Posted on 02/19/2014 5:35:07 AM PST by SeekAndFind
If there is a single lesson that the Obama administration is committed to not learning, it is that economics involves tradeoffs. A recent report from the Congressional Budget Office contains what the administration must surely receive as good news: Its plan to raise the minimum wage to the Democrats’ new target of $10.10 could lift as many as 900,000 Americans out of poverty. The bad news is that it would cast 500,000 American into unemployment by eliminating their jobs.
In December, the president claimed that there is “no solid evidence” that raising the minimum wage costs jobs, an assessment that the Washington Post’s fact-check column awarded two Pinocchios. The president, the Post concluded, was “dismissing the research and findings of a significant part of the economic academy,” that being the not-entirely-controversial claim that buyers buy less of a good when the price goes up. But the president has not been alone in this claim: Joe Sestak argued that we could raise the minimum wage beyond $10.10 “and people would not lose their jobs.” Paul Krugman smugly dismissed these fears in the pages of the New York Times: “The answer is that we have a lot of evidence on what happens when you raise the minimum wage. And the evidence is overwhelmingly positive: hiking the minimum wage has little or no adverse effect on employment.” The New York Times editorial board joined in: “The weight of the evidence shows that increases in the minimum wage have lifted pay without hurting employment.” MSNBC’s Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, accused those critical of the proposed pay hike of ignoring the “evidence.”
CBO estimates are considered the gold standard for policy analysis — when they suit Democrats’ rhetorical needs. For example, the CBO dutifully produced reports showing that, if enacted precisely as written, the Affordable Care Act would reduce deficits — even as the CBO emphasized the unlikelihood of that outcome. Nonetheless, Obamacare critics were pounded over the head with the CBO estimate by such abject apologists as Ezra Klein, late of the Washington Post. Now the Democrats are in a pickle: They can dismiss the estimates of the CBO, which they have relied upon for so much support, or they can say that they do not give a fig about the half-million Americans that the Obama administration’s preferred policy would throw out of work. Mr. Klein, to his credit, has in the past acknowledged the relationship between the price of labor and the demand for labor: In his estimate, throwing low-income people out of work is worth it.
Presidential aide and White House tweeter-in-chief Dan Pfeiffer offered his characteristic dime-deep insight, writing: “The logical extension of the GOP position on today’s CBO report would be to call for lowering the minimum wage.” But that is in fact the tradeoff: Demand curves point south. You can have higher demand and lower prices or lower demand and higher prices. Stamp your feet all you like, you can’t stamp out supply and demand. The logical extension of this insight is not to lower the minimum wage, but to abolish it. The federal minimum wage is merely a statutory floor; the real minimum wage, which already is collected by our millions upon millions of unemployed and will be collected by a half-million more should the Democrats get their way, is $0.00. That’s what unemployment pays.
The stagnant wages of low-income and middle-class Americans are a national scandal, but the solution to it must be an economic one rather than a political one. Americans who are not bound for law school and high-tech jobs need a different and better model of education; the Democrats stop their having it. They do not need the importation of millions of largely uneducated and low-skilled workers from abroad; the Democrats insist upon it. (And so do a number of dangerously wrongheaded Chamber of Commerce Republicans.) American workers need massive capital investment to raise the value of their labor; Democrats desire to tax it. Economic reality is non-negotiable, and passing a law against awful job markets and the wages associated with them will not make that reality go away.
But the White House issued a statement saying “they are wrong”. So I guess everything is OK.
Vicious Circle ... Once started, is difficult to stop. Inflation or Deflation ... two sides of one coin. No matter on which side the coin lands ... Huge Losses.
These are just "job-locked" workers, yearning to breathe free, free from the shackles that bind them to their meager paychecks. With Obamacare, they need not worry about the day-to-day drudgeries inflicted upon them in their minimum-wage job.
Stupid.
They also offered a solution in the event the CBO turns out to be right - to avoid layoffs employers can accept "lower profit margins". Spoken like world-wise economists.
And after just having completed my 2013 tax returns there is no way for me to describe my contempt for the White House and its attitude.
If they keep this up I don't know who they expect is going to fund their welfare state.
Raising the minimum wage is very popular, it will be interesting to see if this sways any opinions.
The CBO’s range of the number of lost jobs went up to 1 million...
Maybe it would help some of the PACs to run Union stories. For example, “Most of the news your read and TV you watch is produced by members of a UNION. The unions are the biggest contributors to politicians (show chart). Why do you think the folks that suggest to you that business pay more or that wages should be hirer or that there should be more UNION jobs in government - why do this stories get such favorable treatment...UNIONS!!” Then show some fat union bosses at a conference - Tag LINE - Unions they get all the good press.
Ask all of these enlightened scholars in charge, How much more will a Big Mac cost? Who pays for that? They are out to get the evil CEO types, this will have a minimal if any impact on them. It will affect significantly the middle class on down, as most goods and services will go up well into the double digit range. Pray.
Something’s gotta give. You either lose jobs, cut hours, eliminate benefits, stagnate the wages of proven employees, raise prices or all of the above.
“The Public Employee Fair Wage Act”
The concept is simple, nobody is forced to live on minimum wage. Everyone will be paid the same. After all, doesn't fairness require that everyone have a living wage?
Let's use public schools as an example. We take the entire employee wage budget and divide it equally for every employee. Principal to janitor and lunch lady, everyone gets the same ‘fair’ wage.
The janitor and lunch lady will get a nice bump in wages to a very livable $17.28 hr. That would warm the hearts of all the liberals...right?
Too be fair pensions and benefits will have to divided equally too, so everyone will get an Owebamacare ‘Bronze’ basic plan and a pension of $16,437.00 yr after 40 years of service.
With their Social Security check of $14,000 a year they can retire in relative comfort with a tad over 30k a year.
There should be some savings for the schools in money spent bargaining all those union contracts, the whole thing can now be figured out on the back of a napkin over lunch!
That should put everyone safely over the food stamp level so we won't have to read anymore newspaper articles about first year teachers on food stamps. Those were real tearjerkers around contract time every year.
Now we just follow the same plan through every government dept and the liberals will have fair wages for everyone.
Wow....Talk about manipulating numbers.
Raising the minimum wage increases the risk of “job-lock.”
Best leave it where it is now or, better yet, reduce it.
Can’t be too careful, y’know.
Yep, and on Stupid Joey’s show this morning on TV they had an economist that said it would create one million new jobs. Is there any liberal, democrat, commie, socialist idiot economist that has ever had to balance a check book for even a household? Raising the price of labor creating jobs!!!!!!! Gawd, where do these people come from??? Where do they go to school to learn these principles of economics.
My Econ 101 prof was retired head economist for US Steel and he always used “cases of scotch” for the “product” when talking about trade. The principles he taught and these new age ones just do not match up.
George Will had it right. Liberals raise the price of tobacco to cut down smoking, raise the price of gas to discourage driving but can’t see the effect of raising the price of labor.
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