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Obama's Minimum Wage Boost Will Result In Even More Job Losses, CBO Finds

Tyler Durden's picture




 

In the aftermath of the crushing humiliation from two weeks ago when the bipartisan (if perpetually wrong) Congressional Budget Office found that Obamacare would result in an additional 2.5 million job losses over the next decade, all else equal, one would think that the administration would, and should, do everything to make sure that the CBO is sufficiently incentivized, monetarily if need be (wink wink) to avoid such embarrassing incidents of truthiness in the future. One would not think that Obama would turn the other cheek and eagerly anticipate yet another roundhouse punch to the face just days later. Yet that is precisely what happened.

Minutes ago, the CBO issued another stunner of a report, looking at the impact of the minimum wage boost proposal from $7.25 to $10.10 (which at least when it comes to Federal workers is nothing more than a populist gimmick since as we showed previously the average Federal worker makes nearly twice as much as the average American). The punchline: while income would be boosted for about 16.5 million workers or a grand amount of about $31 billion, "the income of most workers who became jobless would fall substantially, and the share of low-wage workers who were employed would probably fall slightly." And the cherry on top: as much as an additional 1 million jobs would be lost by the end of 2016.

All in a day's work for central-planning.

The summary findings in a nutshell, er, nutchart:

The longer version:

Increasing the minimum wage would have two principal effects on low-wage workers. Most of them would receive higher pay that would increase their family’s income, and some of those families would see their income rise above the federal poverty threshold. But some jobs for low-wage workers would probably be eliminated, the income of most workers who became jobless would fall substantially, and the share of low-wage workers who were employed would probably fall slightly.

What Options for Increasing the Minimum Wage Did CBO Examine?

For this report, CBO examined the effects on employment and family income of two options for increasing the federal minimum wage (see the figure below):

  • A “$10.10 option” would increase the federal minimum wage from its current rate of $7.25 per hour to $10.10 per hour in three steps—in 2014, 2015, and 2016. After reaching $10.10 in 2016, the minimum wage would be adjusted annually for inflation as measured by the consumer price index.
  • A “$9.00 option” would raise the federal minimum wage from $7.25 per hour to $9.00 per hour in two steps—in 2015 and 2016. After reaching $9.00 in 2016, the minimum wage would not be subsequently adjusted for inflation.

Workers' Hourly Wages and the Federal Minimum Wage

 

What Effects Would Those Options Have?

The $10.10 option would have substantially larger effects on employment and income than the $9.00 option would—because more workers would see their wages rise; the change in their wages would be greater; and, CBO expects, employment would be more responsive to a minimum-wage increase that was larger and was subsequently adjusted for inflation. The net effect of either option on the federal budget would probably be small.

 

Effects of the $10.10 Option on Employment and Income

 

Once fully implemented in the second half of 2016, the $10.10 option would reduce total employment by about 500,000 workers, or 0.3 percent, CBO projects (see the table below). As with any such estimates, however, the actual losses could be smaller or larger; in CBO’s assessment, there is about a two-thirds chance that the effect would be in the range between a very slight reduction in employment and a reduction in employment of 1.0 million workers.

Estimated Effects on Employment of an Increase in the Federal Minimum Wage, Second Half of 2016

 

Many more low-wage workers would see an increase in their earnings. Of those workers who will earn up to $10.10 under current law, most—about 16.5 million, according to CBO’s estimates—would have higher earnings during an average week in the second half of 2016 if the $10.10 option was implemented. Some of the people earning slightly more than $10.10 would also have higher earnings under that option, for reasons discussed below. Further, a few higher-wage workers would owe their jobs and increased earnings to the heightened demand for goods and services that would result from the minimum-wage increase.

 

The increased earnings for low-wage workers resulting from the higher minimum wage would total $31 billion, by CBO’s estimate. However, those earnings would not go only to low-income families, because many low-wage workers are not members of low-income families. Just 19 percent of the $31 billion would accrue to families with earnings below the poverty threshold, whereas 29 percent would accrue to families earning more than three times the poverty threshold, CBO estimates.

It gets worse:

Moreover, the increased earnings for some workers would be accompanied by reductions in real (inflation-adjusted) income for the people who became jobless because of the minimum-wage increase, for business owners, and for consumers facing higher prices. CBO examined family income overall and for various income groups, reaching the following conclusions (see the figure below):

Then there is the question of the impact on the Federal budget:

In addition to affecting employment and family income, increasing the federal minimum wage would affect the federal budget directly by increasing the wages that the federal government paid to a small number of hourly employees and indirectly by boosting the prices of some goods and services purchased by the government. Most of those costs would need to be covered by discretionary appropriations, which are capped through 2021 under current law.

 

Federal spending and taxes would also be indirectly affected by the increases in real income for some people and the reduction in real income for others. As a group, workers with increased earnings would pay more in taxes and receive less in federal benefits of certain types than they would have otherwise. However, people who became jobless because of the minimum-wage increase, business owners, and consumers facing higher prices would see a reduction in real income and would collectively pay less in taxes and receive more in federal benefits than they would have otherwise. CBO concludes that the net effect on the federal budget of raising the minimum wage would probably be a small decrease in budget deficits for several years but a small increase in budget deficits thereafter. It is unclear whether the effect for the coming decade as a whole would be a small increase or a small decrease in budget deficits.

Obviously, it is not rocket science - except to some very confused Keynesians - that hiking minimum wages always results in job losses, and as for the federal deficit in 10 years, the last entity whose opinion we want to hear about this is of course, the CBO, which in 2001 had forecast that 2011 debt would be negative $2.4 trillion.

Of course, the political backlash has already started. The Hill reports:

The office of Speaker John Boehner (R-Ohio) was quick to seize on the CBO finding.

 

“This report confirms what we’ve long known: while helping some, mandating higher wages has real costs, including fewer people working. With unemployment Americans’ top concern, our focus should be creating – not destroying – jobs for those who need them most," said Boehner spokesman Brendan Buck.

And, as expected, the democrats were furious. Again.

But Sen. Tom Harkin (D-Iowa), the lead sponsor of the Senate bill to raise the minimum wage, took issue with the CBO's findings.

 

“More than 600 economists, including seven Nobel Prize laureates, recently affirmed the growing consensus that low-wage workers benefit from modest increases in the minimum wage without negative consequences for the low-wage job market,” Harkin said.

 

“In fact, an analysis of the Fair Minimum Wage Act reveals that gradually raising the minimum wage to $10.10 would raise the wages of nearly 28 million low-wage workers, pumping $22 billion in the economy and—contrary to the CBO’s report— would create 85,000 jobs over three years due to increased consumer demand.”

 

Democrats are making the wage hike a central part of their midterm election argument, and Senate Majority Leader Harry Reid (D-Nev.) has said he will bring a minimum wage bill to the floor in the coming weeks.

Surely there is nothing quite like running on an agenda of even more job losses to assure re-election.

Finally, here is the White House.

No comment necessary.

 

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Tue, 02/18/2014 - 16:20 | 4449440 quasimodo
quasimodo's picture

He's a dipshit at best. This is surprising why?

Tue, 02/18/2014 - 16:23 | 4449455 DaddyO
DaddyO's picture

My comments on minimum wage got fileted in an ealier post by all the statist shills and now Tyler comes to my rescue.

DaddyO

Tue, 02/18/2014 - 16:33 | 4449493 ZerOhead
ZerOhead's picture

Obamanomics

The gift that keeps on taking...

Tue, 02/18/2014 - 16:33 | 4449506 jcaz
jcaz's picture

Votes cost money....

But hey, I won't lose my ObamaPhone over this, will I?

Ok then.....

Tue, 02/18/2014 - 16:37 | 4449522 James_Cole
James_Cole's picture

http://www.zerohedge.com/news/terminated-cbo-whistleblower-shares-her-fu...

Would that be this same CBO?

Who is the CBO serving?

Tue, 02/18/2014 - 16:46 | 4449564 pods
pods's picture

This does not even take any fancy charts or initials after your name to figure out.

If your job's break even max wage (to your employer) is below the new minimum, your job is toast.

Simple as that.  

Willful disregard for these simple axioms does not make them irrevelant.  

I just had a premonition:  A hotline for people to call up and rat out companies that are not stocking enough items in the store, and TP is in short supply.

#Winning

pods

 

Tue, 02/18/2014 - 17:01 | 4449634 macholatte
macholatte's picture

 

The punchline: while income would be boosted for about 16.5 million workers or a grand amount of about $31 billion,

 

simple arithmetic:

The punchline: while Democrat votes would be boosted by about 16.5 million numbskulls which would cost everyone only about $31 billion but not one penny from the DNC.

Tue, 02/18/2014 - 17:08 | 4449659 James_Cole
James_Cole's picture

If your job's break even max wage (to your employer) is below the new minimum, your job is toast.

Simple as that.  

Yes, simple as that, they get to fuck you on both sides. Endless taxpayer cash and subsidies for business (not causing inflation - wink wink), free market for the peons. Oh, but don't worry. We're right on the cusp of getting rid of crony capitalism. Right on the cusp! In the meantime, enjoy your collapsing purchasing power.

Interesting how corporate America was rescued in 2008 by the US taxpayer and turned around and had record profits - thank Gawd. But wages? Ah fuck that noise, that's the peons! Why worry about that? Let the market decide! And guess what, the market has decided. With unemployment nice and high, you're fucked bitchez. 

Tue, 02/18/2014 - 17:17 | 4449704 pods
pods's picture

I can see where you are coming from, but there is no way that coersion (government) is going to help those on the lowest rung of the pay scale by these measures.

Either businesses will increase prices to maintain a suitable profit margin (if they can) or the workers get it in the poopchute.

Nothing like the government fucking the hell out of you for your own good.
Why is it people don't mind being fucked if the fucker had good intentions?  

I am against all of these mafia tactics by government and big business.

But I am not going to condone a good old fucking for the weak because I FEEL like it helps them.

Sorry, results matter, and if you raise the minimum wage certain things happen:

1. Those below that wage see their jobs eliminated.

2.  Everyone above the minimum get a pay cut because costs are going to rise.

3.  Feel good assholes will get to parade around being praised, while secretly being the Ether Bunny.

http://www.urbandictionary.com/define.php?term=ether%20bunny

pods

Tue, 02/18/2014 - 17:26 | 4449753 johnQpublic
johnQpublic's picture

kinda like assuring your high school girlfriend you wont get her pregnant....

because you are fucking her in the ass

Tue, 02/18/2014 - 17:29 | 4449765 James_Cole
James_Cole's picture

Nothing like the government fucking the hell out of you for your own good. Why is it people don't mind being fucked if the fucker had good intentions?  

If it was a choice between cutting .gov subsidies to crony buddies vs. minimum wage I'd be 100% for the former. But that's not on the table. The way it works is the squeaky wheel gets the grease. Why do all these multinationals get so many favours out of .govs? Because they have armies of lobbyists. 

I was living in a place where they had a debate about equivalent to raising the minimum wage, predictable arguments on both sides including the 'unemployment is gonna jump'. Anyway, there was a big labour union that lobbied hard and got the increase. And unemployment? It actually went down. Unrelated to the increase sure, but it just shows the economy is much more complicated than a few factors. 

Tue, 02/18/2014 - 17:24 | 4449745 johnQpublic
johnQpublic's picture

why bis it that the consensus is always wrong?

 

though it is the CBO so they are also prolly wrong

could be much worse, based on their previous work

Tue, 02/18/2014 - 16:36 | 4449517 BLOTTO
BLOTTO's picture

Our 5...5ive dollar foot longggg is about to cost 12 dollars to compensate.

Tue, 02/18/2014 - 16:45 | 4449557 skwid vacuous
skwid vacuous's picture

i am making vacuum packed bags of all the veggies scraped from subway footlongs, thx subway... 

Tue, 02/18/2014 - 17:29 | 4449764 johnQpublic
johnQpublic's picture

only thingi like about subway is you can get as much green pepper on your sandwich as you want

Tue, 02/18/2014 - 16:33 | 4449507 Rick Blaine
Rick Blaine's picture

Obama is a dipshit...

He should've gone for $20/hr...

...for everyone...

...even those who don't have a job.

Now, THAT would REALLY get this economy roaring.

Tue, 02/18/2014 - 17:10 | 4449672 tempo
tempo's picture

My grandson tells me that he will rack up the largest amount of student loans allowed and stay in school as long as possible because its a lot more fun than working a crap job. He believes the Government will eventually allow all student debt to be eliminated in bankruptcy and paid by taxpayers.

Tue, 02/18/2014 - 17:45 | 4449844 Tall Tom
Tall Tom's picture

You grandson sounds like he deserves his enslavement. (I am really very sorry....very sorry to read that.)

 

The Government will not allow for that as when they can indebt you then they can keep you enslaved. That is the plan. He is deluded.

 

Are you going to allow that?

 

Have him read my response.

Tue, 02/18/2014 - 16:55 | 4449613 AmCockerSpaniel
AmCockerSpaniel's picture

>>>>  minimum wage boost proposal from $7.25 to $10.10 (which at least when it comes to Federal workers is nothing more than a populist gimmick since as we showed previously the average Federal worker makes nearly twice as much as the average American) <<<<<

 

This minimum wage boost was for the workers who are working for contractors, and are not

dirrect Fed workers. If we want them to be clean, then we must be clean. So nothing will happen

till new contracts are signed, or the old ones opened to shift the cost to the Fed.

Tue, 02/18/2014 - 16:22 | 4449451 LawsofPhysics
LawsofPhysics's picture

My god, I need a job that allows me to deliver plus or minus 100% of what I promise...

Fire everyone, start over.

Tue, 02/18/2014 - 16:32 | 4449500 Hippocratic Oaf
Hippocratic Oaf's picture

Putting more people on the street and higher inflation for all?

This is good?

Tue, 02/18/2014 - 17:41 | 4449823 LawsofPhysics
LawsofPhysics's picture

Yes, especially if they simply stop looking for work, the employment rate will go up.

Is that you Obama? 

moron.

Tue, 02/18/2014 - 16:22 | 4449452 Lendo
Lendo's picture

Don't let emotion get in the way of facts.

This ship is sinking, get out of USD.

Tue, 02/18/2014 - 16:23 | 4449461 cougar_w
cougar_w's picture

They now have to raise wages to get the inflation numbers they need. If they have to fund it, they'll print money and give it to Main Street (via tax incentives) to pay the higher wages and boost consumer spending. That is called "unsterilized QE" and without it the US economy will enter a consumption-failure-driven deflationary apocalypse at the bottom of which is the destruction of the entire US economy.

It's not going to work. Too little, too late. Wall Street got everything, kept everything, and the rest of us are now dust.

Anybody doesn't get this -- or cannot see the desperation this wage move represents -- is in for a really nasty shock.

 

Tue, 02/18/2014 - 16:31 | 4449494 Winston Churchill
Winston Churchill's picture

Going to need a bigger helicopter.

Tue, 02/18/2014 - 16:31 | 4449497 Grande Tetons
Grande Tetons's picture

New pilot, TD....Captain Yellen. Unless they need two helicopters that is. 

Tue, 02/18/2014 - 16:38 | 4449528 cougar_w
cougar_w's picture

And don't forget:

Cougar_w: Thu, 05/24/2012 - 17:18

Hope you didn't put much money on that bet, Dawg. These fuckers are going to print hard enough to wake the dead. They'll print like mo'fos, print like mad men, print like fly pimps. Print until their eyes bleed.

They will print via the swaps, via bank bailouts and mergers, via fixed Treasury yields, via real honest-to-God negative interest rates, via loans to banks on no collateral, via payroll tax reductions, and in the end via actual fiat paper instruments which they might very well drop in bails from actual mutherfucking helicopters.

They will not give two figs what anyone thinks.

Here is why.

Because this is the Goddamned end of it my friend. There is no accounting beyond this point. There will be no history of it. No one to take notes of rates of exchange, or of the graft and violence, nobody to worry about the deficit or the GDP or the national debt of any nation large or small under the blazing Goddamned sun.

End. Of. It. Does anyone bitch about how Rome totally debased their coinage at the end? Hell no. But whoever did it had enough to hand and grabbed some land with a nice vineyard and sat back and waited for the Middle Ages to start 700 years further on.

And that's what a singularity is about. Anything that passes through is striped of all meaning. Nothing we think is important now will remain so beyond the event horizon. Nobody will remember, nobody will write about it, nobody will be held to any standard. Ever for evar.

So yeah, they'll print like the mad crazed terrorists they are. Because they have nothing to lose, and maybe something to gain. Maybe a dollar. Maybe a day. Maybe a slim chance to escape with some of the loot. Whatever the fuck advantage they see in it, for themselves and their elite crap wanking buddies, they will full-on-full-time-fucking do it to advantage.

Watch for it, Dawg. It's totally on this time, on like Donkey Kong. And when the dust is settled in a generation hence it's going to have become  another unbelievable episode among the ages of men.

Tue, 02/18/2014 - 16:46 | 4449567 ZerOhead
ZerOhead's picture

Yup... that's pretty much it.

Tue, 02/18/2014 - 16:51 | 4449587 Walter E Kurtz
Walter E Kurtz's picture

This is probably one of my all time favorite comments on ZH. I have it saved to file and review it and other comments frequently. Thanks for bringing it back.

Tue, 02/18/2014 - 17:31 | 4449776 cougar_w
cougar_w's picture

It is probably one of your favorites exactly because I spam ZH with it every 6 months :) The power or propaganda.

Actually, I'm gaming G**gle. I want the search engines to associate that rant with any contextual mention of qualitative easing and money printing so that future generations wondering what the Sam Hill happened will at least have to admit that there was a bunch of crazy malcontents who saw it coming, and even knew they saw it coming.

Tue, 02/18/2014 - 18:52 | 4450100 All_Is_Well
All_Is_Well's picture

Best comment of all time on ZH...

Tue, 02/18/2014 - 17:54 | 4449879 Tall Tom
Tall Tom's picture

Tyler.

 

You know the reason behind the effort to raise the Minimum Wage is that they are seeking to raise Social Security and Medicare Tax Revenues.

 

This is not about helping the poor. This is an attempt to keep the insolvent Unemployment Insurance, Social Security and Medicare programs funded.

 

Since FICA, FUTA, and Medicare Taxes are charged as a percentage of Gross, and since Gross Wages increase as a result of a hike in the Minimum Wage then it follows that the Revenues will increase.

 

But you know that it will fail as people will be laid off as a result of the hike.

 

This needs to be exposed. Many miss this. They see that the Government is attempting to "Help" the poor. But they are only interested in extending the Ponzi Scam.

 

You need to write an article about this.

 

Man we are so screwed. I am doing the best that I can to educate as many as I know. But even Peter Schiff misses the underlying motivation.

Tue, 02/18/2014 - 16:36 | 4449519 LawsofPhysics
LawsofPhysics's picture

Still won't help.  If you were to just hand out money, hand it out to people and businesses that have been fiscally responsible.  Stop rewarding bad behavior!!  For example, everyone that is current on a mortage, or paid one off and is current on their property taxes gets $200,000.  If you've been an irresponsible dumbass, fuck off.  I guarrantee many of those people would spend more on other things if they knew they had no mortgage to pay.

The fact that every single fucking "plan" rewards bad behavior tells you everything you need to know about the true intent.

Tue, 02/18/2014 - 16:43 | 4449550 cougar_w
cougar_w's picture

What you are calling "bad behavior" was for the 60 years before called "the triumph of democracy."

Not saying you are wrong. Just noting that framing is 100% of the game.

Tue, 02/18/2014 - 16:57 | 4449608 LawsofPhysics
LawsofPhysics's picture

Well for starters, If a company or institution goes bankrupt under your management, you should be the first one to pay back the creditors, then the owners, then the shareholders no fucking bailouts, period.

These fucks always justify their lavish lifestyles by saying "they accept all the risk"?

Bullshit, there is no risk when uncle Sam is backstopping your shit.

Tue, 02/18/2014 - 17:11 | 4449680 James_Cole
James_Cole's picture

Bullshit, there is no risk when uncle Sam is backstopping your shit.

Risk is for the little people.

Tue, 02/18/2014 - 16:37 | 4449523 centerline
centerline's picture

Yup.  Shoring up the base - which in this case only buys a little more time at even greater expense.  Expect as many such tricks as can be pulled off along the way.

 

Tue, 02/18/2014 - 16:47 | 4449568 Greenskeeper_Carl
Greenskeeper_Carl's picture

i think its also about buying more time for social security/medicade. All these people will still get most of the money paid in taxes back, since they will still not mke much money, but the money paid into those ponzi programs doesnt come back in a tax return. This is just a way for the govt to extend and pretend ith these programs for a few more years. Maybe im reading too much into this, but I wouldnt put it past them. First they start with this MyRA thing, tricking low income people into buying govt debt, then they raise their wages by edict, allowing them to take more money out of the economy and into their ponzi scheme at the little guys expense. It always hurts the bottom segment of society too. Same as always

Tue, 02/18/2014 - 17:12 | 4449684 centerline
centerline's picture

Shit, the ink isn't even dry on this latest move and the CBO already has a report out on it?

It just reeks of a desperation move for short term gains including the upcoming 2014 election cycle.

 

 

Tue, 02/18/2014 - 17:32 | 4449746 cougar_w
cougar_w's picture

They know something they think we don't.

I think it means they intend to knock the chair out from under this economy, and let it fall to its death, sometime in the next 4 months.

Yes all in time for the election cycle.

The player who consistently controls the center of the chessboard, wins. To control the center you have to plan a dozen times a dozen moves ahead at least. That's called controlling the game. Obama's handlers are playing the system like a chessmaster. Obama himself has no skill whatever, except that he knows exactly how to jump when told to jump. But his handlers have some small skill, I'll grant them that. It will not prove enough.

They think they know all this and we don't.

And that is how they lost control of the center of the board. What comes next is fire.

Tue, 02/18/2014 - 17:34 | 4449788 Winston Churchill
Winston Churchill's picture

Agree with your timetable.
Its obvious its going to crash anyway pretty soon,
so they want to control the timing.
Fits with the 'dead men tell no tales' scenario unfolding.
A pandemic of suicided bankers may be our only tell.

Tue, 02/18/2014 - 16:49 | 4449548 ZerOhead
ZerOhead's picture

Correct but missing ONE important point.

As this consumption drained, under-producing and banked out economy collapses into something resembling deflation (it isn't... it's actually DEATH) while prices for food energy etc. (the necessities of life) explode...

Yellen and Fischer will be pumping trillions into the TBTF banks yet again in an attempt to "save the system" which will then effectively transfer all known wealth to the financial elite in a hyperinflationary wave that will immediately render the debt used to amass all these strategic assets worthless.

The perfect heist.

Tue, 02/18/2014 - 16:50 | 4449580 cougar_w
cougar_w's picture

However there is a possible end game here that you should not lose sight of.

They wanted the loot, and now they have the loot. All of it. However the same system in which "the loot" had any meaning and value is now in terminal decline. To them it must feel like winning the lottery the same day the lottery system declares bankruptcy.

The criminal financial system overshot the goal. They now need to back-pedal as hard as they can to try and save the thing they were just yesterday raping to death.

Too little. Too late.

Everyone is going to cry. But the fuckers who ended up with all the loot just in time to lose it in a sucking deflationary cyclone are waking to a living nightmare, snatching defeat from the jaws of victory, and the weak among them are going to kill themselves from grief.

Tue, 02/18/2014 - 17:05 | 4449629 ZerOhead
ZerOhead's picture

As I have said before... it's going to be a bitch for them to find caviar and fuel for their private jets when the planet is in flames.

Back-peddling is simply not possible at this point and not one of these fuckers will admit that their insatiable greed and corruption had anything to do with the collapse.

A very close personal friend of mine cracked into the Forbes billionaire list in 2013. Very nice guy to his friends... but otherwise a pure sociopath.

We are all fucked and there is not a thing that can be done because the real problem lies not in political or economic systems but in human nature itself.

Tue, 02/18/2014 - 17:22 | 4449730 centerline
centerline's picture

I wager that most of the sociopathic assholes who are aware that the shit has hit the fan think they can control what is going on to some degree.  The majority though are just blinded by ego, greed, etc. and are clawing at everything they can to live like rock starts - hookers and blow, fast cars, big boats and bigger houses.  One big free-for-all, fuck-your-neighbor, winner takes all world.

In reality, it just adds up to noise.  In the grand scheme of things - human nature considering - the sum of all these actions are exactly what creates these (historic, repeating) cycles.  This one is a real bitch... massive overshoot facilitated by cheap energy and technology.

 

Tue, 02/18/2014 - 17:43 | 4449830 ZerOhead
ZerOhead's picture

You have learned well young jedi.

Cheap energy and technological evolution is what has allowed us all to live in the most extraordinary of times with a high level of prosperity. It freed us from the enormous amounts of manual labor that used to be used in agriculture, resource extraction, transportation, manufacturing etc. etc.

Cheap debt was the magic that allowed us to all live beyond our means when we collectively stopped producing and focused our economies on consuming the labors of others.

Now the correction component of the cycle is repeating again... and this one is not going to be pleasant for Western civilization as we know it.

 

Tue, 02/18/2014 - 17:57 | 4449891 centerline
centerline's picture

So many other places in the world who are dependant on Western Civilizian for food, medicine, etc. are going to be quickly decimated.  Not sure where it will be the worst.  Or the timing.  Just that it is coming.

The way I look at it is that the paths of an organized implosion or a desperation play to keep the party going both end with a crisis.  Only a truly controlled deflation on a world scale could prevent sudden shocks and draw out what is coming over the decades it would take (perhaps longer).  And that isn't going to happen.  The world is just too dynamic and there are too many people pulling in different directions trying to game everything.  Overshoot - which includes synthetic growth as you mentioned (credit/debt) - in my opinion guarantees a more explosive outcome.

Wish I saw it differenty.  But nothing so far has convinced me otherwise.  Nor does this make me a doomer or negative.  Just trying to wrestle with the data and see where it leads me.  And hoping that information (technology) is the game changer... a chance we might take a step forward as a species at some point.

Tue, 02/18/2014 - 17:59 | 4449901 cougar_w
cougar_w's picture

All we need to do to pay off the debt is discover a use for crude oil. I'm telling ya the stuff is all over the place, seeps out of the ground in places. Hell I bet you can find it it that God-forsaken sand trap Arabia if you looked for it.

I hear it burns. Can you imagine the uses we can come up with for a liquid that actually burns? That's free for the taking? That people want to get rid of? No more whaling for oil. No more boiling fat. Forget that crap. We're only limited by our imagination friends.

Crude oil. Out of the ground. God was a fucking genious, man.

Sky is the limit. I'm telling ya.

Tue, 02/18/2014 - 16:25 | 4449466 i_call_you_my_base
i_call_you_my_base's picture

"the income of most workers who became jobless would fall substantially"

Very counterintuitive.

Tue, 02/18/2014 - 17:19 | 4449716 JohnG
JohnG's picture

 

 

Yup.  Stupid does not allow realization that the true minimum wage is ALWAYS zero.

Tue, 02/18/2014 - 16:25 | 4449467 Save_America1st
Save_America1st's picture

uh....nuh duhhh....

it's called, "The Plan", as in Cloward and Piven.  They're moving it along rather nicely (as far as they're concerned)...but I know they would love the collapse to happen as soon as possible.  But the socialist/Marxist scum are patient.  They've been planning and plodding along waiting to finally run America into the ground for over 100 years.  Thinking they'll take over after the collapse.

They may crash us eventually, but they're going to be wiped out with extreme predjudice for their treason when the people finally wake up and start fighting for their lives.  The Marxist scum won't have a snowball's chance in hell against us at that point. 

Tue, 02/18/2014 - 16:38 | 4449532 DaddyO
DaddyO's picture

It's getting to the collapse you speak of that will be the messiest.

Don't ever underestimate TPTB in painting the Patriots as the scum.

The spirit of King George is in full bloom with King Obamaclause.

The headlines are awash in treasonous bullshit.

DaddyO

Tue, 02/18/2014 - 17:08 | 4449663 Miffed Microbio...
Miffed Microbiologist's picture

At this point daddy o I don't know what to be more frightened about. Total economic collapse or massive drought and starvation. They both seem to lead to the same hellish place. Why does the only option seem to be a one way trip to Mars? I'm fighting despair at times. Especially when I think of my children.

Miffed;-)

Tue, 02/18/2014 - 17:27 | 4449757 pods
pods's picture

Well Miffed, I am in the same boat with youngins, but you do have your mind. And if you ever want to question if you are better off, drive by a mall, or look at the zombies walking the streets staring at their phones waiting for the Matrix to give them that next shot of dopamine.  Easy to see how much better off you are.

It is going to be really tough. But it gives us a chance to take back those ill gotten gains. The real property that was bought with printed funny money.

And we can again tell our servant government to get the hell back in the cage because we are in charge.

The world will be a better place.  Because there are still critical thinkers alive and they are having and educating their kids.  

pods

Tue, 02/18/2014 - 19:01 | 4450112 silverserfer
silverserfer's picture

what should be most frustrating is going off the silver standard. talk about trying to dumb down the populace. minimum wage in '64 was $1.25. Paid in silver thats $19.85(5x$3.97 melt value of silver quarter).

Who hear would flip out like a fish out of water if minimum wage was $19.85/hr? 

 

Tue, 02/18/2014 - 22:00 | 4450959 Miffed Microbio...
Miffed Microbiologist's picture

As parents we look at everything differently. It's a completely different scenario. I naturally understand your outlook.

I vacillate between hoping for the resetting of this world and praying for it never to happen. However, if I am incredibly honest with myself, it must be the reset. This is our kids ONLY hope. Limping along like japan the last 30 years would benefit me not them. I made the choice to bring them into this world. As a parent this is the only just legacy I should bestow to them.

May we find ourselves alive on the other side.

Miffed;-)

Tue, 02/18/2014 - 18:02 | 4449916 Tall Tom
Tall Tom's picture

Miffed...

 

Listen to this.

 

http://youtu.be/dFLr6OM_hS4

 

We cannot do much about the drought. Just keep your head up. Put away food now.

Tue, 02/18/2014 - 21:52 | 4450919 Miffed Microbio...
Miffed Microbiologist's picture

My dear Tom,

Thanks for that. Drove over to Point Loma and took a Hot Yoga class to purge out some of the noise in my mind. Certainly helped. I listened to the album on my way home. Very haunting, eerie and mesmerizing. Thanks for giving me what I needed. You suggested I be a psychologist. Perhaps you should consider explore becoming a psychic. It is nice to know,though I am very alone interacting with sheeple day to day, I can come here and people will understand.

I hope you can plant a garden. I have 15 meat chickens and 10 turkeys coming soon. I am stockpiling food for them and making a little pasture for them to graze. I am surrounded by wonderful neighbors. I have a 10,000 gallon cistern filled. I just pray there is no fire. Be well and be safe my friend.

Miffed;-)

Tue, 02/18/2014 - 16:26 | 4449472 Tenshin Headache
Tenshin Headache's picture

Second half of 2016? Just in time for the election in November.

Tue, 02/18/2014 - 16:45 | 4449559 fzrkid
fzrkid's picture

goes along with my expectations of a September 2016 'adjustment' to the economy

Tue, 02/18/2014 - 16:57 | 4449622 cougar_w
cougar_w's picture

Which dovetails nicely with my expected military-initiated "adjustments" to our 2-party electoral system and 3-way balance of power, just in time (please note) for Obama to grant himself an unlimited number of 3rd terms as president.

Tue, 02/18/2014 - 16:27 | 4449474 replaceme
replaceme's picture

Honestly, it's like this stuff is just Obama f*cking with us... Hey rubes, how about I raise your wages a few bucks and then make sure you lose your jobs - you like that you dipshits??  F*ck yes, you do.  I'll make cigarettes illegal and let you smoke choom in your kids' pre-schools, how's that for a good idea?  Hells yea, that's what I'll do then.

Tue, 02/18/2014 - 16:28 | 4449483 PaperBear
PaperBear's picture

Wrecking the economy one executive order at a time.

Tue, 02/18/2014 - 17:21 | 4449729 JohnG
JohnG's picture

Its a Wreckovery(tm)

Tue, 02/18/2014 - 16:34 | 4449503 mayhem_korner
mayhem_korner's picture

...the growing consensus that low-wage workers benefit from modest increases in the minimum wage without negative consequences for the low-wage job market...

 

Raise the minimum wage to $1M/hour and everyone could be a billionaire by summer!!!

(plus tax "revenues" would go through the roof and the deficit would be gone)

Tue, 02/18/2014 - 18:06 | 4449932 Tall Tom
Tall Tom's picture

The Final Solution ???

 

Default by Hyperinflation. Okay. Why not?  We are screwed anyway.

Tue, 02/18/2014 - 16:33 | 4449504 booboo
booboo's picture

"Surely there is nothing quite like running on an agenda of even more job losses to assure re-election."
Yea, well I hate to break this to you but last week less jobs was spun into a net positive for couch tater and their tater tots. They will now be even "moar" free to feed their entrepreneurial idea of what? toe jam art.

Tue, 02/18/2014 - 16:35 | 4449515 Dr. Engali
Dr. Engali's picture

It won't be long before the CBO backtracks from this report too.

Tue, 02/18/2014 - 16:35 | 4449516 LetsGetPhysical
LetsGetPhysical's picture

He should stick to what he does best... Race Hustling. Leave the other shit to the grown ups who have had actual real jobs.

Tue, 02/18/2014 - 16:36 | 4449520 ShrNfr
ShrNfr's picture

The NYT will hail this job loss as setting them free from the oppression of work.

Tue, 02/18/2014 - 16:37 | 4449527 i_call_you_my_base
i_call_you_my_base's picture

The resulting job losses will be fudged away in the already-fudged numbers. All that people will know is that the democrats raised the minimum wage. And they'll run on that. This is purely political and it will probably work as desired.

Tue, 02/18/2014 - 16:42 | 4449546 El Hosel
El Hosel's picture

Stay home and buy moar stocks, free money daily.

Tue, 02/18/2014 - 16:40 | 4449537 Colonel Klink
Colonel Klink's picture

Hahaha, I don't even have to be a PeeHDee eCONomist to have told you that little fact.

Fucking stupid sheeple, and lying coniving cunt government officials!

Tue, 02/18/2014 - 16:51 | 4449588 Motorhead
Motorhead's picture

KLINK!

Tue, 02/18/2014 - 16:55 | 4449612 Colonel Klink
Colonel Klink's picture

OoooooooBAMA!

Tue, 02/18/2014 - 16:41 | 4449543 skwid vacuous
skwid vacuous's picture

bullish!

Tue, 02/18/2014 - 16:42 | 4449545 Motorhead
Motorhead's picture

"...including seven Nobel Prize [winners]...." 

Yep, that says it all right there.  Fucking clowns.

Tue, 02/18/2014 - 16:43 | 4449552 PontifexMaximus
PontifexMaximus's picture

Who the hell cares about them? Obama needs a high unemployment rate! We have EBT and the Janet has the go for the not tapering, as easy as that.

Tue, 02/18/2014 - 16:46 | 4449563 FieldingMellish
FieldingMellish's picture

More people liberated from the shackles of work.

Tue, 02/18/2014 - 16:46 | 4449565 ZeroPoint
ZeroPoint's picture

You didn't earn that.

Tue, 02/18/2014 - 16:51 | 4449585 syntaxterror
syntaxterror's picture

The newly displaced will start "working" for the Free Shit Army, so it's all good.

Tue, 02/18/2014 - 16:57 | 4449621 ejmoosa
ejmoosa's picture

Why even bother?

Tue, 02/18/2014 - 17:19 | 4449679 gaoptimize
gaoptimize's picture

Let's do some math...

From Wikipedia: "Together, these 3.6 million workers with wages at or below the minimum made up 4.7 percent of all hourly-paid workers."  Many below are tipped up to beyond minimum wage, but lets assume all 3.6 million make exactly Federal minimum wage and work an average of 1,800 hrs/year (may be high).

3.6X10^6 * $7.25 * 1,800 = 3.6X10^6 * ~$13K = ~$47B

Now let's bump it to $10.10 and take out half a million workers (who I assume become wards of the state in some way): 3.1X10^6 * 10.10 * 1,800 = ~$65.5B

The remaining 3.1 million workers will see a one-time 40% increase to their hourly wages (some will see reduced hours) and half a million will get added to the Government benefits at additional annual cost of ~$30K each (Heritage-like estimate, they are probably already costing ~$20K/year each) or ~$15B/year.

So the net affect will be to pay, one way or another, $18.5B+$15B = $33.5B more for 17% less hours, crippling productivity and output at the low end of the wage scale and growing Government.  A no brainner win-win for the communist statists.

 

Tue, 02/18/2014 - 17:41 | 4449828 Vidbizz
Vidbizz's picture

In common core math the answer is blue.

Tue, 02/18/2014 - 19:16 | 4450175 booboo
booboo's picture

it can be the shape of a square too, so we're both right.

Tue, 02/18/2014 - 19:16 | 4450172 dexter_morgan
dexter_morgan's picture

 

"minimum wage and work an average of 1,800 hrs/year (may be high)."

Yes, I suspect WORKing 1800 hours is very high, but perhaps they will be 'employed' 1800 hours during the year is probably close.

Tue, 02/18/2014 - 17:56 | 4449885 NoWayJose
NoWayJose's picture

I highly doubt this affects the number of contract workers -- what you will see instead is that the 'bids' for those contracts will increase - meaning that it will cost the government more to issue those same contracts.  The real loser is the taxpayer who is paying the cost of the wage increase.

Tue, 02/18/2014 - 18:40 | 4450060 Yenbot
Yenbot's picture

I suggest making the new minimum wage the top tier for Fed workers at all levels, from O down to the janitor. $10.10 an hour, take it or leave it. Fed Job = min wage.

Tue, 02/18/2014 - 19:22 | 4450196 dexter_morgan
dexter_morgan's picture

If $10 is good, $20 is twice as good, and $30 three times as good. Why not make it $30/hour - something a faimily could probably live on - would it really make any difference in a labor 'market' that is impacted by so many artificial and arbitrary contrivances already?

In a true free market people would (ideally) be getting paid what their labor is worth to the employer given supply and demand. So raising it, or throwing an artificial minimum in there would logically reduce employment directly, and probably indirectly as potential entrprenuers bybass startup since lower or no profit.

But, we have NOTHING like a free market anymore, so who the hell knows what it would do. It won't raise employment though I'd be willing to bet (except maybe in the gubmits cooked books).

Wed, 02/19/2014 - 09:11 | 4451959 jjsilver
jjsilver's picture

Why aren't people asking the most important question. where does the Federal Government, whose jurisdiction does not extend past Washington D.C. get the authority to tell anybody what to do.

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