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.

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! 
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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%
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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. :-)

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.

$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).

$15 minimum wage will force Chicago taxi meter up $1 a mile -- why wait?

If and when the minimum wage (local, state or federal) is raised to $15, the city of Chicago (and other localities) may be forced to add a dollar a mile to the taxi meter rate – or it may be left with few taxi drivers. If we honestly desire a much higher minimum wage, then, for the same reason we should want to add that dollar now. Could not possibly harm drivers (ask them).

It could be a test for today of whether our hearts will be in the right place on the minimum wage tomorrow.

I had been wondering why the price of taxi medallions multiplied something like 12 X over approximately 25 years to $360,000 – for the privilege of doing such an overworked/underpaid job?

Between 1981 and 1997, when I was still driving, the city allowed one 30 cent a mile increase, at which 1990 midpoint it began building subways to both airports, opening up unlimited limo licenses, putting on free trolleys between all the hotspots downtown (the Aquarium use a be our second hottest spot, after O'Hare) – and adding 38% more taxis! Today's meter is $.50 a mile lower then it was in 1981 adjusted for inflation.

I would guess the $360,000 explanation might be the American $400 “maximum wage” labor market – which I was recently horrified to catch on to at these two sites:
http://www.jobitorial.com/browse.php?Filter=A
http://www.glassdoor.com/Salary/AutoZone-Salaries-E610.htm

These drivers come 10,000 miles through fire and water (or whatever immigrants come through these days :-]) only to find that, in our labor  market, if they are not trained as a x-ray technician or some such skill, about $400 a week, at most $500 a week is the max they can hope to top out at.  Anything is better than facing that.

Related:

a) Ask 100,000 Chicago minority males why they are in street gangs.

b) Chicago does not need a Marshall plan – as theCrain’s well meaning article maintains – America needs to start paying people enough to survive on again.

c) Ghetto schools don’t work because students – and teachers! – perceive there is nothing remunerative enough waiting for them in the labor market to make it worth the extra effort.

I personally am horrified (there's that word again) that most of the non specific skill set people I encounter working every day, all day may to be living close to destitution!  “The median wage in the US per person is $26,695.“
   
Then, I read that only 800 Chicago drivers own medallions.  Mmm. Most medallions were owned long before prices reached today's altitudes – up five times since 2006. If the city is able to auction off 50, wonder how many other owners are selling? Maybe it's a bubble. Maybe the bubble will burst when the minimum wage reaches $15. Which is where we came into this movie.
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Uber?  I was a gypsy cab driver in the Bronx in the 1970s.  We had livery plates – making it legal to pick up by dispatch.  Our insurance was twice that of medallion cabs (reflecting that our driving skills were twice as good?).  We could not legally pick up on the street by hail – technically -- but the mayor instructed the police not to ticket us for that because the yellow cabs would not service the areas we served.

Little did we realize we were being ripped off – we and the limo companies and the taxi drivers! We never guessed we could just use any central dispatch station (VHF radios then – before cell phones) and simply "share rides" with anyone with any car! Holy mackerel!

I think it's time for taxi drivers in Chicago to begin putting in some time – perhaps during hours the city won't let them work – “sharing rides” in their own cars – especially on their days off which might become Friday and Saturday nights. Just experiment a little at first -- gradually they could shift from all taxis to no taxis.

Something for new immigrants to ponder seriously.

Legal aficionados may catch some resemblance between Uber’s “ride sharing” self-description and recently deceased Aereo’s claim it was just leasing antennas, not purveying copyrighted material without paying royalties.  But legalities may never be able to intrude as long as yuppies like “ride sharing” (and Chicago’s mayor’s brother Ari Emanuel, is a major investor in Uber?).  It is a good thing “ride sharing” did not start out on Chicago's poorer West side or South side neighborhoods or it would have been squished in the first week – literally.

Cashing TF bonds impacts top 10 percentile tax payers most -- the opposite of FICA cap

If we don’t want to raise the FICA cap — currently at 83 percentile income — we should shy away from cashing Trust Fund bonds with income tax (the only way to cash them). Income tax is not much applied to bottom 47 percentile incomes (as noted by a recent Republican nominee), meaning Trust Fund payout would fall on the top 17 percentile -- most heavily on the top 10 percentile!

If we honestly wish to minimize the impact of Social Security payout on top 10 percentile incomes, then, the logical resort may be to gradually raise the FICA cap as the shortfall comes along — best we can do.

If this generation of retirees needs a Trust Fund that will last as long as they do, why wont every succeeding generation require the same size, multi-decade Trust Fund?

Practical reality: a Trust Fund that can cover FICA short fall for five years — until Congress gets around to closing the collections gap — is the only practical need (happened a couple of times).

The only practical advantage of today’s multi-decade monster may have been reaped by politicians: spared the need to raise the FICA rate for 60 years — 35 diverting FICA surplus to non-Social Security expenses to pay for bonds — projected 25 years cashing bonds to cover growing FICA shortfall.

Third way out?  Since we may cash bonds with printed money for decades, when bonds finally run out maybe we will print more of them too — out of force of habit (the Fed actually writes checks to make money).  :-)

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ALTERNATE TRUST FUND REALITIES

If Congress in 1983 had set the FICA tax rate so that collections were just a bit above then current payout the Trust Fund bonds would have come into play very quickly -- and been exhausted very quickly.

If Congress in 1983 had set the FICA rate much higher than it did Trust Fund bonds might have accumulated of another 50 years before coming into play.

If -- a much more plausible could-have-been (should-have-been!) -- working incomes (the 83% that pay FICA) had shared equally in the near 50% per capita income growth since 1983 (83s keep popping up) -- and continued into the future keeping up with what hopefully would be reasonably good per capita growth -- then, the Trust Fund bond accumulation could theoretically grow, diverting retirement taxes to on budget items, never to payout a single dime, forever.

Why throw away Israel for a bowl of soup?

Why throw away Israel – the 78% of Palestine absorbed in 1949 -- for a bowl of soup – the 5%?  If by some sorcerer’s black magic the 78% went missing one morning – what would the 5% of misappropriated West Bank land amount to – a big Jewish neighborhood?

New York demographics: ”After dropping from a peak of 2.5 million in the 1950s to a low of 1.4 million in 2002 the population of Jews in the New York metropolitan area grew to 1.54 million in 2011.”
http://en.wikipedia.org/wiki/Demographics_of_New_York_City#Jewish

400,000 Jews in the West Bank -- maybe not even so big.

I compare Israel’s fetish with West Bank settlements with the Irish Republican Army’s (IRA) fetish with Northern Ireland’s six counties – to a native New Yorker, just a big British neighborhood.  I’d love to ask the IRA dopes: If Ireland were not an island (as in surrounded by water), how would they know that the six counties were Irish?  :-)

Approaching 50 years of infinitely more serious – and totally self-imposed -- “troubles” for a little more land in the sand, must Israel go on forever being as dumb as the IRA?

Great idea? Push $1 a mile higher taxi fare -- to make way for $15 minimum wage -- and to build Chicago taxi union

Just had a “great idea” (they always seem great to me, at first): if the minimum wage is raised to a minimally liveable amount, $15 an hour (FOR WHICH THERE IS NO ECONOMIC RATIONALE NOT TO) …

… then, taxi fares in Chicago will for all practical purposes AUTOMATICALLY have to be raised a dollar a mile because nobody will be willing to drive for slave wages anymore.

Therefore: there is CERTAINLY no economic rationale to not raise meter rates to a humane level RIGHT NOW! Passengers will certainly pay the extra dollar. Right now in Chicago the rate per mile is (adjusted for inflation) half a dollar below what it was in 1981 when I started driving here (retired 10 years ago — in San Francisco) — 50% higher per capita income later.
If (terribly) low taxi wage cities are not willing to add a dollar to the meter now — then — they can stop pretending that they are hesitant to raise the minimum to $15 an hour too quickly for fear of upsetting this that or the other thing. They just don’t care.

Another idea: American Federation of State, County & Municipal Employees Council 31 (AFSCME 31) is signing up taxi drivers in Chicago.  One the one hand there is no employer opposition (lease drivers and owner drivers are both the CUSTOMER of the taxi companies).  On the other had it is hard to explain the benefits if it is much more impractical to strike.  IF 31 GETS OUT IN FRONT ON THE DOLLAR A MILE MORE-TAXI "MINIMUM WAGE", then, if successful everybody should join.  Even if the union doesn't succeed the first time, the drivers will see something practical coming from the union.  Remember there is no employer resistance.

Could happen: today's slave wage taxi drivers could open the way -- psychologically -- to quickening the adoption of $15 an hour minimum wage across the country -- emphasis on the word "quickening."
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Quick history of Chicago's (dying) taxi wages — 1981 to 1997:
One 30 cent increase in the mile rate …
… at which 1990 mid-point the city (a) started building subways to both airports, (b) opening up unlimited limo licenses, (c) and putting on free trolleys between all the hot spots downtown (the Aquarium used to be our second hottest spot after O’Hare) …
… and 40% more taxis!