Wednesday, February 18, 2015

Short-hand explanation for $50K minimum needs (poverty) line for a family of three

My short-hand, shore up of $50K minimum needs (poverty) line for a family of three -- detailed in chart 3-2, on p.44 of the MS Foundation book Raise the Floor 
(You may want an inflation calculator -- I possess the 2001 book:

My quick look:
$11,000 Obamacare for a family of four (not three), $498 a month (after $541 subsidy) + $4900 deductible (from Brill, p. 346, close enough);
$4,000 payroll taxes (not even counting all those regressive taxes that we take for granted in consumer prices);
$15,000 rent and utilities for any place decent;
leaving a big $400 a week to feed, cloth, transport (entertain?; MS does not allow a cent for entertainment) four people.  I would call that minimum needs. 

Meanwhile the median income is $26,000. 

3.5% shift in income would pay for a $15 minimum wage (half the workforce is seriously treading water between $300 a week (assuming min wagers get 40 hours; most may not) and $500.  If the 16% of income that shifted to the top 1% after the mid-seventies had instead shifted to the bottom 90% (the top 10% mostly held on to their income share until recent years) the latter would be swimming in money (and FICA collections would be going through the roof -- would stop diverting funds to over bloated TF at some point).

Thursday, February 5, 2015

Gov. Rauner would raise the min wage 50 cents over 7 years (adjusted for expected inflation)

Governor Bruce Rauner wants to raise the minimum wage from $8.25 to $8.75 – if adjusted for expected inflation -- over seven years.

The fed inflation target is 2% – compounded over 7 years that comes to 15%.  Which would chop 13% off the $10 (100% inflation cuts buying power 50%).  Round off to $8.75.

This amounts to about a 6% increase in real buying power after 7 years – about half the expected rate of average income growth in the US –for people who work two jobs for the pay of one now.

1956’s per capita income was about 40% of 2015’s – back when the US Senate Majority Leader took advantage of a few opponents missing from his chamber to quick on the sneak, slip through an $8.75 federal minimum wage (in today’s dollars).  In 1956.  


12 years later, that same leader, now president of US, steamrollered a $10.75 minimum wage through Congress – in step with 23% increase in per capita income over the same span.  We knew LBJ, and Rauner’s no LBJ.
 * * * * * * * * *
E.I.T.C., $55 billion out of a $16,000 billion economy – 1/3 of 1% of GDP – is too small to have a measurable effect on poverty; lost in the noise.


$15 is the 45 percentile US wage -- $26,000 is the median income (must have lost some hours in there somewhere).  Table 2-3 on p. 44 of the Ms Foundation Book Raise the Floor calculates the minimum needs of a family of three that has to pay its own health insurance at $1,000 a week.  (Quack fed poverty line is based on three X price of an emergency diet, dried beans, no expensive canned!).
 * * * * * * * * * *
The Governor wants a low minimum wage to keep Illinois competitive – with whom?  Basket weaving factories in Estonia?  Illinois ranks sixth best out of fifty-one states and D.C. on high income and low local prices.

Tuesday, December 30, 2014

The ultimate prosecutable sweeheart contract -- no contract at all?

The ultimate – federally prosecutable -- sweetheart labor contract may be no contract at all.

No one would doubt the criminality of a mob union boss and/or an employer threatening to fire workers for speaking out against a mobbed-up sweetheart contract – in order to obtain for themselves the pay and benefit moneys that might otherwise have gone to employees through fair bargaining practices.  A for certain RICO or Hobbs Act target.

Why shouldn't the exact same extortionate activity be view in the exact same extortionate light when union busting “consultants” and ownership threaten to strip away workers' economic livelihoods should they dare to participate in a federally approved path to establish federally approved union bargaining rights?
US Attorneys -- Criminal Resource Manual 2403

In current (virtually universal) practice this economically -- and by extension politically -- ruinous extortion is “punished” only under administrative law laid down by the National Labor Relations Board -- and employers found guilty pay only a (usually small) compensation for lost wages (not a penalty).

Alternate route: if any state independently outlaws this form of labor market extortion with a penalty of at least one year in prison, federal prosecution can automatically step in.
 * * * * * * * * * *  
Too obviously, commercial speech (selling soap) is no way nearly as constitutionally protected as political speech (Gettysburg Address).  Not nearly so obvious to the broad swath of public opinion is that commercial association (collective bargaining) should be on almost the high plane of political association (demonstrating) – given its core impact on almost everyone's lives (extracting the max the labor market is able to pay – instead of the min the labor market is willing to pay).

Historically, only labor organizations have empowered the average person with political muscle (campaign financing and lobbying) equal to ever persistent business interests -- deservedly ranking commercial association right along side political association -- and freedom of speech.

Saith the Wisconsin Supreme Court reaffirming legislation that sharply curtailed state employees bargaining scope: “… collective bargaining remains a creation of legislative grace and not constitutional obligation. The First Amendment cannot be used as a vehicle to expand the parameters of a benefit that it does not itself protect … ” [my emphasis] 

Labor’s threshold question here can only be: could any government — federal, state or local — constitutionally bar all employees from collectively bargaining with any employer(s)? Seems impossible given any sensible take on freedom of association. Courts may balance constitutional rights against other interests, or course.  But, at what point along what spectrum may a core constitutional right be said to transmogrify into a non-binding “creation of legislative grace”?
 * * * * * * * * * *
Judicial action?
Labor can challenge type laws that arbitrarily shrink the scope of bargaining.  Wisconsin limited bargaining by state employees to wages (capped to inflation! -- ever hear of econ growth?), all gone on benefit cuts, yearly contracts and union re-certifications, whole categories like home care and child care workers stripped of all bargaining.  Illinois recently passed crackpot legislation requiring public school teachers to have a 75% majority vote to strike (they did!).

"Union Bargaining a Dream For Many State Workers" -- runs off a long (and growing) story of states that have reduced state employee bargaining leeway from short to none. 

Legislative Action?
SCOTUS just ruled federal law supposedly allows Amazon not to pay workers for security check time when leaving -- California labor law says very differently (perhaps also Nevada, Arizona and Pennsylvania).  A state may add a face shield requirement to an OSHA helmet requirement.

State card check?  That the current federal schematic sets up a gauntlet almost no one can pass (50% of private employees are said to want union membership -- but only 5% and going down[!] have it) could create a powerful impetus for First Amendment protected state facilitation of genuinely workable labor organizing schemes -- if there were any question of federal preemption.  

Centralized bargaining!  Should be considered the gold standard of collective bargaining – wherein employees in similar occupations negotiate one universal contract with employers in similar businesses -- the only practicable (75 year, round the world tested) solution to the, otherwise inevitable, labor market race-to-the-bottom.  Given America's unorganized-organized labor -- wherein unorganized Walmart undermines the contracts of organized super markets; where even organized regional airline pilots with $100,000 educations and a hundred lives in their hands are reduced to applying for food stamps -- states could make a heavy substantive case for any First Amendment protected, facilitation of, or even mandating of, sector-wide labor agreements -- again, assuming any preemption question exists.    

A wild card here may be invoking minority union representation where no majority union exists.  This was how American unions often came into being and how they often remained (most Western European unions are minority unions) in the era the Wagner Act was passed -- and other than having fallen out of practice seems to be a federally condoned path to collective bargaining -- according to 230 pages of close analysis by professor Charles J. Morris in his, 2005, book The Blue Eagle At Work: Reclaiming Democratic Rights in the American Workplace (which I'm currently wading through)

PS.  For more encouragement check out Chicago labor lawyer Thomas Geoghegan's latest book: Only One Thing Can Save Us: Why America Needs a New Kind of Labor Movement

Sunday, November 2, 2014

A $20 an hour minimum wage would NOT (!) cost a lot of people their jobs

My response to "A $20 an hour minimum wage really would cost a lot of people their jobs"
by Matthew Yglesias, in Vox, October 28, 2014  

If average Walmart nonsupervisory pay were raised to $100 an hour, the price of $10 items rise to $15. Walmart labor costs are 7%. Nonsupervisory workers average $12 an hour. $12 X 8 = almost $100. One of the $12s is included already.  7x7% = 49%.

Double current Walmart nonsupervisory pay to $24 hourly, throw on 25% for benefits to make it $30 and prices rise about 10%.

Somebody challenged me that raising Walmart prices 10% (at $30 -- only 3.5% at $15 min wage) would charge low income consumers $26 billion more a year ($260 billion sales).  I pointed out they could take it out of the $560 billion raise they would get from a $15 minimum wage. 

A $15 minimum wage would shift about 3.5% of income from the 55 percent of the workforce who garner 90% of income to the 45% who scratch only 10%.  $8,000 average raise X 70 million (45% of 140 million + 5% at minimum now) = $560 billion out of $16,000 billion GDP.  BTW, 45% of workforce not going to be sent home over a 3 1/2 percent shift in income share.

100,000 out of (my estimate) 200,000 gang age, Chicago males are in street gangs – I say because they wont work for a minimum wage several dollars below LBJ’s 1968 minimum wage ($10.95) after per capita income about doubles.  A $15 an hour minimum wage might actually put American born workers back to work at America’s McDonald’s.

 * * * * * * * * * *
”Denmark has no minimum-wage law. But Mr. Elofsson’s $20 an hour is the lowest the fast-food industry can pay under an agreement between Denmark’s 3F union, the nation’s largest, and the Danish employers group Horesta, which includes Burger King, McDonald’s, Starbucks and other restaurant and hotel companies.”

What Denmark does have – along with most of continental Europe and French Canada and Argentina and Indonesia -- is a labor market setup called centralized bargaining where every employee doing similar work (e.g., retail clerk) negotiates one common labor contract with all employers doing similar business (e.g., Safeway, Best Buy, Walmart).

$20 an hour + benefits: it’s the (centralized bargaining) free market!  
 * * * * * * * * * *
Last breath: our difference with Denmark is not education:
Progressive economist Ha-Joon Chang says that our much increased education doesn't add much productivity to the economy.  It is just what we have to do to keep up with what others are doing.  He uses highly efficient and productive Switzerland as an example: going from 15% college to 40% over two decades.
(2011 book, 23 Things They Don't Tell You about Capitalism)

Berkeley political scientist Martín Sánchez Jankowski spent nine years on the streets of five NYC and LA poverty neighborhoods and discovered, among other things, that ghetto schools don't work because students (and teachers!) don't see anything remunerative enough in the labor market when they finish school to make it worth the extra effort.
(2008 book, Cracks in the Pavement: Social Change and Resilience in Poor Neighborhoods)

Some truly free labor market education may be gained reading: Were You Born on the Wrong Continent?: How the European Model Can Help You Get a Life by Thomas Geoghegan.

Friday, October 31, 2014

Obama abandons “the defining challenge of our time” -- after nternal polling

“Democratic Sen. Charles Schumer (D-NY) candidly admits that internal polling data proves the class warfare and soak the rich rhetoric is an election loser.

” ‘There are some who believe it’s better to talk about the negative parts of wealth that people have accumulated, but our polling data show people care less about that and more about how we’re going to help them,’ said [Democratic Sen. Charles] Schumer.”

”Denmark has no minimum-wage law. But Mr. Elofsson’s $20 an hour is the lowest the fast-food industry can pay under an agreement between Denmark’s 3F union, the nation’s largest, and the Danish employers group Horesta, which includes Burger King, McDonald’s, Starbucks and other restaurant and hotel companies.”

It would help if Obama and friends were not helpless to know what actually might reverse middle-class decline (God help the growing ranks of the poor), what modality could reverse the race-to-the-economic-and-political bottom.

A modality at work in every just and bountiful economy in the world: Germany, France, Nordic democracies and continental Europe in general, French-Canada, even Argentina, even Indonesia.  Walmart closed down 88 big boxes in Germany where it had to pay the going wages and benefits (see Denmark above).

Did somebody say CENTRALIZED BARGAINING, as in legally mandated?  In place for nearly seven decades on the continent.

How come America has Marxists and Austrians and every species of economic/social advocate except centralized bargaining oriented believers? ???  Could it be because nobody ever mentions the possibility out loud?

One exception to that: Thomas Geoghegan: Were You Born on the Wrong Continent?: How the European Model Can Help You Get a Life.  Wake up and return to broadly spread prosperity America.

Saturday, October 25, 2014

The issue to end all progressive economic issues: (legally imposed) CENTRALIZED BARGAINING

All we progressives can all bat all the air we want to with wonderfully understanding delineations of all the troubles we’ve seen … but wont ever be able to do a single thing about any of it until America is unionized by law via CENTRALIZED BARGAINING as its statute imposed centerpiece -- like Germany and so many other of the worlds most successful economies have done.  

Whereby, all employees doing similar work negotiate one common contract with all firms: ending the race-to-the-pay-and-benefits-bottom and reestablishing full parity of political muscle with ownership.

Open the issue up (that means mention it out loud in the public square!) and get out of the way of the stampede once people realize what it can do for them.  Supermarket workers and airline employees would kill for centralized bargaining!  !!!  (Look no further than French Canada next door for confidence -- or inspiration)

In his “The Seeds of a New Labor Movement” Harold Meyerson in his American Prospect article portrays David Rolf as the top (I would call it) “ground gainer” (Patton style) of today’s American labor movement.

He writes: “More than most union leaders, Rolf is a student of labor history.” Yet Rolf thinks collective bargaining is dying — just waiting to be dead: “Every condition and factor that underpinned unions’ power from the 1930s through the 1960s was gone: immobile capital, government assistance, the Cold War defense establishment, even organized crime, which propped up some unions so it could loot them. Not to mention losing two generations of workers by not organizing in the private sector after the 1940s. In the ’80s and ’90s, Andy’s [Stern’s] generation rediscovered organizing, but it was too little, too late.”

Top American labor leader sees the history of America and thinks labor is dead. Ever hear of the history of Germany and continental Europe, David? Or of French Canada or even Argentina or even of Indonesia? Wake up and smell the opportunity.   

Ever read a very recent tome by whom many think to be America’s top labor lawyer: Thomas Geoghegan, Were You Born on the Wrong Continent?: How theEuropean Model Can Help You Get a Life.

My personal reaction, a decade ago, on learning of centralized bargaining was: “Why didn’t I think of that?” After wondering for a decade what possible modality could reverse American labors tailspin, the answer seemed so perfectly obvious once you heard it.

It’s sort of like I wondered for two decades why energy increases with the square of the speed. Then, some kid on a science-fiction newsgroup explained to me that: you go twice as far when you go twice as fast; ergo, four times the energy. (If you are doing the two cars hitting head on at 50 miles an hour versus one car hitting a still care at 100, remember to double the weight when two cars are moving — figured that out myself :-))

So when are progressives going to stop pointlessly batting the breeze with their well reasoned complaints and start talking up the issue to end all the other issues?

Sunday, September 28, 2014

In 30 years 1% may take 50% of income -- check the math!

If the top 1% income continues to receive all the economic growth, then, by the time the output per person expands 50% (25-30 years?) the top 1% income will “earn” half of a half-larger economy (25% + 50% = 75% of 150%). By the time output per person doubles (typically 40-50 years) the equation will read 25% + 100% out of 200% = 62.5% of a twice-as-large economy.

Throw in Piketty’s projections — inherited rentier incomes swallowing up even more income share (like the England of old) -- and the bottom drops out for pretty much everyone.

There is a decades old, around the world tested answer. Ask Jimmy Hoffa as I always say — who spent 30 years, fighting (by fair means and admittedly sometimes foul) to spread the negotiation of one, single collectively bargained contract for all employees doing similar work with all employers — spreading outward from the jungle of Detroit’s Depression era labor market, finally to the whole country with the Teamsters 1964 National Master Freight Agreement (covering 400,000 truckers then, 50,000 now). Without so-called centralized bargaining every union these days is subjected to the race-to-the-bottom if employers can point to someone down the road paying less — more is needed than just organizing, as with card check. Ask poverty level wage supermarket employees since Walmart, etc., destroyed their middle class one-union-with-one-employer contracts.

Oddly enough to an American (me), legally mandated, centralized bargaining was instituted by the industrialists in post WWII Europe — something about fending off a labor union race to the top; thereby conserving more money for rebuilding. Today centralized bargaining can be found over the world from nearby French Canada to Argentina to Indonesia.

Which is to say that the most successful labor union (relatively speaking *) in this country and the most successful economies in the world have instituted the only labor setup I have ever heard of that results in a fair and balanced market. The way back for America must begin by everyone talking about that way back -- to everyone.

Campaign financing and lobbying equal to the 1%'s plus 99% of the vote would neatly fall into place.

A Pattern of Retreat: The Decline of Pattern Bargaining

PS.  Where the would the money come from to pay a $15 an hour federal minimum wage: the 55% of the workforce that takes 90% of income share would pay 3.5% higher prices -- shift approx. 3.5% income -- to the 45% who take only 10% share today.  Not going to lay off 45% of the workforce.  The economy grows that much every few years!  :-)  70 million X average $8,000 raise = $560 billion out of our $16,000 billion economy.

Sunday, September 14, 2014

The best (only?) way to reach Democratic voters -- even if you only care about their votes

RE:  Republicans Make Big Advances Thanks to Citizens United
by Alex Kotch
September 10, 2014,  American Prospect

The Rising Tide: Will All Boats Be Lifted?,  August 01, 2014,  by Richard Reeves
... The crucial factor, Podhorzer found, is Democrats’ vote share among voters making less than $50,000: ... whether Democrats win these voters by a 10-point or a 20-point margin tells you who won every national election for the last decade. ... To reach these voters, Podhorzer believes, candidates need to focus on the economic issues of the working class. ‘Economic populism decides who wins elections in America,’ he said.
There is only one realistic way to re-make America economically and politically: legally mandated, centralized bargaining.  All employees doing similar work (e.g., retail clerk) must be able to negotiate one common contract with all firms.  Automatically rebuilding America's unions by law (waiting for the resurrection? -- little things like card check will only find a few new unions on the race-to-the-bottom with all the others) would automatically rebuild and rebalance the political forum too, as the average persons' combined financing and lobbying matched ownership's -- to go with our 99% of the votes.

Even if Democratic candidates don't believe in centralized bargaining for labor contracts (a.k.a.. sector-wide labor agreements), actually don't even want or like them, just cynically pushed them to get votes -- guess what? -- (after explaining the game changing advantages) they will surely get the votes.

The most successful economy in the world, Germany, has the most thorough version of centralized bargaining (ask Lufthansa employees).  The most successful union in this country, the Teamsters, spent 30 years fighting to expand one single labor contract from sea to shining sea, succeeding in 1964 with its National Master Freight Agreement (ask retiring drivers at my old local 804,
30-and-out, $3900 a month).

Centralized bargaining is not some new look or new kook idea -- it is an established practice for almost seven decades, world-wide, from continental Europe, to French Canada, to second-world Argentina, to third-world Indonesia.  Somebody just has to say the words ("centralized bargaining") out loud here -- even if the only thing they want to accomplish is to turn the tide heavily in favor of Democratic candidates.

Monday, August 11, 2014

I like to date Vietnam War years as After Westmoreland: A.W.

I like to date later Vietnam War years as After Westmoreland: A.W.  (numbers are approximate)

After Westmoreland the US gave up on his truly murderous strategy of killing our young men to kill more of theirs: attrition, against a Ho Chi Minh who would have been willing to see everybody in Vietnam croak as long as the last breath was taken by a communist (not much of an exaggeration).  We suffered stretches of bringing home 3,000 body bags a month -- the goal being, in Westmoreland's own words, to reach the "cross-over" point at which the North could no longer replace soldiers faster than we could kill them (his own words!).

That's the war everybody thinks we waged -- and lost!

3 1/2 A.W.  The US ambassador to Vietnam could now drive anywhere in the countryside without a military escort: the payoff of counter-insurgency.  The Viet Cong guerrilla army had been reduced to totally non-Southerners, which in turn left NVA main force units (those guys you see in We Were Soldier Once and Young) eating grass and without ammo.

North Vietnamese Army main force units -- hiding most of the time like guerrillas -- required supplies of food and ammunition to be propositioned in hidden caches before they could mount an attack.  After the countryside was wrested from VC control it was no longer practicable to cache supplies or maintain cave systems.

It was easily practicable to "win the hearts and minds of the people" simply because the Viet Cong were so hated.  The movie Full Metal Jacket portrays the Viet Cong massacre during the battle of Hue: calling in police and teachers and government office workers, etc., for "re-education" and then shooting them in mass graves (bodies depicted under white powder).  The movie said the body count was twenty,  Wikipedia calls the civilian and POW count possibly as high as 6000!

Beginning with his struggle to take over the North (more on that below) Ho and friends only approach to recruitment was to kill and kill and kill anybody who didn't see things their way.

A.W. 4 1/2  The North tried an out and out Korea style conventional invasion -- beaten off with 50% casualties.

A.W. 5  The US Congress cuts off the money and supplies the South needed to continue the war along with US air support -- all reduced to a trickle.  The South begins rationing bullets and artillery rounds.

A.W. 7 1/2  The North -- having harvested a few more crops of eighteen years olds -- finally sent them to overrun the US Congress-disarmed South in six weeks.

Two million South Vietnamese anti-communists fled the advancing forces -- one million by boat.  Good thinking; the North rounded up and shot 130,000 who did not.
 * * * * * * * * *
In the 1950s, Ho Chi Minh's began his life long approach to winning supporters typically by sending terror squads into villages, lining up some boys who may have joined some government program (e.g., education) and shooting them.  When that village was rendered sufficiently docile a maintenance squad would come in and the terror squad would move on the next village (ink blot tactic).

(N.B.  Vietnam was no longer a colony in 1949.)

After Ho won the election in the North -- population 13 million; 98% of the peasants owned the land they tilled (70% in the South) -- Ho shot 50,000 peasants as capitalist exploiters and sent 100,000 to re-education camps.  Had some formula according to how many pigs farmers owned, etc.  (Communists have to have their land reform -- even they admitted they may have gone too far.)  A year later Ho's own home province rebelled -- the army crushed this, killing 6,000 peasants (wounding?).  For the early Ho, see: The Two Vietnams by Bernard Fall -- a French political scientist who was allowed to move freely about the North while the fighting was still going on there.  Killed when his jeep hit a mine in 1967.  I found his book too dry and scholarly to read when I was in my 20s.

[Late addition: a novel by a North Vietnamese veteran whose Glorious 27th Youth Brigade went out with 500 and came back with 10 alive: The Sorrow of War by Bao Ninh -- at first banned in the North but now reportedly allowed.]
 * * * * * * * * * *
Why were we in Vietnam?  Why did we let millions of Koreans die defending their rice and fish exporting peasant culture from collectivization -- when Russia was still on it's back, it's dictator not moving aggressively, only wanting to be Czar; and Mao not really known yet?  Why did we bomb populated cities (!) in helpless Japan?  

We bombed Japan out of force of habit.  If we had never bombed Germany -- in desperation to keep it from taking over the world -- it never would have occurred to us to bomb a single populated city (!) in Japan.

We defended Korea much out of the same force of habit.  Having just fought off two little countries (with single time zones and insufficient natural resources which ironically motivated their aggressions) from taking over the world, we just naturally took on world communism -- even though it posed no critical threat yet and even though the end of the Korean peninsula offered no place else to go.  That happened to turn out just fine.

By 1965, Vietnam's decision year, communism was at high tide: the two biggest countries in the world were coming at us ("We will bury you", "Your children will live under communism" -- for those who weren't around for Khrushchev) with bombs that could literally leave a half-mile deep crater where Hiroshima used to be.  Very scary time.  Khrushchev was a true believer who challenged us everywhere (Berlin grab, Cuban missiles); Mao was as bloodthirsty as Ho (see above) -- and we feared that if the democracies just let Ho run over South Vietnam it would open up the whole world to communist aggressions

Realistic?  ???  At least there was a plausible rationale.  Also Lyndon Johnson couldn't back out of Vietnam and keep his voluminous domestic legislation moving safely past "good old boy" Southern US Senators.  What a choice.

By 1975 we had won globally -- communism was receding worldwide -- we could afford to lose locally.  We, not the South Vietnamese.

Thursday, August 7, 2014

Illinois' new Medicare-Medicaid narrow networks: the older you get, the less care you get?

In Illinois elderly patients on both Medicare and Medicaid are being forced into narrow networks under one insurance company (e.g., Aetna, Blue Cross, Cigna, Humana, Ilinicare, Meridian).

They may be lucky enough to keep their personal care provider -- but he or she is stuck referring them to specialists on the network. PCPs usually refer patients to a physically contiguous medical group: in the same hospital or office building. What happens if PCPs are forced to refer the elderly (the sick elderly) to addresses all over town?

Old people see a lot of specialists. The older -- and more infirm; the more unable to shuffle all over town by themselves -- the more specialists they need to see.  Some of the medical deflation we are going to see here may not be a healthy trend at all.

Horror of horrors: If you got to a doctor or get testing off network -- from providers that accept Medicare -- your Medicare wont pay for it?  Payment is limited to network only -- I think.

Thursday, July 31, 2014

Does raising the minimum wage raise teen unemployment?

Does raising the minimum wage tend to raise teen unemployment?  Very possibly.  

When wages go down -- typically in the US due to pressuring or eliminating a labor union -- the quality of hires tends to go down.  

When bottom end wages go up that naturally attracts better quality hires -- often read more adult workers.  Since one of the big (phoney) arguments against raising the minimum wage is that it is no big help because it is mostly earned by teenagers living at home -- figure out whether it is a bigger, more critical issue to fret the loss of a few teen jobs, or to pay adults enough to raise a family.

Sunday, July 27, 2014

If fast food prices were cut in half ...

If fast food prices were cut in half today, most people would not purchase any more burgers.  How many can they (we) eat?  
We do not know how far below most people's "maximum buy line" prices may have sunk during decades of down-drifting minimum wages -- plausibly meaning today's prices could rise 25% higher and people might buy just as many; 50% might cut into business.  We DO know today's minimum wage is $3.50 an hour below what it was in 1968 -- we DO know per capita income has near doubled over the same time frame.  (See chart below.)  It is perfectly plausible that fast food prices began dropping deeper and deeper below the "maximum buy line" decades ago!

Look at Wal-Mart: 7% labor costs.  DOUBLE Wal-Mart's average wages ($10 to $20 an hour) and ADD health benefits, paid vacations, etc., and prices might go up 10% (7% + 3%?).  If Jimmy Hoffa's Teamsters were in there that would have occasioned long ago.

Look at most of the Americans you meet working on less than specific training required jobs (like x-ray tech): they are embarrassed.  They are earning $400-$500 a week.  $500 is today's median income.

Look at the official federal poverty line: 3 X the price of an emergency diet (dried beans only please; no expensive canned) -- a formula from the mid-fifties = $20,000 poverty line for family of three ($400 a week).  Realistic minimum needs line based on table 3-2, p. 44 (after adjusting for inflation) in the MS Foundation book Raise the Floor works out to more like $50,000 a year for family of three if it has to pay its own medical insurance ($1,000 a week!).  HALF OF TODAY'S AMERICANS EARN HALF THAT POVERTY LINE OR LESS!
  * * * * * * * * * *
double-indexed is for inflation and per capita income growth (2013 dollars):  

yr  per capita    real     nominal  dbl-index   %-of
68    15,473    10.74      (1.60)     10.74      100%
69-70-71-72-73              [real, low point -- 8.41]
74    18,284      9.47      (2.00)     12.61          
75    18,313      9.11      (2.10)     12.61
76    18,945      9.44      (2.30)     13.04        72%
77                                                               [8.86]
78     20,422     9.49      (2.65)      14.11
79     20,696     9.33      (2.90)      14.32
80     20,236     8.78      (3.10)      14.00     
81     20,112     8.61      (3.35)      13.89        62%
82-83-84-85-86-87-88-89                          [6.31]
90     24,000     6.79      (3.80)      16.56  
91     23,540     7.29      (4.25)      16.24        44%
92-93-94-95                                                [6.51]
96     25,887     7.07      (4.75)      17.85
97     26,884     7.49      (5.15)      19.02        39%
98-99-00-01-02-03-04-05-06                      [5.97]
07     29,075     6.59      (5.85)       20.09
08     28,166     7.10      (6.55)       19.45
09     27,819     7.89      (7.25)       19.42        40%
10-11-12                                                      [7.37]  

13     28,829     7.25      (7.25)       19.32        38%
 * * * * * * * * * *
A $15 minimum wage shifts 3.5% of income from the 55 percent of the workforce who garner 90% of income to the 45% who get 10%.  $8,000 average raise X 70 million (45% of 140 million + 5% at minimum now) = $560 billion out of $16,000 billion GDP.  Somebody challenged me that raising Walmart prices 10% (only 3.5% at $15 min) would take $26 billion from the poorest consumers.  I pointed out that with an extra $560 billion they wouldn't be so poor. :-)

Tuesday, July 22, 2014

NYC Taxi & Limousine cops -- Bloomberg's undead?

Why do drivers whose cars are seized for supposedly operating as an illegal taxi have to prove their innocence? Isn't it supposed to be the other way around? Is that how the TLC gets its 80% conviction rate?

How, indeed, could the city prove they are guilty (I've been in criminal court a lot with kids)? Shouldn't the gentleman's two girls in the New York DNA story have had to come to the hearing to testify that it was a paid ride to convict him? Nobody has to talk to a TLC cop. Do most just give up -- intimidated by the crazy legal scam -- or are they found guilty as stated above if they cannot prove they are innocent?

When I was a gypsy cab driver in the Bronx back in the 1970s the mayor instructed the cops not to ticket us for picking up by hail because the medallion cabs would not, did not serve the Bronx and Harlem and in between. Does seven times as many stop-and-seizures than a few years ago -- in the final half year of stop-and-frisk Bloomberg's admin -- sound like a familiar purpose: scare MINORITY people about just driving around doing their legitimate business -- and -- reduce cab pick-up service to zero in minority areas: the old ethnic cleansing scheme; making way for yuppies?

Meantime YUPPIES take advantage of so-called "ride-sharing" by cars without livery plates, without livery insurance (ours used to be twice as high as the yellow cabs') and even brightly identified with big pink mustaches -- without getting arrested.

Just to hammer the latter home: legal aficionados may note some resemblance between Uber's and Lyft's dubious "ride sharing" self-description and Aereo's recently US Supreme Court disallowed self-description that it was only leasing antennas, not purveying copyrighted material.

PS. In my years as a gypsy (admittedly long ago, things may have changed) I never once picked up anyone with luggage or took anyone to a hotel downtown or to any airport, portrayed as the hot zones for catching in the original story -- it was not that kind of business.

Saturday, July 19, 2014

$100 minimum wage – what would REALLY happen? :-)

$100 minimum wage – what would REALLY happen?

Wal-Mart’s labor costs (7% – average $12 an hour) would go up 900% – Wal-Mart prices could go up 50%.
McDonald's labor costs (33% – average $9 an hour) would go up 1100% – McDonald's prices could go up 400%.

Wal-Mart wages up 900% – prices up 50%.
McDonald’s wages up 1100% – prices up 400%.

So far both their workers look to come out ahead (in our crazy scenario) – if only they could live their whole lives on these two job sites. What would happen when the rest of the employee world caught up with their wild raises is hard to say.

It is easy to say what would happen if the federal minimum wage were raised to $15. Wal-Mart wages would jump 50% – prices up 3.5%. McDonald's wages would about double – prices up 25%.  Even if Wal-Mart sales dipped 3.5% and McDonald's sales dipped 25%, their employees would be way ahead.

Easy to calculate* how much a $15 an hour minimum wage would add to the cost of producing America’s products and services: 3.5% (10X what E.I.T.C. transfers clumsily, in once a year lumps). Don’t worry; the 45% of our workforce earning less than today's minimum wage (which is, unbelievably, $1.50 below 1956’s minimum wage) is not going to be laid off over that 3.5%.

* Half the workforce, 70 million workers X $8,000 average raise = $560 million = 3.5% of our $16 trillion GDP (bottom 5% now at minimum wage get two average raises).