I just got some spam mail from Europe about setting a decent minimum wage. If I could email the writers back I would suggest that the minimum wage by definition cannot solve much of labor’s problems — given that we cannot set it any higher than the lowest wage achievable by the weakest union negotiation — otherwise we would put the lowest wage firm out of business by overpricing its product.
I’m assuming the weakness of the negotiations is a result of correctly understood consumer resistance to price increases.
Throw in sector wide bargaining and people will be back celebrating in the streets.
* * * * * *
8 million more voted for Trump this time than last time.
Everybody seems to forget that Trump voters voted for Obama both times he ran. He didn’t deliver so they jumped Hillary’s ship. Problem is they don’t know what they need delivered — and I hazard to say that most of you don’t either dear readers.
“But pinning Mrs. Clinton’s loss on low black turnout would probably be a mistake. Mr. Obama would have easily won both his elections with this level of black turnout and support. (He would have won Michigan, Ohio and Wisconsin each time even if Detroit, Cleveland and Milwaukee had been severed from their states and cast adrift into the Great Lakes.)”
Did I forget to mention that Dick Gephart and Michael Dukakis both lost to Jesse Jackson in the 1988 Democratic primary — Jackson got 54%!
* * * * * *
I have tried to take a little personal poll to see how much American workers would like regularly scheduled union cert/recert/decert elections. Cannot ask store workers for obvious reasons. Can’t get much out of delivery folks (about the only folks I can talk to) — when you try talking unions to them, most have no idea what you are talking about — the country has become so deunionized.
* * * * * *
Ignore mandatory union elections and centralized bargaining at your hazard, yuppie America. Next time you wont have a pandemic to save you from America’s Mussolini.
Arne, I’m much more optimistic about how much the consumer (I always think in terms of the “consumer”) can pay people — not worried much at all how much the consumer can pay.
Minimum wage jobs may be mostly high labor costs business like fast food which have 25% labor costs built into their prices. Raising fast food prices 12.5% would pay for a 50% increase in wages. That might be too much where fast food prices are high already of course. Just citing to principle of wage being only a fraction of price.
Most businesses run 10-15% labor costs — let’s work with 12.5%. Adding 12.5% to their prices could double wages. Walmart at the opposite end has 7% labor costs. Would love to see what the Teamsters Union could do with that.
Let’s say sales fall 10% when prices rise 12.5%. Labor is better off. Of course that is fall in old (previous) customer sales. If the bottom 40% of workers raise their share of overall income from 10% to 20% by negotiating union contracts, then, the businesses they work at may actually increase sales (I would expect). Example of exception would be high end restaurants which would not expect more sales when lower wage workers get raises. (Also their consumers would have less money to spend as they would be paying more for lots of things due to unionization.)
This is an “advertising” ploy. Nobody seems to pick up on regularly scheduled union cert/recert/decert elections at every private workplace” so I’m trying to identify other paths to supposedly resetting the distorted US labor market as falling far short of what’s needed.
Next, I knock the minimum wage as being at best what the weakest union contract could produce. Not something that immediately jumps into our faces while today’s minimum wage is the same after inflation adjustment as the 1956 (!) federal minimum. In that 1956 light, $15/hr can seem like a big step (what I mean by “distorted”). https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=1.60&year1=196801&year2=202007
Last of all, I point out that card check — as close to a solution to rebuilding unions as anyone comes up with these days — could not save the 30% out of 35% of unions lost since their best days; back when organizing without card check was easier than today with card check (impossible in most cases?).
What I’m trying to do is get people to talking about mandatory union votes at every private (non gov) workplace — which seems the ideal solution to America’s warped out of shape labor market — because they understand there isn’t any other realistic path. Just an “advertising” ploy — no deep economic theory. 🙂
“One of the most quietly significant moments in Thursday night’s presidential debate was also one of its most banal. The moderator, Kristen Welker, asked the candidates about the idea of raising the minimum wage. Joe Biden, the Democratic presidential nominee, said he’s for it, as Democrats generally are. But President Donald Trump was skeptical.
“How are you helping your small businesses when you’re forcing wages?” Trump asked. “What’s going to happen and what’s been proven to happen is when you do that, these small businesses fire many of their employees.”
“Florida Amendment 2, the $15 Minimum Wage Initiative, was on the ballot in Florida as an initiated constitutional amendment on November 3, 2020. It was approved.
Back of the envelope(check my math) calculations, but it looks like 1.5 million people that voted to raise the minimum wage also voted for the candidate who doesn’t want to raise the minimum wage.
… Employment growth in the year ending in the first quarter of 2019 was 1.4 percent in both Democratic-leaning and Republican-leaning metro areas, and the unemployment rate in both types of places is roughly equivalent.
Silicon Valley (blue) is booming. So is Provo, Utah (red).
But below the surface, red and blue local economies are worlds apart on enduring, fundamental measures that determine their future prospects and their biggest economic challenges.
The correlations between deeper economic measures and how the contrasting metro areas voted in 2016 are striking. …
… A more educated work force bodes well for future local economic success — and places with brighter prospects swung toward Joe Biden. Jobs requiring more education are projected to grow faster and be at less risk from automation. Counties where more jobs are “routine” (in the sense of being at greater risk from automation) voted strongly for Mr. Trump in 2016 and even more so in 2020, while counties with fewer such jobs swung toward Mr. Biden. Similarly, counties with a mix of occupations that are projected to grow faster voted even more strongly for Mr. Biden in 2020 than for Hillary Clinton in 2016. …
Not only did places with brighter economic prospects swing more toward Mr. Biden, but places with a stronger economy during the past four years did, too. Counties with faster job growth and lower unemployment before the pandemic swung more toward Mr. Biden than other counties. And counties with milder job losses and smaller jumps in unemployment during the pandemic also swung more toward Mr. Biden, even though Republican-leaning places suffered less in the pandemic than Democratic-leaning ones.
Overall voting patterns tend to change very little from election to election. For all the drama and turbulence of this one, the correlation between counties’ vote margins for Mr. Trump in 2016 and 2020 was 0.99 — which is typical of recent successive elections with the same candidate on the ballot.
…
I just got some spam mail from Europe about setting a decent minimum wage. If I could email the writers back I would suggest that the minimum wage by definition cannot solve much of labor’s problems — given that we cannot set it any higher than the lowest wage achievable by the weakest union negotiation — otherwise we would put the lowest wage firm out of business by overpricing its product.
I’m assuming the weakness of the negotiations is a result of correctly understood consumer resistance to price increases.
In America that means that we have to rebuild labor union density (to 50%, 75%) over night:
https://onlabor.org/why-not-hold-union-representation-elections-on-a-regular-schedule/
Throw in sector wide bargaining and people will be back celebrating in the streets.
* * * * * *
8 million more voted for Trump this time than last time.
Everybody seems to forget that Trump voters voted for Obama both times he ran. He didn’t deliver so they jumped Hillary’s ship. Problem is they don’t know what they need delivered — and I hazard to say that most of you don’t either dear readers.
In America we have to rebuild labor union density (to 50%, 75%) over night:
https://onlabor.org/why-not-hold-union-representation-elections-on-a-regular-schedule/
Throw in sector wide bargaining and people will be back celebrating in the streets.
* * * * * *
Everybody forgets Nate Cohn’s, New York Times piece:
https://www.nytimes.com/2016/12/23/upshot/how-the-obama-coalition-crumbled-leaving-an-opening-for-trump.html
“But pinning Mrs. Clinton’s loss on low black turnout would probably be a mistake. Mr. Obama would have easily won both his elections with this level of black turnout and support. (He would have won Michigan, Ohio and Wisconsin each time even if Detroit, Cleveland and Milwaukee had been severed from their states and cast adrift into the Great Lakes.)”
Obama didn’t do anything for them — defined as rearranging the political and economic fabric to make them ascendant:
https://onlabor.org/why-not-hold-union-representation-elections-on-a-regular-schedule/
Did I forget to mention that Dick Gephart and Michael Dukakis both lost to Jesse Jackson in the 1988 Democratic primary — Jackson got 54%!
* * * * * *
I have tried to take a little personal poll to see how much American workers would like regularly scheduled union cert/recert/decert elections. Cannot ask store workers for obvious reasons. Can’t get much out of delivery folks (about the only folks I can talk to) — when you try talking unions to them, most have no idea what you are talking about — the country has become so deunionized.
* * * * * *
Ignore mandatory union elections and centralized bargaining at your hazard, yuppie America. Next time you wont have a pandemic to save you from America’s Mussolini.
“otherwise we would put the lowest wage firm out of business by overpricing its product.”
Isn’t a firm that depends on paying workers less than a living wage a failed business already?
Arne, I’m much more optimistic about how much the consumer (I always think in terms of the “consumer”) can pay people — not worried much at all how much the consumer can pay.
Minimum wage jobs may be mostly high labor costs business like fast food which have 25% labor costs built into their prices. Raising fast food prices 12.5% would pay for a 50% increase in wages. That might be too much where fast food prices are high already of course. Just citing to principle of wage being only a fraction of price.
Most businesses run 10-15% labor costs — let’s work with 12.5%. Adding 12.5% to their prices could double wages. Walmart at the opposite end has 7% labor costs. Would love to see what the Teamsters Union could do with that.
Let’s say sales fall 10% when prices rise 12.5%. Labor is better off. Of course that is fall in old (previous) customer sales. If the bottom 40% of workers raise their share of overall income from 10% to 20% by negotiating union contracts, then, the businesses they work at may actually increase sales (I would expect). Example of exception would be high end restaurants which would not expect more sales when lower wage workers get raises. (Also their consumers would have less money to spend as they would be paying more for lots of things due to unionization.)
Denis,
I think you need to proofread your first sentence.
Why does your wage price analysis care whether the wages rise because of union success versus a minimum wage?
Arne,
This is an “advertising” ploy. Nobody seems to pick up on regularly scheduled union cert/recert/decert elections at every private workplace” so I’m trying to identify other paths to supposedly resetting the distorted US labor market as falling far short of what’s needed.
First, I point out that EITC transfers only 2% of income ($70 billion out of $13 trillion) while 40% of workers are making the same or less than what we think the minimum wage should be ($15/hr).
http://fortune.com/2015/04/13/who-makes-15-per-hour/ (behind pay wall, 2015, but best story).
https://brandiwestjd.medium.com/why-do-jobs-pay-so-little-e9145f69b57c
Next, I knock the minimum wage as being at best what the weakest union contract could produce. Not something that immediately jumps into our faces while today’s minimum wage is the same after inflation adjustment as the 1956 (!) federal minimum. In that 1956 light, $15/hr can seem like a big step (what I mean by “distorted”).
https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=1.60&year1=196801&year2=202007
Last of all, I point out that card check — as close to a solution to rebuilding unions as anyone comes up with these days — could not save the 30% out of 35% of unions lost since their best days; back when organizing without card check was easier than today with card check (impossible in most cases?).
What I’m trying to do is get people to talking about mandatory union votes at every private (non gov) workplace — which seems the ideal solution to America’s warped out of shape labor market — because they understand there isn’t any other realistic path. Just an “advertising” ploy — no deep economic theory. 🙂
Populism
“One of the most quietly significant moments in Thursday night’s presidential debate was also one of its most banal. The moderator, Kristen Welker, asked the candidates about the idea of raising the minimum wage. Joe Biden, the Democratic presidential nominee, said he’s for it, as Democrats generally are. But President Donald Trump was skeptical.
“How are you helping your small businesses when you’re forcing wages?” Trump asked. “What’s going to happen and what’s been proven to happen is when you do that, these small businesses fire many of their employees.”
https://www.vox.com/2020/10…
“Florida Amendment 2, the $15 Minimum Wage Initiative, was on the ballot in Florida as an initiated constitutional amendment on November 3, 2020. It was approved.
Florida Amendment 2
Yes
6,390,807
60.82%
No
4,117,450
39.18%
https://ballotpedia.org/Flo…
Florida presidential results
Donald Trump* gop
5,658,847 51.2%
Joe Biden dem
5,284,453 47.9%
https://www.politico.com/20…
Back of the envelope(check my math) calculations, but it looks like 1.5 million people that voted to raise the minimum wage also voted for the candidate who doesn’t want to raise the minimum wage.
Election Showed a Wider Red-Blue Economic Divide
NY Times – November 11
Red and Blue Economies Are Heading in Sharply Different Directions
NY Times – November 13, 2019
… Employment growth in the year ending in the first quarter of 2019 was 1.4 percent in both Democratic-leaning and Republican-leaning metro areas, and the unemployment rate in both types of places is roughly equivalent.
Silicon Valley (blue) is booming. So is Provo, Utah (red).
But below the surface, red and blue local economies are worlds apart on enduring, fundamental measures that determine their future prospects and their biggest economic challenges.
The correlations between deeper economic measures and how the contrasting metro areas voted in 2016 are striking. …
Election Showed a Wider Red-Blue Economic Divide
… A more educated work force bodes well for future local economic success — and places with brighter prospects swung toward Joe Biden. Jobs requiring more education are projected to grow faster and be at less risk from automation. Counties where more jobs are “routine” (in the sense of being at greater risk from automation) voted strongly for Mr. Trump in 2016 and even more so in 2020, while counties with fewer such jobs swung toward Mr. Biden. Similarly, counties with a mix of occupations that are projected to grow faster voted even more strongly for Mr. Biden in 2020 than for Hillary Clinton in 2016. …
Not only did places with brighter economic prospects swing more toward Mr. Biden, but places with a stronger economy during the past four years did, too. Counties with faster job growth and lower unemployment before the pandemic swung more toward Mr. Biden than other counties. And counties with milder job losses and smaller jumps in unemployment during the pandemic also swung more toward Mr. Biden, even though Republican-leaning places suffered less in the pandemic than Democratic-leaning ones.
Overall voting patterns tend to change very little from election to election. For all the drama and turbulence of this one, the correlation between counties’ vote margins for Mr. Trump in 2016 and 2020 was 0.99 — which is typical of recent successive elections with the same candidate on the ballot.
…