Monday, April 21, 2014

(My) $15 an hour minimum wage (Magnum Opus :-])


Progressive economists should readily admit -- shout -- that a “moderate” federal minimum wage increase, typically 10% cited in conservative studies, should indeed have little or no effect on poverty rates.  Why would an extra 1/4 of one percent of GDP added to low wage pay checks be expected to clear a broad swath through poverty?  That is what a $1 an hour increase in the federal minimum wage equates to -- about $40 billion out of a $16 trillion economy.  (E.I.T.C. shifts $55 billion.)


A $15 an hour minimum wage OTH would send about 3.5% of GDP the way of 45% of American workers -- about $560 billion (much of it to bottom 20 percentile incomes who today take only 2% of overall income).
 * * * * * *

Could raising
the wages of 45% of the workforce actually raise demand for the goods and services they produce?  Sounds sensible at some level; raising wages so much ought to add demand somewhere – but, is it all smoke and mirrors?  Before the 45% -- who would get a wage hike to $15 an hour -- can raise demand anywhere, they would need to get the extra cash from somewhere else – meaning the 55%.  (Bottom 45 percentile incomes – not wages – currently take 10% of overall income – so, at no time are we talking giant chunks of the economy here.)
 
The 45% can get higher pay even as "numerical" (to coin a phrase?) demand for their output declines due to higher prices -- as long as labor gets an bigger enough slice of the new price tags.  This can be compared to a leveraged buyout or buying stocks on margin.  

Products produced by low-wage labor tend to be staples whose demand tends to be inelastic. Demand for food is inelastic – maybe even fast food. If the price of your Saturday family jaunt to McDonald's rises from $24 to $30, are you really going to eat at home (the kiddies haven't forgotten the fundamental theorem of economics: money grows on trees :-])? And fast food should be the most worrisome example: lowest wages to start with; even so, highest labor costs, 25%.

Wal-Mart is the lowest price raising example (surprise) with 7% labor costs. Jump Wal-Mart pay 50% and its prices go up all of 3.5%.

If low wage labor costs average 15% across the board and go up 50%, overall prices increase only 7.5% -- and that is for low wage made products only; nobody's car note, mortgage payment or health premium is affected. If demand drops just enough for price increases to maintain the same gross receipts (conservative, even without inelasticity), low wage income should improve appreciably. 

Allow me to cite: from a 1/ll/14, NYT article "The Vicious Circle of Income Inequality"  by Professor Robert H. Frank of Cornell:
“… higher incomes of top earners have been shifting consumer demand in favor of goods whose value stems from the talents of other top earners. … as the rich get richer, the talented people they patronize get richer, too. Their spending, in turn, increases the incomes of other elite practitioners, and so on.” 


The same species of wheels-within-wheels multiplier ought to work the at both ends of the income spectrum -- and likely in the middle.  A minimum wage raise to $15 an hour is not going to send most low-wage earners in pursuit of upper end autos, extra bedrooms or gold seal medical plans. Wal-Mart and Mickey D's should do just fine, OTH – which in turn should keep Wal-Mart and Mickey D's doing even better.
 * * * * * *
When I was a gypsy cab driver in the Bronx, back in the late 1970s, the city’s yellow cabs raised their meters and we raised ours in step. Most drivers agreed this did not hurt business. I also heard from veteran drivers that the previous meter raise did cost business (I was new – having finally gotten my driver’s license at age 32).

In any market, selling anything, you never know for sure what the customer will pay until you test. Does this chart below look like the federal minimum wage has been much tested over multiple generations?

yr  per capita    real     nominal  dbl-index   %-of
68    15,473    10.74      (1.60)     10.74      100%
69-70-71-72-73                [real, low point --  8.41]
74    18,284      9.47      (2.00)     12.61          
75    18,313      9.11      (2.10)     12.61
76    18,945      9.44      (2.30)     13.04        72%
77                                                                [8.86]
78     20,422     9.49      (2.65)      14.11
79     20,696     9.33      (2.90)      14.32
80     20,236     8.78      (3.10)      14.00     
81     20,112     8.61      (3.35)      13.89        62%
82-83-84-85-86-87-88-89                             [6.31]
90     24,000     6.79      (3.80)      16.56  
91     23,540     7.29      (4.25)      16.24        44%
92-93-94-95                                                  [6.51]
96     25,887     7.07      (4.75)      17.85
97     26,884     7.49      (5.15)      19.02        39%
98-99-00-01-02-03-04-05-06                        [5.97]
07     29,075     6.59      (5.85)       20.09
08     28,166     7.10      (6.55)       19.45
09     27,819     7.89      (7.25)       19.42        40%
10-11-12                                                      [7.37] 
13    29,209?    7.25      (7.25)      20.20?     36%?

  * * * * * *
I almost forgot:  ... :-) ...
There is a growing consensus is that the economy may be permanently slowing down (economists dub this "secular stagnation" as opposed to “cyclical”).  Progressives see DEMAND -- and therefore EMPLOYMENT -- stalled because of too much income squeezed out of the pockets of Americans who spend a lot more than save ...

... meaning that raising the minimum wage – doubling it if we want any noticeable effect on the economy or poverty; not, not quite catching up with 1968 -- should be a sure fire way to bring down unemployment.

Sunday, June 2, 2013

My minimum wage worksheet

My minimum wage worksheet -- the easily could-have-been minimum wage double-indexed for inflation and per capita income growth:
 
yr  per capita    real     nominal  dbl-index   %-of
68    15,473    10.74      (1.60)     10.74      100%
69-70-71-72-73              [real, low point -- 8.41]
74    18,284      9.47      (2.00)     12.61          
75    18,313      9.11      (2.10)     12.61
76    18,945      9.44      (2.30)     13.04        72%
77                                                               [8.86]
78     20,422     9.49      (2.65)      14.11
79     20,696     9.33      (2.90)      14.32
80     20,236     8.78      (3.10)      14.00     
81     20,112     8.61      (3.35)      13.89        62%
82-83-84-85-86-87-88-89                          [6.31]
90     24,000     6.79      (3.80)      16.56  
91     23,540     7.29      (4.25)      16.24        44%
92-93-94-95                                                [6.51]
96     25,887     7.07      (4.75)      17.85
97     26,884     7.49      (5.15)      19.02        39%
98-99-00-01-02-03-04-05-06                      [5.97]
07     29,075     6.59      (5.85)       20.09
08     28,166     7.10      (6.55)       19.45
09     27,819     7.89      (7.25)       19.42        40%
10-11-12                                                      [7.37]  

13    29,209?    7.25      (7.25)      20.20?     36%?

 * * * * * * 

An added thought: By the year 2013 some could speculate that a $20.20/hr minimum wage might not be a realistic expectation evidenced by double indexing alone because the fabric of the economy might have changed so radically over 45 years.  Might be an outside possibility, but, LBJ's 1968 minimum wage would have morphed to more than $14/hr with double indexing by only 1978.  Can anyone explain how the economic fabric might have changed so radically in a mere 10 years?

Saturday, February 4, 2012

DIRECT AID TO ISRAEL SINCE 1970 (millions of dollars)

DIRECT AID TO ISRAEL SINCE 1970 (millions of dollars)
Year------ Nominal------- Adjusted-------------------- Total

1970---------- 93.6--------- 530.00
1971--------- 643.3------- 3,489.70
1972--------- 430.9------- 2,264.00
1973--------- 492.8------- 2,438.47
1974------- 2,621.3----- 11,681.53
1975--------- 778.0------- 3,177.07
1976------- 2,337.7------- 9,026.23
1977------- 1,762.5------- 6,389.79
1978------- 1,822.6------- 6,141.49
1979------- 4,888.0------ 14,791.92-------------- 59,930.02
*****************************************
1980------- 2,121.0------- 5,655.14
1981------- 2,413.4------- 5,833.05
1982------- 2,250.5------- 5,123.66
1983------- 2,505.6------- 5,526.91
1984------- 2,631.6------- 5,564.61
1985------- 3,376.7 ------ 6,894.62
1986------- 3,663.5------- 7,343.71
1987------- 3040.2-------- 5,879.68
1988------- 3,043.4------- 5,885.87
1989------- 3,045.6------- 5,656.11-------------- 59,363.36
*****************************************
1990------- 3,034.9------- 5,377.16
1991------- 3,712.3------- 5,988.20
1992------- 3,100.0------- 4,854.38
1993------- 3,103.4------- 4,178.46
1994------- 3,097.2------- 4,591.46
1995------- 3,102.4------- 4,472.42
1996------- 3,144.0------- 4,402.40
1997------- 3,132.1------- 4,287.37
1998------- 3,080.0------- 4,050.36
1999------- 3,010.0------- 3,969.37-------------- 46,171.58
*****************************************
2000------ 4,131.85------- 5,144.00
2001------ 2,876.05------- 3,569.88
2002------ 2,850.65------- 3,481.31
2003------ 3,745.15------- 4,471.79
2004------ 2,867.25------- 3,334.75
2005------ 2,612.15------- 2,938.50
2006------ 2,534.5--------- 2,762.05
2007------ 2,500.2--------- 2,649.75
2008------ 2,423.9--------- 2,474.59
2009------ 2,550.0--------- 2,611.82-------------- 33,438.44
*****************************************
198,903.40

Friday, December 31, 2010

TSA opposite gender pat-down: mandatory sexual assault to fly -- must complete process once begun!

http://www.airsafe.com/issues/security/tsa-sop-not-redacted.pdf

****************************************
****************************************

2.2.3. HHMD OR PAT-DOWN SCREENING OF INDIVIDUALS
The HHMD TSO is responsible for HHMD screening and pat-down inspections in accordance with the Screening Checkpoint SOP. All HHMD and pat-down searches must be conducted by TSOs of the same gender as the individual presents him or herself to be. Extraordinary circumstances may occur where a TSO of the same gender is not available, including staffing shortage emergencies at any airport or limited staffing at category II, III, and IV airports. Under these circumstances, TSOs of the opposite gender may be allowed to screen individuals in accordance with the provisions of Chapter 4.3.14 of this SOP. During opposite gender screening an STSO or LTSO, if possible, should be present. This rule applies to all references of same gender screening in the Screening Checkpoint SOP.

*******************************************
*******************************************

Revision: 3
Date: May 28, 2008
Implementation Date: June 30, 2008 Screening Management SOP

4.3.14. OPPOSITE GENDER SCREENING
Extraordinary circumstances may occur where a TSO of the same gender as the individual being screened (the gender of an individual is determined by who he or she presents themselves to be) is not available to complete HHMD and/or pat-down screening procedures (for example, staffing shortage emergencies at any airport or limited staffing at Category II, III, and IV airports). Under these staffing shortage emergencies, screening procedures for individuals of the opposite gender, as provided for in this Section, are authorized and STSOs must apply the following procedures.

A. The following notifications must be made within 24 hours of each new staffing shortage event:
1) The STSO must notify the FSD, specifying the anticipated duration of the staffing shortage. The STSO must provide subsequent updates to the FSD if the reported duration is exceeded.
2) The STSO must maintain a count of the number of passengers affected during the staffing shortage and report these numbers to the FSD after the shortage is resolved. No personal or identifying information must be taken from the passenger for purposes of this report. For example, “three female passengers underwent opposite gender screening at Airport X” is an adequate count; however, including the names of the three female passengers in the count would be inappropriate. [my note: Do Touch; Don't Tell]
3) The FSD must in turn notify the Area Director, who must monitor such reports and consider how the patterns of staffing shortages, if any, can be addressed. The Area Director or his or her designee must notify the Office of Civil Rights of the staffing shortage and provide a copy of the report indicating the number of passengers subjected to opposite gender screening at each affected airport.

B. The STSO must ensure that the following notice is provided to an individual of the opposite gender before the individual enters the WTMD:
1) A TSO of the same gender as the individual presents him or herself to be is not available.
2) A TSO of the opposite gender will be required to complete the screening process, which may include physical contact between the TSO and the individual.
3) An LTSO or STSO, if possible, will be present.
4) Once the individual enters the WTMD, the individual must complete the screening process.

[I repeat: "
4) Once the individual enters the WTMD, the individual must complete the screening process." Sorry high school girl!]

Sunday, September 14, 2008

LINKS to Best Inequality (GREAT WAGE DEPRESSION!) Graphs I Have Seen


Links to the best (so-called) "inequality" (try "Great Wage Depression" to be catch the catastrophic depth) graphs I've ever seen.
 
http://www.census.gov/prod/2012pubs/p60-243.pdf     (go to p.5)
http://research.stlouisfed.org/fred2/graph/?g=djN
http://delong.typepad.com/delongslides/2008/08/income-gains-19.html

And keep in mind that MEDIAN household income grew 14% from 1968 to present -- as per capita GDP doubled – ONLY because more persons worked more hours per household.

Saturday, September 13, 2008

My More Complete Profile


I am a taxi-cabist -- or was for about 30 years, starting in the Bronx (car service or gypsy), mostly Chicago (very boring but safer -- until it starved me out) and finally San Francisco (until my back went out, this time).

For the first half of my working life I assumed that the world made a place for me economically. I started to question that as Chicago allowed one 30 cent increase in the taxi meter over a 16 year period, at which 1990 mid-point they began cutting the business seemingly in half (subways to both airports, unlimited limos and free trolleys between downtown hotspots) while adding 40% (!) more cabs.

I always assumed I'd have little to contribution to make in economics on the assumption you needed a Ph.D. for starters (like the physical sciences). About 7 years ago I accidentally delved into the income distribution numbers (after reading something instructive from Paul Krugman) to find out -- Achh! -- a quarter of the workforce is earning less than the minimum wage of 1968 -- the minimum wage was on its way to shrinking to almost half the 1968 min while average income doubled -- the fed poverty line is based on triple an emergency diet's cost and everybody reports it as if it had anything to do with reality?! Achh!

Since I was 17 (1961), with 15 years off in NYC's badlands, I read the political books, mags and watched the talking heads -- and never heard a whisper of these stories which should be taken as our greatest national emergencies. (Perhaps reminds of the frog that got thrown in a pot of cold water and did not sense it heating up to boiling -- nobody noticed the gradual happening?)
*************
About 40,000 emails later all I read is about inequality -- don't know what I had to do with that. The Legislatively (re)impose a fair labor market piece has been emailed to about 1600, majority journalists, so far -- at least a couple hundred to go. It was sparked by reading Thomas Palley saying: "...there remains an unsolved policy challenge of how to fairly distribute income at full employment without triggering inflation."

No possible way. Inflation amounts to our chosen method (as with creditors and debtors) of redistributing income share.

Here was a big -- biggest brain -- labor guy who had obviously never thought through any particular process by which lost income share might be restored. If Palley hasn't, that means no other progressive pro hasn't either -- Achh! I'm hoping that showing around that this is a finite problem with definable borders that can be subject to finite sensible (boilerplate -- nothing fancy) solutions (by a high school educated cab driver yet) that others will feel obligated to also have in hand some kind of finite set of overall solutions to the very finite problem (12.5% income share shift) of inequality.

I think the only reason I came up with some kind of overall solutions when others much more schooled did not is that I am so much more hooked up to the problem on the reptilian level: I am desperately motivated to again (like in the 60s and 70s) be able to find work at a fair wage (Chicago cab driving now pays about half what it paid when I started in 1980) and also to be able to find affordable housing, etc., etc).

Another, trickier barrier to solutions coming from the pros may come on their reptilian level: the way boys instinctively cooperate while on the hunt: every boy keeps in mind what every other boy might be thinking or reacting and THIS IS NOT THE TIME to come up with new ideas. IOW, send a bunch of boys out on the hunt for new ideas and by definition they will never come back with any (alone in the library at 3AM, geek econ boys still think they are ON the hunt -- not preparing). And yes (I have seen this on other topics too), girls are much better at understanding their ability to propose a new idea if it makes sense in the abstract sense and gradually work it in no matter what all the other girls and boys are thinking now.

Maybe if the DeLongs and Bakers and Reichs of the world were presented with the inequality problems of the USA under a different country name where they thought they did not know anything about the politics or the current discussion -- sort of like Microsoft presenting Vista under another name -- maybe then they would come up with the most obvious abstract solution to the unbalanced power of the USA labor market which is surely sector-wide labor agreements (the kind of thing you wish you had thought of by yourself -- and almost wonder why you didn't).

Maybe, my next email out -- whenever that may be -- I will consciously raise the question of why any and all econ brains have not presented some kind of overall answer of their own; they are all surely capable of developing at least one set -- should be like a fun contest (if even I, cabbie can have an entry). Not Obama's $1/hr below LBJ's minimum wage or the Dem's scrape the bottom of the 1930s barrel card check -- but a full income share restore plan.
***************
I'm pretty good at getting over reptilian barriers. My first big success at it was getting more new customers than any other paper boy on my New York Post paper route in 1960. Maybe selling at least the need for inequality solutions on the scale of the problem will be my second great success. :-)

Sunday, August 10, 2008

4% direct inflation by doubling the minimum wage to 15/hr

Jumping to a federal minimum wage from $7.25/hr to $15/hr would add less than 4% direct inflation.

$3.87/hr (average raise) X 2000 hours (full work year) = $7740 annual raise for 70 million workers (half the workforce -- $15/hr is the median wage) = $541.8 billion.  I'll ignore 3.5 million at the minimum wage (getting a full raise) to keep the eighth-grade math simple.  Divide 2012 GDP of $15.8 trillion by $541.8 billion and we get 3.4%.
http://en.wikipedia.org/wiki/Economy_of_the_United_States 

"Since 1973, productivity has grown roughly 80 percent while median hourly compensation improved by roughly 11 percent."
http://stateofworkingamerica.org/fact-sheets/wages/