U.S. minimum wage fact of the day

by on July 21, 2015 at 11:40 am in Current Affairs, Economics, Education, Law | Permalink

In Arkansas, the median hourly wage is $14.01. In Mississippi, it’s an astoundingly low $13.76. It’s likewise below $15 in six other states, and three U.S. territories.

That is from Catherine Rampell.  In such situations, a $15 an hour minimum wage is…shall we say…risky?

1 Steve Sailer July 21, 2015 at 11:43 am

My recollection from ancient Milton Friedman columns in Newsweek was that much of the political appeal of the high minimum wage of the 1960s was to keep jobs from moving from the North to the South.

2 Kris July 21, 2015 at 1:15 pm

That would have been a good excuse for the South to have another go at secession, and avoid all that unpleasantness of Civil Rights and integration.

3 Art Deco July 21, 2015 at 1:30 pm

All those nifty ‘civil rights’ laws are now being used by state officials to impose draconian penalties on small merchants who simply wish to be left alone. Not to mention it’s the considered opinion of the current administration, expressed by the ‘Justice’ department, that any employer’s practices which might have a ‘disparate impact’ on a protected class (e.g. screening out convicts on parole or administering a test to screen out dyslexics) is unlawful. Oh, this just in, a federal regulatory commission has ruled that ‘sexual orientation discrimination’ is ‘sex discrimination’ ergo unlawful, the refusal of Congress to make it so notwithstanding. Oh, did I mention the lawfare exercises which ensue when any state electorate attempts to eliminate by law preference schemes benefiting the Democratic Party’s clientele?

Chickens are here roosting. And, yes, James J. Kilpatrick, Gottfried Dietze, and William Workman did warn you.

4 msgkings July 21, 2015 at 1:51 pm

So a bunch of gay chickens are getting married now. Where’s the tort?

5 prior_approval July 21, 2015 at 12:02 pm

The recently enacted German minimum wage is 8.50 € ( https://de.wikipedia.org/wiki/Mindestlohngesetz_(Deutschland) )

And I would certainly say that in such a situation, ‘a $15 an hour minimum wage is…shall we say…risky?’ to the sort of industrial prowess that both Arkansas and Mississippi are famous for. Of course, German industrial workers tend to be represented by a Mantelvertrag, which makes the idea of a minimum wage laughable. Skilled German workers having never been paid at anything resembling the minimum wage, after all. The puzzle is why the German export economy is doing so well when it tends to have the highest paid workers in the German economy – well, a puzzle to English speakers, as there is a lot of German language discussion about the advantages of ensuring a well paid work force is able to use its skills to earn a decent profit margin from those countries unable to understand how to run a successful high technology/high quality manufacturing economy.

6 Millian July 21, 2015 at 12:18 pm

How is Germany doing so well?

A game called Beggar my neighbours.

7 spencer July 21, 2015 at 12:35 pm

Over the past decade the annual increase in German unit labor cost average under 1.0%, significantly better than any where else in Europe.

8 Art Deco July 21, 2015 at 12:24 pm

And I would certainly say that in such a situation, ‘a $15 an hour minimum wage is…shall we say…risky?’ to the sort of industrial prowess that both Arkansas and Mississippi are famous for. Of course, German industrial workers

Per the World Bank, the domestic product per capita in Germany (at purchasing power parity) is currently $45,600. That in Arkansas is $40,800 and in Mississippi is $35,800. While were at it, the American mean is $54.600.

9 Art Deco July 21, 2015 at 1:08 pm

Subnational statistics are from the U.S. Bureau of Economic Analysis.

Eurostat helpfully supplies regional statistics which indicate that 17% of Germany’s population lives in regions more than 23% below national means and 25% live in regions more than 10% below national means, enough for an unfavorable comparison to Mississippi and Arkansas respectively. About 1% of the U.S. population is to be found in Mississippi and about 4% in Arkansas and loci poorer.

10 Floccina July 21, 2015 at 2:44 pm

Wikipedia shows a bigger difference between Germany and the USA:
https://en.wikipedia.org/wiki/Median_household_income

6 United States 43,585*
7 Canada 41,280
8 South Korea 40,861
9 Kuwait 40,854
10 Netherlands 38,584
11 New Zealand 35,562
12 Hong Kong 35,443
13 Austria 34,911
14 Finland 34,615
15 Japan 34,822
16 Germany 33,333

11 observer July 21, 2015 at 12:38 pm

Germany never needed a minimum wage because the various labor unions would negotiate the minimum wages with employers. I don’t know how many people will be affected by this. Maybe in the McDonalds sector?

12 Chris July 21, 2015 at 12:49 pm

Germany can pay its workers a high wage because German workers are high skilled and make a lot of niche products that don’t have many competitors because of the high skills those products require.

The high wage came afterwards, not before. Simply because you pay someone a high wage won’t magically turn them into a highly trained worker.

Unfortunately, the US doesn’t invest in high skilled vocational education like Germany does. Nor does its laws allow the same kind of apprenticeship culture where companies can invest training its workforce because they know workers will be with them for a long time and won’t leave for another company.

For that matter, the same people demanding an absurdly high minimum wage also are the same people responsible for much of the destruction of the US public education system in our inner cities.

13 JK Brown July 21, 2015 at 1:28 pm

And observation on apprenticeship from 1875:

Viewed in a commercial sense, as an exchange of consideration or values, apprenticeship can be regarded like other engagements ; yet, what an apprentice gives as well as what he receives are alike too conditional and indefinite to be estimated by ordinary standards. An apprentice exchanges unskilled or inferior labour for technical knowledge, or for the privilege and means of acquiring such knowledge. The master is presumed to impart a kind of special knowledge, collected by him at great expense and pains, in return for the gain derived from the unskilled labour of the learner.

….
All these things constitute technical knowledge, and the privilege of their acquirement is an element of value. The common view taken of the matter, however, is that it costs nothing for a master to afford these privileges the work must at any rate be carried on, and is not retarded by being watched and learned by apprentices. Viewed from any point, the privileges of engineering establishments have to be considered as an element of value, to be bought at a price, just as a ton of iron or a certain amount of labour is; and in a commercial sense, as an exchangeable equivalent for labour, material, or money. In return a master receives the unskilled labour or service of the learner; this service is presumed to be given at a reduced rate, or sometimes without compensation, for the privileges of the works and the instruction received.

— J. Richards , ‘Economy of Workshop Manipulation’

The minimum wage laws inhibit the employer from apprenticeships since the unskilled apprentice spends a good portion of their time, not on wholly unskilled tasks, but being taught which is a cost to the employer since it retards production. The author of the above observation also discusses the range of value of various access and asserts that an “apprentice” employed in low skill/muscle task should be paid the going rate for the low skill work, whereas an apprentice gaining valuable training would be paid less.

14 Adrian Ratnapala July 21, 2015 at 11:53 pm

That’s interesting. And Germany has a strong system of apprenticeships. I wonder if they get a carve-out from the minimum wage law.

15 ohwilleke July 22, 2015 at 12:50 am

A large share of German manufacturing workers make cars. A large share of manufacturing workers in the American South also make cars, sometimes German brand cars of the same designs made by German workers.

16 Dan in Euroland July 21, 2015 at 12:03 pm

If its applied uniformly then it will simply lead to changes in the price level. See Hungary: https://www.dropbox.com/s/4wdvae5oo68v8mo/HungaryMW_wpFinal.pdf?dl=0

17 Slocum July 21, 2015 at 1:11 pm

I’d be very surprised if the only effect was passing through higher costs to the consumer. In the U.S., minimum wage employment is most common in restaurants and retail. Higher prices in restaurants will likely result in a reduction in meals eaten and an increase in home cooking (or at least home-eating of packaged foods produced in automated factories). And wouldn’t we also expect to see a shift in retail sales toward retailers with fewer employees (e.g. big box stores like Costco and Sams as well as online retailers like Amazon)? Also, note that in the linked article, the number #1 job category for near-minimum wage workers is ‘cashier’ — a job that is vulnerable to being replaced by automation with more self-checkout lines and paying by smartphone & app. Why, when you go to McDonalds, how hard would it be to order and pay by app and just pick up your food when it’s ready?

18 Brett July 21, 2015 at 1:22 pm

Pay-by-App would come later. Most restaurants don’t accept checks here anymore, only cash and cards – and you could easily design a self-checkout machine to work with those. I saw more primitive versions of them in restaurants in Japan, where you pick an item off a menu and insert cash to pay for it. You then take your ticket to the counter to have the food prepared, or the machine notifies the people working in the back that a new order is up (like the online order systems many take-out places have now).

One tricky part of looking at the restaurants is that you’d have two effects at work. On the one hand, you’d have restaurant food becoming more expensive, triggering a shift towards self-prepared meals and meals at places that keep the costs down by greater productivity (think In-N-Out Burger). On the other hand, you might have a lot more workers with higher nominal incomes even with a disemployment effect from the minimum wage hike, which would increase demand for those foods. After all, fast food places do survive and thrive in places with high statutory or de facto minimum wages, like Australia and Denmark.

19 Slappy McFee July 21, 2015 at 1:57 pm

Paid by app today at Taco Bell. Advertisement on every cup, bag, wrapper for the App. Available for all smartphones and tablets.

20 Slocum July 21, 2015 at 2:01 pm

“After all, fast food places do survive and thrive in places with high statutory or de facto minimum wages, like Australia and Denmark”

But how many fast-food meals per-capita are served in those countries compared to the U.S.?

21 Dan Weber July 21, 2015 at 6:11 pm

Is there an app for a fast-food place such that, if I’m in the passenger seat on a family road trip, I can compose my order on my phone and be told which restaurant I can grab it at?

Dealing with some of those people taking orders is painful.

22 mw July 21, 2015 at 12:12 pm

A more socially aware conclusion would be that in a world of $14 median hourly wages, for social stability what is truly risky is trying to get away with giving a handful of people $10,000 hourly wages.

23 MOFO. July 21, 2015 at 12:53 pm

Cause the people who make $10,000 hourly wages got that way for no reason at all.

24 mavery July 21, 2015 at 1:40 pm

The tautology that effects have causes doesn’t mean we should all be okay with the results.

CEOs and the like receive compensation at such exhorbitant rates due to a combination of (1) earning the company more money in ways that do not increase net welfare for society (for example, stealing market share from another company through a superior ad campaign), (2) earning the company more money in ways that do increase net welfare for society (for example, improvements in the company’s business processes, allowing it to make things better/more efficiently/more cheaply than legacy methods), and (3) dumb luck (for example, he was in the same frat as the guy on the hiring committee, so he got the gig over the other person).

If you’re the company, the compensation is justified based on (1) and (2). If you’re society, (1) is irrelevant, and all you really care about as far as getting this person a just compensation is (2). Regardless, there’s no good way to determine how much of the executive’s compensation is attributable to any of the three categories above.

25 triclops41 July 21, 2015 at 5:35 pm

Agreed. In reality, it’s impossible to separate those 3 with a blunt instrument like regulation.

Glad you agree.

26 Dan Weber July 21, 2015 at 6:12 pm

I don’t think their wages are worth it, but I also don’t see the reason to care.

27 albatross July 21, 2015 at 8:53 pm

CEOs negotiating unreasonably high salaries for themselves is a really small problem that is good at generating outrage and talking points. CEOs whose compensation packages give them perverse incentives w.r.t. risk taking and long-term good management of their companies are a potentially pretty big problem that isn’t very good at generating outrage or talking points.

28 chuck martel July 21, 2015 at 10:44 pm

There is no reason to care unless you own common stock in the company. In that case the compensation committee is stealing the profits that are rightfully yours as an owner and giving them to an employee.

29 Just Saying July 21, 2015 at 12:25 pm

Risky because…why? It will prices of good produced in those states? It will drive jobs from those states?

Manufacturers in the southern states have externalized a significant percent of their costs onto the US public at large, as can be seen in any study of us gov’t expenditures per tax dollar. The South is a giant welfare state, while the north subsidizes the south. Raising the South’s wages will either drive manufacturers to more appropriate locations, or force them to raise their prices such that they’re responsible for their own costs, rather than externalizing them onto the rest of us.

30 Yancey Ward July 21, 2015 at 12:36 pm

Too funny. Every progressive I read says we don’t spend enough on the poor. And then one of them writes a comment like this complaining about how the US government spends more money per capita in the South.

31 RoyL July 21, 2015 at 12:39 pm

And its not even true in the case of Arkansas, which according to this is a net contributor.

http://wallethub.com/edu/states-most-least-dependent-on-the-federal-government/2700/

32 spencer July 21, 2015 at 12:58 pm

I think you need to recheck your source. That source does not say Arkansas is a net contributor, It says Arkansas ranks 13th in something, but it is not net contribution which the source does not provide data on.

33 Locke July 21, 2015 at 12:53 pm

it depends who public money is being spent on. Are they politically loyal?

34 Cooper July 21, 2015 at 1:07 pm

Around 55% of all black people live in The South. Southern blacks also tend to be more rural than non-southern blacks.

Rural ethnic minorities tend to be the poorest people in America. Obviously the South is going to receive lots of transfer payments. You couldn’t design a welfare scheme that didn’t disproportionately benefit this region.

35 Jan July 21, 2015 at 1:12 pm

It’s not a complaint that those individuals are getting some support, but rather calling attention to the irony of it.

36 JWatts July 21, 2015 at 3:04 pm

Do you mean the irony of the Left demanding high welfare transfers and then complaining about the predictable results?

37 triclops41 July 21, 2015 at 5:39 pm

It’s a result of the simple minded thinking Red State or Blue State means anything in reality, then looking for ways to be a good cheerleader for the correct team.

38 Jan July 21, 2015 at 8:34 pm

No, JWatts. We don’t have high welfare transfers compared to other wealthy countries. We could and should have more of a safety net.

39 JWatts July 22, 2015 at 2:39 pm

My phrase: “of the Left demanding high welfare transfers”.

Jan proving my point for me: “We don’t have high welfare transfers compared to other wealthy countries. We could and should have more of a safety net.”

40 Urso July 23, 2015 at 10:48 am

Jan, if you’re concerned that high-income Northerners aren’t devoting enough money to the poor in the South, I couldn’t agree more. I’ll recommend some great charities who’d be happy to accept checks from you & your bien pensant buddies.

41 Realist July 21, 2015 at 12:38 pm

Democrats make up the vast majority of low income welfare recipients. Republicans make up majority of high income earners. See any CNN exit poll. States don’t pay taxes. People do.

Southern states have a large number of low skilled low income people who, as you guessed it, vote Democrat.

42 Shane M July 21, 2015 at 12:54 pm

I live in the south. It’s a pretty red in most areas except the cities. Not sure I’d agree that the vote is democratic.

Ex: In KY rural areas there are a lot of recipients of welfare, and the counties tend to vote republican including low income Appalachia. It’s not uncommon to vote republican but get healthcare via medicaid.
http://www.politico.com/2014-election/results/map/senate/kentucky/#.Va54hLW_GPw

43 observer July 21, 2015 at 12:58 pm

Keep your government hands off my Medicare!

44 spencer July 21, 2015 at 1:02 pm

I think you need to recheck your source. That source does not say Arkansas is a net contributor, It says Arkansas ranks 13th in something, but it is not net contribution which the source does not provide data on.

45 Jan July 21, 2015 at 1:10 pm

However, educated people are also more likely to be Democrat. Are they the low income beneficiaries, too? http://www.people-press.org/2015/04/07/a-deep-dive-into-party-affiliation/

In any case, this speaks to the fact that elected Republicans aren’t doing anything to serve their entire constituencies, rather focusing on the needs of the high-income and Republican folks who elected them.

46 Brian Donohue July 21, 2015 at 1:23 pm

Ha. You’re saying Republicans should listen more to…whom, exactly? Evangelical Christians?

Sorry, they are stuck without much in the way of options, like the blacks that Just Saying clearly gives zero shits about above.

47 Jan July 21, 2015 at 2:21 pm

I think I get what you’re hinting at. But Republicans saying how they need to be more inclusive lately, including lots of people who don’t seem so…traditionally Republican. How much good does it do R’s to have a lot of poor, Democrat-voting individuals in their districts?

48 E. Harding July 21, 2015 at 4:13 pm

“In any case, this speaks to the fact that elected Republicans aren’t doing anything to serve their entire constituencies, rather focusing on the needs of the high-income and Republican folks who elected them.”
-It does not follow. And it’s not a fact.

49 Jan July 21, 2015 at 8:37 pm

If you have a lot of poor people on welfare in your district that is a bad outcome and you should be doing a better job to create opportunities in the are you govern. It’s a pretty straightforward point. If you assume that most of these poor people are Dems, as the person above stated, then it would not be surprising if Republican elected officials don’t really care to do much for them because 1) they are not voting for them anyway and 2) Republicans aren’t known for doing much of anything for poor people.

50 observer July 21, 2015 at 12:41 pm

Southern states are for cutting government spending until it comes time to downsize military spending, specifically on the Army, which has many bases spread across the south.

“According to the White House figures, the South would be disproportionately affected by cuts to the nation’s military, which is a key employer and economic force in many Southern states.”

http://www.southernstudies.org/2013/02/southern-states-would-be-hit-uniquely-hard-by-sequesters-military-budget-cuts.html

51 observer July 21, 2015 at 12:42 pm

“The numbers highlight the South’s ongoing reliance on defense spending, a trend which started during World War II as Southern states aimed to attract war production and military dollars to jumpstart economic recovery after the Great Depression.”

52 observer July 21, 2015 at 12:44 pm

Sorry for the fragmented posts. The South has been and continues to be a basket case. Ending the defense subsides would presumably get many of the job-for-life ZMP employees in the military off of the dole and get them into more productive industries.

53 mbutuomalley July 21, 2015 at 3:04 pm

I thought the military was a jobs and education program for ZMP employees. Wouldn’t cuts to the military disproportionately affect the middle class?

54 Art Deco July 21, 2015 at 6:07 pm

I thought the military was a jobs and education program for ZMP employees.

The military does not accept as recruits people whose scores on pscyhometric tests are below the 16th percentile. They also screen out people with problems of interest to psychiatrists and people with a criminal record of note. Unless you fancy that north of 30 million working aged adults can produce ‘zero marginal product’ for their employers, no the military is not. In any case, they only actually employ about 1.5 million people, which would not make much of a dent in the ZMP population even if it was that large.

55 JWatts July 21, 2015 at 3:08 pm

“Southern states are for cutting government spending until it comes time to downsize military spending, specifically on the Army, which has many bases spread across the south.”

So, what your saying is that people vote in their economic self interest? I’m shocked! Why has nobody ever mentioned this before?

56 Jan July 21, 2015 at 8:49 pm

You can wave your hand and say everyone votes in their self interest, but Republicans (let’s use them as a proxy for Southerners) are very bad on spending in particular. For something that is supposed to be one of their core principles (smaller government, less spending), they have a very hard time living up to it. One common game of theirs is to propose a large amount of cuts to spending but refusing to be specific about what exactly they will cut and when. The military is one of the few things they will get specific about–it’s sacred and cuts aren’t allowed. Food stamps go before military budgets shrink.

57 Careless July 21, 2015 at 9:33 pm

. For something that is supposed to be one of their core principles (smaller government, less spending), they have a very hard time living up to it.

Yep, you want to see a state that spends a lot, you look for one run by Republicans. That’ll do the trick.

58 Urstoff July 21, 2015 at 12:52 pm

So you want to remove the subsidies for the poor, then? That seems an extreme way to fight poverty.

59 JK Brown July 21, 2015 at 1:49 pm

You do realize that minimum wages raise the cost of labor to employers and also raises the level of skill and productivity in employees they will have to seek in order to justify the increased minimum wages? Therefore, the less skilled and less capable workers will become unemployed and unemployable, thus they will end up on the welfare rolls.

Here is the results discovered with the imposition of one of the first minimum wage laws in New Zealand and Australia during their experiment with state socialism at the turn of the 20th century. Sadly, the wage boards were just what the New Deal imposed which extended the length of the Great Depression.

“And in volume 2, page 33, speaking of New Zealand, ” wages in the colony fell generally between 1879 and 1895. In 1889 the minimum amount of wages to be paid in industries was fixed by law. As a result the old and slow workers in the clothing and underclothing trades were all discharged and starved or became paupers,” (vol. 2, page 64). ”

The references in the preceding is to: “ State Experiments in Australia and New Zealand,” written by William P. Reeves

I looked up the reference. The way the old and slow workers being put our of work was handled was eventually the wage board issued them licenses to work at less than the minimum wage. These days, it would be simply to sign them up for a welfare program.

60 Careless July 21, 2015 at 9:30 pm

Manufacturers in the southern states have externalized a significant percent of their costs onto the US public at large,

Yes, if those people are laid off, the state will save tons of money because people making nothing don’t qualify for welfare, right?

It’s continually amazing how this idiotic argument comes up over and over.

61 ohwilleke July 22, 2015 at 12:52 am

Agreed.

The logic of the minimum wage is that sub-living wages are a form of corporate welfare because those sub-living wages force the government to subsidize the workers.

62 Dave July 21, 2015 at 12:28 pm

You obviously don’t understand the minimum wage and causality… if we were to make the minimum wage $200/hour, everyone would be forced to become doctors. Problem solved.

63 spencer July 21, 2015 at 12:48 pm

Real per capita income in Arkansas is 81% or the US national average and ranks number 46 in the ranking of states by real per capita income.

64 mulp July 21, 2015 at 12:51 pm

Obviously the place to shop for cars, gasoline, food, etc is Mississippi because

the Honda Accord made in Tennessee selling for $24,000 in NH where the median household income is $70,000 will sell for $14,000 in Mississippi where MI is$40,000

gasoline at $2.50 a gallon in NH will cost $1.45 in Mississippi

a Big Mac at $4 in NH will cost $2.30 in Mississippi

an unlocked iPhone in NH at $649 will cost $379 in Mississippi

And that’s why the lower wages and incomes are justified in Mississippi, because the people in Mississippi are absolutely not poorer than the anti-tax anti-government libertarians living in NH.

65 MOFO. July 21, 2015 at 12:56 pm

I dont know about NH, but in quite a few places in the US, gas, cars and fast food do cost quite a bit more than you would pay in Mississippi.

66 Urstoff July 21, 2015 at 12:58 pm

A good reason, aside from all the other good reasons, that a federal minimum wage is a bad idea.

67 Urstoff July 21, 2015 at 12:59 pm

aside from the bogus numbers and sarcasm, of course, but cost of living does vary, as do wages for similar jobs across different states/cities/regions

68 Bob from Ohio July 21, 2015 at 1:05 pm

Not that mulp is rational but notice he ignores housing costs.

My sister lives in a 5000 person town in Ohio. Until a recent ownership change and rent increase, she was paying $350 for a two bedroom townhouse that would be at least $1000 in Columbus or Cleveland.

69 Slocum July 21, 2015 at 1:25 pm

And $4500 in San Fransisco

70 Cooper July 21, 2015 at 1:49 pm

Housing is 41% of the CPI. Food and beverages is another 15%.

Even things like entertainment and medical care are mostly produced locally at local price levels. There’s no national market for home health care aides or movie theaters.

People spend most of their income on locally produced goods and services, not internationally traded goods.

The people in Mississippi are obviously poorer than the people in New Hampshire but that’s not really the debate here.

71 jerseycityjoan July 21, 2015 at 11:21 pm

$350 for a two bedroom townhouse anywhere in Ohio sounds very very low.

I don’t think many people in Ohio are paying so little – or $450 either. Some of the little landlords will go for years without increasing their rents for good tenants, or increasing them very little, because they have a horror of dealing with bad tenants.

Certainly I don’t see how we can think, oh man, lots of people can survive on next to nothing because their rents is just a few hundred a month.

72 Apeman July 21, 2015 at 1:02 pm

The big variable is housing. When I was younger and moving my Grandparents out of New Jersey I was struck by how crappy the houses were and how nice the cars were compared to where I live. As you say, the cars cost the same all over. It is houses that are variable in price. I would rather be able to have nice house with a used car then a poor house with a nice car.

The other thing that varies quite is bit is food prices. For some reason, food prices are much higher in Vermont then they are in the poor rural area that I live in.

73 Bob from Ohio July 21, 2015 at 1:08 pm

Food and housing. Unimportant expenses.

74 Jan July 21, 2015 at 2:24 pm

Your typical Ohioan spends more on lapdances than housing. Go Bucks!

75 mbutuomalley July 21, 2015 at 3:07 pm

Is the difference purely regional or is there a quality difference? Time to write a grant.

76 Jan July 21, 2015 at 8:53 pm

You know there is a lot about this we don’t understand.

77 spencer July 21, 2015 at 1:13 pm

The regional price parity index published by the BEA says the cost of living in Arkansas is 87.6% of the national average.as compared to 106.2% in New Hampshire.

I really doubt you data on the price of a Honda Accord

What really drives the differences in cost of living is housing, not goods. In Arkansas home owners equivalent rent is 63% of the national average but goods prices are some 95.6% of the national average. In NH rent is 123% and goods are 98.1%, less than one percentage point more than in Arkansas.

78 JWatts July 21, 2015 at 3:10 pm

“I really doubt you data on the price of a Honda Accord”

I’d say it’s pretty safe to doubt everything that mulp says.

79 Richard A. July 21, 2015 at 1:01 pm

If congress were to mandate e-verify–this would shift the total supply curve for unskilled labor to the left causing the market clearing wage to increase for the unskilled.

80 Art Deco July 21, 2015 at 1:24 pm

Congress has mandated a number of things re immigration control which the last three administrations have answered with non-compliance.

81 A Definite Beta Guy July 21, 2015 at 3:25 pm

Art,
Could you elaborate which items are currently pending with the Executive?

82 Harun July 21, 2015 at 9:58 pm

1) Exit customs system. Have you noticed when you fly to Europe or anywhere else but America, you go through customs coming and going out? America is only incoming. This greatly helps illegals who fly to America and just never leave. Congress already funded this change to also having an exit system, but nothing has been done. It may be a space issue: where would you put the kiosks? It would also mean hiring more workers, which usually is an attraction.

2) the wall. This has already been funded, just not built. California does have a wall, of course, which is why it was ironic to have Californians booing Arizona for wanting one.

83 mavery July 21, 2015 at 1:41 pm

There ya go, with all the government regulation and red tape….

84 Brett July 21, 2015 at 1:18 pm

That’s troubling. Even if you assumed that there was no job loss or decline in investment, and that the cost of the higher wage was entirely passed on to consumers, you’re still going to lose some of the real purchasing power of the higher wage to inflation if so many workers in labor-intensive businesses are facing major labor cost increases.

It could still be good, in a way. That high of a wage increase means that businesses that get more productivity out of their workers are now at an advantage, and there’s an incentive to either deploy machines that can do tasks or change business processes to get more output (think In-N-Out Burger, which pays good wages by keeping the menu simple and making food near-factory-line style). .

85 chuck martel July 21, 2015 at 11:03 pm

” …you’re still going to lose some of the real purchasing power of the higher wage to inflation….”

Please explain to me how higher wages cause inflation. And why rising stock prices do not.

86 Brett July 22, 2015 at 1:14 am

Rising stock prices don’t tend to affect the price level as much as rapidly rising wages, which affect the production costs of everything but especially labor-intensive businesses. That gets translated into higher costs if the companies can’t compensate with greater productivity instead.

87 Floccina July 21, 2015 at 1:41 pm

I do not think that politicians are stupid enough to enact a visible $15/hour minimum wage over night. They will gradually fold it in with some exception the average voter will hardly notice it.

88 E. Harding July 21, 2015 at 3:19 pm

The U.S. median is $17.09, just a little lower than Mississippi’s mean:
http://www.bls.gov/oes/current/oes_nat.htm

89 JWatts July 21, 2015 at 4:32 pm

“At just $7.25 an hour, today’s federal minimum wage is absurdly low. This Friday marks exactly six years since it was last lifted, and it looks especially paltry compared with its peak value in 1968 ($10.97, in today’s dollars). It could stand to rise more than a smidgen above what Sanders has rightly called today’s “starvation wage.””

This is the kind of half informed writing that seems to be the hallmark of modern journalism. There was no EITC in 1968 and the EITC effectively boosts the wages of the working poor without driving up wages and hurting unemployment. So, to say that “Sanders has rightly called today’s “starvation wage.”” is more advocacy than impartial journalism.

90 Dan Weber July 21, 2015 at 6:43 pm

At least he calls 1968 the peak value, instead of pretending he picked it at random as the point where it should be maintained.

91 Cooper July 21, 2015 at 8:13 pm

So Sanders wants to draft a large chunk of the minimum wage workforce, greatly increase defense spending and reduce low skilled immigration down to negligible levels in order to recreate the economic conditions of the late 1960s?

92 Ricardo July 22, 2015 at 7:27 am

“This is the kind of half informed writing that seems to be the hallmark of modern journalism. There was no EITC in 1968 and the EITC effectively boosts the wages of the working poor without driving up wages and hurting unemployment.”

You are only half right. EITC does little to nothing to benefit minimum wage earners with no children. I looked at the IRS’s EITC table not too long ago and a single person with no children earning $7.25 per hour, 40 hours per week, 52 weeks per year earns too much to qualify for EITC. It is slightly more generous with married couples but, even so, the maximum credit is capped at $496. You have to have children to derive significant benefits from EITC.

93 JWatts July 22, 2015 at 2:48 pm

Yes you are correct. It’s primarily designed for adults with children. Here’s the chart:

http://www.taxpolicycenter.org/briefing-book/key-elements/family/eitc.cfm

94 RC July 21, 2015 at 5:22 pm

The posting says nothing about the wage being a minimum wage. That is another issue. All a median wage means is that the largest number of people are getting that wage. It is not an average (mean). So, I’m not sure what that number means except the most number of people are making something above minimum wage. Beyond that it tells us nothing about the composition of those wages. It’s just a number which leaves a lot of information out, which renders it pretty useless.

95 TMC July 21, 2015 at 8:21 pm

That would be the mode. Median is that 50% of the values are higher, and 50% lower

96 ohwilleke July 22, 2015 at 12:58 am

What the number tells us, is that if the minimum wage were increased to $15 an hour, as Bernie Sanders has proposed, that more than 50% of the workers in Arkansas and Mississippi would receive an increase in their hourly rate of compensation.

There are countries where more than half of all workers make the minimum wage, but not many.

97 Jason Smith July 21, 2015 at 6:09 pm

So little faith in entrepreneurship!

Arkansas will just become a hotbed of robot hotels and self-checkout technology.

Unless the idea is that the minimum wage is too low to spur investment in labor reducing technologies and practices, but too high to cost effectively provide goods and services at the current level … sounds like someone is using an implicit model with specific values of the implicit model’s parameters!

98 YetAnotherTom July 21, 2015 at 11:01 pm

I’m from Mississippi. The local residents think that $15/hr minimum is insanity, if my facebook feed is to be believed. $15 is what the local Toyota plant pays, and is considered a pretty solid job. In a way it is, since Teachers, with their 35-45k salaries, are actually considered “well-off” in a lot of Mississippi towns. There are decent houses under a hundred grand in most of the state. A lot of the “Occupy” stuff sounds tone deaf here, since your basically telling experienced workers, who really aren’t struggling, that fast food workers should make as much as them.

99 Flyover Guy July 22, 2015 at 11:44 am

WHAT? I can’t hear you.

100 jerseycityjoan July 22, 2015 at 5:52 pm

I thought of this comment when I read the following AP article about the increased rate of children in poverty:

“More U.S. Children Are Living In Poverty Than During The Great Recession”

“STRUGGLING IN THE SOUTH

States in the South and Southwest continued a steady run at the bottom of the Kids Count rankings for overall child well-being, with issues including economic standing and education.

According to the report, 1 in 3 children from Mississippi live in poverty. Twelve percent of teens from Mississippi and Louisiana were neither in school nor working. Fifteen percent of Nevada children didn’t have health insurance, compared with the nation-best 2 percent in Massachusetts.”

http://www.huffingtonpost.com/2015/07/21/children-poverty-great-recession_n_7841576.html

I in 3 kids are in poverty in your state. You paint a picture of “Everything’s A-OK down here.”

My guess is that the workers you know are at least in the middle ranks of income. Those “elite” factory workers really aren’t making all that much, especially if they’ve been in the workforce for 20 years or more.

Why would people making $8 or $9 an hour look at a big raise with disgust and horror? It’s not most of them believe that they’ll soon get a much better job.

Our population is rapidly growing, mostly due to immigrants and their descendants. As we go from 315 million today to about 400 million people by 2050, real estate prices around the country will go up. The $100,000 house (in 2015 dollars) won’t be available anymore in many if not most places that it is today.

We either have to get more money into workers’ hands through work or government benefits to keep social unrest in check in the future.

101 YetAnotherTom July 23, 2015 at 4:38 am

It’s a delicate thing to talk poorly about the south, because any negativity statistic you can name is disproportionately a statistic about black people.
https://en.wikipedia.org/wiki/List_of_U.S._states_by_African-American_population

Obesity, poverty, poor education, whatever you think is the cause, they’re not doing strikingly worse than the blacks in High tax, high wage Chicago. It reminds me of a recent Salon article, “without the south, the U.S. is pretty normal.” (RE Gun crime, poverty, inequality in comparison to Europe) It really should have read “without the majority of the black population”, the U.S. is pretty normal. (relative to Europe)

So, the original point of a minimum wage increase seeming silly here. Yes, Mississippi has issues. The minimum wage and tax structure is hardly the cause or solution, however. You can argue the blacks are poor because of structural racism, but its not like the more liberal states have fixed that.

102 jerseycityjoan July 24, 2015 at 4:50 am

These are complex issues.

I don’t think it’s fair to point to the South and say “it’s all your fault!” or to blame black people for everything either.

My fear is that the long term American citizen poor to middle income residents there (both black and white) will be among the worst affected by the changes turning America upside down. Many were on shaky ground to start with, so the future upheavals due to higher real estate/rents, more people, fewer jobs, etc., will hit these people hard.

103 Urso July 23, 2015 at 12:02 pm

This is because all the people pushing this are from DC or Manhattan, and they literally cannot comprehend the world beyond their borders (to be fair, the average resident of Pearl River County also can’t comprehend that someone in NYC is “struggling” at $85K, but that part of it doesn’t lead to any particular policy implications).

Minimum wage is a great example of why federalism is necessary. It is simply impossible to come up with a single minimum wage that makes sense across the entire country.

104 Denis Drew July 22, 2015 at 9:24 am

My minimum wage worksheet — the easily could-have-been minimum wage — dbl indexed for inflation and per capita income — 2013 dollars:

yr..per capita…real…nominal…dbl-index…%-of

68…15,473….10.74..(1.60)……10.74……100%
69-70-71-72-73
74…18,284…..9.43…(2.00)……12.61
75…18,313…..9.08…(2.10)……12.61
76…18,945…..9.40…(2.30)……13.04……..72%
77
78…20,422…..9.45…(2.65)……14.11
79…20,696…..9.29…(2.90)……14.32
80…20,236…..8.75…(3.10)……14.00
81…20,112…..8.57…(3.35)……13.89……..62%
82-83-84-85-86-87-88-89
90…24,000…..6.76…(3.80)……16.56
91…23,540…..7.26…(4.25)……16.24……..44%
92-93-94-95
96…25,887…..7.04…(4.75)……17.85
97…26,884…..7.46…(5.15)……19.02……..39%
98-99-00-01-02-03-04-05-06
07…29,075…..6.56…(5.85)……20.09
08…28,166…..7.07…(6.55)……19.45
09…27,819…..7.86…(7.25)……19.42……..40%
10-11-12
13…29,209…..7.25…(7.25)……20.20?……36%?

105 Denis Drew July 22, 2015 at 9:26 am

Let’s try again:

68…15,473….10.74..(1.60)……10.74……100%

69-70-71-72-73

74…18,284…..9.43…(2.00)……12.61

75…18,313…..9.08…(2.10)……12.61

76…18,945…..9.40…(2.30)……13.04……..72%

77

78…20,422…..9.45…(2.65)……14.11

79…20,696…..9.29…(2.90)……14.32

80…20,236…..8.75…(3.10)……14.00

81…20,112…..8.57…(3.35)……13.89……..62%

82-83-84-85-86-87-88-89

90…24,000…..6.76…(3.80)……16.56

91…23,540…..7.26…(4.25)……16.24……..44%

92-93-94-95

96…25,887…..7.04…(4.75)……17.85

97…26,884…..7.46…(5.15)……19.02……..39%

98-99-00-01-02-03-04-05-06

07…29,075…..6.56…(5.85)……20.09

08…28,166…..7.07…(6.55)……19.45

09…27,819…..7.86…(7.25)……19.42……..40%

10-11-12

13…29,209…..7.25…(7.25)……20.20?……36%?

Sorry; sometimes the chart only takes with breaks.

106 JWatts July 22, 2015 at 2:54 pm

Why would you index for inflation and per capita income?

107 Urso July 23, 2015 at 2:20 pm

Yeah I don’t get the double indexing. Also, the decision to start a min wage chart in ’68 is politically charged. That’s the year of the highest ever min wage, relatively speaking. If you pick another starting date, you’d get different results, maybe drastically different depending on the year. This is not to say that starting with ’68 is “wrong” but it’s definitely a data point selected with a certain conclusion in mind.

108 Los Ranchos July 23, 2015 at 12:26 am

Isn’t not allowing regional wage variations sort of like what just happened to Greece?

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