Nima & Dylan discuss Bernie Sanders’ 10 point plan.
Source:
Bernie Sanders Lays Out Bold 10-Point Plan for Democrats (https://www.truthdig.com/articles/bernie-sanders-lays-out-bold-10-point-plan-for-democrats/)
Tag: minimum wage
Airbus, Alabama, and Minimum Wage Legislation
The WSJ writes Airbus’s New Push: Made in the U.S.A.:
Airbus announced plans to start assembling passenger jets in the U.S. starting in 2015, a move likely to affect labor and trade relations on both sides of the Atlantic.
Airbus outlined the plan Monday at an event in Mobile attended by U.S. suppliers, airlines and politicians, carefully stage-managed amid potential negative reaction on both sides of the Atlantic. EADS shares rose 2% Monday in Paris.
The company said it would create 1,000 jobs at its Brookley Aeroplex in Mobile, doubling the company’s U.S. workforce. One assembly-plant job typically supports up to four at suppliers, Airbus said. Parts for the aircraft will be shipped to Mobile from Hamburg, the site of an existing single-aisle Airbus assembly plant.
“We go where the talent is,” Airbus Chief Executive Fabrice Bregier said in Mobile ahead of a parade of local politicians welcoming the $600 million investment. He didn’t respond directly when asked whether the move would shift employment to the U.S. from Europe. The company’s European unions have voiced concern about production moving overseas, according to French media reports.
He said labor flexibility afforded by a union-free facility in right-to-work Alabama helped drive the plan. So, too, did the opportunity to change the balance of dollar-generated revenue with costs that are generated mainly in euros.
Remember that Alabama has no state imposed minimum wage:
About 3 years ago I wrote about The Effects of Different Minimum Wages in Different States:
Expect those states with minimum wages above the federal level (green) to experience problems with their minimum wage legislation sooner or later. That portion of unemployment which is to be imputed upon minimum wage laws will be significantly higher there. Thus overall unemployment is likely to be sustained at much higher levels there. We may see a noticeable exodus of workers from those green states to some of the red, blue, or yellow states over time.
That concept applies globally as much as it does nationally.
On How Minimum Wage Laws Create Unemployment:
States and the federal government have to pay serious attention to this issue. If market wages across the country fall below the minimum wage, long-term mass unemployment will ensue and not go away anytime soon. Lots of people will of course seek refuge on the black market, get paid in cash, and pay no taxes. But to the extent that governments actually enforce those minimum wages that are fixed above market wages, I see nothing but trouble ahead on the employment market.
Recent events in Wisconsin and a general trend towards Right to Work legislation in several states suggests that even politicians are beginning to recognize the necessity of clawing back on the aggression and threats that are inherent in so called “pro-labor” legislation, if their tax livestock and with that their tax farms are to generate enough output moving forward.
Related Posts:
Unemployment Benefits Running Out for 1.5 Million
Another drag on consumer spending is just ahead as Prolonged Aid to Unemployed Is Running Out:
Over the coming months, as many as 1.5 million jobless Americans will exhaust their unemployment insurance benefits, ending what for some has been a last bulwark against foreclosures and destitution.
Because of emergency extensions already enacted by Congress, laid-off workers in nearly half the states can collect benefits for up to 79 weeks, the longest period since the unemployment insurance program was created in the 1930s. But unemployment in this recession has proved to be especially tenacious, and a wave of job-seekers is using up even this prolonged aid.
Tens of thousands of workers have already used up their benefits, and the numbers are expected to soar in the months to come, reaching half a million by the end of September and 1.5 million by the end of the year, according to new projections by the National Employment Law Project, a private research group.
Unemployment insurance is now a lifeline for nine million Americans, with payments averaging just over $300 per week, varying by state and work history. While many recipients find new jobs before exhausting their benefits, large numbers in the current recession have been unable to find work for a year or more.
Calls are rising for Congress to pass yet another extension this fall, possibly adding 13 more weeks of coverage in states with especially high unemployment. As of June, the national unemployment rate was 9.5 percent, reaching 15.2 percent in Michigan. Even if the recession begins to ease, economists say, jobs will remain scarce for some time to come.
“If more help is not on the way, by September a huge wave of workers will start running out of their critical extended benefits, and many will have nothing left to get by on even as work keeps getting harder to find,” said Maurice Emsellem, a policy director of the employment law project.
For many desperate job seekers, any extension will seem a blessing. Pamela C. Lampley of Dillon, S.C., said she sat outside the post office last month and cried because “it was the first Wednesday in quite some time that I’ve gone to the mailbox and left without an unemployment check.” The jobless rate in her state is 12.1 percent.
Ms. Lampley, 40, who is married with three children, lost her job as a human resources officer in January 2008 and had been receiving $351 a week, which covered the groceries and gas. Even so, she and her husband, who still has work as a machinist, were sinking into debt. Now, still poorer, she feels devastated because they cannot buy their son a laptop to take to college and she cannot give her 9-year-old son money for the movies.
In Ohio, where unemployment is 11.1 percent, Cathy Nixon, 39, a mother of four teenagers from Lorain, has been out of work for much of the time since June 2007, and her benefits — $313 a week — run out in September. Ms. Nixon is already fighting foreclosure and said she feared that when the benefits end, “we’ll be homeless.” She was unable to afford summer camp and baseball activities for her children, despite scrimping on basics.
Raymond Crouse of Columbus operated heavy construction machinery but has found no work since 2007. Mr. Crouse is 72 and receives Social Security but said that was not enough to live on. The $190 a month he has received in unemployment benefits enabled him and his wife to hang on to the house they bought 15 years ago, he said. But with the benefits ending next month, he fears that they will not keep up.
In ordinary times, employers pay into a state insurance fund, and workers who lose jobs draw benefits for up to 26 weeks. During recessions, Congress has often paid for extended coverage for an extra 13 or even 20 weeks.
In 2008, as the recession deepened, Congress provided 33 extra weeks of benefits. Earlier this year, President Obama’s stimulus plan offered an additional 20 weeks in states where unemployment surpassed 8 percent, if they adopted new federally recommended rules governing these extra weeks. (South Carolina did not make the changes, and benefits there are running out more quickly.)
Currently, people can draw benefits for up to 79 weeks in 24 states and from 46 weeks to 72 weeks in others.
The stimulus law also, through the end of the year, provided an extra $25 a week to all recipients, exempted a portion of benefits from federal income tax and subsidized Cobra health payments for the unemployed.
Representative Jim McDermott, Democrat of Washington and chairman of the House Subcommittee on Income Security and Family Support, said he would introduce a bill in September to provide yet another 13 weeks of coverage in states with unemployment rates of 9 percent or higher. “Legislators will line up quickly when they start getting calls from desperate constituents,” he said in a telephone interview. The cost would be $40 billion to $70 billion, but the expense would be temporary, Mr. McDermott said.
Some business groups remain skeptical. Douglas Holmes, president of UWC, a group in Washington that represents businesses on unemployment issues, said that there were early glimmers of economic progress and that it was premature to extend benefits again. The money might be better spent, Mr. Holmes said, creating jobs and training people to move into emerging industries.
Traditionally, many economists have been leery of prolonged unemployment benefits because they can reduce the incentive to seek work. But that should not be a concern now because jobs remain so scarce, said Lawrence Katz, a labor economist at Harvard.
For every job that becomes available, about six people are looking, Dr. Katz said. “Unemployment insurance gives income to families who are really suffering and can’t find work even if they are hustling to look,” he said.
With the economy still listing, he added, a temporary extension can provide a quick fiscal stimulus. And, Dr. Katz said, when people exhaust unemployment and health insurance, many end up applying for disability benefits, which become a large, unending drain on the Treasury.
Ms. Lampley, whose benefits have ended, described the tough job market. She used to make nearly $15 an hour and has unsuccessfully sought office and clerical work at $8 an hour. Mr. Crouse said that even if new building projects were planned, construction slows in the winter cold.
And Ms. Nixon said that she had interviewed endlessly for jobs in real estate and office work and that even her teenagers could not find fast-food jobs because laid-off adults were filling them.
“I can’t find a job,” she said, “and you can’t survive if you don’t work.”
My comment: True that. And sadly your government is doing everything possible to make your survival as hard as possible. If the majority mood truly is what McDermott claims it to be, then we are now seeing a toxic mix for employment: Rising unemployment, minimum wages approaching above market level, people made dependent upon the government dole, with a rising number of unemployed sucking the lifeblood out of the declining number of employed. I am afraid he may be right with his assessment of the public mood. His policy recommendations are obviously pathetic: Subsidized unemployment. This is a simple rule: When you subsidize something, you’ll get more of it. And even if we were to enact more federal aid. What comes after it’s been exhausted and yet more people are unemployed as a result? I have a better suggestion: Get rid of minimum wage laws, stop trying to stave off price declines left and right, and employment and real wages will recover quickly.
Related Posts:
The Effects of Different Minimum Wages in Different States
The latest minimum wage map from the DOL website shows us the following:
Minimum Wage Laws in the States – July 24, 2009
Note: Where Federal and state law have different minimum wage rates, the higher standard applies.
States with minimum wage rates higher than the Federal States with no minimum wage law States with minimum wage rates the same as the Federal States with minimum wage rates lower than the Federal American Samoa has special minimum wage rates
As I outlined recently, minimum wage laws create unemployment if the wage is fixed above the market wage.
Expect those states with minimum wages above the federal level (green) to experience problems with their minimum wage legislation sooner or later. That portion of unemployment which is to be imputed upon minimum wage laws will be significantly higher there. Thus overall unemployment is likely to be sustained at much higher levels there. We may see a noticeable exodus of workers from those green states to some of the red, blue, or yellow states over time.
Related Posts:
How Minimum Wage Laws Create Unemployment
The Emergence of a Market Wage
Wage is the price of a labor service. An entrepreneur exchanges money against a worker‘s labor, combining factors of production, and yielding consumer goods. The amount of money to be paid for the labor is negotiated between the entrepreneur and the worker. How much the worker accepts depends on the offers he receives from competing entrepreneurs, how much the entrepreneur is willing to pay depends on the wages that competing workers of similar skill set are asking.
The entrepreneur will only be able to pay a wage that still grants him a sufficient entrepreneurial profit, otherwise he will not embark upon the project in question.
When an entrepreneur looks for a worker to employ, he will, as a tendency, hire that worker who asks least, out of the available pool of skilled workers. The next entrepreneur who is looking for a similar worker, will have to hire one with the next highest asking price, and so on and so forth.
The workers who are already employed, but at lower wages, will ask for higher wages if they notice that other fellow workers are being hired at higher wages, or else they will leave and start working for those entrepreneurs who pay more. So long as the entrepreneur still earns a sufficient profit, he will be able to up his pay. Some entrepreneurs will have no problem at all to up their pay accordingly, others who are less profitable will have to follow along reluctantly.
At some point the wage reaches a level beyond which the least profitable entrepreneur, the marginal entrepreneur, would be unable to employ a worker. He would have to cease his operation and release the worker. The unemployed worker would now have to offer his labor at a lower wage again in order to find employment.
In addition, there is also a wage level below which some workers would be unwilling to sell their labor. They would withdraw themselves from the market for that particular labor and force entrepreneurs to now compete for workers from a smaller pool of people, by upping their offer.
Thus, a market wage emerges somewhere between those two narrow boundaries, which ensures that all workers who have a certain skill to offer can find labor with entrepreneurs who are looking for that skill. It also ensures that all entrepreneurs can find workers at a price level that they will be able to afford.
Minimum Wage Legislation
When a government imposes a minimum wage, is threatens employers with police force if they accept an offer from a worker below a certain wage level. A voluntary agreement between two individuals is outlawed by compulsory means.
If this minimum wage is below the market wage it has no effect at all. It is an empty decree with no purpose whatsoever. The scenario we have to examine more closely here is the one where the minimum wage is set at a level above the market wage.
If the government begins enforcing a wage that is above the market wage, the marginal entrepreneurs that I mentioned above will have to cease their operation. The people who are let go would have to offer a lower wage in order to find new employment. But if the minimum wage is persisted and enforced at the higher level, the worker will not be able to find employment because he won’t be able to work at the wage he is voluntarily offering to accept. Unemployment ensues in the sector where the minimum wage is being enforced. If it is enforced across all sectors, unemployment across all sectors will inevitably ensue.
Current Minimum Wage Situation
Recently the federal minimum wage was raised to $7.25 per hour:
The FLSA establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments. Covered nonexempt workers are entitled to a minimum wage of not less than $7.25 per hour effective July 24, 2009. Overtime pay at a rate not less than one and one-half times the regular rate of pay is required after 40 hours of work in a workweek.
It is true that for most occupations, this wage may currently be below the prevailing market wage. There are separate minimum wage laws in most states which fix it above the federal level.
But we are now in an environment of deflation, with market prices and wages declining left and right. The ability for prices to adjust during such a deflationary environment is the number one driver for employment. The failure to let prices adjust quickly was one of the main causes of mass unemployment during the Great Depression.
One friend of mine recently posted a simple job at the San Francisco minimum wage which is $9.79. He got flooded with tons resumes from college graduates and experienced people. This tells me that even well below that wage he would find willing and able workers for the position he posted.
The solution would be an unconditional abandonment of all minimum wage legislation across the country. Tantamount to this would be a drop or a maintenance of minimum wage levels well below market wages where they fulfill no purpose other than maybe make people feel good.
States and the federal government have to pay serious attention to this issue. If market wages across the country fall below the minimum wage, long-term mass unemployment will ensue and not go away anytime soon. Lots of people will of course seek refuge on the black market, get paid in cash, and pay no taxes. But to the extent that governments actually enforce those minimum wages that are fixed above market wages, I see nothing but trouble ahead on the employment market.