Berkley, that hot bed of social justice, finally allowed to pay a livable $15 per hour wage . . .4/20/2016 UC Berkeley greets $15 minimum wage with job cuts - Hot Air . . .instead cut it payroll budget by $50 million dollars, 500 employees, or 6% of its total personnel. Boy that living wage works quick. Read more below the video!
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The new minimum wage
. . . as with all progressive policies. "Why have California and New York state moved to implement a $15 minimum wage? They say that it's to provide workers with a "living wage." It's true that surviving on $8 or $9, or even $10 an hour, particularly in expensive metropolitan areas like New York, Los Angeles, or San Francisco, is difficult if not impossible. But raising the minimum wage is not going to provide a pathway out of poverty for workers making so little. And lost in all the hoopla is that raising the minimum wage is not only a poverty trap, but really a disguised income redistribution." But income redistribution is a good thing, no? No. Well, not when the redistribution is from the lower middle class to the lower class. Unless the goal is to limit the costs to the middle and upper middle class for the redistributive socialism. I can smell the ozone pouring off the progressives, angry that someone found them out. Here's how it works. More after the page break! Are Robots Job Creators? . . . as usual. "Automation, driven by technological progress, has been increasing inexorably for the past several decades. Two schools of economic thinking have for many years been engaged in a debate about the potential effects of automation on jobs, employment and human activity: Will new technology spawn mass unemployment, as the robots take jobs away from humans? Or will the jobs robots take over release or unveil—or even create—demand for new human jobs? The debate has flared up again recently because of technological achievements such as deep learning, which recently enabled a Google software program called AlphaGo to beat Go world champion Lee Sedol, a task considered even harder than beating the world’s chess champions." Mass jobs are a relatively new phenomenon. Prior to the industrial period there was little need for employees, and so there were few. Most of these jobs were performed by slaves, or people who would not be confused as an employee. Today, mass jobs are common, plentiful, and essential to the economy. So, people like the author, and the people arguing about this issue seem to fail to understand that if this is a phase shift, it will likely do away with jobs as the mechanism by which the new economic model distributes wealth through society. I am unsure whether the outcome of the massive shift we are now undergoing will necessitate a phase shift including the elimination of jobs, but if it does it will result in a fairer, wealthier, more prosperous, and more inclusive economy, not an economy which will see more segregation, and wealth inequality. Although just as the shift from the agricultural phase to the industrial phase brought some temporary wealth inequality, so it is likely will any phase shift in the economy. This happens simply because some see the way to the new economy, and this brings great wealth, while other attempt to conserve the old economy, and this destroys wealth. In this divide tech is bringing wealth, while the blue model, unions, and the like are destroying wealth. "Ultimately the question boils down to this: are today’s modern technological innovations like those of the past, which made obsolete the job of buggy maker, but created the job of automobile manufacturer? Or is there something about today that is markedly different?" This is the wrong question. The question is will these innovations change jobs to better jobs, or will it eliminate jobs? That I cannot answer. "It may seem easy to dismiss today’s concerns as unfounded in reality. But economists Jeffrey Sachs of Columbia University and Laurence Kotlikoff of Boston University argue, “What if machines are getting so smart, thanks to their microprocessor brains, that they no longer need unskilled labor to operate?'" These people are worrywarts fretting about things they do not understand, and likely cannot understand. They need to follow Niebuhr's prayer. "God grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference. Reinhold Niebuhr Quotes at BrainyQuote.com" The do not, and instead they fret, stew and harumph over issues they cannot change. "As the decoupling data show, the U.S. economy has been performing quite poorly for the bottom 90 percent of Americans for the past 40 years. Technology is driving productivity improvements, which grow the economy. But the rising tide is not lifting all boats, and most people are not seeing any benefit from this growth. While the U.S. economy is still creating jobs, it is not creating enough of them. The labor force participation rate, which measures the active portion of the labor force, has been dropping since the late 1990s." This is unadulterated bullshit, or evidence that the people saying this have no understanding of what life was like in the 1970s, 1980s, or 1990s. The authors statements demand substantial proofs not mere hot air and blather. The unemployment rate today is at a national average below 5%. Labor force participation prior to 1970 averages about 58%, it was only after the equal rights, and the women's movements demanded their inclusion in the workforce in great numbers that we saw the labor force participation rate skyrocket to absurdly high levels. There is no evidence that Americans actually wanted this level of labor force participation. We know they did not historically. Now that we are far wealthier than we were in the 1940s, -1980s it seems likely that the LFP rate shift is due to the desires of fewer family members to work, and participate more deeply with family needs, children's needs, old age adult needs, and the like. Statements like the ones made here need extensive proof. They have none, and the author clearly has no understanding of LPF rate changes over time. Yet another piece of detritus to ignore. The poor today live all but infinitely better than the middle class of the 1950s, 1960s, and likely even the 1970s. Air Conditioning, Cable TV, and an Xbox: What is Poverty in the United States Today? The poor and the average of today have a similar spectrum of amenities, although the poor do have fewer. How Poor Are America's Poor? Examining the "Plague" of Poverty in America "The typical American defined as "poor" by the government has a car, air conditioning, a refrigerator, a stove, a clothes washer and dryer, and a microwave. He has two color televisions, cable or satellite TV reception, a VCR or DVD player, and a stereo. He is able to obtain medical care. His home is in good repair and is not overcrowded. By his own report, his family is not hungry and he had sufficient funds in the past year to meet his family's essential needs. While this individual's life is not opulent, it is equally far from the popular images of dire poverty conveyed by the press, liberal activists, and politicians. But the living conditions of the average poor person should not be taken to mean that all poor Americans live without hardship. There is a wide range of living conditions among the poor. Roughly a third of poor households do face material hardships such as overcrowding, intermittent food shortages, or difficulty obtaining medical care. However, even these households would be judged to have high living standards in comparison to most other people in the world." If you scroll to the bottom there is an instructive chart on US versus international housing conditions of which only three countries even compare with the US poor's housing conditions, based on Floor Area per Person: Country (City) Floor Area per Person Persons per Room US Poor 439 .54 Australia (Melbourne) 545.73 .69 Norway (Oslo) 452.09 .50 Canada (Toronto) 442 .50 After this all of the entries are below the US Poor Sweden (Stockholm) 430.56 .56 Remember this compares the US POOR with these other nations (cities). If one takes the time to compare the amenities the US poor have to the amenities the average person in Europe has it is shocking how much better the lives of even poor Americans are than the average European. This includes medicine. CDC - Cancer Survival: The Start of Global Surveillance The CONCORD-2 study is well worth your read. Remember that the figures for the US include our uninsured. It is impossible to believe that the European countries do not beat the US in every category since pretty much everyone in these countries is covered by a national health care plan. But they commonly do not, and even more surprisingly the US commonly beats many of these countries for the majority of the cancers, especially the more esoteric, even with our uninsured cohort. Five-Year Survival Rates for Patients Diagnosed with Five Common Cancers in Seven Countries, 2005–2009 Country Female Breast Colon Lung Prostate Childhood Leukemia Canada* 85.8 62.8 17.3 91.7 90.6 France** 86.9 59.8 13.6 90.5 89.2 Germany 85.3 64.6 16.2 91.2 91.8 Italy 86.2 63.2 14.7 89.7 87.7 Japan 84.7 64.4 30.1 86.8 81.1 United Kingdom* 81.1 53.8 9.6 83.2 89.1 United States 88.6 64.7 18.7 97.2 87.7 Comparing the amenities the poor have today with the past is eye opening, but I will leave that mostly to you. I don't remember most Americans in 1970 having a cell phone, a computer, internet, air conditioning, a microwave, color television (at all), cable or satellite TV reception, a VCR or DVD player, or a stereo. Food issues were rampant among the poor, as was hunger, and medical care was a problem as well, both in availability and the care available. Medical care today is far advanced from that of 1970. No, the average poor person today lives better than the average person of 1970, and of everyone living in 1920 or before. The New Republic should be ashamed of itself for publishing this tripe. "While manufacturing output is at an all-time high, manufacturing employment is today lower than it was in the later 1940s. Wages for private nonsupervisory employees have stagnated since the late 1960s, and the wages-to-GDP ratio has been declining since 1970. Long-term unemployment is trending upwards, and inequality has become a global discussion topic, following the publication of Thomas Piety’s 2014 book, Capital in the Twenty-First Century." This is bullshit, and nonsense. It is not the actual wage which matters but what the wage can purchase, and wages today, stagnant or not purchase more than they did in the past, and they purchase higher quality goods. Plus, non-wage benefits have risen, and when accounted for, this answers the wage stagnation "riddle" nicely. Failing to evaluate all the evidence, and misunderstanding that product price deflation, and quality improvement also answer much of the question. Stagnating Middle-Class? - Cafe Hayek Dead Wrong with Johan Norberg - Stagnant Middle Class The New Republic has attempted here to pull off the difficult Triple Lindy of squaring the progressive economic canard. It cannot be done, or if it is, it requires advanced forms of pretzel logic to pull off, because the facts simply do not support the progressive theories. Student Loan Excesses Harm the Most Vulnerable It looks more like the goal of these schemes is to impoverish the poor. This article is written about student loans, and points out how these loans actually hurt the people the Boomer progressives are attempting to help. "The real losers in the student loan merry-go-round are precisely kinds of students—marginal, little family experience in college, low income—that the Obama administration most wants to help. The Wall Street Journal: 'The conventional wisdom among student activists and and elected leaders is that high levels of student debt are causing young Americans to delay key milestones like buying a home, getting married and having kids. New research paints a more complicated picture. It suggests student debt is indeed a barrier for a significant minority—college dropouts—but that it’s generally not holding back those who earned degrees […]' College dropouts … typically owe small amounts of student debt—under $10,000—but don’t have the degrees that provide an earnings boost that would position them to buy a home." But this problem is much deeper than just student loans. The prior post on the minimum wage is another area where the Boomer progressives have created policies disastrous to the poor, The list is endless, public transit, the minimum wage, higher education, and higher education loans, occupational licensing, unionization, and myriad other Boomer progressive government policies damage the poor, while benefiting the upper middle class the most, and while still offering some benefit to the middle class. Most of the benefit comes from the upper middle class being able to navigate the rules, so upper middle class parents help their children navigate the college by ensuring they take a major which will result in a job as well as an education. "Well-intentioned but harebrained social engineering is a menace to the poor. Instead of idealistic social schemes, policy elites should go back to the basics: expand vocational education and training programs, limit competition from illegal unskilled immigrants, reduce paperwork and regulatory restrictions that make it hard to start businesses in the cities where so many poor people live, and put an end to the war on low-wage jobs that is forcing employers to replace tellers, checkout clerks and other unskilled and semiskilled jobs with machines. These are policies that would actually help, but they violate treasured liberal myths, so we earnestly saddle poor kids with debt they can’t afford for degrees they can’t get—after making them waste 12 years in lousy schools that we can’t seem to operate effectively." Mead gets much wrong here. Yes, the idealistic social schemes are terrible, but his prescriptions for solving the problems won't work. It is not competition from illegal unskilled immigrants which are causing problems. And while reducing paperwork and making it easier to start businesses would be a benefit, it is not as important as eliminating occupational licensing, eliminating the minimum wage, eliminating all federal and state employer/employee regulations, implementing a federal right to work law, eliminating all Davis-Bacon and related work laws, among many others. These would have immediate, direct, and positive results on employment, and create the underlying pressures necessary to create jobs which would allow people to build job skills, and begin to rise up the wage ladder. The Cruelty of the $15 Minimum Wage . . . for people (workers) who have not committed a crime. Employers will not pay workers more money than the worker is profitable to employ. Period. Dead Wrong with Johan Norberg - Stagnant Middle Class
Johan Norberg makes excellent points that first when benefits are included, real wages have risen, and second it is not the wage, but how much the wage can purchase that matters. I have written about this often. The wage stagnation issue is a canard which is designed to throw readers off the correct trail. American's are far wealthier today than we were in the 1970s. Much of this has come from the continuous decline in prices since then. It is also due to the decline in energy, and food as a components of daily living. The decline in the price of food has been dramatic, from about 25% of average daily budget at about the turn of the 20th century, to about 6% of the average daily budget today. Essentially, while wages rose only a little, prices collapsed, quality improved, and energy costs plummeted (both the actual cost of energy, and the amount of energy necessary to operate an appliance. This year we will hear much about wage stagnation, ignore these complaints, they are voiced by either duplicitous agitators, or the uninformed. Geography and the Minimum Wage | Newgeography.com
. . . depending upon the area's wealth, prosperity, and economic activity. Watkins provides an excellent analysis of how and why minimum wage increases hit some areas harder than other. "Most commentary on California’s decision to increase the state minimum wage to $15 over time is either along the lines of it being a boon to minimum-wage workers and their families or a disaster for California’s economy. Neither is accurate. Different regions sill see different outcomes. Central California, the great valley that runs from Bakersfield to Redding, once again, will bear a disproportionate burden. Some workers’ income will increase, but hardly enough to afford a standard of living that most readers would find acceptable. At 40 hours a week and working 52 weeks a year, the minimum-wage worker will earn $31,200 a year before taxes. Try living on that in San Francisco or Santa Barbara." Fortunately most minimum wage earners do not have to try and live on $31,200 per year, they are second, or third earners in the household. The ones who do, often quickly earn more than the minimum since they are sufficiently productive for the employer to pay them more for their work. "California is in transition from a tradable goods and services producing economy to a consumption and non-tradable services producing economy. Tradable goods and services are goods and services that can be consumed far from where they are produced. Manufacturing is the classic example of tradable products, but thanks to the internet, services are also increasingly tradable. These days, many services that were once non-tradable are tradable. Tax preparation, legal research, accounting, and term-paper writing are examples of tradable services that were once non-tradable. As a friend of mine says, anything done at a computer can be done anywhere in the world. Non-tradable services are those that must be consumed where they are produced. Lawn care, haircuts, and home maintenance are some examples." This distinction is important. "Most of California’s wealthy coastal citizens never see California’s poor inland communities. Yet, wealthy Coastal Californians --- particularly from San Francisco --- dominate state policy. They implement policy as if the entire state were as wealthy as the communities they live in. The minimum wage increase is just the latest example. Decency would seem to require that California find ways to accommodate the circumstances and needs of our least advantaged citizens and regions. We don’t though. Instead we create policy that hurts our least advantaged and makes their challenging lives even more so." The idea that the wealthy care about the poor is misplaced, they do not. They care about seeing the poor, and being forced to deal with the poor. What the wealthy want is for the poor to disappear, absent that, they want them to earn enough not to be visibly poor. They also want to "fight" for public policies which make them, the wealthy, feel smugly superior, policies like the $15 minimum wage. It is the same in Oregon but the valley is wealthy, and populated and the rest of the state poor, and unpopulated. The divide in Oregon will be huge. Wealthy Californian coastal elites will treat the central valley of California like a foreign, third world nation filled with curious poverty stricken people. To the extent they ever travel through the area it is like a school field trip, an educational lark. The real trick in public policy is to control the wealthy, and to focus their attentions onto policies which will actually have a productive public outcome. The now destitute, and moribund progressive model offers nothing in this regard, but much in the ability for the wealthy to feel smug, and the politicians to access graft, and corruption. This makes the necessary changes difficult . . . but not impossible. This must change, and soon, or we risk a serious blowback from the poor. Millennials Like Socialism — Until They Get Jobs
. . . and find in the robbing Peter to pay Paul game, they are Peter. They will like it even less once they have to start paying for all those wealthy Boomers retirements, medical costs, etc. "Millennials are the only age group in America in which a majority views socialism favorably." Of course they do. Families are socialist in nature, and the children are takers, not earners. But once they learn what it is like to work for pay, they begin to change their minds. "So what does socialism actually mean to millennials? Scandinavia. Even though countries such as Denmark aren’t socialist states (as the Danish prime minster has taken great pains to emphasize) and Denmark itself outranks the United States on a number of economic freedom measures such as less business regulation and lower corporate tax rates, young people like that country’s expanded social welfare programs." Also unsurprising, since these people have little savings, they feel insecure. The American system is based on the atomized nuclear family, where each individual or couple is economically separate, and independent from others including their family. This creates a dynamic economy since each nuclear family must achieve to support itself, but it also creates a high level of insecurity. Traditionally this was solved by lots of hard work. Since the welfare revolution back in the 1930s, we have seen ever more welfare, or security spread across the land. The Millennials believe it is appropriate for them to access some of this security to assuage their feelings of insecurity. This is likely the least efficient way to solve this problem. A better way would be to create, and fund personal tax favored (and bankruptcy protected) accounts which will allow the individual to create a personal welfare buffer. While the government will need to backstop such a program, it would go far to reform the welfare system in a positive manner. Another mechanism to address this would be a minimum income formulation (this can be used in conjunction with the tax favored account model). This should be accompanied by the elimination of the income tax, the corporate tax, the payroll tax, and the estate and gift tax. Then a minimum income could be instituted where individuals so needing would have to access the funds by agreeing to pay income tax. Of course, this "tax" would be negative while the individual's earning were below the minimum income level, and once near or above the individual would simply stop participating in the voluntary income tax and no longer receive minimum income funds. Payments would be direct deposited into one of the above tax favored accounts. This would eliminate the income tax for those who make a living wage, and only require it for those who do not, and who wish welfare income supplementation. The unpleasant nature of the income tax, the penalties, and other issues would likely limit who would be willing to seek this assistance to those who need the assistance. The real benefits would be the total elimination of the federal welfare state, and the elimination of the income tax, corporate tax, etc. The benefits of this would be huge. Just the billions of dollars saved in tax preparation costs would be huge. Plus, without these taxes, there would be no need for offshore tax avoidance schemes, or the myriad corporate tax dodging schemes. The tax would become a consumption tax, and everyone from businesses, to illegal immigrants would pay their fair share. The minimum income would eliminate the need for a minimum wage, and most of the other inane employment regulations. These changes would make businesses more competitive, and bring businesses to America. We would have an onshoring "problem" with businesses, not an offshoring problem, since there would be no corporate income tax to push business to incorporate in foreign nations with lower tax rates. Nor would Apple have an incentive to anchor income offshore. The problem? Not enough graft, and corruption for the politicians. This is nearly always the reason simple, effective, and efficient political changes never happen. Add to that we have the worst political class in history, and one might despair. However, the current government pension and inefficiency/funding crisis is likely to result in wholesale change to our body politic, and our underlying political, and governmental institutions. I suspect this will offer us the ability to move from the now decaying progressive system to a more vibrant economic, social, technological model. Here's hoping! Hat tip: Instapundit IT’S USUALLY LIKE THAT: Millennials Like Socialism — Until They Get Jobs. A $15 Minimum Wage Is A Booby Prize For American Workers | Newgeography.com
. . . over at newgeography.com It is a good look at the new minimum wage, and the possible problems, and outcomes. I think he is partially correct about his allegation of a new feudalism. This is not the coming economic model, but the dying current blue economic model. Socialism is a heresy of feudalism, and progressivism is a softer younger sister of Socialism. It is no surprise as the blue model, Socialism, and progressivism all whither, that the result would be a shift towards more feudalistic models. Those who wish to continue the blue model believe what is necessary is to return to a more pure form to kick the now old dying model. But nothing will keep this horse alive nor will breathe life into the horse once dead. Kotkin noted that we seem to be in a period of change. I found this point particularly interesting, "In these and other core cities, we are seeing something reminiscent of the Victorian era, where a larger proportion of workers are earning their living serving the wealthy and their needs as nannies, restaurant workers, dog-walkers and the like." But what happened after that period of the Victorian era was the rapid growth of wealth among all Americans. We all prospered. The economic change from 1900 to the present is greater than all the economic change prior to that period. I fully expect that we are in a flux period much like the flux period at the end of the Victorian era. I expect the wealth we experience in the subsequent decades to be far greater than anything that happened during the 20th century. I expect that the prosperity we will experience during this new period, and economic model will be greater than all the prosperity up to the end of the progressive blue model. I think Kotkin may be a little too dour in his assumptions of the future. Our children will live lives more prosperous, more secure, and more enjoyable than we. Coyote Blog | Dispatches from District 48
. . . a good smackdown. Coyote makes a very important point: (Click on the link above to see the graph.) "Note the calculations in the last two lines, which look at two approaches to fighting poverty. If we took the poorest 20% and kept their current number of hours worked the same, but magically raised their hourly earnings to that of the second quintile (ie from $14.21 to $17.33), it would increase their annual household income by $2,558, a 22% increase (I say magically because clearly if wages are raised via a minimum wage mandate, employment in this groups would drop even further, likely offsetting most of the gains). However, if instead we did nothing to their wages but encouraged more employment such that their number of workers rose to that of the second quintile, this would increase household income by a whopping $13,357, a 115% percent increase." It is not the hourly rate that is the problem, it is either the number of workers, or the amount of time worked. What is so tragic about this is most of the progressive policies used to help the poor do the opposite. For example, Obamacare has driven employers to institute a 24-28 hour work week as standard for many businesses, thereby removing workers from the mandatory health insurance calculation. Obamacare does not help these low wage workers it hurts them. And so will the minimum wage increase. What would help is reducing the regulatory costs, and taxes on employers who employ workers in any form, and especially on full time low wage workers. I do not advocate subsidizing low wage workers, since so few are actually the poor, and so many are young adults simply developing work skills. It would be better to support the poor through an EITC program, or even a guaranteed minimum wage program available for the poor. Be sure to read all of Coyote's blog posts. |
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