[For background, please read these two posts first: 1) Minimum Wage and 2) Minimum Wage - 2 ]
When the BLS came out with the employment data last week and the bullish spin from the happy talk people - including President Bush - was that the jump in unemployment was due to teen workers (and therefore not so bad?), I was surprised. Not surprised that teen employment was on the decline, but that so many people were supposedly shocked that it would happen or feel that the loss of teen jobs is not so important. Read this forecast from the Center For Labor Market Studies at Northeastern University - it is titled - The Continued Collapse of the Nation’s Teen Job Market and the Dismal Outlook for the 2008 Summer Labor Market for Teens: Does Anybody Care? I guess people cared a little bit, regardless of how much the teen job market really dominated the jump in unemployment.
I’ve decided to politicize this issue. Go back to what the politicians who pushed for the Minimum Wage increase promised about how this would help people out of poverty. How did that work out? Just go with the political spin and do what they do. Make stupid associations between the legislation they proposed and the results that actually resulted. Assume that most teens start off or continue working in jobs paying close to the minimum wage. Therefore, maybe it would be appropriate to suggest that we need to lower the minimum wage to get all these newly unemployed teens back into the work force and reduce the growing poverty problem we have in America. Just blindly forget all the other reasons why the economy is sucking and make a “political statement of fact” (usually not factual) that one thing will cause another with a perfect correlation - like raising the minimum wage will lift people out of poverty. Except this time, make the reverse argument and suggest that raising the minimum wage last July actually caused 100% of the rise in unemployment (teen and adult). Why not exaggerate and ignore almost every economic principle by isolating on just one thing that supposedly has no negative side effects or unintended consequences - isn’t that what politicians do? To make your case, it should be easy. Just show a chart of unemployment stats in the year before and the year after the minimum wage increase. Then pull up (click here and scroll down) the arguments for supporting the minimum wage and point out how many of them have not worked out so well in the past year. Then review the arguments for not having the minimum wage and point out how many of them have turned out to be true since last July.
In this election year, there are a lot of policy initiatives being offered by both candidates. The campaigns love to do what they did with the minimum wage legislation, make stupid assumptions and then make promises that are impossible to keep (because economic reality trumps political economics). Later, when the results trickle in and things didn’t turn out as planned, there are few political consequences, only real consequences for American citizens. As I said last year, increasing the minimum wage is not a solution to fixing the growing income and wealth gap that is growing in our country. It’s certainly not the cause of it (as per my politicizing in the previous paragraph) but the reality is that it did not help.
This article has 7 comments:
- CLH
- 607 Comments
Jun 10 09:14 AM- alphameister
- 87 Comments
Jun 10 09:26 AM- flipper
- 1 Comment
Jun 10 01:39 PM- eltigre
- 5 Comments
Jun 11 10:00 AM- willynill
- 21 Comments
Jun 14 03:38 PM- kebu77
- 56 Comments
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Jun 16 09:45 AM1. The Fed MW had not been increased in 10 years. Most States by now have enacted their own MWs, and most of those far exceeded the eroded Fed MW. The first 2 installments in the Fed MW increase basically brought the Fed MW up to about the typical State level (of course with variations from state-to-state).
(BTW, we can thank Sen. Kennedy, among others, who frustrated enactment of an indexed MW in the late '70s that would track the average hourly mfg. earnings - - Kennedy wanted a 50% figure, a little too high, politics being the art of the possible. An indexed Fed MW, tracking the Empl. Cost Index or based on say, 45% of the mfg. avg. wage, would have avoided the minor disruptions to the economy caused by the legislated step-ups and the major disruptions to a relatively small number of vulnerable workers caused by the steady erosion between Cong. enactments. An added benefit of such an enduring social contract would be the absence of the many inane observations that accompany these periodic increases.)
2. Overtime compensation (OT) cannot be manipulated for a worker who is paid right at the MW. It is a simple calculation of 1.5 times the MW rate, nothing less. This is less true for workers paid higher than the MW. The employer sets the pay and hours to be worked when the worker is hired and can set a lower regular rate to offset OT hours worked @ 1.5.
3. The Fed MW-OT law and its State counterparts, along with their recordkeeping requirements, make businessmen out of small employers. They quit keeping their records on the floor of their pickup trucks. They manage their workers better. Better-managed workers benefit in many cases NOT by getting higher wages but by spending less time hanging around for the boss to figure out what their next job is. (S/he serves who is only engaged to wait.) Nothing concentrates the mind of a small employer in a, typically, marginal enterprise like having to pay for all hours worked and keep a record of it.
- FGH
- 7 Comments
Oct 28 05:57 PM