Our Minimum Wage Economy

Poor RetireeOne of the first jobs I had was as a baker for the pretentiously titled Cafe Des Croissants. And I remember that one of the owners had worked for the post office. He told me that he believed as his old employer that wages should go up only as productivity increased. I thought that sucked, because I was making minimum wage. That was way below the going rate for a real baker and there were not really any opportunities for productivity increases.

Despite all of that, the minimum wage that I was making then (about 30 years ago) was far better than the minimum wage today. This is because the minimum wage hasn’t kept pace with the rate of inflation. But that’s the least of it. If the minimum had gone up at the rate of worker productivity, it would now be over $17 per hour. This result comes from the Center for Economic and Policy Research (CEPR), which has been publishing a lot of interesting stuff about the minimum wage recently. According to their research, the minimum wage in real dollars peaked in 1968.

In another paper, they provide the following table that ought to make everyone in our country ashamed:

Characteristics of Low Wage Workers

What this table shows is that low wage workers are getting older and more educated. So all that stuff that we are told about work experience and education being key to getting good jobs, in as much as it was ever true, is less and less true. I think it is an indication that having a good job was always mostly a question of birth luck and as time has gone on, the few governmental safeguards against this have been greatly limited. Employers might say that they will raise wages at the rate of productivity growth, but the truth is altogether different. If an employer can simply keep more profits and share none of the productivity gains, he will. And that is why unions and minimum wage laws are so important.

Matt Yglesias wrote a thoughtful article last week. He started by noting that the data on the effect of raising the minimum wage are mixed. Some studies say it hurts employment and others say it doesn’t. To me, the studies are very clear: raising the minimum wage tends not to hurt employment, but if it does, the effect is small. That really ought to be the end of the story. Yglesias (as is his way) doesn’t even consider that. But he looks at the history: the 1960s to be exact. And he doesn’t see any hit from having a higher minimum wage. He asks the question, Why Would the Minimum Wage Pack More Disemployment Punch Today Than in the 1960s? He can’t come up with any answer to that, so he concludes that it wouldn’t.

I think I can explain why especially now raising the minimum wage wouldn’t increase unemployment. Businesses are more profitable today than ever. They are sitting on piles of cash. So are the rich. As a result of all that wealth just sitting around, millions of people are not being employed. Raising the minimum wage would move money from the rich (who aren’t spending it) to the poor (who will). The extra money spent by the poor would increase demand, which would create more employment. (And it would not increase prices by an equal amount.)

Raising the minimum wage is an obvious thing the federal government should do. It won’t be done, of course. The Republicans are totally against it because they still believe all that nonsense about supply side economics. And really, if the last 30 years haven’t harmed their faith in that kind of crank economics, nothing will. So I’m looking toward 2017. Or 2019.

The Count of Alexandre Dumas

Alexandre DumasThe wonderful Russian portrait painter Vladimir Borovikovsky was born on this day in 1757. Venezuelan revolutionary Simon Bolivar was born in 1783. Composer Adolphe Adam was born in 1803.

At the very end of my career as a music student, I was introduced to the great American composer Ernest Bloch. My teacher told me he was a “Jewish” composer. By this, I don’t think she meant to be racist; she meant it in a stylistic sense. But it only added to my confusion about what exactly “Jewish” meant. Through that time and much later it really only meant a large collection of artists who I loved. And Bloch was most certainly part of that. His work was both modern and beautiful. My understand is that he did a lot of work with traditional Jewish folk tunes. What I played was Suite Modale for Flute and Piano, but never this well:

English author Robert Graves was born in 1895. Although she is most remembered for being generally insane, Zelda Fitzgerald, who was born in 1900, was quite a fine writer. And composer Leo Arnaud was born in 1904. You’ve probably never heard his name, but I know you’ve heard his music if you’ve ever watched the Olympics:

Easily flustered comedian Michael Richards is 64. For the record, Richards is not a racist. Sometimes you call your best friend the worst thing you can think of. And sometimes you totally blow it. What’s more, he has more than made up for it. To start with, he gave an actual apology, not a, “I’m sorry if anyone was offended” pretend apology. And he did more than that. And then he basically disappeared out of shame. I am highly sympathetic.

The great director Gus Van Sant is 61. He has done a lot of fine work, but two films really stand out. One is Drugstore Cowboy, perhaps the best drug movie ever. It completely captures both the romance and the tragedy of the junkie life. The second is My Own Private Idaho. What is amazing about it is that he’s managed to take a really problematic Shakespeare play and turn it into great art. What’s more, he fixed the ending. Hal was always a troublesome character and in Van Sant’s telling, he gets the unhappy ending he deserves that was not possible in Shakespeare’s time. Here is the great repudiation scene leading up to it:

Jennifer Lopez is 44. And child actor Anna Paquin is 31.

The day, however, belongs to the great adventure novelist Alexandre Dumas who was born on this day in 1802. I’ve never read him in French because I don’t read French. But I loved the translations of his novels The Count of Monte Cristo and The Three Musketeers when I was young. I especially liked the former—I was always very taken with revenge fiction. Now, I’m afraid I’m a little too postmodern to fully enjoy such straightforward fiction anymore. But his work is still marvelous.

Happy birthday Alexandre Dumas!

GOP and Democratic Governors Are Not Equal

Beth ReinhardBeth Reinhard has written quite an amazing article. It is a thing to behold—but not in a good way. The basic argument is that it isn’t just Republicans who are getting extreme, it’s Democrats as well. This is Villager Think at its most basic. As I’ve long argued, politicians should do what their constituencies want. The idea that some Representative should care what’s happening in national elections is madness. But for the Villagers, the right non-ideological position is the one in the “middle.” Of course, the “middle” is defined as halfway between the Republicans and Democrats, so it isn’t like either side can ever really win this game.

The article focuses on state governments. It begins by characterizing the Republican moves in the most charitable light: they have passed laws to “restrict abortion, rein in labor unions, and slash state spending.” I would not characterize laws designed to shut down all abortion clinics in a state with “restricting” abortion. Nor would I laws designed to destroy labor unions as “reining” them in. And “slashing spending” has a special meaning when those very Republicans are also cutting taxes on the rich. But the article doesn’t even mention what is the most remarkable move from Republicans: voter suppression laws.

Even given this limited view of what the Republicans are doing, the contrast with Democrats is astounding. Democrats are pushing “stronger gun safety legislation and gay marriage.” By gun safety we are primarily talking about background checks. Regardless, gay rights are popular most places in the country. It isn’t like Mississippi Democrats are pushing for same sex marriage. The gun issue is even stronger. The article notes that while gun purchase background checks are hugely popular, not everyone is please—especially in Colorado. “In northern Colorado, several rural counties are threatening to secede over the new gun restrictions, driving privileges for illegal immigrants, and a renewable-energy mandate.” I see: some people in conservative rural communities are upset and that means that the Colorado governor is moving far to the left. It apparently doesn’t matter that Colorado voted for Obama over Romney by over 5 percentage points.

There is one conservative issue that most Democrats like: capital punishment. And that’s an issue where John Hickenlooper is pushing against public opinion. So Reinhard is arguing that all of the Republican radicalism, which has pushed the party far to the right of anything we’ve seen before in this country, is equivalent to John Hickenlooper standing up against the majority of his state on a death penalty case. After you cut through all of hedging and analysis from moderate observers, that’s what you get: the Democrats are on the verge of being seen to be as radical as the Republicans. Or at least that’s what Reinhard thinks.

What is most troubling about this kind of reporting is its not too subtle advice to Democrats: don’t move to the left, even if that is where your constituencies are moving. Of course, these same people are calling for Democrats to “hold the line” are also calling for them to “lead.” Apparently, the Democratic Party is supposed to lead the people nowhere, because where we are is just perfect. I think that the Democratic Party has not moved nearly far enough left. I found this quote from Bill Galston quite amusing, “Especially on social issues, the center of gravity in the Democratic Party has moved in the more liberal direction.” Really?! Especially on social issues? How about only on social issues. In fact, one of the radically liberal governors that Reinhard mentions is Andrew Cuomo, an economic conservative. On economic issues, the party has not moved to the left at all. Meanwhile, conservatives have moved into feudal territory on the economy. But I doubt we’ll be seeing any articles about that from Reinhard.

H/T: Ed Kilgore