The Greenspan/Bernanke recession has made things bad all over. Last Tuesday, I drove to my local Convenience Center for Collecting Residential Trash and Recycling only to find it closed. In an effort to further cut costs during these economic hard times, my county has cut back on the number of days these centers are open from five to four. I am sure that many Americans have similar stories whether it has to do with government services, the number of tellers in your local bank, or the number of folks flipping burgers at your local fast food shop. Spending is down and revenue is scarce so government and business are cutting back on expenses.
The cause of this current circumstance is well known. For too long Americans and their government spent money like crazy – money neither group had. To their credit, many Americans seem to have learned their lesson. The national savings rate is at an all time high somewhere around seven percent. These Americans have sobered up and are paying down loans and building nest eggs for the future. In spite of Washington’s irresponsible spending to coax the American people to spend our way to recovery, they haven’t and as a consequence prices for everyday items have generally fallen. This is what happens when a Federal Reserve induced bubble pops. The prices of overvalued items and assets fall. Logically, what should happen as well is that wages should fall by a comparable amount. As companies were “doing well” during the boom, wages rose as a consequence. Thus, as prices decline so should wages as a consequence.
Thanks to our ever benevolent leaders in Washington, wages are about to go up this week. On Friday, the federal minimum wage will increase from $6.55 per hour to $7.25 per hour. Of course, this increase is meant to help the economically underprivileged among us cope with the ever increasing price of things. But, three questions immediately arise: 1. Hasn’t the rate of inflation as reported by the Bureau of Labor Statistics actually gone down in the last year? Seems like an odd time for a raise in the base wage? 2. Given the current unemployment rate, should Uncle Sam be raising the cost by more than ten percent on business to hire and retain employees? 3. Why do we need a minimum wage in the first place?
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Article comments
— go to most recent comments1 - Dave Nalle
All true, but it's also true that even the target minimum wage of $7.15 is below the base market-set wage in almost every state, so the minimum wage is utterly meaningless.
Dave
2 - Bliffle
Kenns articles have really gone down through the floor in quality, from the rather good start he made here on BC some time ago.
Now he publishes the Political Cant of his favorite ideologues without the least little bit of inspection. For example:
"Think about this, isn’t it better to have 20 people working at $3.63 per hour than 10 people at $7.25? "
Not really, even if it could be true. What you'll end up with is simply those same 10 people working for $3.63.
Producer economics do not control the USA economy, consumer economics do. Producers just follow the lead of proven consumption patterns.
3 - Clavos
As Dave pointed out, the labor market generally results in wages greater than the minimum anyway.
4 - roger nowosielski
Except for sweat shops and ... fill in your own blanks.
5 - Dave Nalle
Sweat shops are illegal and only exist because of a market in illegal labor which makes them possible. They certainly aren't part of the regular labor market. Stop the slave trade and you stop the sweatshops.
Dave
6 - Dave Nalle
Bliffle, the time will come when Oabma, like FDR, will try to tell us that we need to raise wages even further and employ people half-time at the higher wage to make more jobs available. He'll argue that it's better to have 2 people working 20 hours a week for $300 than to have 1 person working 40 hours a week for $500.
Dave
7 - roger nowosielski
Give the state of the economy and rising unemployment, Dave, it's not such a bad idea. I don't see why you should object.
8 - Dave Nalle
Because it will come with forcing businesses to hire more people and pay more salaries for work they don't need done, driving those companies into bankruptcy or state control as the whole system is driven down into destruction so that it can pave the way for more socialism.
Dave
9 - roger nowosielski
The idea is to spread the wealth when times are tough. You don't want to create a permanent rift between the haves and the have-nots. So yes, part-time employment is a better solution for the country and its people, especially now. It would only benefit the companies for not having to pay full benefits they may be required to do with full-time workers.
10 - handyguy
Actually, this propaganda purporting to attack the idea of a minimum wage is itself subterfuge -- for yet another Paultard/Know-Nothing call for the abolition of the Federal Reserve. Looniness is everywhere at BC these days, sometimes in the guise of pseudo-intellectual articles by [eye-roll, please] "international educators."
11 - roger nowosielski
I'd have to agree, Handy. I've been here no longer than eight months, and the quality of thought surely deteriorated. Perhaps it's because people have become frantic, like rats on a sinking ship.
12 - Dave Nalle
At least Kenn doesn't just write the same article over and over like some I won't mention.
Sure this isn't all that timely or inspiring, but he has a good basic point on the idiocy of the minimum wage as a concept.
Dave
13 - roger nowosielski
The minimum wage concept, arguably, may have to be put on hold in hard economic times. As to its "idiocy," it remains for you to argue. Unless you come from a supposition that nation's wealth can only come about at the expense of its workers. And if you do, than you subscribe, however unwittingly, to Marx's theory of labor as surplus value.
14 - Clavos
It's idiocy because, with few exceptions, the labor market dynamics in most of the country dictate a higher wage than the "minimum wage."
Thus, most menial jobs are already paying at least $8 an hour, when the minimum is only just going up to $7.25 this coming Friday, July 24th.
15 - roger nowosielski
So what's the big deal, then? Just in case it might keep some folks honest?
16 - Jordan Richardson
At least Kenn doesn't just write the same article over and over like some I won't mention.
Oh that's rich.
17 - Dave Nalle
Roger, it's just that it's pointless and entirely symbolic. It allows the politicians to say they have done something for the people when in fact they have done nothing at all. Not terribly important, but very irritating.
Dave
18 - roger nowosielski
That may be so, Dave, but the way I figure, there are so many more vital issues to be concerned about. That's all.
19 - Bliffle
Dave says:
"Because it will come with forcing businesses to hire more people...."
How does the government 'force' businesses to do that?
"... and pay more salaries for work they don't need done,..."
...and how does the government do that?
"... driving those companies into bankruptcy or state control..."
How?
"... as the whole system is driven down into destruction so that it can pave the way for more socialism."
Sounds like the recent financial system collapse. Which lead to CORPORATE socialism, i.e., massive handouts to corporations. But I didn't see any socialism for mere people. All I saw was some crocodile tears for dispossessed homeowners, without any real concrete action. Well, there was the re-nstatement of the million dollar bonuses to the Pampered Princes of Wall Street, which seems to be bipartisan among the Rulers, although bipartisan opposed by the citizens.
20 - roger nowosielski
Meanwhile, the foreclosure rates keep on rising and despite the stimulus plan, it's all happening before our very eyes.
Some socialism.
21 - Baronius
Kenn's articles haven't changed in quality at all, but his subject matter has. He opposes military intervention abroad and excessive government regulation at home. That's a valid ideology, although I don't necessarily agree with it. There are a bunch of ideologies reflected on these boards (when people are writing articles), and they don't have to correspond with either party's platform.
22 - Clavos
There are a bunch of ideologies reflected on these boards (when people are writing articles), and they don't have to correspond with either party's platform.
One would hope that most wouldn't correspond with either party, or these threads would become nothing but PR outlets for the Reps and Dems.
23 - Dave Nalle
Based on #19 Bliffle has never heard of the depression and FDR's programs in response to it.
And Roger, you remind me of how regionalized these problems are. Look at the foreclosure rates for Texas.
Dave
24 - roger nowosielski
Great chart, Dave.
25 - Bliffle
How was FDR "...forcing businesses to hire more people and pay more salaries for work they don't need done, ..."?