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Meet IL Governor Bruce Rauner -- Poster Boy for War on Middle Class
Posted: 02/10/2015 8:51 am EST Updated: 02/10/2015 9:59 am EST
Last fall, Illinois GOP candidate Bruce Rauner spent $63.9 million -- $27.3 million of his own money -- to buy the right to occupy the Illinois Governor's mansion.
Now that he's in office his first moves have confirmed that he is the poster boy for the War on the Middle Class.
Rauner is a hybrid of the worst traits of Mitt Romney and Wisconsin Governor Scott Walker. In fact, you could say he personally embodies the reason why -- even though our economy has grown 77% in the last 35 years -- the wages of ordinary Americans have been stagnant or actually declined.
For those who are unfamiliar with Rauner, all you need to know is summed up in one brief story. Early in the GOP primary, Rauner made it clear that he wanted to reduce Illinois' minimum wage -- and at one point even indicated he wanted it abolished entirely. Yet last year Rauner himself made more than $25,000 per hour -- fifty-two million dollars per year. That's right, he made more than an average minimum wage worker makes all year long in less than the first hour of the first day of the year.
Now, by the way, in the face of the overwhelming passage of a referendum calling for an increase in the state minimum wage, Rauner has grudgingly agreed to support an increase -- of twenty-five cents per hour per year over seven years. That's barely more than the rate of inflation.
Much like Romney, Rauner made his money as an investor and speculator. After he bought many of those businesses, he bled them of cash.
His companies moved over 4,000 jobs abroad.
One of Rauner's companies, Trans Healthcare Inc., owned over 200 nursing homes. The firm had judgments issued against it for over $2 billion for patient neglect. Rather than fix the problems and pay the claims, Rauner's investment firm sold Trans Healthcare to a company that then declared bankruptcy and dodged paying the claims of the abused residents.
Now that he is governor, Rauner has proposed draconian limits on the collective bargaining rights of unions representing state employees, cutting back on their pay, prohibiting workers from being able to negotiate over wages and benefits, and transferring all future state pension benefits into risky 401(k) plans.
And he has declared war on middle class state employee salaries.
Rauner brazenly claims that state employees' average wage of $64,000 per year is simply too high. This from a man who makes $64,000 in two and a half hours.
To justify his claims, Rauner argues that many state employees make more than their counterparts in the private sector or surrounding states. For instance, he claims that Illinois state highway workers make $49,000 per year, which he says is more than the $36,000 average paid to state highway workers in five neighboring states.
That's right, a guy who last year made $25,000 an hour speculating and flying around on a corporate jet, is furious that someone who works 40 hours a week pouring concrete, laying hot asphalt and fixing potholes -- serious physical work -- makes as much all year as he does in two hours.
Rauner's first major assault on the middle class was an executive order giving state workers who are covered by labor contracts the choice to benefit from those contracts without paying a "fair share" contribution to support the union that negotiates and administers them.
Rauner -- and other anti-union ideologues -- claim that workers should not be "forced" to join unions against their will. In fact no one is forced to join a union. The provisions in labor agreements with state unions -- in many states -- require that after state workers have democratically chosen a bargaining agent, that employees who do not wish to join the union should pay a "fair share" contribution to support the portions of the union's operations that negotiate and administer the provisions of the labor contract from which they are benefiting.
Note that they are not required to contribute to any of the political activities of the union.
This is the same principle we use at all levels of democratic government. Once an election is held for mayor and the city council, you can't refuse to pay taxes to support the functions of the government from which you benefit. City government produces what economists refer to a "public goods". They engage in activities that benefit everyone, even if you don't "pay" for the products and services. That's why we have taxes. Otherwise there would be perverse incentive for "free riders" who would benefit but don't contribute.
The same is true with unions.
Rauner's actions have nothing to do with giving employees a "choice". They have everything to do with reducing the resources that are available to unions -- which he is determined to destroy.
Since unions -- and collective bargaining -- are the major weapons every day people have to raise their wages, his assault on unions is a direct attack on the middle class and its future in America.
It's not just that Rauner drips with hypocrisy. His view of the world is emblematic of the massive difference in perspective between most ordinary Americans and the privileged .01%.
Remember that America is richer today than any other society in human history. Our per-capita GDP increased 77% over the last 35 years while average incomes of ordinary people flat-lined. That happened because virtually all of the increases went into the pockets of the top 1% -- guys precisely like Rauner.
The rules of the economic game have been rigged to allow the Rauner crowd to siphon off virtually all of the increased productivity of ordinary working people.
The result: corporate profits are at record highs, the stock market has posted record highs -- and the percentage of national income going to wages is at record lows.
Not only is that unfair and undemocratic -- it's bad economics. If consumers -- the real job creators -- don't have enough money in their pockets to create demand for the new products and services that result from higher productivity, the economy will stagnate.
Rauner, on the other hand, is an ardent devotee of discredited "trickle down economics." And you have to admit, it's been pretty good for him. After all, the man owns nine homes, including a New York penthouse and three ranches.
And "trickle down" has been pretty good to other multi-millionaires that run in the Rauner crowd.
The New York Times recently reported that the luxury goods market in the U.S. has been robust relative to the rest of the world.
In the United States, spending on personal luxury goods rose a steady 5 percent last year to about $73 billion, Bain estimates, compared with negative growth in previous juggernauts like China and Russia.
"There's a whole new generation of 30- and 40-year-olds making millions of dollars a year in hedge funds and technology and real estate," said David Friedman, president of the wealth consultancy Wealth-X.
Milton Troche, 29, whose father runs a textile company in New York, said business was looking up and that he felt flush enough to upgrade his wardrobe this year. "I wanted the larger buckle," Mr. Troche said, stepping out with his $450 belt from Ferragamo's flagship store on Fifth Avenue. "You can wear a T-shirt with it, but you still get the girls."
Much of the growing wealth in America comes from equity markets that have performed well, adding to the wealth of upper-income Americans who are most likely invested in stocks. In the United States, the rich also have relatively more of their money left over to spend, because of lower top marginal income tax rates.
Tough for Rauner and his crowd to comprehend what it is like to live on a minimum wage salary of $15,000 to $17,000 a year -- or even to make ends meet on a middle class income like $64,000 a year. After all, they're busy buying $450 belt buckles. That's more than a week's pay for a minimum wage worker in Illinois.
Rauner and company share assumptions that are entirely foreign to most ordinary Americans.
One of those assumptions is that wages should be set entirely by "the invisible hand of the market" -- like the prices of soybeans or corn.
Only problem is that people are not commodities to be bought and sold. They are the point of the economy.
There was a time, just over 160 years ago, when people themselves were bought and sold -- right here in America. Slavery is now illegal. But people like Rauner want to return to an age when the labor of people can be bought and sold on an open market without restriction or regulation.
We know from actual experience where that kind of unregulated, union-free labor market leads: to child labor, sweat shops, and 70-hour work weeks. That's what it was like in America before unions and the New Deal demanded that ordinary people be paid a living wage. That's when most Americans got the 2-day weekend, when child labor was banned, and health and safety restrictions ended sweat shops. That's when America got a robust middle class.
To avoid those kind of restrictions, many corporations -- such as Rauner's -- have outsourced jobs to emerging economies where they can still pay poverty wages, avoid paying benefits and be freed from "burdensome" health and safety requirements.
Their vision of the future of America is a society where they can make as much as they want regardless of the consequences for ordinary Americans -- where they are free to pay labor "whatever the market will bear."
It is that view of America that is destroying the American middle class.
For most people, being "middle class" means making enough to have a modicum of economic security. It means escaping the perilous existence of living paycheck to paycheck -- always one car repair or illness away from falling off the economic cliff.
For most people being "middle class" means being able to set something aside every month, having a pension that will support a decent retirement, and making enough to educate your kids so that they can aspire to do a little better than you did.
That American Dream requires a middle class income, and $64,000 a year begins to qualify. The thirty-six thousand dollars a year Rauner would like to pay highway workers does not. And as President Obama said in his State of the Union, if Rauner thinks someone can survive on a minimum wage salary, he should try it.
But what is particularly outrageous is that in a country that is richer than it has ever been, Rauner believes that state workers shouldn't be paid middle class incomes.
If we are to reverse the tide of growing income inequality, we must embrace a different paradigm for paying labor in America. Speculators and business people should be free to make as much as they want. But first they have to pay all of their employees a middle class, living wage. No more exploiting the work others do in order to make yourself a multi-millionaire or billionaire. You are free to become fabulously wealthy, but only after you've shared what the company has earned with the workers who make it possible.
In Rauner's state of the state, he expressed outrage that union employees got modest wage increases that were higher than the limited number of non-union state workers. But that's one point of unions -- to raise the wages of ordinary people.
That's not an argument against unions. It's an argument for unions. Raising the wages of ordinary Americans happens to be the most important priority in our economy. That is precisely why every working person in America should have the right to collectively bargain over their wages and working conditions. That's the reason that the average union worker makes more than the average non-union worker.
If plutocrats like Rauner were not allowed to siphon off all of the increase in economic growth -- if the rules of the economic game were not rigged in their favor -- America could afford to pay everyone a living, middle class wage.
But at the very least, we should all be able to agree that the people who we ourselves hire -- who the public hires to do our work -- should all make middle class incomes. It would be shameful if they did not.
Of course Rauner is just looking out for himself and his friends, the same way he did in private life. At the same time he proposed to cut the wages of ordinary state workers, he came out firmly against converting the current Illinois income tax from a flat tax, where janitors pay the same tax rate as billionaires, to a progressive income tax that asks those who have benefited most from our economy to make the largest contributions in taxes.
A progressive income tax is the best -- fairest way -- to fix Illinois' chronic fiscal problems. But Rauner would rather cut the income of ordinary middle class public employees than ask the wealthy to pay their fair share.
And while we're talking about hypocrisy, how does Rauner explain that at the same time he wants to cut the wages of ordinary, middle class state employees, the six-figure salaries of his newly-hired top staff average 36% higher than those of his Democratic predecessor Pat Quinn.
Rauner fooled some voters in the last election. Still others didn't understand the danger Rauner poses to the middle class and didn't take the time to vote.
Now it's time to spread the word across America: beware of Illinois Governor Bruce Rauner. He personally embodies the War on the Middle Class.
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