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With Americans still trapped in the fifth year of our Great Recession, and median personal income having been essentially stagnant for forty years, perhaps we should finally admit that decades of economic policies have largely failed.
The last two years of our supposed recovery have seen American growth rates averaging well under 2 percent.[1]“United States GDP Growth Rate,” Trading Economics, from Bureau of Economic Analysis (October, 2012), http://www.tradingeconomics.com/united-states/gdp-growth . Although our media often pays greater attention to the recent gains in stock market and asset prices, such paltry growth means that many of the millions of jobs lost in 2008 and 2009 will never be regained, and the broadest measures of American unemployment and underemployment will remain stuck in the vicinity of 15%.[2]Bureau of Labor Statistics, “Employment, Hours, and Earnings from the Current Employment Statistics survey (National),” updated October 5, 2012. Meanwhile, an astonishing 93% of the total increase in income during the recovery period has been captured by the top one percent of earners, who now hold almost as much net wealth as the bottom 95 percent of our society.[3]Emmanuel Saez, “Striking it Richer: The Evolution of Top Incomes in the United States,” March 2, 2012, http://elsa.berkeley.edu/~saez/saez-UStopincomes-2010.pdf ; Edward N. Wolff, “The Asset Price Meltdown and the Wealth of the Middle Class,” New York University, August 26, 2012, http://appam.confex.com/data/extendedabstract/appam..._0.pdf This polarized situation does not bode well for our future, and unless broader social trends in jobs and incomes soon improve, dark days surely lie ahead.
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If we seek to create jobs and raise incomes for ordinary Americans, we should consider what sorts of jobs and incomes these might be. Since economists and policy analysts tend to have advanced degrees and many leading journalists these days are Ivy League alumni, their employment perceptions may often diverge from reality. So let us review the official government data from the Bureau of Labor Statistics (BLS), as discussed by Prof. Jack Metzgar of Chicago’s Center for Working-Class Studies and brought to my attention in an excellent column by the late Alexander Cockburn.[4]Jack Metzgar, “Education, Jobs, and Wages,” Working-Class Perspectives: Commentary from the Center for Working-Class Studies, March 5, 2012, http://workingclassstudies.wordpress.com/2012/03/05...wages/ Alexander Cockburn, “The Myth of the ‘Knowledge Economy,’” Counterpunch, March 23, 2012, http://www.counterpunch.org/2012/03/23/the-myth-of-...onomy/ . Metzgar writes:
The BLS’s three largest occupational categories by themselves accounted for more than one-third of the workforce in 2010 (49 million jobs), and they will make an outsized contribution to the new jobs projected for 2020. They are:
Office and administrative support occupations (median wage of $30,710)
Sales and related occupations ($24,370)
Food preparation and serving occupations ($18,770)
Other occupations projected to provide the largest number of new jobs in the next decade include child care workers ($19,300), personal care aides ($19,640), home health aides ($20,560), janitors and cleaners ($22,210), teacher assistants ($23,220), non-construction laborers ($23,460), security guards ($23,920), and construction laborers ($29,280).
Although our bipartisan elites regularly suggest higher education as the best elixir for what ails our economy and its workers, few of these job categories seem logical careers for individuals who have devoted four years of their life to the study of History, Psychology, or Business Education, often at considerable expense. Nor would we expect the increased production of such degrees, presumably at lower-tier or for-profit colleges, to have much positive impact on the wages or working conditions of janitors or security guards.
Consider that only 20% of current jobs require even a bachelors’ degree.[5]C. Brett Lockard and Michael Wolf, “Occupational employment projections to 2020,” Bureau of Labor Statistics, Table 6, http://www.bls.gov/opub/mlr/2012/01/art5full.pdf . More than 30% of Americans over the age of 25 have graduated college, so this implies that one-third or more of today’s college graduates are over-educated for their current employment, perhaps conforming to the stereotype of the college psychology major working at Starbucks or McDonalds.
Furthermore, this employment situation will change only gradually over the next decade, according to BLS projections. Millions of jobs in our “knowledge economy” do currently require a post-graduate degree, and the numbers are growing rapidly; but even by 2020, these will constitute less than 5% of the total, while around 70% of all jobs will still require merely a high school diploma.[6]Some analysts have criticized the BLS statistics based on their methodology. Anthony Carnevale of the Georgetown University Center on Education and the Workforce claims the BLS significantly underestimates educational requirements and created an alternate methodology to predict future employment educational requirements. Carnevale’s research can be found here: http://www9.georgetown.edu/grad/gppi/hpi/cew/pdfs/F...rt.pdf . Since the main difference between the BLS and the Georgetown numbers are not in the number of bachelor’s or advanced degrees required but rather in how many people need alternate forms of postsecondary training (some college or vocational school), the argument that there is an overemphasis on 4-year degrees can be made with either set of numbers.
Education may be valuable for other reasons, but it does not seem to hold the answer to our jobs and incomes problem.
If additional education is a dead end, other partisan nostrums appear equally doubtful. Large cuts in government taxation or regulation are unlikely to benefit the average sales clerk or waitress. And the favored progressive proposal of a huge new government stimulus package has absolutely no chance of getting through Congress; but even if it did, few of the funds would flow to the low-paid private sector service workers catalogued above, and any broader social gains would rely upon a secondary boost in economic activity produced by putting extra government dollars into private pockets.
So how might we possibly raise the wages of American workers who fill this huge roster of underpaid and lesser-skilled positions, holding jobs which are almost entirely concentrated in the private service sector?
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Perhaps the most effective means of raising their wages is simply to raise their wages.
Consider the impact of a large increase in the federal minimum wage, perhaps to $10 or more likely $12 per hour.
The generally low-end jobs catalogued above are entirely in the non-tradable service sector; they could not be outsourced to even lower-paid foreigners in Bangalore or Manila. Perhaps there might be some incentive for further automation, but the nature of the jobs in question – focused on personal interactions requiring human skills – are exactly those least open to mechanical replacement. Just consider the difficulty and expense of automating the job of a home health care aide, child care worker, or bartender.
With direct replacement via outsourcing or automation unlikely, employers responding to a higher minimum wage would be faced with the choice of either increasing the wages of their lowest paid workers by perhaps a couple of dollars per hour, or eliminating their jobs. There would likely be some job loss,[7]Research has not provided a conclusive answer to the question of job loss. While economic theory predicts that some job loss would occur with higher minimum wages, the widely cited research of economists David Card and Alan B. Krueger showed “no evidence for a large negative employment effect of higher minimum wages.” A selection of relevant research can be found here: http://www.swcollege.com/bef/policy_debates/increas...m.html . but given the simultaneous rise in labor costs among all competitors and the localized market for these services, the logical business response would be to raise prices by a few percent to help cover increased costs while also trimming current profit margins. Perhaps consumers would pay 3 percent more for Wal-Mart goods or an extra dime for a McDonald’s hamburger, but most of the jobs would still exist and the price changes would be small compared to typical fluctuations due to commodity and energy prices, international exchange rates, or Chinese production costs.
The resulting one-time inflationary spike would slightly raise living expenses for everyone in our society, but the immediate 20% or 30% boost in the take-home pay of many millions of America’s lowest income workers would make it easy for them to absorb these small costs, while the impact upon the middle or upper classes would be totally negligible. An increase in the hourly minimum wage from the current federal level of $7.25 to (say) $12.00 might also have secondary, smaller ripple effects, boosting wages currently above that level as well.
A minimum wage in this range is hardly absurd or extreme. In 2012 dollars, the American minimum wage was over $10 in 1968 during our peak of postwar prosperity and full employment.[8]Ralph Nader, “Minimum Wage: Catching Up with 1968,” Common Dreams, February 29, 2012 The average minimum wage in Canadian provinces is currently well over $10 per hour, the national figure for France is more than $12, and Australia has the remarkable combination of a minimum wage of nearly $16.50 together with 5 percent unemployment.[9]Ontario Ministry of Labour; Hugh Carnegy, “French government raises minimum wage,” Financial Times, June 26, 2012; “National minimum wage,” Fair Work Ombudsman, Australian Government, page updated 1 July 2012, http://www.fairwork.gov.au/pay/national-minimum-wag...t.aspx .
Even a large increase in the minimum wage would have very little impact on America’s international competitiveness since almost everyone employed in our surviving manufacturing export sector – whether in unionized Seattle or non-union South Carolina – already earns far above the current minimum wage. The same is also true for government workers, resulting in negligible increased cost to taxpayers.
Leaving aside the obvious gains in financial and personal well-being for the lower strata of America’s working class, there would also be a large economic multiplier effect, boosting general business activity in our weak economy. America’s working poor tend to spend almost every dollar they earn, often even sinking into temporary debt on a monthly basis.[10]Bureau of Labor Statistics, “Income before taxes: Average annual expenditures and characteristics,” Consumer Expenditure Survey, 2011, http://www.bls.gov/cex/2011/Standard/income.pdf . Raising the annual income of each such wage-earner couple by eight or ten thousand dollars would immediately send those same dollars flowing into the regular consumer economy, boosting sales and general economic activity. In effect, the proposal represents an enormous government stimulus package, but one targeting the working-poor and funded entirely by the private sector.
Ironically, it is likely that major elements of the private sector would be perfectly happy with this arrangement. For example, despite their low-wage and anti-worker reputation, Wal-Mart’s top executives lobbied Congress in 2005 for an increase in the minimum wage, concerned that their working-class customer base was growing too impoverished to shop at their stores.[11]“Wal-Mart calls for minimum wage hike,” CNN/Money, October 25, 2005, http://money.cnn.com/2005/10/25/news/fortune500/wal..._wage/ . Wal-Mart might never be willing to raise its wages in isolation, but if a higher minimum wage forces all competitors to do the same, then prices can also be raised to help make up the difference, while the large rise in disposable consumer income would greatly increase sales.
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Although the direct financial benefits to working-class Americans and our economy as a whole are the primary justifications for the proposal, there are a number of subsidiary benefits as well, ranging across both economic and non-economic areas.
First, the net dollar transfers through the labor market in this proposal would generally be from higher to lower income strata, and lower-income individuals tend to pay a much larger fraction of their income in payroll and sales taxes. Thus, a large boost in working-class wages would obviously have a very positive impact on the financial health of Social Security, Medicare and other government programs funded directly from the paycheck. Meanwhile, increased sales tax collections would improve the dismal fiscal picture for state and local governments, and the public school systems they finance.
Furthermore, as large portions of the working-poor became much less poor, the payout of the existing Federal Earned Income Tax Credit (EITC) would be sharply reduced. Although popular among politicians, the EITC is a classic example of economic special interests privatizing profits while socializing costs: employers receive the full benefits of their low-wage workforce while a substantial fraction of the wage expense is pushed onto the taxpayers. Private companies should fund their own payrolls rather than rely upon substantial government subsidies, which produce major distortions in market signals.
Even on the highly contentious and seemingly unrelated issue of immigration, a large rise in the minimum wage might have a strongly positive impact. During the last decade or two, American immigration has been running at historically high levels, with the overwhelming majority of these immigrants being drawn here by hopes of employment.[12]“2011 Yearbook of Immigration Statistics,” Office of Immigration Statistics, Department of Homeland Security, September 2012, http://www.dhs.gov/sites/default/files/publications...11.pdf . This vast influx of eager workers has naturally strengthened the position of Capital at the expense of Labor, and much of the stagnation or decline in working-class wages has probably been a result, since this sector has been in greatest direct competition with lower-skilled immigrants.[13]While most experts agree that unskilled immigration depresses the wages of low-skilled American workers to some degree, they disagree about the extent of the effect. For a recent overview of the scholarly debate, see Harry J. Holzer, “Immigration Policy and Less-Skilled Workers in the United States,” Migration Policy Institute, January 2011. http://www.migrationpolicy.org/pubs/Holzer-January2...11.pdf or Linda Levine, “Immigration: The Effects on Low-Skilled and High-Skilled Native-Born Workers,” Congressional Research Service, April 2010, http://www.au.af.mil/au/awc/awcgate/crs/95-408.pdf .
Not only would a large rise in the minimum wage reverse many years of this economic “race to the bottom,” but it would impact immigration itself, even without changes in government enforcement policy. One of the few sectors likely to be devastated by a much higher minimum wage would be the sweatshops and other very low wage or marginal businesses which tend to disproportionably employ new immigrants, especially illegal ones. Sweatshops and similar industries have no legitimate place in a developed economy, and their elimination would reduce the sort of lowest-rung job openings continually drawing impoverished new immigrants. Meanwhile, those immigrants who have already been here some time, learned English, and established a solid employment record would be kept on at higher wages, reaping the same major benefits as non-immigrant Americans within the ranks of the working-poor.
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Finally, one of the more unexpected benefits of a large rise in the minimum wage would follow from a total reversal of bipartisan conventional wisdom. Whereas our elites regularly tell us that an increase in higher education might have the benefit of raising American wages, I would instead argue that a sharp rise in ordinary wages would have the benefit of reducing higher education, whose growth increasingly resembles that of an unsustainable bubble.
Between 2000 and 2010, enrollment in postsecondary institutions increased 37 percent, compared to just 11 percent during the previous decade, with the recent increase being almost three times that of the growth of the underlying population of 18- to 24-year-olds. Indeed, relative enrollment growth for older students – 25 and above – was far greater than for students in the younger, more traditional ages. Furthermore, “Business” has overwhelmingly become the most popular undergraduate major, attracting nearly as many students as the combined total of the next three categories – Social Sciences and History, Health Sciences, and Education.[14]Thomas Snyder and Sally Dillow, Digest of Education Statistics 2011, Chapter 3 and Table 286, April 2012, The National Center for Educational Statistics.
If rapidly growing numbers of individuals, especially those many years past their high school graduation, are now attending college and majoring in Business, they are probably not doing so purely out of love of learning and a desire for broadening their intellectual horizons. Instead, they have presumably accepted the pronouncements of authority figures that higher education will benefit them economically. Put in harsher terms, they may believe that a college degree is their best hope of avoiding a life of permanent poverty trapped in the ranks of the working-poor.
Although there is a clear mismatch between the requirements of America’s projected jobs and the benefits of a college education, this notion of “college or poverty” may not be entirely mistaken. A recent college graduate is almost 20 percentage points more likely to have a job than a person of the same age with only a high school degree.[15]Adam Looney and Michael Greenstone, “Regardless of the Cost, College Still Matters,” The Hamilton Project (October 2012), http://www.hamiltonproject.org/papers/regardless_of...tters/ . As a competitive signaling device, a 4-year degree may help someone land an office job as an administrative assistant rather than one as a fast-food server. But this is costly to the individual and to society.
Even leaving aside the absurdity of young people spending years of their lives studying business theory or psychology to obtain jobs which traditionally went to high school graduates, the financial cost is enormous. A generation or more ago, expenses at solid state institutions and similar colleges were fairly low, and could mostly be financed by small grants, parental savings, and part-time student jobs. But educational costs have increased 133% above inflation over the last thirty years,[16]Costs have risen from $7,759 in 1980-81 to $18,133 in 2010-2011 in inflation-adjusted 2009-2010 dollars. Thomas Snyder and Sally Dillow,Digest of Education Statistics, 2011, Chapter 3 and Table 349, April 2012, The National Center for Educational Statistics. and the government-subsidized college-loan industry has grown in parallel. Last year, the total volume of outstanding student-loan debt passed the trillion dollar mark, now exceeding either credit-card or auto loan debt.[17]“Quarterly Report on Household Debt and Credit,” Federal Reserve Bank of New York (August 2012), http://www.newyorkfed.org/research/national_economy...12.pdf .
Two-thirds of recent college graduates borrowed to finance their education, and their average debt is over $23,000, while the load for those who pursue graduate or professional degrees can easily exceed the hundred thousand dollar mark.[18]Andrew Martin and Andrew W. Lehren, “Degrees of Debt: A Generation Hobbled by the Soaring Cost of College,” The New York Times, May 12, 2012, http://www.nytimes.com/2012/05/13/business/student-...t.html . These debts are exempt from bankruptcy discharge, and unless graduates quickly find high-paying jobs – not easy in an economy with very high youthful unemployment – the required payments may remain larger than the combined total of their federal, state, and local taxes. This privatized “education tax” may become a permanent, terrible burden, pushing any plans for marriage, family, and home purchase into the distant future. Barely half of 18- to 24-year-olds are currently employed, the lowest level in over sixty years,[19]“Young, Underemployed and Optimistic,” Pew Research, February 9, 2012, http://pewresearch.org/pubs/2191/young-adults-worke...ession . so we should not be surprised that a quarter of all student-loan payers are currently delinquent.[20]Andrew Martin and Andrew W. Lehren, “Fed Study of Student Debt Outlines a Growing Burden,” The New York Times, March 5, 2012, http://www.nytimes.com/2012/03/06/business/study-fi...d.html . Without the possibility of bankruptcy to clear their load, permanent debt-peonage for a substantial fraction of the next generation seems a very real possibility.
The aggressive marketing tactics of for-profit colleges and the student loan industry have disturbing parallels with the sub-prime lenders who played a destructive role in the Housing Bubble. Our national elites gave strong public support to the goal of universal home-ownership. Families were warned that if they did not stretch their income and their credit to buy a house at the inflated prices being offered, they would be permanently priced out of the market and condemned to second-class economic citizenship. Today, very similar warnings are made about the failure to invest in a college education, and this is backed by the aggressive advertising and sales tactics of the lucrative and well-connected for-profit sectors of the Higher Education-Industrial Complex, such as University of Phoenix and Kaplan Schools.
The lax lending standards and regulatory policies supporting greater homeownership were a major factor in our catastrophic financial collapse, in which the average family has now lost 40% of its net worth and many millions of Americans are on the edge of foreclosure, bankruptcy, and destitution.[21]Binjamin Appelbaum, “Family Net Worth Drops to Level of Early ‘90s, Fed Says,” The New York Times, June 11, 2012, http://www.nytimes.com/2012/06/12/business/economy/...s.html Nearly everyone lost, while a tiny handful of individuals and companies made vast, unearned fortunes from facilitating the growth of the bubble or later betting upon its collapse. A similar outcome in higher education seems quite likely.
Now consider the impact of a sharp rise in the minimum wage, sufficient to remove the taint of poverty overhanging so many of our lower-tier jobs. Those academically-oriented students who plan to pursue challenging college majors in engineering, computer software, or other STEM fields would be completely unaffected by a rise in pay for home health aides, nor would there be any impact on the college plans of those seeking to broaden their horizons with serious academic study in literature, history, or philosophy.
But for those millions who regard postsecondary education as merely a way of punching their ticket with a “business” degree and thereby gaining a shot at a middle class income, the calculus would be different: four years of academic work, four years of foregone income, and many tens of thousands of dollars in tuition and fees would be weighed against earning a reasonable living straight out of high school or with a form of shorter vocational training like an apprenticeship. Certainly in the past, when well-paid factory jobs were plentiful, a large fraction of students made the latter choice, and seldom regretted it.
Meanwhile, if college enrollments were reduced to those who actually wanted or needed a college education, supply and demand would begin deflating our Higher Education Bubble, forcing a sharp drop in ever-escalating educational costs. Since government loans and subsidies would be targeted at a much smaller pool of students, they could be made more generous, reducing the debt burden on those who do still seek a degree.
•�•�•
Public policy experts sometimes glorify complexity, proposing intricate, interlocking systems aimed at a desired result. But such structures are only as strong as their weakest link, and a proposal too complex to fully understand is also too complex to fix. Our government has sought to ensure a decent living for American workers through an enormous array of income subsidies, public benefits, training programs, and educational loans; at this point, many of these components have accumulated powerful and parasitic side-beneficiaries while leaving the working class behind.
Since this vast and leaky conglomeration has failed at its intended goal, perhaps we should just try raising wages instead.
(Originally published November 15, 2012 by The New America Foundation – PDF)
References
[1] “United States GDP Growth Rate,” Trading Economics, from Bureau of Economic Analysis (October, 2012), http://www.tradingeconomics.com/united-states/gdp-growth .
[2] Bureau of Labor Statistics, “Employment, Hours, and Earnings from the Current Employment Statistics survey (National),” updated October 5, 2012.
[3] Emmanuel Saez, “Striking it Richer: The Evolution of Top Incomes in the United States,” March 2, 2012, http://elsa.berkeley.edu/~saez/saez-UStopincomes-2010.pdf ; Edward N. Wolff, “The Asset Price Meltdown and the Wealth of the Middle Class,” New York University, August 26, 2012, http://appam.confex.com/data/extendedabstract/appam/2012/Paper_2134_extendedabstract_151_0.pdf
[4] Jack Metzgar, “Education, Jobs, and Wages,” Working-Class Perspectives: Commentary from the Center for Working-Class Studies, March 5, 2012, http://workingclassstudies.wordpress.com/2012/03/05/education-jobs-and-wages/ Alexander Cockburn, “The Myth of the ‘Knowledge Economy,’” Counterpunch, March 23, 2012, http://www.counterpunch.org/2012/03/23/the-myth-of-the-knowledge-economy/ .
[5] C. Brett Lockard and Michael Wolf, “Occupational employment projections to 2020,” Bureau of Labor Statistics, Table 6, http://www.bls.gov/opub/mlr/2012/01/art5full.pdf .
[6] Some analysts have criticized the BLS statistics based on their methodology. Anthony Carnevale of the Georgetown University Center on Education and the Workforce claims the BLS significantly underestimates educational requirements and created an alternate methodology to predict future employment educational requirements. Carnevale’s research can be found here: http://www9.georgetown.edu/grad/gppi/hpi/cew/pdfs/FullReport.pdf . Since the main difference between the BLS and the Georgetown numbers are not in the number of bachelor’s or advanced degrees required but rather in how many people need alternate forms of postsecondary training (some college or vocational school), the argument that there is an overemphasis on 4-year degrees can be made with either set of numbers.
[7] Research has not provided a conclusive answer to the question of job loss. While economic theory predicts that some job loss would occur with higher minimum wages, the widely cited research of economists David Card and Alan B. Krueger showed “no evidence for a large negative employment effect of higher minimum wages.” A selection of relevant research can be found here: http://www.swcollege.com/bef/policy_debates/increase_minimum.html .
[8] Ralph Nader, “Minimum Wage: Catching Up with 1968,” Common Dreams, February 29, 2012
[9] Ontario Ministry of Labour; Hugh Carnegy, “French government raises minimum wage,” Financial Times, June 26, 2012; “National minimum wage,” Fair Work Ombudsman, Australian Government, page updated 1 July 2012, http://www.fairwork.gov.au/pay/national-minimum-wage/pages/default.aspx .
[10] Bureau of Labor Statistics, “Income before taxes: Average annual expenditures and characteristics,” Consumer Expenditure Survey, 2011, http://www.bls.gov/cex/2011/Standard/income.pdf .
[11] “Wal-Mart calls for minimum wage hike,” CNN/Money, October 25, 2005, http://money.cnn.com/2005/10/25/news/fortune500/walmart_wage/ .
[12] “2011 Yearbook of Immigration Statistics,” Office of Immigration Statistics, Department of Homeland Security, September 2012, http://www.dhs.gov/sites/default/files/publications/immigration-statistics/yearbook/2011/ois_yb_2011.pdf .
[13] While most experts agree that unskilled immigration depresses the wages of low-skilled American workers to some degree, they disagree about the extent of the effect. For a recent overview of the scholarly debate, see Harry J. Holzer, “Immigration Policy and Less-Skilled Workers in the United States,” Migration Policy Institute, January 2011. http://www.migrationpolicy.org/pubs/Holzer-January2011.pdf or Linda Levine, “Immigration: The Effects on Low-Skilled and High-Skilled Native-Born Workers,” Congressional Research Service, April 2010, http://www.au.af.mil/au/awc/awcgate/crs/95-408.pdf .
[14] Thomas Snyder and Sally Dillow, Digest of Education Statistics 2011, Chapter 3 and Table 286, April 2012, The National Center for Educational Statistics.
[15] Adam Looney and Michael Greenstone, “Regardless of the Cost, College Still Matters,” The Hamilton Project (October 2012), http://www.hamiltonproject.org/papers/regardless_of_the_cost_college_still_matters/ .
[16] Costs have risen from $7,759 in 1980-81 to $18,133 in 2010-2011 in inflation-adjusted 2009-2010 dollars. Thomas Snyder and Sally Dillow,Digest of Education Statistics, 2011, Chapter 3 and Table 349, April 2012, The National Center for Educational Statistics.
[17] “Quarterly Report on Household Debt and Credit,” Federal Reserve Bank of New York (August 2012), http://www.newyorkfed.org/research/national_economy/householdcredit/DistrictReport_Q22012.pdf .
[18] Andrew Martin and Andrew W. Lehren, “Degrees of Debt: A Generation Hobbled by the Soaring Cost of College,” The New York Times, May 12, 2012, http://www.nytimes.com/2012/05/13/business/student-loans-weighing-down-a-generation-with-heavy-debt.html .
[19] “Young, Underemployed and Optimistic,” Pew Research, February 9, 2012, http://pewresearch.org/pubs/2191/young-adults-workers-labor-market-pay-careers-advancement-recession .
[20] Andrew Martin and Andrew W. Lehren, “Fed Study of Student Debt Outlines a Growing Burden,” The New York Times, March 5, 2012, http://www.nytimes.com/2012/03/06/business/study-finds-a-growing-student-debt-load.html .
[21] Binjamin Appelbaum, “Family Net Worth Drops to Level of Early ‘90s, Fed Says,” The New York Times, June 11, 2012, http://www.nytimes.com/2012/06/12/business/economy/family-net-worth-drops-to-level-of-early-90s-fed-says.html
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Of course if your already making $10-$12 an hour, you get the short end of this deal. I think the bigger problem is that inflation often outpaces the wage increases people earn thinking it will get them ahead. Also, many of the businesses that would be most affected by a rise in minimum have small margins for error in the labor cost of their business models (this is especially true in food service, runaway labor cost will kill you in food service). So the businesses most effective will either raise prices, causing more inflation that means that those who get raises will get less for their money, while those who were trying to get ahead are bumped cown to minimum wage as prices rise. Or people are laid off, meaning those left to work in the service sector will be working harder to satisfy customers already angered by raises in price.
Make no mistake, Im all for people earning more money, but not if that money is worth less. While the one percent is reinvesting thier dollars and earning faster than the rate of inflation, the working poor who cant afford expert to think for them have to make critical decisions based around a fluctuating dollar? Please, it would be better to stop draining their wealth with an economy based around the goverment fixing everything than it would be to try and have the government fix everything.
Excellent ideas, though many of the people who run the GOP seem eager to drive wages down–and seem to think that the real problem with the US economy is that Americans are overpaid.
Or, how about the REALLY conservative prospect of admitting that many jobs just aren’t going to pay very well, and that’s life. That’s reality, something that seems to be sorely lacking at AmCon of late.
But no, let’s ape liberals and manipulate labor markets and use the power of the government to make employers pay more than a job is worth. Let’s continue to help pump the idea that everyone deserves a McMansion and free college, no matter how much their skills are actually worth, rather than telling people the truth: hey, your job is worth an apartment and a used car, at best.
Here’s a very very ‘old school’ notion. The top one percent sit down and consider how long they can sit in that position before there is an implosion from society. That implosion will either by legislative action wrst some of their profits or they could make the choice to make a little less and increase wages and re-invest in the US.
I am not a fan of revolts, but the bailouts as wellas what occurred still smells bad and tastes worse than it smells. How long before the have nots decide to start having by any means neccessary? How much is a billion more, more or less?
It won’t matter if the money was earned or unearned. Whether it was obtained legally or well within legal boundaries. I think there’s a subtle warning in this election. The current WH occupant is only mouthing social theory. Perhaps, one day the one percent will find themselves crying,’Let them eat cake.’
Only to discover unwelcome guests in your kitchen.
Did I neglect to mention that I long to be one the 1%.
Ron Unz……Any kind of government intervention in the broad economy,other than for safety and health reasons,is usually counter productive. Minimum wages, always inflationary, also tend to cut off the bottom rungs of the economic ladder thus perpetuating the poverty class in America. Your point of college being wasteful,uneconomic and costly is true. College is for people who need specific skills for certain occupations in life(doctors,lawyers,chemists,biologists,physicists,engineers and so forth). Better to go into the Trades or ,better yet, become entrepreneur minded and start a business. Also,the notion that minimum wages boost payroll taxes shows how far down the path America has become toward a collectivized society. That is the notion that one does not own the fruits of one’s labor but that fruit instead belongs to the State to be redistributed as seen politically fit. Maybe the answer would be to abolish all payroll and income taxes until a certain high level of income was reached. This would allow more wealth to remain in the economy to create even more wealth and thus more real jobs. In the long run,as you suggest, government interference in the economy has perpetuated a wasteful,bloated bureaucracy plus a literal army of parasites who game the system for whatever economic advantage they can. Raising the minimum wage is not the answer. Better to work to dismantle the present tax and spend welfare state while at the same time teaching people the tough love of self reliance and self responsibility. After all,this is what made America economically great in the first place.
What the? I thought I was on “the American conservative” website I must be on “the American socialist” site.
Read Milton Friedman.
GET YOUR HAND OUT OF MY POCKET!
As Archbishop Fulton Sheen put it, “Man is not for the economy, but the economy is for man.”
The reason certain sectors of the economy (science/tech) have boomed is because the federal government has directed spending in this area. It is largely defense/homeland security related (with varying degrees of separation). We have lots of people working from home as consultants for IT firms working for companies who get 95% of their revenue from government contracts. Looking at the largest corporations in places like Virginia or Massachusetts. You will see among the top ten employers in those states companies who get 90+% of their business from the federal government.
We will defend and secure our way into prosperity. Then again, Obama met with Rev. Al Sharpton to discuss the looming fiscal cliff. Maybe we’ll extort out way into prosperity.
“Without the possibility of bankruptcy to clear their load, permanent debt-peonage for a substantial fraction of the next generation seems a very real possibility.” I’d say it’s even a reality.
Thanks for this article. Raising the minimum wage is a course of action with merit that is all too often disregarded as heresy according to the Gospel of Prosperity.
Some people never learn. It is precisely this meddling in the free market by Government that has produced this low growth economy.
In addition to lost jobs any additional increases in prices would cause a greater increase in the CPI which would cause workers with built in COLAS to receive wage increases which would cause the price of their product to increase which could result in more jobs going overseas. Any addition to the CPI caused by this ridiculous idea would cause Social Security payments and Government pensions to increase which would increase the deficit even more.
Any wage increases due to anything other than an increase in productivity will have more negative consequences than positive which would cause people like this writer probably suggesting even more meddling in the economy.
My early Austrian tendencies sees this as an inflationary practice that will cause a brief wage bubble. The market will eventually catch up and we’ll end up in the same situation. Some of your arguments regarding the cost-benefit of minor increases as compared to wages is interesting. I’m an armchair economist and am not so sure if the math would work (again, given my leanings). But I’m sure that it’s not strictly economics…
The segment about education cost resonates very strongly with me. Unfortunately, I see the problem as much more than wages. Sure, a wage increase could potentially make people realize that a college degree is unnecessary to live a sustainable economic life. But there is a deep stigma in our society about people who do not attend a post-secondary institution. There is even now a stigma for those that attend a less than four year post-secondary institution. From a very young age, children are told that college is the only way to make it. The only way to live the good life is to sit in classroom for 15-20 years of your life. It’s obviously the result of generational assumptions and experience — “Dad and Mom went to State University, so you have to, too.” Other paths are eradicated from early on. The trades and artisan careers are grouped into the category of the “unfit for advancement.” Children are discouraged from using their God-given talents and abilities in order to pursue a cubicle job. The society promises them prosperity if they just put in those four more years. Plus, “everyone needs that college experience to live a little, right?”
The education system is broken from the bottom up. We’re totally missing the boat with all of our policy directed towards “better test scores” and other top-down bureaucratic “fixes.” The technocracy is disabling and it’s only growing bigger and faster as we scramble to try and fix the mess we’ve created. Centralization of education underpins the debacle of our public school system.
I want to keep writing, but what really matters is that our problems of the wealth gap, poverty and unemployment are very cultural and not simply economic. When we approach these issues with government policy strictly by viewing humans with homo economicus presuppostions, we’ve already lost the battle. We’re just centralizing, bureaucratizing, and immobilizing our country. We kick the can down the road, just in another way. Wages aren’t enough. Our culture is broken.
Excellent article! The private sector would be wise to distribute more of their profits to their workers rather than to shareholders. No one is saying they should distribute all or most just more. If the private sector refuses to do so, the government will eventually do it for them. If the government is then prevented from doing so, people will take things into their own hands (revolution). Income ineqaulity is pernicious.
Isn’t it sad that one must annotate the obvious?
The pressure on wages are downward. Anti-labor and right-to-work laws are meant to increase the bottom line of commercial enterprises, presumably for the purpose of expansion. Though there is no guarantee that any particular company will use cheaper labor for expansion, they will commonly tell you that they can hire more people if labor cost, (was paid), less. So the companies do well but not necessarily the employees. I think the average wage would have to be around $25 or $30 an hour for an employee to be able to buy as much with a dollar as that employee could have bought in the 1970’s. One might effectively argue that business in America owes much of its overall 30 year success to shrinking labors costs rather than by risk, innovation or invention. Risk being mostly by utilizing other people’s money by loans and by floating various investment “instruments”.
I agree that the lower end of the income spectrum righteously deserves a massive pay increase and that this would reduce the utilization of social programs and increase retail sales. For some to argue that a mere $100 tax rebate would have an appreciable effect on the national economy, imagine what an increase of five or eight bucks an hour for wage earners would do for it! Spreading the labor cost load out into product pricing would be nearly academic and easily done in my opinion.
This one article utterly restores my confidence that conservative thought still has a great deal to offer in the public discourse of the American Republic.
Employers always whine about the impact on their suddenly negligible profits when the minimum wage is increased, but more money in the hands of working families is always the engine of renewed prosperity.
The reason for doing it by law is precisely to provide a level playing field. One magnanimous employer doing it on their own can’t compete. If everyone has to pay increased wages, everyone benefits from the resulting prosperity, including (as noted above) Wal-Mart.
I wonder how many out there will have the knee jerk reaction that this is a socialistic idea. Getting business off the public teat and supporting participation by labor in the benefits of capitalism should be squarely in the conservative camp. Finacialization and legislative moat building for business is not growth, it is rent seeking and a form of hidden taxation. Raising the Minimum Wage back up to the level of the late 60’s would be a good start towards maybe going back to a society where a single wage earner can actually support a family again.
Walter Williams Thomas Sowell on the minimum wage.
A tight labor market drives wages higher, but unfortunately the elites in both political parties refuse to enforce immigration laws. Thus the country has been flooded with poor unskilled people and wages have stagnated for those without a college degree. All the jobs teenagers used to do during the summer are now filled by illegal immigrants. The kitchen at my favorite Prime Steakhouse is staffed with nothing but illegals. When I was college back in the 70s I paid my tuition by working in a fine dining establishment.
Bravo! the article is good as it does identify how lower middle and working class Americans have been thrown under the bus by the last 30 years of “supply side” and trickle down economics. Raising the minimum wage is an excellent idea if not blocked as usual by the corporate elite and the Wall St juggernaut. As Mr Unz suggests, this would merely restore the minimum to its value in the 60’s. The elephant in the room is the devastating loss of collective bargaining and the legitimate rights of working people to belong to a trade union . The 2 party duopoly in D.C. love to affirm the democratic rights of workers in places like Vietnam, China and Iran. However here at home the cheap labor model featuring union busting and class warfare is considered one of the great achievements of the new services economy.
I admit I only read the first half of this article and briefly scanned the rest, so maybe this is addressed and countered, but here’s the issue I see with raising the minimum wage: it will increase unemployment and underemployment.
With the Affordable Care Act coming into play, we face a future economy as follows:
Most of the working poor will find themselves working two or more part time jobs. Full time employment will be only for management, highly skilled professionals, and executives. Everyone below that level will be relegated to multiple part time jobs (so their employers can avoid the onerous requirements of the new law) and still these wages will remain stagnant, even if you raised the minimum wage, you’re only pushing the least skilled, the older over qualified, and others who don’t fit into these particular roles out of the job market.
We will end up with far more young, minorities, elders, and other low skilled / over qualified people on the government dole to survive.
The problem is that we have a mismatch between what the future economy will look like and what we encourage our future workers to do. I often say, not everyone can be an geneticist or a lawyer, so why do we encourage so many of our kids who may not have the apptitude for those careers to take out huge loans and end up dropping out or finishing with huge loans and no job prospects?
I would encourage every young person thinking about going to college to reconsider and instead, join the workforce whereever possible for now, maybe work your way up into a job that pays your tuition, and THEN go to college. Future generations will have to follow this pattern to be successful:
1. Graduate highschool and work a couple of low paying low skilled part time jobs
2. Prove yourself in time in those positions and move up to a more senior position in one or both (whichever will hire full time)
3. Put in more time and work up to management, then seek out benefits like tuition reimbursement
4. Go to school part time while working full time, after several years finishing your degree
5. Use that degree to move into an executive position with your company.
All in all, this would probably take 10 or more years since graduating from high school. The millenial generation believes erroneously that they will be handed a high paying job one they graduate high school with their liberal arts degree, despite the lack of job experience and despite the lack of connections gained through life experience.
Wow never thought I would see this on a conservative web site (or is this a set up?). Nevertheless, its fairly simple: if you want less government, increase and protect the wealth of the working class. Unfortunately, the minimum wage is probably the most simple and equitable way. Implement gradually.
I simply can’t imagine that providing employers with an artificial incentive to cut jobs, cut hours, and refrain from hiring new workers can work to the benefit of the lowest strata of American society. Yes, low take-home pay is a problem, but so is unemployment, and the inability to secure an entry-level job has a poisonous effect on an individual’s prospects for better employment in the future. Some workers would no doubt benefit from an increased minimum wage, but the broad middle class would simply see price increases while the underclass would be knocked further out of reach of economic opportunity.
Did I read a seriously well thought out piece about raising the minimum wage on a website marked as conservative?
Seriously.. I only came here a few weeks ago. Is this normal? This is also the place that showed that wonderful item on copyright reform.
I mean, I agree to the concept, but thought that there was sufficient argument that it wouldn’t work. In fact, this seems to push the idea of the ‘living wage’; setting a minimum rate that a person could live on without government services like welfare.
It is compelling, especially since the article suggests that the current solution isn’t working, which is a frightful prospect.
I am compelled, however, to ponder something: while raising the wage won’t result in a mass drop in jobs, it will cause some drag to job growth as employers push to try making due with fewer workers, which gets to this question:
Do we prefer having 3 people employed at 12/hr or 5 people employed at 7.25.
Both situations result in an overall similar cost to the employer (note this is just a rough example to serve the point of “higher paid but fewer or more at lower pay”, not to resemble true data as it won’t account for other labor costs)
There’s benefits to both concepts. The former means less people are pulling from the government (2 people unemployed vs 5 people below the poverty line). The latter means more people actually working and, thus less people having their skillsets decay. The latter also means not seeing cases of the employer trying to make 3 people do the work of 5, burning them out much faster and lowering the overall quality.
Overall, though, I believe the former might be the better option. However, I fear that I may be missing some viewpoints that would discredit the idea. Thus I present my case here in the hopes of the replies helping to give me a full picture.
1. The latter may actually lower the number of available jobs: When an individual has a job that doesn’t earn enough, they pick up another job to pay the bills, either via another person (2 income families when the original plan was for only 1 wage earner) or by the individual working two jobs.
As such, $7.25 would compel the 5 to take up other jobs. Potentially, that could mean a total of 10 jobs taken up by those 5. The former’s case could, at best, be seen as 7 jobs ‘used’ (3 originally taken, 2 lost through layoffs, 2 replacement jobs for the unemployed). Given that, increasing the wage to the point that individuals aren’t compelled to take a second job would result in a net gain that offsets the job losses.
2. Fewer people on the government dole.
Interestingly, this concept is already carried out via the recent increase to 7.25. An individual making minimum wage at full time makes just enough to avoid most government services and the EITC if they are alone. Note that the increase came at the time of the recession, which makes seeing fewer full time workers using them hard to spot among the millions out of work or working part time. Still, such people are on the edge of receiving these services: all it takes is going to part time-30 hours instead of 40-or having a child to open the floodgates. Since they are already working, there isn’t much that can be done to change their situation since we don’t demand they take a second job or find a better one.
In the latter situation, the three working are far out of the reach of government services if they are working anywhere close to 30 hours. The two who aren’t working are receiving services, but fall into the push to gain employment applied by such services. If we include systems to train those individuals into new fields, we stand a good chance of moving them into some kind of work, thus removing them completely from the system.
Also note that our current set of services cannot, in any way, compete with 24k in income. You won’t see many opt for the government dole instead of that. Those that will choose to opt for it are already using it now anyway.
So 5 people who are a hairbreath away from unlimited services or 2 people who are receiving it along with a direct push to become employed and, thus off the service.
3. More tax revenue.
While going from 7.25 to 12/hr full time doesn’t increase how many pay taxes for the most part (single people with no children will sit right at the ‘pay something’ at 7.25 and the child tax credit and HoH status just eats up the tax liability of 12/hr) it will push part timers into ‘enough income to pay’ range and cuts down on how much extra income people receive come April (said single w/ child at 12/hr loses about $2000 in refundable credits thanks to the increase in taxes and the drop in EIC).
The other ideas presented in the article also apply, such as more income towards those most willing to spend it on necessities (thus not only feeding the economy, but feeding it to places such as basic clothing, food, and repairs more than to the latest iPhone) and also providing an alternative to feeding the higher education bubble that’s set to explode (which also means fewer government loans that can default, and less demand for higher end work since some people actually would be content to remain a janitor if they could just make a basic living out of it)
Meanwhile, the biggest argument I’ve heard against the minimum wage, other than the job losses, is how jobs will be taken from teenagers who will not be able to compete with the regular workers. Given that this is already happening at the current wage, I find this a diminished argument. Along with this, teenagers aren’t required to have a job at that age, if it really comes down to that situation. Included with this is the concept that the jobs offered to teenagers may not be the best sources of teaching good work habits. A teen that’s lazy at school won’t learn to be hard working at work: instead they will learn how to earn a paycheck while doing as little work as possible in an environment that tends not to value them.
Lastly, I’d rather have the food I eat handled by someone who values their job as a permanent income and, perhaps, even a career position, than someone who sees it as ‘afterschool extra shoe money”.
The other argument of companies outsourcing jobs overseas is rather moot, given that there’s no way we can even hope to compete with the labor costs overseas. Opening the flood gates to very small income work would just mean many more people working jobs ‘not worth the money’ while being subsidized by the government. Real employment should be a job that allows a person to be fully removed from government services. Otherwise, we can just give everyone government jobs (at least then we might get some improvments to our infrastructure)
Thus the idea: instead of trying to keep up a large safety net and large tax payouts to try to compensate for diminishing incomes, apply an income tax. We can then lower the corporate tax rate and perhaps give Labor based deductions for businesses to compensate. The alternative seems to be either subsidizing a nationwide education system or just take the Social Darwinian approach and just let those people eat cake.
Hallelujah!
Raising the minimum wage is also very popular, with local and state-wide increases regularly winning at the ballot box.
I shouldn’t gloat, I know, but it’s nice to see a conservative make the same case that labor-oriented progressives have been making for at least 15 years. Now, if only you all could let go of your residule distate for unions, we could see real wages really take off, with shorter working hours as a benefit for both the currently employeed and under or unemployed. Higher wages and lower unemployment means a smaller lumpen proletariat, too, which would lower the pressure on existing government social workers and case managers, as well as the pressure to hire more and more of them (Give me an Amen!).
And as long as we’re going to de-emphasize the Earned Income Tax Credit – at one time the conservative alternative to raising the minimum wage – how about we undo some more of Ronald Reagan and the late Jerry Solomon’s work and return to the system of grants that once made up 75% of federal financial aid for higher education (I think it’s now 25% and dropping)? The student loan bubble hit students of the traditional professions (law, medicine and dentistry) 20 years ago and has been migrating out and down ever since.
Mr. Leach,
Raising the wages of the lowest paid generally results in raising the wages of the next rung up and the next rung and the next (with gradually reduced impact, I imagine) so that employers can maintain some differential in the wages of their workers. The folks currently making $10 or $12 an hour will see their wages go up to $12, $13, $14 or $15 per hour. And I think you are incorrect about general inflation usually outpacing wage growth, at least moderate wage growth. I believe it will reduce the value of fixed assets, of capital, but I don’t see it as a bad thing if Warren Buffett, the Koch Brothers, the waltons or George Soros see their net worth reduced by a few billion dollars.
Tom,
Productivity has been going up for the last 20-30 years, as oten (or more often!) from shear speed-up as from automation, and workers have NOT seen an increase in their wages and benefits as a result, aside from a short bump at the end of the 90’s. The wealth created by that increase in productivity has all accrued to the wealthy and the super wealthy, and a simple raise in the minimum wage (and indexing it to the cost of living!) is a reasonable first step for correcting that imbalance.
libertarian jerry,
People like shared risk and shared sacrifice, and social insurance that folks pay into is not exactly the gulag.
To be fair, there have been some attempts to automate such jobs as fast food service – I think one of them actually outsourced the drive-through line to India, I kid you not – so a raise in the minimum wage could have a negative impact on some jobs, but the overall benefit to the economy and to the working class would be far more substantial.
Oh, and a lot of the current minimum and near-minimum wage jobs – all of those health and direct care aides, for instance – are held by adults and parents, not kids. Man, the positive impact on rural counties of all of those direct care workers receiving a significant wage increase would be incredible. Revived localities, less pressure to leave for the cities and suburbs (and colleges), and less pressure to maintain or open new prisons and jails. And if it results in better training and targeted certification in the helping professions, all the better for everyone involved, from the clients to the caregivers to the generally much less expensive community colleges.
Every time I read one of these, I can only think of how much easier the negative income tax would be easier to implement.
As regards the central conceit of the article – that minimum wage increases would assist in myriad ways to correct stagnant median income – I would ask the author to consider such action against the larger spectrum of data. Namely, to my knowledge, median compensation has been keeping pace with productivity increases: the market has been rewarding its employees commensurate with fundamental expectations, but those rewards are apparently being chewed up before showing up in median wages.
So, what to make of that? One conclusion is that the market is still well-functioning as regards compensation, but something has gone cock-eyed regarding the relationship of wages to total compensation.
A corollary to the above is that if compensation is market-correct and expected to remain at its current position, then an increase to wages implies a decrease to non-wage compensation in order to maintain overall levels of compensation.
The substance of the wage/compensation gap should be obvious, or at least seemed so to me: employer-provided insurance explains the gap between compensation and wages. I know that roughly 10% of my overall compensation is in premiums paid by my employer, compensation which never appears on any pay stub I receive.
The implication is that an increase to wages would erode private provision of healthcare, a net gain of zero for society and likely a net gain for the poorest, a net loss for the middle class management, and no change at the executive level. That really ought not to be the way to address the wage shortfall; at least, there must be better ways, yes?
How to address that gap – presuming we’re looking at the private healthcare effect – leads naturally toward a consideration of America’s egregiously expensive healthcare system, and how much damn money is wasted in it compared to any other delivery system in the world.
So long as healthcare costs dramatically outpace inflation, there is little hope that the net gap between wages and compensation will shift to wages. Frankly, until America accepts some form of cost-controlled socialized medicine – we have a world of implemented examples, good and bad, from which to learn and model from – that gap is going to stay, and mucking about with minimum wages is only going to rob middle class Peter to pay lower class Paul.
Once again, another example of why I love TAC. The undervaluing of work is a major moral and economic scandal in this country. It is outrageous that people who care for our children, the sick, prepare our food, keep our public places clean and the like are paid as if their work was not worth anything. If every CEO in this country disappeared tomorrow, life would go on with hardly a hiccup. If low wage workers disappeared tomorrow, we’d be screwed!
Yet another writer who should be fired from this site and never come back. The minimum wage is one of the stupidest and most counterproductive laws in the country. It hurts the people that it claims to help. All it does is price people out of the market who cannot produce the hourly rate that the minimum wage required their employer to pay them. This is a classic case of what is seen vs. what is unseen. You can see the people who are making a new minimum wage. What you can’t see are the people that would have been hired had the minimum wage not existed.
BTW, the people worrying about the effect that raising the minimum wage will have on employment aren’t considering a simple reality: most companies are squeezing the work which used to be done by 2 or 3 people out of each employee and have been for some time. There’s very little excess there for them to squeeze more work out. There would be businesses which would have to face the reality that they just aren’t successful enough to survive in a first world country. Which is fine – others will take their place. We shouldn’t be enabling failure with slave wages and government subsidies. Most businesses will have to combine various cost cuts, more equitable distribution of profits and some increase passed onto customers. We Americans create enough wealth with our labors that there’s more than enough to go around for all who participate. Asking for that wealth to be distributed more fairly – without government redistribution – is right, moral, fair and reasonable. This is why we have government – to keep people’s worst impulses from running amuck.
cka2nd
Unions had absolutely nothing to do with the rising of wages or the bettering of working conditions in America. The real reason these things happened (and will hopefully happen again) was due to capital investment. Investing in better means of production to increase productivity is what really raised wages in this country.
Unions have traditionally been supportive of the minimum wage not because it improves anyone’s wages, but because it causes less jobs to be created. Then, rather than the company creating jobs, the unions can take that money for themselves.
This has even had racial implications in countries like South Africa. The white, racist unions there support minimum wage laws because the last thing they want is their company using its money to hire lower skilled black workers. They know that the minimum wage laws keep black people out and that’s they way they want it.
I wish I could make myself believe it was this simple.
Raising the minimum wage isn’t going to stop jobs going overseas (obviously only applies to jobs that can be offshored). In fact, the reverse is true.
Rasising the minimum wage isn’t going to slow automation that increases efficiency but results (at least in the short term) in fewer “low-skill” jobs. In fact, the reverse is true.
I don’t know what the answer is, but this isn’t it.
S Peter Cordner – yeah, healthcare cost inflation has to be playing a role here. I’m not convinced it’s THE reason, but it’s gotta be one of the keys. 7% a year or whatever it’s been over the past couple of decades is just insane, and it’s wrecking people’s budgets (household and governmental).
Sambhavami, yuge, yuge! All argument against the minimum wage rest on some heroic assumptions – that there are no economic profits beyond the short term, markets sooner than later price everything right, and market prices serve the cause of social mobility. Sadly the ones offended by the author’s modest proposal ignore his most compelling exhibits – real wages are down, wages do not contribute so much as imagined to costs, and that the oft quoted proportionality of wages and unemployment isn’t so, given the case of other wealthy countries particularly Australia. Ron is right and has demolished every argument against the minimum wage, showing them to be bogus. I request his detractors to take a cold shower and abandon their misconceptions and illusions.
S Peter
” Namely, to my knowledge, median compensation has been keeping pace with productivity increases: the market has been rewarding its employees commensurate with fundamental expectations, but those rewards are apparently being chewed up before showing up in median wages.”
By my knowledge, the compensation increases seen aren’t being proportionally placed. That is, the higher your wages before, the faster they are growing now. The lower your old wages, the slower they are advancing. The lowest income have been producing more, but have not seen either an income increase or an increase in other compensation such as benefits (instead, benefits have been dropping.. which helped spark the health care and social security debates).
I bet this can be proven by crosschecking the overall compensation with compensation based on income status.
@Rob
Given the incomes of the countries outside the US and the sheer cost savings of automation, I don’t think anything other than a complete removal of the minimum wage will make any real difference to either issue. Instead, the article notes that there’s a large number of positions that cannot be outsourced that will benefit from the increase.
Thus not increasing the minimum wage won’t preserve jobs set for automation or outsourcing. Increasing it will allow the jobs that remain to be worthwhile.
Besides, if China is of any judge: outsourcing will be fixed by simple time. It seems once you push any country through industrial revolution, they respond in a post-revolution demand for workers rights.
This is a horrible idea. Most economists believe that the minimum wage is bad for poor people and the economy as a whole. For one, it makes it much harder for low skilled teenagers to enter the work force and start gaining skills and good work habits.
A far better proposal would be to abolish the minimum wage entirely.
Our economy took a major hit through the export of our manufacturing base in the name of “free” trade. Did anyone really think a country could remain economically afloat trading monopoly money back and forth? Get real.
Add to that tens of millions of immigrants (illegal and legal) and millions more who want to come here and are willing to work for peanuts and you have a recipe for the great American pauperization.
Re: how about the REALLY conservative prospect of admitting that many jobs just aren’t going to pay very well, and that’s life.
How about also admitting that sometimes criminals victimize people and that’s just life, so why bother having police? That sometimes buildings catch of fire and maybe we’re better off if they burn to the ground. That some people get sick and die and we’re never going to cure that 100% so why bother having healthcare?
I don’t think nonchalant fatalism of this sort is remotely conservative.
Re: Most economists believe that the minimum wage is bad for poor people and the economy as a whole.
Most economists can’t come to a conclusion if you laid them end to end.
What is this blasphemous nonsense? How dare this author (hack is more like it), claim that the way to raise wages is by raising wages. Doesn’t he know that the way of Wal-Mart is the way of business today?
Anyways, why do these people, who constitute the 47% of which Mitt so rightly derides and dismissed, deserve any attention at all? Let them wallow in their relative poverty and be happy for what crumbs fall from the table.
Someone get this heretic into the stocks where he rightly belongs!
“Any wage increases due to anything other than an increase in productivity”
the remarkable increase in productivity over the past 30 years hasn’t done much for wages has it! tho’ it has lined the pockets of, y’know, some people.
again and again in the posts above (not in all, of course) there is an unspoken assumption: that workers ought to have their lives controlled by those who are out to maximize their own profit. that’s the “free” market! it’s a sure sign of “lack of responsibility” and “lack of self reliance” etc. when working people cotton on to the fact that they are the wealth creators and act accordingly.
This article is vested in the notion that the ONLY way to earn income is through a job. It is one-factor thinking that ONLY see labor worker input and not capital owner input. Yet, the author states: “Meanwhile, an astonishing 93 percent of the total increase in income during the recovery period has been captured by the top one percent of earners, who now hold almost as much net wealth as the bottom 95 percent of our society. This polarized situation does not bode well for our future, and unless broader social trends in jobs and incomes soon improve, dark days surely lie ahead.”
No where is there a discussion of how the top one percent of earners actually EARN their income, except for the vague reference to “net wealth.”
What is never addressed is the reason people are poor and inflicted with poverty is that they are capitalless and do not own income-producing productive capital assets embodied in the companies they work for and other companies they do not work for. Until we reform the system to enable ordinary Americans to acquire viable ownership shares in the FUTURE productive capital asset growth of existing and future companies, and pay back the investment loans out of the future earnings of the investments, increasingly more Americans will fall to poverty levels. This is because full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum. Private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever increasing role.
Because there are not enough “customers with money” to purchase the products and services that the economy can deliver, there is a gross imbalance in production and consumption because of CONCENTRATED OWNERSHIP of the productive capital assets of production among a few in the population. This denies the vast majority the income and thus purchasing power to fulfill their demand for products and services to enrich their lives.
For solutions please see my article published by The Huffington Post at http://www.huffingtonpost.com/gary-reber/who-should-own-america_b_2040592.html
Re: Most economists can’t come to a conclusion if you laid them end to end.
The overall negative effect of the minimum wage on poor people and the economy as a whole is one of the issues that economists *most* agree on.
cka2nd,
Thanks for the reply. As someone who has worked in the service sector during minimum wage increases, trust me, even if they could afford to most businesses will not increase pay across the board all at once without a corresponding increase in earnings. They can raise prices to raise earnings (after they raise prices to regain profits lost from a forced wage hike), but that may drive away customers until all prices rise, including the price of goods that people on minimum wage have to buy.
Both marxist and libertarian economist have pointed out that working class wages have stagnated, not increasing meaningfully for the last four decades. How many times have we increased the minimum wage in that time? How successful were those attempts at rising the wage (in terms of spending power, not arbitrary numbers) of the average worker? Is there any evidence that minimum wages, in contemporay American history, that this kind of fix has fixed anything? If higher minimum wages worked, then why would we need to raise them again?
A far simpler solution would be to reward the people who actually earn raises with an increase in spending power. For this to happen we must first get inflation under control. Would this fix everything? Probably not. But at least a stable currency would allow the American people to orientate themselves in the economy, and that orientation would allow us, both individually and collectively, to make better economic observations and thus make better economic decisions.
Of course to fix the inflation problem we would need to control spending, as the government relies on inflation to pay down its debt. Solving the spending problem could help balance out the inequality gap by taking aim at those top earners who mooch of government spending (Lockmart). Hopefully, once the spending and its related debt are under control, taxes can be lowered. This in turn could help those low earners keep more in there pocket, rather than giving them a wage increase as well as a larger tax burden.
Sometimes I wonder if the minds of libertarians are stuck in America’s golden era in the 20th century.
Was the British government right to stop the abuse of workers in the 19th century:
http://www.dailymail.co.uk/news/article-1312764/Britains-child-slaves-New-book-says-misery-helped-forge-Britain.html
The funny thing about libertarianism is that it believes in nonviolence and free associations. When feudalism gave way to industrial capitalism in Britain the people who worked the land for their daily bread could no longer do so because it was enclosed. They had to go work in factories. This was an act of political violence. If eugenics (decrease supply to improve demand) and the minimum wage is unacceptable then what would the third option be for the 1/3 of Americans (surplus) who have no economic value? Feudalism?
Whoops I forgot a few things,
Roman, great analysis. Id like to add more but culture is a big issue, and Ill ramble on too long 🙂
Mr Unz, even though I disagree with you, I thank you and the American Conservative for broadening the discussion. Im not a conservative. Im happy to borrow from conservative influences, but Ill borrow from anybody. Lets just say I would not pass any ones ideological purity test. For me, writers and media outlets such as these makes me feel like I have a place in the discussion. I dont see rhetorical, self righteous and angry politics helping our country. We need more open minded thinking. Thank you.
sreve, socialism is where the public owns the means of production. Better wages is not socialism wages have been stagnant since about 1985.
~~~
Since our economy is based on consumerism a higher wage should result in more consumption and the more consumption the more jobs created while shareholder profits rise.
But since the end of the cold war whole nations have been opened with lots of cheap labor. And since we have entered the post industrial stage and gone into financial capitalism, whiich is mostly just trading pieces of paper backed by real estate….well, you see the results.
And the way things are going, since the shadow banking has some 23 trillion in debt based products, and the middle class being decimated by cost increases in food, health care and energy and more and more on the welfare and unemployment role…many of these debts simply cant be paid and then our Wall Street corrupted politicians in DC will then begin austerity measures and things will get considerably worse.
Tax cuts have not created jobs. Privatizing has not lowered government debt or decreased its spending. The government has been spending more and more and more and more for decades now. The broken window theory is shot to hell. Wars dont stimulate economies.
The fact is things, as they are, wont end well and socialism or nationalism is not the cure nor is bailing out to big to fail. And maybe that is what should have happened.
conativejj,
the Affordable Care Act is a bad law, but you’re scare-mongering is most unwarranted, if you are indeed serious and not just being sarcastic.
@Gary
That.. is a unique way of handling the situation. So If I read both the comment, your article, and the Act right:
Everyone gets a ‘capital card’.. sort of a debit card with a stock of money used to buy investments.
Using that card, people can invest in certain companies that they are already dealing with-either via work, via buying a service, or a few ‘safe’ preapproved companies. Aka, I can invest in my current phone company, my current job, and/or, say, Microsoft (since I can’t see anyone not include them on the list).
btw, like the limitations: I had fears of Head-On attempting to advertise their company to invest in.
One BIG problem however, the initial capital. am I right in reading that the Act expects the government to give 7000 to every child upon childbirth and expect 1000 in dividends in the first year? What sort of investments are being done to ensure a 14% year over year growth?
The invested capital has to be big by the time the person becomes working age. Note that investments typically work because 1: the person isn’t pulling from the fund regularly and 2: the person doesn’t require the same % of growth every year.
That is, I put in 50k, then just let it sit. If the next 5 years amounts to 5% interest, that’s ok, since year 6 would net about 35% interest, amounting to the ‘well documented’ 10% yearly interest overall.
If I then have 50k invested, even if it isn’t mine, and I’m only making $7.25/hr, I’m going to want that 5k a year (10%/yr) of my own to supplement my income to an effective $9.65/hr (which is still rather low). If I’m allowed to do so then unless the government is adding extra capital then that item isn’t growing.
The website shows that there will be hundreds invested. However, the interest gained is rather high, especially with such a limited assortment of stocks allowed. Without that investment, this makes a great retirement system, but it won’t be enough to serve as supplemental income.
@William
As far as minimum wage is concerned, it’s not really meant to boost other people’s income. The theory of incomes being ‘bumped up’ is just a nice side affect if true. The true purpose is to keep the lowest incomes out of poverty, by keeping the lowest income available above the poverty line. In that task, it has been successful until about 40 years ago, when the minimum wage was not raised enough to counteract inflation. Instead of increases, the EITC was established as an alternative.
For the record, the recent increase has brought the minimum back out of the poverty line.
The article itself is advocating, essentually, a ‘living wage’: an income that can be relied upon to..well.. live on. It would not be a great standard, but it would be a ‘humane’ standard (shelter, food, basic necessities, so on).
This isn’t for the middle class. The middle class would have to be assisted through other means. This is for the lower class.
As far as controlling inflation to establish better raises, that, honestly, seems an odd link. Raises are not a product of excess money held by a company. It is given as a means to better hold preferred talent: sort of a “please stay with us and keep working well”. It comes from a company seeing value in their workers. This is why we had relatively low inflation, high productivity, and high profits during the 90
s and 2000s and yet wages continued to stagnate. It was automation and outsourcing that downvalued the lower class and lower-middle worker.
Controlling inflation is important. However, I don’t see how that links to a sudden increase of income beyond good old “more money for me, I give more money to you” which has not been proven true in the field. It also has no link with the lowest paid who have only seen increases thanks to the minimum wage law.
Mogden says:
November 19, 2012 at 1:25 pm
This is a horrible idea. Most economists believe that the minimum wage is bad for poor people and the economy as a whole. For one, it makes it much harder for low skilled teenagers to enter the work force and start gaining skills and good work habits.
A far better proposal would be to abolish the minimum wage entirely.”
—
1. any examples of articles that you find applicable to that theory? Note that I stopped buying into ‘most’ claims back when Most economists believed that the housing market would never drop.
As far as teenagers gaining skills, unless they plan to go into a retail or money management position (and the latter is a stretch), such teenagers would be better off with internships or focusing on skills related to their chosen profession (or choosing that profession in the first place). A 6 month job at McDonalds doesn’t offer much to a typical resume.
As far as ‘good work ethic’, I would like to see an article with actual data, because the personal experience I have with positions available to teenagers makes me question what sort of worth ethic is gained from such positions that wasn’t already a part of the person’s identity beforehand.
As I said in another comment, I have heard that raising the minimum wage is a ‘bad thing’ and simply accepted that. This article has finally led me to question that logic, so I do want to see counterexamples.
For example, how does the economy benefit from opening a host of new jobs that leave people in welfare anyway? Working while under the government dole is still being dependent on the government.
Great piece Ron.
That wealth distribution doughnut is pretty amazing,
Speaks for itself as an argument for shifting from an income tax to a wealth tax as Daniel Altman suggested today in the Times (and by Ronald McKinnon earlier this year in the WSJ),.
http://www.nytimes.com/2012/11/19/opinion/to-reduce-inequality-tax-wealth-not-income.html?_r=0
libertarian jerry says: “Any kind of government intervention in the broad economy, other than for safety and health reasons, is usually counter productive.”
Like libertarian jerry, many comments ignore the reality of considerable “intervention in the broad economy” that has benefited the most wealthy. Spend some time reading about the money spent by lobbyist on Congress and the resulting laws that benefit the organizations that employee the lobbyists.
Subsidies of the Rich and Famous (Robin Hood in Reverse) by Tom A. Coburn, M.D. U.S. Senator (R-OK), Nov 2011 (37 pages of details and many footnotes with links to detail)
“From tax write-offs for gambling losses, vacation homes, and luxury yachts to subsidies for their ranches and estates, the government is subsidizing the lifestyles of the rich and famous. Multi-millionaires are even receiving government checks for not working. This welfare for the well-off – costing billions of dollars a year – is being paid for with the taxes of the less fortunate, many who are working two jobs just to make ends meet, and IOUs to be paid off by future generations.”
“We should never demonize those who are successful. Nor should we pamper them with unnecessary welfare to create an appearance everyone is benefiting from federal programs.”
http://tinyurl.com/a5mo8dr
Walmart Net Income:
2012 – 15,699,000,
2011 – 16,389,000,
2010 – 14,370,000
“Today the Walton family of Walmart own more wealth than the bottom 40 percent of America.” PolitiFact – True
“In economics, wealth is commonly measured in terms of net worth, and it’s defined as the value of assets minus liabilities.”
“Six members of the Walton family appear on the Forbes 400 list of the wealthiest Americans. … That’s a grand total of $102.7 billion for the whole family.”
Examples of Walmart employees receiving Medicaid health insurance paid by taxpayers rather than the Walton family:
Missouri: In early 2011, Walmart led all employers with 10,028 employees and their dependents enrolled in Missouri’s Medicaid, Total Cost to taxpayers = $6,506,254
http://dss.mo.gov/mhd/general/pdf/emp-match.pdf
Read the complete list of employers in the above. For example, Sisters of Mercy Health System
http://tinyurl.com/dyfhqmf
Massachusetts: In FY09, Walmart led all employers with 10,171 employees and their dependents using publicly subsidized health care. Total Cost for taxpayers = $16,591,264
http://tinyurl.com/cujquny
Connecticut: In 2011, Walmart topped the list of Medicaid employers. As of May 2011, 3,654 Medicaid enrollees in the state were either Walmart associates (1,189 recipients) or the children of associates (2,465 recipients)
http://tinyurl.com/cuokjbp
Even for employees who are eligible for coverage from Walmart, the costs of the plans that the company offers are unaffordable for many hourly associates, who earn an average of just $8.81 per hour.
http://tinyurl.com/cjlklb5
Many of the employers in the food service industry that are threatening to limit employee hours to avoid paying for health insurance also make large profits and pay top management big salaries.
The elephant in the room is immigration. Unchecked immigration-what we have had for 40 years-has put a downward pressure on wages. An immutable law of labor-the larger the labor pool, the lower the wages. Unfortunately for fans of immigration such as this article’s author, thats an uncomfortable truth. And as for unions, they have supported unchecked immigration, so they share as much blame as the wealthy business owners.
Ron’s argument makes too much sense. It won’t work because greed and egos are too dominant.
And immigration is a red herring. Blame foreigners for our own stupidity and pro-plutocracy free markets mindlessness.
Historically, in the American experience, labor was in relative short supply compared to natural resources and capital.
A tight labor market results in rising wages.
And, historically, productivity gains were spread among management, ownership, and labor.
But in the last 30 years or so, productivity gains did not lead to increased purchasing power (higher wages) for labor.
One of the best things for low income earners is a tight labor market (this applies to all wage earners for that matter).
Reduced immigration (both legal and illegal) would help tighten the labor market, especially for low wage jobs.
And enough middle class Americans also have lost jobs to foreign replacement workers on H1B work visas, too.
I agree with the sentiment expressed by the author: Higher wages are good for the American economy and for those who want less government.
If you want more voters to support less government, then promote policies which lead to wages that allow independence from government subsidies.
Don’t be surprised when low wage earners vote for candidates who promise subsidies.
A broad tightening of the labor market as opposed to a direct government requirement on individual employers is likely to be more effective over the long haul.
I give credit to the author for bringing up the subject, it’s an issue (purchasing power) conservatives need to tackle.
To be honest, I think I’ll need to ask for data on how immigration is causing widespread lockdowns in lower-middle class jobs.
No, I’m not saying ‘immigration doesn’t cause a problem.’ I’m asking about the scope. So far, illegal immigration is mostly affecting the construction and agricultural fields. However, construction is never a good industry to depend on for large scale employment (the housing bubble showed why) and, frankly, not many are running out seeking farming jobs nowadays.
Legal immigration, meanwhile, seems to be mostly affecting high tech positions due to the sheer difficulty and cost of legally accessing this country. Given that companies are so desperate for talent that they are currently spending millions to buy out other companies JUST to pick up preferred workers, it may be safe to argue that legal immigration isn’t causing a shortage of jobs in the affected sectors.
Meanwhile ,the jobs that are being discussed now, minimum wage blue and white collar work, have no signs of being affected by immigration. A day laborer being paid $2/hr in construction wouldn’t cause Walmart to lower their cashier wages, and Walmart isn’t hiring a mass of illegal workers just to keep wages down.
Lastly, it doesn’t put into the account the number of businesses that were started by legal immigration. As such, shutting down immigration doesn’t just cut down on workers, but also employers.
That’s not to say that immigration isn’t a big issue or that it doesn’t affect employment. In fact, although it may not directly affect this scope now, it can be used to affect it. Instead of simply shutting the whole system down, we could open the gates for entrepreneurs: If you plan to start a business, you are welcome. Meanwhile, focusing more on attacking businesses that employ illegal immigrants would effectively starve out the illegal issue (the proof of that comes with the past recession. Once the job marked died out over here in 2008, illegal immigration decreased. No Jobs, no job seekers).
It would cause another issue regarding price inflation of goods but that’s not a good reason to keep things as they are.
@Wesley RE: Affordable Care Act “Scare Mongering”
http://online.wsj.com/article/SB10001424052970204707104578094941709047834.html?mod=WSJ_hp_LEFTWhatsNewsCollection
(Unfortunately it is now subscription only, so you may not be able to read the article unless you have a WSJ subscription)
I wanted to add this, the issue is that we have killed entrepreneurism and innovation here in the US. There’s nothing saying people HAVE to work for large companies that end up outsourcing jobs.
I see many posters on here complain about how many jobs were outsourced, how illegal immigrants push down wages for the lower tiers, etc. The easiest way to remedy this is encourage more people to start their own businesses by reducing all the excessive barriers to entry into the market.
Someone wants to clean houses, install sound systems, fix computers, babysit, cut hair, walk dogs, landscape, etc… They all have to jump through numerous hoops to be legit in our society that ends up costing far too much to make it worthwhile. Especially since it’s easier to go on the government dole and the latter pays better in the short term.
It’s ridiculous when the government is sending around officials to shut down kids lemonade stands because they didn’t comply with health standards, tax and license requirements etc. A six year old is going to go through all that to sell $.25 lemonade on the street corner?
I’m not saying eliminate ALL regulations, but let’s use some common sense here. Is it absolutely imperative that the government regulate, license, or otherwise limit entry into the market based on some action of a small business? If not, let the people get to work, make some money, and benefit their local economies.
If that’s not good enough, then fine, I’ll appeal to the Kenyesians on here to demand the Fed print out enough money to give every man, woman, and child in the US, legal or not, $1,000,000 to boost the economy. If government spending is the only way to fix the economy, why not give the money directly to the taxpayers so they can spend it as they see fit? Think about how much the economy would grow in a week if everyone had $1,000,000 to spend on whatever they want. And since inflation isn’t a concern – at least based on how the Fed has acted recently with the various QEs – then we have no need to fear an inflated dollar when we pump about $312,000,000,000,000 into our economy overnight.
Thanks for this interesting article. I subscribed today, even though I am not a conservative.
In the long history of American labor relations, immigrants were always brought in by employers to break the labor movement or get workers below the prevailing wages people were willing to take. The big lie campaign about a tech “shortage” in order to get H-1Bs was really companies crying about having to bid up for talent well above the rate of inflation. There never was any real shortage and the engineering schools were full to the brim of soon to be engineers in the mid 80s. The meat packing companies brought in scabs from Mexico while the Reagan administration looked the other way. The construction and janitorial unions were broken by illegal alien labor in California as well.
If the people doing the hiring think bringing in immigrants lowers wages, who cares what some economists “research” “proves”.
conativjj I think you have bought into the Republican garbage too much:
Someone wants to clean houses, install sound systems, fix computers, babysit, cut hair, walk dogs, landscape, etc… They all have to jump through numerous hoops to be legit in our society that ends up costing far too much to make it worthwhile. Especially since it’s easier to go on the government dole and the latter pays better in the short term.
My mom’s gardener barely speaks passable English. He has a business that his daughter manages for the most part. If things were really that onerous this guy could not stay in business.
I know a guy who handles the computer network at the UCLA Medical center, he does consulting work on the side. All he needs from the local government is a business license. He never complains about all the so-called government red tape.
Mr. Leach,
Regarding the minimum wage, the problem is that while there have been several increases in the federal minimum wage over the last 40 years, they have all been so small that it has not kept up its purchasing power relative to inflation. As Mr. Unz noted, the purchasing power of the federal minimum wage peaked in 1968 and has never come close to recovering. By restoring its purchasing power it would serve again as a floor below which legal compensation could not fall, AND indexing it to the cost of living there would no longer be a trapdoor through which employers could keep wages artificially low.
As for inflation, remember that it has been remarkably stable for the last 20 years, rising between 2% and 4% every year. And event throughout the 80’s, it was under more control than previously, but these are exactly the decades where wages stagnated or fell.
I visited this site today after reading David Brooks’ column in today’s NYT.
I don’t mean this to be a provocative comment, but I am astonished to discover such a well-reasoned and thoughtful article on a conservative website, an article that accepts the premise that action by the government to override market forces can be beneficial and acceptable to conservatives.
I’m an independent who supported Obama in 2008 and 2012, not out of any passion for the Democrats but because of a visceral dislike for the unreasonableness and magical thinking of the Republican party.
I really want the Republican party to reform; I want a rational center-right party free of religious dogma and sectarianism, one representing all Americans.
I shall subscribe to some of the blogs on this site and see if they start to influence the Republican party at large.
@ Mark in LA
Ok, so tell me why then more people aren’t going out and starting new businesses now then? If government isn’t a problem and it’s easy to start a legit business (I assume the two people you held up as an example are current on all their applicable taxes, insurance, and licensing/bonding requirements), then why have the numbers of unemployed moving to long term unemployment/underemployment increased in the wake of the financial crisis of 2008?
I seriously want to know the liberal take as to why more people aren’t starting their own businesses.
@conativejj
* Even if it is easy to start a business, a business will only succeed when there is demand. There is no demand.
* In any case, not everyone wants to run his/her own business.
Article subtitled “A simple remedy for income stagnation”
In the sense that a shotgun blast is a cure for cancer, I presume.
Conativejj has some great points. In addition to what we often think of as regulation reform we also need to address things like liability. Im not saying people shouldnt be liable for wrong doing, but limiting frivilous lawsuits and rewarding appropriate amounts to those harmed would go a long way. Another part of the problem with starting a small business is the issue of low wages, making it hard to save and invest. Of course saving is also made harder by inflation.
Which brings me to you cka2nd. I find it interesting that your post read to me like you were saying that minimum wage laws would work if it wasnt for inflation, but that inflation isnt an issue. First of all, inflation is inherently destabilizing, so there is nothing “remarkabley stable” about your money being worth less and less every year. Even if it inflation is holding itself at under 5 percent (a manipulated figure that is questionable at best, see http://www.shadowstats.com/ ), it seems as if your forgetting about exponential growth.
If inflation “stabalized” at 3 percent, it would mean that prices would double every twenty three years or so? At best that makes minimum wage increases by themselves a band aid, punting the problem down the road. But what would inflation of say 5 percent mean? Prices doubling evey 14 years. 10 percent? Prices double every 10 years. Doubling time will get ya ( http://www.youtube.com/watch?v=F-QA2rkpBSY ). Making things worse is that inflation does not occur evenly or all at once, as the cost of education and health care shows. Personally Im worried about what will happen once QEinfinity trickles down…
The three top job categories are:
Office and administrative support occupations
Sales and related occupations
Food preparation and serving occupations
None of the first two make anything and the third is mostly convenience. Not only are we a service economy, we’re a fluff service economy. Consider: He’s an attorney ($150,000 a year), she’s a sales rep ($100,000), they spend $50,000 on child care and housekeepers, maybe $20,000 on eating out, for a total of $320,000 pumped into the GDP, not one penny of which really produces anything of substance. Yes, ultimately the people they pay will buy things that are grown or manufactured, but paying assembly line workers the same amounts would create a whole lot more substance with a lot less waste.
“Any kind of government intervention in the broad economy,other than for safety and health reasons,is usually counter productive” -Am Con Poster
I was reading some Paul Craig Roberts [Ex Reagan Treasury Secretary] stuff…He thought that the end of the cold war had unintended consequences as it opened up labor markets that were theretofore closed.
Now, this was government working to defeat communism, and maybe it did, but this government action opened up cheap labor markets that Americans simply could not match due to the costs of living in this country.
So I agree that government interference is counterproductive in this sense.
having been making a living in american manufacturing as an entry level employee…bouncing between the south, and michigan over the last decade…no, most folks aren’t making more than $10. there’s far too big a churn of temps/entry level folks who start at something like $8…a third or more of the workforce is made up of folks like that, and the great majority of them never get out of that churn.
also…sure, you bump a guy like me up to $12 and hour and it’s going to help…but…that dime on a big mac, and three percent on *everything else i buy*…isn’t going to have as little impact on just how much help it is, as the author seems to think.
This is the first time I visited this site, and I’m disgusted. How far will the right bend to return to power? I’ll never return again, because I was expecting a conservative site that supported conservative values, like free markets.
I would happily reply to you Joe, but since you won’t be back you wouldn’t see it anyway. Its probably for the best, I would hate for your health or confort to be negatively affected. Besides, the web is full of people selling identity and releif packaged convieniently to relieve the wants of confirmation bias and the needs of the threatened ego.
This theory looks good on paper but I fear the worst if it ever comes into effect.
There are tons of employers out there that could afford to pay their employees more and they should. But the problem with a government mandate is that even the small companies out there have to pay their employees more as well.
There are tons of mom and pop stores out there that do not have millions of dollars in profit every year. Those are the companies that this will hurt the most. One can argue that they can just raise their prices to cover the raised wages. But just because they raise prices does not guarantee that their customers will continue to shop with that small business after their prices have gone up.
And a lot of those business’s will then have to just get by with less employees.
The employees that remain may make more money, but it will sure not help the unemployment overall.
I would love to see everyone make more money. But there are only a few bad apples that could and should pay their employees more out of the bunch. The small mom and pop stores will for sure take a hit if they have to pay everyone more.
Some business’s can raise prices and still keep their customer base. But others can’t…
For example, an automotive oil changing business. If they raise their prices, there will be a percentage of people that will just decide to change their own car oil because it is too expensive to have someone else do it for them at that point.
Not all businesses can just charge more and know that people will still come.
Believe me, I am not some greedy fat cat that just wants the minimum wage class to suffer. I really think something needs to be done. All I am trying to point out is that history has shown us multiple times that sometimes making a mandate for something can cause more harm than good.
I am not acting like I have the answer either, I just personally know a lot of small business owners who are barley getting by as is with their current cost.
It is easy to get caught up on greedy corporations and how they should pay more, just remember that EVERY BUSINESS has to also go by the new rules, not just the ones that can easily afford it.
Just something to consider..
Give everyone more money, and then everyone is richer, right? What a simple solution… not like that “magical” thinking by “pro-plutocrat”, “free market zealots”.
Dr Murphy, if you’re reading, you have your work cut out for you. I’m glad you came over from Mises. You guys need to get out of your temples and proselytize more often.
I wholeheartedly agree with rasing the minimum wage and the authors intentions, but honestly, I think the chances that the House would pass a minimum wage (even a dollar increase, let alone $3 to $5) are about as likely as the House agreeing to another stimulus. When the stars align and minimum wage reform is possible, we should set a floor (like the hourly equivalent of twice the poverty level).
I was reading some Paul Craig Roberts [Ex Reagan Treasury Secretary] stuff…He thought that the end of the cold war had unintended consequences as it opened up labor markets that were theretofore closed.
Ding, ding, ding.
More of a problem than immigration, IMO.
Cheap labor, particularly in Asia #1.
Ever increasing automation is #2.
Immigration is, IMO, a distant 3rd.
It’s possible that we could have absorbed 1 or even 2 of these. All three at the same time, though… the results aren’t really a mystery are they?
Problem is, just like I doubt raising the minimum wage would really help, I doubt protectionism would really help. I’ve looked around at the arguments for and against devaluing the dollar (more), and I’m not confident that would help either (obviously, it both hurts and helps, the question is what does it do on balance).
connativjj – how is a person with a physics degree supposed to start his own business? Doing what? What is a computer programmer supposed to do? I made a lot more working for a company with less stress that I ever would have trying to start a business. I had a few ideas for software that could be sold in my 30 years, but there were already small companies providing that software with ads in the back of trade magazines. Why should I write it in my spare time and if it doesn’t take off, I wasted years?
The types of business you described, few people want to do or most people already make a better living than that. In addition, as another person pointed out, there has to be a demand. How many gardeners in an area is too many? How many taxi drivers? How many small retail shops fail because nobody ever goes in to buy their stuff?
The biggest reason why people do not want to start a business is because most people understand that the majority of small businesses fail. If you have a comfortable living and existence now, why trade it in for the great unknown.
My dad started his own business only because at the time he wasn’t getting any response to the interviews he was going on. Just as he decided to start a business and bought all the equipment he got an offer he would have accepted. The first few years were tough, including problems with the IRS over not paying taxes quarterly. Eventually it was successful but I think he would have rather just gotten the job with the large corporation and collected a salary given the problems related to the business like bidding on jobs and being undercut by people who do lousy work. It wasn’t until he built a steady clientele that were willing to pay more for better work that he was successful.
People with advanced degrees, or even BAs, could become tutors for one. I am a huge history buff, and I see the future of education (which is NOT what liberals want to hear unfortunately) as highly decentralized, where people will do as the Romans did and hire a teacher to teach their kids individually.
I envision families pooling their resources together to hire a teacher, paying that person say $5,000-$10,000 a year each to teach a group of say 10-15 students. This is less than dinosaur seniority teachers make, yes, and definitely less than total compensation, but then this would be a perfect opportunity for recent graduates with liberal arts degrees, versus selling insurance, working at Starbucks, or working retail.
Public education, like communism, sounds good in theory, but in practice, with the inherent disequality between individuals and the lack of infinite resources, it just doesn’t work out as intended.
And to your other points, so you have a job, I’m not talking about your situation. What would you do if you didn’t have a job tomorrow? Go out and find a similar one with another company? What if that sort of job doesn’t exist anymore? Can you sell your skills and experience on the open market to other entrepreneurs? This is the direction our economy will need to go until it can stabilize and we figure out exactly what the next economy will look like. Right now, everything is up in the air and no economist, I don’t care where he or she graduated, can accurately predict what the economy will look like in 10-30 years. My suggestion is a short term solution to get the wheels turning again until entrepreneurs develop the next big thing that will define our next economy.
And yes, most small businesses fail, most run in the red the first few years before they can turn a profit. But again, why do we as a society prefer that people go on the government dole versus going out there and experimenting with new ideas, new markets, new products, new services? Why is there no major demand for horseshoers or cart makers or wig makers in 2012? Because that economy doesn’t exist anymore… So why are we trying to revive an economy that doesn’t exist anymore by propping up older industries that have proven failures or at least unsustainable into the 21st century? It’s as effective as bringing back 18th century industries (which may happen anyway if we really go off the rails and fail to effectively fix these issues in the next half century).
I continue to find these sorts of articles baffling in TAC. This publication has definitely jumped the shark. I voted for Buchanan every chance I got, but somehow I cannot imagine that a Buchanan Administration would have raised the minimum wage. Conservatives do not believe in federal anti poverty measures…remember?
While a few seem to like giving random “OMG it stinks” comments, it’s nice to hear deep, well reasoned comments from those opposing this situation.
The biggest item, I believe, comes from the matter of mom and pops. They would have less flexibility in handling the added labor costs.
There is one issue though. Let’s imagine that every big box company just ups and decides to raise their wages. Suddenly the people taking up applications to the Mom/Pops have to compete with their $7.25 offerings against Walmart’s 12/hr.
They won’t be able to do so.
In truth, if our REALLY small businesses can’t compete with higher wages in either path, then it means the only way they can survive is by unsustainable conditions (unless someone want to argue that $7.25/hr is a sustainable wage for the average person).
A few ideas to throw around to compensate:
1. Set the minimum wage based on company size. Smaller the size, lower the minimum. That’s already done for farming, which can allow a smaller wage than normal.
While this attempts to create the very issue I brought up above, it MAY result in another situation: large companies boosting their requirements. The old “Teenagers won’t be able to get the jobs anymore” argument.
If those situations combine, we get an interesting result: big companies offering wages that are easier to stick around with, but fewer of them while Small Mom and Pops can offer more positions at the lower wage for the ones that lose their jobs.
Combine this with other features, such as softening costly regulations that aren’t needed (and those DO exist btw) and punishing companies who rely on illegal labor (so they don’t compete with the legal companies) and yo umay get a decent balance.
I am surprised that a site, claiming to be conservative, would recommend improving the lives of laborers (in general) by raising the minimum wage. My surprise is greater that so many people subscribing to a site, claiming to be conservative, would agree and even try to further elaborate such nonsense.
For any pool of labor, if the minimum wage is set below the market clearing price for that labor, there will be no effect whatsoever. If the minimum wage is set above the market clearing price for that labor, bad things will happen.
It is quite possible that some employers of this labor will agree to pay the higher wage. At first, those employees would appear to benefit. The law of supply, however, guarantees that fewer employers will offer the job at the higher wage. Therefore, fewer people will be employed than were employed at the market clearing price. This is bad thing number one.
Eventually, even those employees lucky enough to remain employed at the higher wage will get screwed. Since fewer people are employed at the higher wage than at the market clearing price, the law of demand guarantees that there will be people willing to perform the labor for a lower wage. While the government prevents such a voluntary transaction, an arbitrage opportunity is presented to employers. The employers can require that the employees have to pay fees, supply their own materials, work harder, work under less desirable conditions or anything else that will make the total package worth the lower value that the marginal employee will agree to. This lower value is not only lower than the minimum wage, it is lower than the market clearing price. This is bad thing number two.
If you want to improve wages, you first need to encourage savings which will increase capital formation. Increased capital will lead to improved productivity and greater wealth. Increased wealth leads to a higher standard of living. Increased productivity can command a higher wage.
Needless to say, our government is discouraging savings through taxes and monetary inflation. Our government is also discouraging enterprise in general by creating a capricious and arbitrary business environment through regulation.
Mr. Leach,
With respect to your answer to Joe above, I must say ZING!
That was a good one.
Yours truly,
The Wet One
conativejj – you are off point. I just disagreed with your claim that “government regulations” were keeping people from starting their own business. I am all for people who want to start a business doing so, and I hope they are successful. However, the government isn’t the primary impediment to their success. There are plenty of grad students putting up signs for tutoring at every university – nobody from the government is stopping them.
Well Gilbert it is because “conservatism” has become bastardized to mean do what ever some CEO wants. In reality, my conservatism is about conserving communities and making them better places to live. Is it more important for some people to get cheap Chinese products or is it more important to have a society where Dad seemingly (how ever artificial it might be) provides for his family and has time to spend with them and mold his sons into responsible adults who also provide for their families? Because the economics profession can’t quantify what the value of this is they pretend it isn’t important or never seem to talk about it.
Our markets uber alles thinking is taking us in the wrong direction. If that is conservatism, then I am not one.
Wal-Mart did not really call for a minimum wage raise so people could afford their products, nor did Ford increase his employee’s wages so they could afford his cars. The fraction of an employee’s pay-check going to an individual firm is generally too small. I was actually working retail at Target when that company advocated a higher minimum wage: the reason was that Target started out their employees at a wage already above what it would be raised to and kept it there for longer, while Wal-Mart started out at a lower wage than Target but rather quickly raised the wage of those who stayed on. Corporations that advocate changes in laws tend to push for those that will screw over their competition and raise entry barriers.
Yes, EITC socializes costs. That’s the point. If you think as a society we need to help out the poorest, then we as a society (in accordance with our tax bill) help them. Raising the minimum wage puts the burden on the consumers of those particular industries. If you shop at Cost-Co (which has far fewer employees, but at significantly higher wages) instead of Wal-Mart, you pay nothing extra. Unz was earlier advocating raising the minimum wage as a measure to control immigration, which I will grant might have actually been effective. Now he’s advocating it because of the recession, which is actually the worst time to do so (which of course means that Congress did do so). Scott Sumner has some good graphs on the relation between inverted detrended real wages and industrial output during the Great Depression. Going off the gold standard helped with the “sticky wage” problem, but cartelization under the NIRA prolonged it.
“Public education, like communism, sounds good in theory, but in practice, with the inherent disequality between individuals and the lack of infinite resources, it just doesn’t work out as intended.”
“Private education, like laissez-faire capitalism, sounds good in theory, but in practice, with the inhereent disequality between individual and the lack of infinite resources, it just doesn’t work out as intended.”
TGGP:
“Yes, EITC socializes costs. That’s the point. If you think as a society we need to help out the poorest, then we as a society (in accordance with our tax bill) help them. ”
I was personally under the assumption that “direct government support” was deemed a ‘bad thing’.
By the looks of things, no one is advocating that our lowest earning regular full time workers getting 15k/yr or less is a good thing. As such, it’s a case of how do we deal with the situation, without saying “well, we don’t”. So far I know of three general options:
Climbing the Ladder: We deem low wage work as a ‘stepping stone’. It’s meant to be low because the worker is meant to transcend it either by natural Raise, Promotion, or Job Change. This is the method that society assumed was the Best way to go. This is also what’s putting massive pressure towards getting people into higher education, so that they can climb that ladder.
Even if we abandon the central idea of the minimum wage, there is the secondary idea: that this method isn’t working. Companies aren’t handing wages or promotions to good performers, and everyone seeking training and education is creating a massive college loan bubble.
The Living Wage: Deem low wage work as a viable option (aka: Somebody’s gotta do it) and make said work sustainable. This is where the minimum wage supporters are aiming for in the end: the point where a janitor can remain a janitor and be able to pay their bills and live in some form of life.
Government Support: Focus on the government taking up the slack for the lack of a sustainable income. Sort of Living Wage handled in 2 checks, one private, one public. This is where Welfare comes from, along with the EITC.
Of course, a mix of all three options are allowed. We currently rely on the Ladder, and use the Wage and Support ideas as secondary options. Note that relaxing one aspect (i.e. cutting down student loans) results in a need to push the other two options. This article advocates letting back on the Ladder and trusting more on the Wage.
If I were to be 100% honest, I want to abandon the Livable Wage and replace it fully with Government Support to prop a person well above the poverty rate, then tie it to training towards inudstries that are in need. If you aren’t working, you get just barely enough for the basics (not fully against putting limits to let go of ‘forever unemployed). When you work the government subsidizes the income so that whatever job you are in, you become much better off. Not unlike how the ETIC rises with income added but a longer curve. The end amount would be enough to rent and pay basic utilities in an area with a relatively cheap cost of living (aka, no it won’t be enough to let you live in New York or California. Moving Assistance can be provided to let you find a cheaper location).
(sidenote: I would be MUCH more able to take the whole ‘states rights’ ideal IF it was much easier to move between states, especially for those deep into poverty)
An alternative to working would be training. Forgivable loans would include room and board support so that a person could train full time instead of working (to both let the person focus on said training and pull individuals from the labor supply). The ‘forgiveness’ would be contingent on a degree in a field that is in high demand (more ‘Hard sciences’ less ‘Humanities’. Education ‘for the sake of learning’ is great, but not something government should be paying for). Chances are, it wouldn’t be 100%.. partially forgiven with the rest paid by a tax who’s payments scale on income.
It’s thoughts like that which is why I deem myself Left leaning instead of conservative.
However, I’m assuming a large number of the readers here are in physical pain now from reading such a thing, so I’ll state here that though I’d support such a system, I make no attempt to PUSH such a system. Thus I come here to listen to conservative ideas and ponder Living Wages or other options. My goal is to make sure that people have a method to have some regular standard of living even if their original conditions, or even past choices placed them in a bad situation (CURRENT actions, not so much). If it can be done through conservative means, then I’m all ears.
..though I’ll admit, the ideas I’ve heard before coming to this site have been…lacking.
@Mark in LA
“Well Gilbert it is because “conservatism” has become bastardized to mean do what ever some CEO wants. ”
Well Mark, you are telling me the problem is not what ‘conservatism” has become, but rather the problem is that you are not the CEO. If we would all appoint you CEO, everything would be fine.
The use of minimum wage to ‘improve’ the lives of workers is not only dictatorial — it is misguided and will not achieve what you intend. You do not ‘improve’ the lives of other people by limiting the peaceful choices available to them.
Mr. Leach,
Prices cannot be truly stable over a twenty-year period. They will rise or fall, and the trick is to limit the inflation or deflation so that they economy does not go off the rails. A 2-3% annual inflation rates seems to me to be one that, by itself, will neither shatter nor hyper-boost an economy.
What I am tryign to say about increasing the minimum wage and wages in general is something like this:
If wages increase on average by 5%, there is likely to be an increase in the general rate of inflation but said increase will likely be less than that in wages, leaving the average worker with a net gain. In the simplest terms, 5% Raise – 3% Inflation = 2% Net Raise.
This is analagous to, on the one hand, the fact that while executive compensation has skyrocketed over the last 30 years, the overall inflation rate has not kept pace. Or, more appropo, working class wages and compensation increased in the post-war period at a faster rate than inflation, and I don’t see why that cannot, or should not, happen again.
Dakarian,
Regarding specifically your reply to TGGP, as opposed to your other posts, I wouldn’t describe your thoughts on the Ladder vs. Wages vs. Support as “Left-leaning.” To be honest, I would describe them as Technocratic, Liberal-Technocratic, Liberal-Statist-Technocratic or, if I were being really cruel, Mommy State-Technocratic. Speaking as an honest-to-God Trotskyist, I’m not exactly a believer in Laissez-Faire economics, that the only good regulation is no regulation or that every problem has a simple solution, but Gods, what you describe is the kind of convoluted and interventionist program that only a Michael Dukakis (or a neo-liberal pundit) could love.
Rather than empowering people to fight to increase their wages, rather than providing a fairly simple, easy-to-understand and widely supported wage floor, you’d provide direct government subsidies to low-wage workers (for which the middle class and rich will be only too happy to pay taxes), but only enough to live in lower cost areas (and taxes would pay to move ALL of the working poor from New York to Alabama, I take it?).
Your alternative would target training and educational funds based on economic/industrial policy and educational policy (would the wildly over-sought business degree be subsidized or not?). I pity the poor case workers (I trust public administration and social work will be subsidized degrees) who’d have to run this Income Support or Training For Need program. I pity the poor person – working or seeking an education – even more when they are faced with losing their generous (for now, maybe) subsidy if they stay in high-cost California to care for their sick mother instead of moving to low-cost Idaho. But we can right a regulation to cover that!
Sometimes simple solutions, or at least relatively simple ones, are the way to go. I’d like governments, even bourgeois governments, to ensure that wages can support a decent standard of living and that public services such as public education, public health insurance or hunting liscences are either free or low-cost. Generally speaking, I’d like to keep government out of my bedroom and out of my choice of job or college.
Whose bright idea was it that China, with its two-dollar-an-hour tradition, should set the standard for wages in the era of globalization anyway? It always seemed to me that since it was the US who was leading the globalization movement, the US should try to set the standards. Yet, if like me, you’ve been watching the daily business reports on cable TV, with their celebrations every time a month went by without a rise in wages, you too would be shaking your head in disbelief.
Here’s what economist Henry C.K. Liu wrote in 2008:
“… financial manipulation cannot replace the need for adequate income growth. The mismatch of income with asset price is the definition of a financial bubble. People were buying homes with cheap credit at prices that their income could not afford. The more home prices rose due to cheap credit, the more homeowners fell into the debt trap. Yet in all the current talk about finding ways to deal with the crisis, not one single voice is heard from official circles about the need to increase worker income.* Instead, false hopes on one-time stimulant tax rebates are hailed as the magic bullet.”
— Henry C.K. Liu, economist, UCBerkeley
“Debt Capitalism Self-Destructs,” 22 July 2008
In other words, it’s taken 5 years for someone to come up with the bright idea that if you want to reduce the Grand-Canyon-sized gap between rich and poor, you have to, well, reduce it.
The problem, of course, is that if you start paying workers enough to buy the stuff they want, they won’t have to remortgage their homes and max out their credit cards — and where would the banks be then?
@Cka
I warned you it wouldn’t be pretty. You only have yourself to blame for the chest pains.
Joking aside, firstly, my statement of ‘leftleaning’ is sort of a lazy identification. I haven’t really gotten to fully IDing what I am. Or rather, perhaps I’m still developing it. In truth, I still held back a bit because I kept it secular. I’m a firm believer in “Religious ideas should be based between the individual and God and should not be imposed upon people who don’t believe in it.” I don’t think many on any side of the isle would like what I believed to be The American Way.
Given that, I would much rather have a less government intensive approach would be useful and viable in solving the issue. It’s why, even when I cringed at what was coming out of conservative areas, I kept coming back to listen. bah, a reason why I was so interested in this topic is because I was hoping to see arguments against it and alternatives, so I can finally hear something other than..well.
“This is jsut part of teh Socialist agenda. Those Marxist Unionist Atheist Muslims want to steal our freedoms!”
I’d rather hear “I see what you’re after.. you’re flat wrong in how to get it.. here’s why.. here’s what would work better.”
Ok with all of that out of the way:
What I had thrown up to scare everyone is really just what we have now turned into an overall government package. We have UI and welfare for those out of work. UI partial payments in some states do the ‘fill in for inadequate income’ if you do work an EITC kicks in to add extra income. In Georgia, if you are a full time student, the ‘look for work’ requirement is waved.
All I really did was remove the minimum wage requirement, picked up the poverty line (the ‘can’t afford to live in California is actually an increase. Right now you can’t live in most anywhere with what you get. The statement was to just keep it from trying to keep raising to ‘serve the poor people in Beverly Hills’), add in a few more forgiveness programs to what’s already around now (and limit what you can do.
Oh, except the moving thing. That’s just a pet desire for me. Sorry for sneaking that in.
I would love to have a more efficient, less expensive, less government empowering system. However, I haven’t found anything that works better than the mess we have now. Thus the ‘best option’ is right now ‘take what we have now, fill in the holes’. The idea of trading it for a higher minimum wage is appealing, but the counter arguments have a point about how nasty it is to small business. The article itself is correct on how broken the educational system is, and once that breaks it’ll be a LOT harder to Fight for higher wages.
I don’t think a ‘simple solution’ applies here because it’s not a simple problem. I’m all ears for options, though.
A government imposed increase of minimum wage? That’s a non-starter for the GOP, who are the conservatives, who are the opposite of liberals, who are against government regulation of private businessess, remember?
Not a Republican or “conservatives” myself, (in quotation because I am a bit confused what different conservatives think conservatism is), I am all for it. In fact we should promote minimum wage globally, the best way to improve workers’ standard of living (which is what economic development is all about, right?) and reduce incensitves for American companies to look for cheaper (and more exploited) workers elsewhere.
If you haven’t read this, maybe this would be further food for thought when we ponder the size of government in our life:
http://www.nytimes.com/2012/11/24/world/asia/china-journalist-who-reported-childrens-deaths-held.html?ref=world
Just look at what is happening now with Walmart, until enough number of workers stop coming to work, all at once, or better still, until the shoppers actually stop going to Walmart in throng, nothing will change. Until then, the six heirs of Sam Walten will remain among those 1%. Now, how do we decide who deserve to get paid more?
Gilbert, I don’t support the use of the minimum wage to increase people’s earnings. I propose the end of free trade, illegal alien labor, and stopping all immigration – same as Pat Buchanan. As the labor market tightens up, pay will have to go to those in demand and businesses subsidized by the tax payer via illegal alien labor and other low wage scams will go under or find a way to be more efficient to use the higher cost labor.
The worker will know (at least he will think that) that the higher wage he is getting is earned and not just handed to him resulting in a much healthier self image for the working people and their dependents. The savings from less crime and family problems will be well worth it.
The money will come from higher prices for us all, lower profits and bonuses for the mostly useless management (I do know, as an engineer, I saw their utter worthlessness in action) and their cronies on Wall Street – too bad, so sad.
Er, I thought the name of this entity was American Conservative, not American Social Democrat. What are you thinking??? Wages should be set by the free market, period. There shouldn’t even BE a minimum wage for crying out loud. ” the logical business response would be to… trim current profit margins”. Indeed. I think that sentence alone entirely refutes the rest of the article. Businesses are in business for profit. They’re not charities. This article belongs in The Nation, not here.
@Floyd
If I may be bold, it’s this “That’s just wrong, it should be this way, go away” is exactly why the conservative message is ignored by half of the country.
“This is wrong.. it should be this.. now shut up” is not the way to convince people of your point.
No, I don’t want this website to be agreeing to this ideal: I can go to any liberal spot to find that.
But I KNOW you don’t like it. I KNOW you want something else. I want to know why “I” should be wanting that something else. I also want to know how that ‘something else’ would help those who this idea is trying to help in the first place.
A few others have posted good, strong reasons. The idea of how this will help large corporations kill small competition is a compelling one, for example. Perhaps other explanations to those who are just thinking “well, what about ME” would help get the message out past preaching to the choir.
Along with this would be an answer to WHY removing the minimum wage and letting companies just run on profit alone is a ‘good thing’ for most americans who don’t run companies. Myself, I’m picturing a mass of people being paid $2.15/hr gobbling up welfare checks since they are well below the poverty line.
Or as an alternative, I can picture the conditions set in mainland china, which, for all their state-loving ways use a LOT of pro-business policies, such as no minimum wage and no union organizing. I believe we constantly complain about how ‘cheap quality’ such products are and how their workplaces are ‘sweatshops’. Do people really look at china’s labor system and say “That’s what the US needs”?
Just believing in something is fine and great. However, if you want your belief to have any worth in this country, you’ll have to stop trying to use blunt force to get your way: you’re going to have to convince those who don’t naturally believe in what you stand for. You’ll need to figure out HOW your message relates to the person you’re talking to.
You’ll need to actually address topics like this, not just push it aside so it doesn’t ‘dirty’ your site. “Make it so that I get paid more” is VERY appealing. So is “let everyone have everything from the store for free.”
However, I can convince someone who goes “oo, I like that!” why it would actually stink to live like that in both a “care about others” way and a “care about myself” way. I can go one further and explain how a better alternative exists and why they would rather have that instead.
Can the same thing be done with the minimum wage? So far I heard a good reason in a ‘care about others’ realm (which works well with me). Very little in a ‘cares about myself’ way, and I’ve yet to hear a good alternative here or elsewhere.
Well, someone tried the ‘stepping stone’ argument but given how most of the lower class are in dead-end jobs that layoff even the best workers and don’t have the time/resources/access to get a better job, that’s a hard sell.
Then there’s the “well they aren’t putting enough effort in so forget them.” Not many movements survive by vilifying anyone that isn’t them.
So those that disagree with the article, please reply.. particularly with better ideas on how those on the lowest end can get out of the rut they are currently in.
“This vast influx of eager workers has naturally strengthened the position of Capital at the expense of Labor, and much of the stagnation or decline in working-class wages has probably been a result, since this sector has been in greatest direct competition with lower-skilled immigrants”
One of the most important sentences in this fine article. It is depressing that something so obvious – intuitive, even – is questioned or ignored in most discussions of the topic.
Naturally employers want unrestricted immigration, including the illegal kind. And naturally this depresses working class wages.
Dakarian, it seems to me like your confusing government with society. This is easy to do, I have done it myself. Still, just because someone doesnt think the government should or can fix a problem does not mean that they do not want to see the problem fixed. Besides, if Democracy really is government by the people then it really is people whos actions matter. People form cultures, and perhaps a cultural solution is whats needed. Perhaps a real labor movement could be something as simple as large amounts of people refusing to work for less than they see as fair.
But maybe there arent any easy solutions, or any solutions at all, at least not now. Just because there is a problem we shouldnt just “do something.” Thats how gasoline gets thrown on fires. Perhaps we should only do something if we have good reason to expect good results. The history of minimum wages certainly do not suggest such results.
I hope Im not straw manning you as I split hairs, and I do appreciate what you are saying. While I have already suggested that a more stable monetary policy would go farther for helping those with low incomes (full disclosure I include myself in that group), Id be happy to try and help brainstorm ideas for solutions:
-Lowering the cost of living might be a better solution than raising wages. Again inflation comes into play.
-Many people live in places where they more or less need to pay to procure, maintain and fuel a car. They also need to pay for insurance. Public transit and and end to modernist civil engineering (Im thinking knockingdown neighborhoods for freeways, suburban sprawl) could both be more cost effective.
-People could start expecting products to last longer and be cheaper to maintain. Modern consumer habits do not suggest we value quality too little.
-Less government actions that discourage small business. Zoning, credentialization, liability, and regulation all need to be examimed if not rethought. If my suspisions are right we might be able to increase positive activity in healthcare, food service, and realestate.
-Specific to real estate for low income earners, hundreds of pages of specific building codes does little to spur innovation in low cost housing.
-We all want people to have access to healthcare and education. Again lets approach the problem from a different angle. Healthcare and education get more expensive the more government pays into it. Lets stop that. Or lets go single payer, both have drawbacks but either would beat our current worst of both worlds system.
-Energy cost hit poor people hard. There is more than enough crony capitalism in energy to prevent innovation or efficiency. Lets have energy solutions duke it out on the market. Personally I think the way forward on energy is for small scale local energy solutions rather than big grids, which soak up cost.
@william
No no, you aren’t strawmanning. As I said before, I’m LOOKING for other viewpoints: other alternatives. You’d be surprised how many choose the ‘government option’ because it’s the only option they’ve heard of that doesn’t seem to work against reality (easier to see a law just sa y”you get this much” than expect a manager who keeps saying “I’m not a charity” to decide to pay more).
In truth, I tend to view governments as a part of society, along with corporations and other features. As you suggest, it’s run by us, established and accepted by us and thus are all options on how to establish a situation.
The best option is if we can do things on our own. Sometimes, that’s not possible, so we organize into groups: organizations, companies, agencies, and so on to mobilize action. When THAT is not enough, we become more organized, which is what a government is. due to that setup, government IS an answer, but should always be the last option, the final tool when all else fails.
As far as what you bring up:
-Inflation, as an overall whole, is actually pretty stable, and has been for some time. What’s out of whack are specific, though important, elements, such as health care, gas, and food. Though we do need to tackle these elements, I don’t think they can serve as a short term solution. I DON’T feel comfortable with the government attempting to force food and gas prices low, especially since the former has ugly consequences and the latter is already in a natural transition (perhaps some funding to help research)
Health care, since the government is well deep into it already (LONG before Obamacare) they might as well keep working on it.
Still, overall it’s something to remember, since letting inflation blow up as a whole spells doom to our livability.
– Public transportation as a method to bring down costs. You’re preaching to the choir here. Far too many issues are resolved by just helping people be more mobile and doing something about the Sprawl.
-As far as the idea of valuing durable items, the only way I can think of to manage that is by letting the price increase on nonessentials (you heard me, higher priced iphones) and making sure we don’t go back to easy credit. When the price to replace is low and ‘money’ is easy to get, the natural response is to replace it rather than repair it. Ending policies aimed at keeping prices low on such items would do the trick.
I mean, if it means people stop buying the iPhone then we aren’t exactly losing a lot of american jobs, especially if they use the money to go to the doctor’s instead.
–
“-Less government actions that discourage small business. Zoning, credentialization, liability, and regulation all need to be examimed if not rethought. If my suspisions are right we might be able to increase positive activity in healthcare, food service, and realestat”
I quoted this because..seriously, everyone on the conservative side needs to be talking about THIS more.
No.. don’t fuss, you are NOT. Not enough. Instead, the fight has been on items that affect others (this article for example, where “Abolish the minimum wage” sounds a lot like “We need more people to be paid like 3rd world countries do”). do you think there’s masses of voters that will fight you on Zoning laws? On needless credential laws?
And regulation. PLEASE be more specific on this one. Just saying “regulation” lumps everything into one pot, ready to be slammed with “Well, we didn’t regulate the food industry when those peopled died from peanut butter” and “Look how great the banking industry did with deregulation!”
But I doubt you mean food safety and bankers when you say “regulation” do you? Then PLEASE specify. Give examples. Mr.Worker may not like you talking about cutting his pay, but he’ll be on your side if you talk about “Stupid government tricks,”
Same goes for the building codes. Where is the widespread push for dealing with THAT?
-lastly, healthcare. There’s far, FAR more than just government affecting the bill (though some of it has a government hand in it). We have the pure inability to know what we are paying for when choosing medical services (why CAN’T I shop via price for hospital care?). We have a deep push for expensive treatments rather than inexpensive alternatives (no, I’m not speaking “New age medicine”. Just saying that there’s no incentive to use a cheaper treatment than an expensive one even if both are equally viable). We have doctors that have to hire a team of staff JUST to handle the insurance claims, and another team to handle the lawsuits. We have no push for preventative/early treatments (Romney’s ‘health care’ idea died i nmy eyes when he said that states that push the ER option as a viable ‘health care’ are fine).
I WOULD be ok with a public option, or perhaps single payer, but I respect the mindset of the country and this country does NOT want single payer (or a public option? really?). Thus, if they want a private only system then we’ll have to do what we can with it. There are systems out there that keep a private system and work.
It WOULD be nice to see alternatives other than just going back to 2008..and staying there or thinking that ‘crossing state lines’ will work much better than it did for the credit card industry (I thought we cared about state’s rights)
I guess the TL:DR is that you’re suggesting to aim at the cost of living more than the income increases. Sort of a Living Wage by Reverse: Instead of bumping up the wage to reach cost of living, you lower cost of living to meet the current Wage. That’s….new and I kind of like that idea. Worst case is that you could hybrid it: aim to lowe rthe cost of living, then if it still didn’t hit, a smaller wage hike would work, or set the wage to CoL then use that as an incentive to push that cost down. Or perhaps a more targetted approach, not unlike the food stamp program: find the areas that’s pushing CoL to high amounts, then do a direct subsidy to the poor. Not only keeps it from falling on the backs of business but also makes sure that the funds aren’t used in the wrong place. Subsidies to move to a cheaper location perhaps (yes it is my pet topic.. ignore my indulgence in mention it if you wish).
In any case, thanks for providing the alternative look. It’s made this thread well worth it.
Dakarian,
Thanks for the back and forth. Government is something that some people want. The problem is that it forces itself onto those people that don’t. This is a major moral issue. There are also practical issues, such as how fast decisions can be made, and how informed those decisions can be. Goverment sanctioned officialdom, as well as careerism, have a tendency to create an insulated closed system, with disastrous effects on decision making. Then of course there is outright curruption. History provides ample evidence that too much central planning and control leading too nothing good, so why do we insist on starting down that path?
We could go on and on about the efficicy of our current idea of government, getting into things like tribal leadership versus hierarchy, circles versus triangles, but my point is that just because people can not think of a better option it does not mean that they should always go for the quick easy fix. Especially not if it infringes on anothers liberty. If anything, this leads to periodic bloodshed at the disincintive of trying something new. Or old. Human evolution did not occur in the presence of government, and that worked out pretty well. Since we climbed out of the water we have continued to adpat and grow as we have spread across the earth, with government becoming nearly universal only quite recently, and only then by less than admirable means.
Ultimately, government may be a choice rather than an inevidability, as heritical as that may be to churches of progress and providence. As such, it is a choice people are making. Im more or less fine with this (despite my Thelemist leanings, its never good to burden oneself with rigid definitions). This is mainly due to my knowing that Im on the planet with other people, and I wish to encourage peoples self determination even when its outside of my philosophical box. Also, I do think government can have a part to play. If we are going to have a government, we should have good government.
Im for a lean central government that focuses on what it can do well and what we can all agree on, or at least tolerate. A strong defense force might apply here, although I think this needs to be reformed and reproportioned. States rights might be part of this solution. People often agree that they want government to provide stability, so I see no reason for this desire to not extend to monetary policy.
Ive probably talked enough about inflation on this articles comments, but I disagree with the conventional wisdom that says inflation is stable. I also disagree that deflation is something to be feared. Despite the mental gymnastics of many economist (often the same economist who helped us get into this mess), I refuse to believe that prices going down would be a bad thing. Perhaps other people will wait a year to buy groceries, but Im hungry now. While we might not be able to achieve perfect monetary stability, I would rather try for some stability than jusy give up on the idea. Large increases over many years can hide in low yearly percentage points (Exponential Function! Doubling Time). If anything markets are supposed to make things cheaper, so If why not try to point monetary instability in that direction?
As for regulation, if your going to bring up the banks its important to remember that we have not prosecuted outright criminality. I tend to think that prosecuting felons would be better than complex regulation. Its also important to remember those banks would have been pusished through failure had it not been for government. We need to stop rewarding bad behavior and propping up failure, just as we need to think about the efficacy of regulation not just its desireability. Im in favor of big dumb laws we can all be expected to understand without lawyers and follow without disincintive, laws designed to protect freedom of choice rather than infringe upon it.
Im going to stop myself here. I know I skipped over a lot of the issues we talked about to dwell on some others. Since your a curious type Im going to share some icconclastic links, just as an offering of brainfood
Freedom Is A Two-Edged Sword by the occultist playboy rocket scientist Jack Parsons. The title should let you know what your in for, but he is one of my influences so naturally hes a bit unconventional.
http://www.bibliotecapleyades.net/bb/babalon210.htm
Welcome to the Reservation. Native American Russell Means shares unique historical and cultural perspective in this video. Is where he has been where we all are going?
http://www.youtube.com/watch?v=-LA-S64QY3o
American John Boyd was the greatest strategic thinker in a country that hates stratgic thinking. He was largely responsible for creating the F-15, F-16 and the defense reform movement. His briefings are more about how to think than are prescriptions of what to think, and as such apply to more than just military matters.
http://fasttransients.wordpress.com/439-2/
A surprisingly good read, and an excellent analysis. I am especially grateful to see someone writing about the crisis of higher education and student loan debt, as I feel that this topic has been roundly ignored by both major parties and yet is a growing moral and economic crisis that is imperiling the future of the middle class in this country. High school students are not well-educated consumers, and particularly in families where a student may be the first member of the family to attend college oft times the parents are no better off when it comes to understanding the financial aid system and the implications of student loan debt.
As a millennial I know many people who graduated (or worse, didn’t graduate) with high levels of student loan debt. In some cases their monthly payments are the equivalent of a mid-size mortgage and will take nearly as long to pay off. How can these young adults be expected to achieve anything close to the prosperity of their parents when it appears that they will spend a large portion of their productive years paying off massive amounts of debt that isn’t turning into equity rather than starting families, buying houses and saving for their retirements?
Furthermore, the liberal trope of equal opportunity has led to policies that promote the idea that all individuals should aspire to higher education when it is a plain truth that not all people are suited for one. Respectable blue collar labor and skilled trades have been devalued by a dogma that says that the only ticket to a middle class existence is a college education. This is not only untrue, it has economically marginalized individuals whose talents are not oriented toward higher learning. In an era where the manufacturers who still operate factories in this country complain that they cannot find enough skilled laborers to maintain and operate the machinery of mass production, it is ridiculous that vocational education is has been stigmatized in favor of an educational system that produces more unemployed business majors than skilled mechanics.
Personally, I see government as a more natural event, a part of our evolution, or rather a device in handling the element of power and control.
Many seem to think that control is something you can remove if the right pieces can be dismantled. However, I do not believe that. I believe Control-the ability to force someone to do what they do not wish to do-is an inherent function, similar to language and the concept of trade. It is a powerful, but dangerous tool, not unlike the creation of a knife.
A lot of how I really feel about Control falls too deeply into Religion and I feel this may not be the place to go into that. Just know that there is an element left unsaid that would fill in the final gaps in this while I explain how it fits within the secular world.
It would be best if no person used Control on each other: that all issues could be resolved without transgressing the desires of another. Alas, I do not like developing a system that requires an inherent change in society. We need a current system until society is ready for a better one. In this world, Control always exists. If no one uses it, a ‘power vacuum’ is created, waiting for the first to claim it. Those that do gain benefits beyond those that do not. Those with Power can seize control of those first few, but simply replace one tyrant for another. Should that person leave, another will take their place. This is not government as we know it: this is what happens whether we choose to or not.
What eventually happens is that a group decides that if a tyrant must exist, that it will be one of their choosing. This is the creation of government. There are other elements but the basic root is the same: the group evokes a situation to avoid the situation being evoked by another interest.
I believe that many different forms of government can work, with their own strengths and weaknesses. A country that wants a Monarchy can make one work. A country that wants a Democracy can make one work. Both can also fail by not addressing their weaknesses.
This country seems to have a goal of softening the Tyrant’s touch as much as possible. I believe that our founding fathers decided that the Tyrant would be weakest when inefficient. Thus we have a President that cannot create law, a lawmaking group that can break down at a moment’s notice, a judicial body that can strike down laws at a moment’s notice. If any piece of the groups disagrees strong enough, the Tyrant falls on its face.
This is, oddly enough, why I prefer the “law of the land’ clause and cannot fully adopt States Rights. ALL governments are Tyrants, Federal, State, and Local. State governments are much more efficient, much quicker to act, and much more capable of using Control on its people. The claim that they are the people’s voice is the same claim the Fed uses as is just as broken. State government is a Tyrant, a fast, strong tyrant better able to Control those who speak against it. While individuals can move, technically, it is not always the case. Every person who cannot move from their state for any reason is a prisoner in their own home. Worse, a Federal law tends to be harder to enforce, easier to slip around, and is usually watered down. For example, Federal law makes marijuana use illegal, yet many in California use it openly. States with the same law, however, crack down on it much more violently.
Thus, if Control must exist, I would rather it be given to the half blind oaf that can barely walk than the well toned brute with a mean backhand.
Still, I respect that we have States and Federal, and both must be utilized, so many cases can be moved to the States.
As far as the tools of government-I agree, if we must have one we might as well use it right-items that have proven to be hard to perform outside of a group make sense. However, I also add elements that can be abused by other groups. Defense fits the former. So lies Public Transportation, though only in areas that prove to be unprofitable for private industry to run in a way that is useful to the local population. Note that this is why I do not believe that government agencies should be profitable: if they were then a private industry could have handled it in the same manner.
The police the latter: I do not want Law Enforcement to be a Power controlled by a group with no accountability. While using government to control the Police is sadly limited such Controls exist, a company would have no incentive at all beyond profit and so a bear does not care if you threaten to stop feeding it when someone else is wiling to do the cooking.
Beyond this I believe in government being the final shield against instability. This is the source for anti-trust laws and civil rights. This is also where I see the safety net: the last piece between a person and destruction.
Regulation fits here, though very carefully. You are correct that many of these cases, though I believe the removal of many of the older regulations have not been beneficial towards society nor the financial industry either.
I apologize for not having my own set of offerings. My mindset has been much more scatterbrained and in development, pulling from bits and pieces from various locations. I will take a look at those links, however and thank you for them.
Do you realize that Hoover thought that raising wages, or just keeping them high when employers wanted or needed to lower them, and that is the actual cause of the Great Depression?
Go look up Hoover’s memoirs. Go to volume 2, page 108, and you will read where he advocated the same policy, of increasing wages so that employees would have the money to buy the goods they were producing. Supposedly, this economic merry-go-round would revive the economy.
Lee Ohanian of UCLA calculates that this was the cause of 2/3 of the unemployment and 2/3 of the drop in GDP during the Great Depression. Look up his article “What — Or Who — Started the Great Depression”.
Having worked a job which required a high school diploma as a college graduate, I’m going to say that part of the problem is quite the opposite – there are a number of jobs which we currently state require high school diplomas which you cannot fill with someone without a college degree. This is, ironically, not necessarily because of the work (which doesn’t require a college education, though it does require high school science courses) but rather because the person who went to college is smarter and more able, on average, than the person who went to high school. While a high performer with a high school diploma can fill these positions, it was often beyond the level at which those people could operate – there was a high failure rate amongst them.
That being said, we are also producing people with the wrong kind of college education. As a nation we really should not subsidize as many history and psychology majors, and more heavily subsidize two year degrees in technical fields as well as four year degrees in engineering and science. Part of the reason that people are going to college is that it is expected, but the reality is that almost all of the new jobs we are creating require technical skill – we need tons of people working in labs, but we probably actually have a surplus of management and other personnel.
I do agree that raising minimum wage is logical for the reasons you have stated.
I will also note one other thing – while you scoff at the idea of automating some of these things, in reality sales is already actually getting highly automated with the internet, office and administrative support positions now, thanks to automation, can be more broadly distributed – so one such person to a group of twenty or more people (if indeed they are necessary at all as an independent position), and food preparation has actually become increasinly automated and easy over time – though we are far from the realm of automated cooks being in McDonalds, there’s nothing stopping McDonalds from setting up an automatic ordering kiosk for people who have credit cards, or from restaurants from having people pick up their food themselves, something many already do.
While we will never do away with these positions entirely, while they have been growing in recent times, I expect them to actually start going away by mid century. In fact, a lot of younger people are confused about what office and administrative support positions are even supposed to do for them, as they’re used to doing it themselves.
I will also note that your final pronouncement is very ironic – in the past, lots of people DID forgo higher education for jobs in the forestry industry, mining, and factory jobs. When those jobs went away, those people became unemployed, and they constitute a pretty large portion of the unemployed people today. They were uprepared for any other sort of work.
This is a great theory, raise mandatory wages for people who have little experience or lack the competencies required for higher level jobs. I am all for something that would raise wages for everybody, but this sounds a lot like rearranging Titanic deck chairs with respect to the idea that it just moves money around in a way that is unsustainable. There will likely be substantial job loss, not a little, particularly among American teens and into their early 20’s. The crime rate will rise, as it always does when joblessness occurs among this demographic: drug use, shoplifting and gang related violence are likely to rise as well.
Long term, the economy will simply adapt to new wages with price inflation on the poor and the middle class. We have seen this phenomenon with other wage control actions taken by the government. Inflation ties to government assistance will rise significantly raising deficits. Liberal governments will continue to raise taxes on the rich. The same business owners who pay the higher wages, will also have their taxes raised to pay for higher entitlements. The rich will have been double dipped and, over time, will not likely 1) stay in business or 2) will stop expanding in the US and attempt to expand overseas where profits are more likely. Both of these scenarios necessarily mean more unemployment.
To all those armchair economists (Michael, Titanium Dragon, Saulius) I ask one question: WHERE ARE YOUR SOURCES?!?
You spout rhetoric like you’ve been prepared for nothing else your entire lives, and yet you can come up with no reputable quotations or links to scholarly articles…
There are some good observations in this article, but I see one major oversight. It seems that the assumption is made that all employers are large corporations. Minimum wage increase has a profound impact on small businesses which employee a large share of the workforce.
My brother and I were brought on by our parents to convert their family business into a different sector which requires a major overhaul and lots of hard work. It’s very similar to starting a new business from scratch.
When the minimum wage was increased by about $2/hour, it severely cut into the profit margin which was directly funding the cost of conversion. We are the only employees and yet it made a big impact. With less revenue, we have been unable to build the business any quicker. Small businesses, like ours, adapt to the demand of consumers and if we were able to put that income from our wages (1/3 of which we don’t see anyway because of taxes) into development, we would be much farther along in the business. When the income is able to outgrow expenses, our wages will be increased because like the personal relationship that develops between employees and employers in small businesses, our parents want to treat us well. Not only will pay increase, but the workload will be able to be spread among more people as our goal is to hire more people when we can.
So as a minimum wage employee, I dread the thought of a mandatory minimum wage increase. Cost of living will go up which will offset most of the extra income and 1/3 of that money will vanish from our family’s profits to go to taxes. I hate to think that I will be pouring my blood, sweat, and tears into the business at this rate for an even longer period of time!
How can a small business ever get traction to get off the ground when we just keep adding more and more costs? It seems to me that this ultimately will create an even greater disparity between the wealthiest people and those who are trying to work hard to build something of their own. Why don’t we just make that glass ceiling out of bullet-proof glass while we’re at it!
Excuse me Ben, maybe it would help you build your business if labor was free. Why should public policy be geared toward making it easier for people to grow their businesses by exploiting their workers.
That’s been tried and tried and tried, but the cost of living still rises faster than the wages. It’s a short-term “feel good” benefit. It also reduces the incentive for employers to hire the newbies–the unskilled–for on-job learning of the “how to”.
In good economic times, the period of unemployment from layoffs among the least useful can be relatively short-term. In the sort of economy we have now, it’s very much a long-term penalty.
The minimum wage should set up a increasing schedule in line with economical growth. This will prevent widdening of social economic gap between rich and poor. This will prevent social crisis leading to violent revolution. This also prevent price collapse for housing, stock, commodities. A good inflation is healthy for economy.
The Federal Reserve creates money from nothing but sheer will; digitally.
Issue money directly to people instead of corporations. Eliminate the finance industry replacing it with individual pursuit of dreams. If money is a function of imagination then why not use money to spark imaginations?
Who needs rich people when everyone gets access to new credit and capital directly from the Federal Reserve?
Who cares who gets rich off what idea when the “market” will be people buying your goods, services or paying for your personality? Let markets form from the will of people responding to free credit flow of ideas.
If you’re thinking in terms of government action or wages you’ve already lost. Government action can’t make labor more productive, just more costly. There is no reason to believe that making it illegal to employ people who are worth less than a certain number increases wages. Yes, the sector that is internationally tradable pays more than the minimum wage, but it’s workers buy things from people who do pay the minimum wage. If it goes up so does their living expenses, so they are in real term earning less, the opposite of the objective.
The answer is simple, get out of the way. Scrap all the thousands of ways the government stops poor people making money. The real minimum wage is how much you need to pay someone to stop him going into business for himself. With thousands of regulations, many of them specifically designed to prevent competition from poor people, that wage is a lot lower.
I’m not convinced, but very appreciative of the article.
First point: the list of 3 top catagories includes “office and administrative support” – this catagory can be and often is sent overseas. Equivalently, in the chart of occupations with largest projected growth there are “office clerk” and “customer service” – both of which are often shipped overseas. So the argument for a rise in minimum wage needs to take into account job losses in those areas.
Second: The discussion of higher education is very important to the subject: in some sense the easiest way to increase the net worth of low wage people is to stop requiring $20k loans to get a low wage job. One issue with that is a college degree in some cases is really just a legal method of gauging basic skills, like reading, writing and arithmetic, that are no longer guaranteed by a high school education and are illegal for an employer to test for. An alternative way of guaranteeing basic skills, that won’t trigger anti-discrimination suits, could help solve that issue. Some kind of 3rd party testing/qualification might be able to do this. But the general argument – that higher education in over-subscribed and under-utilized is very clear.
Third is a more general point. The general argument that understanding the jobs we are creating, we can prepare workers for those jobs, and we should expect our society to reflect those jobs and act accordingly is good. There is still a missing link, though. We still use lightbulbs, and we used to make lightbulbs cost effectively in the US, and still could. Our federal government enacted a ban on incandescent bulbs (since rescinded) with the expectation that manufacturers would transition their factories to the latest designs. They did not take into account our conflicting and physically unrealistic regulations on manufacturing which made transitioning factories virtually impossible. Factories closed, the ban was lifted, but many of the jobs were already gone. This is not a comment about too much regulation, it is a comment about poor regulation. We do not need to look to China, where their regulations are not effectively protecting their environment, we can look to Germany, where they are able to manufacture many products efficiently while protecting their environment, because their regulations are scientifically sound. We have some regulations that are so weak, they are meaningless, and other regulations that are so tight that no one actually follows them, it just means you need to be grandfathered, or you need a waiver to go into business.
Lastly I want to applaud the final paragraphs: complexity is wildly overvalued and usually doesn’t accomplish the real goal.
Unfortunately, no one considers the reverse side of this coin: we have had MASSIVE population increases in the US (especially since 1960), which inevitably leads to more unemployment, underemployment, labor force dropouts and people needing public assistance as the market can’t absorb so many more mouths to feed so fast. In 1960 (incidentally, the first census in which I would be personally represented), the US population was just under 180 million. Just over 50 years later, that population is WELL OVER 300 million (an increase of over 70%, and this despite wars in Viet Nam, the Mid East, etc, as well as legal abortion which should have REDUCED our population from 180 million to far less than that as people died off– but for other reasons has failed miserably to do so).
With such an increase in population since 1960, is it any wonder that wages have stagnated over this period of increase? Frankly, with more potential workers in the labor force (not to mention those who have dropped out!) as well as less unionized workers unable (or unwilling) to demand massive wage increases and many low wage jobs going overseas, it’s a wonder why U S wages haven’t FALLEN over time (which would be a damper on price INFLATION, BTW).
And remember this basic economic fact:
ANY increase in wages (whether due to union or personal bargaining OR a government mandate such as a ‘minimum wage’) will over time lead to an increase in prices (all other things being EQUAL), which will lead to demands to increase wages to “catch up”, etc. You wind up starting a NEVER-ENDING CYCLE which leads to more impoverishment than it can ever help to stop It may be that the very EXISTENCE of the minimum wage (from the first day of its creation in 1938 as a result of FDR’s “New Deal”) is an unwitting cause of unemployment (and wage stagnation due to an excess in “the reserve army of the unemployed”) in this country (due to policies which encourage too many Americans to live way beyond the Biblical “three score and 10″ [70] years”). The minimum wage maybe an idea that has long outlived its usefulness (if it ever had any in the first place). To increase it rather than eradicate it will only make inflation worse — we have a chance to nip it in the bud if we repeal one more plank of FDR’s version of “The (American) Communist Manifesto” — the minimum wage– ASAP.
An intelligent and interesting post. A couple of comments:
A minimum wage by itself may not, in the abstract, raise wages. However, IF ENFORCED, it would greatly reduce illegal immigration and reduce the demand of the business lobbies for ever more legal migration.
If you simply can’t reduce your wages below say $12/hour, then there is no reason to import foreign nationals to work at $5.
So here is one elephant in the room: instead of increasing the minimum wage, how about actually enforcing current laws as respect to illegal immigrants? Stop letting them and their employers ignore our existing minimum wage laws, and tax laws, and labor laws, and identity theft laws etc.etc. That might have a much bigger impact on the current job market for US citizens.
As a society, nothing furthers tension than the idea that people who can’t afford children are being subsidized to breed more via Medicaid, etc; while the high taxes and cost of living make it increasingly impossible for those of us who practice civic responsibility to have children (to say nothing of rampant feminism).
There are 2 causes to the problem:
1) An impossible sum is being extracted from young workers to support more or less lavish lifestyles of the elderly. That sum extracted is in the form of low wages, high taxes, poor services.
There is a looming financial crisis due to pensions and Benefits P&Bs. Which is to say transfers from everyone else to the elderly. This includes underfunded state and local P&Bs like Illinois, NJ, Kentucky to non funded P&Bs like Social Security and all fed gov programs.
In NJ they raised the gas tax, a low gas tax used to be sacred in NJ, and as near as I can see sent it to the pension scheme. The Chicago public school to prison pipeline P&Bs will now be funded with state money.
Much of the high cost of education is caused by the need to pay for retirees. So one suggestion might be to steal from Clinton’s welfare to work and have retirees to work programs. You want your government pension you have to work a certain number of hours for it. For example, retired teachers would have their P&Bs reduced to whatever was reserved for (probably a 60% reduction given CALPERS treatement of Loyalton), they could get their full P&Bs if they worked as teaching assistants for a few hours a day, or mind autistic kids in exchange for government making up their pension payments .
2) How about all the money that went to Iraqistan. Now you could say most of that money just went to workers in the US to make guided bombs and such. The problem with that reasoning is that if that money went into capital investments like flood control in Houston, or even ghost cities like in China, there would be some return on investment. Linking back to the pensions crisis, one reason for it is what the economists call mal investment leading to returns less than the 10% they needed and predicted in 2000 when Gray Davis retroactively increased pension benefits to Calis largely old line white retirees.
As for #1, I am nearly a senior myself, and while my retirement will be comfortable, is will not approach lavishness. Wife and I have been white-collar wage slaves for 30 years and lived pretty simply, having 2 kids. And most of my siblings, cousins, in-laws, etc. are in the same boat.
So I’m with #2. I really have to wonder what life in the US would be like if the pentagon didn’t vacuum up more than a half trillion bucks every year. China, which has 3 times as many people as we do, spends 1/4 as much on “defense” (:rofl). And they’re in second place. Nobel Peace Prize Obama started 4 new wars on top of the 2 (or so) he was left by GWB. The problem seems to be that none of these wars ever end.
Medicare for all, massive infrastructure upgrades (lots of decent-paying jobs there), energy conversion…all depend on whether the MIC, Healthcare, and Oil lobbies can be driven into submission. As my Magic 8-ball would say, “Signs point to no”.
You can’t raise wages as long as there is continual massive importation of wage slaves and cheap labor, who out-compete American Citizens for jobs.
If you want higher salaries, then reduce immigration.
“Healthcare . . . lobbies can be driven into submission.”
American medicine’s Iron Pyramid is among the cruelest of lobbies, and its appetite for money insatiable. I suspect only massive municipal and state financial crises in pensions and benefits will bring that bunch to heel. Corporate bankruptcies and shutdowns, driven by health care costs as big contributors, seem to have had no effect on our political elites’ capacity to focus attention on busting up that racket.
Find me a democrat who doesn’t support more work visas, illegal immigration and work visas. You can’t. So while you will find a good number of RINO traitors who fit your description, more republicans oppose those wage killing policies than democrats which is why tech and the chamber of commerce oppose them and Trump.
Chucky Schumer does NOT want any restrictions on employers hiring illegals. He never approves of that as a stand-alone bill when everybody in the working classes he supposedly represents would support it. He knows that if illegals can’t get jobs, they can’t stay and pump out future Democrats.
It’s kind of odd that this article shows such clear-headed thinking when it comes to demonstrating the flaws in bogus platitudes like “education is the answer to all our economics woes” yet makes almost the same errors in its propagation of the “raise the minimum wage!” dogma. (I suppose this is analogous to Gell-Mann amnesia.)
Specifically, the problem with the more education mantra, as pointed out in the quote above, is that education by itself does not necessarily make workers more productive, and thus valuable to wage-paying employers. Likewise, simply dictating that workers need to be paid more (conditional on still being offered a job given the new price floor) doesn’t make them more productive, and thus raise their value to the employers who pay them wages in exchange for their labor.
The best case scenario for a minimum wage increase is that employers are so concentrated and monopsonistic that it functions as a transfer from the relatively wealthy to the relatively poor. (The worst and middle of the road cases involve involuntary unemployment, off-setting higher prices, increased automation, substitution of less valuable benefits and amenities, etc. In general, plans based on having the government set the price of something by diktat rarely survive contact with the real world mostly intact.)
In which case…why not simply have a direct transfer, like the E.I.T.C., funded by progressive taxation from the relatively wealthy to the relatively poor? This would do all the good things that one would hope that a minimum wage would do, without the at least plausible downsides a minimum wage increase might have. (Consider the likely effects of raising the minimum wage to $100 an hour if you doubt that there might at least hypothetically be such downsides.)
(I was editing an addendum to this just as the time to do so ran out.)
Of course, there is an additional motivation, explicit here, for Mr. Unz’s support for raising the minimum wage. Namely, that it will likely price Latin American immigrants, particularly illegal ones, out of the labor market. That is to say, what libertarian critics decry as a cost of the minimum wage is here touted as a benefit.
While this is certainly an ingenious way to oppose immigration, I think that it nonetheless falls short as a matter of progressive economic policy (as it’s presented here.) This is why, it seems to me, young liberal pundits like Ezra Klein and Matt Yglesias are more skeptical of increasing the minimum wage. (Klein in particular made his reputation largely on the strength of his consistently left-leaning coverage of health care policy debates, so I think knocking his progressive credentials on the basis of his muted views on the minimum wage is unfair.)
Because this is a subsidy for the employers who hire illegal aliens and given our love of cutting taxes for the wealthy, will never be paid by the wealthy. There should NEVER be anything like EITC so that the customers of a business pay the full cost of that business. If the business cannot raise it’s prices enough to pay for the labor it needs it goes out of business. This is actually better for all of us as it stops being a magnet for illegal alien labor.
China spends 1/4 of what we spend on defense because the people doing the work are making less than 1/4 of what Americans make. But they’ve launched 44 ships in the last five years, a pace we couldn’t hope to match.
I just got out of the hospital (my chair broke and I fell on my TV breaking my ribs and the TV) and Kaiser sends over Social Workers to asks me if I’m depressed. I say no, if I want to get depressed I will re-read “Race Against the Machine” by Andrew McAfee and Erik Brynjolfsson.
Brynjolfsson had to dial his depressing thesis back in order to maintain his lecture career. The original thesis in the book is so damn bleak. Basically he says that machines can do just about any kind of job better than any person and people will be becoming unemployed at an ever increasing rate. The exception is the owner class. If you own the factory that houses the machines that make the products you will be rich beyond the dreams of avarice.
Something like that seems to be happening right now – all the new wealth accumulates only to the super rich.
When I was a teen they had a race car called the Birdcage Maserati. Instead of a normal frame for lightness they had a bunch of Italian workmen weld together a whole lot of tiny metal tubes into a three dimensional space frame. Last month TV showed the new Maserati assembly plant – it’s totally automated. You expect that sort of thing from a mass auto maker like Toyota but Maserati is a boutique car maker. Automation is everywhere.
I was an econ major as an undergraduate. I bought the standard conservative argument about minimum wages, but I think the ground has shifted under our feet. It looks to me as if the only way to get resources to the former working population is to give them ownership in the factories. That sounds a lot like socialism but is there another way?
Not so fast there.
The ones who can afford to pay higher wages are typically subsidized by the government in more ways than one. All corporations get special favors from the government above and beyond a reduction of exposure to liability. They even get bailed out and receive other forms of welfare that small businesses can never hope to obtain. It’s little wonder that WalFart’s been lobbying for an increase in the minimum wage; it tends to put the smaller competition out of business.
Ya wanna get more people working? It would undoubtedly help to abolish the concept of corporations and their special treatment and let the small businessman compete somewhat instead of making life ever more difficult for them.
I believe the follies of the minimum wage were discussed by Herbert Spencer, to name just one, around 1850 or so and if anyone’s interested, I’ll look it up. You’d think we’d have learned something in the interval.
I’m actually shocked that Mr. Unz, as obviously intelligent as he is, advocates for more government interference in our lives, and also that he fails to distinguish between education and schooling. When intelligent and well meaning people advocate for such things, I begin to lose all hope that anything will ever change for the better.
Here’s another suggestion and I don’t pretend to know THE answer, but this may be a better one.:
Stop spending trillions each year on wars. Stop adding trillions a year in debt. Get government out of the business of supporting the moneyed classes in any way imaginable and some ways unimaginable by any decent person, and get government off the backs of the truly productive classes since it should be obvious that free people are more productive than those motivated by coercion, which is the basis for government.
Many people these days seem not to be able to think outside the trap of statism.
I said nothing about minimum wages. Ron is just arguing that raising wages forces businesses to hire Americans as it dilutes the advantage of hiring illegals. I don’t completely agree. I think raising the minimum wage will just cause more cheating since nobody is enforcing labor laws any more than they are enforcing immigration laws.
My view has always been that throwing illegals out of the country will cause wages to rise to the point that welfare is no longer needed for low wage workers and the economy will be in better balance. Society will also be healthier mentally as people have a better self image. Everybody will assume they are self-sufficient.
As for your views on corporations, only big companies can do big things. We have to have them if we want to live in a technologically advanced world.
Henry Ford CREATED a market which had not existed when he paid his employees $5.00 per day. The average wage of the day was around $1.25 per day. Of course, the wall street types and the banksters howled that Ford’s wage rates would destroy capitalism. Guess what?? The OPPOSITE happened. Henry Ford knew one of the basic tenets of a free, capitalistic society, that a well-paid work force would be able to participate and contribute to a strong economy, unlike what is taught in business schools today–that wages must be kept to a bare minimum and that the stockholder is king. Our “free trade” politicians have assisted the greedy wall street types and banksters in depressing wages on the promise of cheap foreign products. A good example of this is the negative criticism that Costco receives for paying its employees well above market wages. These same wall street types praise Wal-Mart for paying its employees barely subsistence wages. Any sane person KNOWS that in order for capitalism to work, employees need to make an adequate wage. Unfortunately, this premise does not exist in today’s business climate.
Henry Ford openly criticized those of the “tribe” for manipulating wall street and banksters to their own advantage, and was roundly (and unjustly) criticized for pointing out the TRUTH. Catholic priest, Father Coughlin did the same thing and was punished by the Catholic church, despite his popularity and exposing the TRUTH of the American economy and the outsider internationalists that ran it . . . and STILL run it.
Our “race to the bottom” will not be without consequences. A great “realignment is necessary (and is coming) . .
The difference with Ford was that he knew his business, knew his market and knew what he could afford. There wasn’t a kn0w-nothing commissar at the top forcing him to raise his wages.
I would only disagree with your tarring of Henry Ford with the epithet of capitalist. He was no capitalist. He was an Industrialist. Industrialists are interested in building something. Capitalists only care about shekels.
Good point! thank you
Is it true that the $15 minimum wage law mandated in Seattle has resulted in
unskilled workers now earning an average $1200 LESS per year than before
thanks to shorter hours and small businesses closing, all because of that law?
thanks to shorter hours
I wouldn’t buy anything with nonsense like this. I don’t know of too many businesses who pay people to sit around and do nothing, regardless of how low the hourly rate of pay is.
Yeah, some restaurants go out of business but what good are jobs that pay so little that the employee is on some form of welfare? In addition, restaurants go out of business all the time and the business is highly cyclical.
http://dailysignal.com/2015/10/22/seattle-hiked-the-minimum-wage-to-15-an-hour-heres-what-happened-to-seattles-job-market/
The article fails to deal with the distinction between wages and labor costs. Cash wages may have been stagnant for many years but labor costs born by the employer have risen dramatically, whether from increased costs of employee benefits (medical, dental, disability, etc.) or increased costs imposed by regulation (maternity leaves of four months, family leave, OSHA, Obamacare, etc.).
Higher minimum wage laws may not cause a loss of jobs (however, too much data shows that it does) but what it will do is force/allow employers to be more picky about whom they hire. Raise the minimum wage to $15 /hr and more people will get off their butts and look for work. But that does not increase the demand for workers, it only increases the supply of workers. So employers will not take a chance hiring the kid with no experience, or the kid still in school who needs scheduling accommodations. They will hire the safe, experienced worker. There will be no “entry level” jobs where young people can get their first job experience.
There will be no “entry level” jobs where young people can get their first job experience.
That is what keeping the illegals out of the country is supposed to do. Do you really think that, when I was a teenager, the manager at McDonalds wanted to have a staff of 45 teens, 10 seniors (to work during school hours), and about 10 full time drop-out or “assistant manager” types? Handling those teens was like hearding cats but they had to put up with it.
Bring in the illegals and reduce the staff to 25 full time illegals, 20 of which never get a raise and try and figure out what the owner will do.
At the bottom end of the wage scale everybody has a hard time trying to build a good crew. Some managers get sick of an endless supply of goofs and pay the occasional star enough to keep them until they build a good crew. Some managers have a never ending stream of people who won’t stay no matter how good they are because the wages stay low.
Fine piece and analysis. There is significant room for upward revisions in wages, particularly for the three BLS groups you noted. Surely the best expansionary policy instrument indicated for the economy today.
There is an estimate [if I am not mistaken, by Mankiw and Alessina, Harvard] where the elasticity of substitution between labour and mechanisation is quite low; until $23/hr is breached.
Problem is it attracts even more mexicans, it accelerates the automized economy which we are not ready for with hundreds of millions of useless mouths and no way to stop them so along with UNZ minimum wage victory there’s a minimum income push right behind it full blown communism being pushed by billionaires who dont have to live with these useless nigger mouths.
A better idea is a white country which would raise the IQ of the far left side of the bell curve a standard deviation 15 pts, and thats before beginning to do the population wide genetic and social improvements a white nation would allow that a multicultural nation cant even utter aloud.
That would raise wages for the right reason. wages increases by fiat are fiat money.like most fiat money they come with strings attached to redistribute to niggers. so not only do all the min wage niggers get paid exorbitantly and so flood in ever faster into our nations with their useless villages in tow. but as wages at the bottom push wages up through the top, affirmative action makes sure niggers get half those wages too, if you count women as niggers as you should, and they insist they are,its more like 75% or better of the jobs in most federally enforced affirmative action zones (which is almost everywhere now) go to niggers at inflated wages forcing the wages of productive whites down to compensate while forcing the whites to actually get the jobs done.
Capitalist like this because like high corporate taxes they simply pass the cost on to their customers and write it off, laughing all the way to the offshore bank. . They also like it because understanding the game, they hedge against fiat.They also use their influence in partnership with the (((left))) to have the government further subsidize those niggers inflated wages with socialized everything from healthcare, lawsuit retirement plans, welfare, childcare, free food, to cellphones, tampons, and condoms. And most of all because of course they want a one world economic order of magnitude more customers,, And to continue to triangulate old school socialisms ruined economies and general low IQ third world dysfunction to depress wages worldwide for as long as possible, one labor market works well for them as the fiat wages white taxpayers pay and the fiat debt their grandchildren inherit makes those wages high enough the niggers can buy the capitalist products. Its giant ponzi scheme, The capitalist are getting rich the left is getting the other half of the power, and whites are being enslaved while their nations are looted of a thousand years of equity.
Anyone who thinks capitalists make natural conservatives probably thinks hispanics make natural republicans. _ and probably learned about the world from the jews like UNZ. n fairness UNZ at least is honestly mistaken and like many goodwhites jew or not actually believes a lot of shit and I have to give him credit for building this site, but if jews are to avoid another expulsion they had better wake the fuck up and do an about face and become white nationalists
Some sort of (re)distribution is required.
I just don’t see any other way around it.
Socialism will, always, boil down to politicians and apparatchiks taking more and more power in a society and then abusing it.
You are correct, IMHO.
Automation is a game changer.
Some people believe it’s not that important, like industrial revolution before. Some jobs will go out, some jobs will come in.
I don’t much believe it.
Trump has failed in all what he promised except in “bring the jobs back”.
Even if he brings those industries back he won’t bring jobs.
Call me cynic, but before the problem was fixed by colonization (sending surplus population out) and big wars (huge loss of life and material destruction).
It would probably work even now (war that is) except it can’t due to nuclear weapons.
Either way you cut it some sort of redistribution is a solution.
Plus surveillance and police state.
Combination of both should work.
Dystopian, in any case.
Thanks for replying. My comment was so far down in the stack I feared no one would ever see it – and I feel deeply about the issue. I am however not certain that I am right.
Right now it seems as if all the added wealth accrues only to the top one percent. This is disturbing but it is not completely new. Something like that happened in the twenties. Income distribution was crazy unequal. Now it seems to be happening again. This time it is clearly associated with automation.
There is the big automation issue and the smaller one. The smaller one deals with unemployment and income distribution. The big one deals with the looming prospect that humans as a species will no longer be needed at all. I can’t quite grapple with the big issue so I’ll confine myself to the unemployment-distribution issue.
In the middle ages everything was made by home crafts. Our present great wealth stems from the mechanization and automation of all manufacturing in purpose built factories. People nowadays get every article from some factory. For example, I had a Jimmy Dean sausage biscuit for breakfast. I warmed it up in my microwave but otherwise it had never been touched by human hands. Whoever owns the Jimmy Dean factory must make a lot of money. There are no cooks, waitresses, or other humans involve. There is me the consumer and some guy who owns the factory.
This I suspect will be the pattern increasingly. If so there is very little room for the middle class and les for the lower class. Those who provide personal services will escape for a while. As others have noted truck drivers are in the crosshairs of those who create automation. My Jimmy Dean breakfast will soon be delivered by a driverless vehicle.
There is plenty of wealth around in my dystopian scenario. Those sausage biscuits are mighty tasty. But the beneficiaries of all that wealth creation are becoming only factory owners. In the IT world we have had ‘lights out’ operations for many years. There are server farms where no light shines. The computers don’t care and it lowers costs. Soon breakfast biscuits will be made in the dark. We are fast approaching a world where there are these factories that support humans but no human is welcome inside.
When all the disposed former truck drivers unite they will demand a stake in the ownership of these factories.
My sentiment exactly.
Agree with all.
Two things, maybe.
The consumer is supposed to have some disposable income to buy stuff produced by that factory and owned by that guy.
So…..how does that consumer get his income is he is not employed?
Two scenarios, maybe:
1. I guess in science-fiction scenario an average consumer, in that world, gets his/her income by all powerful AI?!
2. He/she gets doled out, by the state, something enough not to get desperate enough to “rock the boat”. Combine that with surveillance state and proper incarceration system, well…it could work well.
Which brings us to
Who knows?
Possible, but requires a cultural, philosophical shift in Western perception. “Commies!!”.
As I see now, I believe the option 2 is more probable. Just keep along the current course and it will happen. Brasil of sort.
This is huge topic and, interestingly enough, you don’t see much about it.
Probably because smart people believe they’ll be at the winning end of the pyramid. I feel they are for some surprise.
As for those from “basket of deplorables” nobody cares. Anywhere.
If the wages are raised, the tsunami of illegals will increase too. The jobs are a powerful magnet that attracts more immigrants, legal and illegal, so anyway the American people would NOT get jobs . It is necessary firts to stop entrance of imigrants, specially illegals. Illegals offer to work for less than minimum wage. For a Central American, a salary of 5 dollars per hour is still very attractive compared to one dollar per hour (or less) he gets in his country, so Americans can not compete with illegals. Maybe if presence of illegals in US land is punished by death penalty, that would scare them and nobody would try to enter USA illegally. then Americans could get the jobs.
If the minimum wage law really worked as advertised then we could just make the minimum wage $1,000,000 (one million) dollars an hour and we would all be millionaires and only have to work one hour a year.
But it doesn’t work that way. Any law which sets the minimum wage higher than the market wage destroys jobs.
Now deleting line 7 from the Federal IRS 1040 form, that line where you write down your “wages, salaries, and tips” to be subject to the Federal Income Tax, now that would help the American workers. Get rid of the federal income tax on jobs. A tax on jobs kills jobs. It is the taxing of jobs, in all forms, that is destroying the market value of American workers.