just make it $20/hr.

why not?

make sure you keep fucking the teachers though, because otherwise the world would burn.

2/3/2014 8:19:01 PM

Quote :

"Not greed, but misplaced priorities combined with effective conservative propaganda that uneducated workers don't deserve the American dream."

Moron, quote me some specific "conservative propaganda" that cites uneducated workers not deserving the American dream.

2/3/2014 8:33:34 PM

Quote :

" If you're making $11/hr, you're probably not going to be much in the way of renegotiating anything, because you're making $11/hr. I'm just sayin..."

At companies with a large number of employees working at or just above the min. wage, a person making between the $10/hour and $15/hour is probably going to be a lower level manager (shift manager, line manager, etc). IMO, these people are crucial to our economy and especially crucial to businesses with a lot of min. wage employees. They are the folks cracking the whip on those crappy min. wage employees, dealing with their customer service screw-ups, are probably capable of filling in for whoever decides not to show on any given day, etc. If you’re an owner and know you’ve got a decent shift manager that’s already trained and you trust – you’d be damn crazy not to sit down and renegotiate their salary now that they are only making a few dollars more than min. wage.

It may not happen immediately, but a min. wage increase will cascade upward (the effects will get smaller the further up you go in the pay scale, until there is eventually no effect)

Quote :

" I think this is the wrong way to judge the impact of the min wage. There is nothing about the minimum wage that suggests it will increase the economy's productive capacity. This is a question of income **distribution**. Therefore, in the long-run, an extra-dollar being spent by low wage workers means one less dollar being spent by someone else."

Money moves through the economy differently depending on how it’s spent. When a company takes its profits and buys back stock or increases dividends, but doesn’t invest in future revenues, (companies are setting records for this behavior right now btw) that money goes directly to the investment class where its most likely to get re-invested or plopped in a bank account. Compare that to a poor, who has a much higher propensity to spend. They spend their money at the local corner store. The store clerk gets a cut of that and buys a cheeseburger after work, etc etc on down the line until its eventually skimmed up as profit by company owners and reinvested. The money tends to change hands much more rapidly or the “velocity” of money has increased in the second scenario.

If GDP is one of the simplest measures of our “economy’s productive capacity” and GDP = money supply *the velocity of money (by definition). Then we can say that increasing the velocity of money will increase GDP.

Economies fed from the bottom up in this way are more resilient and capable of greater growth.

Quote :

" I think this is really what the minimum wage debate is all about. Progressives inherently distrust decentralized decision making in the market place. They want the government to constrain it. Like I said before, if this was REALLY about helping working families, there are better ways to do it (EITC). Instead, this is about comforting progressive that are afraid of the market."

Several of us already indicated this doesn’t have a chance at passing (probably wouldn’t even pass the senate) and is either feel-good saber-rattling for the progressive base or a convenient way to paint Republicans as poor-haters and score some political point.

You still haven’t told us how you would pay for a doubling in the size of the EITC.

I wouldn’t say progressives are afraid of market forces, only that they are realists and recognize that market failures do occur, or sometimes markets don’t produce an ideal situation for a huge segment of our population. Since the rules of most markets are pretty arbitrary, why shouldn’t we tweak them to produce a better outcome (yes, sometimes this includes repealing or reforming rules that are barriers to business, but not always)? If the rising tide isn’t lifting all the boats in the harbor then why wouldn’t you pump water from the boats with holes in them, or take some buoyancy from a boat floating high and try to shore up a sinking one?

Quote :

" Flaw in your calculations I believe... $2900 eitc being 1.45 sounds good and all... But that 1.45 isn't taxable income... So, the 2.75/hr wage increase will be equivalent to a lower than $5500 eitc"

I see what you are saying, however, if you are receiving an EITC, you aren’t paying income taxes (well not until you get to the very upper bound of the EITC). Payroll and sales taxes would diminish that wage increase though. You right. But they aren’t included for simplicity.

2/4/2014 12:42:38 PM

TerdFerguson

Quote :

"Money moves through the economy differently depending on how it’s spent. When a company takes its profits and buys back stock or increases dividends, but doesn’t invest in future revenues, (companies are setting records for this behavior right now btw) that money goes directly to the investment class where its most likely to get re-invested or plopped in a bank account. Compare that to a poor, who has a much higher propensity to spend. They spend their money at the local corner store. The store clerk gets a cut of that and buys a cheeseburger after work, etc etc on down the line until its eventually skimmed up as profit by company owners and reinvested. The money tends to change hands much more rapidly or the “velocity” of money has increased in the second scenario. If GDP is one of the simplest measures of our “economy’s productive capacity” and GDP = money supply *the velocity of money (by definition). Then we can say that increasing the velocity of money will increase GDP. "

Well, actually, it is NOMINAL GDP that equals Velocity * Money Supply. And Nominal GDP is equal to Price Level * Real Output. Or putting them both together....

Price Level * Real Output = Velocity * Money Supply.

This is important because Real Output is determined by "real" factors (e.g. number of workers in the economy, level of capital, etc). In the long run, it is not influenced by "nominal" factors (like changes in velocity or money supply) because of adjustments in the price level. If this was not the case, we could "print our way to prosperity" by just doubling the money supply every year.

Quote :

"Several of us already indicated this doesn’t have a chance at passing "

And I think I gave pretty good reasons for why the reasons it wont pass are bs. It basically boils down to "the Republicans won't let us!" or "it's too complicated to be popular!". Neither of those reasons make sense.

Quote :

"You still haven’t told us how you would pay for a doubling in the size of the EITC."

Well, I still don't buy that we need to double the EITC like you claim. But you're right that I have not said how "we" would pay for an increase in EITC. But is there really a way to answer that in an internet forum setting?

I could give you my personal opinions about the taxes that would need to be increased or the alternative spending that would be cut. But the truth is that the specifics would be hammered out through the political process. Just like they were with the Affordable Care Act.

But the entire question seems a little strange to me. It seems to imply "we" don't have to pay for the minimum wage. Is raising the minimum wage "free", just because it doesn't require raising taxes? I don't think so. We're still transferring resources from one group to another. The *real* question is what is the best way to do that.

Quote :

"I wouldn’t say progressives are afraid of market forces, only that they are realists and recognize that market failures do occur, or sometimes markets don’t produce an ideal situation for a huge segment of our population."

Is your situation ideal? Are you getting paid what you "deserve"? If so, why is that not true for lower paid workers? If not, why are we stopping at the minimum wage? Why not have the government set all wages?

Saying that we don't want children growing up hungry or that we want to provide a basic safety net for our citizens doesn't mean we need the government telling McDonalds how much their workers are really "worth". There are smarter ways to achieve this goal.

[Edited on February 4, 2014 at 4:06 PM. Reason : ``]

2/4/2014 3:56:03 PM

I think Republicans should actually agree to the hike, but demand that it be 25 or 35 dollars an hour, and refuse to accept anything lower than that. Yes, it will be disastrous for the very poor in the short-term, but long-term it will bury "progressive" economic black magic in the ground where it belongs.

It's a win win for the GOP. If Obama refuses, then clearly he must hate the poor. He'd have to explain why such a high minimum wage is a bad idea, which would have to lead into a discussion about why we have a minimum wage at all.

2/4/2014 5:15:09 PM

Quote :

"I see what you are saying, however, if you are receiving an EITC, you aren’t paying income taxes (well not until you get to the very upper bound of the EITC). Payroll and sales taxes would diminish that wage increase though. You right. But they aren’t included for simplicity."

Simplicity is good, but when you're talking wage targets and EITC comparison, I think its pretty crucial. People are sitting here cheating over wage targets with quarters per hour. I'd contend that the taxes are pretty critical when comparing the EITC to an hourly wage.

[Edited on February 4, 2014 at 8:41 PM. Reason : .]

2/4/2014 8:40:40 PM

Quote :

" This is important because Real Output is determined by "real" factors[b] (e.g. number of workers in the economy, level of capital, etc). In the long run, it is not influenced by "nominal" factors (like changes in velocity or money supply) [b]because of adjustments in the price level. If this was not the case, we could "print our way to prosperity" by just doubling the money supply every year. "

"Real" output can't be influenced by money velocity or money supply? Are you suggesting that they can only influence price levels/inflation and "real output" is totally independent? We've poured money into our economy since the recession through stimulus and QE, so we should expect a corresponding rise in price levels, but inflation expectations have been super low. Both real GDP and nominal GDP have been growing slowly and inflation has been growing even slower. The only explanation is a corresponding drop in money velocity is keeping price levels from being influenced by QE. By extension lower money velocity is also reducing our REAL output.

Adjustments in price levels WON'T be as sensitive to nominal changes in our current environment:

Prices have to remain competitive. Companies are still out there trying to undercut each others prices to capture more of the market. For this reason we can expect companies to look for other ways to keep prices down. Yes, they have other options. Take a look at the vast majority of S&P 500 companies, especially those that require a higher % of lower wage workers for their business model (especially those in retail, fast food, etc) and you're gonna find they have spent hundreds of millions or in some cases billions on stock buy backs or increased dividends since the recession. There's nothing wrong with that (not ethically/morally, etc), its just the not what our economy needs right now and the deeper we get into it the more self-re-enforcing it is.

I know you are right now because we still need a mechanism to explain how changes in velocity can increase REAL growth:

You need to note that we are growing the market demand at the lower end of the market by increasing the min. wage. This area typically requires more capital inputs to service the entirety of the market (labor, equipment, automation, facilities, etc) when compared to the extreme high end of the market. Its the difference between 50 Mcdonalds and 5 high end steak houses in a given city or building 5,000 runabout boats vs. 5 yachts. Which requires more capital (and especially labor) to get started? This increases overall REAL investment in the economy which translates directly to future REAL growth in GDP.

Isn't this entire argument the only way you can explain how so many studies of min. wage increases show neutral or growth in labor demand after the min. wage increase?

Quote :

"It basically boils down to "the Republicans won't let us!""

umm, how does that not make sense?

Quote :

"But the entire question seems a little strange to me. It seems to imply "we" don't have to pay for the minimum wage. Is raising the minimum wage "free", just because it doesn't require raising taxes? I don't think so. We're still transferring resources from one group to another. The *real* question is what is the best way to do that. "

The only reason I mentioned it was you keep explaining why the EITC is a better option, but you're leaving out the ugliest part of that option - raising revenues.





[Edited on February 4, 2014 at 9:41 PM. Reason : ^yeah, I agree, but I'm damn sure not gonna dive that deep into it. ]

2/4/2014 9:37:49 PM

Quote :

"I think Republicans should actually agree to the hike, but demand that it be 25 or 35 dollars an hour, and refuse to accept anything lower than that. Yes, it will be disastrous for the very poor in the short-term, but long-term it will bury "progressive" economic black magic in the ground where it belongs."

We could tolerate a minimum wage of $35 if it was phased in slowly enough. It would be a really odd policy proposal, but not technically in feasible.

There are pretty obvious, intuitive reasons why a raise of a few dollar (basically to keep pace with historical levels) makes sense but $35 does not. Your proposal would make the GOP look dumber than they already do.

2/4/2014 10:12:36 PM

Quote :

" Since the rules of most markets are pretty arbitrary, why shouldn’t we tweak them to produce a better outcome "

The reason is because often our "tweaks", even though they have good intentions, come with tremendous negative and unintended consequences. You need look no further than healthcare and education for examples of this. Both have seen an endless stream of gov't tweaks, and costs in them are skyrocketing out of control.

For instance, due to a previous gov't "tweak" of wage caps, the federal gov't gave tax breaks to companies for providing health insurance to their employees. Now, your health insurance is tied to your job, and that comes with all kinds of negative outcomes. Likewise, we "tweaked" ERs to force them to treat any and all people who come through the door, so now people use the ER as a primary care doctor, because they can't afford insurance or lost it when they changed jobs.

Likewise, in higher education, we wanted to encourage lending, so we "tweaked" it so that student loans couldn't be discharged in bankruptcy. Since lenders can't lose, they'll lend to anyone, and colleges know students have an endless supply of student loan money, the end result is skyrocketing tuition prices and people who will never get out of that debt.

Furthermore, the notion of a "tweak" is that you can just pull it back if things aren't working right. Yet, you tell me how easy it would be to pull back the employer healthcare tax credits or the student loan bankruptcy laws. The negative consequences of that, namely, drastic market corrections (that we desperately need, mind you), are entirely unpalatable to the public. Hell, we can't pull back on farm subsidies, so instead we're paying millions of dollars a year to huge corporations such as Monsanto and Cargill to "help them make ends meet as struggling farmers".

Tweaking is great, in a car; it's horrible in an economy, especially when you don't even know what affects the tweaking will have long-term.

2/4/2014 10:42:41 PM

^ but you aren't considering what the market was like before those "tweaks."

Wage controls kept us competitive during WWII. A simple fix to sending 100,000s of our labor over seas

Before tuition subsidies, college was for the rich. Those tuition subsidies have given us one of the most flexible and educated working populations in the world.

Requiring ER to treat people kept the lepers from piling up in the streets.

We have pulled back on tweaks. See deregulation in the early 80s. I mentioned earlier that repealing laws can be just as important. We HAVE pulled back on Ag subsidies THIS YEAR - we ended direct payments, which are by far the most egregious subsidy in the farm bill.

2/5/2014 7:10:02 AM

Quote :

""Real" output can't be influenced by money velocity or money supply? Are you suggesting that they can only influence price levels/inflation and "real output" is totally independent? We've poured money into our economy since the recession through stimulus and QE, so we should expect a corresponding rise in price levels, but inflation expectations have been super low. Both real GDP and nominal GDP have been growing slowly and inflation has been growing even slower. The only explanation is a corresponding drop in money velocity is keeping price levels from being influenced by QE. By extension lower money velocity is also reducing our REAL output."

I agree that in the near term, prices may not adjust fully. If prices are perfectly fixed, it is clear from the equation of exchange you posted earlier (P*Q = M*V) that any increase in the money supply or velocity will HAVE to result in an increase in real output. However, prices won't stay inflexible forever. Eventually, they will adjust so that output returns to the level determined by underlying real factors. That's why I emphasized the "long-run", which I think should the relevant frame of reference for enacting *permanent* policy changes.

Like I said, imagine if this was not the case. If output wasn't bound by real factors (like the number of workers in the economy), why couldn't the Fed just keep printing money to make us richer and richer? Intuitively, it should make sense that money is just little slips of paper. It doesn't actually add to our productive capacity.

Quote :

"Isn't this entire argument the only way you can explain how so many studies of min. wage increases show neutral or growth in labor demand after the min. wage increase?"

Actually, I think it has to do with the notion that the labor market is not perfectly competitive. Instead, in many areas, firms may have a certain amount of market power that allows them to negotiate lower wages with their workers than what would prevail in a competitive market.

Quote :

"Socks: "It basically boils down to "the Republicans won't let us!" TerdFerguson:"umm, how does that not make sense?""

Because there is no reason to think that Republicans would not support an increase in the EITC. Like I said before, Republicans love tax cuts to begin with. But I want to expand on that now by saying EITC actually has a long republican history.

1) EITC was inspired by Milton Friedman's Negative Income Tax Idea (Republican).

2) It was first enacted under President Ford (Republican)

3) It was expanded under Reagan, Bush I, and Bush II (all Republicans).

4) The pundits / public intellectuals currently boosting the idea of expanding EITC instead of raising min wage are folks like Greg Mankiw (Republican).

Adding all of this together make me seriously doubt that Republicans would not favor an EITC expansion over a higher min wage.

Quote :

"The only reason I mentioned it was you keep explaining why the EITC is a better option, but you're leaving out the ugliest part of that option - raising revenues."

Fair enough. I do agree that increasing EITC would require the revenue to be made up somewhere if we expect it to be revenue neutral. But I'm not sure this is the ugliest part of expanding the EITC. In fact, I would argue that this is a feature and not a bug! With the EITC we can more explicitly target not only who we are giving resources to (working poor families) but who we are taking resources from (say by raising taxes on the rich).

Contrast that with the minimum wage. It isn't clear who the resources will ultimately come from to pay for higher wages. Maybe it will come in the form of lower company proftis at the top? Maybe lower salaries for folks in the middle? Maybe higher consumer prices? It is hard to say and it is impossible to control. This should be a very scary part of the minimum wage if the goal is to transfer resources from the rich to the poor.

[Edited on February 5, 2014 at 1:56 PM. Reason : ``]

2/5/2014 1:49:01 PM

Quote :

"Because there is no reason to think that Republicans would not support an increase in the EITC. Like I said before, Republicans love tax cuts to begin with. But I want to expand on that now by saying EITC actually has a long republican history. "

Republicans have been opposed to them since 1995 and have been killing them at state level. They are not going to support one at the federal level, and definitely not if a democrat proposes it. So there is definitely a reason to think that Republicans would not support it, that reason being that they haven't. Republicans want to raise taxes for the poor, they are opposed to negative tax rates and progressive taxes. http://www.motherjones.com/kevin-drum/2012/09/republicans-and-47-case-study

2/5/2014 2:05:58 PM

Well, if a non-partisan blogger like Kevin Drum has something bad to say about Republicans, it must be true....

Quote :

"The minimum wage makes it more expensive for employers to hire low-skilled workers. The EITC, on the other hand, gives workers a boost—without hurting their prospects."

Paul Ryan - R, January 13, 2014
http://budget.house.gov/news/documentsingle.aspx?DocumentID=366688

Woops.

[Edited on February 5, 2014 at 2:51 PM. Reason : ``]

2/5/2014 2:40:38 PM

Paul Ryan is not, and hasn't really ever been, a voice of the general GOP agenda

We just got rid of the EITC in NC, getting rid of the EITC and negative tax rates is the GOP agenda

Here is what he was referencing regarding 1995:
http://www.nytimes.com/1995/09/19/us/clinton-defends-income-tax-credit-against-gop-cut.html

Here are Republicans now:
States:
http://www.bizjournals.com/triangle/news/2013/03/13/mccrory-signs-bill-eliminating-tax.html
http://www.njspotlight.com/stories/12/0807/2151/http://host.madison.com/news/local/govt-and-politics/walker-s-budget-slashes-tax-credits-that-aid-poor/article_e25ede58-b707-5876-9735-ecf0aa178e6d.html
http://www.freep.com/article/20140109/NEWS06/301090125/michigan-gop-road-funding
etc...
Federal:
http://www.realclearpolitics.com/articles/2013/03/14/ryans_blurred_vision_what_the_new_republican_budget_reveals_and_conceals_117433.html
http://www.politico.com/story/2014/01/some-fear-eitc-obamacare-tax-credits-to-share-woes-102853.html

their track record is clear


[Edited on February 5, 2014 at 3:20 PM. Reason : .]

2/5/2014 3:08:37 PM

so a prominent house republican's opinion on expanding the federal eitc from one month ago is irrelevant for how republicans will vote now.

instead, let's see what Republicans at the state level or in 1995 have to say.

...

okay.

[Edited on February 5, 2014 at 3:30 PM. Reason : ``]

2/5/2014 3:13:53 PM

you shouldn't trust any recent posturing by the GOP, it will be undone by Obama's support of an EITC

Republicans haven't just not supported an EITC, they have actively fought to have it cut or removed for the past 20 years. It's true that it should fit their platform, but they don't understand that. To many idiot ideologues think its not fair when people get paid for not doing anything, and that's what they think it is anytime someone gets a tax rebate that more than they contributed in taxes.

[Edited on February 5, 2014 at 3:34 PM. Reason : .]

2/5/2014 3:31:28 PM

Did you miss where I noted that George W. Bush expanded the EITC? I'm pretty sure he was President less than 20 years ago.

I also mentioned that Bush's former advisers are rallying for its expansion in recent op-eds. I already linked to a blog post by Greg Mankiw from December. But there is more. Here is a good piece from January 10th by Glenn Hubbard, former Chairman of the Council of Economic Advisers under Bush:

Quote :

"A second employee-based approach builds on the earned-income tax credit, which promotes work as it reduces poverty. While successful, the credit could be improved if inclusion were the goal. As currently constructed, the credit mixes support for families with a tax credit on earnings. Increasing the credit for childless workers to an amount closer to that for families with children would augment the direct work incentive and help counter poverty among the working poor."

http://www.washingtonpost.com/opinions/tax-reform-is-the-best-way-to-tackle-income-inequality/2014/01/10/112710ea-68ca-11e3-a0b9-249bbb34602c_story.html ).

This obviously doesn't seem to count. Instead, we need Democrat Kevin Drum to read the mind of Republicans from 20 years ago to tell us what will really happen. I think I see what's going on...

Quote :

"I JUST *KNOW* THAT THEY WON'T SUPPORT EXPANDING THE EITC NO MATTER WHAT THEY SAY!!!!"

This is an argument I simply can't argue against. So I will not try.

[Edited on February 5, 2014 at 3:48 PM. Reason : ``]

2/5/2014 3:46:07 PM

Bush was pretty progressive, a lot more progressive than the party now and more progressive than the party then
From 1999:
Bush Criticism of GOP Proposal Surprised House

Quote :

"During a campaign appearance in California on Thursday, Bush said he was against the House plan to save $8.7 billion over the next year by deferring tax credit payments for low-income working families. "I don't think they ought to balance their budget on the backs of the poor," said the GOP presidential front-runner."

http://www.washingtonpost.com/wp-srv/politics/campaigns/wh2000/stories/congress100299.htm

Criticism Appears to Doom Republican Budget Tactic

Quote :

"Mr. Bush strongly criticized the Republican plan, which calls for delaying payments of the earned-income tax credit, a tax break for 20 million working-class Americans. The proposal was championed by a fellow Texas Republican, Tom DeLay, the House majority whip."

http://www.nytimes.com/1999/10/01/us/criticism-appears-to-doom-republican-budget-tactic.html

Bush--gasp!--takes On The Gop

Quote :

"Responding to a House GOP plan to balance the federal budget by delaying payments of the Earned Income Tax Credit (EITC), Bush declared that the party "shouldn't balance the budget on the backs of the poor." A few days later, Bush scolded the party for relying on sterile, negative rhetoric. "Too often, my party has confused the need for limited government with a disdain for government itself," he said."

http://articles.chicagotribune.com/1999-10-08/news/9910080393_1_house-gop-gop-candidate-george-w-bush


[Edited on February 5, 2014 at 3:56 PM. Reason : history]

2/5/2014 3:49:00 PM

What about Mitt Romney and the 47% video? Then entire "Makers vs. Takers" and "everyone should have some skin in the game" memes that get so much service?


The reality is, especially for politicians, you need to show me with your actions:


S. 836 Working Families Tax Relief Act of 2013
https://www.govtrack.us/congress/bills/113/s836

currently in the senate finance committee, not a single republican co-sponsor. As far as I know its not expected to make it out of committee (not sure why). It strengthens the EITC, nearly doubles the maximum credit in a lot of cases. It allows for a much higher credit to go to people without any children (a very good change IMO). It also simplifies some elements of the EITC to make it easier to dispense and to help reduce fraud (EITC has one of the higher fraud rates for welfare programs). It also makes some changes to the Child tax credit that occurred in 2009 permanent.

Now, maybe there is something buried in this bill that is a non-starter for Republicans and I skimmed over it (please correct me if so). Maybe it will make it out of committee and then it will get some bipartisan support - in which case I will gladly come back to this thread and eat crow.

but will your mind change Socks`` if it makes it out of committee and barely gets any Republican votes????

[Edited on February 5, 2014 at 4:29 PM. Reason : user tag effed it up]

2/5/2014 4:28:23 PM

Quote :

"There are pretty obvious, intuitive reasons why a raise of a few dollar (basically to keep pace with historical levels) makes sense but $35 does not. Your proposal would make the GOP look dumber than they already do."

What are those reasons? If a 5 dollar hike is great and will make life better for the poor, then wouldn't a 10 dollar hike be even better? Why not 15 or 20?

2/5/2014 4:59:55 PM

Quote :

"What are those reasons? If a 5 dollar hike is great and will make life better for the poor, then wouldn't a 10 dollar hike be even better? Why not 15 or 20? "

Because the point isn't to make things better for the poor, you couldn't do this raising the min wage anyway.

The point is to provide stability to social structures that underly every aspect of society, without destabilizing other aspects. You want to create an environment where the ambitious and motivated can succeed on as level a playing field as possible, and where future generations are encouraged.

When you have the scenario we have now, where pay isn't keeping pace with productivity, profits, or hasn't been keeping up with inflation, it creates a negative feedback loop that not only creates more poverty, it discourages people from being able to rise out of poverty, and we've seen this in the economic disparity data. You can argue that letting employers pay people dirt helps employment, which is probably true for the short term, but it leads to more costly problems in the future. It would be self-defeating, and ultimately result in a worse situation.

So, the reason you wouldn't want to make it $30/hour is that this destabilizes too many other aspects of the system, far exceeds historical rates, and would cause major issues for the cost of goods. It would directly impact "middle class" salaried positions as well, and have a domino effect throughout the system if dumped down all at once. A raise from $8 to $10 an hour doesn't cause these issues.

Note that I'm not saying raising the limit is the best idea or even a good idea, i'm saying it's not a bad idea, and the argument of "well why not make it $40/hour!!" is clearly idiotic. Things aren't as black/white and simplistic as the libertarians would like you to believe.

2/5/2014 6:04:30 PM

Quote :

"Before tuition subsidies, college was for the rich. Those tuition subsidies have given us one of the most flexible and educated working populations in the world."

Last I looked, college is still for the rich. Not many families can afford to drop ~10k / year or more (1/4 - 1/5 the median household income) on schooling. And skyrocketing tuition costs (fed in part by the subsidies and easy availability of tuition money) has meant that paying for college via summer jobs waiting tables or what have you (as many people used to), is more or less impossible now.

Disclaimer: The following calculations have been done on less than 12 hours sleep in the last 72 hours and could be off. I don't believe they're materially off to the point where the underlying point is not made.

I mean, let's look at NCSU, subsidized by the tax payers, expects that an NC resident, living at home will have annual expenses of $16k while at school (http://www.ncsu.edu/future-students/can-i-afford-it/). The costs are split by semester, so our student needs to come up with 8k by july and then again by december. Assuming our intrepid student starts a summer job right away on May 15th and works full time until the end of july, they'll have ~55 working days (440 hours). Assuming a ~15% tax rate (NC 7%, Federal 15%, plus FICA taxes and general taxes, yes they will likely get a refund as a student, but they'll have to pay it first), that means our intrepid scholar needs to earn effectively $21 / hour for all 55 days to pay for the first semester of tuition, or the equivalent of a $42,000 / year job.

But let's say our intrepid scholar's parents have been saving all along, 1k / year for their entire life and pays for their first year at school. What would it take for our student to pay for their schooling using a summer job? The last day of exams for spring 2014 is May 6, and the Fall semester starts Aug 20, giving us ~75 (600) working days. At the same estimated tax rate, our student needs to earn $33 / hour, 40 hours a week from May 6 to August 20 to pay for their annual tuition, or a mere $66k / year. And all of that is just tuition/fees/books costs, never mind any other expenses they may have.

Just for gits and shiggles, in 1977, NC State estimates a total of ~$1100 tuition and fees for a year (http://upa.ncsu.edu/univ/hist/tuition-fees-history), the inflation calculator (http://data.bls.gov/cgi-bin/cpicalc.pl?cost1=1100&year1=1977&year2=2013) tells us that this would be equivalent to ~$4,230 today. If tuition had held at these rates, our intrepid scholar at the same tax rate would need to earn a measly $8.30 / hour all summer long to pay for their tuition after the first year.

And for comparison, though I can't find numbers for NSCU, here's some numbers (http://www.archives.upenn.edu/histy/features/tuition/1920.html) from U. Penn. for 1920: $350 tuition / fees and books, works out to ~$4,077 today. Even if we assume that number was per semester, it's still just 8k per year back in the 1920's, half of the cost of a tax payer subsidized education today.

2/5/2014 7:07:53 PM

^^ The recent run ups in profitability are in finance, education, and healthcare, industries which do not employ minimum wage workers. The industries that do employ minimum wage workers such as retail are just as profitable as ever: Not much. As such, how can you say pay has not kept up with productivity?

That airplanes stay airborne does not revoke the law of Gravity. Similarly, that data does not always show the law of Demand does not revoke it either. If you raise employer costs by statute, some will find a way to stay open with fewer worker hours, some of them will opt not to expand, and some of them will shutdown. This will manifest itself into fewer job opportunities for minimum wage workers and enlarge the already huge army of the unemployable whose only job prospects are illegal. How does doing this in any way "provide stability to social structures"?

The purpose of the minimum wage is to keep poor blacks and immigrants out and render the retail market safe for middle-class white teenagers.

[Edited on February 5, 2014 at 7:17 PM. Reason : ^]

2/5/2014 7:16:38 PM

^^ I agree with everything you said, however there are other ways to offset the cost of college. There are work/study positions that students can get, as well as a part time job throughout the semester. I'm not saying it is right to have to do that, but it is an option.

I believe that tuition costs are criminal, especially for subsidized schools such as those in the UNC system. How come nobody looks at ways to trim tuition down so the poor can actually afford anything other than a community college? There are only so many scholorships to go around.

2/5/2014 9:52:00 PM

A part time job is peanuts compared to the cost of college, a part time job and working in the summer was actually enough in the 70's, not now.

has Soxks conceded that Republicans, for whatever reason, have been against EITC?

[Edited on February 6, 2014 at 7:07 AM. Reason : ,]

2/6/2014 7:05:43 AM

Quote :

"Last I looked, college is still for the rich. ......... half of the cost of a tax payer subsidized education today."

I understand the sentiment. College needs to be more affordable, but it seems like you left something out of your analysis - how has the taxpayer subsidy changed over that time period?

I'm having a super hard time finding any info on the UNC system's budget in 1920, or really any detailed budget data (I'm not sure it was even officially the UNC system yet.) I'm just going to leave it out for now, sorry.


The comparison between now and the late-70s works for me though.

Go here to see where I'm pulling the State General Fund contribution to the UNC system (Appendix Table 10, very last page of the .pdf):
http://www.osbm.state.nc.us/new_content/historical_budget_data.pdf

1979-1980 (the earliest date they report): $437 million -> inflation Calculator -> $1,678 million in 2013 dollars

2012-2013: $2,670 million

However, the number of students the UNC system educates has also grown over that time period
Go here and download the first excel file and go the the "4yr PUBLIC tab- it will list the total Public college enrollment in NC:
http://www.sreb.org/page/1354/date_library_enrollment__instructional_delivery_modes.html

1979: 115,979
2013: 220,121

So looking at the per student taxpayer subsidy:

1979: $1,678 million/115,979 = ~$14,500/student
2013: $2,670 million/220,121 = ~$12,100/student

Other revenue sources for colleges have been similarly squeezed in recent years (research grants, etc).

That isn't to say that taxpayer subsidies explain the entirety of the increase in college costs, because I do think that college loans are playing a factor. I just feel obligated to point out that the story is complicated.

2/6/2014 10:28:04 AM

Quote :

"Now, maybe there is something buried in this bill that is a non-starter for Republicans and I skimmed over it (please correct me if so). Maybe it will make it out of committee and then it will get some bipartisan support - in which case I will gladly come back to this thread and eat crow. but will your mind change Socks`` if it makes it out of committee and barely gets any Republican votes????"

I will be surprised and disappointed if the bill gets out of committee and doesn't receive significant Republican support. At the very least, I hope that they formulate another bill of their own that offers EITC as an alternative to raising the min wage that a majority of Republicans can get behind. If neither of those things happen, I would be the one forced to eat crow.

But, really I am just happy right now that your link shows that at least some Democrats are at least proposing an expansion in the EITC and not just relying on the "Republicans would block it" cop out. And that's all really wanted at the start of this thread. Because complaining about Republican obstructionism is exactly that, a cop out. The fact is that a Republican president supported the expansion of the EITC in the recent past and many prominent Republicans continue to support expanding the EITC or similar policies today. (dtown seems to think these Republicans either don't matter or are not "true" Republicans but there is not much I can do about that). So it makes no sense to dismiss the possibility of expanding the EITC out of hand.

I just hope this measure gets some support from the White House.

2/6/2014 12:40:41 PM

no, my position is that the language has only changed in the last few weeks and you shouldn't count on it to continue since it will require them to agree with something Obama supports. You also shouldn't count on it to continue because Republicans have a clear history of being opposed to an EITC for the past 20+ years, and when that Republican president passed one he did so against the resistance and criticism from his own party (and the party has only become less progressive since then).

[Edited on February 6, 2014 at 12:57 PM. Reason : .]

2/6/2014 12:56:15 PM

dtown,

Your position has been changing as either google or myself provides you with new info. You went from "Republicans only support tax cuts for the rich" to "Republicans have opposed EITC for 20 years" to "Some Republicans have supported expanding EITC, but many also opposed it".

If your current position is just that expanding EITC is not universally supported by all Republicans at all time, then I can't help but agree.

But I still honestly believe that a majority of Republicans will support expanding the EITC as an alternative to raising the minimum wage. And recent comments made by leading Republicans only bolster that belief.

I could be wrong. I will be disappointed if I am. But I think I have done a good job of demonstrating that expanding the EITC is not such an obvious political dead end that it should not be considered as an alternative (which was the initial criticism). There is a very real chance it could pass. So I don't know what more I can say on this subject, so I will let you have the last word on what Republicans "truly" believe.

[Edited on February 6, 2014 at 3:21 PM. Reason : "Let me tell you what Republicans REALLY believe" said the Democrat. [/unbiased]]

2/6/2014 3:11:58 PM

i've had the same position this entire time, chief

Quote :

"If your current position is just that expanding EITC is not universally supported by all Republicans at all time, then I can't help but agree. "

no, my position is that they have been actively against it for at least the past 20 years.


[Edited on February 6, 2014 at 3:20 PM. Reason : who said I'm a democrat?]

2/6/2014 3:19:45 PM

Earlier I posted a link to an article where Paul Krugman makes the case for raising the minimum wage today. It is interesting that in arguing against a setting a minimum "living wage" in 1998 he laid out a position closer to my own.

The article is interesting and I think does a fair job of arguing both sides. I wish he would revisit this article, since I would like to know what changed his mind (or if he really did).

Quote :

"Now to me, at least, the obvious question is, why take this route? Why increase the cost of labor to employers so sharply, which--Card/Krueger notwithstanding--must pose a significant risk of pricing some workers out of the market, in order to give those workers so little extra income? Why not give them the money directly, say, via an increase in the tax credit? One answer is political: What a shift from income supports to living wage legislation does is to move the costs of income redistribution off-budget. And this may be a smart move if you believe that America should do more for its working poor, but that if it comes down to spending money on-budget it won't.... But I suspect there is another, deeper issue here--namely, that even without political constraints, advocates of a living wage would not be satisfied with any plan that relies on after-market redistribution. They don't want people to "have" a decent income, they want them to "earn" it, not be dependent on demeaning handouts.... In short, what the living wage is really about is not living standards, or even economics, but morality. Its advocates are basically opposed to the idea that wages are a market price--determined by supply and demand, the same as the price of apples or coal. And it is for that reason, rather than the practical details, that the broader political movement of which the demand for a living wage is the leading edge is ultimately doomed to failure: For the amorality of the market economy is part of its essence, and cannot be legislated away."

http://www.questia.com/library/1P3-669277141/metaphors-of-economic-activity-in-19th-and-20th-century

[Edited on February 6, 2014 at 3:48 PM. Reason : ``]

2/6/2014 3:43:06 PM

The CBO has weighed in on the potential minimum wage hike to $10.10 per hour.

http://www.cbo.gov/publication/44995

The Bad News: They find a hike in the minimum wage to $10.10 will lead to a net loss of around 500,000 jobs.

The Good News: If you are lucky enough to keep your low-paying job, you will be earning more income! They estimate that earnings will increase by $31 million.

The Bad News: Just because you have a low-paying job, doesn't mean you are in a low-income family. According to CBO estimates, only 19% of that $31 million would accrue to families living in poverty. By contrast, 29% would accrue to families earning more than three times the poverty threshold.


In other words, the public intentions of this policy are to help combat poverty. The results of policy will be to put many people's jobs in jeopardy and to primarily benefit families well above the poverty line.

[Edited on February 19, 2014 at 1:11 AM. Reason : ``]

2/19/2014 1:10:01 AM

What? Pricing people out of a job doesn't help those people? Well, color me shocked!

2/19/2014 1:23:28 AM

^^well, if you drill down into the report their actual confidence interval ranges from "a very slight increase in employment to a loss of up to 1 million jobs." The 500,000 loss is just the central figure. So, IMO, job losses from a minimum wage increase are still debatable.

Also, its $31 Billion not $31 million

[Edited on February 19, 2014 at 8:36 AM. Reason : The way you read this report also depends on if you want to combat poverty or income inequality]

2/19/2014 8:33:34 AM

no, $10.10/hr is slight decrease to loss of 1 million gobs

($9/hr is slight increase to loss of 200k jobs)

2/19/2014 9:21:20 AM

Terd Ferguson,

Actually, you may want to double check that. See Table 1 in the full CBO report. It says the range of employment impacts for a wage hike to $10.10 will be between a very slight DECREASE and 1 million workers losing their jobs (not a slight increase). But you're right that I just reported the central estimate and that the true impact could be bigger or smaller. Of course, that's true of ANY point estimate.

In either case, I think the more interesting finding is that very few of the benefits of a hike in minimum wage will go to the families in poverty. Something tells me that statistic will not make its way into any of President Obama's speeches anytime soon.

---

On a different note, the full CBO report also discusses the EITC. Here is one interesting excerpt.

Quote :

"To achieve any given increase in the resources of lower-income families would require a greater shift of resources in the economy if done by increasing the minimum wage than if done by increasing the EITC. The reason is that a minimum-wage increase would add to the resources of most families of low-wage workers regardless of those families’ income...By contrast, an increase in the EITC would go almost entirely to lower-income families."

[Edited on February 19, 2014 at 11:45 AM. Reason : ``]

2/19/2014 11:39:32 AM

The poorest among us lose their jobs and middle class teenagers get a raise. The war on the poor continues apace.

2/19/2014 2:47:14 PM

Why would the poor stand to lose their minimum wage job over middle class teenagers?

2/19/2014 2:57:16 PM

how about whoever sucks at their job more lose their job?

2/19/2014 3:23:02 PM

Thats what I was thinking.

2/19/2014 3:25:31 PM

``

[Edited on February 19, 2014 at 7:32 PM. Reason : ``]

2/19/2014 7:28:50 PM

They should make it 9/hr and have it scheduled to increase to $10.10 after the next presidential election. See who wanna repeal it?

2/19/2014 9:34:10 PM

What does it really matter anyway. Going from what it is now to 10.10 isn't really going to raise anyone out of poverty. It will just allow people to buy more junk.

2/20/2014 7:11:39 AM

yah, I realize there are two different scenarios. The only reason I quoted the "increase" in employment was to show its possible and capture the full range mentioned in the paper. If you look at the reason the CBO included the increase in employment in the paper, its because of the exact mechanism I described ITT.

The kicker is they arbitrarily (well IMO, see page 27 of appendix A) reduce this effect by 10%.

And reporting the central estimate in this case is kinda meaningless to me. Notice they don't call it the median estimate - its because they don't have a clue what the actual distribution of the data looks like. They use different effects they gathered from literature, adjust them slightly to better fit their uses, and then plug and chug it in their economic model. Absolutely nothing wrong with that method, but it doesn't explain why they are picking the central estimate as the number to report when they have the same confidence level in their entire range. I've only skimmed the report but haven't found the CBO mention anywhere what the range of estimates of the effect they tried, or if they weighted some of the estimates as more significant than others (ie. if two studies are very similar and one finds a more statistically significant effect, should it be weighted more heavily?).

I guess what I was looking for was something more along the lines of:



FYI, the CBO used -0.2 elasticity in their analysis (which isn't necessarily wrong, since the study this graph was pulled from was focused slightly differently)

2/20/2014 9:48:18 AM

Terd,

Well, since they are two different policies, I personally wouldn't combine them. But I see what you were getting at.

I also think you make a good point when you say that CBO doesn't know what the distribution of their data looks like looks like. They say there is a 75% chance the employment impact for a $10.10 hike will fall between 0 and 1 million workers. But they can't say what the mean or median point estimate would be (like you point out). That's why the central estimate they report is just a mid-point between the two polls.

But I think the central estimate does have meaning. That meaning is that the economists at the CBO that compiled this report don't really believe that all outcomes between 0 and 1 million jobs lost are equally likely, even if they can't narrow their estimates down further. So they have used the mid-point of 500,000 jobs as a way of conveying that the impact probably won't be zero, but it probably won't be as bad as 1 million jobs lost either. In other words, it is a reflection of their judgement, not an explicit result of their analysis.

At least that is how I interpret it (they don't explicitly state this in the report). This probably wouldn't hold up in a peer-reviewed academic publication, but academics have the luxury of sticking to questions they can answer well. Government economists with tight budgets, poor data, and a demanding client don't have that option.

[Edited on February 20, 2014 at 10:46 AM. Reason : ``]

[Edited on February 20, 2014 at 10:49 AM. Reason : ``]

2/20/2014 10:46:35 AM

^Agree, especially with the CBO often tackling very difficult questions. I want to make it clear that I don't think this is a bad report or even that their estimates are incorrect, just that I think their work is being misrepresented in some important ways.

2/20/2014 11:28:50 AM

The GAP is raising their wages:
http://www.huffingtonpost.com/2014/02/20/gap-minimum-wage_n_4826415.html

2/20/2014 10:01:31 PM

http://www.usatoday.com/story/money/business/2014/06/02/seattle-minimum-wage-vote/9863061/

"Businesses employing more than 500 workers would be required to pay $15 an hour by 2017, or 2018 if health care is offered. Smaller businesses would have five to seven years to phase in the increase. Part of employees' tips and benefits could be applied toward the higher minimum for as long as 11 years."

good experiment to see if they get replaced by robots i guess...

6/3/2014 12:58:03 PM

Saw this on facebook. The problem with its logic is that many in the private sector, and public sector for that matter, also have wages that haven't kept up with inflation. Especially in the last 6 years or so.

6/6/2014 7:38:22 AM

Quote :

"Saw this on facebook. The problem with its logic is that many in the private sector, and public sector for that matter, also have wages that haven't kept up with inflation. Especially in the last 6 years or so."

why would that mean there's a problem with the logic?

6/6/2014 8:39:03 AM