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Guest Post: Income Disparity Solution: Restore The Minimum Wage To 1969 Levels

Tyler Durden's picture




 

Submitted by Charles Hugh Smith from Of Two Minds

Income Disparity Solution: Restore the Minimum Wage to 1969 Levels

If we want to lessen income disparity, the solution is easy: restore the minimum wage to levels considered reasonable 43 years ago in 1969.

There is much hand-wringing about the vast income disparity in the U.S. between the top 5% and the bottom 25%, and precious little offered as a solution. Once again we are told the problem is "complex" and thus by inference, insoluble.

Actually, it's easily addressed with one simple act: restore the minimum wage to its 1969 level, and adjust it for the inflation that has been officially under-reported. If you go to the Bureau of Labor Statistics Inflation Calculator and plug in $1.60 (the minimum wage in 1969 when I started working summers in high school) and select the year 1969, you find that in 2012 dollars the minimum wage should be $10 per hour if it were to match the rate considered "reasonable" 43 years ago, when the nation was significantly less wealthy and much less productive.

The current Federal minimum wage is $7.25, though states can raise it at their discretion. State rates runs from $7.25 to $8.25, with Washington state the one outlier at $9.04/hour.

In 40 years of unparalleled wealth and income creation, the U.S. minimum wage has declined by roughly a third in real terms. "Official" measures of inflation have been gamed and massaged for decades to artificially lower the rate, for a variety of reasons: to mask the destructiveness to purchasing power of Federal Reserve policy, to lower the annual cost-of-living increases to Social Security recipients, and to generally make inept politicians look more competent than reality would allow.

The full extent of this gaming is open to debate, but let's assume inflation has been under-reported by about 1% per year for the past two decades. That would suggest the minimum wage should be adjusted upward by about 20%, from $10 to $12/hour.

All those claiming such an increase will destroy the nation (or equivalent hyperbole) need to explain how the nation survived the prosperous 1960s paying the equivalent of $10-$12/hour in minimum wage. Exactly what has weakened the economy such that the lowest paid workers must bear the brunt of wage cuts?

To understand the modest scale of such an increase in the context of total household income and wealth, consider these charts. Let's start by recalling that 38 Million Workers Made Less Than $10,000 in 2010-- Equal to California's Population. (Why the Middle Class Is Doomed April 17, 2012).

There are about 140 million jobs in the U.S., including part-time and temporary, and roughly 40 million workers earn less than $10,000 a year. This is the vast population earning minimum wage, and their earnings constitute a small share of total income.

 

 

The bottom 90% have seen their wages stagnate for 40 years, but the bottom layer earning minimum wage have seen their real earnings decline by roughly one-third (not counting entitlements they might qualify for as members of the "working poor.")

 

 

In the good old days of more widely distributed incomes, the bottom 20% who generally earn minimum wage actually saw significant increases in income. That has reversed in the financialization era.

 

 

Those earning minimum wage hold a tiny sliver of the nation's wealth.

 

 

Apologists for low wages claim we must "get competitive" with low-wage nations, as global wage arbitrage has cut wages everywhere. This claim overlooks the fact that the vast majority of minimum-wage positions are precisely the jobs that cannot be outsourced: cleaning offices, fast-food jobs, pizza delivery, agricultural work, and so on.

Other apologists claim that since these positions are "low productivity," they "deserve" lower wages. If we as a nation reckoned them worthy of $10-$12/hour 40 years ago, then why are low-productivity jobs less deserving now?

Still other apologists claim that raising the minimum wage would 1) destroy small businesses and 2) trigger painful increases in food and other prices.

The only way the minimum wage can hurt small business is if some small businesses are allowed to cheat and pay illegally low wages as a way of lowering the cost of their service. If the law were uniformly and aggressively enforced, for "black market" and above-market wages alike, then those cheating their employees would slowly be eliminated from the economy via heavy fines.

Once everyone is paying $10-$12/hour, even for informal work, the "playing field" will be leveled at a higher scale.

Given the modest share of the national income earned by low-paid workers, claims that costs would skyrocket are groundless. Yes, costs would rise, but not by enough to impoverish the nation.

What all those decrying restoration of a reasonable minimum wage overlook is that the working poor will spend most of their increased wages, and that will actually aid the economy where it counts. Aren't we tired yet of Federal Reserve policies that enable more skimming by the top 1% while giving nothing to the bottom 50%? The simple, straightforward way to correct the vast income imbalances is to restore the minimum wage to 1969 levels and adjust for under-reported inflation.

What about the wealthy? Shouldn't they pay more than the rest of us? Well, actually, they already do, for the most part: the top 25% of taxpayers--34 million workers out of a workforce of 140 million--pay almost 90% of all Federal income taxes. But we'll address that aspect of income disparity tomorrow.

 

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Thu, 05/31/2012 - 12:02 | 2479797 slackrabbit
slackrabbit's picture

Madness. It all mine I tell you.

Hey put down that pitch fork!

 

Or we could just let the banks fail and have the 1% adjust automaticaly.

For them its bad, for us not so much....

Thu, 05/31/2012 - 12:05 | 2479836 Caviar Emptor
Caviar Emptor's picture

I'd like my minimum wage in gold mr bossman 

Heard about it on channel ZH

Thu, 05/31/2012 - 12:17 | 2479911 Atlas_shrugging
Atlas_shrugging's picture

methinks mdb posted this... well played!  wage and price controls for all!!

Thu, 05/31/2012 - 12:26 | 2479960 flacon
flacon's picture

Minimum Wage is the minimum level of skills for which a company is legally allowed to hire.

 

In other words, it is the level at whcih the government deems people's skills to be too low to hire.

 

In other words, the higher the minimum wage, the less people in the workforce. 

 

Or to put it another way, minimum wage generates unemployment. 

Thu, 05/31/2012 - 12:33 | 2479973 flacon
flacon's picture

The real problem is not that wages are too low, it's that the cost of living is too high, and the reason for that is because our economic system is designed to give the fruits of the "invisible hand" to the bankers through our fraudulent debt-based fractional reserve monetary system.

 

Thu, 05/31/2012 - 13:10 | 2480221 Thisson
Thisson's picture

I agree with both your points: minimum wage increases destroy jobs and the true solution is to reduce the cost of living.  Ironically, Charles Hugh Smith got that right in his post yesterday.  I don't understand why this new article misses the point that minimum wages (and price controls in general) are another form of (bad) central planning .

 

 

Thu, 05/31/2012 - 13:32 | 2480283 flacon
flacon's picture

I don't understand why he believes in minimum wage either since it is a concept that has been thoroughly debunked as a statist myth.

 

Charles Hugh Smith wants to raise minimum wage by 20%. Why not raise it by 200% and see what happens - or is there some sort of Keynesian "sweet spot" that he believes it should be at - not too hot, not too cold?

 

 

Thu, 05/31/2012 - 14:09 | 2480565 Buzz Fuzzel
Buzz Fuzzel's picture

When I got my first minimum wage job in 1967, working at a gas station, the minimum wage was $1.40 per hour.  We sold gas that summeras low as 19 cents per gallon.  This is complicated math but stick with me please.  In the summer of 1967 a gallon of gas cost me 14% of my hourly wage.  With gas today at $3.50 per gallon a minimum wage earner pays 48% of his hourly wage for a gallon of gas.  The same is true for nearly every necessity of life we purchase. 

The fuzzy thinking which argues “low-wage earners” will be better off if we use political coercion to force their rich bosses to pay them more is a fantasy like most of the progressive, liberal, collectivist dogma. 

If a minimum wage law lifts low-wage earners out of poverty why stop there?  Why not set the minimum wage at $200 or even $500 per hour and make everyone rich?  For thinking people the answer is obvious.

Thu, 05/31/2012 - 14:42 | 2480697 SimplePrinciple
SimplePrinciple's picture

First the earned income tax credit was supposed to subsidize the working poor.  Second, we tried to round up all the potential competition for low-skill jobs and dump them into college courtesy of student loans.  Now, here we are again screwing with prices directly with the minimum wage.  A sorry state of affairs.

Thu, 05/31/2012 - 14:11 | 2480572 zaphod
zaphod's picture

The high minimum wage existed back then because there was a lack of global competition. Manufacturing was centered in the US after WWII and global trade was lower due to the residual effects of the depression era trade barriers created.

With more open trade, comes lower salaries for the bottom 50%.

You want higher minimum wages, then re-enact the depression era trade policies.

Thu, 05/31/2012 - 15:44 | 2480930 HurricaneSeason
HurricaneSeason's picture

That's the elephant in the room.  I don't think it came up in the Republican debates. They said that lower corporate taxes would make American companies more competitive globally.  Like that will make up for $1 or 2$ an hour labor with no benefits or rules. The "American" companies would be paying too much in taxes to bring their profits back to the U.S. to build factories.  I'm hoping China confiscates their factories and resources at some point. There's no tweaking the whole mess anymore, it needs to explode.

Thu, 05/31/2012 - 19:36 | 2481730 dolly madison
dolly madison's picture

You want higher minimum wages, then re-enact the depression era trade policies.

 

+100

Thu, 05/31/2012 - 14:32 | 2480668 philgramm
philgramm's picture

 

The pulling forward of demand over the last 20 years caused the housing bubble and the dot.com bubble and the student loan bubble and the money-printing bubble.  Now prices are too high and wages too low.  Increasing wages will not slow down the increase in cost of living.  The continued drumming up of an economy that is all smoke and mirrors (consumerism) is not the answer.   On the contrary it is the problem.  We Americans should reject this centrally planned attempt to reboot this economy.  It is a dead model.    

Deleveraging is the answer for all of us.  For the individual, for the family, for the munis, for the states, for the feds.  EVERYONE needs to deleverage.  There are NO other answers.  Cut back, survive, and prosper at a later time when the environment for calculated risk-taking is friendlier.  The added benefit of delevaraging is that it makes you flexible and able to handle many stresses due to lower costs (monetary and otherwise).  Taleb describes this well in an upcoming book called "Antifragility".  Just my humble opinion.

Thu, 05/31/2012 - 15:32 | 2480884 maximin thrax
maximin thrax's picture

More borrowing is the TPTB's one and only cure for our economic ills. Increased wages inevitably result in increased leverage, because no matter what ones income level one borrows as much as the bank allows in order to obtain the good life as painlessly as possible. Higher wages and higher taxes portend greater consumer and government debt - NEVER less debt!

Thu, 05/31/2012 - 17:58 | 2481430 Breaker
Breaker's picture

"...or is there some sort of Keynesian "sweet spot" that he believes it should be at - not too hot, not too cold?"

 

Of course, it's important that wise rulers be able to set the minimum wage because, being wise, they know what the sweet spot is.

Thu, 05/31/2012 - 15:20 | 2480841 maximin thrax
maximin thrax's picture

Yep. The "vast wealth creation" of the past decades that raised living standards has paralleled a vast debt creation. Much of the wealth the rich posess is not land, gold, and gemstones but obligations from individuals, corporations and governments that are claims on fantasy future income. And when that debt is not paid back then trillions of dollars in "wealth" evaporates and we get a deep depression. When that happens current minimum wage levels will be middle-class pay in this country and people will be glad to get it.

 

Thu, 05/31/2012 - 14:00 | 2480498 aerojet
aerojet's picture

That's exactly right, but it cannot be emphasized enough--everything financial out there is designed to sell you the idea of living the good life while simultaneously making it impossible to achieve that lifestyle because it is all really designed as a conduit for wealth concentration at the top. 

http://en.wikipedia.org/wiki/Anomie

...an individual suffering from anomie would strive to attain the common goals of a specific society yet would not be able to reach these goals legitimately because of the structural limitations in society. As a result the individual would exhibit deviant behavior. Friedrich Hayek notably uses the word anomie with this meaning.

I just got a retirement report from my company and it claims that I will need $1.7M in savings to retire at age 65 assuming I need 80% of what I make now in order to live.  That is never conceivably going to happen, barring hyperinflation, of course.  Do I really need 80% of my current annual income when I'm 65 and up?  Damned if I know.  It seems unreasonable, though.  But again, here are these financial wizards planting ideas in people's heads. 

I think we're going to see a big uptick in suicides as Boomers are forced into retirement with no money to sustain themselves.  Many will be living with their children, which seems like an oxymoron given that many children of Boomers never left the nest.  Regardless, there's going to be too many broke Boomers and not enough places to put them. 

Thu, 05/31/2012 - 19:45 | 2481747 fnord88
fnord88's picture

well a 1% return on 1.7M is only 17K. In our new age of ZIRP for ever, i think you will need more like 5M

Thu, 05/31/2012 - 12:36 | 2480003 FL_Conservative
FL_Conservative's picture

Exactly. Unintended consequences of misguided political pandering.  Markets aren't perfect, but will naturally gravitate towards equillibrium.  Governments are FAR less perfect and generally gravitate to those with money to line their pockets.  Charles Hugh Smith, you demonstrated complete ignorance of economic principles in this article. 

Thu, 05/31/2012 - 12:45 | 2480061 MeBizarro
MeBizarro's picture

To what equlilibrium are you talking about? 

Thu, 05/31/2012 - 13:03 | 2480183 CrockettAlmanac.com
CrockettAlmanac.com's picture

Satisfaction of market participants through voluntary interaction.

Thu, 05/31/2012 - 14:01 | 2480508 aerojet
aerojet's picture

Which isn't perfect by any means, but it is way safer than central planners picking the winners and losers like we have right now.

Thu, 05/31/2012 - 13:03 | 2480185 The Alarmist
The Alarmist's picture

How about the equilibrium that should exist between real pay and real-productivity.  The KSA's (Knowledge, Skills, and Abilities) of a college grad of 2012 are at best on par with those of a high-school grad of 1969, so all else being equal the current minimum wage of $7 or so is probably too much for a lower-skilled worker.

Thu, 05/31/2012 - 13:24 | 2480290 cranky-old-geezer
cranky-old-geezer's picture

 

 

When I see "should" I dismiss the rest of the comment, it's meaningless.

None of the "should" stuff is gonna happen without a full-on revolution ending the present government (and Fed banking system), then creating a new constitutional government (without the Fed banking system)

...and that's not gonna happen.

"Should" is nonsense.  It ain't gonna happen.

Thu, 05/31/2012 - 19:58 | 2481769 FL_Conservative
FL_Conservative's picture

Our Constitution is fine.  Its the politicians that are fucking things up pandering so that they can extend "their welcome" in office.

Thu, 05/31/2012 - 12:41 | 2480040 Ben Dover
Ben Dover's picture

I suspect unemployment has been increasing all on it's own with no help from the minimum wage for a while now.

Thu, 05/31/2012 - 16:03 | 2480988 AchtungAffen
AchtungAffen's picture

Wow, by your logic war is peace, ignorance strength...

Fri, 06/01/2012 - 13:46 | 2484998 Rusty_Shackleford
Rusty_Shackleford's picture

Bingo. The only thing minimum wage laws do is make more and more jobs illegal.

How does making jobs illegal help anyone?

If we could eliminate poverty by making the minimum wage $10, why the hell don't we make the minimum wage $500/hr and ensure everlasting prosperity?

Thu, 05/31/2012 - 12:19 | 2479923 MiguelitoRaton
MiguelitoRaton's picture

OH Charlie, I see you are in favor of price fixing. Yes let's fix the price of labor, fix the price of money (interest rates) this whole statist centralized control approach is sooo effective, we need more of it. Screw the free market, supply and demand be damned, we need price-fixing for everything. It worked really well in Russia! /sarcasm

Thu, 05/31/2012 - 12:38 | 2480032 Rylie
Rylie's picture

if you consider raising the minimum wage price fixing, wouldn't putting a minimum on wages at any price be price fixing.

So in other words if you want totally free markets there would be no minimum wage. We could then insistently compete with China and India for manufacturing jobs.

 

Thu, 05/31/2012 - 12:45 | 2480066 Ben Dover
Ben Dover's picture

the quality of life issue is always important to consider.

Thu, 05/31/2012 - 12:57 | 2480147 HungrySeagull
HungrySeagull's picture

Cardboard box, Thompson Surface Sealer and something for the nest on cold nights or a wife.

Thu, 05/31/2012 - 13:39 | 2480381 UP Forester
UP Forester's picture

Ya know, it's funny, but the wife and I start out around the middle quintile (gross), but after Fed Income, State Income, FICA, health insurance, 401k loan and hospital bill deduction, end up around the 4th quintile.

Then, after housing (small mortgage), gas to get to work, car insurance, license plates, food to survive, car repairs, electric bill, phone bill, radiology bill, home insurance and land taxes, we've got about enough to pay for internet, a night out on the town, and either a purse for her or an ASE for us....

....yeah, definitely living better than my parents, when my dad worked and my mom stayed home and took care of me and my brother, with enough left over for two cars, two snowmobiles and a summer trip.

Life is good....

Thu, 05/31/2012 - 12:54 | 2480118 Bob
Bob's picture

We'd have to eliminate the evil "social safety net" in order to compete--even at matching wages you'd need workers without options to accept the working conditions and terms appropriate to their stations. 

Neoliberal Express: All Aboard!

First Stop: Prosperity Mountain in the Land of Unfettered Unicorn Capitalism.

Liberty--First, Last and Always!

Ron Paul, 2012

Thu, 05/31/2012 - 13:05 | 2480189 CrockettAlmanac.com
CrockettAlmanac.com's picture

Freedom is bad, lock me up if I interact voluntarily with others, 2012!

Thu, 05/31/2012 - 13:15 | 2480258 Bob
Bob's picture

Ooops!  Problem is when money is used as a weapon and most people are unarmed. 

That's not freedom.  That's tyranny. 

Slogans are nice, but reality really has to be accommodated.

Thu, 05/31/2012 - 13:52 | 2480446 CrockettAlmanac.com
CrockettAlmanac.com's picture

 

reality really has to be accommodated.

 

The statist believes that his ability to centrally plan for billions of others is greater than reality although reality must on occasion be "accommodated."

But the truth is that reality always supersedes the plans of men. We must accommodate ourselves to reality and not the other way around. And reality dictates that as each man has his own will he must needs be his own sovereign. Reality demands it and will accept no accommodation while some individuals presume to undertake the direction of others against their will.

Thu, 05/31/2012 - 14:03 | 2480513 Bob
Bob's picture

Chapter and verse, the Book of Liberty?

What the labor class knows is they've gotten screwed and neoliberal "economics" has been the means. 

Any paradigm, however sophisticated or earnestly idealistic, that justifies it is just self-serving bullshit. imo. 

Thu, 05/31/2012 - 14:21 | 2480626 CrockettAlmanac.com
CrockettAlmanac.com's picture

I don't worry about ideals but I do have principles. The most important principle to me is self determination. Each individual has a right to be free to strive for his own betterment.

I used to vote Democrat and think liberally in furtherance of those principles. But one day I realized that statist policies do not support those principles and in many cases undermine them. I saw that I had to stop supporting many policies which I had long believed in in order to continue to be true to my principles.

I'll leave idealism to the statists who actually believe in ideals which can be promulgated from on high. Us regular folks are more interested in the mechanics of living in the real world rather than hearing more about how the bright boys in Washington know better about how we should live our lives than we do ourselves.

Get real.

Thu, 05/31/2012 - 14:38 | 2480684 Bob
Bob's picture

Like it's only the "statists" who are caught up in bullshit!  Looks like you've swung to just a different extreme.  I think the Buddhists are onto something important with their "middle road" philosophy, fwiw.

Good luck, CA.  :-)

Thu, 05/31/2012 - 16:39 | 2481095 PianoRacer
PianoRacer's picture

Typical left/right black/white linear thinking. "I don't like what you're saying, but I don't like the status quo, so the answer must lie somewhere in the middle!" Pathetic.

You've got it right, CA. It's a simple algorithm that logically flows from the Non-Agression Principle. The use of force is wrong; the State is DEFINED by the use of force; therefore the State is wrong.

Just like it would be WRONG to point a gun at someone and tell them they must have sex with you (we call this RAPE):

  • Pointing guns at people and telling them what they can and cannot pay people for their labor, is WRONG.
  • Pointing guns at people and telling them that they must fork over a hefty portion of their income is WRONG.
  • Pointing guns at people and telling them who they can and cannot marry is WRONG.

And so on.

Nice to see you've got it figured out CA. The most important conversation about these topics is currently taking place at www.freedomainradio.com. THIS is the next step people; aren't you tired of flailing about in the moral world, relying on opinions and sophistry to determine truth from falsehood? I mean christ, if that's the best Steve Jobs could do, instead of an iPhone we'd have a pile of transistors glued to a circuit board and wrapped in whipped cream. It's time to apply some god damn SCIENCE to questions of the State, of Religion, of Philosophy, of Economics, of Parenting, of HUMAN INTERACTION.

You'll never get good at poker by just playing poker; you have to read some books on strategy, you have to engage with the game on every level and with a scientific and statistical approach. These issues are NO DIFFERENT, and until we get rid of this RETARDED SOPHISTRY - and  I say this as a regular reader of Chuck's work - we will go exactly NOWHERE.

Again, people, please: join the conversation. www.freedomainradio.com. The conversation is happening, and you are MISSING IT. 

Thu, 05/31/2012 - 13:12 | 2480237 Thisson
Thisson's picture

We don't need to regulate a minimum wage.  What we need to do is to remove all the factors that artificially jack up the cost of living, so people can afford to live decently on market-based wages.

This means we stop the credit-based inflation of prices throughout the economy, in housing, college tuition prices, health care, etc and get rid of all of the financial parasite rentiers' profiteering. 

Thu, 05/31/2012 - 12:19 | 2479924 slackrabbit
slackrabbit's picture

Excellant! Actually, that's  King Bossman now - I brought the Kingdom of Illinois for 1 fake gold coin and a packet of gravel from a former Governor there

The  traditional coinage for trade was payment in silver. 

I will pay you 30 - also a very  traditional  sum - to hunt down our former slavers

Thu, 05/31/2012 - 12:15 | 2479901 TheAntiBen
TheAntiBen's picture

Increasing the minimum wage is the stupidist idea ever.  What really needs to happen is we need to eliminate the minimum wage.  Minimum wage, and the increases thereof, are actually one of the biggest job destroyers ever.  I'm sorry, but some jobs just flat out are not worth $10/hr.  There used to be jobs that younger kids could pick up that would be "worth" less than minimum wage, yet they still provided money for young teenagers and provided a service to people and business owners.  Sweeping a shop up in the evening is just not worth $10/hr.  Now, because of "minimum wage" these jobs are gone, because the job was never worth what the minimum wage was.  So now, instead of having young teenagers working and making SOME form of money and learning valuable lessons, we instead have them sitting around at home getting fat, or worse.  The amitious ones will go do free internships to boost their resume.  In the mean time, we have businesses utilizing LESS employees and asking these employees to work MORE because they can't afford to hire another person at $10/hr whereas they might have been able to $5 an hour.

 

Honestly, where is the sense of responsibility and selfworth in our society any more.  Do we honestly need the government to tell us what a job is worth?  It would seem that if someone offered a job at $5/hr, and NOBODY took the job, than obviously the wages offered were just flat out too low.  If you have TONS of people clamoring for even a $5/hr job, then they obviously decided that even at $5/hr, the job is better than nothing.  Free market baby, all the way...

Thu, 05/31/2012 - 12:27 | 2479963 Marginal Call
Marginal Call's picture

Kids can and still do work for below min. wage.  Nobody is stopping enterprising young kids from doing their neighbors yard work or other under the table work.  And here in WA state, with the $9/hr we have one of the healthiest economies nationwide.  We still make stuff here.

Thu, 05/31/2012 - 12:58 | 2480159 t0mmyBerg
t0mmyBerg's picture

Great.  So you can move the labor outside the official economy into the cash economy.  Works for some.  But there is no arguing the fact that Minimum Wage is price fixing and the necessary result of price fixing is shortages if the market clearing price is lower than the artificially set price.  Add to that the fact that our liberal facist nanny-state overlords will come into your back yard to stop it if they can or into your living room to take away the babysitter.  After all they know what is best for you in every facet of life and you are not capable of making your own decisions, like what size soda to have if you live under Iron Mike in NYC.

When I was young I worked at a place called Pauls Landing which was basically a boat rental place.  We got paid peanuts.  But it was invaluable experience.  Now I am pretty sure Paul wanted to write those salaries off on his tax return as a business expense, which he would not be able to do if he paid us in the cash economy.  I am also pretty sure that raises in the minimum wage put him out of business.  The shortage of labor that results when the centrally planned price is higher than the market clearing price hurts both the potential employees who find there are no jobs as well as the small businesses that could scrape by if they could pay the market clearing price.  Net result is lower level of economic activity.

Thu, 05/31/2012 - 13:18 | 2480268 Marginal Call
Marginal Call's picture

School kids have worked in the cash economy since there's been school.

 

So when the Greeks go black market to avoid the banks and taxes the Zero Hedge crowd roars in approval.  But a high school kid mowing lawns for cash?  Job killing pimple faced punk.

Fri, 06/01/2012 - 08:49 | 2483357 Lord Koos
Lord Koos's picture

In case you haven't noticed, the official economy is presently fucked about seven different ways.

Thu, 05/31/2012 - 13:13 | 2480242 flacon
flacon's picture

But it's illegal to sell lemonade now. It's all over the news, kids being arrested, lemonade confiscated etc. 

Thu, 05/31/2012 - 13:39 | 2480390 Marginal Call
Marginal Call's picture

To me it's funny, because that shit happened in Iowa, and Georgia.  While the neighbor kids up the block from my house run one every summer in communist Seattle without issue.

 

I swear the biggest problem is people have lost their minds and threw common sense out the window in exchange for reactionary bullshit.

Thu, 05/31/2012 - 14:15 | 2480594 BooMushroom
BooMushroom's picture

What you just said is that nobody is stopping anyone from illegally offering or accepting sub-minimum-wage jobs. That is actually the STATED PURPOSE OF THE LAW. It seems you are advocating a lower or non-existent minimum wage, but only for jobs you approve of.

Thu, 05/31/2012 - 12:31 | 2479993 slackrabbit
slackrabbit's picture

I was actually favouring just a free market - if you want fix poverty, don't subsidise losers - it won't fix everything, but its a start.....in any case it looks like socialist Europe will eventaully get that ball rolling

Thu, 05/31/2012 - 12:49 | 2480090 MeBizarro
MeBizarro's picture

BS.  Minimum wage laws have a nominal impact on overall employment figures one way or another.

Thu, 05/31/2012 - 13:14 | 2480233 CrockettAlmanac.com
CrockettAlmanac.com's picture

Right. The people on the fringes with no experience or skills are insignificant. Therefore they should be blocked from gaining experience in the workplace and simply be forgotten. They can go on welfare or just eat each other's faces off. Makes little difference to the broader economy. And besides, shutting people out of the workforce makes me, as a big hearted do-gooder, feel really swell. I like to know I've made a difference in the lives of others.

Thu, 05/31/2012 - 13:39 | 2480385 bobnoxy
bobnoxy's picture

And when has a rising minimum wage ever cost jobs here? The answer is never. Look it up (I did) instead of mindlessly repeating what you always hear on Fox News and CNBC, fed to them by some right wing think tank like the Heritage Foundation.

Thu, 05/31/2012 - 13:56 | 2480470 Bob
Bob's picture

Folks are so proud of what they got teeched in Econ 101 that they don't need to look at nuthin. 

Too bad they never made it to Econ 301.

Thu, 05/31/2012 - 18:07 | 2481474 Breaker
Breaker's picture

"Increasing the minimum wage is the stupidist idea ever."

Well. . . . There are other really stupid ideas lining up for the top spot. How about having the goverment control the entire healthcare system with what will be about 25,000 pages of unreadable regulations? Or, what about Congress making sure banks loan exponentially increasing amounts of money to people who can't pay it back and then blaming the banks for doing what the congresscritters wanted them to do? Or, how 'bout expanding the money supply every time the stock market dips and keeping interest rates at zero percent for years on end? And to top it off, make sure college graduates are at least $100,000 in debt when they graduate?

It's a really stupid idea. But the "stupidist"???

 

 

Thu, 05/31/2012 - 12:52 | 2480113 RmcAZ
RmcAZ's picture

Uhh better idea... how about stop inflating the damn currency into oblivion and then we don't have to worry about changing minimum wage.

Thu, 05/31/2012 - 13:04 | 2480190 Bollixed
Bollixed's picture

How about we regulate bankster pay back to 1969 levels...

Thu, 05/31/2012 - 13:16 | 2480261 CrockettAlmanac.com
CrockettAlmanac.com's picture

How about we deregulate banker pay back to 1912 levels?

Thu, 05/31/2012 - 13:02 | 2480178 Meremortal
Meremortal's picture

$10 an hour? Peanuts! Make it $100 an hour, then everyone can be the 1%!

Economics is so simple!

Thu, 05/31/2012 - 13:15 | 2480253 Thisson
Thisson's picture

I appreciate your sarcasm :-)

Thu, 05/31/2012 - 13:06 | 2480199 slackrabbit
slackrabbit's picture

Just in case I wasn't clear - i dont favor the wage controls - im one of those 'mad' libertarians - i just think the easiest way to fix the disparity complained about  - is to stop bailing out losers.

If your rich because of hard work, good on you...if your rich because you got protection from washington, london, berlin because you made bad bets - Um no........And have you seen my new meat cleaver?

Thu, 05/31/2012 - 14:54 | 2480734 short-swap
short-swap's picture

I'm really tired of the whole "top 1% versus the bottom 1%" line of thinking. This implies a static situation over the last several decades rather than the reality of a dynamic economy. Not everyone making income that puts them in the bottom segment stays that way forever. And if you look at things realistically, you'd realize that the bottom can't go below zero (not taking debt into account of course...) but the upper bracket has no upper bound. So as the top 1% bracket increases, the income disparity will naturally widen as the lowest earners of a society will always hover just above zero. This does not mean that those in a given income range are resigned to that range forever.

Thu, 05/31/2012 - 11:58 | 2479799 Bunga Bunga
Bunga Bunga's picture

But an office computer was $1,736,500 then.

Thu, 05/31/2012 - 12:04 | 2479837 slackrabbit
slackrabbit's picture

and with Bens printing it will be again ;-)

Thu, 05/31/2012 - 12:06 | 2479853 mayhem_korner
mayhem_korner's picture

 

 

Pretty soon, it will cost $1,736,500 for the paper to print a $1 bill.

Thu, 05/31/2012 - 11:58 | 2479802 jekyll island
jekyll island's picture

Better idea:  Get rid of minimum wage completely and stop government intervention into the marketplace.  Oh, and End the Fed too.  

Thu, 05/31/2012 - 12:00 | 2479812 Spastica Rex
Spastica Rex's picture

Better idea:  Get rid of minimum wage completely

But isn't that what illegal immigration is for?

Thu, 05/31/2012 - 12:02 | 2479829 Kreditanstalt
Kreditanstalt's picture

YES!  Immigration controls are a subsidy for expensive labour.  Remove all immigration controls.

Thu, 05/31/2012 - 12:06 | 2479849 Caviar Emptor
Caviar Emptor's picture

Remove ALL laws. 

Oh and those morals and social conventions too. 

 

Thu, 05/31/2012 - 12:07 | 2479859 DaveyJones
DaveyJones's picture

beat me to it.

Thu, 05/31/2012 - 12:11 | 2479882 Spastica Rex
Spastica Rex's picture

Nature is red in tooth and claw; I reckon that's the law that matters in the end.

It's good to be a tiger, or a king.

Thu, 05/31/2012 - 12:20 | 2479928 Caviar Emptor
Caviar Emptor's picture

I wasn't thinking that large. Just wanted the freedom to fart in public

Thu, 05/31/2012 - 13:48 | 2480433 AnAnonymous
AnAnonymous's picture

It's good to be a tiger, or a king.
_____________________

Probably better to be a King than a tiger.

But hey, decades of BBC wild life documentaries painting predators as the wild life supremos have to take its toll.

Thu, 05/31/2012 - 14:16 | 2480600 Spastica Rex
Spastica Rex's picture

No kidding - let's all observe a moment of silence for the unfairly maligned predators of the world.

 

 

The darkness drops again but now I know

That twenty centuries of stony sleep

Were vexed to nightmare by a rocking cradle,

And what rough beast, its hour come round at last,

Slouches towards Bethlehem to be born?

 

Enjoy your 21st Century.

 

Thu, 05/31/2012 - 12:15 | 2479898 jekyll island
jekyll island's picture

The time when illegal immigrant labor worked for peanuts has largely come and gone.  They work for about the same amount as US citizens in the construction and agriculture industry.  Mexicans work harder and are more reliable and that's why they are in demand.  I work in an ER in Mississippi, there is a constant stream of US residents coming in to get a work excuse or to try to claim disability because they don't want to work in the chicken processing plants.  Why work that hard if you can get Uncle Sugar to pay you instead? 

 

 

Thu, 05/31/2012 - 12:33 | 2480002 Spastica Rex
Spastica Rex's picture

Well, Mississippi and whatnot... Maybe all y'all could secede and petition for union with Mexico?

Thu, 05/31/2012 - 12:37 | 2480018 jekyll island
jekyll island's picture

I didn't say I lived in Mississippi.  

Thu, 05/31/2012 - 12:41 | 2480025 jekyll island
jekyll island's picture

Besides, I really like chicken.  Now you are gonna piss Janus off and he will type a two page response to your smarmy comment.  

Thu, 05/31/2012 - 12:58 | 2480158 HungrySeagull
HungrySeagull's picture

A visit to the chicken processor plant with the rebellious workforce will change that liking for chicken.

Thu, 05/31/2012 - 13:15 | 2480256 jekyll island
jekyll island's picture

I've been there.  It is hard work, smells bad and workers stand on their feet for hours with sharp knives dissecting chicken.  Not something I would want to do, but I would if that were my only option.  BTW the slaughterhouses are worse.  At least you don't have to worry about a hog or a steer breaking loose before it gets hammered.  

Thu, 05/31/2012 - 12:06 | 2479852 RazvanM
RazvanM's picture

At one time this America was created by illegal immigration. "Give me your tired, your poor..."

Thu, 05/31/2012 - 12:10 | 2479879 Robot Traders Mom
Robot Traders Mom's picture

I'm glad you put in the disclaimer "at one time"

Thu, 05/31/2012 - 12:22 | 2479910 ElvisDog
ElvisDog's picture

Do you always just make shit up, or have you taken the time to learn anything about history? In the "Give me your tired, your poor" era, immigrants came to the U.S. mostly from Europe on ships and had to pass through Ellis Island. They went through the legal screening process (basically you had to prove that you could work and/or support yourself) and then they were let into the country. Got that? They were legal immigrants, dumbshit.

Thu, 05/31/2012 - 12:45 | 2480062 SgtShaftoe
SgtShaftoe's picture

I think perhaps you should go back and read your history books, or better yet burn your old ones full of statist lies and go read some true and unbiased ones.

The immigration controls we have now don't allow people to come here legally unless you effectively win the lottery 1000/1 chances or so. You should talk to any European that has tried to immigrate here in the last 20 years. It's damn near impossible, but we let any Sudanese uneducated person/ family in and give them a check. I have been through the process myself for my family, and it's troublingly Kafka'esque.

The fact is, the Mexicans aren't the problem. I have first hand experience with many wonderful mexican families too. Unbiased studies show immigrants on the whole contribute a multiple more to GDP than ones that cost ( outliers). There was a really good discussion on the subject over at econtalk.org a year or so ago. Do a search on their site for it.

I suggest you really know what the fuck you are talking about before bellaring on like a crazed idiot about things you clearly don't understand context to.

Thu, 05/31/2012 - 12:53 | 2480124 ElvisDog
ElvisDog's picture

You are a fucking idiot, SgtShaftoe. I was referring to the early 20th century when the overwhelming percentage of immigrants were legal immigrants that came through and were processed through Ellis Island. You're referring to the here and now when Ellis Island is a National Park and our immigration laws and policies have changed from 100 years ago.

So, tell me shit-for-brains, how is what I wrote above a "statist lie" (whatever the hell that even means)? Are you implying that the extraordinarily well-documented surge in legal immigration in the late 19th and early 20th century didn't happen that way? And what does "I have first hand experience with many wonderful mexican families" mean anyway. A little hidden guilt perhaps? Seems to me that's a little like saying "some of my best friends are black".

Thu, 05/31/2012 - 13:17 | 2480263 SgtShaftoe
SgtShaftoe's picture

You state that the immigrants of yesteryear went through legal screening processes.  That's true.  However you imply that immigrants should just go through the legal screening process now as in the past.  The fact is, that's just not fucking possible.  It really gets me bent when people who have no idea how fucked up the current immigration laws are, and how impossible it is to come here go off on how immigrants are the source of all of our problems.  The "Dey took our Yobs!!!!!!" argument  That's just not fucking true.  Your impication that immigrants should simply follow the legal process and come here legally is a statist lie, or more correctly stinks of state nationalism like the fucking Nazis. 

My statement about mexicans was simply to emphasise that we are all individuals entitled to basic god given rights no matter what geography one was born in.  Respect individuals for what they are.  When one starts going after one group or another you risk going down that slippery slope to terrible ends:

Ostracism

  stimulating public outcry, private shunning and discrimination against the menace

  Enacting laws to exclude the menace from society

Confiscation

  Registration of personal property

  Reporting persons' banking transactions

  civil forfiture laws to confiscate property of the menace

Concentration

  Relocating and interning large segments of the menace population

Annihilation

  Preventing the birth of children to persons considered part of the menace, outright death squads, mechanical extermination

 

(From JPFO.org)

Thu, 05/31/2012 - 13:24 | 2480301 ElvisDog
ElvisDog's picture

Okay, that's fine, no more insults from me. One last point, I never wrote about current immigration policies and made no linkage from what was done in 1900 versus what is or should be done now. That was an element that you brought into the discussion, not me. Might have been better for you to have started a new thread.

Thu, 05/31/2012 - 14:16 | 2480591 t0mmyBerg
t0mmyBerg's picture

you could not be more right.  I was an attorney and I shared my apartment with a couple fleeing from South Africa when the ANC came into power 20 or so years ago and Cape Town was burning.  Argentinian Jew (male) and Dutch Afrikaner (sp? - female).  Very nice people.  I researched the law and was astounded to find that legal immigration was basically impossible.  I wrote a Senator I knew.  No deal.  I also know people from Wales (part of the British Isles for those who are geographically challenged, like ElvisDog presumably), Hong Kong and Hungary who found it basically impossible to immigrate.  These were people with whom I was working.

So what chaps my ass is when people talk about how you have to stand in line and do it legally.  Well if you really did that, the line would be longer than a human lifetime.  In other words not doable.  So there is no legal way, basically because the laws are broken in immigration as they are in nearly every aspect of the law as Congress has completely abdicated its role.  fix the laws so that there is a legal way for non-PhDs to come upt to some reasonable limit (which I would define as the maximum number of people that can be acculturated annually, they are a boon to the economy) and then talk to me about doing it legally.

Thu, 05/31/2012 - 13:07 | 2480201 RazvanM
RazvanM's picture

"They were legal immigrants" - they were not for the Indians that were the owners of the land. I am not saying this with sarcasm and I am not trying to be a smart ass.

 

This discussion on minimum wage is pretty common in an ex-communist country like Romania, where I live, and the populists and communists are leading it. I am pretty amazed that somebody in US of A would want to be protected by the law and by the government to obtain a decent pay for work.

Now, the Mexicans that are entering US looking for work are poor, but working people. They will enter anyway, legally or illegally. But if they are not let in, US is actually creating jobs for the smugglers and creating the opportunity for lots of people living in US to profit from this smuggling of people. Then, the illegal immigrants will not be able to work legally, so there is another opportunity for human exploiters. So, static barriers are created (laws, regulations, walls), but they are no match for dynamic people - and the costs to have these barriers become unbearable. I know pretty much about the implications because I know stories about people from my country illegally going to EU countries looking for work. Even highly educated people were desperate enough to work as unqualified workers.

What I want to say is that there is nothing you can do to stop poor, desperate people to come into US looking for job. Or to accept very low wages by US standards, if they have no other choice. So, trying to enforce higher minimum wage is mainly an expense on the private companies that will support the costs.

Thu, 05/31/2012 - 13:33 | 2480352 ElvisDog
ElvisDog's picture

I think the immigration debate will largely become a moot point, because immigration will slow to a trickle all on its own. Illegal immigrants come for jobs. What are some of the largest industries that employ illegals? hotels, restaurants, construction, landscaping, housecleaning, other home-maintenance services. What do all of those jobs have in common? They rely on an expanding middle class with enough discretionary income to hire those services. So for millions of new immigrants to come into the country to find jobs, there has to be millions of new middle-class and upper middle class people to hire them. But the middle class in the U.S. is shrinking, not growing. When your discretionary income shrinks you might decide to clean your own house or mow your own lawn. In the future, existing immigrants, legal and illegal, will have a hard enough time finding or keeping their jobs let alone millions of new ones.

Bottom line is without a increasing supply of low-end service jobs in the U.S., the immigrants won't immigrate. And that, in my opinion, is what is happening and will happen in the future.

Thu, 05/31/2012 - 13:52 | 2480457 AnAnonymous
AnAnonymous's picture

Jobs are one way to consume resources.

They are others. And human beings have been following the fluxes of resources for ages...

And the US will not cease in one day to be the world center for resources consumption, the rest of the world being organized to allow that consumption.

US world order.

Thu, 05/31/2012 - 12:27 | 2479964 Stuck on Zero
Stuck on Zero's picture

"Give me your tired, your poor..." was written by a Frenchman.  It was never U.S. Policy untiled Ted Kennedy came along.

Thu, 05/31/2012 - 13:23 | 2480298 CrockettAlmanac.com
CrockettAlmanac.com's picture

Incorrect.

 

"The New Colossus" is a sonnet by Emma Lazarus (1849–1887), written in 1883 and, in 1903, engraved on a bronze plaque and mounted inside the lower level of the pedestal of the Statue of Liberty.

 

http://en.wikipedia.org/wiki/The_New_Colossus

 

Emma Lazarus (July 22, 1849 – November 19, 1887) was an American poet born in New York City.

She is best known for "The New Colossus", a sonnet written in 1883; its lines appear on a bronze plaque in the pedestal of the Statue of Liberty[1] placed in 1903.[2]

 

http://en.wikipedia.org/wiki/Emma_Lazarus

Thu, 05/31/2012 - 12:40 | 2480036 ebworthen
ebworthen's picture

That was legal immigration where people got off the boat to stay, not Western Union their wages across the border every week while parasitizing schools, hospitals, police, and every other public service..

Unpaid bill?  Trouble with the law?  Change towns or go back across the border for 6 months to a year.  Handouts in every state and almost zero enforcement.  If you don't have trackable wages to garnish or a house to confiscate how are they going to hold you to task the way they do a captive citizen?

Thu, 05/31/2012 - 13:12 | 2480232 RazvanM
RazvanM's picture

Interesting that you mentioned about "captive citizen". So, I believe that you should direct your grief elsewere, not only to the immigrants.

Thu, 05/31/2012 - 13:27 | 2480315 CrockettAlmanac.com
CrockettAlmanac.com's picture

That was legal immigration where people got off the boat to stay, not Western Union their wages across the border every week while parasitizing schools, hospitals, police, and every other public service..

 

As I recall about half of European immigrants to the US from 1880 through 1920 returned to Europe to retire. While they worked in America they sent money to the families to which they planned to return and built up nest eggs for their eventual repatriation.

Thu, 05/31/2012 - 13:52 | 2480456 Lednbrass
Lednbrass's picture

Do you have some evidence to back up your claim about returning to Europe to retire? Nothing from Wikipedia please.

Thu, 05/31/2012 - 13:59 | 2480488 CrockettAlmanac.com
CrockettAlmanac.com's picture

Just general knowledge on my part. Google gives us the following when we search for "europeans immigrants returned home:"

 

We have more statistics relating to the huge migrations of the late 19th and early 20th centuries. Although statistics on departing passengers were not kept until 1908, figures that have been developed by scholars reveal some interesting patterns. Several believe that, overall, as many as one in three American immigrants returned to their home country. In some years there was one departure for every two arrivals. (However, as stated above this does not mean the person was leaving permanently or that he had not made other trips.) During the depression of the 1930s there were actually more people leaving the US than entering.

http://www.genealogy.com/96_donna.html

 

Plenty more available on the Google. Some sources may have different information. Let me know what you discover.

Thu, 05/31/2012 - 12:03 | 2479833 northman
northman's picture

I was going to say the same thing! The best idea ever is 'end the fed, commodity backed currency, less government intervention'. This is the best way to bring wages back into line because while it may not increase wages at the bottom, it'll certainly take a chunk off the top!

Thu, 05/31/2012 - 12:06 | 2479854 rumblefish
rumblefish's picture

Jekyll is correct. Nothing the goverment has ever intervened with has been good. Let the market decide.

CHS, I am fan of your work, but you are wrong here.

Thu, 05/31/2012 - 12:14 | 2479899 NotApplicable
NotApplicable's picture

Absolutely. This article is something like Krugman would come up with.

CHS, there are likely hundreds of articles over on Mises.org that explain in clear detail why you are so, so very wrong. Here's one to start.

Mythology of the Minimum Wage

http://mises.org/daily/2130

Thu, 05/31/2012 - 13:29 | 2480332 CommunityStandard
CommunityStandard's picture

If the market is to decide on wages, the market needs to be able to decide on everything.  You can't eliminate minimum wage until you eliminate TBTF and central banking interference.

Thu, 05/31/2012 - 12:11 | 2479884 Kreditanstalt
Kreditanstalt's picture

Strange, isn't it, how the same people who want government out of the marketplace scream for even more government when it comes to "illegal" immigrants offering to do their jobs more cheaply...? 

Thu, 05/31/2012 - 12:20 | 2479931 jekyll island
jekyll island's picture

I don't think that is entirely on point.  The main problem with illegal immigration labor is that they do not pay taxes and their families consume resources like healthcare and education that is paid for with that funding.  

Thu, 05/31/2012 - 12:32 | 2480000 Kreditanstalt
Kreditanstalt's picture

Agreed.  But that's the government's fault.

I'm just saying that most commenters here seem to be small government types except when it affects them...   Deep inside, they seem to want a big military, iron borders, and more cops on the street...go figure...

Thu, 05/31/2012 - 12:55 | 2480094 jekyll island
jekyll island's picture

It's like Mark Twain said:  "All generalizations are false, including this one."

Being on the fringe as we are will always generate a variety of opinions.  We have had 40 years of big government, big military, increasing police state - how's that working for us?  I would like to believe everyone wants less gubmint, fewer laws, more efficiency.   

Thu, 05/31/2012 - 13:57 | 2480480 Lednbrass
Lednbrass's picture

I dont see any philosophical inconsistency between wanting less government interference in daily life and not wanting invaders showing up in your community. If one were arguing the total anarchist view there would be an inconsistency there but very few take that position. Wanting my government localized and minimzed instead of centralized and strengthened is not in opposition to not wanting parasites.

Thu, 05/31/2012 - 14:07 | 2480554 Kreditanstalt
Kreditanstalt's picture

Theis view seems inconsistent.

But you need more border guards, more cops, courts and centralized government for that.  And I'll bet you also "support 'our' troops" too and want a strong military to fight "terrorism", right?  And more government bank regulation...and...and...

Instead, why not open the borders entirely?  Anyone can come in and bid for jobs, as long as they obey all the rules and laws, commit no thefts or assaults, etc., and use no taxpayer-funded social programs...?

Thu, 05/31/2012 - 12:59 | 2480164 SgtShaftoe
SgtShaftoe's picture

Not true, most pay taxes, and can never get a refund because they used a bogus social. They pay sales tax as well. You can't have a bank account without a social, or a drivers license. The "free" services argument is very rare, but always reported. You don't hear about people that don't game the system.

Listen to this: http://www.econtalk.org/archives/2010/10/caplan_on_immig.html

Thu, 05/31/2012 - 13:25 | 2480304 jekyll island
jekyll island's picture

You don't need a driver's license to drive.  You don't have to have a bank account, last time I checked cash worked just fine.  Many of these jobs are seasonal, illegals can move around and stay ahead of the system.  Medicaid will pay for pregnant women and children even if they are in country illegally, go figure that out.  For the rest, well they come to the ER for care, got the government mandate EMTALA to thank for that.  Free services rare?  Did you hear about all the parents who pulled their kids out of school in Alabama because they toughened their immigration stance?  The school districts complained because the enrollment dropped and they feared their budgets would be cut.  

Thu, 05/31/2012 - 13:44 | 2480417 SgtShaftoe
SgtShaftoe's picture

I'd advocate we get rid of all government free services, schools, etc.  However from econtalk:

Immigrants coming here to abuse the welfare state. Has some initial credibility. If you take a look at how much money you can get for free from the U.S. government, it is considerably higher than what hardworking people elsewhere. They can make more money here doing nothing than by the sweat of their brow in, say, Bangladesh. However, there are a few problems with this. Again, going to the negative respectable estimates of whether or not immigrants pay more taxes than they receive in services, only mildly negative. And there are actually other estimates, also respectable, that get the opposite effect, saying that immigrants are net taxpayers--receive less in services than they pay in taxes. If you are incredulous about this, remember: a lot of what government does is what economists call non-rival. Government can provide the service to a very large number of people for about the same cost as they can provide it to a very small number of people.

Most obvious case is something like nuclear deterrents. If you double the population of the United States, we don't need any more nuclear deterrents in order to deter an attack on our population. A lot of things are like this. But most things are not. Things like direct welfare; free education; free health care. The two big ones are defense and debt. When you increase the immigrant population, you are averaging the debt and the interest that has to be paid on that debt over a larger population.

One common misconception about the welfare state that makes people think immigrants are worse than they are, is that we imagine that the welfare state is mainly about helping the poor. We take a look and say, there are all these poor immigrants coming here, so obviously it's going to be a net drain. Factually wrong. Take a look at the numbers on the budget. While the poor do get a fair amount, maybe 10%, of the Federal budget, they are a very distant runner-up against the group that actually gets the biggest part, which is the elderly. Social Security and Medicare are a much bigger deal than Medicaid, Food Stamps, housing vouchers, etc. Often immigrants tend to be poor; especially those who can't legally come here tend to be poor; they often tend to be young. Which means they will not only be paying taxes into our system for a very long time, but on top of that their home country has also often paid for their education. When you put this all together, basically, as you raise the percentage of government spending up to a plausible amount that is nonrival, then you wind up actually concluding that immigrants are net taxpayers.

At the Federal level, they almost certainly are. The Federal government mostly handles the payments for the elderly. At the State level, more likely to be true that immigrants are a net drain, which then creates the illusion that immigrants are a drain overall. Really what's going on when Californian taxpayers complain about immigration is that they are trying to improve the fiscal situation of California, but worsening the situation of the Federal government. If you go and add up all the effects together, much more favorable to immigrants. In terms of fiscal effect--illegal immigrants are often the best, because they often pay taxes on things they are never going to get any benefit from. Their employers contribute. Not only are there benefits they are never going to get, but often illegal immigrants are too frightened of getting caught to apply for benefits that Americans would. Flip side of that: Because they are illegal, a lot of their economic activity takes place in maybe underground activity, where maybe cash business, very little taxes paid by anybody. Still end up paying things like sales taxes and all indirect taxes. Property taxes, if renting someone is indirectly doing that.

Thu, 05/31/2012 - 14:51 | 2480726 jekyll island
jekyll island's picture

Good points, the reality is that this was not a concern until the economy went south.  Now illegal aliens are a problem when they were a valuable part of the workforce all along.  Too complex for me to figure out, I'd rather have the productive illegal immigrants than the current US government.  I'd consider that a win-win.  

Thu, 05/31/2012 - 14:05 | 2480532 Lednbrass
Lednbrass's picture

Employment in Alabama has also improved because of the laws, and it is a good thing.

When the anti-illegal laws passed in South Carolina and businesses started getting nailed there was a similar exodus, my aunt was an ESOL teacher and they were able to cut one of them from each of the elementary, middle, and high schools where I lived at the time. No doubt the bloated administration was aghast at the thought of losing their funding, but the population was happy about it. The lawn care crew in the complex I lived in at the time went from all Mexicans to young 20-ish white and black guys, I talked to them and they were quite happy for the $11/hr. jobs in spite of working in the summer SC heat.

Making it against the law for an illegal to even attend a university that gets even a dollar of state funding was also an excellent way to encourage them to head for Texas or California.

As for medical costs, I think it should be made into a business.  Any dollar of cost incurred at a medical institution should be subracted from any aid given to their country of origin.

Thu, 05/31/2012 - 14:59 | 2480759 jekyll island
jekyll island's picture

Why are we paying aid to foreign countries?  

Thu, 05/31/2012 - 15:49 | 2480945 holdingontomypants
holdingontomypants's picture

What I am at a loss over is it is illegal to be working here in the US undocumented but the IRS mandates that even illegal workers must report all income earned and gives them a tax payer identification number to use since they don't have the social security number normally used to file taxes. While I recognize the IRS has no immigration enforcement responsibilities it seems they exacerbate the problem by making it easy for the illegal worker to file taxes and collect refunds including child tax credits and earned income credits using childrens names that the IRS has no means to verify because the illegal worker doesn't have to list a social security number for each of the children. I on the other hand have to list my childs social security number or I assume I wouldn't get the credit. I saw an article not to long ago where an illegal worker got back over $11,000 in earned income credits on neices and nephews he claimed lived in his trailer. When the reporter asked him why he was doing this he basically stated because the government allows him and many others to do so. Something is very wrong with our system that allows this to go on even though the Treasury inspector general brought this to the IRS atatention they have done nothing to close this loophole up.

Thu, 05/31/2012 - 12:49 | 2480093 Blammo
Blammo's picture

  The only problem I have with hardcore,fullbore libertarian philosophy is, it's utopean and doesn't account for the fact that liberals/socialists exist and won't ever go away.

  Establish a pocket of libertarian utopia somewhere (democratically agreed upon),with no border restrictions and you'll soon be swamped by leftist newcomers and their legislation.....

    "Then came the lawyers, and then came the rules"........Mark Knophler

Thu, 05/31/2012 - 13:39 | 2480388 CrockettAlmanac.com
CrockettAlmanac.com's picture

 

 

Establish a pocket of libertarian utopia somewhere (democratically agreed upon),with no border restrictions and you'll soon be swamped by leftist newcomers and their legislation.....

 

What is a "libertarian utopia?" Utopia is an imaginary centrally planned society. Libertarians eschew authoritative central planning and so a "libertarian utopia" could neither be conceived of nor implemented. Voluntary interaction and the establishment of Utopia stand in direct opposition to each other.

Thu, 05/31/2012 - 14:54 | 2480740 Blammo
Blammo's picture

Utopia is imaginary,ideal,and unattainable. If you can imagine one that's not centrally planned (eg. A society that would "eschew autoritative central planning"),I argue it's utopean,and disagree with nothing you said aside from our definitional quibble.

Thu, 05/31/2012 - 12:58 | 2480152 MeBizarro
MeBizarro's picture

Completely empty rhetoric you see on here way too often.  End the Fed, get the gov't out, blah blah blah. 

Thu, 05/31/2012 - 11:59 | 2479803 Kreditanstalt
Kreditanstalt's picture

OTOH, why should governments be in the wage market at all?

Get the hell out!  The market knows best who should be paid how much and for what...

 

Thu, 05/31/2012 - 12:07 | 2479860 jekyll island
jekyll island's picture

I lost interest there at the end when he mentioned the top 1% skimming.  I guess the writer is too liberal to go an figure out that it's the top 0.01% that is responsible for most of the wealth inequality.  There is no room for class warfare in the US and indirectly that is what he is proposing.  How about attacking crony capitalism and the superwealthy?  

Thu, 05/31/2012 - 12:00 | 2479807 Cognitive Dissonance
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....you find that in 2012 dollars the minimum wage should be $10 per hour if it were to match the rate considered "reasonable" 43 years ago.....

And if you use the "real" inflation rate the minimum wage in 2012 dollars would be $6 Gazillion. So let's pick a spot somewhere inbetween and call it even.

Thu, 05/31/2012 - 12:01 | 2479823 slackrabbit
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See I knew a Gazillion would be a real number one day!

Take that Oxbridge scholars!!!

Thu, 05/31/2012 - 12:45 | 2480068 Cognitive Dissonance
Cognitive Dissonance's picture

Wait until I roll out Bazillion. Then call those scholars.

Thu, 05/31/2012 - 12:00 | 2479808 tgatliff
tgatliff's picture

Without working out the globalization imbalance issue, the only thing that raising the minimum wage would do is kill allot of jobs..

 

A better solution... Start encouraging productive business by raising base interest rates to their historical average of about 6%.  Without the ability for savers to make money, sustainable productive business cannot exist.   Yes, it will destroy the current financial world, but will also start to put in place the ground work needed for productive business to come back.

 

Thu, 05/31/2012 - 12:08 | 2479868 slackrabbit
slackrabbit's picture

lets be honest 6% in this day and age?

If interest rates are a measure of risk, wouldn't it be just a little higher? 

And one got any figures they would lend money out at today?

I'd say 10-12% - anyone else have a number?

Thu, 05/31/2012 - 13:58 | 2480487 AnAnonymous
AnAnonymous's picture

Without the ability for savers to make money, sustainable productive business cannot exist.

___________________

The key point indeed. Another US citizen truism.

And US citizen truism have benefited humanity...

Thu, 05/31/2012 - 12:00 | 2479810 chunkylover42
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Except that the large majority of minimum wage earners are teenagers and high school students just starting out in the work force.  The notion of the worker on minimum wage supporting their family of 4 is a very rare exception not the rule.

Raising the min wage just makes younger, untrained workers less attractive to hire and shuts them out of the work force.  Then they have problems finding a job later because they don't have (enough) experience in the workplace.  You end up perpetuating a vicious cycle.

Thu, 05/31/2012 - 12:07 | 2479855 i_call_you_my_base
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Not the large majority, half: http://www.bls.gov/cps/minwage2011.htm

The information is there, no need to make assumptions.

Thu, 05/31/2012 - 12:55 | 2480136 chunkylover42
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Perhaps I am misstating my argument a bit so let me be more thorough.  As your link explains, minimum wage workers tend to be young (age 16-24).  They are a 20% of those paid hourly rates, but half of those making minimum wage.  I think this is where you are getting the half that you reference.  So the other half of minimum wage workers are over age 24.  But how many of those are the primary earner in the household?  The tables don't tell us that explicitly, but we can see that nearly 60% work less than 34 hours a week, and only about 20% work 40 or more hours, which suggest a lot of part-time workers (reasons can vary but if you're supporting a family on a minimum wage you probably work more hours, not fewer).  Also, only 20% of those on minimum wage are over age 24 and have never been married.  So the chances of someone being the primary earner trying to support a family (spouse and/or children) is a pretty small number, maybe 4% of those over age 24 (20% x 20%), which is 2% of all hourly paid workers. 

Factor in that hourly paid workers are about half the U.S. labor force and the minimum wage or below figure is 5% of that, we're talking about a small subset of 2.5% of the labor force that is truly dependent on a minimum wage to support a family (4% of 2.5% is 0.1% or one tenth of one percent).  Obviously the numbers here are just approximations, but directionally it's in the ballpark - it's a small number.  Given the damage inflicted through higher union pay and pension obligations (contracts are often indexed to the minimum wage) and higher teen unemployment and less prepared young people for the work force, there are better, more efficient ways to help the tiny number of people that rely on minimum wage to raise their family.

Thu, 05/31/2012 - 12:15 | 2479906 DaveyJones
DaveyJones's picture

have you been to Walmart?

Thu, 05/31/2012 - 12:19 | 2479921 NotApplicable
NotApplicable's picture

Bad example.

Wal-Mart uses minimum wage as a barrier to entry for competition. (in other words, they pay more than that, where their competition may not be able to afford it). WM has actually came out for higher minimum wages in the past for that very reason.

Thu, 05/31/2012 - 12:17 | 2479909 NotApplicable
NotApplicable's picture

Funny how such obvious, factual information gets down-voted by those who obviously don't care to consider it.

Thu, 05/31/2012 - 12:43 | 2480047 Marginal Call
Marginal Call's picture

There is a fact deficit in his post.  High school kids do not make up the majority of minimum wage earners.

 

How many retail establishments or restaurants have you been in lately that were staffed by high schoolers?  Or do you shop at hot topic?

Thu, 05/31/2012 - 12:58 | 2480161 chunkylover42
chunkylover42's picture

please see my clarification above.  I misstated the case about high schoolers/teenagers being the majority of the minimum wage workers.  my point was intended to highlight that there is a very small number of primary earners that depend on minimum wage to support themselves or a family.

Thu, 05/31/2012 - 12:59 | 2480166 HungrySeagull
HungrySeagull's picture

Bullshit.

Go to the county health dept or the high school with daycare programs.

Thu, 05/31/2012 - 12:02 | 2479815 Zero Govt
Zero Govt's picture

rather than yet more central command and Govt intervention how about we ditch minimum wage, retirement age, entitlements, unemployment, welfare, 'free' healthcare, rigged cartel health insurance and aaaaaaaaaaaaaaall the other turds the Govt throws in the road for commerce to drive around?

in short why don't the meddlers fuck off 

Thu, 05/31/2012 - 12:12 | 2479889 tarsubil
tarsubil's picture

Don't you see? If CHS were the one centrally planning everything, we'd all be saved. Don't you want to be helped? All you have to do is give up all your freedoms.

Thu, 05/31/2012 - 12:21 | 2479934 optimator
optimator's picture

And allow employers to replace anyone that walks off his job, including union workers of course.

Thu, 05/31/2012 - 13:21 | 2480288 Zero Govt
Zero Govt's picture

Yes the Wests problem is we have too many meddlers and not enough achievers

..and behind every failed wave of Govt meddlers we have another army of meddlers ready and willing to try their luck (and fail)

let's just give Freedom a chance, it couldn't possibly be worse than this Govt shithole we're in

Thu, 05/31/2012 - 12:01 | 2479817 mr1963
mr1963's picture

Implement this and labor costs across the board -- including state and local salaries and pensions will explode. Most -- not all -- Union contracts are indexed to the minimum wage, a $3.00 raise here means a raise to every government union employee, not to mention the pension increase...

And me, well I'll pay for it six ways from Sunday.

 

 

Thu, 05/31/2012 - 12:05 | 2479845 mayhem_korner
mayhem_korner's picture

 

 

Labor costs cannot explode unless there is either (1) market demand to support the produced goods & services at those labor rates or (2) the gubbmint subsidizes it through unrepayable debt.

Thu, 05/31/2012 - 12:04 | 2479818 Kreditanstalt
Kreditanstalt's picture

Why should labour be protected with these artificial government-imposed job-destroying minimum wages at all???

While CAPITAL - investors and savers! - is PUNISHED, PUNISHED and PUNISHED...

Thu, 05/31/2012 - 12:11 | 2479871 LawsofPhysics
LawsofPhysics's picture

You are a moron.  CAPITAL has not come from "savers" in 30+ fucking years.  It has come from a printing press that the Federal Reserve Bank has been running along with the PDs at the expense of savers, taxpayers, and the bond holders (see declining rates and negative rates in TIPS).  Wake the fuck up, Prosecute the fucking fraud, restore the rule of law and contracts, and reward the SAVERS and responsible behavior and all the capital mis-allocation and malinvestment will fix itself.  Wake the fuck up already.

ZIRP implies that there is no real cost for creating capital, even when nothing of real value is added to the system, you are a moron if you really think that is sustainable.

Thu, 05/31/2012 - 12:12 | 2479894 Kreditanstalt
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Lost you in the obscenities...try again.

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