We've had one of these before, but with the dems campaigning on this issue, and with it seemingly having such a large public support, I was recently thinking about this.

Our resident economics superstar Lonesnark has always insisted that it's bad for the economy, and because of this I couldn't fully support it.

But, it does seem like it would more of a good thing.

Oregon has the most liberal minimum wage laws in the country right now (I think...), and if you look for studies to see this effect, the first hit in Google is one from the EPI: http://www.epionline.org/study_detail.cfm?sid=22

I read this, but it was so obviously negatively biased against the hike, and spun in a disingenuous way, it was almost sickening. But, if you scroll down to the bottom, where they report the raw numbers, it does look like overall, it's a good thing.

Does it cause job loss? Yes, but it's a fairly small number (less than 4% of all the affected workers). Also, it does seem that a large group are in fact teenagers and people living with their parents, who don't really need a hike to live, but by far the largest group, a plurality (almost 50%), was people in households making less than $20k/year, and i'm sure these people COULD use the boost in wage. It seems to me, the loss in jobs is worth the big gains for the lowest income workers.

This article is more recent than the EPI "study": http://online.wsj.com/public/article/SB116250968954211912-ulbQAzJn_bfqr5q1NjAS2gGurCU_20071102.html

And it basically reaches the same conclusions I did. There are some issues (particularly with agriculture), but overall Oregon isn't suffering economically from this. It seems the stabilizing factor is that the people this laws benefit are the same people that will have to use the money they are making to buy stuff from the local market. They can't afford to invest it, and they can't afford to travel with it, so it stays around the local area, and helps to offset the increase the businesses are paying to their employees.

1/8/2007 1:22:17 AM

1/8/2007 1:24:21 AM

we discussed this in the "democrats back at it" thread

[Edited on January 8, 2007 at 1:33 AM. Reason : .]

1/8/2007 1:28:13 AM

What about upward pressure on wages in the US economy overall? Think about this: If the minimum--the floor--of wages is higher, then workers earning more than the minimum are moved closer to that floor. Those workers--particularly workers that are represented in collective bargaining--will in turn demand higher wages. Thus, retail costs--and even costs of capital goods--will likely rise, which would obviously create the potential for cooling of the economy.

I will say that--because the minimum wage has not been raised since the Clinton years and many of the lower-end jobs at issue cannot be outsourced--I DO NOT think this particular increase will very damaging to our economy. Some employers will trade up for their money by hiring workers with more skills, but I think this will have a minimal effect.

I, too, am interested in what LoneSnark has to say on the subject. I don't have his level of education or experience with economics--or his charts!

[Edited on January 8, 2007 at 1:51 AM. Reason : .]

1/8/2007 1:49:17 AM

^That seems to be mere speculation though.

What bugs me is that people are speculating that kind of thing, but when you look at real-world situations, it is never as bad as they say.

I'm mostly looking for more information, or better analysis of the data. If what I believe is wrong, why is it wrong?

Union workers are generally a good ways a way in terms of wage from the minimum earners.

And the national retail chains won't have a problem paying the wage increase, because for them, it's an insignificant expense.

It's the small businesses and local restaurants where the price is passed on to the consumer, but according to that second link I posted, people seem to be willing to pay this price (and this may be a result of the fact that they too are being paid more).

The fact is that Oregon hasn't fallen in to economic chaos as a result of the increase. Consumer prices haven't skyrocketed, and businesses haven't shut down. To the contrary, things are going well for them.

The biggest area, as I mentioned, that does seem to be suffering is the smaller and mid-sized farms.

1/8/2007 1:56:37 AM

Historically, moron, what I have posted actually happens--it is NOT simply speculation. In addition, I hold a BS in business administration, and I'll wager that I know more about economics than the average person. That said, did you notice the part of the post in which I clearly indicated that I DO NOT think the raise will be very damaging? I didn't mention this, but I don't think the raise will help very much those workers that it is supposedly intended to help, either.

PS: One more thing, all this is made possible by a "solid if not spectacular" (NPR) US economy. The report referenced Q4 '06.

[Edited on January 8, 2007 at 2:24 AM. Reason : .]

1/8/2007 2:08:50 AM

Historically, when has the cost of goods in general risen due to a forced increase in wages?

I've already acknowledged the restaurant and agriculture rise, but I can't see places like Wal-mart or Best Buy raising prices, not because they can afford it (which they can), but because they won't need to, because most of their employees make a good amount above minimum wage as it is. And the ones that are lower on the ladder are the kids that don't care.

1/8/2007 2:23:27 AM

^ Damn, man! I NEVER said it was a one-to-one effect! I said it was "upward pressure," which pops through in the economy here and there. Hell, you acknowledged as much yourself ("restaurant and agriculture rise"). And add to that list groups of workers that collectively bargain.

Don't kid yourself, the labor unions have been pushing, lobbying, and throwing around major money to raise the minimum wage for years. THEY are the prime mover of this legislation. Think about it: Who has more money for lobbying Congress, poor people or labor unions?

1/8/2007 2:33:08 AM

Why do you keep bringing up the unions?

It doesn't matter if they are the prime motivators, OF COURSE they're going to push stuff that benefits them (just like congress votes itself a pay raise). The majority of groups WOULDN'T vote against the pay raise for themselves.

And I didn't say you said it was a one-to-one comparison. You said that there's historical evidence, and I wanted to know WHAT historical evidence. I assume you're not just saying that to try and trick me. So, WHAT historical evidence were you talking about?

1/8/2007 2:36:30 AM

It never ceases to amaze me that this discussion always immediately deteriorates into cost-benefit analysis on the effect of minimum wages.

By arguing this way, both sides implicitly agree on the most important aspect of it - that the government has the right to fix prices between private parties in a transaction.

It's my labor and I should have the right to sell it as I see fit. Any other arrangement takes away from my rights as an individual, as well as those of my potential employer.

How can we call it freedom when the threat of force is used to ensure that transactions are at a 'just' or 'fair' price determined by an outside, third party?

1/8/2007 3:51:35 AM

^

Quote :

"Few men desire liberty; most men wish only for a just master."

Sallust (Roman historian, c. 40 BC)

I agree. But the current discussion is about what is, not what should be.

1/8/2007 4:05:23 AM

Well, that's a short discussion.

The federal minimum wage is $5.15, though higher in some states that mandate more.

1/8/2007 4:08:26 AM

^^^^

Quote :

"Why do you keep bringing up the unions?"

Quote :

"[Labor unions] push stuff that benefits them. . . . "

You answered your own question.

[Edited on January 8, 2007 at 4:08 AM. Reason : ^]

1/8/2007 4:08:28 AM

^^ And it's a good point against a minimum wage. Hell, if seven or eight dollars is good, why not ten or fifteen dollars? Because even some of the moonbats know that it would hurt the economy--just as some argue the current minimum wage does.

1/8/2007 4:11:54 AM

hahahahaha, I wasn't even arguing anythiing.

I was getting on point with what you said the discussion was. You said the discussion was about what is, not what should be. So I mentioned to everyone what is. And, as shown, that's a short discussion.

Then you continue to argue, in every post, what should be.

1/8/2007 4:14:43 AM

^ GODDAMMIT! I was trying to agree with you! Fuck it.

1/8/2007 4:40:37 AM

Quote :

"Does it cause job loss? Yes, but it's a fairly small number (less than 4% of all the affected workers). Also, it does seem that a large group are in fact teenagers and people living with their parents, who don't really need a hike to live, but by far the largest group, a plurality (almost 50%), was people in households making less than $20k/year, and i'm sure these people COULD use the boost in wage. It seems to me, the loss in jobs is worth the big gains for the lowest income workers."

I'm going to have to remember that 4% is a small number...

Which group of workers does the 4% come out of? The majority of it is going to come from the group which can afford it the least--those with household incomes below $20k. Is it OK that some of those suffer in order that the majority have a chance to be better off?

Unions come into play because many of their collective bargaining agreements are tied to the minimum wage.

Incidently, workers making minimum wage in the state of Oregon make up less than 3% of the state's population.

1/8/2007 9:18:50 AM

Quote :

"Our resident economics superstar Lonesnark has always insisted that it's bad for the economy, and because of this I couldn't fully support it."

It is not "bad for the economy" because all the actors will mitigate the damage by reducing labor inputs and substituting capital inputs.

For example, a recent study in Ohio, I believe, found just such an adjustment in response to the new higher minimum wage. Specifically, it turns out fast-food chains are very good at minimizing labor costs thanks to the use of pre-packaged food (pre-cut fries, pre-shredded lettuce, etc). Therefore, when the minimum wage was raised there was a sizeable increase in employment at fast-food chains. This is because labor-intensive independent restaurants were forced to raise prices more than labor-conserving chain restaurants, and customers bolted.

So, back to the original point, a free economy can adjust to absorb quite a lot of meddling. All in all, the economic impact of the minimum wage hike was minimal as all the business lost by independent restaurants was picked up by chain restaurants. It is actually possible that all this shuffling produced a net-benefit for the economic statistics of the region, since chain stores are less likely to engage in under-the-table deals and thus shifting more economic activity into the view of statistics takers.

No, my objection to the minimum wage is that it is immoral for two reasons: on a civil rights level, as TULIPlovr pointed out, AND on a cost-benefit level. While chain stores were able to fill all the business lost by the independent stores with no loss of economic activity, they did it with absolutely less labor. Those workers had to go somewhere, not all of them found work in the chain stores. And being who they are, fully grown working poor, many do not have permanent addresses, no phone, or were even being paid under-the-table, so unemployment insurance may be unavailable and they will probably not show up on government statistics trying to measure unemployment (which are collected via phone surveys).

Now, I admit this is not a huge number of people. By one estimate, for every 10% raise in the minimum wage employment drops only 1%. So, a $1 raise is a 20% increase so employment will drop 2%. So what? The vast majority of workers are being helped, right? Well, but do we have the right to sacrifice the lives of 2% just to make life more comfortable for 98%? While surviving on a low wage is difficult, it is nothing compared to surviving on no wage at all, which results in homelessness and possible death.

This is why I am a strong advocate of increasing the EITC. There is no question that the EITC results in hard and very measurable economic loss in Government statistics as we are taking money away form the most productive in society and giving it to the least productive. But this is a small price to pay to actually help the poor and is not a potential death sentence for 2% of the same.

1/8/2007 11:07:30 AM

^ agree, over that single person 12k mark taxes take an immediate large chunk... (20-25% state and federal combined)

1/8/2007 12:58:24 PM

dude, the minimum wage has been 5.15 since 1997 or some shit. 5 dollars isn't what it used to be. You can't buy shit on that wage. It's about time they raised that shit. I remember getting paychecks in high school a few years back that couldn't afford much more than gasoline because it was so fucking expensive.

1/8/2007 1:30:46 PM

raising min wage still isnt going to do anything to force companies like walmart to give their employees any benefits

1/8/2007 1:53:02 PM

Why is Walmart always the easy target?

Just as many companies are as bloodthirsty but it's just that Walmart came out on top.

1/8/2007 1:56:18 PM

Quote :

"dude, the minimum wage has been 5.15 since 1997 or some shit. 5 dollars isn't what it used to be. You can't buy shit on that wage"

So do what is rational: Quit and let someone that really needs the job to take it.

This is another reason the EITC is a better idea than a higher minimum wage. A higher minimum wage encourages discouraged workers, such as teenagers, to enter the work force and take jobs away from the disadvantaged. So the poorest among us that didn't lose their job to the higher wage would then lose it to some 16 year old kid.

The EITC appears to the market as a directed wage subsidy. So, those in a poor household get the whole subsidy, turning $5.15 into $6.78 an hour. Meanwhile, teenage dependents that are covered on their parents taxes are stuck with just the $5.15 an hour and thus discouraged from entering the workforce, locking in supply and driving up wages.

1/8/2007 2:08:47 PM

Quote :

"Which group of workers does the 4% come out of? The majority of it is going to come from the group which can afford it the least--those with household incomes below $20k. Is it OK that some of those suffer in order that the majority have a chance to be better off? "

You're right that just by the numbers, most of the unemployment comes from the low income households, but that's because it's mostly low income households that make up minimum wage workers.

But, as a percentage of income brackets, it's a pretty close to 3% of each income bracket that is going to lose jobs, from the actually poor families to the teenagers to the housewives that work minimum wage jobs.

The opposite spin is that it's also mostly the lowest workers that are helped by the minimum wage increase. The other 93% of the households in the income brackets where both members are in the minimum wage field will get a very direct boost to their income.

Quote :

"Now, I admit this is not a huge number of people. By one estimate, for every 10% raise in the minimum wage employment drops only 1%. So, a $1 raise is a 20% increase so employment will drop 2%. So what? The vast majority of workers are being helped, right? Well, but do we have the right to sacrifice the lives of 2% just to make life more comfortable for 98%? While surviving on a low wage is difficult, it is nothing compared to surviving on no wage at all, which results in homelessness and possible death. "

That's a good argument I think, but choosing a position on that would seem to necessitate having to have a certain view on other political issues where certain people are sacrificed for the good of the many. Gov. policy routinely neglects certain groups for the betterment of others, and the min. wage increase seems like one of the least offensive implementations of that type of policy.

Quote :

"This is why I am a strong advocate of increasing the EITC. There is no question that the EITC results in hard and very measurable economic loss in Government statistics as we are taking money away form the most productive in society and giving it to the least productive. But this is a small price to pay to actually help the poor and is not a potential death sentence for 2% of the same."

The increase of the EITC sounds like a good idea too, but this seems like something that conservatives would generally be against under the premise of "OMG INCOME REDISTRIBUTION!!@!121." But, it would account well for the issues with agriculture, and if modified appropriately, provide just as much a boost as a minimum wage hike would provide. But, if it is only received after someone gets their tax return, it still doesn't do too much to help those poorer households, who usually need the money immediately.

1/8/2007 2:27:19 PM

Quote :

"Just as many companies are as bloodthirsty but it's just that Walmart came out on top"

well they are worth $189 billion as of March 2006...the largest retail company in the world...13th largest company...only larger companies are banks, insurance and oil companies...IIRC they pay their employees probably double minimum wage, but they dont give any benefits...which would completely go along with my point if I am correct

1/8/2007 3:09:48 PM

^ correct they should give benefits...

1/8/2007 3:13:31 PM

Quote :

"That's a good argument I think, but choosing a position on that would seem to necessitate having to have a certain view on other political issues where certain people are sacrificed for the good of the many."

Well, that is the question, is it morally right to do this? Economics cannot answer that question, it can only give you a list of effects, it is up to all of us to choose which list we prefer. And as Thomas Robert Malthus explained in the 18th century and I choose to believe, the only help the poor actually need from Government is secure economic rights to property and contracts, both of which are violated by the minimum wage.

Quote :

"But, if it is only received after someone gets their tax return, it still doesn't do too much to help those poorer households, who usually need the money immediately."

Remember how the government withholds from your salary every pay-check? Well, the IRS will do the reverse with the EITC for those that need it. What it does is give you the estimated amount based on last years tax return. If they over-pay or under-pay you will repay/refund.

[Edited on January 8, 2007 at 3:24 PM. Reason : .,.]

1/8/2007 3:21:37 PM

^ again agree, the best government is one not too involved.... imho

1/8/2007 3:22:50 PM

Quote :

"You're right that just by the numbers, most of the unemployment comes from the low income households, but that's because it's mostly low income households that make up minimum wage workers."

By majority I meant that a disproportionate percentage will come from the low income households. All of those households are already (or should aready be) working. With a higher minimum wage, those same low income households will be competing with a larger number of teenagers/housewives/college students/parentcanpays/second jobbers/etc.

An increase in minimum wage isn't going to entice low income workers to enter the market. It entices those who don't have to work to enter the market and compete with those who do have to work. This is what LoneSnark has been saying.

1/8/2007 4:19:15 PM

unless it was raised to such a point where people could work 40 hours and afford to live instead of 60 hours per week.

now, there are a lot of assumptions in that comment that Lone wont agree with, but it is possible.

1/8/2007 5:48:22 PM

^x5 Concerning the loss of health-care and even some other benefits, that is the trend. Some argue that businesses should not provide health-care and retirement benefits, that those services should be purchased by individuals (or groups of individuals) in the market. I mean, you don't ask your employer to pay your car insurance, why do you ask your employer to pay your medical insurance? Answer: Tradition, mostly, and competition for workers.

1/8/2007 6:54:12 PM

my employer pays for my car and medical insurance (with deductible of course)

ftw

[Edited on January 8, 2007 at 7:02 PM. Reason : .]

1/8/2007 7:02:03 PM

^ Great negotiation.

1/8/2007 7:06:43 PM

then again i have a college degree and have certain skills; i dont work at friggin walmart

1/8/2007 7:09:31 PM

Quote :

"unless it was raised to such a point where people could work 40 hours and afford to live instead of 60 hours per week. now, there are a lot of assumptions in that comment that Lone wont agree with, but it is possible."

Oh, but it more than possible, it is has even been measured! There is a swath of this nation's poor which are re-enacting the ancient trend called "the Iron Law of Wages." This section of the population was first noticed and written about back in 1975 with the first inception of the EITC when it was noticed that the EITC actually resulted in lower hours worked among a percentage of those eligible which was not shared by peers. Once noticed, of course, economists were able to go back and look at old data involving other government assistance programs to notice a similar effect.

It seems there is a section of the population that wants a minimalist standard of living and works only enough hours to secure it. Therefore, if you double their wage, either by getting a raise or from Government subsidy, then they will work half as many hours. This led to theories that we could manage the low-wage market through the minimum wage because even if a higher wage reduces the demand for labor from business it will also reduce the supply of labor as, given a higher wage, some workers work fewer hours.

But this effect has already been studied and is simply not a large enough percentage of the minimum wage crowd to counteract the reduced demand for labor from business. The rest of the minimum wage labor market, made up of middle-class second earners such as teenagers and spouses, tend to pick their desired hours and then let the wage determine their expectations.

1/8/2007 7:50:16 PM

^Reagan was wrong about everything else. Why do we assume he was right about poor people being lazy?

1/8/2007 9:24:24 PM

Are you trolling?


Or are you just being dumb?

My money is on trolling, but I'll at least give you the benefit of the doubt.

[Edited on January 8, 2007 at 9:51 PM. Reason : ]

1/8/2007 9:50:39 PM

What does anything I wrote have to do with either Reagan or laziness?

Is it laziness to not only want to support your family but also spend time with it? Besides, I thought that was what you were referring to: a string of papers suggesting a higher minimum wage would actually reduce unemployment by reducing the hours worked and therefore the supply of workers?

1/8/2007 9:54:26 PM

Probably the same reason we're supposed to believe someone who thought food production wouldn't be able to keep up with exponential population growth (in reference to Malthus).

It seems that most everyone in this thread thinks that a price floor on labor will create a labor surplus. This would only be the case in a perfectly competitive market, the unskilled labor market tends to be riddled with buyer market power as only large corporations can support such a disproportionate ratio of skilled to unskilled labor.

1/8/2007 9:54:35 PM

Yea, Kris is here. Suddenly all economic theory and historical experience is worthless, all that matters is markets=bad, government=good

1/8/2007 10:35:04 PM

You want to talk economic theory? Everytime I try to with you, you just start misinterpreting some unrelated study.

I never said all markets were bad or that all government intervention is good, but there are flaws in the free market, and thus there is a time and a place where the government must pick up the slack and adjust for these.

1/8/2007 10:46:03 PM

http://www.irs.gov/individuals/article/0,,id=96406,00.html

Quote :

"When the EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit."

I'm glad I read this - I had previously not read any research which suggested alternatives to an increase in minimum wage.

Loneshark, what is your analysis as to the effect of this scenario (where tax filers who meet conditions where the EITC will give them money beyond what they earned)?

Depending on the amount of EITC extra income earned I can imagine this might have some very odd effects on wages.

For instance if Company A is paying 5.15 an hour and a worker there would actually be making 5.25 an hour, another Company B which would competively be able to pay 5.25 an hour would probably be forced to increase their wage.

1/8/2007 11:03:05 PM

^^ What is it to imply that a market that could not possibly be more competitive (tens of thousands of competitors) is "riddled with buyer market power"?

You can argue workers have too much difficulty finding out what other employers are willing to pay, but the solution is more page space in the want-ads of the newspaper, not wage regulation.

^ could you rephrase your question? The results of the EITC are quite intentional: low-wage individuals capable of declaring income get a check from the government. It is a strong incentive to work and a wealth transfer to those most in need without any negative effects beyond the taxation and administrative overhead.

[Edited on January 8, 2007 at 11:07 PM. Reason : .,.]

1/8/2007 11:03:37 PM

The late great Milton Friedman wrote:

"The government first provides schools in which many young people, disproportionately black, are educated so poorly that they do not have the skills that would enable them to get good wages.
It then penalizes them a second time by preventing them from offering to work for low wages as a means of inducing employers to give them on-the-job training. All this in the name of helping the poor"

Higher min. wages means less people on the payroll. Is it better to have these people unemployed or employed at low wages?

1/8/2007 11:11:11 PM

^^ I did some further reading on the EITC and I believe I answered my question, thanks

I basically figure the answer to the question I'm not explaining well is that the number of people and thus employers which it would affect are almost negligible.

[Edited on January 8, 2007 at 11:31 PM. Reason : .]

1/8/2007 11:30:19 PM

Not entirely true. Any individual earning less than $13k a year will get something from the EITC, even if it isn't larger than his tax obligation.

1/9/2007 12:16:57 AM

Quote :

"What is it to imply that a market that could not possibly be more competitive (tens of thousands of competitors) is "riddled with buyer market power"?"

People without relibale transportation don't have a lot of options with employers, even still, most large employers of minimium wage are large retail chains.

Quote :

"You can argue workers have too much difficulty finding out what other employers are willing to pay, but the solution is more page space in the want-ads of the newspaper, not wage regulation."

It's not that they have difficulty finding what other employers pay, they all pay the same, the problem is that it isn't really possible for unskilled workers out of work to unionize to push for adequate wages.

Quote :

"Higher min. wages means less people on the payroll. Is it better to have these people unemployed or employed at low wages?"

That's not neccesarily true, it is possible to raise the price for labor without affecting the amount demanded in a market that isn't perfectly competitive.

1/9/2007 12:34:53 AM

Quote :

"the problem is that it isn't really possible for unskilled workers out of work to unionize to push for adequate wages"

Which would be counter productive in a market which could not possibly be any more competitive (tens of thousands of competitors).

Quote :

"even still, most large employers of minimium wage are large retail chains."

Completely untrue. Not even an entry-level stocker at walmart earns $5.15 an hour. The bulk of minimum wage employers work in small establishments such as gas stations, restaurants, and service providers where managers can keep an eye on the workers, eliminating the "autonomy" premium paid by large employers.

Quote :

"That's not neccesarily true, it is possible to raise the price for labor without affecting the amount demanded in a market that isn't perfectly competitive."

Which is obviously not the case when there are tens of thousands of competitors within a bus ride of each other.

[Edited on January 9, 2007 at 1:36 AM. Reason : .,.]

1/9/2007 1:35:59 AM

From New York Time's columnist, Bob Herbert...

Quote :

"Working Harder for the Man January 8, 2007 By BOB HERBERT Robert L. Nardelli, the chairman and chief executive of Home Depot, began the new year with a pink slip and a golden parachute. The company handed him a breathtaking $210 million to take a hike. What would he have been worth if he’d done a good job? Data recently compiled by the Center for Labor Market Studies at Northeastern University in Boston offers a startling look at just how out of whack executive compensation has become. Some of the Wall Street Christmas bonuses last month were fabulous enough to resurrect an adult’s belief in Santa Claus. Morgan Stanley’s John Mack got stock and options worth in excess of $40 million. Lloyd Blankfein at Goldman Sachs did even better — $53.4 million. According to the center’s director, Andrew Sum, the top five Wall Street firms (Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch and Morgan Stanley) were expected to award an estimated $36 billion to $44 billion worth of bonuses to their 173,000 employees, an average of between $208,000 and $254,000, “with the bulk of the gains accruing to the top 1,000 or so highest-paid managers.” Now consider what’s been happening to the bulk of the American population, the ordinary men and women who have to work for a living somewhere below the stratosphere of the top corporate executives. Between 2000 and 2006, labor productivity in the nonfarm sector of the economy rose by an impressive 18 percent. But workers were not paid for that impressive effort. During that period, according to Mr. Sum, the inflation-adjusted weekly wages of workers increased by just 1 percent. That’s $3.20 a week. As Mr. Sum wryly observed, that won’t even buy you a six-pack of Bud Light. Joe Six-Pack has been downsized. Three bucks ain’t what it used to be. There are 93 million production and nonsupervisory workers (exclusive of farmworkers) in the U.S. Their combined real annual earnings from 2000 to 2006 rose by $15.4 billion, which is less than half of the combined bonuses awarded by the five Wall Street firms for just one year. “Just these bonuses — for one year — overwhelmingly exceed all the pay increases received by these workers over the entire six-year period,” said Mr. Sum. In a development described by Mr. Sum as “quite stark and rather bleak for the economic well-being of the average worker,” the once strong link between productivity gains and real wage increases has been severed. The mystery to me is why workers aren’t more scandalized. If your productivity increases by 18 percent and your pay goes up by 1 percent, you’ve been dealt a hand full of jokers in a game in which jokers aren’t wild. Workers have received some modest increases in benefits over the past six years, but most of the money from their productivity gains — by far, it’s not even a close call — has gone into profits and the salaries of top executives. Fairness plays no role in this system. The corporate elite control it, and they have turned it to their ends. Mr. Sum, a longtime expert on the economic life of the American worker, said he is astonished at the degree to which ordinary workers have been shortchanged over the past several years. “Productivity has been exceptional,” he said. “And for most of my life, the way to get wages up was to be more productive. That’s how our economy was supposed to work.” The productivity gains in the go-go decades that followed World War II were broadly shared, and the result was a dramatic, sustained increase in the quality of life for most Americans. Nowadays workers have to be more productive just to maintain their economic status quo. Productivity gains are no longer broadly shared. They’re barely shared at all. The pervasive unfairness in the way the great wealth of the United States is distributed should be seen for what it is, an insidious disease eating away at the structure of the society and undermining its future. The middle class is hurting, propped up by the wobbly crutches of personal debt. The safety net, not just for the poor, but for the middle class as well, is disappearing. The savings rate has dropped to below zero, and more Americans are filing for bankruptcy than for divorce. Your pension? Don’t ask. There’s a reason why the power elite get bent out of shape at the merest mention of a class conflict in the U.S. The fear is that the cringing majority that has taken it on the chin for so long will wise up and begin to fight back."

1/9/2007 9:04:14 AM

Quote :

"Which would be counter productive in a market which could not possibly be any more competitive (tens of thousands of competitors)."

They don't have tens of thousands of competitors. You've got the nearby fast food and retail stores, a few resturants, and that's it.

Quote :

"Not even an entry-level stocker at walmart earns $5.15 an hour."

Not according to http://www.amazon.com/exec/obidos/ISBN=0805063897/

Quote :

"The bulk of minimum wage employers work in small establishments such as gas stations"

It doesn't take more than one employee at most gas stations, so they must be skilled enough to work alone. You'll be hard pressed to find unskilled or minimium wage workers in gas stations.

Quote :

"Which is obviously not the case when there are tens of thousands of competitors within a bus ride of each other."

This wouldn't be the case in a large city, much less anywhere else.

1/9/2007 9:14:33 AM