raising federal minimum wage to $10.10

[ajackson]

When adjusted for inflation, mean household income has been stagnant dating back to the mid 60s...we can argue about whether raising the minimum wage is appropriate in the short term ( I think we agree that monetary reform is the long term solution)...but we shouldn't be pretending that it's long term inflation depressing wages when the stagnation started well before said inflation (and before we left the gold standard in the 70s).

Feel free to measure in any year-dollar you choose, and you'll see that real median household income was rising until about 2001, right after the dotcom bubble burst. Real wages have also grown if you count benefits (public and private), which most liberal economists are anxious to exclude. Look at real compensation if you have doubts. The PPP numbers are much less pretty, and that's why I harp on inflation.

The inflationary problems and the stagnation of labor productivity against real compensation is not a mystery to Beltway economists. Minimum wage was at the bottom of the Obama administration's to-do list. First was healthcare reform. Then EPA fracking and CAFE. Then a half-assed attempt at education reform. Now, with the party in dire straits, they throw minimum wage to the base. It's politically motivated, not economically motivated.

Why would you use the median? No one is arguing that the top 20% hasn't seen income growth. The problem is that we've had only negligible real income growth for the bottom 80% dating back to 1967, which is reflected in census data on real mean income by quintile.

Employer health benefits can not be considered income for the purposes of this discussion because, regardless of their dollar value, they do not provide additional purchasing power to the beneficiary (unless the beneficiary was paying for health insurance on their own and experience a noticeable savings by switching to the plan offered by their employer - but this is rare).

I understand that Obama is just playing politics with it, but that doesn't make it bad policy.

[AggregateDemand]

Why would you use the median? No one is arguing that the top 20% hasn't seen income growth. The problem is that we've had only negligible real income growth for the bottom 80% dating back to 1967, which is reflected in census data on real mean income by quintile.

Employer health benefits can not be considered income for the purposes of this discussion because, regardless of their dollar value, they do not provide additional purchasing power to the beneficiary (unless the beneficiary was paying for health insurance on their own and experience a noticeable savings by switching to the plan offered by their employer - but this is rare).

I understand that Obama is just playing politics with it, but that doesn't make it bad policy.

You're referencing mean income within the quintile system, which is similar to median income (50th percentile). Neither measure recognizes the surge in executive pay when calculating income for the average American.

Furthermore, the bottom two quintiles are basically indexed to inflation. 5th quintile is welfare recipients and single social security recipients. 4th quintile is generally fixed income elderly (often inflation indexed) and minimum wage earners (adjusted for inflation periodically). Naturally, we aren't going to have wage growth for either quintile. It's only a problem if your society has very little economic mobility.

The middle quintile is what matters (median income). If you look at the data, it was growing quite nicely until the 21st century. After the dotcom bubble burst, the US began to develop economic cancer from poorly conceived government programs.

[ajackson]

Why would you use the median? No one is arguing that the top 20% hasn't seen income growth. The problem is that we've had only negligible real income growth for the bottom 80% dating back to 1967, which is reflected in census data on real mean income by quintile.

Employer health benefits can not be considered income for the purposes of this discussion because, regardless of their dollar value, they do not provide additional purchasing power to the beneficiary (unless the beneficiary was paying for health insurance on their own and experience a noticeable savings by switching to the plan offered by their employer - but this is rare).

I understand that Obama is just playing politics with it, but that doesn't make it bad policy.

You're referencing mean income within the quintile system, which is similar to median income (50th percentile). Neither measure recognizes the surge in executive pay when calculating income for the average American.

Furthermore, the bottom two quintiles are basically indexed to inflation. 5th quartile is welfare recipients and single social security recipients. 4th quartile is generally fixed income elderly (often inflation indexed) and minimum wage earners (adjusted for inflation periodically). Naturally, we aren't going to have wage growth for either quintile. It's only a problem if your society has very little economic mobility.

The middle quintile is what matters (median income). If you look at the data, it was growing quite nicely until the 21st century. After the dotcom bubble burst, the US began to develop economic cancer from poorly conceived government programs.

The bottom 40% of our labor force is entirely made up welfare/social security recipients and low wage workers? I find that unlikely, but even if it were so - it would make the point about the stimulative effect on consumer spending of raising the minimum wage. Furthermore, you'll have to explain how there is "naturally" no income growth for low wage earners due to economic mobility - I don't see the correlation.

What government programs between the early 2000s and now are you referencing? Bad monetary and fiscal policy (and the overall trend of inflation) predates the dotcom burst by decades.

[AggregateDemand]

The bottom 40% of our labor force is entirely made up welfare/social security recipients and low wage workers? I find that unlikely, but even if it were so - it would make the point about the stimulative effect on consumer spending of raising the minimum wage. Furthermore, you'll have to explain how there is "naturally" no income growth for low wage earners due to economic mobility - I don't see the correlation.

What government programs between the early 2000s and now are you referencing? Bad monetary and fiscal policy (and the overall trend of inflation) predates the dotcom burst by decades.

Labor force participation rate is only about 63%. 5th and 4th quintile are generally non-laborers. Welfare recipients. Disability. Fixed-income elderly. Min wage or unskilled. You wouldn't judge the strength of your economy by those inflation-adjusted quintiles, any more than you'd judge the country by the 1st or 2nd quintiles.

I didn't say it was natural to have no income growth due to economic mobility. I said the stagnation of min wage and unskilled wage is not a particularly big problem unless your society does not have economic mobility. The US has little economic mobility, but that isn't fixed with minimum wage. I said it's natural to have no real growth in inflation-adjusted benefits, including min wage.

The bad economic policies were lax CAFE regulations, expansion of "affordable housing" liquidity initiatives (housing bubble), terrible health insurance regulation, and expansion of student lending (rather than addressing cost).

[ajackson]

The bottom 40% of our labor force is entirely made up welfare/social security recipients and low wage workers? I find that unlikely, but even if it were so - it would make the point about the stimulative effect on consumer spending of raising the minimum wage. Furthermore, you'll have to explain how there is "naturally" no income growth for low wage earners due to economic mobility - I don't see the correlation.

What government programs between the early 2000s and now are you referencing? Bad monetary and fiscal policy (and the overall trend of inflation) predates the dotcom burst by decades.

Labor force participation rate is only about 63%. 5th and 4th quintile are generally non-laborers. Welfare recipients. Disability. Fixed-income elderly. Min wage or unskilled. You wouldn't judge the strength of your economy by those inflation-adjusted quintiles, any more than you'd judge the country by the 1st or 2nd quintiles.

I didn't say it was natural to have no income growth due to economic mobility. I said the stagnation of min wage and unskilled wage is not a particularly big problem unless your society does not have economic mobility. The US has little economic mobility, but that isn't fixed with minimum wage. I said it's natural to have no real growth in inflation-adjusted benefits, including min wage.

The bad economic policies were lax CAFE regulations, expansion of "affordable housing" liquidity initiatives (housing bubble), terrible health insurance regulation, and expansion of student lending (rather than addressing cost).

The mean income of the fourth quintile is roughly $28,000 (or 13$ to 14$ an hour). There are millions of workers, across virtually every industry, who make less than that.  They are not a statistical irrelevancy - but its besides the point, because they make up a huge portion of consumer spending, the demand that powers the economy. It's on the basis that still nearly 100% of their income will be spent back into the economy that increasing the minimum wage is sound policy.

Stagnant wages for 40% of the population is something I would consider troublesome regardless of economic mobility...but we'll have to agree to disagree there.

I'm not arguing that anything you've listed constitutes good policy, but I fail to see the relevance of any of them in disqualifying utilizing minimum wage increases as sound economic policy.

[AggregateDemand]

The mean income of the fourth quintile is roughly $28,000 (or 13$ to 14$ an hour). There are millions of workers, across virtually every industry, who make less than that.  

That's nice, but we're talking about household income. We've got about 120M US households and 70M Americans on Welfare and Social Security with low marriage rates and low family rates. They make up a majority of the bottom two quintiles.

Regardless, the conversation cannot revolve around income alone. It doesn't make any sense that median income could be stagnant, yet American employment could be deteriorating. If you look at real compensation a completely different picture emerges. The growth rates look more similar to those of the top quintile, and that's why businesses aren't hiring. Consumer spending is weak because most of our compensation growth is non-cash benefits.

[ajackson]

The mean income of the fourth quintile is roughly $28,000 (or 13$ to 14$ an hour). There are millions of workers, across virtually every industry, who make less than that.  

That's nice, but we're talking about household income. We've got about 120M US households and 70M Americans on Welfare and Social Security with low marriage rates and low family rates. They make up a majority of the bottom two quintiles.

So we agree that wage stagnation effects tens if millions households/individuals?

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Consumer spending is weak because compensation growth has not included more spendable income (purchasing power) for the lower quintiles? Essentially, this is what I've arguing this whole time. How would a minimum wage increase not alleviate the downward pressure on consumer spending in the short term?

[AggregateDemand]

Consumer spending is weak because compensation growth has not included more spendable income (purchasing power) for the lower quintiles? Essentially, this is what I've arguing this whole time. How would a minimum wage increase not alleviate the downward pressure on consumer spending in the short term?

It probably will work in the short term, but that's all it's good for, and it has complications. Treating the symptoms is not good economic policy. Raising wages in an economy with growth rates below federal deficits is not a good idea, either.

Minimum wage is the policy that appeals to America's vanity. That's about it.

[ajackson]

Consumer spending is weak because compensation growth has not included more spendable income (purchasing power) for the lower quintiles? Essentially, this is what I've arguing this whole time. How would a minimum wage increase not alleviate the downward pressure on consumer spending in the short term?

It probably will work in the short term, but that's all it's good for, and it has complications. Treating the symptoms is not good economic policy. Raising wages in an economy with growth rates below federal deficits is not a good idea, either.

Minimum wage is the policy that appeals to America's vanity. That's about it.

I would also prefer a long term solution (monetary reform), but I can't find a justification for letting 5,000,000 people remain in poverty when, without a single new program or adding to the deficit, they could be brought out of it with the added benefit that their new found income will be spent back into the economy...the only losers in this are the 500,000 or so people who were desperately waiting for more positions to open up at Taco Bell.

It's not a solution I'm glad we need to deploy...but we have to work in the confines of the economy we have until we get the substantive, long term reforms we want.

[AggregateDemand]

I would also prefer a long term solution (monetary reform), but I can't find a justification for letting 5,000,000 people remain in poverty when, without a single new program or adding to the deficit, they could be brought out of it with the added benefit that their new found income will be spent back into the economy...the only losers in this are the 500,000 or so people who were desperately waiting for more positions to open up at Taco Bell.

It's not a solution I'm glad we need to deploy...but we have to work in the confines of the economy we have until we get the substantive, long term reforms we want.

If you really want to help, you'll support policy that actually works. Minimum wage is fraught with complications, and it could easily put another 1M Americans out of work, if unexpected complications arise.

We've embraced lazy socio-economic gambling for decades. It's not working, and no one in their right mind would continue the ruse.

[ajackson]

I would also prefer a long term solution (monetary reform), but I can't find a justification for letting 5,000,000 people remain in poverty when, without a single new program or adding to the deficit, they could be brought out of it with the added benefit that their new found income will be spent back into the economy...the only losers in this are the 500,000 or so people who were desperately waiting for more positions to open up at Taco Bell.

It's not a solution I'm glad we need to deploy...but we have to work in the confines of the economy we have until we get the substantive, long term reforms we want.

If you really want to help, you'll support policy that actually works. Minimum wage is fraught with complications, and it could easily put another 1M Americans out of work, if unexpected complications arise.

We've embraced lazy socio-economic gambling for decades. It's not working, and no one in their right mind would continue the ruse.

What short term policies do you propose? There are no economic initiatives that are free from potential complications - including tax cuts and deficit spending ( yet I repeat myself...). Furthermore, there is no indication that workers would be laid off if the minimum wage were raised, rather the danger is to future minimum wage job creation - which is an acceptable risk in terms of the benefit to consumer spending.

Where's the gamble if we can safely assume that at $10.10/hr, nearly 100% of minimum wage workers' income will be spent back into the economy from which the increase was pulled. It's a fluidity measure more than anything, moving capital from where it's stagnant and not being adequately invested (employers) to where it's fluid (consumers).

[Del Tachi]

If the minimum wage was raised to $10.10, I would lose my job. 

[Hatman 🍁]

Support (not a poor hater)

[AggregateDemand]

What short term policies do you propose? There are no economic initiatives that are free from potential complications - including tax cuts and deficit spending ( yet I repeat myself...). Furthermore, there is no indication that workers would be laid off if the minimum wage were raised, rather the danger is to future minimum wage job creation - which is an acceptable risk in terms of the benefit to consumer spending.

Where's the gamble if we can safely assume that at $10.10/hr, nearly 100% of minimum wage workers' income will be spent back into the economy from which the increase was pulled. It's a fluidity measure more than anything, moving capital from where it's stagnant and not being adequately invested (employers) to where it's fluid (consumers).

If you want to identify useful policy, you have to go back to the fitness analogy. At all levels, Americans are taxed at roughly 30% of GDP. It's an ample diet. Unfortunately, a lion's share of the budget is dedicated to sedentary lifestyle, which is making the US an unfit economy and society.

Raising the minimum wage merely dumps the cost of government fiscal indiscretion onto employers. They will continue to shake off the unwarranted burden as they've been doing for the last decade. The Obama administration knows that little will be accomplished, and that's why they haven't brought it up until they needed to buy a few votes.

[ajackson]

What short term policies do you propose? There are no economic initiatives that are free from potential complications - including tax cuts and deficit spending ( yet I repeat myself...). Furthermore, there is no indication that workers would be laid off if the minimum wage were raised, rather the danger is to future minimum wage job creation - which is an acceptable risk in terms of the benefit to consumer spending.

Where's the gamble if we can safely assume that at $10.10/hr, nearly 100% of minimum wage workers' income will be spent back into the economy from which the increase was pulled. It's a fluidity measure more than anything, moving capital from where it's stagnant and not being adequately invested (employers) to where it's fluid (consumers).

If you want to identify useful policy, you have to go back to the fitness analogy. At all levels, Americans are taxed at roughly 30% of GDP. It's an ample diet. Unfortunately, a lion's share of the budget is dedicated to sedentary lifestyle, which is making the US an unfit economy and society.

Raising the minimum wage merely dumps the cost of government fiscal indiscretion onto employers. They will continue to shake off the unwarranted burden as they've been doing for the last decade. The Obama administration knows that little will be accomplished, and that's why they haven't brought it up until they needed to buy a few votes.

One could argue that businesses are dumping their labor costs onto the safety net by paying wages at rates that qualify full time workers for benefits - therefore feeding the welfare spending that you are claiming makes for an unfit and sedentary society.

[AggregateDemand]

One could argue that businesses are dumping their labor costs onto the safety net by paying wages at rates that qualify full time workers for benefits - therefore feeding the welfare spending that you are claiming makes for an unfit and sedentary society.

Every time one makes that argument, jobs get outsourced, and we are confronted with the inconvenient truth that corporations don't have to pay our inflated labor compensation rates. Instead, the government has abdicated the responsibilities it supposedly taxes the citizens to pursue.

It is also clear that the government imposes the highest tax rates on the poor, which keeps the poor completely dependent upon handouts. Someone on welfare cannot take part time work at minimum wage because their benefit loss is greater than their marginal income. You can't fault corporate America for that outcome.

[nolesfan2011]

Support

Support raising it to $16 an hour

[ajackson]

One could argue that businesses are dumping their labor costs onto the safety net by paying wages at rates that qualify full time workers for benefits - therefore feeding the welfare spending that you are claiming makes for an unfit and sedentary society.

Every time one makes that argument, jobs get outsourced, and we are confronted with the inconvenient truth that corporations don't have to pay our inflated labor compensation rates. Instead, the government has abdicated the responsibilities it supposedly taxes the citizens to pursue.

It is also clear that the government imposes the highest tax rates on the poor, which keeps the poor completely dependent upon handouts. Someone on welfare cannot take part time work at minimum wage because their benefit loss is greater than their marginal income. You can't fault corporate America for that outcome.

Retail and service jobs, the vast majority of minimum wage jobs, are physically impossible to outsource. You can not move your cashiers and janitors to India...you are referencing manufacturing jobs which has never paid minimum wage.

After refundable tax credits and deductions, many of the poorest people have negative tax rates. I don't believe they should get both...but thats another thread.

[AggregateDemand]

Retail and service jobs, the vast majority of minimum wage jobs, are physically impossible to outsource. You can not move your cashiers and janitors to India...you are referencing manufacturing jobs which has never paid minimum wage.

After refundable tax credits and deductions, many of the poorest people have negative tax rates. I don't believe they should get both...but thats another thread.

Then imagine retail hours get cut back. Cashiers become more automated. Janitor work gets outsourced, which means more work for the same pay. Apply whatever corporate strategy is applicable to stay on budget.

The more the government tries to dump their social responsibility onto corporate America, the worse things get for the low wage workers.

[Joshgreen]

Support, obviously. Anyone who doesn't fundamentally misunderstands or is just unschooled in introductory economics. Read up, you'll change your mind.

[ajackson]

Retail and service jobs, the vast majority of minimum wage jobs, are physically impossible to outsource. You can not move your cashiers and janitors to India...you are referencing manufacturing jobs which has never paid minimum wage.

After refundable tax credits and deductions, many of the poorest people have negative tax rates. I don't believe they should get both...but thats another thread.

Then imagine retail hours get cut back. Cashiers become more automated. Janitor work gets outsourced, which means more work for the same pay. Apply whatever corporate strategy is applicable to stay on budget.

The more the government tries to dump their social responsibility onto corporate America, the worse things get for the low wage workers.

If retail businesses could have become more efficient and cost effective using those measures, then they would have already. Labor demand doesn't decrease because the price inflates, because cutting labor means cutting productivity. Companies don't lay off employees if the business is succeeding, and there is no evidence that hike of this size would put anyone out of business.

Again, I would argue that it's corporate America dumping its labor cost on the safety net by paying poverty level wages to 4% of full time workers and 7% of all workers.

[AggregateDemand]

If retail businesses could have become more efficient and cost effective using those measures, then they would have already.

No they wouldn't, and basic operations theory explains why. But when external pressures are applied, like minimum wage, companies unleash the Six-Sigma death eaters to find new ways to kneecap employees, and run leaner than ever before. Operations theory says it's not a good idea, but companies feel they are forced to take unnecessary cost-cutting risks.

The entire basis of your argument is that poverty wages are morally wrong; therefore, the market is to blame. That's not how it works, and that line of thinking is the source of many of our problems because it encourages government to abandon its responsibility.

[ajackson]

If retail businesses could have become more efficient and cost effective using those measures, then they would have already.

No they wouldn't, and basic operations theory explains why. But when external pressures are applied, like minimum wage, companies unleash the Six-Sigma death eaters to find new ways to kneecap employees, and run leaner than ever before. Operations theory says it's not a good idea, but companies feel they are forced to take unnecessary cost-cutting risks.

The entire basis of your argument is that poverty wages are morally wrong; therefore, the market is to blame. That's not how it works, and that line of thinking is the source of many of our problems because it encourages government to abandon its responsibility.

Operations theory? Are you talking about the manuals that explain how something is supposed to work or something else? You've lost me.

The basis of my argument is that stagnant wages are economically destructive and that raising the minimum wage is a valid counter measure to that. If our goal is to stimulate the economy without increasing the deficit (or even writing a new law), it's a common sense idea.

[politicallefty]

Support. However, instead of the Senate bill, I'd prefer it go into effect by the end of the year and subsequently index it to inflation thereon.