Open thread March 26, 2013 Dan Crawford | March 26, 2013 6:34 am Tags: open thread Comments (14) | Digg Facebook Twitter |
Hey, this is the original Angry Bear look and structure. Late last evening there seemed to be no Angry Bear. Before that there was a strange looking new Angry Bear. Is this the result of “migration” that Dan was talking about? I do like this better than what I thought was to be, but now seems not to be.
I already posted:
(a) If the minimum wage were raised to the median wage — then — half the workforce will get a raise ranging from one-tenth (retail clerks) to one-third (fast food workers) of what their employers will be forced to raise prices in order to compensate for higher labor costs. (b) Raising the federal minimum wage to $30,000/yr ($15/hr) would add only 3.6% direct inflation.
Let’s take this a little further:
Superficially it sounds like employers cannot lose. But, the bottom line question is whether higher wages will create higher demand or at least continue the current level of demand at the increased consumer prices.
If you “know enough about economics” (this is for non-followers of economics) to know what the price of a quart of milk or a loaf of bread is (which the first George Bush famously did not — not to pick on) then you “know enough about economics” to know that: at $30,000/yr wages consumers will spend a lot more burgers then they will at $15,000/yr. You also know that at 40,000/yr, consumers may not spend any more on burgers at $40,000/yr than at $30,000/yr. In my high school economics — forget 101 — they explained the principle of diminishing returns thus: you might prefer an ice cream cone to a hot dog but after three ice cream cones you might prefer the hot dog. At $30.000/yr — especially with multiple household incomes — folks are probably buying all the fast food they desire.
Desire for fast food will stay the same if the minimum wage is raised from $30,000/y to $40,000/yr but the price will go up 11%, possibly leading to sales loss — or possibly not; consumers will have more money to spend.
The price of a fast food meal will go from $5 to $6.65 to $7.50 as the minimum wage rises from $15,000/yr to $30,000/yr $40,000/yr.
If fast food employees have the power to negotiate (most workably via legally mandated, sector-wide labor agreements — union and minimum wage not are mutually exclusive) they may be willing to lose some sales — and some jobs — to get a 33% increase in pay. All the market will bear is good enough for labor too.
All of which tells us that a $20/hr minimum wage may be every bit as practicable as a $15/hr minimum wage. Matter of fact that would fall just short of what productivity increases since 1968 ($10.50/hr adjusted) would give.
[Hope the link works — if not I will post it below after working out the kinks — cannot do the latter without erasing everything else now apparently.]
What this all boils down to is what a ridiculous COAST-TO-COAST LABOR MARKET SINK HOLE WE AMERICANS HAVE ALLOWED OURSELVES TO BE SUCKED DOWN INTO (hardly suggested by the wan, antiseptic phrase “inequality”). Which leads to a big question about whether our progressive, supposed elites who haven’t told us this “know enough about economics.”
Here’s hoping on the disappearing link:
Wish this story would get more play.
“Why Tea Partiers Are Boycotting Fox News”
by David Freedlander, Daily Beast
My favorite bit from the piece:
“Among the demands the protesters have is that Fox News “be the right-wing CBS News: to break stories, to break information, and to do what news organizations have always done with such stories: break politicians,” that the network have at least one segment on Benghazi every night on two of its prime-time shows; that Fox similarly devote investigative resources to discovering the truth of Obama’s birth certificate; and that the network cease striving to be “fair and balanced.”
“We need Fox to turn right,” said Hjerlied. “We think this is a cover-up and Fox is aiding and abetting it. This is the way Hitler started taking over Germany, by managing and manipulating the news media.””
No, anirrationalviewoftheirrational, it’s time these kooks get less press. They suck more than their fair share of resources as it is.
Denis – Doesn’t it depend on where that money comes from? If a big min wage hike was accompanied by more federal spending then that would be a direct injection increasing financial assets to the economy, and targeted at lower income groups. If for example, the money is reshuffled from the same income group in the form of higher prices prices is that truly a net gain?
I am for a min wage hike, but in a way that does not reshuffle within the same income group.
unless you spend all of your money on happy meals, you are unlikely to suffer reshufflement.
but you touch on another point. i suspect that if the government hired “low skill” workers at a living wage, other employers would be forced to raise wages to compete. and this would all happen by the miracle of the markets… that is, without a government “mandate.
maybe i’m just getting old and sot in my ways, but i was pretty sure that this question had already been answered in about 1936. the fact that it never goes away is a testament to the power of political lying.
Minimum Wage Would Be $21.72 If It Kept Pace With Increases In Productivity: Study
The question really is — as asked by Senator Elizabeth Warren this week at a congressional hearing: “So my question is Mr. Dube, with a minimum wage of $7.25 an hour, what happened to the other $14.75? It sure didn’t go to the worker.”
I’m suggesting that we have fallen into a wage hole so deep we cannot even see the top anymore. We think that a minimum wage that is $1.25/hr lower than the 1956 minimum wage is anything less than completely crazy.
Another way to put (as John Travolta would have put it) is: If Americans of 1968 were told by an angel that by early 2007 the minimum wage would drop almost in half they would have thought it must be gonna be a comet hit, a small nuclear exchange (that we lost), the sun cooling off and deep freezing the earth, etc.
Another way to put: Malthus showed how per person consumption dropped off in step with population growth (limiting population) — BEFORE INDUSTRIALIZATION began increasing per person output every year regardless of population growth. Under Malthusian theory, while the population of the United States increased 50% from 1968 to 2007, the minimum wage would have been shaved 33% (same resources supporting more people). In actual — post industrial revolution — fact the minimum wage dropped closer to 50%!
It is just a matter of getting back to normal.
Coberly, I ask mainly because if wages are higher, but the overall economy is suffering higher unemployment (not because of the higher wages mind you but other forces like austerity) then do higher wages matter? Do high wages for people matter a lot in Spain or Greece when there is 25% unemployment? If unemployment comes down, then don’t wages begin to rise? Is the latter the better mechanism through better fiscal policy – and as you suggest a job guarantee?
Obviously, the question has not been answered properly enough, if the min wage is still too low. As I said I support it, and politically I think you can get it higher, if you push the right buttons. For example, cut the corporate tax rate in change for a significantly higher min wage. Thus many companies will support a higher wage offsetting the lobbying from those that don’t.
Again, I am for higher wages, and a higher minimum.
i think you need to take the problems separately.
i am reasonably sure that a gradual increase in minimum wage to something like a “living” wage would not create unemployment… rather the opposite.
we have unemployment today because of bad behavior by the banks… and the congress in the pay of the banks. not because the wages of labor were too high.
on the other hand, we have low wages because there is an infinite supply of the unemployed. that is a feature of “capitalism” not a bug.
we, the consumer, those of us with money, may see higher prices for some things.
this will not be a hardship. getting things for cheap because they are made by slave labor is not good for us, and really does NOT make us any “richer.”
look around, and you will see that we spend a great deal of our money on cheap crap that even we don’t want a week later.
CORRECTION for the second paragraph in the second comment above — inverted the eighth-grade math (been a long time :-]).
I already posted:
(a) If the minimum wage were raised to the median wage — then — half the workforce will get raises ranging from ten times (retail clerks) to three times (fast food workers) what their employers will be forced to raise prices in order to compensate for higher labor costs — labor running from 1/10th to 1/3rd of product costs. (b) Raising the federal minimum wage to $30,000/yr ($15/hr) would add only 3.6% direct inflation.
BRUSSELS — European Union antitrust regulators have expanded their investigation into whether a small network of big banks unfairly controls the derivatives market.
The inquiry, which has already ensnared major international giants like Barclays, JPMorgan Chase and Deutsche Bank, has been broadened to include the International Swaps and Derivatives Association, a trade organization for market participants.
The European Commission, which oversees antitrust regulation, had “found preliminary indications that I.S.D.A. may have been involved in a coordinated effort of investment banks to delay or prevent exchanges from entering the credit derivatives business,” European antitrust regulators said in a statement. “Such behavior, if established, would stifle competition in the internal market in breach of E.U. antitrust rules.”
A key effort in the Dodd-Frank financial reform act has been to bring transparency and reforms to the complex, shadowy market of derivatives. On Wednesday, however, Republicans and Democrats on the House Agriculture Committee approved seven bills that would roll back parts of the Dodd-Frank financial regulations. The bills will now proceed to a floor vote.
So what do these measures do? They weaken Title VII of Dodd-Frank, which is the part that regulates derivatives. Since Dodd-Frank, there’s been an extensive amount of debate about the new rules for derivatives, which range from collateral to price transparency. But there has also been a counter-debate about who has to follow the new rules. Those who fall under “end-user exemptions” are largely able to forgo following the Dodd-Frank rules, and the easiest way to understand the bills passed out of the Agriculture Committee is to note that they seek to expand the scope of those exemptions.
[Why can’t we be more like Europe?]