Monday, March 06, 2006
Minimum Wage
Jane Galt takes apart the liberal raise the minimum wage argument. It amazes me that Democrats try to use this argument to gain traction in the polls. Raising the minimum wage does nothing to help the poor and probably ends up harming those in most need of help. I've said too much, Jane says it much better.
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6 comments:
Funny, you say that the minimum wage does nothing to help the poor and ends up harming those most in need of help, and just after that you say that free trade with the slave wage using Chinese is no biggy. I guess wages never really can be low enough for some people, huh?
Poor boy, you should read the post I linked to to address your concerns about the minimum wage. As for trade with China, we have more high paying jobs in this country because of free trade than we would have if we didn't have free trade. Not that you're concerned, but China also has more high paying jobs because of free trade. With the rise of a Chinese middle class will come increased demand for American goods thereby creating even more high paying American jobs.
Jeff, thanks for the response. The fact is, though, that the American standard of living is lower in 2006 than it was in 1973. There's nothing more to say -- we are the first generation of Americans that works harder, for less, than our parents did. As for the Chinese -- what is the average wage for a Chinese worker these days?
Poor, always glad to respond, espescially to a fellow KC blogger. But, you seem to be mistaken in your assertion that the standard of living in the US is lower in 2006 than in 1973. I'd like to know where you would get a piece of information like that. As far as working harder, Americans have more free time than ever. The average real after-tax disposable per capita income of urban Chinese households last year was more than five times the level of 1978 and double the level of a decade ago in 1993. Whether you're concerned or not about the Chinese is immaterial, it's just a data point that both sides have benefited from trade.
The information on wages now, as compared to 1973 is something which I just know. I read a lot of Economics materials because I'm studying Economics for my graduate degree now. Off the top of my head, I do recall a story on A-1 in the Kansas City Star from two Mondays ago, I believe, that referred to the same Data.
But, think about it logically for a moment (and if you really, really want hard facts, I'll provide them given a few days since I'd have to go back over materials in my free time, which is at a premium right now). In 1973 the average American family was making it on one income, today, that's damn near impossible. The price of homes, gasoline, automobiles and almost ever other commodity neccessary for modern life has increased at a rate greater than both core inflation and of wages. To believe that Americans are better off now than they were 30 years ago is to simply ignore way we live now as opposed to then. 72 month car payments in 1973, for instance, would be absolutely unheard of; in 1973 you were expected to put 50% down, finance the other 50% for 12-24 months and that's it. That was possible because cars weren't as much when measured against incomes as they are now. That is a tangible change in the standard of living (we have more crap, sure, but we also have a negative savings rate of .06%, or something close to that. That's unheard of in American history, save for a couple of years during the depression).
And for me to ask what the average per capita income in China is, and you to anwer with the growth in incomes is a little disingenuous, I think. If you have an income of $0.30 per hour, and you make $2.00 per hour 20 years later, what percentage increase is that? It's about 700%, but not exactly what we'd call a living wage. In reality, the average Chinese worker makes $2,900 dollars per year (23,600 yuan), which is a bit more than $1.00 per hour.
You brought up free time, as well, which is a good point. Time is a commodity as well, and if you put a dollar value on time, then you can certainly make an argument that the lost wages of the American worker over the last 30 years have been gained back in time. But, since your idle time is worth slightly more than half of your waged time (depending, of course, on your tax bracket and some other considerations), I think that the math would still work out to show Americans losing.
First off, how can this be possible: "The price of homes, gasoline, automobiles and almost ever other commodity neccessary for modern life has increased at a rate greater than both core inflation".
Inflation is the measure of these increases. Food is certainly not more expensive than in 1973, it's more plentiful and less expensive. I'm not sure the wage data is necessarily representative because the economy has absorbed many women into the workforce since 1973 with very little real effect on unemployment. Like you, my free time is at a premium or I would look up the labor participation rate in 1973 compared to today. As I'm sure you know, with more people qualified to work, there is a downward pressure on wages. Wages also isn't the best statistic, total compensation should be used.
True, credit was not as easy to come by in 1973, but is that a good thing or a bad thing? Also, the government has dictated the price of autos by increasing the number of regulations a car maker must go through in order to produce and limiting the number of car suppliers in the market (through regulation and barriers to entry). But, more households have multiple vehicles than they did in 1973, therefore, increasing the need for 72 month loans.
The things you call 'crap', such as televisions, washing machines, dishwashers, VCR's, CD Players, computers, the Internet, etc. were either luxury goods or didn't exist in 1973. They're things we take for granted today and can be found in all but the poorest of households today. You may disagree but I think these things increase our collective standard of living.
The Chinese have to start somewhere, if they continue to increase GDP 7-10%/year their standard of living will not be so negligible in 20 years.
Where are you going to grad school? I went to Rockhurst, I was just curious if you were going there.
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