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Thursday, October 3, 2013

Compassion in America

How to de-incentivize the work force without really trying

By Sam Huntington



One of the most fundamental principles of economics is that people tend to purchase more when prices are lower, and they purchase less when prices are higher. No matter, those who think that the way to stimulate the economy is through federal spending of borrowed money also think that the way to increase employment is to raise the minimum wage. There is simply no shortage of incredulousness on the political left, but they do celebrate how kindhearted they are. Sadly, and this is a trend, no one on the left considers the consequences of their poorly contrived schemes.

Here is an interesting fact: nations with minimum wage laws almost always have higher rates of unemployment, compared to those without minimum wage laws. One of these is Switzerland, which in 2003 reported a five-year unemployment high of 3.9 percent. Ten years later, the unemployment rate is 3.1 percent. You will not find such low numbers in the United States since the administration of Calvin Coolidge, and there is a reason for this: when the cost of labor to employers is low, unemployment is low. When the cost of labor to employers is high, unemployment is high.


As for demonstrating compassion toward the poor, first define what it is to be poor in the United States of America today. According to the US Census Bureau, 15% of the American people live in poverty. This equates to about 46 million people, which is no small number. In 2012, the poverty rate was higher than it was in 2007. This should tell us something about what a genius our bi-polar president is. Nevertheless, what does it mean to be poor in the United States, and generate a demand from the left of more empathy for the economically disadvantaged? For starters, the poorest American today lives better than the richest persons did one hundred years ago. Here are some interesting facts:


  • If poverty suggests lacking nutritious food, adequate housing, climate controlled environment, and adequate clothing for a family, then very few of the people classified as living in poverty by the Census bureau could be characterized as poor
  • Most of the people classified as poor owned one automobile
  • Most had air conditioning systems in their homes
  • Most had two color television sets
  • Most had cable or satellite television
  • Most had a computer
  • Most had a DVD player, or a VCR
  • Most with children had a game system, such as X-box or Play Station
  • Most households had a refrigerator, oven, stove, and microwave
  • Most households had washing machines, dryers, ceiling fans, and cordless phones
  • Most people classified as poor had smart-phones


Yes, there are people living in poverty in the United States, but we should wonder how many of these are poor in a meaningful sense. We must address this question because the official definition of poverty originates with the federal government, who has an agenda. The people who provide these definitions are the same bureaucrats who offer a rationale for maintaining the welfare state; not incidentally, the same people whose jobs depend on general acceptance of these official standards and definitions. Likewise, if I need to say it, the same people who argue that welfare benefits should exceed the minimum wage.

Here is another fact: most people in the lower income brackets do not remain in poverty for very long. Most working people in the bottom 20% of income do not stay there for more than a few years. Most of these people ultimately end up in the top 20% income bracket. You see, this is how it works. It is why most cruise ship passengers are older people, rather than 20-somethings. The longer you work, the wealthier you become—generally. There is nothing enigmatic about the fact that most people begin their working career in entry-level jobs. As people gain more experience in the work place, the more money they are likely to earn.

What are these compassionate progressives really doing for young people, or for the poor, by demanding an increase in the minimum wage? Well, for starters, they are keeping them from getting a job. Employers hire when the cost of labor is low. Next, because young people cannot access entry-level jobs, the left-wingers are more or less guaranteeing a reduction in income over the working life of that individual. They also miss valuable work experience —the kind of knowledge that might qualify them for a better paying job in the future.

A few months ago, the US unemployment rate fell to 7.7%, which is still somewhat high. Among black young people, however, the unemployment rate for the same period was 43.1%. We must return to the original question: how does the leftist demand for an increase to the minimum wage actually help to reduce unemployment?

14 comments:

  1. "We must return to the original question: how does the leftist demand for an increase to the minimum wage actually help to reduce unemployment?"

    Clearly it doesn't. What Marxian-Socialist-Fabian-Progressive-Liberal-Statist thinking produces is INFLATION and a levelling effect that, if unchecked, guarantees MUTUALLY SHARED DEPRIVATION for all but the leaders of the "politburo" who rules from the top down.

    ReplyDelete
  2. Welcome to the new "legislatively created" United Part-time States of America!

    Obamacare Full Frontal: Of 953,000 Jobs Created In 2013, 77%, Or 731,000 Are Part-Time

    ReplyDelete
  3. If you can't afford the new minimum wage... simply cut back the hours in a work week. ;)

    ReplyDelete
  4. It isn't just leftists, unless they now write history books (mine isn't even THAT leftist, until I hit the 1850-1920). This seems to be a trend of thought of nearly everyone: raise minimum wage so we don't have the travesties of the factory system a hundred years ago, because higher wages= more stuff bought= better economy.

    Ignoring a simple fact anyone who's played Simcity (or ANY business game) knows: companies have to raise the cost of stuff, so they still make enough to 1) pay everyone 2) do R&R 3) upgrade just about everything and 4) have a cushion for the inevitable disaster. If they cannot afford more workers, they will not hire more workers. That simple. But of course, every business owner is a money-grubbing Scrooge who can easily lose everything he's earned because it isn't fair that he has that much money. Okay, I'll concede some are. Majority? Nope.

    As for that poverty definition: no, sorry, that is absurd. Poverty is not being able to eat every day, having a house that barely keeps you alive, and the same ragged clothes for over two years. In every other nation, THAT is a poverty line. If you can seriously get any tech, you are not in poverty. Poor, maybe. Poverty? Hell no.

    @FT actually, they KNOW it produces inflation, they WANT inflation, cause it helps the little guy (taken straight from my history book). What, if any, logic is behind that I do not know!

    ReplyDelete
  5. A few years ago, teachers in my area were clamoring for a pay raise. Local school officials caved in to demands to avoid a strike. I think the raise was around 4% … no big deal, right? Except, in the next month, there was a 4% increase in the cost of groceries, gasoline prices, rents, and within a few months of that, utilities. We all wondered how that raise helped anyone, including the idiot teachers.

    ReplyDelete
  6. Shutnado Alert! REPEAT Shutnado Alert!

    During the Government Shutdown, no updates will be made to the MyPublicLands Instagram.

    REPEAT

    During the Government Shutdown, no updates will be made to the MyPublicLands Instagram.

    This has been an ALERT of the Emergency Shutnado notification system. Had this been an ACTUAL emergency, the info that would have been found there counld instead be found @ DOI.gov/shutdown.

    That is all. Carry on.

    ReplyDelete
  7. Here's 'compassion' for you....

    More GOP hypocrites, grandstanding on the backs of 2 million average Americans out of work and millions more being denied critical services. The GOP are nothing but scammers. They cut funding to the WW ll memorial then make a big show and fund it themselves all the while they are trying to de-fund the VA by $6 BILLION DOLLARS. Hypocrites! You don't shut down the government and then selectively fund certain parks to gain the good graces of the populous.

    Paul Rand; VA Care End Eyed for 1.3 Million Vets
    http://www.vmwusa.org/index.php/healthcareservices/hcarticles/47-health/1079-va-care-end-eyed-for-13-million-vets

    ReplyDelete
    Replies
    1. I’m trying to figure out whether you’re just plain stupid, or if there is a substance abuse issue that demands immediate attention. Government shutdowns involve –let’s say it together—NON-essential services. By definition, that means NOT critical. So either you are lying, or educated by leftists.

      Ask yourself this. Why are we spending ANY money on NONESSENTIAL services? No, don’t rush out an answer. Give a few days, and think about it. I realize that at first, thinking will cause you to have headaches, but you’ll get used to them.

      Delete
    2. Sorry guy, the smart one ouy there (on the left) see right through the crap the GOP is pulling. All of it. You do too, but you're a lapdog. I understand.

      Delete
    3. Another leftist lie: "I understand."

      Delete
  8. Is It True
    That when Hillary runs for President, she’s gonna pick Oprah for her Vice President!

    ReplyDelete
  9. excellent review and of course the Libs still have a hate on for the finest econmic system and country in the world..sigh............

    ReplyDelete
    Replies
    1. Riiight....the Libs didn't destroy the economy, try to stall its recovery with a record number of filibusters and then shut it down becasue they don't want average Americans to have health coverage.

      Delete
    2. It's not that anyone (read that how you want to) doesn't want the average American to have health coverage... just not the abortion fondly known as Obamacare. What is it about "NO COMPROMISE" do you not understand. I realize that, with you people, we're dealing with a severely, mentally handicapped portion of glazed-eyed liberals -- but still...

      Delete

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