Two Cents On The Minimum Wage
Once upon a time, the minimum wage, similar gratis trade, was a basic examine of whether you lot were awake inwards the offset calendar week of econ 1. We position a horizontal trace inwards a furnish as well as need graph. Minimum reward increase unemployment of piteous people.
It's dorsum of course. I won't review hither the struggle over Card as well as Kruger's provocative results, diff inwards diff estimators, empirical travel without theory (is at that topographic point truly no exchange to upper-case missive of the alphabet or high skilled labor? Is the cost elasticity truly zero?) as well as thus on. This is all low-hanging fruit. (See Greg Mankiw, who asks if $9 why non $20, David Henderson's nice post with slap-up quotes from Paul Krugman on only how bad minimum reward were earlier evil Republicans didn't similar them, the state of the Union Address was to me, an interesting peek into the Administration's thinking, as well as a revealing slice of political rhetoric (I hateful that inwards the skilful feel of "rhetoric," i.e. "what arguments nosotros purpose to persuade people")
My thought: What planet practice the president's advisers alive on? Come get got a look, say, at the due south side of Chicago, where I grew upwards as well as live, as well as where President Obama spent many formative years every bit a community organizer as well as thus knows it fifty-fifty better. Is the first-order job of these neighborhoods that its residents alive inwards intact families with 2 kids, i full-time wage earner, trying to alive on the reward from a full-time minimum wage job, but having a tough fourth dimension making ends meet? Is there anyone like this?
The tragedy of the neighborhoods approximately where I live, as well as President Obama used to live, is the vast position out of people with no project at all. How does raising the minimum wage for the few who get got a minimum-wage project aid the vast bulk who get got no project at all?
Minimum reward are virtually teenagers as well as immature adults, most withal living at home. It's virtually the "dating" stage of work-force attachment, where people acquire the skills as well as habits, as well as brand connections yesteryear which they tin motility upwards to amend jobs when they are laid to get got families.
"Families" is an interesting give-and-take every bit well. Marriage with lower-income Americans is rare, every bit President Obama made clear when he came dorsum to utter to students at Hyde Park High school and made some controversial remarks virtually the absence of fathers.
For instance inwards zip code 60619, only due south of the University, at that topographic point are "4,967 married couples with children, as well as 12,745 single-parent households (2,655 men, 10,090 women)." Here's the marital condition chart.
What "family" agency inwards this vocalisation communication is, yesteryear as well as large, a unmarried adult woman with children. I'm non starting a Murphy Brown argument, but it is an interesting purpose of the word. I wonder how many of the Republican ears inwards the audience listened to "working families" as well as heard "single women with children as well as no manful somebody raise inwards sight?" More worthy of our sympathy, indeed, but a real dissimilar motion-picture demonstrate of what sort of policies mightiness truly work.
And fifty-fifty then, the modern Scrooge ("are at that topographic point no workhouses?") mightiness ask, "Is at that topographic point no earned-income taxation credit? Is at that topographic point no dwelling heating subsidy? Are at that topographic point no nutrient stamps? Is at that topographic point no schip or medicaid? Have they non applied for social safety disability? Are at that topographic point no department 8 housing vouchers?"
The signal is non to live heartless -- authorities programs or not, life on the lower halt of America's economical as well as social spectrum is pretty awful. The signal is, if nosotros seriously desire to address the problems of the "working poor," if nosotros desire policies that truly travel rather than spew a lot of TV fourth dimension as well as brand us experience good, permit us pigment a vaguely realistic motion-picture demonstrate of what their life is like. Absolutely nobody (except maybe illegal aliens) is trying to back upwards a identify unit of measurement on $14,500 from a total fourth dimension minimum wage job, period. The actual economical life of the "working poor" is a welter of authorities programs, transitory employment, as well as a lot of illegal activity
And, i huge job facing people who practice travel total fourth dimension as well as earn minimum wage is the astounding marginal taxation rates that our diverse social programs imply. In fact, much of the enhance from $7.25 to $9.00 volition live taken away. Even to a greater extent than of a enhance to $20 an threescore minutes volition live taken away. The construction of our programs that are supposed to aid people are instead trapping them. (Previous posts here as well as here.)
Yes indeed, permit us aid families to "finally acquire ahead!" Let us utter virtually lousy schools, incentive-destroying social programs, horrendous violence, life-destroying incarceration, as well as the state of war on drugs run amok. The minimum wage may slightly aid the few who tin acquire such jobs, as well as position such entry-level jobs slightly to a greater extent than out of attain for many others. But it's only irrelevant to the real, first-order problems such families face.
The terminal trace likewise caught my eye: "For businesses across the country, it would hateful customers with to a greater extent than coin inwards their pockets." I wonder who signed off on that one.
Even if the Administration's theory works, it is just the same every bit a taxation on sales of local businesses (i.e. cost passed on every bit higher prices) to subsidize employment. This is an interesting harbinger of things to come upwards inwards the politics of budgets: Passing a national sales taxation on businesses that employ minimum wage workers, to fund an on-budget subsidy of those workers' wages, would manifestly become nowhere politically, as well as would count on the budget. But forcing businesses to practice it, though economically equivalent, makes it looks every bit if the authorities is non taxing as well as spending every bit much every bit it is.
And of course, that taxation comes out of the real pockets it's going dorsum in. Back to Greg Mankiw's inquiry virtually how much the wage should be: on this theory at that topographic point is no limit! If you lot pay them $20, as well as thus customers get got $20 to a greater extent than to spend. If you lot pay them $50, as well as thus they get got $50 to a greater extent than to spend.
Now nosotros truly get got crossed the line, from serious economics, to short acre Rome burns, to believing inwards magic.
It's dorsum of course. I won't review hither the struggle over Card as well as Kruger's provocative results, diff inwards diff estimators, empirical travel without theory (is at that topographic point truly no exchange to upper-case missive of the alphabet or high skilled labor? Is the cost elasticity truly zero?) as well as thus on. This is all low-hanging fruit. (See Greg Mankiw, who asks if $9 why non $20, David Henderson's nice post with slap-up quotes from Paul Krugman on only how bad minimum reward were earlier evil Republicans didn't similar them, the state of the Union Address was to me, an interesting peek into the Administration's thinking, as well as a revealing slice of political rhetoric (I hateful that inwards the skilful feel of "rhetoric," i.e. "what arguments nosotros purpose to persuade people")
...today, a full-time worker making the minimum wage earns $14,500 a year. Even with the taxation relief we’ve position inwards place, a identify unit of measurement with 2 kids that earns the minimum wage withal lives below the poverty line. That’s wrong....What caught my optic is the "family with 2 kids," "...millions of working families." It paints a grim picture: mom, dad, 2 kids, trying to live i wage earner's full-time minimum-wage job.
Tonight, let’s declare that inwards the wealthiest nation on Earth, no i who industrial plant full-time should get got to alive inwards poverty, as well as enhance the federal minimum wage to $9.00 an hour. This unmarried pace would enhance the incomes of millions of working families. It could hateful the departure betwixt groceries or the nutrient bank; rent or eviction; scraping yesteryear or finally getting ahead. For businesses across the country, it would hateful customers with to a greater extent than coin inwards their pockets....
My thought: What planet practice the president's advisers alive on? Come get got a look, say, at the due south side of Chicago, where I grew upwards as well as live, as well as where President Obama spent many formative years every bit a community organizer as well as thus knows it fifty-fifty better. Is the first-order job of these neighborhoods that its residents alive inwards intact families with 2 kids, i full-time wage earner, trying to alive on the reward from a full-time minimum wage job, but having a tough fourth dimension making ends meet? Is there anyone like this?
The tragedy of the neighborhoods approximately where I live, as well as President Obama used to live, is the vast position out of people with no project at all. How does raising the minimum wage for the few who get got a minimum-wage project aid the vast bulk who get got no project at all?
Minimum reward are virtually teenagers as well as immature adults, most withal living at home. It's virtually the "dating" stage of work-force attachment, where people acquire the skills as well as habits, as well as brand connections yesteryear which they tin motility upwards to amend jobs when they are laid to get got families.
"Families" is an interesting give-and-take every bit well. Marriage with lower-income Americans is rare, every bit President Obama made clear when he came dorsum to utter to students at Hyde Park High school and made some controversial remarks virtually the absence of fathers.
What "family" agency inwards this vocalisation communication is, yesteryear as well as large, a unmarried adult woman with children. I'm non starting a Murphy Brown argument, but it is an interesting purpose of the word. I wonder how many of the Republican ears inwards the audience listened to "working families" as well as heard "single women with children as well as no manful somebody raise inwards sight?" More worthy of our sympathy, indeed, but a real dissimilar motion-picture demonstrate of what sort of policies mightiness truly work.
And fifty-fifty then, the modern Scrooge ("are at that topographic point no workhouses?") mightiness ask, "Is at that topographic point no earned-income taxation credit? Is at that topographic point no dwelling heating subsidy? Are at that topographic point no nutrient stamps? Is at that topographic point no schip or medicaid? Have they non applied for social safety disability? Are at that topographic point no department 8 housing vouchers?"
The signal is non to live heartless -- authorities programs or not, life on the lower halt of America's economical as well as social spectrum is pretty awful. The signal is, if nosotros seriously desire to address the problems of the "working poor," if nosotros desire policies that truly travel rather than spew a lot of TV fourth dimension as well as brand us experience good, permit us pigment a vaguely realistic motion-picture demonstrate of what their life is like. Absolutely nobody (except maybe illegal aliens) is trying to back upwards a identify unit of measurement on $14,500 from a total fourth dimension minimum wage job, period. The actual economical life of the "working poor" is a welter of authorities programs, transitory employment, as well as a lot of illegal activity
And, i huge job facing people who practice travel total fourth dimension as well as earn minimum wage is the astounding marginal taxation rates that our diverse social programs imply. In fact, much of the enhance from $7.25 to $9.00 volition live taken away. Even to a greater extent than of a enhance to $20 an threescore minutes volition live taken away. The construction of our programs that are supposed to aid people are instead trapping them. (Previous posts here as well as here.)
Yes indeed, permit us aid families to "finally acquire ahead!" Let us utter virtually lousy schools, incentive-destroying social programs, horrendous violence, life-destroying incarceration, as well as the state of war on drugs run amok. The minimum wage may slightly aid the few who tin acquire such jobs, as well as position such entry-level jobs slightly to a greater extent than out of attain for many others. But it's only irrelevant to the real, first-order problems such families face.
The terminal trace likewise caught my eye: "For businesses across the country, it would hateful customers with to a greater extent than coin inwards their pockets." I wonder who signed off on that one.
Even if the Administration's theory works, it is just the same every bit a taxation on sales of local businesses (i.e. cost passed on every bit higher prices) to subsidize employment. This is an interesting harbinger of things to come upwards inwards the politics of budgets: Passing a national sales taxation on businesses that employ minimum wage workers, to fund an on-budget subsidy of those workers' wages, would manifestly become nowhere politically, as well as would count on the budget. But forcing businesses to practice it, though economically equivalent, makes it looks every bit if the authorities is non taxing as well as spending every bit much every bit it is.
And of course, that taxation comes out of the real pockets it's going dorsum in. Back to Greg Mankiw's inquiry virtually how much the wage should be: on this theory at that topographic point is no limit! If you lot pay them $20, as well as thus customers get got $20 to a greater extent than to spend. If you lot pay them $50, as well as thus they get got $50 to a greater extent than to spend.
Now nosotros truly get got crossed the line, from serious economics, to short acre Rome burns, to believing inwards magic.
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