Nixon twice vetoed minimum wage increases, after taking a huge illegal donation from Ray Kroc of MacDonald's. To say "The Nixon Administration stepped in..." is an absurd characterization of what took place politically.
When I first saw this post I thought "what now", but it's actually very useful. Almost no one wants to talk about the cost and overcharges of the dead but it's real and hits people hard at a time they can least afford it and not in their right minds.
it could be worse than just intellectual property...europe is including prostitution and drug dealing in their GDP figures..
the GDP technical note said that BEA assumed an increase in exports ex-gold and a decrease in imports ex gold, and that wholesale and retail inventories and nondurable manufacturing inventories had decreased in September...because of trade, WSJ says economists at BNP Paribas now track third-quarter GDP at 2.8% and J.P. Morgan forecasters think the rate will be revised to 2.9%, while the econ shops at Goldman Sachs, Royal Bank of Scotland, & Capital Economics think the rate will fall to about 3%....i'm not sure...imports of non-monetary gold were down $462 million, exports were up $740 million...i dont know how the BEA handles that..
I said at the beginning GDP would be revised down on imports, but it has happened that other elements of GDP were revised up so significantly it wiped out the downward import effect.
My problem is the faux paus "intellectual property" and other modifications to GDP itself that occurred. How much fiction is that creating?
Why does the author only want to help minimum wage earners in such a small way? It's like he's saying to min wage earners, "I am on your team, I want you to go from groveling in near poverty to groveling 10% less in near poverty." Why not raise the minimum wage to $40 dollars an hour? This is still less than $100,000 per year by a long shot which isn't much purchasing capacity. If you want to champion the cause for lower income people, then do it. Paying them $4 more per hour? Please. Don't waste your readers' time.
Treasurer Joe Hockey and billionaire Rupert Murdoch recently made impassioned speeches expressing their deep concern about the problem of rising inequality — the rich are getting richer, while the poor are suffering from stagnant or even declining real wages...Hockey and Murdoch were arguing that lower taxes and smaller government are the best ways to address inequality.
If QE and monetary policy didn’t cause rising inequality, what did then? Technology has shifted the nature of work dramatically over the past century — from farms to factories to office buildings. It has also increased the returns to certain specialized skills and cognitive ability. This technological change has greatly improved standards of living. However it has left many people who do not have higher-education degrees with stagnant real wages or long-term unemployment. As a result, inequality has increased. This skill-biased technological change has been going on for a while, as has the resulting rise in inequality. [But] we could give everyone in the world a PhD, but there would still be a lot of inequality.
Instead, fiscal policy, rather than monetary policy, can reduce inequality via progressive taxes. Current Fed chairwoman Janet Yellen said as much in a recent speech on inequality, targeting inheritance in particular as a source of persistent gaps in economic opportunities for the rich and poor.
Countries with higher and more progressive tax rates have less inequality, but still grow just as fast or faster than countries with lower taxes and more inequality...So next time a Treasurer, a billionaire or anyone else tries to argue that QE is responsible for rising inequality and the best solution is lower taxes, I recommend being more than a little skeptical.
the Census report on Construction Spending for September (pdf) estimated that our seasonally adjusted construction spending for the month would work out to an annual rate of $950.9 billion of spending overall, 0.4 percent (±2.0%)* below the revised August estimate of spending at a $955.2 billion annual rate and well below estimates of a 0.6% increase from originally published figures....construction spending for August was revised from the originally reported $961.0 billion to $955.2 billion and construction spending for July was revised down from $968.8 billion to $960.0 billion, so construction spending for the entire third quarter is considerably lower than previous estimates and will likely result in downward revisions of GDP components for residential construction, private structures, and public investment.....
Where do the FICA taxes deducted from our paychecks go, if not to a mythical "trust fund"? And exactly what is your plan for "strengthening" Social Security if not for taxation to finance this imaginary fund? I'm a little confused as to your remedies. Are you saying the Social Security Trust Fund can never go broke or be under-funded because there is no fund? And if all we need is a few "keystrokes" (if it's really that easy) why don't we already do this — and also give everybody on disability and all our retirees a big raise too!
Other news on the subject:
(Washington Post) How you would fix Social Security: Tax higher earnings -- "If 90 percent of all earnings were covered and taxed by Social Security, the earnings cap would be $250,200, based on the intermediate assumptions of the 2014 Social Security Trustees Report. Even though plans to raise the cap would also include increasing benefits for higher earners, this change would still erase 20 percent of Social Security’s projected shortfall in 2033, the year in which it would no longer be able to pay full benefits. This change would touch very few workers, so maybe it’s no surprise it was the most frequently chosen solution in a survey that allowed readers to choose more than one solution." http://www.washingtonpost.com/news/get-there/wp/2014/10/27/how-you-would...
(Forbes) "Congress Proposes Three Changes To Social Security That Make Sense 1) Change in Cost of Living Adjustments (rather than using CPI-W, or chained-CPI, use CPI-E) 2) Increase in the Threshold Amounts for Inclusion of Social Security Benefits in Taxable Income 3) Phased-in Increase in Social Security Tax Rate" http://www.forbes.com/sites/jamiehopkins/2014/10/29/congress-proposes-th...
(The Hill) "Once Republicans are in control of both houses of Congress, it will only be a matter of time before they send legislation to the president's desk to cut [Social Security] benefits. Given the president's history, it is almost certain he will be forced to or willingly sacrifice these financial safety nets." (Such as switching to chained-CPI to calulate COLAs in exchange for not shutting down the entire government.) http://thehill.com/blogs/pundits-blog/campaign/222406-social-security-co...
(Tucson.Com) Changes for the necessary credits one needs to qualify for Social Security: "Most people who are working earn four credits per year. In 2014, you earned those four credits once you made $4,800. In 2015, you won’t get those credits until you make $4,880. (You actually will get one Social Security credit for each $1,220 you earn in 2015. But no one can earn more than four credits per year.) To qualify for retirement benefits, you generally need 40 credits. Fewer credits may be needed to get Social Security disability payments, or for your family members to get survivor benefits if you die." http://tucson.com/business/national-and-international/social-security-an...
Re: "In addition to taxing capital gains for Social Security, all capital gains should be taxed as regular wages based on the current progressive tax rates. This would GREATLY help pay down the government debt and shore up the Social Security Trust Fund."
I agree with much of what you said and I agree 100% with your sentiment, but your economics not so much.
Since leaving the gold standard in 1976, Federal taxes serve 2 purposes 1) to throttle inflation by sucking money out of the economy and 2) to redistribute wealth. Federal taxes do NOT pay for spending since the dollar is fiat and Uncle Sam can pay any bill with keystrokes, limited only by inflation.
Hence a FICA tax is not required to "fund" the SS trust fund. In fact, there is no physical SS trust fund, it's merely an imaginary accounting identity. Can you show me a picture of the trust fund vault where all the dollars and bonds are stored? No, you can't, because no such vault exists.
In addition, the FICA tax is a regressive tax and no progressive should support regressive taxation. To the contrary, progressive tax rates are a cornerstone of progressive values.
Removing the cap would make FICA less regressive, but still regressive nonetheless. I repeat, no progressive should support regressive taxation.
I propose eliminating the regressive FICA tax all together and "paying for" SS out of the general budget, the same way we "pay for" the CIA.
If demand-pull inflation rears its head at some point in the future, it may be necessary to raise taxes to suck money out of the economy (I advocate indexing tax rates to U-3 -- the lower the U-3, the higher the tax rate). But anti-inflation taxes could and should be progressive taxes.
Re: paying down the government debt. If Congress ordered it, we could start paying off the national debt tomorrow, since Uncle Sam can pay any bill with keystrokes. In fact, it is not necessary to sell treasury bonds in the first place, since Uncle Sam can deficit spend with keystrokes (there is a law requiring the treasury to sell bonds equal to the deficit, but Congress could simply repeal that law). The practice of selling treasury bonds dates back to the gold standard and no longer makes sense with today's fiat money.
To sum things up, I agree with you that progressive taxation is a good thing and that the rich should pay more. However, the main purpose of taxes is to suck money out of the economy to control inflation, not to "pay for" government spending. Let's stop handicapping SS with the myth that it has to be funded by an imaginary trust fund.
i understand that the change in the change in real private inventories is what is applied to the change in real GDP, but havent quite wrapped my head around the concept as to why...ie, real private inventories grew by an inflation adjusted $62.8 billion in the third quarter after growth of $84.8 billion in the 2nd quarter, and hence the $22.0 billion slower inventory growth subtracted 0.57% from GDP...still, i want to think that since inventories grew rather than shrunk, they should have added to GDP...what is the logic that makes postitive inventory growth in this case a subtraction from GDP, whereas positive growth in other forms of investment, such as equipment, will always add to GDP?
we have a glut of domestic gas and generally over the past couple of years the cost of producting fracked gas has exceeded the price...gas in Europe is 3 times as expensive; in Japan, it's five times as much as here...fracking continues because they've been able to pull speculative capital in and sell quantities of junk bonds...most drillers fund their operations through a combination of lines of credit, cash flow, and junk debt...with falling prices, lines of credit will dry up, cash flow will shrink and the interest on any new junk debt be that much higher...for instance, the Caa1 rated bonds for former Chesapeake CEO Aubrey McClendon's new company, American Energy Partners, fell 20% since they were issued in July...but because depletion rates on fracked wells are 80 to 90 percent over the first two years, they can't cut back and wait for better prices...to make their interest payments, they have to maintain cash flow, & to do that, they have to keep drilling...
oil is different case because oil is traded worldwide, and US prices move with international prices...the cost of producing the marginal barrel in the US is around $100, many fracking operations break even at $80...nonetheless, they're still in the same fix as those drilling for gas; they have to maintain unprofitable operations just to continue to make payments on their debt...
last week heavily indebted and over-leveraged Chesapeake Energy was forced to sell 413,000 acres with 1,500 wells in West Virginia and southwest Pennsylvania to its rival Southwestern Energy Corp for $5 billion...although this deal was probably in the works before the oil price collapse of recent weeks, the fact that they went through with it at this time at fire-sale prices indicates that their cash flow had probably dwindled to nearly nothing in the face of low gas & oil prices, and that they needed to sell these proprieties just to raise enough cash to keep their other operations running...Chesapeake's problems may be an isolated case, as it had run up $16.2 billion in debt under McClendon, while its capital spending exceeded cash flow by $47.4 billion over the last five years as gas prices collapsed, but if the low oil prices last several weeks persist through the winter, we can expect that more similarly over leveraged oil patch frackers will be squeezed in the same way...
How does this analysis change if you count only heads of households? For example, at least some of the low wage earners are kids and students who aren't supporting themselves.
62 million households in America’s least affluent half averaged only $11,000 in net worth last year, 50 percent less than bottom-half families averaged after inflation in 1989. Over those same years, top 5 percent household average net worth nearly doubled — to $6.8 million.
America’s “pace of new business creation,” the Fed chair details, “has gradually declined” as inequality in the United States has increased. This “slowdown in business formation” may be jeopardizing “a significant source of economic opportunity” for families “below the very top in income and wealth.”
However, the raw numbers for hourly wages are largely irrelevant unless the differences in cost of living are factored in. Cost of living is different in nearly every local market, and it's hard to account for that, but essential for this discussion.
Secondly, the cost (or value) of money goes down over time due to inflation. Therefore, it is also highly relevant to see how wages change over time in real terms. At a minimum, any economy worth its salt should be able to provide constant real wages over time. What we see in the US is that minimum wages have gone down for the last 40 years. This shows how we are letting our economy simply produce more poverty over time. That is what should really get people angry, because minimum wage is a political choice made by our government. Why should minimum wage ever go down in real terms? That is tantamount to undermining the entire concept of the minimum wage.
While I think that raising minimum wages would be beneficial in the short term, and the relative depression of minimum wages is symptomatic of the systematic economic disembowelment of the USA, by itself it will not help much in the long run.
The problem is the positive feedback loop between the monied interests and the politicians.
I don't trust the Democrats on minimum wage, as both parties raise issues which play to their base, which they count on the other party to keep them from doing. A lot of what goes on in the political scene is like Wrestlemania.
I don't trust the Republicans on immigration, for the same reason.
I do have to admit that those on the left seem more able to identify with the plight of others, and appear more compassionate. This irritates me, but I have to admit it is true. Comparing the politics and policies of the folks who own Wal-Mart with those who run Costco, (if you are of a conservative bent) is downright embarrassing.
I would be pleased to vote for a political party which would advance an economic policy which results in the demand for labor increasing to such an extent that it makes the minimum wage irrelevant.
That would include
1. Effective prevention of illegal labor.
That would create significant demand for low to medium skill workers who are US citizens or legal residents. The primary beneficiaries would be those demographics which currently suffer very high unemployment, and also the working poor. The working poor would benefit from the relative shortage of people capable of working, which would raise wages according to the basic principle of supply and demand.
2. Reasonably high tariffs
Tariffs would give an advantage to domestic production, which would encourage local innovation. They also would to some extent offset the advantage businesses with global scale have with respect to their smaller competitors. This would result in more demand for skilled and unskilled workers, which would raise real wage rates. While in the short term this would raise the price of imported goods, the effect on cost would be more nearly neutral, as (if the increase in cost of the imported goods is just the tariff) then there is tax revenue of the full amount of the tariff. This is a tax paid only by those who buy imported goods, and can offset other taxes.
3. Strong incentives for US industrial development.
I don't think either party is interested in those things.
That said, I remain mostly a social issues voter, as those things are perhaps more important, and also there is an apparent difference between the parties on those issues. I have been poor, and what passes for poor in the US isn't that bad.
Peace.
Despite the spin from the likes of the Hoover or Cato Institutes these numbers/stats do not put our economy/future in a very good light. The irony of all this , if you are a retail (small) investor; is that you need medium income wage earners to buy the "stuff" varied companies produce. Less income , less purchases. I hold no hope in Conservative or far right think tanks to "get" this. Hopefully, this obvious economic path will ease; it cannot continue as this article points out; it's simply not substanable.
After winning re-election last night, Paul Ryan [as expected] said he would seek the chairmanship of the the House Ways and Means Committee (the chief tax-writing committee.)
http://www.bloombergview.com/articles/2014-11-05/paul-ryan-tips-his-hand...
From Paul Ryan's website on tax reform: "Promotes saving by eliminating taxes on interest, capital gains, and dividends; also eliminates the death tax." (The death tax is the inheritance tax.)
http://roadmap.republicans.budget.house.gov/issues/issue/?IssueID=8514
Nixon twice vetoed minimum wage increases, after taking a huge illegal donation from Ray Kroc of MacDonald's. To say "The Nixon Administration stepped in..." is an absurd characterization of what took place politically.
When I first saw this post I thought "what now", but it's actually very useful. Almost no one wants to talk about the cost and overcharges of the dead but it's real and hits people hard at a time they can least afford it and not in their right minds.
I couldn't get to this today but as expected the trade revisions will pull down GDP.
it could be worse than just intellectual property...europe is including prostitution and drug dealing in their GDP figures..
the GDP technical note said that BEA assumed an increase in exports ex-gold and a decrease in imports ex gold, and that wholesale and retail inventories and nondurable manufacturing inventories had decreased in September...because of trade, WSJ says economists at BNP Paribas now track third-quarter GDP at 2.8% and J.P. Morgan forecasters think the rate will be revised to 2.9%, while the econ shops at Goldman Sachs, Royal Bank of Scotland, & Capital Economics think the rate will fall to about 3%....i'm not sure...imports of non-monetary gold were down $462 million, exports were up $740 million...i dont know how the BEA handles that..
I said at the beginning GDP would be revised down on imports, but it has happened that other elements of GDP were revised up so significantly it wiped out the downward import effect.
My problem is the faux paus "intellectual property" and other modifications to GDP itself that occurred. How much fiction is that creating?
Why does the author only want to help minimum wage earners in such a small way? It's like he's saying to min wage earners, "I am on your team, I want you to go from groveling in near poverty to groveling 10% less in near poverty." Why not raise the minimum wage to $40 dollars an hour? This is still less than $100,000 per year by a long shot which isn't much purchasing capacity. If you want to champion the cause for lower income people, then do it. Paying them $4 more per hour? Please. Don't waste your readers' time.
Treasurer Joe Hockey and billionaire Rupert Murdoch recently made impassioned speeches expressing their deep concern about the problem of rising inequality — the rich are getting richer, while the poor are suffering from stagnant or even declining real wages...Hockey and Murdoch were arguing that lower taxes and smaller government are the best ways to address inequality.
If QE and monetary policy didn’t cause rising inequality, what did then? Technology has shifted the nature of work dramatically over the past century — from farms to factories to office buildings. It has also increased the returns to certain specialized skills and cognitive ability. This technological change has greatly improved standards of living. However it has left many people who do not have higher-education degrees with stagnant real wages or long-term unemployment. As a result, inequality has increased. This skill-biased technological change has been going on for a while, as has the resulting rise in inequality. [But] we could give everyone in the world a PhD, but there would still be a lot of inequality.
Instead, fiscal policy, rather than monetary policy, can reduce inequality via progressive taxes. Current Fed chairwoman Janet Yellen said as much in a recent speech on inequality, targeting inheritance in particular as a source of persistent gaps in economic opportunities for the rich and poor.
Countries with higher and more progressive tax rates have less inequality, but still grow just as fast or faster than countries with lower taxes and more inequality...So next time a Treasurer, a billionaire or anyone else tries to argue that QE is responsible for rising inequality and the best solution is lower taxes, I recommend being more than a little skeptical.
SOURCE:
https://theconversation.com/quantitative-easing-is-over-but-can-joe-hock...
Where do the FICA taxes deducted from our paychecks go, if not to a mythical "trust fund"? And exactly what is your plan for "strengthening" Social Security if not for taxation to finance this imaginary fund? I'm a little confused as to your remedies. Are you saying the Social Security Trust Fund can never go broke or be under-funded because there is no fund? And if all we need is a few "keystrokes" (if it's really that easy) why don't we already do this — and also give everybody on disability and all our retirees a big raise too!
Other news on the subject:
(Washington Post) How you would fix Social Security: Tax higher earnings -- "If 90 percent of all earnings were covered and taxed by Social Security, the earnings cap would be $250,200, based on the intermediate assumptions of the 2014 Social Security Trustees Report. Even though plans to raise the cap would also include increasing benefits for higher earners, this change would still erase 20 percent of Social Security’s projected shortfall in 2033, the year in which it would no longer be able to pay full benefits. This change would touch very few workers, so maybe it’s no surprise it was the most frequently chosen solution in a survey that allowed readers to choose more than one solution."
http://www.washingtonpost.com/news/get-there/wp/2014/10/27/how-you-would...
(Forbes) "Congress Proposes Three Changes To Social Security That Make Sense 1) Change in Cost of Living Adjustments (rather than using CPI-W, or chained-CPI, use CPI-E) 2) Increase in the Threshold Amounts for Inclusion of Social Security Benefits in Taxable Income 3) Phased-in Increase in Social Security Tax Rate"
http://www.forbes.com/sites/jamiehopkins/2014/10/29/congress-proposes-th...
(The Hill) "Once Republicans are in control of both houses of Congress, it will only be a matter of time before they send legislation to the president's desk to cut [Social Security] benefits. Given the president's history, it is almost certain he will be forced to or willingly sacrifice these financial safety nets." (Such as switching to chained-CPI to calulate COLAs in exchange for not shutting down the entire government.)
http://thehill.com/blogs/pundits-blog/campaign/222406-social-security-co...
(Tucson.Com) Changes for the necessary credits one needs to qualify for Social Security: "Most people who are working earn four credits per year. In 2014, you earned those four credits once you made $4,800. In 2015, you won’t get those credits until you make $4,880. (You actually will get one Social Security credit for each $1,220 you earn in 2015. But no one can earn more than four credits per year.) To qualify for retirement benefits, you generally need 40 credits. Fewer credits may be needed to get Social Security disability payments, or for your family members to get survivor benefits if you die."
http://tucson.com/business/national-and-international/social-security-an...
Re: "In addition to taxing capital gains for Social Security, all capital gains should be taxed as regular wages based on the current progressive tax rates. This would GREATLY help pay down the government debt and shore up the Social Security Trust Fund."
I agree with much of what you said and I agree 100% with your sentiment, but your economics not so much.
Since leaving the gold standard in 1976, Federal taxes serve 2 purposes 1) to throttle inflation by sucking money out of the economy and 2) to redistribute wealth. Federal taxes do NOT pay for spending since the dollar is fiat and Uncle Sam can pay any bill with keystrokes, limited only by inflation.
Hence a FICA tax is not required to "fund" the SS trust fund. In fact, there is no physical SS trust fund, it's merely an imaginary accounting identity. Can you show me a picture of the trust fund vault where all the dollars and bonds are stored? No, you can't, because no such vault exists.
In addition, the FICA tax is a regressive tax and no progressive should support regressive taxation. To the contrary, progressive tax rates are a cornerstone of progressive values.
Removing the cap would make FICA less regressive, but still regressive nonetheless. I repeat, no progressive should support regressive taxation.
I propose eliminating the regressive FICA tax all together and "paying for" SS out of the general budget, the same way we "pay for" the CIA.
If demand-pull inflation rears its head at some point in the future, it may be necessary to raise taxes to suck money out of the economy (I advocate indexing tax rates to U-3 -- the lower the U-3, the higher the tax rate). But anti-inflation taxes could and should be progressive taxes.
Re: paying down the government debt. If Congress ordered it, we could start paying off the national debt tomorrow, since Uncle Sam can pay any bill with keystrokes. In fact, it is not necessary to sell treasury bonds in the first place, since Uncle Sam can deficit spend with keystrokes (there is a law requiring the treasury to sell bonds equal to the deficit, but Congress could simply repeal that law). The practice of selling treasury bonds dates back to the gold standard and no longer makes sense with today's fiat money.
To sum things up, I agree with you that progressive taxation is a good thing and that the rich should pay more. However, the main purpose of taxes is to suck money out of the economy to control inflation, not to "pay for" government spending. Let's stop handicapping SS with the myth that it has to be funded by an imaginary trust fund.
increases, because mfg is still happening.
If they stuff never sells, it can even become a liability.
imo
i understand that the change in the change in real private inventories is what is applied to the change in real GDP, but havent quite wrapped my head around the concept as to why...ie, real private inventories grew by an inflation adjusted $62.8 billion in the third quarter after growth of $84.8 billion in the 2nd quarter, and hence the $22.0 billion slower inventory growth subtracted 0.57% from GDP...still, i want to think that since inventories grew rather than shrunk, they should have added to GDP...what is the logic that makes postitive inventory growth in this case a subtraction from GDP, whereas positive growth in other forms of investment, such as equipment, will always add to GDP?
we have a glut of domestic gas and generally over the past couple of years the cost of producting fracked gas has exceeded the price...gas in Europe is 3 times as expensive; in Japan, it's five times as much as here...fracking continues because they've been able to pull speculative capital in and sell quantities of junk bonds...most drillers fund their operations through a combination of lines of credit, cash flow, and junk debt...with falling prices, lines of credit will dry up, cash flow will shrink and the interest on any new junk debt be that much higher...for instance, the Caa1 rated bonds for former Chesapeake CEO Aubrey McClendon's new company, American Energy Partners, fell 20% since they were issued in July...but because depletion rates on fracked wells are 80 to 90 percent over the first two years, they can't cut back and wait for better prices...to make their interest payments, they have to maintain cash flow, & to do that, they have to keep drilling...
oil is different case because oil is traded worldwide, and US prices move with international prices...the cost of producing the marginal barrel in the US is around $100, many fracking operations break even at $80...nonetheless, they're still in the same fix as those drilling for gas; they have to maintain unprofitable operations just to continue to make payments on their debt...
last week heavily indebted and over-leveraged Chesapeake Energy was forced to sell 413,000 acres with 1,500 wells in West Virginia and southwest Pennsylvania to its rival Southwestern Energy Corp for $5 billion...although this deal was probably in the works before the oil price collapse of recent weeks, the fact that they went through with it at this time at fire-sale prices indicates that their cash flow had probably dwindled to nearly nothing in the face of low gas & oil prices, and that they needed to sell these proprieties just to raise enough cash to keep their other operations running...Chesapeake's problems may be an isolated case, as it had run up $16.2 billion in debt under McClendon, while its capital spending exceeded cash flow by $47.4 billion over the last five years as gas prices collapsed, but if the low oil prices last several weeks persist through the winter, we can expect that more similarly over leveraged oil patch frackers will be squeezed in the same way...
This is from the IRS just wages reported from W-2 in aggregate.
How does this analysis change if you count only heads of households? For example, at least some of the low wage earners are kids and students who aren't supporting themselves.
62 million households in America’s least affluent half averaged only $11,000 in net worth last year, 50 percent less than bottom-half families averaged after inflation in 1989. Over those same years, top 5 percent household average net worth nearly doubled — to $6.8 million.
America’s “pace of new business creation,” the Fed chair details, “has gradually declined” as inequality in the United States has increased. This “slowdown in business formation” may be jeopardizing “a significant source of economic opportunity” for families “below the very top in income and wealth.”
http://www.federalreserve.gov/pubs/bulletin/2014/pdf/scf14.pdf
I think this article hits on an important topic.
However, the raw numbers for hourly wages are largely irrelevant unless the differences in cost of living are factored in. Cost of living is different in nearly every local market, and it's hard to account for that, but essential for this discussion.
Secondly, the cost (or value) of money goes down over time due to inflation. Therefore, it is also highly relevant to see how wages change over time in real terms. At a minimum, any economy worth its salt should be able to provide constant real wages over time. What we see in the US is that minimum wages have gone down for the last 40 years. This shows how we are letting our economy simply produce more poverty over time. That is what should really get people angry, because minimum wage is a political choice made by our government. Why should minimum wage ever go down in real terms? That is tantamount to undermining the entire concept of the minimum wage.
While I think that raising minimum wages would be beneficial in the short term, and the relative depression of minimum wages is symptomatic of the systematic economic disembowelment of the USA, by itself it will not help much in the long run.
The problem is the positive feedback loop between the monied interests and the politicians.
I don't trust the Democrats on minimum wage, as both parties raise issues which play to their base, which they count on the other party to keep them from doing. A lot of what goes on in the political scene is like Wrestlemania.
I don't trust the Republicans on immigration, for the same reason.
I do have to admit that those on the left seem more able to identify with the plight of others, and appear more compassionate. This irritates me, but I have to admit it is true. Comparing the politics and policies of the folks who own Wal-Mart with those who run Costco, (if you are of a conservative bent) is downright embarrassing.
I would be pleased to vote for a political party which would advance an economic policy which results in the demand for labor increasing to such an extent that it makes the minimum wage irrelevant.
That would include
1. Effective prevention of illegal labor.
That would create significant demand for low to medium skill workers who are US citizens or legal residents. The primary beneficiaries would be those demographics which currently suffer very high unemployment, and also the working poor. The working poor would benefit from the relative shortage of people capable of working, which would raise wages according to the basic principle of supply and demand.
2. Reasonably high tariffs
Tariffs would give an advantage to domestic production, which would encourage local innovation. They also would to some extent offset the advantage businesses with global scale have with respect to their smaller competitors. This would result in more demand for skilled and unskilled workers, which would raise real wage rates. While in the short term this would raise the price of imported goods, the effect on cost would be more nearly neutral, as (if the increase in cost of the imported goods is just the tariff) then there is tax revenue of the full amount of the tariff. This is a tax paid only by those who buy imported goods, and can offset other taxes.
3. Strong incentives for US industrial development.
I don't think either party is interested in those things.
That said, I remain mostly a social issues voter, as those things are perhaps more important, and also there is an apparent difference between the parties on those issues. I have been poor, and what passes for poor in the US isn't that bad.
Peace.
Despite the spin from the likes of the Hoover or Cato Institutes these numbers/stats do not put our economy/future in a very good light. The irony of all this , if you are a retail (small) investor; is that you need medium income wage earners to buy the "stuff" varied companies produce. Less income , less purchases. I hold no hope in Conservative or far right think tanks to "get" this. Hopefully, this obvious economic path will ease; it cannot continue as this article points out; it's simply not substanable.
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