Reuters blog archive
from The Edgy Optimist:
In his speech at the Center for American Progress this week, President Obama devoted considerable time to an issue suddenly much in discussion: the minimum wage. This is not a new debate. In fact, it neatly echoes the last time Congress raised the minimum wage, in 2007, which echoed the debates before that. Few economic issues are such sweet catnip to ideological camps, and there is precisely zero consensus about whether these minimums have positive, negative or no effect.
Supporters say that a higher minimum wage will give people a better standard of living and boost consumption. Detractors argue that it will lead companies to hire fewer workers and kill job creation. One thing no one addresses, however, is that regardless of whether the government raises the minimum wage, our society can’t endlessly coast with a system that includes wage stagnation for the many and soaring prosperity for the few, nor can the government snap its legislative fingers and magically produce income. Someone will pay for these increases; nothing is free.
You wouldn’t know that from the tenor of the debate. In Obama’s speech, he stated that, “it’s well past the time to raise a minimum wage that in real terms right now is below where it was when Harry Truman was in office.” He acknowledged that many resist the idea of mandating a wage above the current $7.25 an hour. “We all know the arguments that have been used against a higher minimum wage. Some say it actually hurts low-wage workers -- businesses will be less likely to hire them. But there’s no solid evidence that a higher minimum wage costs jobs, and research shows it raises incomes for low-wage workers and boosts short-term economic growth.”
It was a robust, populist speech, and it triggered an inevitable retaliation on the right. “Mr. Obama wants to raise the minimum wage to please his union backers,” harrumphed a Wall Street Journal commentator. Jennifer Rubin of the Washington Post decried the idea as just more government wealth transfer, and she countered that rather than raising wages, “One way to lessen income inequality would be to stop transferring wealth from young to old.”
from The Great Debate:
Akil Poynter, 20, works 30 hours a week at a St. Louis area McDonald’s, earning $7.35 an hour for manning the grill. Since the Florissant Valley Community College student can't get by on that income, he took on a second job, preparing sandwiches and salads at a local Panera Bread. There he receives $7.95 an hour for another 25 hours of labor a week.
Asked the difference between his two employers, Poynter says there isn’t much of one. Panera’s nicer surroundings and higher-quality food don’t translate to better working conditions. "The environment is different but the work is the same," Poynter noted. "Workers are working their butt off every day to get their paycheck."
from Reihan Salam:
One of the scariest notions about America’s sluggish labor market recovery is that it doesn’t represent an aberration, but rather a new reality in which good jobs are few and far between, particularly for those with limited skills. It is certainly possible that the future will be brighter than we think, and that we will soon enter a new economic Golden Age in which people with low education levels will flourish as employers clamor for their services at ever-higher wages. But if this happy outcome does not come to pass, as the current evidence suggests, the United States and other market democracies will have to come up with a Plan B.
A number of interrelated developments, from automation to organizational innovation to off-shoring, appear to have reduced the willingness of employers to pay middle-income wages to less-skilled workers. That is, the problem is not that there is no wage at which employers will take on less-skilled workers. If this were the case, agriculture and hospitality companies wouldn’t be pressing lawmakers for an immigration overhaul that would allow for a large influx of less-skilled workers from abroad.
from The Great Debate:
Germany has once again become the world’s favorite whipping boy, roundly criticized over the past few days by the U.S. Treasury, a top International Monetary Fund official and the European Commission president, among others, for running record trade and current account surpluses that are supposedly detrimental to the European and global economy.
The arguments continue, with the Germans themselves saying that the surpluses are simply the happy result of the nation’s industrial competitiveness and don’t hurt anyone else. Lost in the debate, however, is what’s happening in Berlin right now. As Chancellor Angela Merkel seeks to form a new coalition government, she appears to be on the verge of throwing out some of the very policies that underpin the export boom of the past decade.
from Photographers' Blog:
By Ueslei Marcelino
I phoned Sueli yesterday to give her the good news.
“Mrs. Sueli. The government just announced that it will increase the minimum wage in January!”
With the same lively voice she spoke with when I visited her a few days earlier, she responded, “Child, that’s a great thing. Maybe there will be a little extra money now to buy some meat?”
from The Great Debate:
Fast-food workers in more than 50 cities Thursday are striking for fair pay and the right to form a union -- the biggest walkout to hit the industry. This latest round of labor unrest comes 50 years after hundreds of thousands of Americans, led by Martin Luther King Jr., joined the March on Washington for Jobs and Freedom, demanding not only civil rights, but also good jobs and economic equality.
One demand of the 1963 marchers was raising the federal minimum wage to $2 an hour. In today’s dollars, that’s roughly $15 an hour -- what the striking fast-food workers are now calling for.
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Besides its underwhelming job growth, there was another problem with July's jobs report: the quality of new jobs. Roughly 60% of the 162,000 were in low-paying industries like retail, restaurants, home health care, and temp jobs (many of which have seen real wages decrease since 2008).
from The Great Debate:
Good for President Barack Obama for emphasizing the need to restore America’s middle class. However, the actual proposals in his new summer offensive would not go very far toward that worthy goal.
America is moving, at an accelerating pace, toward an economy with tens of millions of poorly paid service jobs at one end, and a relatively small number of astronomically compensated financial jobs at the other. In between the fast food workers, who demonstrated this week for a living wage, and the hedge fund billionaires is a new creative class heavily based on the Internet. But the web entrepreneurs are too narrow a segment on which to rebuild a broad middle class.
President Barack Obama proposed a hike in the U.S. minimum wage during his State of the Union Address in February. Since then, we haven’t really heard very much about the proposal. That’s too bad for a U.S. economy that could still use a bit of a boost, according to new research.
A paper from the Chicago Fed finds that, while there might be little impact on long-term growth prospects from a higher minimum wage, the measure could add as much as 0.3 percentage point to gross domestic product in the short-run. That’s not insignificant for an economy that expanded at a soft annualized rate of just 1.1 percent over the last two quarters.