Minimum Wage and McBudgets

[GGT]

Yup. That's why the world went through a horrific crisis when we moved past the agrarian age. When we stopped needing as many farmers ALL THE JOBS WENT AWAY!

Expanding on what Veldan and Khen said, every era/age is different in magnitude and scale. The digital/information age has moved innovation and change at exponential speeds, so fast that many jobs disappeared without comparable replacements. Hell, the transitions have been so rapid they've outpaced ethical and legislative dilemmas, from medicine to military.

It's not that ALL the jobs went away but that too many people -- that used to occupy the middle-income/middle class -- are now underemployed and/or underpaid. Long term unemployment is a serious problem. Especially for that 50 yr old Bookkeeper who expanded their education and skills to become an Accountant or CPA, only to be replaced by computer apps. Even Secretary of US Treasury Geithner used Turbo-Tax....

Lewk: Do you think there are structural problems in our labor markets? Do you admit or deny middle-income quintiles are shrinking along with their job prospects? If you answer No to both, then continuing parallel conversations won't go anywhere.

[Lewkowski]

Expanding on what Veldan and Khen said, every era/age is different in magnitude and scale. The digital/information age has moved innovation and change at exponential speeds, so fast that many jobs disappeared without comparable replacements. Hell, the transitions have been so rapid they've outpaced ethical and legislative dilemmas, from medicine to military.

It's not that ALL the jobs went away but that too many people -- that used to occupy the middle-income/middle class -- are now underemployed and/or underpaid. Long term unemployment is a serious problem. Especially for that 50 yr old Bookkeeper who expanded their education and skills to become an Accountant or CPA, only to be replaced by computer apps. Even Secretary of US Treasury Geithner used Turbo-Tax....

Lewk: Do you think there are structural problems in our labor markets? Do you admit or deny middle-income quintiles are shrinking along with their job prospects? If you answer No to both, then continuing parallel conversations won't go anywhere.

Structural problems always exist in labor markets. Certain areas have higher demand then can be adequately supplied. Other areas have an oversurplus, the brilliant part of this day and age is that those market problems are easier to fix with technology.

Are you all going to sit here straight faced and say there are NO professions right now in demand with a shortage of qualified individuals?

[GGT]

That kind of labor supply/demand flux also "always exists in labor markets".

That doesn't address what you think about the shrinking middle, or if you even acknowledge it's a problem....

[Veldan Rath]

Yes Lewk, there is a shortage of qualified individuals...we don't have them. I'm not a true IT person, with training and time I could move into a new tech role, but a person that has worked a hard labor trade all their life will have a much harder time attempting such a transition.

[Loki]

Yeah, a 50 year old will have it easy to train for a completely different job and als find a job. Right.

I imagine the same was true for 50-year-old farmers or horse buggy drivers.

[GGT]

I imagine the same was true for 50-year-old farmers or horse buggy drivers.

They didn't have our modern standard of living, literacy rates, or life expectancy. Horse buggy drivers, seriously?

http://www.huffingtonpost.com/2013/1...n_4460725.html

Income Inequality Is Hurting The Economy, 3 Dozen Economists Say

http://usmayors.org/search/googlesea...3105j924449j17

http://www.bloomberg.com/news/2013-1...h-economy.html

[Loki]

I fail to see how any of your points are relevant to what I said. FYI, driving horse carriages was a major industry until the invention of car.

[GGT]

What's irrelevant is you comparing the 19th century to the 21st, trying to equate the Industrial Age with the Digital Age, or applying economic theories of the US dominant, post-WWII boom era to a totally different, globally connected, rapidly evolving world economy.

Auto manufacturing was also a major industry, employing unskilled workers with an 8th grade education....but paid enough income to buy the cars they built, so they could participate in - and help grow - a newly mobile economy. Mobile meaning transportation, logistics, distribution, etc. but also income upward mobility. Millions of auto workers, and component suppliers, helped expand the commerce that built the middle income/middle class.

As an industry, it helped create the sophisticated automation, engineering, robotics, and efficiency that eventually replaced hundreds of thousands of manual/menial labor jobs. And outsourced what it could to cheaper labor nations so more Americans could afford to buy finance a new car. The industry also made millions of investors billions of profits in the stock market, until it didn't. The growth was great, enormous, and helped lift millions into the middle class. But it came with unintended consequences not felt in the "real economy" until a few generations later.

And here we are. With huge demographic shifts, limited jobs, disparate income levels, and a shrinking middle. An ageing society with delayed retirements, growing service/retail industries that don't pay living wages, 'youth' unemployment/underemployment, and sluggish growth.

That's why I think raising federal minimum wage to at least $9.25/hour would act as an economic stimulus. FFS, that barely raises it to COL and inflation adjusted rates from the 1970's. Horse buggy drivers my ass.

[Loki]

And again, how is this relevant to the fact that a large amount of farmers and carriage drivers lost their jobs due to technological progress, many of them at an old age? FYI, the farming sector was still rapidly declining all the way up to WWII.

[Lewkowski]

Because in GGTs mind this time its different. Every generation has these types of fools.

[Loki]

Incidentally, if GGT wants a recent example, think about secretaries and the invention of the computer. I forget the exact numbers, but the popularization of the personal computer led to well over half of all secretaries losing their jobs, many of them women who've worked for the same company for decades. This took place in the '90s. A period of high female unemployment, right GGT?

[Being]

Incidentally, if GGT wants a recent example, think about secretaries and the invention of the computer. I forget the exact numbers, but the popularization of the personal computer led to well over half of all secretaries losing their jobs, many of them women who've worked for the same company for decades. This took place in the '90s. A period of high female unemployment, right GGT?

I'm suprised you didn't use the origin of the term computer as the basis of your irrelevant point.

[GGT]

And again, how is this relevant to the fact that a large amount of farmers and carriage drivers lost their jobs due to technological progress, many of them at an old age? FYI, the farming sector was still rapidly declining all the way up to WWII.

The difference is the scale and speed of that progress, and how it impacted the labor force. Of course, family farmers and horse buggy drivers were eventually replaced by machinery...but it took decades, generations. Change came pretty slow to rural areas, compared to urban cities, since expanding electricity and phone service was a long slog. <FYI, the rural south (mostly farmers) didn't have electricity until the early 1940's, and they still used outhouses and pot belly stoves. And horses. >

However, they also benefited from concurrent progress in education, medicine, and public investments in infrastructure. The itinerate farmer could send all their kids to school (at least through 8th grade) and maybe get a government loan to buy a tractor to do the plowing (instead of the kids being farmhands)....and their standard of living, quality of life, longevity, and job opportunities grew.

Incidentally, if GGT wants a recent example, think about secretaries and the invention of the computer. I forget the exact numbers, but the popularization of the personal computer led to well over half of all secretaries losing their jobs, many of them women who've worked for the same company for decades. This took place in the '90s. A period of high female unemployment, right GGT?

Yeah, the telegraph and telephone replaced the pony express, too. Trains, planes and automobiles replaced those horse buggy drivers, carriage builders, and buggy whip makers. But there were more jobs created in those new industries, even unskilled jobs, by the sheer size and scale of progress and growth. Entire families migrated to cities or new transportation hubs because there were available jobs, and each generation climbed the ladder of middle class "prosperity".

And yes, the personal computer replaced millions of "pink collar" jobs, from phone operators to answering services to secretaries. But those workers could upgrade skills/education and still be relevant in the company, making the transition to Customer Relations, Human Resources, or internal IT development or coordination. Natural attrition didn't mean no job, but a transition to a new job, at equal or greater pay.

And even in the 90's that transition didn't mean slipping from middle-income to low-income, or working poor. I'm not saying anything new or controversial here. The long-term aggregate data clearly shows that we're becoming a Tale of Two Americas -- top and bottom heavy with growing income disparity -- and a shrinking middle. It's myopic and delusional to only consider GDP, unemployment rates, number of jobs created, productivity, or stock market gains as metrics of a "healthy" economy.

[Loki]

http://www.nytimes.com/2014/02/16/us...-wages.html?hp

Still waiting for the NYT to give a reason why a $50 minimum wage wouldn't be great.

[Flixy]

http://www.nytimes.com/2014/02/16/us...-wages.html?hp

Still waiting for the NYT to give a reason why a $50 minimum wage wouldn't be great.

Not that I'm saying the minimum income should be raised, but your argument is basically like 'a 90% income tax would be bad, so income tax is bad'. The actual rate matters to the argument.

[Loki]

Except the NY Times consistently claims (implicitly or explicitly) that there is no real trade-off to raising the minimum wage. Apparently all it does is improve the quality of life of workers! There's no coherent argument about why a high minimum wage might be bad other than some dismissive quotes from business owners about passing on the cost to consumers.

[Dreadnaught]

http://www.nytimes.com/2014/02/16/us...-wages.html?hp

Still waiting for the NYT to give a reason why a $50 minimum wage wouldn't be great.

They referenced that the bar was forced to lay-off a dishwasher because of the minimum wage increase. It's pretty lame that they didn't bother to find and interview the dishwasher to get his opinion of the law.

The article also points out that the two states have different business/sales tax climates.

It's a pretty plain attempt at advocacy journalism with a pretty specious hypothesis.

[Loki]

The guy has quite a few other articles on the minimum wage and socialism. Don't think he's an ideologue; just someone who accepts at face value whatever he's told by the people he covers.

[Flixy]

Except the NY Times consistently claims (implicitly or explicitly) that there is no real trade-off to raising the minimum wage. Apparently all it does is improve the quality of life of workers! There's no coherent argument about why a high minimum wage might be bad other than some dismissive quotes from business owners about passing on the cost to consumers.

As opposed to the immense amount of attention the opponents give to the social effects?

[Loki]

NY Times isn't supposed to be advocacy journalism.

[Loki]

http://www.nytimes.com/2014/02/19/bu...imum-wage.html Who knew there were trade-offs involved in economics.

[Ominous Gamer]

Love how the article claims up to 500,000 lost jobs and the first quote by a republican immediately bumps that number up to a million

[Loki]

The study says the range is from nil to a million.

[Ominous Gamer]

so nil is a tradeoff?

[Loki]

Do you know how confidence intervals work?

[GGT]

Still waiting for Loki to stop asking a NYT writer to defend a fallacy. Everyone knows economics has moving parts and trade-offs, including other NYT writers. It's not about how high the minimum should be, but bringing the floor back in-line with COL and inflation.

It's stupid to pay 1970's wages, then complain about more working people needing "welfare". It's also disingenuous to ignore that low/mid wage positions were disappearing for at least a decade, and contributed to high unemployment during the Great Recession. Now that we're in 'recovery', businesses need/want more demand from people with money to spend.

[Ominous Gamer]

Do you know how confidence intervals work?

explain how nil is less likely to be an outcome over a million

[Loki]

This is how policy advocacy works. It's dishonest by definition. If you don't like it, read academic studies.

Incidentally:

"White House economists said they think the effect could be close to zero job loss since businesses' higher payroll costs could be offset by lower turnover and higher productivity"

Still waiting for Loki to stop asking a NYT writer to defend a fallacy. Everyone knows economics has moving parts and trade-offs, including other NYT writers. It's not about how high the minimum should be, but bringing the floor back in-line with COL and inflation.

It's stupid to pay 1970's wages, then complain about more working people needing "welfare". It's also disingenuous to ignore that low/mid wage positions were disappearing for at least a decade, and contributed to high unemployment during the Great Recession. Now that we're in 'recovery', businesses need/want more demand from people with money to spend.

Do you even listen to yourself? Whether the minimum wage is beneficial or not has absolutely nothing to do with the previous minimum wage levels...

Anyway, back to the actual argument here, is anyone missing the rather obvious point that the entire "gain" from a minimum wage comes from redistribution? If the poor "gain" $5 billion, it means that someone loses $5 billion. That means not only is there no net benefit for the economy, but we end up with an extra 500,000 unemployed...If the government was actually concerned about helping poor people directly, it would give them money for working. All a minimum wage does is make leftist politicians popular for using other people's money.

[GGT]

This is how policy advocacy works. It's dishonest by definition. If you don't like it, read academic studies.

Incidentally:

"White House economists said they think the effect could be close to zero job loss since businesses' higher payroll costs could be offset by lower turnover and higher productivity"

Where you stand depends on where you sit. Academic "studies" can be used to defend or debunk every public policy. I wouldn't call that dishonest, though. Maybe contextual is a better term.

Do you even listen to yourself? Whether the minimum wage is beneficial or not has absolutely nothing to do with the previous minimum wage levels...

But it's already been concluded that a minimum wage is economically beneficial. See prior Academic "studies".

Anyway, back to the actual argument here, is anyone missing the rather obvious point that the entire "gain" from a minimum wage comes from redistribution? If the poor "gain" $5 billion, it means that someone loses $5 billion. That means not only is there no net benefit for the economy, but we end up with an extra 500,000 unemployed...If the government was actually concerned about helping poor people directly, it would give them money for working. All a minimum wage does is make leftist politicians popular for using other people's money.

No. You're abusing terms, and using words like "redistribution" to make labor economics look like a zero-sum game. Weren't you chastising NYT writers for the same mistake just a few posts ago?

Glaring gap -- people generally don't want "the government to give them money for working". They'd prefer their employer pay a living wage, so they don't need food stamps or other "welfare" subsidies.

[GGT]

Also, no question about it....civilized societies use "other people's money" to distribute public services across a broad and diverse landscape. We use Taxation for multiple reasons, using different schemes. But keeping minimum wage at 1970's purchasing power is regressive. It mainly benefits large multi-national corporations (like Walmart or McDonald's), and becomes Corporate Welfare due to our tax codes.