When I was young, I was taught, “A fair day’s work for a fair day’s wage.” I could work a 40 hour week and make a decent living. I could even raise a family, send my kids to college and still look forward to retiring someday. But since trickle down economics, multiple recessions, the housing bubble, special treatment of banks ‘too big to fail’ and other corporate rot, that’s all gone. The jobs that are now available require I work two of them so I can default on a mortgage, apply for food assistance and deny my children the opportunity for a higher education. Meanwhile, the lazy rich help themselves to the fruits of my labor and produce nothing. Somehow, though, this is my fault.
The reality is that corporate America has stopped paying their workers for their work. Productivity is way up but wages are stagnant. Does that sound like the America you grew up believing in? It certainly doesn’t to me. The obvious solution is for corporate America to pay a fair minimum wage but the right finds the idea of this simple fix horrifying. When asked, those on the right use canned responses to explain why you don’t, and shouldn’t, make a living wage. Here are the top 5 “reasons” and why they’re completely wrong.
(1) Raising The Minimum Wage Will Cost Jobs
The biggest lie. Several studies have shown that increasing the minimum wage reduces turnover, increases spending and increases demand. These studies have all come to the conclusion that raising the wage has a negligible effect one way or another on job creation.
U.S. experience, it turns out, offers many ‘natural experiments’ here, in which one state raises its minimum wage while others do not. And while there are dissenters, as there always are, the great preponderance of the evidence from these natural experiments points to little if any negative effect of minimum wage increases on employment. - Paul Krugman
Does giving an increase really cost jobs? No. It seems that the real “problem” with an increase is that it affects profit margins. We, as a country, can more than afford increases on the minimum wage at the cost of a wage decrease on those earning the maximum. In other words, millions of poor workers can make more if millionaires and billionaires lose a tiny fraction of their yearly income. Clearly, you can see why corporate America is allergic to this idea. Sacrifce a third yacht so millions of people don’t have to use food stamps to survive? Blasphemy!
China’s official bank system, which is controlled by the state, is very conservative, much as American banks were before 1980. Interest rates on bank accounts are very low, just barely above the CPI.
Rich investors seeking better returns on their money have turned to wealth management products (WMPs) created by independent firms, which promise high yields to the buyers. Paradoxically, it’s the banks which market and distribute these products to their major account holders.
Normally, the banks have stepped in when those promises fall short, but the Industrial and Commercial Bank of China (ICBC) has indicated that it may not support a WMP that was scheduled to begin payouts on Jan. 31, the last day of the Chinese lunar calendar this year.
Experts are worried that a default could tip the credit-dependent Chinese economy into chaos.
Most wealth management products are sold with some form of bank guarantee, leading many investors to believe that the products are effectively risk-free, despite the often high promised yield.
But, in an unprecedented move, ICBC has said it will not stand behind the Rmb3bn ($495m) investment product it distributed through its branches in 2010, according to people familiar with the situation. The fund matures at the end of this month.
Zhang Zhiwei, China economist at Nomura, said that a default in the shadow banking sector could trigger a ripple effect across the whole financial system.
According to the Financial Times, the “shadow banking” sector accounts for one-third of China’s credit economy, which in total amounts to 17.3 trillion RMB (about $3 trillion). The fund in jeopardy is only worth about $495 million, a mere drop in the bucket, but a default would threaten public trust in the banking and investment sector.
ICBC marketed a product optimistically called “2010 China Credit / Credit Equals Gold #1 Collective Trust Product,” the funds of which were to finance a coal company that is now facing bankruptcy. The first payouts were to begin at the end of this month.
The creator of the WMP, China Credit Trust Co., has promised to make partial payments to investors, but those investors will also expect some redress from ICBC.
While not specifically mentioned in the FT article, I’ve read elsewhere that the government will pressure ICBC to pay investors, to avoid a possible economic meltdown. forbes.com
Economists disagree on how much a credit crunch in China would affect the global economy.
By Megan McArdle
If you’re a recent college graduate, I commend to you this story from the Wall Street Journal on the peripatetic career paths of the Ohio State Class of 2008. With the financial markets crashing, these kids ended up taking jobs they didn’t want in places they didn’t want to be — or moving into mom’s basement while they struggled to forge a career out of their thin employment prospects. But the kids the Wall Street Journal interviewed are (except for one sad chap who decided to move to New York) basically OK. They’re not doing what they thought they’d be doing. Still, they’re having good lives, and even good careers, though it took them longer than it took luckier classes that graduated in more prosperous times.
Don’t get me wrong, youngsters: I feel your pain. I graduated from business school in 2001. The job I had lined up with a management consulting firm evaporated, with the coup-de-grace delivered just as the MBA Class of 2002 began recruiting. Suddenly I was competing with kids who hadn’t lost a job — and even though the job loss wasn’t my fault (my whole class was laid off), employers didn’t see why they should take a chance on an unemployed person. To make matters worse, I spent a year doing administrative work in a trailer at the World Trade Center disaster recovery site, rather than immediately looking for a new “career” job. To make matters still worse, my previous job had been in the tech industry. There was about a year and a half when I had no idea where I was going to find another full-time job. I began to think I had inadvertently ruined my life.
Eventually, I got a job with the Economist magazine, which I found because of this blog I’d started while working at the World Trade Center. Ten years later, things are pretty much all right. Okay, I got lucky … but you know what? As the Journal article shows, eventually, if you keep moving, you’ll probably get lucky too. So here are some hard-but-hopeful truths for the classes of 2008-13, inclusive:
1. You need to take a job, any job. Every time you leave your house, or otherwise make contact with the real world, you create opportunities for something good to happen to your career. Leaving the house also keeps you from falling prey to depression, which tends to plague the unemployed like, well, the plague. Also, it’s easier not to look completely desperate when you have a little money coming in. “Desperate” is not a good look to wear to a job interview.
2. Don’t say you can’t work a lesser job because you won’t be able to focus on your job search. After the first few weeks, your job search is not taking you 60 hours a week. There just aren’t that many prospects out there. Don’t give yourself excuses to stay home and sulk and/or sponge off mom and dad — who will, incidentally, be much happier to have you in the basement if you’re visibly working hard.
And here’s the kicker:
11. If you really want to work somewhere, volunteer to work unpaid. Take it as a second job — nights, weekends, whatever. Yes, this will cut into your social life. So will working at Target, in your thirties.
Fuck you Megan and your privileged white ass.
All of the “13 tips” are just variations on “work for nothing” or “work for whatever you can get.” BE HAPPY FOR THAT BOWL OF GRUEL. You know that people who are working part-time at Walmart or McDonald’s for minimum wage still have to make themselves available for scheduling 24/7, if they ask for a few hours to go to a job interview, they might not have that part time jrrb to go back to.
When unpaid internships (slave labor) are the norm for entry level, then what used to be entry-level salaries will become the norm for someone seeking paid work after a year or two years of slave labor. And all experienced workers’ pay will slide downward accordingly.
The American Dream will be fulfilled when everybody is striving to work for minimum wage (after working at an unpaid internship) and the Waltons have all Teh Moneys.
Is that really “not down by much”? Given that some growth is required every year merely to keep pace with higher costs and a growing population, a cut in unadjusted dollar terms over three years is actually a lot. Government spending has actually dropped by 2 percentage points of gross domestic product since 2010. That’s a very fast drop, especially given the backdrop of an economy coping with the vast fallout from the largest economic crisis since the Great Depression. Indeed, the consensus of the macroeconomic forecasting field is that rapid government cutbacks are hampering the recovery, and thus prolonging the enormous human misery of high unemployment, though that consensus does not appear anywhere in the story.
The story proceeds to report that the federal workforce is not shrinking by much:
Measured another way — not in dollars, but in people — the government has about 4.1 million employees today, military and civilian. That’s more than the populations of 24 states.
Back in 2010, it had 4.3 million employees. More than the populations of 24 states.
Another way to put that fact would be that the federal workforce has declined by 4.65 percent over three years. Still another way to put it would be that, over the last several years, the federal workforce as a percentage of the population has continued its historic decline:
WASHINGTON — U.S. employers added 162,000 jobs in July, the fewest since March. The gains were enough to lower the unemployment rate to a 4 1/2 -year low of 7.4 percent, a good sign in an otherwise lackluster report.
The Labor Department said Friday that unemployment fell from 7.6 percent in June.
The economy added 26,000 fewer jobs in May and June than previously estimated. Americans worked fewer hours. And their pay dipped. The figures suggest weak economic growth may be making businesses cautious about hiring.
Reaction to the jobs report on financial markets was slightly negative. Stock index futures gave up early gains and were little changed shortly after the report came out. The yield on the benchmark 10-year Treasury note fell to 2.64 percent from 2.71 percent as investors bought U.S. government bonds.
Yesterday’s Bulls & Bears opened with an effort to kill a discussion about calls for raising the minimum wage. Host Brenda Buttner began by asking regular Gary B. Smith, a reliable conservative voice on the show, “Will maximizing the minimum wage minimize or maximize our job growth?”
Right on schedule, Smith said “It’s going to kill job growth, especially when you get right down to it, what the minimum wage does, it discriminates against less-skilled workers, it’s plain and simple. New York, in 2006, raised their minimum wage from about $5.15 to $6.75. They saw a 20% increase in unemployment against younger, lesser skilled workers. In 2007, before the recession started, unemployment amongst young black teenagers… was about 29%. Now, after all the stimulus and what we’ve done, it’s now 40%. So it’s - clearly, it works against these workers.”
David Mercer was the lone liberal on the five-person panel. He said, “With all-time profits now being experienced by corporations, it’s about time after four years that workers get a fair share of that. And I think in doing so, you also help the economy by giving them more affordable wages to have more economic security. That puts in more buying power, and increases demand that overall increases growth in the economy leading to other hiring.”
After that comment, Buttner quickly stepped in to redirect the conversation - in a direction that just happened to highlight and promote conservative ideology. She “asked” another reliable conservative on the panel, John Layfield, “Does this just ignore supply and demand in the job market?”
Sure enough, Layfield replied, “Yeah it does ignore supply and demand completely. Look, I love the argument here that these companies are making so much money, how dare they make so much money? And I love the jobs plan. You have got companies who have a lot of cash on balance sheets, so the jobs plan of the administration is, we want you to take that cash and hire people you don’t need. Look, the minimum wage affects only about 2.9% of workers, and understand the average family that has a minimum wage worker makes $53,000 per year.”
Buttner again steered the discussion into conservative-talking-point territory by asking another conservative regular, Tracy Byrnes, “The job creators… are they the ones who are going to get hit the hardest by this?”
Byrnes took the ball and ran with into the “smear those who disagree as socialists” territory. She said, “Absolutely. I mean, You raise the minimum wage, they can’t afford the extra dishwasher in the kitchen. And why should they? When they can have family members do it. It hurts the entry-level jobs. It’s going to hurt our teenagers. …This notion that we’re going to keep raising it just to share the wealth ‘cause, ‘Well, we’re almost socialist anyway at this point,’ is ridiculous.”
Read more at newshounds.us
WASHINGTON (AP) — Four out of 5 U.S. adults struggle with joblessness, near poverty or reliance on welfare for at least parts of their lives, a sign of deteriorating economic security and an elusive American dream.
Survey data exclusive to The Associated Press points to an increasingly globalized U.S. economy, the widening gap between rich and poor and loss of good-paying manufacturing jobs as reasons for the trend.
The findings come as President Barack Obama tries to renew his administration’s emphasis on the economy, saying in recent speeches that his highest priority is to “rebuild ladders of opportunity” and reverse income inequality.
Hardship is particularly on the rise among whites, based on several measures. Pessimism among that racial group about their families’ economic futures has climbed to the highest point since at least 1987. In the most recent AP-GfK poll, 63 percent of whites called the economy “poor.”
“I think it’s going to get worse,” said Irene Salyers, 52, of Buchanan County, Va., a declining coal region in Appalachia. Married and divorced three times, Salyers now helps run a fruit and vegetable stand with her boyfriend, but it doesn’t generate much income. They live mostly off government disability checks.
“If you do try to go apply for a job, they’re not hiring people, and they’re not paying that much to even go to work,” she said. Children, she said, have “nothing better to do than to get on drugs.”
While racial and ethnic minorities are more likely to live in poverty, race disparities in the poverty rate have narrowed substantially since the 1970s, census data show. Economic insecurity among whites also is more pervasive than is shown in government data, engulfing more than 76 percent of white adults by the time they turn 60, according to a new economic gauge being published next year by the Oxford University Press.
The gauge defines “economic insecurity” as experiencing unemployment during the year, or a year or more of reliance on government aid such as food stamps or income below 150 percent of the poverty line. Measured across all races, the risk of economic insecurity rises to 79 percent.
“It’s time that America comes to understand that many of the nation’s biggest disparities, from education and life expectancy to poverty, are increasingly due to economic class position,” said William Julius Wilson, a Harvard professor who specializes in race and poverty.
He noted that despite continuing economic difficulties, minorities have more optimism about the future after Obama’s election, while struggling whites do not.
“There is the real possibility that white alienation will increase if steps are not taken to highlight and address inequality on a broad front,” Wilson said.
Wingnuts are laughing and gloating ITZ OBAMUZ FAULT!!11!!! just like they laughed and gloated over Detroit.
President Obama tells the American people about his speech at Knox College on Wednesday, where he discussed the cornerstones of what it means to be middle class, including having a good job, a home that is your own, quality education, a secure retirement, and affordable health care.