The Cynical Economist

From Heritage Foundation 
by Amy Payne

When someone says “minimum wage,” what comes to mind? Do you think of teenagers flipping burgers? Or a single parent trying to feed several kids? While President Obama and other proponents of a higher minimum wage want you to visualize that single parent, the truth is that a burger-flipping teenager or college student with a part-time job paints a much more accurate picture of the minimum wage in America. In his State of the Union address, President Obama called for an increase in the minimum wage from $7.25 to $9 an hour. Today, Democrats in Congress are arguing that the President didn’t go far enough, proposing an increase to more than $10 an hour. Minimum-wage increases reduce the number of entry-level minimum-wage jobs available—actually hurting many of the workers proponents want to help. And who are these workers? The President and others keep going back to five key myths about minimum-wage workers. Heritage labor expert James Sherk has already debunked them all.

Myth #1: Hordes of Minimum-Wage Workers Very few Americans are actually working for the federal minimum wage—it’s just 2.9 percent of all workers in the United States. In other words, 97 percent of American workers make more than minimum wage.

Myth #2: The “Working Poor” Getting By on Minimum Wage More than half of minimum-wage workers are between the ages of 16 and 24. These young people tend to work part-time, and a majority of them are enrolled in school at the same time—so the after-school burger flipper or college student with a part-time job is the real deal. A hike in the minimum wage primarily raises pay for suburban teenagers, not the working poor. In fact, America’s poor aren’t the “working poor” at all. Sherk explains that “Contrary to what many assume, low wages are not their primary problem, because most poor Americans do not work for the minimum wage. The problem is that most poor Americans do not work at all.” Cutting down the number of entry-level jobs by raising the minimum wage surely isn’t going to help these people who need jobs.

Myth #3: Minimum-Wage Workers Trapped in Poverty The average family income of a minimum-wage worker is more than $53,000 a year. How is this possible at $7.25 an hour? Few workers with minimum-wage jobs are the primary earners in their families. This is also true of older minimum-wage earners. Three-fourths of workers 25 and older earning the minimum wage live above the poverty line. In fact, 62 percent have incomes over 150 percent of the poverty line.

Myth #4: Lifelong Minimum-Wage Earners Minimum-wage earners don’t stay in those jobs forever. It’s easy to get the idea from politicians that “minimum-wage workers” are a permanent class of people. But in fact, two-thirds of minimum-wage workers earn a raise within a year. As they gain experience and employment skills, they become more productive and can command higher wages. Entry-level, minimum-wage jobs are the first rung on many workers’ career ladders.

Myth #5: More Single Parents on Minimum Wage Very few single parents are working full-time in minimum-wage jobs. Unfortunately, politicians overuse that example. A greater proportion of employees in the overall workforce (5.6 percent) are single parents working full-time jobs, while for minimum-wage workers that proportion is 4 percent—because so many minimum-wage workers are secondary earners. Don’t be fooled by the myths. A minimum wage increase will not reduce poverty. Instead, it will hurt many of the workers its proponents want to help. As James Sherk and Rudy Takala sum it up:

A higher minimum wage would help some workers, but few of them are poor. The larger effect is hurting the ability of potential workers living in poverty to get their foot in the door of employment. A minimum wage hike might help politicians win plaudits from the press, but it wouldn’t reduce poverty rates.

Darden tests limiting worker hours as health-care changes loom

Analysts say many other companies, including the White Castle hamburger chain, are considering employing fewer full-timers because of key features of the Affordable Care Act scheduled to go into effect in 2014. Under that law, large companies must provide affordable health insurance to employees working an average of at least 30 hours per week.

If they do not, the companies can face fines of up to $3,000 for each employee who then turns to an exchange — an online marketplace — for insurance.

“I think a lot of those employers, especially restaurants, are just going to ensure nobody gets scheduled more than 30 hours a week,” said Matthew Snook, partner with human-resources consulting company Mercer.

Darden said its goal at the test restaurants is to keep employees at 28 hours a week.

Analysts said limiting hours could pose new challenges, including higher turnover and less-qualified workers.

Wynn On Obama: “I’ll Be Damned If I Want To Have Him Lecture Me”

WYNN: I’ve created about 250,000 direct and indirect jobs according to the state of Nevada’s measurement. If the number is 250,000, that’s exactly 250,000 more than this president, who I’ll be damned if I want to have him lecture me about small business and jobs. I’m a job creator. Guys like me are job creators and we don’t like having a bulls-eye painted on our back.
The president is trying to put himself between me and my employees. By class warfare, by deprecating and calling a group that makes money ‘billionaires and millionaires who don’t pay their share.’ I gave 120% of my salary and bonus away last year to charities, as I do most years. I can’t stand the idea of being demagogued, that is put down by a president who has never created any jobs and who doesn’t even understand how the economy works.

“I’m afraid of the president. I have no idea what goofy idea, what crazy, anti-business program this administration will come up. I have no idea. And I have to tell you Jon that every business guy I know in the country is frightened of Barack Obama and the way he thinks.

David Siegel: Anti-Obama email wasn’t a threat to employees

“It was a private memo,” Siegel said.

In the memo, Siegel wrote, “The economy doesn’t currently pose a threat to your job. What does threaten your job however, is another 4 years of the same Presidential administration.”

The email continues, saying, “If any new taxes are levied on me, or my company, as our current President plans, I will have no choice but to reduce the size of this company. Rather than grow this company I will be forced to cut back. This means fewer jobs, less benefits and certainly less opportunity for everyone.”

When asked if Siegel saw how the email could be intimidating to employees, he replied “That’s not so and I didn’t try to intimidate anybody. I have lived through the last four years of the Obama administration. It hasn’t been fun.”

Fedex to cut thousands from workforce

The cuts are part of a plan to boost profits by $1.7 billion by 2016, mainly through intensified cost reductions.

They also come in the wake of the company’s warnings that its business is being hit by the global economic slowdown.

CRUISE LINER EXEC WRITES SCATHING LETTER TO OBAMA OVER NEW REGULATIONS

American Flagship Project challenges President Obama to explain why his Administration has blocked America’s entry into the $40 billion-a-year foreign-dominated cruise sector

Obama blocks thousands of new jobs and billions in tax revenues by new anti-American policy

From Washington examiner

by Sean Higgins

Advocating for the working man doesn’t pay too poorly, it seems. Here’s a list of the annual salaries and benefits earned by the nation’s top labor officials, according to the Labor Department. This data is based on 2011 filings:

AFL-CIO President Richard Trumka – $293,750.

National Education Association President Dennis Van Roekel – $460,060

Service Employees International Union President Mary Kay Henry – $290,334.

American Federation of State, County & Municipal Employees President Gerald McEntee – $512,489.

International Brotherhood of Teamsters President James P. Hoffa , Jr. – $372,489.

American Federation of Teachers President Randi Weingarten – $493,859.

International Association of Fire Fighters President Harold Schaitberger – $323,811.

American Federation of Government Employees President John Gage – $198,690. (Gage retired this month)

United Food and Commercial Workers President Joseph Hansen – $361,124

That’s still not in the the league of most top corporate executives, but it’s not bad. Interesting to note too that Trumka, who leads the largest coalition of unions, is on the lower end of the scale.

Obama Touts the $400 Million Taxpayer Loan To Solar Company in his weekly address on July 3, 2010….

….”when fully operational these plants will produce millions of state of the art solar panels each year….”

oops…. I guess they will  not… because they just got bankrupt….

Abound Solar, Recipient of $400 Million Loan Guarantee, Shuts Down

Abound Solar, a Colorado thin-film photovoltaic panel startup that snagged $400 million in federal loan guarantees to take on industry leader First Solar, is shutting down and filing for bankruptcy, according to the U.S. Department of Energy.

“Because of the strong protections we put in place for taxpayers, the department has already protected more than 80% of the original loan amount,” Energy Department spokesman Damien LaVera wrote in a blog post Thursday, noting that Abound had drawn down less than $70 million of the loan guarantee. “Once the bankruptcy liquidation is complete, the Department expects the total loss to the taxpayer to be between 10 and 15 percent of the original loan amount.”

So that’s the good news?

The American taxpayers are going to lose “only” $40-$60 million dollars?

Where are those “free” money coming from?

How many families had to work to give you those millions, that you are claiming are well spend?

The average family (two parents, two kids) in 2006 paid 30% tax on their income. That  is from each dollar they earn, they owed the government 30 cents.

They protected us? Instead of losing very large sum of money we lost large sum of money

You are no better than the banksters who are risking and playing with the others people money

From Townhall
by Daniel J. Mitchell

I’ve occasionally commented on foolish public policy in the United Kingdom, including analysis on how the welfare state destroys lives and turns people into despicable moochers.

But if you really want to understand the horrifying absurdity of the welfare state, check out these passages from  a report in the Daily Mail.

Carl Cooper thought he was doing a public service by offering seven benefits claimants the chance to work for him. But the company boss was flabbergasted when none of them turned up on the first day. Astonishingly, not a single one even had the courtesy to tell the marketing firm boss they would not be coming in. Mr Cooper and other staff members called the new employees to ask them where they were. Initially, some refused to answer their phones  when they recognised the number calling them. When the staff finally got through, five said they would be better off staying on state benefits rather than doing the commission-based work. Four of the seven also claimed  torrential rain had put them off.

Wow. Five out of seven admitted that mooching off the taxpayers was a better way to live. What does that tell us about the over-generosity of handouts?

Let’s continue.

Mr Cooper, who runs Car Smart, a marketing firm for independent car dealers in Canterbury, Kent, criticised the benefits system and said it rewarded people for doing nothing. He added: ‘I was left stunned when none of the new recruits turned up for work. They are a bunch of workshy layabouts. ‘These are people who are so morally twisted that they would rather stay on the dole than work. ‘People keep saying there are not enough jobs in the UK but the real problem is that there are not enough determined or ambitious people. ‘The benefit system is too generous and encourages the unemployed to stay unemployed and just breeds more laziness.’

But it’s even worse than Mr. Cooper realizes. He’ll still be paying these people, but in the form of taxes that then get redistributed to subsidize idleness.

You might think the moochers would lose their benefits because they chose laziness over work, but you would be wrong.

Mr Cooper said all his employees received a basic retainer of £100 a week initially and are enrolled on to the company’s commission structure, which could see earnings rise to up to £400 a week. The jobseekers who failed to turn up will not lose their benefits because the basic pay is under the minimum wage.

I found the above story via Kyle Smith, who also cites a story from the Times about a crazy proposal to have bureaucrats scrub floors and serve as human alarm clocks for the welfare class.

Town hall officials have been told to get down on their hands and knees and “clean the floors” of the homes they visit under David Cameron’s Troubled Families programme. They have also been urged to turn up at family homes at 7am if necessary to get parents out of bed and children ready for school on time. The orders were issued by the programme head, Louise Casey… “I want to see people rolling up their sleeves and getting down and cleaning the floors if that is what needs to be done. If a family needs to be shown how to heat up a pizza, show them how to do it. If it takes going round three times a week at 7am to get Mum up, then do it.”

I would have included a link to the underlying story, but the Times has the most incompetently designed website I’ve ever encountered (presumably because they want to charge, but they don’t even give you a chance to click on the story and then pay).

Anyhow, I have three quick reactions to this bit of foolishness.

1. I’d like to see the head bureaucrat, Ms. Casey, spend a month scrubbing floors and waking people up at 7:00 a.m. She strikes me as the typical leftist clown, sitting in an office enjoying a cushy and overpaid job while dreaming up absurd ideas on how to waste taxpayer money. Maybe if she gets her hands dirty by “rolling up [her] sleeves,” she’ll learn the difference between blackboard theorizing and the real world.

2. My gut reaction is that the government should cut the handouts to these dysfunctional households. For every day the welfare bums aren’t up on time to get their kids to school, they lose 10 percent of their loot. If their floors are dirty, that’s another 10 percent. If you want to change their behavior, start cutting into the budget for cigarettes and booze.

3. More realistically, we’re dealing with a problem of people who have little if any self-respect, and they pass horrible habits to their children. Kicking them off the dole might wake up some of them, but I suspect more than a few of them are past the point of no return. Society would probably be better off if their kids were put in foster homes, but I’m sure government would screw that up as well.

Stories like this leave me increasingly convinced that the only good approach is radical decentralization. Get these programs out of capital cities like Washington and London. The U.S. welfare reform was a decent start, but get responsibility to the local level. And in cities, put neighborhoods in charge. Have those small communities in charge of raising the money and spending the money.

That approach is far more likely to generate good ideas and good solutions, though I confess I’m pessimistic about anything working.

But we should figure out ways to stop inter-generational poverty and welfare. I gather it’s considered bad form to suggest mandatory birth control for welfare recipients, so has anyone proposed a different approach that might work?