Media clips
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These are all interesting ideas, but they are definitely putting a thumb on the scale towards an estimate of job losses that is, as Harvard University’s Lawrence Katz told me, “higher than the consensus.” The CBO, in effect, is trying to referee a debate among economists, but the report doesn’t quite convey the level of debate and the ambiguity when it comes to these numbers. Instead, it gives a narrow, and headline grabbing, result.
New Republic February 19, 2014 -
The CBO of course found a slightly higher number. Nobel Prize–winning economist Joseph Stiglitz told reporters on a Tuesday afternoon conference call held by the Economic Policy Institute that he would quibble with the heft CBO gave to some studies versus others. “When you do a meta-analysis, the question is how do you weight different studies. Some of the studies come closer to being controlled experiments, and therefore have more credibility with most economists,” he said. “The CBO analysis I think underestimated the benefits and overestimated the costs in several respects.”
The Nation February 19, 2014 -
Several top labor economists said on Tuesday that the budget office was overstating the proposal’s effect on the job market. Lawrence Katz of Harvard, for instance, said that the budget office had used “a lot of off-the-shelf estimates” of the jobs effect, and that if it had emphasized findings from higher-quality studies, it would have found a smaller or negligible impact on total employment.
More conservative economists said that the profession had long viewed raising the minimum wage, like any increase in price, as having an effect on the demand for jobs.
“The Congressional Budget Office confirms the president proposes an unprecedented increase in the minimum wage that will cost hundreds of thousands of jobs,” said James Sherk, who analyzes the labor markets for the Heritage Foundation, a right-of-center research group.
The New York Times February 19, 2014 -
The current minimum of $7.25 an hour is indefensibly low. So, obviously, $10.10 an hour by 2016 — the goal of President Obama and congressional Democrats — would be an improvement.
But “$10.10 tomorrow” is still inadequate.
It is low compared to relevant economic benchmarks, including purchasing power, wage growth and productivity growth, as explained here.
It is also a low-ball proposal in historical perspective. The Economic Policy Institute ran the numbers in this report. Here’s what stands out:
• The average of all previous increases, dating back to 1939, is 13 percent in inflation-adjusted terms. The average of the proposed yearly increases to $10.10 is just 9.5 percent. (The comparison looks even worse when unadjusted for inflation, at 17.5 percent for previous increases, versus 11.7 percent for the proposed increase.)
• The proposed increases are smaller than the historical average even excluding the particularly large increase in 1950, when the minimum was raised by 87.5 percent.
The New York Times February 19, 2014 -
Management has always been overrepresented among top earners, of course. What has changed is what they are paid. About 70 percent of the increase in income going to the top 0.1 percent from 1979 to 2005 comes from increasing pay for executives and financial services professionals, researchers estimate.
One study by the Economic Policy Institute, a left-of-center research group based in Washington, found that compensation for chief executives swelled about 725 percent in real terms from 1978 to 2011. At the same time, worker compensation increased just 5.7 percent. The ratio of chief executive compensation to worker compensation has grown to 209-to-1 in 2011 from 18-to-1 in 1965. By just about any measure, earnings for executives are near their highs, achieved during the stock-market bubble that occurred around the millennium.
The New York Times February 18, 2014 -
Bill Maher, pay attention.
To begin with, almost all the government dollars spent on children comes from state and local governments, mostly for education. State and local per capita spending on kids swamps the federal government’s spending 8 to 1. And there are twice as many children 18 and under as seniors 65 and over (this 2008 figure comes from the Urban Institute, the source of the federal spending comparison).
Add up everything, and spending by governments at all levels in 2008 came to about $1 trillion on seniors and $936 billion on children. In other words, virtually 1 to 1.
Henry Aaron, a leading expert on social insurance at the Brookings Institution, demolished the argument about generational theft here, and Monique Morrissey of the Economic Policy Institute took a credulous Washington press corps to task here.
Los Angeles Times February 18, 2014 -
Here’s the fine print: If a worker — not necessarily a restaurant worker, but again, most in this category are — earns $30 or more from tips per month, her employer (most tipped workers are women; we’ll get to that) may pay $2.13 per hour, assuming that their earnings equal or exceed the federal minimum wage, currently a whopping $7.25 an hour. It’s not the same in every state, as David Cooper explains in this excellent Economic Policy Institute post: “There are 18 states where the tipped minimum wage is $2.13, seven states where the tipped minimum wage is equal to the regular minimum wage.” Many states have tipped minimum wages greater than $2.13, but not by much; 22 states still allow employers to pay tipped workers less than $3 per hour.
The New York Times February 18, 2014 -
It’s an ambitious target, $10.10: Correctly adjusting for inflation using the Bureau of Labor Statistics’ best historical data series, it would be the highest minimum wage ever—more potent in buying power than the $1.60 mandated wage in 1968, when middle-class jobs were plentiful, factories hummed, and labor unions ruled. It’s just more than half of the $19.55 median wage for full-time workers, which would put the U.S. minimum-to-median ratio back in sync with that of other rich, industrialized countries.
Bumping up the base over two years, as suggested by the Obama-endorsed bill by Representative George Miller (D-Calif.) and Senator Tom Harkin (D-Iowa), would directly affect 17 million workers and indirectly benefit an additional 11 million near-minimum workers who’d probably be given raises to preserve pay ladders, estimates the Economic Policy Institute, which favors the increase. Those 28 million workers make up a fifth of the labor force, and an almost 40 percent raise would meaningfully relieve their economic anxiety. (On Feb. 12, Obama signed an executive order raising the floor for federal contractor workers to $10.10 starting next year.)
Bloomberg BusinessWeek February 18, 2014 -
A study released Monday that was commissioned by the pro-business group the Maryland Foundation for Research and Economic Education, predicted that raising the minimum wage to $10 an hour would result in the loss of 11,502 jobs, increase the price of consumer goods and weaken the state’s competitive position.
But Douglas Hall, an economist with the liberal Economic Policy Institute, who testified alongside O’Malley on Tuesday, questioned the methodology of the study. He argued that a minimum-wage increase would strengthen Maryland’s economy because low-wage workers would have more money to spend on goods and services.
About 67,000 workers in Maryland earned the minimum wage or less in 2012, according to the U.S. Bureau of Labor Statistics.
The bill would affect a far greater number of workers, however, since many more earn less than $10.10 an hour. An analysis by the Economic Policy Institute that was cited by Maryland legislative analysts put that figure at 304,000.
The Washington Post February 12, 2014 -
According to data from the Bureau of Labor Statistics the unemployment rate for 20 to 24-year-olds was 11.9% in January, up from 11.1% the month prior(compared to 6.6% for population at large,which was down slightly from December). And that’s just unemployment, not underemployment. An April 2013 survey by consulting firm Accenture found that 41% of 2011 and 2012 college graduates have a job that does not require their degree. In 2011, the Economic Policy Institute found that entry-level wages for males with college degrees were only 5% higher adjusted for inflation than in 1979. Female wages were 15% higher, but still 9% below what a man earned in 1979. Meanwhile, the Consumer Financial Protection Bureau estimates that outstanding student loan debt is near $1.2 trillion and growing at an astounding rate.
Forbes February 12, 2014