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Your Wednesday Dose of Doom & Gloom

February 19th, 2014 - 11:03 am

We need to have an unhappy talk about a few things.

Let’s start with the minimum wage hike being demanded by the White House. The CBO says raising the minimum wage will lift 2.5 million Americans out of poverty, but at the cost of 500,000 jobs. Other studies through the years have proven at various times that the minimum wage hurts employment, except when it helps, or the other times when it has no effect at all. The results often seem to depend on who’s doing the studies — so it’s hard to say for sure.

I’m going to assume however that the CBO is mostly on-target. We’ve been in a jobs crisis for so long that the crisis is often called “the new normal.” Making hiring more expensive might be a boon in good times when the money is rolling in and the product is flying out the door, but these are most emphatically not good times. Wages tend to go up during booms anyway, which might make minimum wage hikes then the equivalent of spitting with the wind.

But as previously noted, the studies I’ve seen are all over the board, so I’m going with my gut and a shot of 80-proof Econ 101.

What really lifts people out of poverty is steady work. A minimum wage job is typically your first job. You don’t know much, you can’t produce much, so you’re not worth much. With time and experience your skills and productivity increase, and pay raises typically follow. So do promotions. This is what we call a “career.”

The trick it seems to me then is to get that foot in the door, to get that first job no matter what it pays. Some starter jobs are considered so valuable that young workers will do them for free. This is what we call “interns.”

So perhaps a minimum wage of $10 or so really would lift 2.5 million Americans out of poverty. But it would also be condemning half a million Americans to continued poverty, and perhaps even longterm dependency. When food stamp spending is at record levels (doubled just since Professor Ditherton Wiggleroom’s election, and despite five years of “recovery”) this would seem an unwise moment to eliminate any number of entry-level jobs. If we’re looking at wage mandates as social policy (and as a libertarian the idea makes me cringe) then we might better serve the poor by creating a sub-minimum wage for first-time employees under the age of, say, 25, who are brought on as additional hires. Anything to get people honest work with practical experience and real, if modest, paychecks.

Anything, really, to avoid condemning young Americans to a lifetime on the dole.

Ideas like this are bound to go nowhere in today’s Washington, which is mired in the New Deal notion that the way to eliminate poverty is to make everything more expensive. I might have mentioned this before, but the expression (and the song) “Nice Work If You Can Get It” dates from the Great Depression. Washington had, during a time of crushing poverty and deflation, jacked up the cost of labor. If you were employed, you generally had it pretty good. But the cost was a destitute and permanent underclass of the unemployable, adding up to about 15-20% of the workforce. So the work really was nice; the getting it was hard.

And things went on like this for years and years. The Great Depression refused to end until FDR died and his employment-hostile polices died with him.

Comments are closed.

Top Rated Comments   
Below-normal interest rates don't encourage more savings, they discourage them.

The stock market is up wildly because all this new money from "quantitative easing" and "asset purchasing" by the Fed has to go somewhere. Perversely, low interest rates don't make credit easier, they make it harder to qualify for because the lenders don't make as much on the transaction.

And the bond market, traditionally a little more than four times the total size of the equity markets worldwide, is stressed for returns, with bond managers putting money into equities to chase the returns and save their jobs.

The minimum wage isn't a huge factor for the simple reason very few people earn it at any given time. Even at McDonald's, if you haven't earned a raise in six months, they aren't going to keep you on at the minimum because you have proved yourself worthless, so they get rid of you. It has never been a panacea for this reason, but it never seems to be the deterrent to job creation that theory supposes, either. It's not the hill to die on.

At least Frank and Peggy could find some work: http://youtu.be/NVgKiadhVJk
30 weeks ago
30 weeks ago Link To Comment
When you have people who hate capitalism in charge of it, it is often hard to separate the intended consequences from the unintended consequences of their imbecilic "cures" for the "ills of capitalism".

When you have people who do not like Middle America in charge, it is hard to separate out the targeted assaults on their health, wealth and well being from the unintended destruction of their health, wealth and well being.

When you have people who do not like Judeo-Christian religion in charge, it is hard to separate out their obliteration of the right to hold the tenets of their faith from the unintended burning of those rights to the ground.

Making $400 per week is not going to materially change anyone's life who is making $360 per week. Nobody who thinks that it will...makes $400 dollars per week....gross...and tries to live off of it.

You aren't "escaping poverty", you are shuffling around creditors with a couple of dollars more staving them off.

It's a cosmetic change, not a lifestyle one. When so many leftist fascist programs are killing off businesses, cosmetic changes are crass political ploys, throwing crumbs at the crumbling.

Those 500,000 lost jobs may be titled "funemployment" or "free agency" to the arrogant bastards who are trying to crater the free market...but, they aren't comical to the one in six people who are out of work and are trying to figure out how to be productive and useful in the living of their lives.

Those who have given up, those who are underemployed, those who are trying to scratch out an American middle class existence are facing tyranny in the eye and want someone to fight for them, not throw them a crust of bread, give them a pat on the head and tell them "it's for your vote that I am so magnanimous".

Forget the minimum wage, let's raise the gallows...and hang the treasonous.
30 weeks ago
30 weeks ago Link To Comment
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All Comments   (19)
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my roomate's mother makes $85 hourly on the laptop . She has been unemployed for ten months but last month her income was $12072 just working on the laptop for a few hours. take a look at the site here............. www.works12.com
29 weeks ago
29 weeks ago Link To Comment
"The issue itself is a replay of the Left’s fictitious War on Women."

Well, that is technically untrue. The War on Women by the Left is very real.
30 weeks ago
30 weeks ago Link To Comment
Sadly, we are simply repeating the all-too-predictable Cycle of Democracy (attributed to Scot Professor, Dr. Alexander Tytler):

"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover they can vote themselves largess from the public treasury.

From that moment on, the majority always votes for the candidates promising them the most benefits from the public treasury, with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.

The average age of the world's greatest civilizations has been 200 years. These nations have progressed through this sequence:

From bondage to spiritual faith;
from spiritual faith to great courage;
from courage to liberty;
from liberty to abundance;
from abundance to selfishness;
from selfishness to apathy;
from apathy to dependence;
from dependency back again into bondage." End quote.

A strong case can be made that we are in the Dependency stage of the sequence.

Unfortunately, there is no way we can pay the hundreds of trillions of dollars in Social Security, Medicare and other expenditures we are scheduled to pay out over the next several decades.

It's not enough to go after the "evil" 1%. The numbers are too enormous.

In order to avoid this financial disaster, the average citizen would have to agree to forfeit the SSI/Medicare and many other benefits/entitlements that have been promised to him. That ain't gonna happen!

The government running out of the ability to pay trillions in SSI, Medicare and a long list of other payments that millions of people rely on in order to survive will bring about complete societal collapse. At that point, a dictator (even if it means bondage) will be welcomed by the people to restore order.

Depressingly predictable.

If, after taking a long sober took at reality and the math, you honestly think we can reverse this cycle before going to the final step in the sequence, I'm all ears. Tell me how. (not by listing things we "should" do, but by listing things we "will" do).
30 weeks ago
30 weeks ago Link To Comment
Below-normal interest rates don't encourage more savings, they discourage them.

The stock market is up wildly because all this new money from "quantitative easing" and "asset purchasing" by the Fed has to go somewhere. Perversely, low interest rates don't make credit easier, they make it harder to qualify for because the lenders don't make as much on the transaction.

And the bond market, traditionally a little more than four times the total size of the equity markets worldwide, is stressed for returns, with bond managers putting money into equities to chase the returns and save their jobs.

The minimum wage isn't a huge factor for the simple reason very few people earn it at any given time. Even at McDonald's, if you haven't earned a raise in six months, they aren't going to keep you on at the minimum because you have proved yourself worthless, so they get rid of you. It has never been a panacea for this reason, but it never seems to be the deterrent to job creation that theory supposes, either. It's not the hill to die on.

At least Frank and Peggy could find some work: http://youtu.be/NVgKiadhVJk
30 weeks ago
30 weeks ago Link To Comment
Nothing like the destruction of opportunity sold under the guise equality.
Sorry, I keep posting but I am so ticked off.
30 weeks ago
30 weeks ago Link To Comment
I've been arguing this exactly for years on Huffpoo: the Lean forward Progressive Dims are nothing but a line by line repeat of the very same in 1920-20's.

The platform, the policies, the propaganda...all repeats of a long gone failed era.

Nothing ticks off a 21 yr old more than telling them they are manipulated repeats serving to funnel money to rich syndicalist Dims.

Thank you for demonstrating the failed economics.
30 weeks ago
30 weeks ago Link To Comment
Has anyone looked at how the new minimum wage rate for Federal Contractors has any effect on the rates established under McNamara-O'Hara Service Contract Act or the Davis-Bacon Act?

Is there an escalation clause in either that bumps up all the contractor rates if one rate changes? Just saying, since the union contractors at the much higher rates would benefit substantially.
30 weeks ago
30 weeks ago Link To Comment
Unions generally do have their wages tied to the minimum wage.
30 weeks ago
30 weeks ago Link To Comment
To be specific, some union contracts have (or had) have their pay tied to a multiple of the minimum wage. So if it goes up, they get a bonanza. I do not know if this is still true.
30 weeks ago
30 weeks ago Link To Comment
Not really, at least not in the union states and outside the hospitality industry. Outside the hospitality industry with its tip system, the only place the federal minimum wage is really relevant is in the rural South and West or in certain kinds of remote work where the employee must stay on the work premises full-time.

In the high-cost urban areas of the Country, nobody works for the minimum wage outside the hospitality industry. Even in the lower cost areas such as the rural South, nobody works for the minimum wage long if they demonstrate even the slightest indicia of ability and work ethic.

I appreciate the free-market arguments against increasing the federal minimum wage, but it really is an irrelevance unless you want to roll back time thirty or forty years and replace UPC codes, scanners, and computers in retail. Back then you could work after school or summers in retail at the minimum wage and get some work experience so when you got out of HS or college you had work experience on your resume. That work is pretty much all gone in America, a victim of technology and the US tax system.

I don't know that this is a hill worth dying on for conservatives/Republicans. And to the original point, Davis-Bacon prevailing wages are so far above the federal MW that the federal MW is an irrelevance. Any federally funded work is going to be at the highest wages and most restrictive conditions in the market area. Stuff like the recently famous vendor employees in The Pentagon are an aberration, poster children.
30 weeks ago
30 weeks ago Link To Comment
My latest crazy idea is a federal law increasing the MW to $15/hr, with a local option (down to the city level) to nullify the increase. With a little luck, this will destroy the economies of liberal bastions while teaching a useful lesson.
30 weeks ago
30 weeks ago Link To Comment
If you took all the economists in the world, lined them up end to end, they wouldn't reach a conclusion.

Also, you forgot re: immigration. Nothing better for the employment prospects of the lower echelons of the workforce in a stagnant, depressed economy than bringing in 11 million more workers.

*sigh*
30 weeks ago
30 weeks ago Link To Comment
it has been a very long time since i worked for minimum wage. however, in 1967 i got my first non-farm job and minimum wage was $1.40/hr. i, however, got $1.25. why? training wage for the first 6 months. does "training wage" still exist?
30 weeks ago
30 weeks ago Link To Comment
When you factor in inflation, $1.25 in 1967 dollars is a fair bit more than minimum wage is today.

But a bit less seriously, I have always thought that if minimum wage was tied to Congressional salaries that the minimum wage would be $25 an hour by now.
30 weeks ago
30 weeks ago Link To Comment
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