minimum wage hikes(follow-up)...not so good

[PBRme]

This is a really simplistic way of viewing Milton Friedman or the way he looked at the world. Sort of Paul Ryan's view of economics.

If you read "Free to Choose" that is exactly the view to which Milton Friedman would subscribe.

In spite of your glib and unsupported statement.

[ATL MU Warrior]

IMO, the evidence shows that socialism does no better for its poor than does capitalism - other than giving them more company. And just as in capitalism, the elites/rich do great - only there' fewer of them. The best thing about capitalism for its citizens? There's mobility for the lower and middle classes - one's economic status is not determined at birth.

Isn't this really the crux of the issue?  Some people still believe this to be true and to those folks, everything going on in the country is some normal part of our great capitalistic society.  Winners and losers and all that.

Others are worried that it is no longer true and want to use government as a way to help those stuck in the lower class, mostly (they believe) through no/little fault of their own. 

I don't know who's right and I'm sure (like in anything else) we could all find all sorts of studies to confirm our own personal viewpoint. 

[Lennys Tap]

This is a really simplistic way of viewing Milton Friedman or the way he looked at the world. Sort of Paul Ryan's view of economics.

You're absolutely, positively wrong about Friedman. Not surprising.

[B. McBannerson]

The problem with that study is you can find other reputable studies that show something different. You also cannot take anything away from their conclusions is they do not know the source of the actual problems they define, and if it is even the minimum wage increase.

It may be just another study, but found it remarkable it was done by University of Washington, commented on by the Washington Post, and if the article was read, backed as very credible by MIT.  That is why it has received the coverage it has, even in left of center periodicals.

What struck me is wages go up, which is not surprising.  However, total take home pay goes down, which is also not surprising.  A business has to make money to survive.

Those that challenge this notion here, where a fixed cost (labor) rises unfettered by a gov't action without the ability to recoup those costs in a market environment (raising prices suppresses demand), leads me to believe those individuals have never had to meet a payroll, owned a business.  Merely my opinion.

[warriorchick]

I'm aware that this exists, but I don't believe your statement of "the majority" is correct.

And I'm not sure what industry this is, but if it is factory work, it is shameful to be paying $15 an hour for a union job.

The Institute of Tax and Economic Policy, which is a non-partisan group, cites several studies that estimate that between 50 and 75 percent of illegal immigrants pay federal and state income tax through payroll deductions. That means they are not being paid "under the table".

https://itep.org/wp-content/uploads/immigration2017.pdf

And the job I was talking about wasn't a factory job, but it was a job that literally required no skills that any able-bodied person doesn't possess.  And at the time, $15 an hour was more than 2.5 times the minimum wage.  Add the benefits and it was closer to 4 times the minimum wage.

And if any union wage can be described as "shameful", isn't that on the union, not the employer?

[Jay Bee]

I wrote it in response to JB saying that all companies take care of their lower-level employees wonderfully. He KNOWS that isn't true, and I used an anecdote to show it.

It's like saying that we don't need environmental regulation because all companies would be good stewards to the environment.

You are free to have bad beliefs and silly opinions, but please refrain from lying about what I said. “All companies” is not true – you are lying about what I said.

Sorry you let yourself get gypped at your ball washing job, but that has nothing to do with the topic at hand.

I’ll give you a story as well. As a teen I work at McDonald’s. I got a raise. They wrote the amount on a form. I asked for a copy. They paid me the appropriate amount going forward. If they had not, I would have demanded it back.

You also entered into a contract for a certain pay rate (verbal, apparently.. not always the best idea, but still sounds like you have a valid contract). You could have demanded it back.

There was legal relief available to you as well. That’s where government and/or courts can come into play – enforcement of contracts. Those rules exist to protect all parties. It’s not a perfect system, but is far better than handcuffing and strong arming businesses to pay some arbitrary minimum.

[mu03eng]

I hadn't thought about all that, mu03. Very deep stuff. Some of it is troubling, but I'm not as high on states' rights as some are. The states have gotten an awful lot wrong! (But of course, so have the feds. It's a debate that will never end.)

But yeah, look at the out-of-state money that comes into so many state elections now. We had local judge elections getting campaign money from thousands of miles away in 2016!

I don't see how one turns the clock back on this, um, "progress," for better or worse. Almost surely worse.

Absolutely, states get stuff wrong all the time, but that's the beauty of the system, other states can learn lessons (good and bad) and approach a problem in their own way to achieve success.

This is ultimately why I have a big issue with the idea that Romneycare means Obamacare should be acceptable, etc. Romneycare probably worked for Massachusetts but that's also largely because it was law crafted for the unique characteristics of Massachusetts. Transporting that (I know they didn't literally do that but you get my point) to the federal level won't work because the demographics and culture of Massachusetts is going to be different then California or New Mexico or Mississippi.

One of the funny things(not haha funny but ironic funny) is that right now, fully one-third of US citizens are on some form of government health insurance (Medicare or Medicaid), I even found an article that indicates that half of all health insurance is government-based (though I'm dubious of the source). Let's assume the 1/3 number is more accurate....if the healthcare system is broken or not working then those programs have to be at least partially responsible for the break, however reforming or changing those programs seems to be a non-starter.

There is no doubt those programs provide a necessary service (I have nephews that receive necessary care from programs supported by medicaid that would otherwise be unavailable) however, they have somehow transformed from providing extraordinary care to providing standard care which reduces the effectiveness of the overall system. So for every kid that needs services for say autism there are adults who are using it for standard healthcare delivery for various reasons. This trajectory is unsustainable.


http://www.cnsnews.com/news/article/medicaid-and-medicare-enrollees-now-outnumber-full-time-private-sector-workers

[mu03eng]

Isn't this really the crux of the issue?  Some people still believe this to be true and to those folks, everything going on in the country is some normal part of our great capitalistic society.  Winners and losers and all that.

Others are worried that it is no longer true and want to use government as a way to help those stuck in the lower class, mostly (they believe) through no/little fault of their own. 

I don't know who's right and I'm sure (like in anything else) we could all find all sorts of studies to confirm our own personal viewpoint.

Part of the issue is that government policy from the Obama administration was directly responsible for the widening gap between the haves and have nots. Fiscal policy was created that floated the stock market and changed pay rules for executives to focus it on long range growth.....as a result the executives have more financial benefit from a bull market and the poor have limited to no access to the wealth "generation" from the stock market. I'm not arguing whether this was intended or not (and it's continued in the Trump administration) My point is that government policies has directly led to the disparity but that disparity was than point to as an issue by the very people that created it.

The law of unintended consequences has never been more proven or demonstrated than in the last 10 years.   

[MUBurrow]

One of the funny things(not haha funny but ironic funny) is that right now, fully one-third of US citizens are on some form of government health insurance (Medicare or Medicaid), I even found an article that indicates that half of all health insurance is government-based (though I'm dubious of the source). Let's assume the 1/3 number is more accurate....if the healthcare system is broken or not working then those programs have to be at least partially responsible for the break, however reforming or changing those programs seems to be a non-starter.

There is no doubt those programs provide a necessary service (I have nephews that receive necessary care from programs supported by medicaid that would otherwise be unavailable) however, they have somehow transformed from providing extraordinary care to providing standard care which reduces the effectiveness of the overall system. So for every kid that needs services for say autism there are adults who are using it for standard healthcare delivery for various reasons. This trajectory is unsustrightble.

For me, the overwhelming popularity of Medicare and Medicaid highlights how disingenuous it is for us to claim that "free markets" really have much, if anything, to do with our end goals on health care. Its okay for us to admit sometimes that we don't like the results that an actual "free market" would give us in certain sectors, and then craft a solution accordingly (and maybe with a bit less moralistic burden to swallow what the invisible hand gives us). In health care, that's due to what we societally deem an unacceptable result of the free market have-nots, e.g., we're not willing to live in a country where children would commonly die for want of health care. And that's good! And I don't think we should have to feel Catholic guilt because we interfered in the "free market" for health care services to craft our desired result. 

We do this all the time, and I just wish we would admit it more and not feel so tethered to lusting after a poor approximation of a "free market." Energy is another good example. That's a market dominated by a few enormous natural resource-mining energy companies wherein the barriers to entry and market control have all but eroded any resemblance to a free market. Then on the local level, we use government-sanctioned monopolies. Energy is not a free market. And this is without speaking to the supply-side subsidies throughout the whole chain. But then when we begin to talk about renewable energy, for some reason, the conversation switches to "an inability to compete in the free market." That market is anything but free, and if you required the current players to internalize all of their externalities, whether pollution or subsidies or governmental protection (e.g. proposed taxes for folks with solar panels to subsidize grid maintenance), the conversation would be a lot different. And hell, maybe renewables would still lose - but at least then we'd be having an academically honest conversation.

[Pakuni]

For me, the overwhelming popularity of Medicare and Medicaid highlights how disingenuous it is for us to claim that "free markets" really have much, if anything, to do with our end goals on health care. Its okay for us to admit sometimes that we don't like the results that an actual "free market" would give us in certain sectors, and then craft a solution accordingly (and maybe with a bit less moralistic burden to swallow what the invisible hand gives us). In health care, that's due to what we societally deem an unacceptable result of the free market have-nots, e.g., we're not willing to live in a country where children would commonly die for want of health care. And that's good! And I don't think we should have to feel Catholic guilt because we interfered in the "free market" for health care services to craft our desired result. 

We do this all the time, and I just wish we would admit it more and not feel so tethered to lusting after a poor approximation of a "free market." Energy is another good example. That's a market dominated by a few enormous natural resource-mining energy companies wherein the barriers to entry and market control have all but eroded any resemblance to a free market. Then on the local level, we use government-sanctioned monopolies. Energy is not a free market. And this is without speaking to the supply-side subsidies throughout the whole chain. But then when we begin to talk about renewable energy, for some reason, the conversation switches to "an inability to compete in the free market." That market is anything but free, and if you required the current players to internalize all of their externalities, whether pollution or subsidies or governmental protection (e.g. proposed taxes for folks with solar panels to subsidize grid maintenance), the conversation would be a lot different. And hell, maybe renewables would still lose - but at least then we'd be having an academically honest conversation.

This is so true.
The reality is, nobody really wants free markets. This is true, perhaps especially so, of the capitalist titans of industry who proclaim their love of free markets but would collectively poop their Brooks Brothers suit pants if we got rid of their tax credits, tax-sharing agreements, property assessment discounts, TIF districts, research grants, etc., etc. They want truly free markets no more than Bernie Sanders. They just want the market rigged in a different direction.

What's maddening is how often this is portrayed - including here sometimes - as an either/or proposition. As in, either you're a free marketers or you're a socialist. the reality is most people - and the vast majority of Western governments - blend the two. 

[mu_hilltopper]

This might have been posted .. relevant:

Minimum wage set to drop in Missouri
http://www.stltoday.com/news/local/govt-and-politics/st-louis-minimum-wage-will-revert-back-to-in-august/article_0428b488-d4e2-5778-895b-f44ad92cc65a.html

[mu_hilltopper]

Stolen from reddit .. I found this interesting:


A few facts worth mentioning in any minimum wage article:
-When the minimum wage was first enacted in 1938, it would make you 80% of the GDP per capita and only a few years later increased to 90%, the equivalent of $24 an hour in today's economy.
-Between then and the early 1970s, it stayed above 70% of GDP per capita, the equivalent of $18.60 an hour nearly every year.
-The minimum wage was raised significantly by every president, Republican and Democrat from '38 to '81.
-The US minimum wage was a living wage every year from '38 until some time in the late '80s, and no serious political candidate would have suggested it shouldn't be until Reagan.
-Every year that the minimum wage is not increased, it effectively drops by about 2% in purchasing power.
-As a percent of GDP per capita, over 70% of employed Americans now make less than the New Deal era minimum wage... even just adjusted for CPI inflation that figure is over 40% makes less than the 1968 minimum wage.
-Entry level wages still are that high (or fairly close to it) all over the rest of the developed world.
-The US has one of the lowest minimum wages as a percent of GDP per capita in the entire world, including the developing world, lower than places like India.

https://www.reddit.com/r/news/comments/6llqoi/st_louis_will_drop_minimum_wage_from_10_to_770/djux9ck/

[mu03eng]

For me, the overwhelming popularity of Medicare and Medicaid highlights how disingenuous it is for us to claim that "free markets" really have much, if anything, to do with our end goals on health care.

So because people like getting "free" stuff that means we don't believe in free markets? Quite frankly, our problem with healthcare is that no one actually understands what the end goals are. Healthcare is almost talked about in political terms and not in terms that actually are about health and/or care.

[MU82]

You are free to have bad beliefs and silly opinions, but please refrain from lying about what I said. “All companies” is not true – you are lying about what I said.

You said:

Companies do a great job of placing decent value on low-level employees, but have to deal with the gov't as well, unfortunately.

I responded with:

You should have started your post with: "High-quality, moral, fair-minded companies ... "

Then I would have agreed with you. Unfortunately, many companies try to get away with whatever they can.

I won't say it's all or even the majority, just as you shouldn't have suggested that all companies do a "great job."


I then went into my anecdote, which you dismissed with a wave of your hand, as you like to do.

pathetic story about a thief. We're talking about a company having the right to offer whatever pay they like, and potential employees deciding if they are agreeable to it or not.

Your total refusal to accept that any company could do the opposite what you claimed was, IMHO, you implying that "all companies do a great job ... "

And now you have taken umbrage with that.

So either you are acknowledging that companies sometimes intentionally screw their lower-level employees (which I guess would make you a "liar" in your first post) ... or you are doubling-down while also falling back on pathetic name-calling tactics.

And we haven't even gotten around to defining "decent value" yet! I'm guessing you have a different definition of it than a minimum-wage worker might.

Have a nice day!

[warriorchick]

Stolen from reddit .. I found this interesting:


A few facts worth mentioning in any minimum wage article:
-When the minimum wage was first enacted in 1938, it would make you 80% of the GDP per capita and only a few years later increased to 90%, the equivalent of $24 an hour in today's economy.
-Between then and the early 1970s, it stayed above 70% of GDP per capita, the equivalent of $18.60 an hour nearly every year.
-The minimum wage was raised significantly by every president, Republican and Democrat from '38 to '81.
-The US minimum wage was a living wage every year from '38 until some time in the late '80s, and no serious political candidate would have suggested it shouldn't be until Reagan.
-Every year that the minimum wage is not increased, it effectively drops by about 2% in purchasing power.
-As a percent of GDP per capita, over 70% of employed Americans now make less than the New Deal era minimum wage... even just adjusted for CPI inflation that figure is over 40% makes less than the 1968 minimum wage.
-Entry level wages still are that high (or fairly close to it) all over the rest of the developed world.
-The US has one of the lowest minimum wages as a percent of GDP per capita in the entire world, including the developing world, lower than places like India.

https://www.reddit.com/r/news/comments/6llqoi/st_louis_will_drop_minimum_wage_from_10_to_770/djux9ck/

I am not sure GDP per capita is the proper way to analyze the minimum wage.  1938 was during the Great Depression.  Of course the GDP was in the crapper.  And do you really advocate that minimum wage should be $24 an hour? Perhaps it's a way to measure wealth distribution, but not necessarily whether a minimum wage rate is appropriate.

Perhaps we should use inflation to analyze it The minimum wage in 1938 was 25 cents an hour.  That's about $4.25 in today's dollars.  Yes, that's low, but hey, statistics.

[TAMU, Knower of Ball]

No government has ever truly been capitalistic (or communist for that matter).   They have all been varying degrees of socialist. The demonization of socialism has always been amusing to me. As Pakuni said,  no one actually wants truly free markets.

My economic views are much more conservative than my social views (not saying that much).  The question for me has always been about whether it's better to inconvenience many to stop the abuse of a few. I do believe that most companies are moral entities that treat their employees fairly.  But there are some that commit abuses and because there isn't as much social mobility as people think,  the disadvantaged who work for them are forced to deal with it.

Take the FLSA update that almost went through.  It inconvenienced people in my office. The update would have put restrictions unwanted by those it was designed to help.  For example,  my office said employees would no longer be able to have email connected to their phones because if they were checking email after hours they would need to pay them for that. That was obnoxious and slowed our productivity. But I recognize that in the fast food industry for example,  there are workers who are forced to work 80 hour weeks with no overtime pay. Is the inconvenience of people in my office (and others like them)  worth the abuse others go through? I don't have a good answer. In general,  I'm a fan of state governments figuring out economic issues. They are just more likely to know what is sustainable in their state.

[Lennys Tap]

This is so true.
The reality is, nobody really wants free markets. This is true, perhaps especially so, of the capitalist titans of industry who proclaim their love of free markets but would collectively poop their Brooks Brothers suit pants if we got rid of their tax credits, tax-sharing agreements, property assessment discounts, TIF districts, research grants, etc., etc. They want truly free markets no more than Bernie Sanders. They just want the market rigged in a different direction.

What's maddening is how often this is portrayed - including here sometimes - as an either/or proposition. As in, either you're a free marketers or you're a socialist. the reality is most people - and the vast majority of Western governments - blend the two.

The reality is not that "nobody wants free markets". The reality is that big business, big labor, etc., (any big special interest group) doesn't want free markets. They want special treatment. Governments don't want free markets, either. They interfere with what government's desire to expand and consolidate their power. The result of the unholy alliance is, as you point out, a blend - free markets and individual freedom, to a greater or lesser extent, are the losers in that blend.

[GGGG]

The reality is not that "nobody wants free markets". The reality is that big business, big labor, etc., (any big special interest group) doesn't want free markets. They want special treatment. Governments don't want free markets, either. They interfere with what government's desire to expand and consolidate their power. The result of the unholy alliance is, as you point out, a blend - free markets and individual freedom, to a greater or lesser extent, are the losers in that blend.

Most individuals don't want free market either.  They wants their social security, Medicare, etc.  They want government regulation of safety, food, etc.

[MUBurrow]

The reality is not that "nobody wants free markets". The reality is that big business, big labor, etc., (any big special interest group) doesn't want free markets. They want special treatment. Governments don't want free markets, either. They interfere with what government's desire to expand and consolidate their power. The result of the unholy alliance is, as you point out, a blend - free markets and individual freedom, to a greater or lesser extent, are the losers in that blend.

See what frustrates me is that this isn't the binary you're making it out to be. This "either you love free markets or you want special treatment" at best ignores the consequences of a truly free market. Here is what I find to be a particularly prescient Adam Smith quote: "Wherever there is great property, there is great inequality... for one very rich man, there must be at least five hundred poor."

Is that truly what we want to strive toward? A world with 20 rich men and 10,000 poor? By putting ourselves into this binary of "either you want freedom or you back government's desire to expand and consolidate its power" we're boiling our options down to either being a commie or looking around at a disappearing middle class, wage stagnation for a vast majority of earners and continuous wealth consolidation in a smaller and small minority and saying "well, I guess that's just the consequences of loving freedom." We have more nuanced choices than that, and we all suffer by automatically demonizing the right leaning, who want to approximate free markets as closely as possible, as uncaring and solely self-interested or the left-leaning as lazy or anti-freedom.

[MU Fan in Connecticut]

See what frustrates me is that this isn't the binary you're making it out to be. This "either you love free markets or you want special treatment" at best ignores the consequences of a truly free market. Here is what I find to be a particularly prescient Adam Smith quote: "Wherever there is great property, there is great inequality... for one very rich man, there must be at least five hundred poor."

Is that truly what we want to strive toward? A world with 20 rich men and 10,000 poor? By putting ourselves into this binary of "either you want freedom or you back government's desire to expand and consolidate its power" we're boiling our options down to either being a commie or looking around at a disappearing middle class, wage stagnation for a vast majority of earners and continuous wealth consolidation in a smaller and small minority and saying "well, I guess that's just the consequences of loving freedom." We have more nuanced choices than that, and we all suffer by automatically demonizing the right leaning, who want to approximate free markets as closely as possible, as uncaring and solely self-interested or the left-leaning as lazy or anti-freedom.

I just read this yesterday in the print edition. 
It seems to be right on your point. 

The Conservative Case for Unions
How a new kind of labor organization could address the grievances underlying populist anger

JONATHAN RAUCH  JULY/AUGUST 2017 ISSUE 

https://www.theatlantic.com/magazine/archive/2017/07/the-conservative-case-for-unions/528708/

[Pakuni]

The reality is not that "nobody wants free markets". The reality is that big business, big labor, etc., (any big special interest group) doesn't want free markets. They want special treatment. Governments don't want free markets, either. They interfere with what government's desire to expand and consolidate their power. The result of the unholy alliance is, as you point out, a blend - free markets and individual freedom, to a greater or lesser extent, are the losers in that blend.

I suspect that most people who claim they want truly free markets either are blissfully unaware or willfully ignorant of the implications of truly free markets.

[Lennys Tap]

See what frustrates me is that this isn't the binary you're making it out to be. This "either you love free markets or you want special treatment" at best ignores the consequences of a truly free market. Here is what I find to be a particularly prescient Adam Smith quote: "Wherever there is great property, there is great inequality... for one very rich man, there must be at least five hundred poor."

Is that truly what we want to strive toward? A world with 20 rich men and 10,000 poor? By putting ourselves into this binary of "either you want freedom or you back government's desire to expand and consolidate its power" we're boiling our options down to either being a commie or looking around at a disappearing middle class, wage stagnation for a vast majority of earners and continuous wealth consolidation in a smaller and small minority and saying "well, I guess that's just the consequences of loving freedom." We have more nuanced choices than that, and we all suffer by automatically demonizing the right leaning, who want to approximate free markets as closely as possible, as uncaring and solely self-interested or the left-leaning as lazy or anti-freedom.

I don't want to demonize anyone - but it's my opinion that those who ascribe to the Friedman philosophy are better student of history. Pre free markets, poverty and suffering were the norms. They are still the norms in areas untouched by or rejecting of free market principles.

We'll never see a perfect solution for the human condition, but individual freedoms + a market economy produces much better results than any alternative I've ever seen.

[Lennys Tap]

I suspect that most people who claim they want truly free markets either are blissfully unaware or willfully ignorant of the implications of truly free markets.

What are the horrible consequences of free markets that you fear? If there are abuses (child labor, monopolies that restrict competition, etc.,) societies are free to enact common sense laws for its citizens protection.

[Pakuni]

What are the horrible consequences of free markets that you fear? If there are abuses (child labor, monopolies that restrict competition, etc.,) societies are free to enact common sense laws for its citizens protection.

That's my point .... what you're calling "common sense laws for its citizens protection" are, in fact, government interference with the free market.
You can't claim you want a truly free market while also supporting government regulation of private enterprise, such as restricting who a business can hire or preventing someone from working via child labor laws.
Well, you can, it's just inconsistent.

The debate isn't free market vs socialism, as you've posited it. The debate is how to best strike the necessary balance between a free market and a government freely elected to serve the best interests of its citizens. It's a worthy, honest debate that's being held all across the world every day, with people way smarter than me or you making worthy, intelligent arguments up and down the spectrum.

Regarding your earlier post, how do you define "free market principles?" To me that seems exceptionally vague. So vague that one could find "free market principles" at work in nearly every country on earth. Even the most socialist countries on earth, particularly in the Western world, have extensive free market elements.

[MU82]

That's my point .... what you're calling "common sense laws for its citizens protection" are, in fact, government interference with the free market.
You can't claim you want a truly free market while also supporting government regulation of private enterprise, such as restricting who a business can hire or preventing someone from working via child labor laws.
Well, you can, it's just inconsistent.

Exactly.