Doggedly searching for the crux of the biscuit.
[bumped back to the top of the page due to the update]
Less than a week after voting themselves a seventh straight cost of living pay increase, the GOP House scuttled an attempt to raise the minimum wage for the first time in a decade. Meanwhile, the GOP Senate killed a bill that would have created a committee to investigate and oversee the awarding of contracts in Iraq and Afghanistan, a process that is riddled with fraud and incompetence. They have raised the US debt ceiling four times in the past five years, and it now stands at roughly nine trillion dollars, of which nearly half a trillion can be attributed directly to occupying Middle Eastern countries. And, of course, the lobbying/bribery scandals just continue piling up, while the use of pork-delivering earmarks expands faster than ever.
Remember that $300 tax rebate Bush gave you back in 2001? How's that working out for you?
Update: A few facts by way of Farber.
For shame, Republicans. For shame.
TrackBack[Homer Simpson]Mmm... Dollars...[/Homer Simpson]
Posted by: The Modesto Kid at June 21, 2006 10:35 AMIs that pay hike for Congessional Republicans only, or will the House Democrats (grudgingly, of course!) accept the fatter pay-envelope as well?
Just wondering...
For an opposing view, consider the following, from Dafydd ab Hugh's blog "Big Lizards."
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"A pair of quick hits from Robert Novak's column today. First, economics -- Democrat style:
[Seven - Novak mistakenly says six] Republican defections (in the House Appropriations Committee) produced a 32 to 27 committee vote, amending the health and education spending bill, for an increase to $7.25 an hour of the current $5.15 rate that has not been changed since 1997.
Though the bill will evidently not be brought to the floor of the House, let's pause a moment to look at those figures. According to the inflation calculator on the Bureau of Labor Statistics website, $5.15 in 1997 is worth $6.50 in 2006. That is an increase of 26% over nine years, or 2.9% per year.
But the amount that the Democrats (and seven Republicans) want to raise the minimum wage is 41%! That means they are acting as if inflation has been running at more than 4.5% per year the last nine years, rather than the actual rate of 2.9%.
This is the essence of liberalism. This is nothing more than a tax hike on businesses... and guaranteed to cause a massive rise in unemployment, as small businesses -- the backbone of the American economy and the source of the lion's share of the job growth during this excellent recovery -- suddenly discover that five employees next year cost as much as seven employees do this year... with predictable consequences for businesses that typically operate at the bare minimum of profit margin.
Thus, among smaller businesses that employ primarily minimum-wage employees -- and among all businesses whose labor contracts for their employees are negotiated with the union as defined multiples of the minimum wage -- a hike of 41% in the minimum wage could lead to a 25% - 30% layoff rate... especially for unskilled workers, the very ones least likely to find another job... and the very ones that Democrats pretend to be concerned about.
And who are those six Republicans? Novak doesn't tell us, but from the virtually unreadable MSNBC websight, where some advert threatens to engulf and devour the entire page (at least on Netscape and Firefox), we learn who they are:
* Bill Young (R-FL, 87%);
* Mike Simpson (R-ID, 92%);
* Ray LaHood (R-IL, 65%);
* Jo Ann Emerson (R-MO, 88%);
* John Sweeney (R-NY, 72%);
* Jim Walsh (R-NY 65%);
* Don Sherwood (R-PA, 84%).
If you think they're all liberals, think again. This is an eclectic mix of liberal Republicans (LaHood, Walsh), moderates Sweeny, Sherwood), and conservatives (Young, Emerson, and Simpson.) Sadly, the fundamentals of economics -- what I call "Econ. 101" in the categories here -- elude not just the Left but also many conservative Republicans. Among those who agitate for a much higher minimum wage is the soft-hearted, soft-headed conservative Dennis Prager. (Prager also supports affirmative action -- but "only for blacks," because of the "legacy of slavery and Jim Crow.") Maths and economics do not appear to be Mr. Prager's long suit.
If the conservative Republicans voted on committee for the hike expecting Speaker Hastert to kill it by bringing last year's Health and Education spending bill to the floor instead -- which he did -- then I find that even more reprehensible: it's both dishonest and hypocritical. Dishonest, because they know it isn't going to happen, so they're deliberately raising false hopes among the working poor; hypocritical, because they will go home in August and tell their constituents about their frugality and how much they support a free market.
Novak continues, saying:
Republicans want to avoid a minimum wage floor fight, where Democrats would point out that House members Tuesday, for the eighth straight Congress, raised their own pay. The latest $3,300 increase puts the House's annual salary at $168,500.
But again, do the math: this hike of $3,300 from a base salary of $165,200 is only 2%... which is less than a single year's inflation. So Democrats want to shame Republicans, who accepted a 2% COLA, into voting for a 41% increase in the minimum wage, and the GOP is running scared.
I'm certainly no fan of congressional pay hikes; but I'm also no fan of innumeracy... and the plain fact is that the House's raise is insignificant, while the proposed increase in the minimum wage would be devastating not only for small businesses but for the working poor as well -- Prager or no Prager."
link:
http://biglizards.net/blog/archives/2006/06/minimum_wage.html
Is that pay hike for Congessional Republicans only
Oh puh-leeze. Look who voted which way.
And Dafydd ab Hugh, aside from being a deeply silly person in general, is purposefully comparing apples and oranges, then accusing others of innumeracy.
Posted by: apostropher at June 21, 2006 11:34 PMI think one point that gets overlooked in the minimum wage debate is that you're not supposed to stay on the minimum wage forever. It's for entry-level jobs that people are meant to outgrow as they acquire some modicum, however modest, of skills and experience.
A minimum-wage job is not meant to last from one's days as a callow youth straight through to his eventual retirement. Minimum-wage workers can and do get raises quite quickly, by getting promoted or by using their work experience to land a better job.
Posted by: Gaijin Biker at June 22, 2006 01:20 AMAnd of course in the meantime all their landlords are perfectly happy to take "I'll pay the full rent when I get more experience at it," right?
Posted by: Robust McManlyPants at June 22, 2006 03:29 AMOf course not, so maybe you live in a place where rents are cheaper. You get roommates. You find ways to save money. You figure it out.
Of course, no one wants to live like that any longer than they have to. Hence, the incentive to get a better job.
Posted by: Gaijin Biker at June 22, 2006 05:28 AMapo and RMP, GB is absolutely right about the minimum wage. I mean it; seriously!
The Republicans have certainly grossly mismanaged the budget, but setting minimum wages just means that some people who really need work can't find it at all. It chokes off demand for legal workers, and increases demand for illegal ones.
Posted by: TokyoTom at June 22, 2006 05:59 AMsetting minimum wages just means that some people who really need work can't find it at all
This is true in an Econ101 textbook, but real-life experience has not borne this theory out. They said the same thing before the last hike, and low-wage workers instead got the strongest job market in three decades. This is like the Laffer curve. At *some* point of taxation, you'll start getting diminishing returns, but if you're to the left of the peak, increased taxation means increased revenue. If it were a linear rise (as the anti-minimum-hikers imply), then we should just cut it down to $1.00/hour or eliminate it altogether, right?
Anyhow, I don't buy that raising the minimum gross weekly salary from $208 to $290 places such a burden on employers that they will have to stop hiring. Thanks to the magic of inflation, they are paying less for those employees than they were ten years ago, while certainly having raised prices during that span. They can afford it.
you're not supposed to stay on the minimum wage forever
That's really beside the point, yo.
Posted by: apostropher at June 22, 2006 09:26 AMI can't tell when Tokyo Tom is being sarcastic anymore.
Posted by: Gaijin Biker at June 22, 2006 11:31 AMFuckin' Bush administration. They kill irony and satire, we take refuge in crude-but-effective sarcasm. Now they are rendering sarcasm ineffective, where can we go?
Posted by: Clownæsthesiologist at June 22, 2006 12:18 PMI linked to this article somewhere over on Unfogged, but I figured I'd do it over here too. It's about labor issues, so it's at least tangentially related to the debates over the minimum wage. Anyway I thought it was an interesting analysis of the French student strike, and very different from anything I read or heard in any of the major media while the strike was ongoing.</squatblog>
Posted by: M/tch M/lls at June 22, 2006 05:00 PMGB, I'm not particularly puzzled that you have allowed my sarcasm to "sistract" you from the many points where I agree with you. It's a struggle to think free, and I bash you because it seems to me that your support for the Administration is too reflexive - such that people who disagree are lumped together as liberals, Dims, the "MSM" etc., the better to dismiss them and thereby avoid the effort to think through what they say (this is simply human, so all of us do this, even if we're trying not to - in fact, I just did it). That's why it doesn't surprise me that, even after crossing swords with you on your own blog for some time now, you still seem to be inclined to think I'm a liberal.
Posted by: TokyoTom at June 22, 2006 10:51 PMapo, I think you're wrong to support a higher minimum wage, both empirically and on theorical grounds. However well-intentioned they may be, minimum wages end up hurting the very people they are designed to help, by restricting the demand for jobs that the unskilled are in a position to supply. As a result, there is an increase in demand for illegal labor by undocumented workers who will work below the minimum wage and without benefits.
This is the chief economic driver behind the expansion of illegal immigration, and the reason why the Bush administration has been slow to act on illegal immigration and has essentially stopped enforcement efforts - the minimum wage, when coupled with relatively porous borders and lax enforcement, is a real boon to American employers, who have a huge pool of workers who are unlikely to make a fuss over wages or unsafe working conditions.
We would be better of actually legalizing the illegal workers, eliminating minimum wages and, if we still wish to help the poor, do so by expanding programs that that actually work, such as the Earned Income Tax Credit, Medicare, job training programs, development zones and better policing. We should also stop the totally counterproductive war on drugs, which has simply encouraged the lawlessness that so hinders he economic development of inner cities.
Here are a few quickly Googled links on these topics:
http://www.arizonawatch.com/index.php?s=minimum+wage (a numbe of excellent posts)
http://www.janegalt.net/blog/archives/005713.html
www.oecdobserver.org/news/fullstory.php/aid=190
http://www.cato.org/pubs/pas/pa106.html
www.mackinac.org/674
usliberals.about.com/od/immigration/a/IllegalImmi_3.htm
www.samizdata.net/blog/archives/2006/05/minimum_wage_an.html
lawprofessors.typepad.com/laborprof_blog/ 2006/06/the_job_magnet_.html
lawprofessors.typepad.com/laborprof_blog/ 2006/06/making_a_connec.html
www.pbs.org/newshour/bb/congress/ jan-june06/immigration_3-31.html
EITC
http://www.marginalrevolution.com/marginalrevolution/2004/05/the_best_antipo.html
Gaijin, the theory is that minimum wage is for teenagers, but that's not the reality. Sad, but true.
Posted by: bitchphd at June 22, 2006 11:16 PMHowever well-intentioned they may be, minimum wages end up hurting the very people they are designed to help, by restricting the demand for jobs that the unskilled are in a position to supply.
If there is a relationship between raising the minimum wage and restricting demand for unskilled jobs, it's very slight and profoundly less evident than the relationship between raising the minimum wage and raising the living standard of the poor. At least at the rate of increasing the minimum wage that we're talking about here.
Posted by: M/tch M/lls at June 23, 2006 12:04 AMAs a result, there is an increase in demand for illegal labor by undocumented workers who will work below the minimum wage and without benefits.
By this logic, there should be a demonstrable decline in illegal immigration since 1997, because the real value of the minimum wage has declined. Also because of the declining US dollar.
Also, hoping the EITC will take care of things, from what i've read, is bit like hoping for ponies. It's a good program; it's just insufficient.
Also, medicare is headed for major troubles in the not-to-distant future. I wouldn't be gambling on it, not with the Repubs (who want to kill it) in charge.
Re: GB's first comment. True libertarianism! But, really, what you suggest is certainly possibly for most people. But there's all sorts of misfortunes out there. And people make stupid mistakes. It's a moral argument that we should only punish people so much for their being handicapped physically, emotionally, or mentaly, or for having dropped out of HS and having 3 kids. If you can make it to a full weeks work, you should have a chance of making it. It's a moral argument. (Possibly an economic argument in there, too.) And it's for these irregularities that we propose a minimum living wage in this country.
Posted by: Michael at June 23, 2006 05:31 AMBrad DeLong has a couple of posts relevant to the minimum wage discussion:
The Minimum Wage: Some Aircover for Gene Sperling...
Posted by: M/tch M/lls at June 24, 2006 02:50 PM