Friday, February 15, 2013

Minimum wage

Robert Reich offers (in Salon) an excellent argument in favor of the minimum wage. So has Paul Krugman, natch. So has fellow blogger Dakinkat, who teaches economics. Read all three, but Kat's piece is especially good.

Employers won’t outsource the jobs abroad or substitute machines for them because jobs at this low level of pay are all in the local personal service sector (retail, restaurant, hotel and so on), where employers pass on any small wage hikes to customers as pennies more on their bills. States that have a minimum wage closer to $9 than the current federal minimum don’t have higher rates of unemployment than do states still at the federal minimum.
Actually, there’s so much good rationale that even Walmart lobbies congress for increases. That probably will surprise you, but it’s pretty simple. Minimum wage workers are Walmart shoppers. Giving them more income turns them into customers. They don’t have any leftover money so they basically spend all they get.
Walmart, I would add, already runs a very tight ship at most stores. They can't fire employees and keep the doors open the same number of hours. So you can't argue that a nine-buck-an-hour wage will cause massive lay-offs.

Raising the minimum wage should reduce the number of people who borrow beyond their means to go to college. They will stay on the job if they feel that they can get ahead without higher education.

Kat directs our attention to this New Yorker article:
A second important and (largely) undisputed finding is that there is no obvious link between the minimum wage and the unemployment rate. During the nineteen sixties, when the minimum wage was raised sharply, unemployment rates were sharply lower than they were in the nineteen eighties, when the real value of the minimum wage fell dramatically. If you look across the states, some of which set a minimum wage above the federal minimum, you can’t see any sign of higher rates leading to higher unemployment. In Nevada, where the national minimum of $7.25 an hour applies, the jobless rate is 10.2 per cent. In Vermont, where the minimum wage is $8.60 an hour, the unemployment rate is 5.1 per cent. What these figures tell us is that other factors, such as the overall state of the economy and how local industries are doing, matter a lot more for employment than the level of the minimum wage does.
In August of 2011, this humble blog took notice of Home Depot founder Bernie Marcus. He made the news when he announced that he could not have started his business if Obama's onerous gummint regulations had been in place in 1978, when Home Depot began. This claim didn't convince anyone who could recall the actual regulatory environment in 1978; as noted above, the real minimum wage was higher then than it is now.

As I pointed out in that earlier post...
By the way: There are Home Depots in Canada! Plenty of 'em!

Those stores remain open for business even though those despicable job-killing gummint regulations are even more severe north of the border. (And yes, employers there do like to bitch about that situation.) Those unlucky Canucks agonize under the burdens of a socialized health care regime, which businesses large and small must help to fund.

And yet -- how can this be? -- Home Depot Canada is doing fine!

In Canada, the minimum wage is higher -- between $8.75 and $11.00 an hour (figured in "international dollars"). The government also imposes stricter environmental standards.
Finally, here's Paul Krugman:
The truth is that top Republicans have so little regard for ordinary workers that they can’t even manage to pretend otherwise. Case in point: on the last Labor Day, Eric Cantor declared,
Today, we celebrate those who have taken a risk, worked hard, built a business and earned their own success.
Yep: even on Labor Day, Cantor had nothing positive to say about workers, just praise for their bosses.
This really is new. Even in Reagan's time, Republicans always managed, on Labor Day, to scrounge up a few pro-forma words of praise for the American worker. Either the ideology has grown more severe or the personal insecurities of our modern Randroids have reached the level of psychosis.

Maybe next Labor Day, Sarah Palin will tell us that Paul Revere made his famous ride to warn the British not to impose further regulations on our Job Creators.
San Francisco vs Alabama

San Francisco min wage: $10.55
Alabama min wage: $7.25

San Francisco unemployment rate: 6.5%
Alabama unemployment rate: 7.1%

San Francisco pays its workers at least 25% more and has less unemployment than Rock Hard Right Wing Alabama.

Sucks to be beat by a bunch of flaming Liberals don't it macho man!
I found this interesting.

Think Progress:

OOPS: GOP Rep. Inadvertently Makes The Case For Nearly Doubling The Minimum Wage

A stronger minimum wage, [Tennessee Rep. Marsha Blackburn (R) ] said, would negatively affect the ability of young workers to enter the workforce as teenagers, and would prevent them from learning responsibility like she did when she was a teenage retail employee making a seemingly-measly $2.15 an hour in Mississippi…

Making $2.15 an hour certainly does sound worse than today’s minimum wage, which federal law mandates must be at least $7.25 an hour. But what Blackburn didn’t realize is that she accidentally undermined her own argument, since the value of the dollar has changed immensely since her teenage years. Blackburn was born in 1952, so she likely took that retail job at some point between 1968 and 1970. And according to the Bureau of Labor Statistics’ inflation calculator, the $2.15 an hour Blackburn made then is worth somewhere between $12.72 and $14.18 an hour in today’s dollars, depending on which year she started.

At that time, the minimum wage was $1.60, equivalent to $10.56 in today’s terms. Today’s minimum wage is equivalent to just $1.10 an hour in 1968 dollars, meaning the teenage Blackburn managed to enter the workforce making almost double the wage she now says is keeping teenagers out of the workforce.

Carolyn Kay
From the post war period right up till 1975 wage increases for ordinary workers tracked US national productivity increases. Bureau of Labor Statistics figures show that from 1975 till the present productivity increased by a massive 154% while wages increased by a measly 13% in real terms. Workers are now working twice as hard for the same or even less pay than they were earning in 1975. So there is no question that the middle and working classes have been totally ripped off by employers and the wealthy. See here and here.

The current public debate on wage increases has focused on the benefits to the economy and that the impact on employer costs and unemployment numbers will be minimal. These secondary arguments fail to address the economic elephant in the room -- that workers have been systematically robbed for a generation of wage increases to which they are fully entitled and it's about time they started getting it. The cash is out there and they have been owed it for a long, long time. It's about wage justice, not affordability.
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