$ 7.25 does seem a tad low

[Thailandnotes]

"The first statement we can make without fear of contradiction is that, at $7.25 an hour, the current minimum wage is pretty low. In nominal dollars, it’s gone up quite a bit over the past twenty-five years. In 1978, it was $2.65; in 1991, it was $4.25. But these figures don’t take into account rising prices, which eat away at purchasing power. After adjusting for inflation, the minimum wage is about $3.30 less than it was in 1968. Back then—forty-five years ago—the minimum wage was $10.56 an hour, according to a very useful chart from CNNMoney.

"We also know that the U.S. minimum wage is low compared to its counterparts in other advanced countries. In France and Ireland, for example, the minimum remuneration level is more than eleven dollars an hour. Even in Great Britain, which is usually regarded as a country with a flexible, U.S.-style labor market, it is close to ten dollars an hour. Another informative chart, this one from Business Insider, shows that the U.S. minimum wage is comparable to ones in places like Greece, Spain, and Slovenia—countries where G.D.P. per capita and labor productivity are markedly lower than here in the United States. We have an advanced economy but a middle-level minimum wage."

Read more: http://www.newyorker.com/online/blog...#ixzz2KvQ41Pf4

[lektrode]

Re: $ 7.25 does seem a tad low

..... After adjusting for inflation, the minimum wage is about $3.30 less than it was in 1968. Back then—forty-five years ago—the minimum wage was $10.56 an hour, according to a very useful chart from CNNMoney.

of course that was back in 'the good ole days' - before all the costs of the kennedy/johnson war, the unionization of the fed workforce and 'the great society' all hit in full force....

and THEN the middle east started dictating US foreign policy, all because we couldnt develop our energy ace in the hole? (that was rumored to make electricity too cheap to meter....)

and now we're worried about 'global climate warming change' - which will undoubtably result in even lower real rates of 'wage growth' ????

and the band played on....

[lektrode]

Re: $ 7.25 does seem a tad low

so, what?

no comments here?

oh come ON, surely somebody has a comeback for this one....

[metalman]

Re: $ 7.25 does seem a tad low

so, what?

no comments here?

oh come ON, surely somebody has a comeback for this one....

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[dcarrigg]

Re: $ 7.25 does seem a tad low

so, what?

no comments here?

oh come ON, surely somebody has a comeback for this one....

Well, the way I look at it, America for decades had a minimum wage that was about equal to Canada. Then there was the 10 years from 97 to 07 where minimum wage never went up. Now Canada has a minimum $9.75 minimum wage.

You can't do NAFTA and not try to make things match.

Mexico's up to $5.10.

If we're not going to raise it, I can see the US having the same minimum wage as Mexico in 5 years. Only Mexico will have universal healthcare by then. So it will still be cheaper for employers who don't have to pay health insurance to hire Mexicans that make more than Americans.

But if we're hell bent on driving down wages of the middle and working class to third world levels in this country, then we'll get there.

And it will sure as hell solve the immigration problem when you get a higher minimum wage and healthcare by going south from Arizona.

The powers that be want a banana republic. They'll probably get it.

[lektrode]

Re: $ 7.25 does seem a tad low

.....
The powers that be want a banana republic. They'll probably get it.

yep - with our 'fearless leader' leading the charge - altho i cant say i disagree with the need to boost the minwage - tween the bailout of the banksters and their trillions in funny money gutting the value of the dollar, the .gov at every level sucking us dry - and THEN there's the med-insurance-industrial complex sticking an even bigger needle into our veins - why not drive up the unemployment rate - that'll drive even more in their direction, fer chrisakes....

• February 15, 2013, 6:58 p.m. ET

The Minority Youth Unemployment Act


A higher minimum wage will hurt Obama's most loyal supporters

One paradox of the Obama Presidency is how it has retained the support of young people and minorities despite the damage its policies have done to their economic prospects. In his latest attempt to increase the minority youth jobless rate, President Obama is proposing to raise the minimum wage.

In his State of the Union address, Mr. Obama proposed an increase to $9 an hour by 2015 from $7.25, and then indexing the minimum to inflation. "Employers may get a more stable workforce due to reduced turnover and increased productivity," the White House says. No doubt employers are slamming their foreheads wondering why they didn't think of that.
And don't worry about lost jobs. "A range of economic studies," a White House memo assures, "show that modestly raising the minimum wage increases earnings and reduces poverty without measurably reducing employment." Note the shifty adverbs, "modestly" and "measurably," which can paper over a lot of economic damage.


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In the real world, setting a floor under the price of labor creates winners and losers. Some workers will get a $1.75 raise. Great. But others—typically the least educated and skilled—will be priced out of the job market and their pay won't rise to $9. It will be zero.
University of California at Irvine economist David Neumark has looked at more than 100 major academic studies on the minimum wage, and he says the White House claim of de minimis job losses "grossly misstates the weight of the evidence." About 85% of the studies "find a negative employment effect on low-skilled workers."
The minimum wage is also an ineffective way to reduce poverty. Most families in poverty don't have someone who works, so making it more difficult to get a job exacerbates poverty. Mr. Obama says that a "family with two kids that earns the minimum wage still lives below the poverty level. That is wrong."
He left out that most minimum-wage earners are not the primary bread winner. Nearly 40% live with a parent or relative. The average family income of a household with a minimum-wage worker is about $47,023—which is far above the poverty line of $23,550 for a family of four.
Mr. Obama didn't even tell the whole story about parents raising a family on a minimum-wage income. A full-time minimum-wage worker earns roughly $15,000 a year. But that worker also receives a cash supplement from the earned income tax credit of roughly $5,000, and many states provide benefits on top of that to reward working. That doesn't count government benefits like food stamps, Medicaid, child care and more. According to data from the Employment Policies Institute, about two of every three minimum-wage workers also get a raise within one year.


The damage from a minimum wage hike depends on the overall labor market. If the job market is buoyant, as it is in the fracking boomtown of Williston, N.D., fast-food workers may already make more than $9 an hour. But when the jobless rate is high, as it still is in California and New York, the increase punishes minority youth in particular.
That is what happened during the last series of wage hikes to $7.25 from $5.15 that started in July 2007 as the economy was headed toward recession. The last increase hit in July 2009 just after the recession ended, and as the nearby chart shows, the jobless rate jumped for teens and black teens especially. For black teens, the rate has remained close to 40% and was still 37.8% in January.
A study by economists William Even of Miami University and David Macpherson of Trinity University concludes that in the 21 states where the full 40% wage increase took effect, "the consequences of the minimum wage for black young adults without a diploma were actually worse than the consequences of the Great Recession."
William Dunkelberg, chief economist for the National Federation of Independent Business, says that after the July 2009 increase 600,000 teen jobs disappeared in the next six months even as GDP expanded. In the previous six months, when the economy was still shrinking, half as many teen jobs were lost. The overall teen jobless rate was still 23.4% last month, which means demand for unskilled workers is low even at $7.25 an hour. Demand will be lower at $9.
Mr. Obama's economists know all this, but then the minimum wage has nothing to do with poverty or unemployment. It's a political play to reward unions and box in Republicans. The minimum wage polls well because Americans naturally want everyone to make more money, and the damage in foregone jobs isn't obvious.
It'd be nice to think that some Republicans, even one, would make the moral case that the minimum wage hurts the poorest workers. But both Presidents Bush, 41 and 43, went along with increases and so did the Newt Gingrich Congress in 1996. Mr. Obama knows that history. Republicans may fold again to take the issue off the table in 2014, but it's a tragedy that those who will suffer the most are Mr. Obama's most ardent supporters.
A version of this article appeared February 16, 2013, on page A12 in the U.S. edition of The Wall Street Journal, with the headline: The Minority Youth Unemployment Act.

now they just need to cue up 'the wage/price spiral' show

[aaron]

Re: $ 7.25 does seem a tad low

Wars cost money. These wars have been extremely expensive. Of course the middle class and poor must pay. I would feel more sympathy (I do still feel a lot of it), had the same people not voted for Bush (War/Butter), as well as Obama (War/Butter) the second time around. I can forgive people for voting in a liar/incompetent. But, if you vote the same wankers in a second time, you made your bed. C'est sa vie.

In reality, Americans lost their right to a decent wage by spending it all on war.
Mexicans have not yet built a nation that can pay a decent wage, but they are working on it.
Canadians have taken better care of their republic (or whatever they call it) and deserve what they can pay themselves.

[littleshark]

Re: $ 7.25 does seem a tad low

Obama is the greatest thing to ever happen to special-interests. The perfet front, a minority leader for the poor to rally around while special interests impoverish them more and more with Obama as their front man claiming to be Robin Hood.

The increasing minimum wage theory to help an economy has to be the most easily debunked theory in economics, and it shows how stupid (unfortunately, Rightfully so) and how much contempt Obama has for the population that he would make this a talking point in the state of the union.

Increasing the minimum wage means people who dont deserve that wage will be unemployed. Very simple. Its charity, and businesses arent charities.

[aaron]

Re: $ 7.25 does seem a tad low

I did not listen to the speech and do not care to.

Did somebody really argue that increasing the minimum wage was good for the economy?

It could be in some other economy, but not ours.

I think the idea is that it would be good for the working poor, no?

I would rather see a government subsidy to add to wages to make up that difference. Actually, I think they did come up with that... earned income credit or something, no? Guess that does not work either.

The solutions are out there. There is just not the political will. The people who might have to give up some money do not want to do so. They own the government, means of production, and have really gotten their tentacles into the justice system as well.

[shiny!]

Re: $ 7.25 does seem a tad low

It's true that a raise in the minimum wage will raise prices and put a number of people out of work. But the problem isn't the poorest people wanting a living wage. It's FIRE raping our productive economy, creating trillions in debt, sending us over the abyss while the architects of our destruction collect billions in bonuses. Then when the poorest of the poor ask for another dollar or two per hour, everyone screams that this will hurt our economy beyond repair.

[littleshark]

Re: $ 7.25 does seem a tad low

It's true that a raise in the minimum wage will raise prices and put a number of people out of work. But the problem isn't the poorest people wanting a living wage. It's FIRE raping our productive economy, creating trillions in debt, sending us over the abyss while the architects of our destruction collect billions in bonuses. Then when the poorest of the poor ask for another dollar or two per hour, everyone screams that this will hurt our economy beyond repair.

Two wrongs dont make a right. bernanke prints money for the banks, obama is going to print for the special interests. What could go wrong?

How FIRE destroys the economy is debated enlessly here, im just pointing out a few poor people will get higher wages, more will lose their jobs, and more union heads/special interests will benefit.

I think the pooret of the poor want a job period, not an extra 2 bucks if they already have one.

[aaron]

Re: $ 7.25 does seem a tad low

On the radio in the summer, farmers in Washington complained because there was nobody willing to pick the apples and cherries off the trees. The few natives that do try end up quitting. The imported Mexican laborers will do it. I believe the wages are $9 or 10 bucks an hour... I think they were even say $11 bucks an hour, plus room and board.

Now, in a more closed economy, wages would be much higher. That is what it would take to get the trees picked. I suspect they would have no problem finding workers at $20/hour right now. Prices would be higher for people who can afford cherries and apples, but the lower rung of the ladder would certainly be better off (including more jobs, more money to spend with its multiplier effects, etc) and I dare say it would filter through the entire economy = higher wages.

However, since the U.S. must compete with other countries where the cost of living is much lower, we are particularly screwed. Paying higher wages to your employees makes you have to raise your prices beyond what your foreign competitors have to. Or

While the owner class would like you to believe "Free Trade" is good for you, it is really only good for rest of the world and the pockets of the ultra-wealthy.

Personally, I waver at times... is it better that 400 million Chinese have the ability to eat now or would it be better for Americans to be able to consume more? If we as a nation feel it is more important to rain democracy down on other countries than to provide health care to our own citizens, do we really deserve all those jobs we have exported away?

[GRG55]

Re: $ 7.25 does seem a tad low

...While the owner class would like you to believe "Free Trade" is good for you, it is really only good for rest of the world and the pockets of the ultra-wealthy.

...

There is no possible way that anybody can make a valid argument that trade is detrimental to the collective standard of living across the globe. How the hell do you think the USA got so damn rich in the first place?

Study any of the closed economies during the 20th century when global trade was increasing steadily and what you will find is poverty, destitution and periodic famine. It does not matter what form of government was in place. India, the world's so-called "largest democracy", is an excellent case study.

[GRG55]

Re: $ 7.25 does seem a tad low

Can someone here explain how the level of a minimum wage is established? (In other words, what is the "right" level?)

[aaron]

Re: $ 7.25 does seem a tad low

I was not talking about history. I was talking about the here and now. And, I did say it is good for the rest of the world. I guess I should have said, coming from the American perspective. - I do have my location up in my profile. Your tone is unappreciated.


NAFTA, WTO... have they been good for America?
Have they been good for China? India? Asian countries that have kept their home markets and industries protected?

Perhaps you mean the idea of "Free trade"? I do not think we have that. I think we have governments in cahoots with the very wealthy strip mining the world under the banner of "free trade".

Ross Perot pointed out the giant sucking sound of jobs leaving our shores... what was that 25 years ago?

But, yes, trade is good. It just has not been that good for U.S. citizens. It has definitely been good for China, India, Japan, Germany, Korea, Taiwan, and even Canada/Australia. And, for Overall Wealth. But, it has not been good for the U.S., and for better or worse, that is where I live.