Showing posts with label Minimum wage. Show all posts
Showing posts with label Minimum wage. Show all posts

Thursday, October 2, 2014

On Wage Slavery

I think "Wage Slavery" is a false term.
Wages are what employees gain from their service and labor to their employer. It is an act of voluntary exchange on the part of both parties. If wages were not gained by this service then slavery would exist, in the presence of wages though it is merely employment by mutual terms.

Slavery, historically, is the position of a person who through compulsion is held against their will and forced (by threat of violence)to work for the gain of the "slaveholder or slave master".

Using the word wages in conjunction with the word slavery does two things. One it lowers the definition of wages to the negative connotation of being forced to work for the benefit of another without ANY reimbursement. Secondly it tends to negate the real horrors of real slavery that has happened and is still happening around the world.  

The term "wage slavery" defined deals with those wages that are so low that a person who is employed relies on them just for basic survival. Of course wages should be used in the pursuit of survival and any wants left to be pursued, if that is the want of the wage earner. One cannot force a person to use their own property in any other way that they do not wish. 

Hereto we must interject on the reverse side of this issue. Mandatory wage and Minimum wage laws handed down from government bureaus and departments. These laws force businesses and businesses owners to provide wages beyond that of market value or personal labor value. These laws almost always lead to higher prices in market goods as the mandatory minimum wages are offset in the businessman's pursuit to maintain certain levels of profit. 

Wage Slavery is a false point being made by those that wish to direct the affairs of businesses that do not affect them in the personal way.

Tuesday, June 17, 2014

Tahmooressi and the Border Issue

The latest battle between political parties and their followers and pundits is the issue of Borders, Securing those borders, Immigration and Amnesty. It has in the past few months become the most visible topic by candidates, commentators and political junkies alike. The story of ex-US Marine Sgt. Andrew Tahmooressi has reignited this issue and has left myself with more than enough questions to the idea of borders and the sincerity of either political party and their adherents to the motives of their stances. The idea of borders, definable lines arbitrarily drawn on maps and fought over, has consumed the airwaves.

As always, the issue is made to be seen as only two options. Pro Immigration and Anti Immigration or Pro-Amnesty and Anti-Amnesty. The first option is to allow amnesty to persons already in the country "illegally" and the second is to continue deportation and criminal charges against those living in the United States borders without having gone through the immigration process, the "legal" way as they call it. The line these two beliefs draws is apparent and approachable by yet other paths. The history of immigration into the United States is riddled with laws, regulation, restrictions, hate, fear, death and hypocrisy. Beginning the Idea of America on the act of Immigration, Genocide and Conquest doesn't lend well to the history of immigration into this country and the resulting years and decades since the first Illegal Alien stepped foot on American soil. If we were to respect borders of any countries our military armaments would rust and its soldiers be taken back to private employment. If one reduces this issue down to its base it is a belief that one person may have say over the movement of another, this is to say that one person holds rule over another, or that any government have the right to restrict travel in any way.

We have seen wars fought over land, deaths in foreign countries in the name of this land and a new breed of bigots and hypocrites arise from the simple act of movement and travel around the globe. The mainstream accepted idea on immigration is to subject other human beings to tests and health restrictions, to perform up to certain levels, to curtail freedom and to allow themselves to be robbed of wealth in the process. Every year hundreds of people die in an effort to reach "The Most Free and Most Prosperous Country in the World". They die in their attempt to reach a land that promises freedom and prosperity, they die for a lack of freedom to enjoy a better life, they die for a lack of freedom to move about the earth unhindered and uninhibited. The act of Legalized Immigration is an act of barbarity and exclusivity.


To say you believe in the closing of borders, demarcations of land used in exclusion by one government entity, You have not only barred any entering of outside persons but have also confined oneself to the same rule. You have created your own prison.

The economic theory behind the want of closed borders is this. As more and more immigrants come into this country they will, without fail, turn and send these American dollars outside of our borders. In a proper understanding of Economics this isn't seen as a negative as any country that bars it's currency from foreign circulation fails to have that currency to buy products from the foreign markets. If this theory were to hold water, countries would have difficulty acquiring goods from foreign markets for lack of foreign funds. Now one might say to convert these currencies would be the answer and to reduce trade to currency exchanges and money manipulation. There is also the prohibition of allowing workers into trades within a country. Lower skilled workers who enter into a foreign marker make much lower wages, while this is seen on its surface as a negative, is actually a positive. Lower wages equal out to lower costs and in effect lead to lower prices. "Let's look at the problem of immigration from another angle. There exists a market demand for low-skilled cheap labor. Part of this demand is being met by outsourcing of jobs overseas. The rest is met by vast numbers of immigrants coming to this country. Illegal immigration is the market supplying a demand. A demand is being met and satisfied. When viewed this way, how is this a problem? This triumph of the market is not in itself a problem." says Wade A. Mitchell

Now to the Hypocrisy Part.

Ex-US Marine Sgt. Andrew Tahmooressi sits in a jail cell in Mexico for this very act, and the hypocrites on every side of the political aisle are in fervor for his release and an escape from the very laws they seek to impose on their own borders. The Marine, who had been visiting friends had supposedly come upon a border crossing station and checkpoint run by the Mexican Federal Government. Tahmooressi alledges to have informed the guards that he had registered weapons in the vehicle and had just made a wrong turn. Enforcing their own laws the border agents arrested Tahmooressi and the ensuing battle over his release has brought a new wave of nationalistic border builders and wall wishers. Whether Tahmooressi had or had not meant to cross into Mexico and whether or not he informed them of his weaponry, the Mexican Border Agents did the job of upholding their national law. This law may not be agreeable to me but it is to those that wish to "secure" the US's borders in the same fashion. It is hypocritical to say that a man from America should be released from custody yet scream and push for the same actions from your own border agents and administration.  This is the real gap in reasoning I see in the issue.

The gap in this is the face of the issue, subjective value and nationalism. Nationalism, to believe that the nation of your residence is befitting a higher status and therefore more rule over any other. The Subjective Value to reduce a mans worth and the worth of all others to the geographical location of their birth. The happenstance of birth in any place of the world  does not predispose one to a higher place in the world or a higher rule over others. It should not be seen as a benefit or hindrance where one is placed on the earth and it should not be restricted or inhibited in any way to any place he wishes to travel.

The issue of borders can best be seen from afar. Space. In the pictures of earth from above there are no borders, there is only earth, all of us together, all of us combined in this experience.






Saturday, May 24, 2014

Minimum Wage Law

The Minimum Wage hurts both businesses and workers alike in that it takes away the right of them both to come to mutually beneficial terms of employment. Below is a recent conversation I had with the Manager of a local grocery chain. As I explain how the minimum wage laws hurt the contracts between company and workers, it also fails to allow services to be rendered at a rate of agreement and forces businesses to comply with rules and laws, mandates and edicts of government agencies that are not present at the time or place. 


Me: Hello I wanted to find out if you were hiring at the moment.
Store Manager (SM): We take applications and fill spots according to the need.
Me: Great, I noticed the parking lot was full of shopping carts and wanted to offer my services for retrieving those carts. I assure you my rate would be sufficient and according to the skills involved.
SM:Your rate?
Me: Yes sir you see I would willingly accept $4 per hour until the job was complete or until a specified time had passed, your decision,
SM: Oh no we cannot do that, that is well below the Minimum Wage set by law, I am sorry but there is no way.
Me: Would you deny me to make any wage simply on an edict of a federal and state agency that is not present at this time or place?
SM: Sir, there is nothing I can do, they set the rate at which I am supposed to pay employees.
Me: And is that fair to either you or the employee? I ask, if I were to say that $4 per hour is what it would cost to have my services, which are needed by the state of your parking lot, and that wage would sufficiently support myself, why then would you deny me a chance to use my skills to earn a wage simply on the arbitrary and unfair rule that takes away the right of companies and employees to come to mutually beneficial terms of employment?
SM: It may not be fair but that is the law and this company will not skirt the law in order to hire cheaper labor.
Me: The company willingly gives away it's right to mutually beneficial terms of employment contracts on the will of a government office that is not present, leaving customers swerving to miss your shopping carts, and then you can deny a man who offers services to help not only you but your customers the ability to earn a wage that is fair and agreeable?
SM: Sir, I am sorry I cannot help you in your search for temporary employment, rules and laws are there for the protection of the people...
Me: Excuse me sir but how then is the minimum wage law helping either me or you in this instance?
SM: Well it isn't in this instance but what you are asking is not normal, a low wage for work is almost unheard of.
Me; I assure you my decision on that number is equal to the amount of skill I have in the matter compared to the time it would take to do the job and given the need for the service the wage seems more than fair, wouldn't you agree?
SM: Well yes but that isn't the point, the point is that we cannot have you on the books at that wage...
Me: Fantastic, I will work for cash money, that would insure neither the company nor I would have to pay taxes on that money, what a fantastic idea.
SM: Sir, No we cannot do that.
Me: Why not, it was your idea. Let me be completely honest, I didn't come in here to bother you with all of this, I just wanted to see how the common company would refuse a person a wage on the edicts of a government agency, against the better judgement and benefits of both parties. I thank you for your time. Good afternoon.
SM: Good afternoon to you as well.

Monday, March 3, 2014

What You Weren't Told About The Minimum Wage by Skyler Lehto.

I came across this Video by Skyler Lehto on his YouTube channel. It raises what I believe to be the greatest argument against any artificial raise in minimum wages in the United States. Transcribed under this video is the complete text. 





Last year, President Obama proposed a hike in the federal minimum wage from $7.25 to $9.00 an hour. After the predictable failure of his proposal, Obama and his party have returned with the Harkin/Miller proposal to raise the minimum wage to $10.10 an hour. What I’m going to do in this video is make several points to confront the myths and address the reality behind the minimum wage. 

Point #1 

Elizabeth Warren’s assertion about a $22-an-hour productivity-adjusted minimum wage is highly misleading. 
First of all, the fact that the minimum wage has fallen behind in value does not mean that the jobs themselves have been held back just as much. In fact, over the past 34 years for which the BLS has maintained this data, the percentage of jobs paying at or below minimum wage has fallen precipitously. So the fact that the minimum wage is lower does not necessarily mean that most low-end workers are worse off for it. What’s more, the federal minimum wage law in 1960 did not apply to as many sectors of the economy as it does today, so Warren’s comparison is not entirely commensurable. Second, her suggestion overlooks a very crucial distinction between average productivity and marginal productivity. Not only did she cherry pick one of the highest estimates of productivity growth, but the statistic that Warren uses is based on an aggregate measure of productivity growth for the whole economy. However, we have to recognize that different jobs have changed in marginal productivity by vastly different amounts. Given the changes in technology and composition of the economy since 1960, some types of jobs have grown tremendously in productivity, whereas others have not grown nearly as much. Economists refer to this phenomenon as skill-biased technological change. As Christopher Wheeler notes in his 2005 St. Louis Fed study, increased wage dispersion since 1983 is significantly correlated with the increased relevance of college education and occupational computer use. Long story short, if we want more workers to earn $22 an hour, it requires getting more people the skills to actually take on these higher productivity jobs. 

Point #2 

The minimum wage is not a big stimulus to the economy. Many proponents of a higher minimum wage argue that giving workers more money to spend will set off a virtuous cycle leading to more jobs and more economic growth. Putting the transient nature of Keynesianism aside, the quantitative effect of a minimum wage increase on spending is actually quite trivial, because only a small portion of workers earn at or near the minimum wage, and much of their increased spending would come at the expense of others. As Obama's former chief economist Christina Romer writes, “the income increase from the higher minimum wage would be about $50 billion. Even assuming all of that higher income was redistributed from the wealthiest families, the difference in spending behavior is likely to translate into only an additional $10-20 billion in consumer purchases. That’s not much in a $15 trillion economy.” Now granted, that was in consideration of the $9.00 minimum wage proposal. But even if the minimum wage hike boosted total spending by as much as $40 billion, that would still amount to less than one quarter of one percent of GDP, which isn't much to get excited about.

Point #3

Australia’s minimum wage is not $16 an hour in US terms. People who make this claim are not doing the currency conversion properly. The exchange rate between two currencies in the foreign exchange market does not necessarily reflect what the currencies are valued at domestically. The nominal exchange rate is often skewed from the real exchange rate due to various factors, such as taxes on imports and exports, or international financial flows that favor one currency over another. Making an accurate price comparison between two countries requires taking account for something called purchasing power parity. Doing this, we discover that Australia’s minimum wage is actually $10.51 in US terms. While that is measurably higher than the US, it’s a far cry from the $16 an hour that many have suggested, and it doesn't come without its share of unintended consequences. Along these lines, people will also occasionally cite higher minimum wages in Canada. But applying the same process to Canada using Ontario’s minimum wage results in a figure of only $8.03 in US terms. 

Point #4

The minimum wage does little to reduce poverty. Supporters of a minimum wage hike usually take it as an article to faith that it will effectuate a reduction in poverty by raising incomes for the working poor. Yet the vast majority of empirical evidence suggests otherwise. Most studies, such as Neumark and Wascher in 1997, Vedder and Gallaway in 2001, Sabia and Burkhauser in 2010, and Sabia and Nielsen 2012 find that minimum wage hikes have no significant effect towards reducing poverty. This is because there are several factors either trivialize or negate the positive effects of a higher minimum wage. First of all, 80 percent of minimum wage earners are not in poverty. The mean household income for a minimum wage worker is around fifty-one thousand dollars a year, because most minimum wage workers are actually second and third earners in their household. Three out of five minimum wage workers end up getting a pay raise anyway within their first year. As it currently stands, the median age of a minimum wage worker is 24, and single parents working full time only constitute four percent of minimum wage workers. Ironically enough, raising the minimum wage is least likely to benefit the workers who actually are in poverty, because as their income rises, many see their government benefits sharply reduced. And of course, the minimum wage is going to have a hard time reaching the 65 percent of impoverished adults who are not employed. To make matters worse, raising the minimum wage comes with adverse side effects. Among these include higher food prices, and a decrease in employment opportunities, which brings me to my next point. 

Point #5 

The minimum wage worsens unemployment for the low-skilled. Now this point has been heavily researched and discussed amongst economists, especially with the new minimum wage research that has proliferated since the 1990s. Nearly two-thirds of new minimum wage research studies indicate a negative employment effect associated with the minimum wage. But a few studies have purported to find a zero or positive effect of the minimum wage on employment. One such study was done by David Card and Alan Krueger in 1994. More recently, another was done by Dube, Lester and Reich in 2010, and another by Allegretto, Dube, and Reich in 2011. These studies have numerous flaws, as David Neumark and William Wascher have pointed out. Most of the details are too extensive for this video, but I would like to indulge in the following. Suppose it were true that the minimum wage has zero effect on the quantity of labor employed by low-wage employers. In that case, it would still be likely to have deleterious effects on the employment prospects of the low-skilled because of something called “labor-labor substitution.” Hypothetically speaking, even if employers paid for the higher minimum wage entirely through prices, productivity, and reduced turnover, the positive supply effects of a higher wage would give the employer a larger labor pool to draw from. Consequently, they would be able to select more-skilled applicants at the expense of those who are less-skilled. And to add insult to injury, lower turnover means fewer job openings for those looking to get a foothold in the job market. Thus, a higher minimum wage would still make it more difficult for the low-skilled to find employment, even if the employer’s elasticity of labor demand were zero. So it should come as no surprise that when we segment the labor force by skill level, as economist Antony Davies and many others have done, we find that a higher minimum wage is correlated with higher unemployment for the lowest-skilled members of the work force. This is also why in their meta-study of new minimum wage research, Neumark and Wascher concluded that, “the studies that focused on the least-skilled groups provide relatively overwhelming evidence of stronger dis-employment effects for these groups.” All in all, three-quarters of economists recognize that   the minimum wage has negative effects on the employment of low-skilled workers. 

Point #6 

The minimum wage hurts the disadvantaged. Most advocates for a higher minimum wage are undoubtedly motivated to improve the well-being of the worst-off members of society. But good intentions are no excuse for bad results, and the minimum wage is just that for the lowest-skilled members of the workforce. Not only does the minimum wage make it more difficult for less-skilled prospective workers to find jobs, but evidence suggests that it also has a long-term negative effect. A 2004 study from Neumark and Nizalova found that exposure to a higher minimum wage during young adulthood is associated with lower earning several years later, and that the main reason for this is a deprivation of work experience during younger years. They also found that this effect was more pronounced for blacks than any other racial group. This is unsurprising, given how black teenage unemployment is exceedingly high, in great part due to the minimum wage. 

So there you have it. Average productivity is not the same as marginal productivity. $16 in Australia is not the same as $16 in the US. Being on the minimum wage is not the same as being in poverty. Raising the minimum wage is not the same as helping the disadvantaged. Good intentions are not the same as good results. And for those reasons, raising the minimum wage is not the same as a good idea.

Special Thanks to Skyler Lehto for permission to transcribe as well as my wife for transcribing this.