Archive for the ‘Minimum Wage’ Category

A Great Question About Unemployment

Wednesday, August 6th, 2008

Neal Boortz asks it here.

Why in the world isn’t anyone connecting the increase in the jobless rate last month to the increase in the minimum wage? At the beginning of the last month the minimum wage went up by 70 cents.

There are some left-wingers running around, with the same rights and privileges as you and me, insisting that an increase in the minimum wage will lower unemployment, if anything.

And, as the guy pointed out in that martial-arts video, you aren’t supposed to be trying to “raise a family” on minimum wage. That is the situation for some folks, but debating how many is pretty useless. The problem begins there. Minimum wage is for kids. Bachelors. Heck, not even bachelors. People just starting out.

Just another example: People on the left say they’re here to help people in a certain economic circumstance, and their “help” comes in the form of making it artificially expensive for others to do business with them. When business is made artificially expensive, less of it goes on. What’s so hard about that.

How about this. How about we ask the democrats to go on record, and say — yes, it is our position that if we can raise the minimum wage high enough, we’ll have full employment. And then explain to us how that works, assuming they really want to take that position.

Bare Minimum

Monday, March 12th, 2007

Red State restates the obvious about the minimum wage.

BOTH the House of Representatives and the Senate have recently passed bills raising the minimum wage. The Senate bill includes tax breaks for businesses, based on the following logic: While a minimum wage increase is popular, the resulting higher labor costs will translate into fewer jobs, more expensive products or both. The solution, the senators concluded, was to subsidize companies that hire disadvantaged workers, in order to reimburse them for these higher wage costs.

Does this reasoning hold up? A look at one of the key pieces of this business tax package — the Work Opportunity Tax Credit, which has been in place since 1996 and would be extended for five years under the proposal — suggests otherwise.

I Wish More People Got This

Thursday, January 25th, 2007

Debating the minimum wage is a depressing experience for me, compared to other issues…like for example, gun control. People who disagree with me about gun control, think if you outlaw guns, you eventually get rid of them. I don’t think it works that way, but I can understand why they would. You want to get rid of guns…you make it illegal to own them…eventually, they’re gone. Okay. Understandable. Simplistic, wrong-headed…but understandable.

Minimum wage is different. I end up arguing with people over whether some third-party’s wages should be “raised”…and I have never quite found a diplomatic way of pointing out what these people are missing. That isn’t what a minimum wage law does. I simply pronounce what the law is all about, and we have to start arguing about that because it sounds like I’m indulging in extravagant fantasy about the long-term future effects of the law. I’m not doing that; I’m simply summarizing what the law is supposed to do. It OUTLAWS JOBS. That is what is written, that is the long-term effect, it is the immediate effect, it is what is done, it is what is supposed to happen. Guy A hires Guy B, if the terms of the contract between A and B don’t fulfill the parameters codified by the legislature, Guy A has broken the law. There are no funds collected, from anywhere, to supplement Guy B’s paycheck — and that is what would have to happen for anyone’s “wages” to be “raised.”

This is breathtakingly simple. It isn’t even logic. It’s just observing what’s happening, and recognizing what the argument is supposed to be about.

Once you recognize that, this article should yield no astonishing surprises, none at all. Yet some people will not only be surprised, they’ll refuse to acknowledge anything meritorious in it. Simply amazing.

Minimum wage hurts those it means to help

After the November elections — with the return of a Democratic majority in the U.S. Congress and the Indiana House — the minimum wage is receiving maximum attention. Applauded as everything from an effective poverty-fighting tool to the epitome of economic justice, a higher minimum wage is popular with politicians and the general public. But economists point to the demographics of the lowest-paid workers and note that small business owners may be unwilling to pay higher wages for the same productivity.
In any case, the punch line is that some poor people would be helped at the expense of other poor people — a curious attempt at economic justice and a less than impressive poverty-fighting tool. Those who keep their jobs would be better off while others would lose their jobs. Sadly, the latter would lose what they most need– an earned income and an opportunity to build job experience and skills. Ironically, the minimum wage steps on some of the most vulnerable in trying to help others.

Memo For File XXXVI

Sunday, December 24th, 2006

Blogger friend James Bostwick over at Newsblog Central has performed an excellent fisking job on some silly blow-dried airhead piece in SFGate about the minimum wage. He gets two shiny gold stars for this one. It’s not for the great smart-alecky job of fisking, since I’m not a big fan of fisking anyway. It’s for 1) correctly pointing out that the minimum wage is all about outlawing jobs, rather than about giving people money; and 2) linking to an insightful and well-written column over at the Mises Institute explaining in detail, for those who need to have it explained, Point 1). And as far as the fisking goes, it does have a place — and this is one of those places. Example:

Alice Laguerre is among the millions of workers now earning less than $7.25 an hour. She makes $6.55 an hour driving cars headed for the auction blocks in Orlando, Fla., and says a boost in the federal minimum wage would help her build a nest egg for emergencies.

Really? ‘Cause somehow that just doesn’t mesh numbers-wise with this passage:

That can be tough these days, acknowledges Laguerre, 53, after paying the monthly rent and utilities on her two-bedroom apartment and after recently buying a car — a blue 1994 Buick Century.

Check out monthly rents for two-bedroom apartments in Orlando, Florida–you’d be lucky to find something under $800. And the Blue Book value on a 1994 Buick Century is between $2000 and $2500, depending on four or six cylinder models (maybe blue ones are cheaper.) With a typical 40-hour work week, Laguerre makes $1,048 gross a month. And she still has to pay food, utilities, etc. Even if she has another job as the breadwinner, it doesn’t compute.

Ding ding ding ding ding, we have a winner. A problem is identified, and a solution is proposed — yet the solution is ineffectual against the stated problem, and no one with a reputation worth defending seeks to assert anything different. Not only do we go ahead and implement the ineffectual solution once, we do it many times, over several generations — and act surprised when the problem remains.

You know what is unique about the issue of the minimum wage, is it reveals the failure of the liberal mindset to adhere to the plane of reality, like no other issue before us. You go down through the list, there’s a conservative outlook on the effect of a given proposed policy, and then there’s a liberal outlook. Conservatives think wars may be necessary some of the time, to keep larger wars from happening later — liberals think war can be avoided forever, when one interested side has decided to simply stop fighting them. Conservatives think global warming is part of a natural cycle, liberals think it’s an extinction-level event. Conservatives think the death tax is double-taxation, liberals figure that just because the taxed party is seeing the loot for the first time, this is somehow not the case. The same goes for gun control. Conservatives say if guns are outlawed, only outlaws have guns. Liberals say if we don’t (in the words of Michael Moore) “have all these guns lying around,” there won’t be any gun violence because it won’t be possible. Like Obi-Wan said, you come to find out a great many of the truths we cling to depend greatly on our point-of-view…

…but in the case of the minimum wage, it’s different. It’s much simpler. Conservatives say it’s all about outlawing jobs. This is not a point-of-view. It’s simply what the policy does. To extrapolate any more complicated mission from a minimum wage law, is to indulge in fantasy.

And yet, from sea to shining sea, untold millions of people so indulge. And they think they’re commenting intelligently on the policy. Nobody seeks to assert any minimum wage law, federal or state, anywhere, engages in an effort to collect revenues to supplement these wages. That would probably be shot down as “corporate welfare” if it were ever proposed. So lacking that, we borrow from Bostwick’s terminology to illustrate what the law really does: make “free and voluntary wage contracts illegal.”

There really isn’t any disagreement about the minimum wage as a job killer. Not among those who make the policy. It’s like arguing over whether a higher prime interest rate has a retarding effect on the economy. There’s a reason why the federal minimum wage hasn’t been raised in a decade, and there’s a reason why the amount of the proposed increase is proportional to the number of years since the last increase. The minimum wage is already indexed to inflation, for all practical purposes; we just have this ceremonial knock-down-drag-out, just before the increase kicks in. When Congress increases it, it increases it as much as can be afforded. Over the long haul, adjusted for inflation, it doesn’t increase. Not really.

And that is why we’re allowed to argue over the job-killing effect. It’s made into a matter of individual perspective, artficially.

Suppose we had some genuine curiosity about whether the minimum wage is deleterious to the job situation, and were willing to make some real changes to policy in order to settle the matter. There’s almost no limit to what we could do, save for our imagination. We could, just for starters, increase it after inflation. We could index it to the inflation rate over a period of several years — doubled. Or tripled. Inflation for Fiscal Year 1 is 3.5%, minimum wage automatically goes up by 10.5%. Do that for a decade. Or, we could go the other way. Rather than freezing it over a period of several years, thereby asking for sob-story articles like this one — “imagine what it would be like to work without a pay raise for nearly 10 years” — we could cut the dollar amount. We could even sunset that measure. For the next thirty-six months, the federal minimum wage nosedives by a buck fifty an hour, just so we can see what happens. That would effectively legalize the “free and voluntary wage contracts” that were, up until then, illegal. Maybe more people would then be hired. Perhaps not? At the end of the three years, we wouldn’t have to argue about it. We’d know.

In my lifetime, and beyond, we haven’t done any of those things. We just keep it at a posted dollar amount across several years, which is silly because inflation is always around and never goes away. And at the end of some period of time, we have our predictable Republican/Democrat knockem-sockem routines, and of course the Democrats always win. They must. The debate is about the theory, only on the surface, only cosmetically. In substance, the debate always turns to what a rotten time Alice Laguerre is having of things, and whether she could use a few more dollars in her purse.

That’s just stupid. Of course she can use them.

What is to be gleaned from the data, if we were to sit down with our state governments, our fifty-one social laboratories, to figure out what the minimum wage does? Not much. Conservatives theorize this would prove the minimum wage kills jobs, liberals say it would exonerate the minimum wage. Some hard-core leftists will insist the minimum wage reduces the unemployment rate, and they’re all too willing to offer cherry-picked examples to support what they want supported. Never, in my experience, has anyone sat down with all of the data at a given time, and presented it in a simplified way so cause-and-effect could be examined with some intellectual sincerity. Well, a few months ago I actually did this. I went through 51 states and I plotted it. Not that hard. Turns out conservatives and liberals are both wrong. What one gleans from the data, is that different parts of the country have different economies. The scatter diagram that results, presents no correlation whatsoever between the state’s effective minimum wage, and the unemployment rate of that region:

You can review my data for the effective minimum wage levels here and you can check my data on the unemployment figures here. The chart was last refreshed back in July, so admittedly there’s an issue of currency. But nothing that would impact the cause-and-effect between wage controls and unemployment figures; and anyone who doesn’t trust the scatter, in an hour or two could repeat the exercise entirely. The data is all there and it can be accessed by anyone who wants to.

You see over on the left side, we have several states with no minimum wage. In the eyes of the law, the effective minimum there reverts to the federal rate of $5.15. The latest reported unemployment rates from these localities is between 3½ and just over 8 percent, which is roughly on par with the other states that yank it between one and two dollars over the federal minimum. THERE…IS…NO…CORRELATION. None. What you’re seeing here, is a disparity amongst the states as far as how draconian of a minimum wage you can afford to have — based on what’s going on there.

I would expect “most” Americans, if they were to explore this honestly, would opt for a “moderate” approach to the minimum wage. If such an argument were then to be pursued honestly, we would then see those Americans would end up supporting a full repeal of the federal minimum wage. That would be moderate, would it not? In twenty-five states, this would have no effect whatsoever. Among the states that remain, doubtlessly most of them would pass state-level measures to re-institute the federal minimum that had just been nullified. The states that would seize the opportunity and ratchet the effective minimum downward, I expect, would be down in the single digits. The states leaving the minimum-wage concept non-existent, leaving everything up to the employer and the employee, I would probably be able to count on the fingers of one hand.

Let us then plot those on a scatter diagram like the one above, with some contrails to show how things are moving around. Who knows what would be revealed two or three years afterward? Truth be told, I think I’ve got an idea. Deep down, I don’t think anyone disagrees with my idea. Not if they were to bet some real money on it, they wouldn’t.

Once again…if we did that, we would know.

But decade after decade after decade…we do none of these things. We just let conservatives and liberals argue over what the minimum wage does to the job market. We all know the conservatives are right — all they’re saying, is when you make a commodity more expensive it’s less likely to be consumed. That’s Econ 101 stuff. And yet…we also know whenever the argument comes up, the liberals will win. So it’s known, the way we engage the argument, the wrong side will win. It isn’t just conservatives who know this. Everybody knows it. We just don’t want to admit it.

This is an issue that is supposed to be really, really, breathtakingly, important. We don’t act like it is.

Kennedy’s Agenda

Saturday, November 18th, 2006

If I ever get tired of trying to make an honest living and want to start ripping people off, and make sure I never get caught at it, I’m going to start talking in a thick Boston accent heavily sprinkled with the word “Ah.” It seems to be an effective way to deflect probing questions. That’s the one thought I have, reading the AP’s puff-piece about Ted Kennedy’s “agenda” for next year, as chairman of the Senate Committee on Health, Education, Labor and Pensions.

Ted Kennedy“Americans are working harder than ever, but millions of hardworking men and women across the country aren’t getting their fair share,” Kennedy said during a speech outlining his legislative agenda for next year. “We’re not rewarding work fairly anymore, and working families are falling behind.”

President Bush signaled readiness last week to consider some Democratic priorities such as a minimum-wage increase, overhauling immigration policy and finding compromise on renewing the No Child Left Behind education law.

Critics of boosting the minimum wage say it kills job creation as employers hire fewer entry-level workers to compensate for the higher wage expenses. Kennedy said the minimum wage has remained at $5.15 an hour for nearly 10 years. Under Kennedy’s proposal, the increase would occur over about a two-year period.

Most states have their own minimum wages laws, with some states having rates the same as the federal minimum wage and some with rates higher than the federal minimum.

Kennedy noted that ballot initiatives establishing or raising the minimum wage in six states all passed in this month’s election.

“If there is one message from this election that emerged loud and clear, it’s that no one who works for a living should have to live in poverty,” Kennedy said.

Kennedy also said he would seek to expand federal support for research on stem cells coming from embryos, which Congress approved last year, but Bush vetoed. The issue won’t go away, he promised.

On education, Kennedy said he would seek to make college more affordable by increasing the size of Pell Grants from $4,050 to $5,100, and by cutting interest rates on student loans.

He said that the student loan business has become too profitable for the banking industry. “It’s time to take the moneychangers out of the temple on student loans,” he said.

I don’t have to wait too long, nowadays, for a left-winger to insist that his positions on various issues makes him smart, and my position make me dense. We live in a time in which people on both sides of the aisle, apply rustic and faulty “intelligece tests” to those around them, by gathering up peoples’ positions on the issues. Well, the minimum wage has become my way of paying this back. Lefty says I’m a big ol’ NASCAR dolt because I supported “George Bush’s illegal war in Iraq,” and golly, you know he just may have a point. Maybe the left-wing hippy does know something I don’t. So like a pig digging for truffles, hoping to engage an intellect that maybe has a different perspective to provide me, perhaps finding an angle to the big picture of which I was previously not aware, I ask about the minimum wage. If my left-wing antagonist supports the minimum wage, I can rule out this possibility. Completely. If the asshole has a brain in his head he isn’t using it. And he isn’t seeking to “educate” me, he just wants to indoctrinate me and assimilate me into the collective. There’s no thought involved. Guaranteed.

Raising the minimum wage has been a favorite agenda of Democrats my entire life, and then some. Whenever the subject comes up, my favorite way of commenting on it has come to be “Congress is currently reviewing a measure to outlaw millions of jobs.” The lefties out there, predictably, cite this as further evidence of my cluelessness and thick-headedness. But who’s clueless? Congress raises the minimum wage — is Congress considering the appropriation of general funds to reimburse employers for the difference? Not so far as I can see…ever. Is Congress going to provide punitive measures against employers who dismiss their associates, specifically because of the financial ramifications of the increase? Again, not within my memory.

So the minimum wage is all about defining a class of jobs out there, and announcing that something has got to happen with them if the employer is not to violate this new law. On what that something is, Congress, within the information that has made its way to me, throughout my lifetime — has not a tinker’s damn to say about anything. Nor has Congress sought to say anything. The employer has absolute latitude; all that is required of him, is that something be changed. We have this pipe dream that the employer is going to say “Good golly! I better find some more money to pay these people!”

But a pipe dream is all it is.

With things left unchanged, these millions of jobs, which up until the moment in question were in comportation with the law…no longer are. And at that point, Congress’ involvement abruptly comes to a stop. Seriously. In my lifetime, I have yet to see a pro-increase-minimum-wage Congressman step up and so much as denounce employers opting to get rid of these now-more-expensive associates. I have not yet see anything like that happen yet. I’m waaaaaaiiiiiiting…haven’t seen it.

So to say this kind of activity is “a bill to outlaw jobs,” is simply a more accurate statement of the facts. The pit bull that is in place to keep those jobs from being eliminated, is the union. But of course all those “hardworking men and women” who are affected by minimum wage laws, are not necessarily represented by a union. Those who are not, are off Kennedy’s radar. This is only about the unionized forces. And the purpose of the legislation, is to pay back those unions by increasing the wages from which the union dues are going to be derived.

Just a little bit of payback. One hand washing the other.

But don’t the egghead economic scientists insist that the minimum wage does nothing to eliminate jobs, in fact, may actually cut the unemployment rate? Why, yes they do! They have yet to explain how making any commodity more expensive, stimulates the consumption of it. They can’t explain that…because that simply isn’t how things work. In fact, if you listen to them carefully, you’ll see they don’t even come out and say this is what’s happening. They’ll recite some cherry-picked facts to lead the audience to this conclusion, but you won’t hear a pro-minimum-wage egghead economist guy come out and say, “when it became more expensive to hire people, employers jumped at the chance to do so, because it made good financial sense to them to spend more money on the same labor.”

As far as the unemployment rate being kept more-or-less the same throughout various increases in the minimum wage, this much is true. And it’s by design. Adjusted for inflation, throughout forty years the minimum wage hasn’t even been raised, really. It is generally agreed to have peaked, in “real” dollars, sometime in the late 1960’s. We’re coming up on ten years since the last federal increase…unemployment is at an all-time low…the conditions are right. It is “time” to raise it. What if — and this is just a hypothetical — we were to yank the minimum wage up when unemployment was high? If it really wasn’t a job-killer, wouldn’t that make a lot of sense? Or…what about the Rush Limbaugh hypothetical? Why not $20 an hour? Why not $50? The position of the left on this, as far as I can gather, is that this would be “silly.” Or yes, this would cause unemployment, but things are different when the increase is more “reasonable.”

So you see, there isn’t any disagreement about the minimum wage between the right and the left. Both sides agree that it is safe in smaller doses, dangerous in higher doses — essentially, that it does indeed cause existing jobs to disappear. They disagree only in what is to be acknowledged exuberantly, or conceded grudgingly. What it does, is put people in control of the job market — union officials, politicians, lobbyists — who have nothing whatsoever to do with creating those jobs, or for getting the objectives of those jobs fulfilled. It keeps them in charge of things.

Now, what would happen if regulation was peeled way back, and the employers and employees had more control? There are those who believe the employers would run everything; and since employers don’t really want to hire anybody, all the jobs would disappear except for a handful, and those wouldn’t pay for shit.

Well, I can only go by what I see. People having jobs and losing them…people applying for jobs and not getting them…people hired on, and the jobs suddenly going away…this happens five times, and only one time out of those five, at most, does the issue have something to do with a stingy employer cutting corners. The other four, it has something to do with regulation, or auditing. Decisions about jobs, being made by people who have nothing to do with the job being done.

Why does this ratio seem so out of balance? It makes perfect sense when you think about it. The stakeholders in the job getting done, if they are to make the decisions, the job stays. Of course it does. They want to get that job done, because if they didn’t, the job never would have come to be in the first place.

Of course…Kennedy speaks with that thick Boston accent. And he uses the word “Ah.” So none of this came out in the interview…or press conference…whatever it was. Kennedy said stuff, and if anybody asked a probing question anywhere, it didn’t make it into print. The AP just caught his glittering generalities and wrote ’em up.

Kennedy also said he wanted to support embryonic stem cell research.

What exactly is this committee and when did it get formed? I was just noticing…grinding up babies doesn’t have a whole lot to do with outlawing jobs. Kennedy’s chairmanship puts him in a position to do both. This borders on the surreal.

When I was a pre-teenager type kid, “baby in a blender” jokes were all the rage. If I could travel back to that time, and tell people in 2006 this will actually become a legislative agenda, they’d never believe it. And here we are.

I’m more concerned about the ability we have to vote in these legislative agendas. Mark Foley sent some spicy Internet messages to a former page, and we have this huge sloshing mushbucket of unrelated liberal objectives now in charge of the nation’s capital. Suppose — and this is another hypothetical — as a member of the electorate, I was desiring a little bit more surgical precision in what was to receive my support. Suppose I was in favor of grinding up the babies, but against outlawing jobs. Or vice-versa. What if some parts of Kennedy’s agenda sounded good to me, and other parts of it did not.

How do I vote for that? I just have one Congressman…some years I have a Senator running too, the one this year was a shoe-in even though I despise her…I can elect these incumbents, or vote ’em out. And based on who wins — and a lot of years, it’s just like this one, some silly scandal decides everything — we have this asshole and his juggernaut agenda, mashing up babies, outlawing jobs, making war on the cherished American values of individuality, capitalism, opportunity, keeping the money you have earned…choice. We vote for our elected representatives, and the elected representatives vote on all of Sen. Kennedy’s agenda, or none of it. Can’t have nuthin’ in-between.

I’ve been listening to liberals for six years tell me our “democracy is slipping away.” Well, it certainly is…just not in the way they’ve been saying.