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A recent story in the Indianapolis Business Journal confirms what rational observers have been saying for quite a long time: keeping wages low is bad for business, and hurts the economy.

When significant numbers of workers are struggling just to make ends meet, they don’t have discretionary funds to spend in the market. That depresses business activity–and is a further drag on job creation. Most people with even an elementary understanding of market behaviors had figured that out.

What many of us probably didn’t realize is that, according to both the IBJ and that well-known bastion of socialism, Standard and Poor, low wages also threaten state budgets.

Indiana has tied its fiscal wagon to a mule. The biggest source of revenue for the state is its sales tax, which at 7 percent is among the highest in the nation. But the slowdown in wage growth for most Hoosiers means they’re not spending much more money than before. And our wealthiest residents tend to save a greater share of their income and spend it on untaxed services.

Standard and Poor report that the widening gap between the wealthiest Americans and everyone else has made it more difficult for the economy to recover from the Great Recession. Their report attributes the sluggish recovery primarily to low wages; that’s because consumer spending fuels about 70 percent of the economy, and weak pay typically slows economic growth.

This isn’t rocket science. People can’t spend what they don’t have. Economic growth–for better or worse (and that’s a different debate)–requires consumer spending.

That’s the reason that evidence fails to support all those rosy promises about economic growth being triggered by Right to Work laws, and that’s the reason that the economy actually improves in places that raise the minimum wage.

When poorer people have more money, they spend it. What a concept.

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A friend who works for a charitable foundation sent me an interesting article a couple of weeks ago, describing an upcoming, invitation-only conference to debate whether the rules that currently govern such enterprises are actually promoting the common good.

Some of the questions to be discussed were intriguing, to say the least. They ranged from “should donors get a bigger tax benefit if the charity to which they contribute helps vulnerable people?” to whether foundations should be required to spend more than 5% of their assets, as they are currently required to do, to a re-examination of the different legal treatment of private foundations and public charities.

These are all important issues in philanthropy, but if I had to choose the most significant item on the conference agenda, it would be “Does the law adequately delineate what makes an organization ‘charitable,’ given that some nonprofits (like hospitals) operate in a way that is indistinguishable from their for-profit counterparts?”

Actually, what sorts of activities are appropriately labeled “charity” is less obvious than we might think. Feeding the hungry? Sure. Building a wing on the church? Maybe. A Lexus for the nonprofit’s CEO? Probably not. And there are plenty of nonprofit, tax-exempt entities that are not “charitable” in the usual sense–arts organizations, professional associations and the like fall into a different category.

Any lawyer who helps new organizations incorporate can attest to the blurred boundaries between far too many for-profit and non-profit enterprises. Take the hospital example cited in the article: CEOs and upper managers at purportedly “nonprofit” hospitals take home salaries that are the envy of many for-profit businesspeople; meanwhile, the hospitals pay no taxes–including property taxes to local governments– and enjoy other benefits of a tax-exempt entity. The amount of “charity” they engage in is an open question.

Hospitals are hardly the only entities taking advantage of the opportunity to do well by purporting to do good. A corporation with a mission that is arguably philanthropic can forego “profit” by the simple expedient of paying money that would otherwise be considered profits as salaries.

Americans as a whole are a charitable lot. We give a lot of money to causes we care about, with the expectation that we are thereby making our communities and our world a bit better. If antiquated rules and dubious behaviors make us cynical, and less charitable, we’ll all suffer.

A good hard look at these issues is in order, and I’m pleased to see that it’s occurring.

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The comments over the past couple of days have been weighty (and a bit heated), as readers have debated serious issues and explored consequential attitudes. I haven’t participated in those discussions, although I’ve followed them, because I had to fly to Washington, D.C., on Thursday for business meetings.

That trip once again involved something very trivial but very annoying, something that really does drive me nuts–partly because I just don’t understand it. Not a “heavy” issue, just an aggravating aspect of modern American life.

Here’s the thing: if you drive down America’s highways, you pass sign after sign advertising inexpensive motels. Many offer free breakfasts; more offer free wi-fi.

When I attend conferences at fancy, expensive hotels, however, as I did on my quick trip to D.C., I am almost always charged for wi-fi. At the J.W. Marriott it was 12.95 per day for the privilege of connecting my laptop to the internet.

Can anyone explain to me why a Comfort Inn on the interstate charging 39.95 a night can offer free internet, but a “chi chi” hotel charging 350+ a night feels entitled to nickel and dime its patrons for the privilege of doing digital business?

Granted, this is what we might call a “First World” problem. But it is very irritating.

Any hotel owners out there with an explanation?

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Gannett has “spun off” its print media holdings into a separate company, and not so coincidentally, the Indianapolis Star is once again cutting staff.

The Indianapolis Newspaper Guild announced that the newspaper will reduce newsroom staff and management by another 15 percent over the next few weeks. That will leave the employee count at 106, down from the current 124, and substantially below historic levels.

The paper plans to cut five of its remaining 11 photographers and the entire staff of the copy desk. The Guild said the cutbacks mark the sixth round of layoffs at the Star in six years.

In a story detailing the changes, Star Editor Jeff Taylor wrote that the paper was

“taking steps to significantly recast our newsroom in coming weeks. We will expand our reporting staff, further sharpen our focus on being responsive to the interests of our readers in real time, and deepen our community connections.”

Taylor said more reporters will be dedicated to investigative, business and “quality-of-life” coverage.

More investigative reporting. Right. And I have a really nice bridge to sell you….

If memory serves, each of the previous rounds of cuts has been accompanied by these same promises–and each time, the promises have proved hollow. At this point, there is more actual news in the IBJ and more “news I can use” in my monthly neighborhood paper, the Urban Times, than in the Indianapolis Star. 

This isn’t nostalgia for the way things never were. I’ll be the first to acknowledge that the Star was never a first-rank newspaper. It did, however, have investigative reporters. It did have statehouse reporters, and a city beat staffed by people who had some institutional memory and the cojones to call ’em like they saw ’em–people who reported on the nitty-gritty of government and didn’t waste precious column inches fawning over elected officials.

Today’s Star–with its “McPaper” insert– panders to celebrity watchers, hypes new restaurants and “hot properties,” pads the paper with vapid “human interest” features, and runs paid obituaries and advertisements where news used to go. None of this requires that quaint thing we used to call journalism. On the rare occasions when the Star reports on public matters, it is often painfully apparent that the reporter didn’t understand the issue sufficiently to write a coherent story–a deficiency shared by whoever is currently copyediting. (The garbled prose and typos in so many articles suggests that the copyediting function has already been dispensed with.)

The problem is, in the absence of a newspaper of general circulation performing the time-honored “watchdog” function, We the People have absolutely no way of holding our elected officials accountable. The recent recycling deal is a perfect example: the Mayor’s office reported that the vendor would recycle 80-90% of the trash collected, and the paper uncritically repeated that assertion. The actual contract requires the vendor to recycle less than 20%. If we had a real newspaper–with enough real reporters–someone would have read the contract and noted the discrepancy.

The saddest part of all this is that newspapers remain profitable–just not profitable enough to satisfy Gannett and its shareholders. Gannett doesn’t seem to understand that cutting staff may boost profit margins in the short term, but the lack of substantive content will doom the enterprise in the long term.

And the long term isn’t very far away.

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