least knows some of what they’re doing.
But at the same time, when you arbitrarily — without any other value being relevant — raise the minimum wage, the owner of the business is not sitting there with a pile of money in the back closet and says, “Oh, okay. You want me to raise the minimum wage on however many of my people? Fine, I have the cash.” They don’t have the money. Obama does not know, because he doesn’t care and because he’s never been there.
He doesn’t understand how fragile (and largely because of his policies) most small businesses are today. They do not have a pile of cash. They just can’t sit there and pay a minimum wage increase. Many of them are going to fire a person or two or more in order to have the money to pay the remaining employees the new mandated minimum wage. A business allocates X for labor.
So Obama comes in and says, “Well, we’re gonna make you pay another buck and a half per hour.” Well, what’s that do to the X factor, the labor? It’s just gone up. Well, what if there isn’t any appreciable increase in business to cover it? It’s gotta come from somewhere. What has always happened is that people end up being fired, or losing their jobs. This is on top now of being cut to 30 hours a week or less.
People end up being let go so that those remaining can make the minimum wage. Then what that happens, Obama and the Democrats come along and start talking about how mean and selfish and greedy business owners are. This has been the Democrat Party trick for as long as I can remember. These people who have had their hours cut and have lost health care, there is not a minimum wage increase being talked about that can restore what they have lost via their hours being cut.
There isn’t enough money here.
That’s not what this is about. It isn’t about making people wealthier. It isn’t about people making more money. This is a pure political play. This is about the poor being fooled into thinking only Obama cares about ’em and that nobody else does. Obama is who has created the atmosphere that they can’t thrive. Obama is their biggest obstacle. Obama and his policies are their biggest problem, and yet he gets to portray himself as a solution.
That’s all this attempt is. It’s all it’s been since the minimum wage was created. Like I say, there is not a law that can make somebody more valuable to a business, not a law that can make somebody rich. Well, wait a minute now. Obama can play crony capitalism with CEOs and make them richer, but that’s not for you. It’s not gonna work that way for you, because you don’t bring enough to the table. All you bring is a vote. If you run a corporation, you can bring a lot to Obama.
This is hideous stuff.
It really is.
RUSH: You know what else raising the minimum wage could result in, ladies and gentlemen? It could, in some cases, lead to employers hiring illegals. Employers don’t have to pay the Obamacare penalty for illegal aliens, either. You know that that happens. (The illegals, since they’re illegal, they’ll work for less than minimum wage.) These idiots sit up there and they do not understand the dynamic reaction to the things they impose on me. They think they’ll raise taxes, and these suckers will just sit there and pay it. They think they’re gonna raise the minimum wage on businesses, and they’ll just sit there and pay it rather than trying to find a way around it, which is what happens.
They never do get it.