Results for “"minimum wage"”

290 found

Steve Kaplan and Joshua Rauh write:

We consider how much of the top end of the income distribution can be
attributed to four sectors — top executives of non-financial firms
(Main Street); financial service sector employees from investment
banks, hedge funds, private equity funds, and mutual funds (Wall
Street); corporate lawyers; and professional athletes and celebrities. 
Non-financial public company CEOs and top executives do not represent
more than 6.5% of any of the top AGI brackets (the top 0.1%, 0.01%,
0.001%, and 0.0001%).  Individuals in the Wall Street category comprise
at least as high a percentage of the top AGI brackets as non-financial
executives of public companies.  While the representation of top
executives in the top AGI brackets has increased from 1994 to 2004, the
representation of Wall Street has likely increased even more.  While the
groups we study represent a substantial portion of the top income
groups, they miss a large number of high-earning individuals.  We
conclude by considering how our results inform different explanations
for the increased skewness at the top end of the distribution.  We argue
the evidence is most consistent with theories of superstars, skill
biased technological change, greater scale and their interaction.

Here is the link, here is the non-gated version.  How about this bit from the text?:

…the top 25 hedge fund managers combined appear to have earned more than all 500 S&P 500 CEOs combined (both realized and estimated).

This is important too:

…we do not find that the top brackets are dominated by CEOs and top executives who arguably have the greatest influence over their own pay.  In fact, on an ex ante basis, we find that the representation of CEOs and top executives in the top brackets has remained constant since 1994.  Our evidence, therefore, suggests that poor corporate governance or managerial power over shareholders cannot be more than a small part of the picture of increasing income inequality, even at the very upper end of the distribution.  We also discuss the claim that CEOs and top executives are not paid for performance relative to other groups.  Contrary to this claim, we find that realized CEO pay is highly related to firm industry-adjusted stock performance.  Our evidence also is hard to reconcile with the arguments in Piketty and Saez (2006a) and Levy and Temin (2007) that the increase in pay at the top is driven by the recent removal of social norms regarding pay inequality.  Levy and Temin (2007) emphasize the importance of Federal government policies towards unions, income taxation and the minimum wage.  While top executive pay has increased, so has the pay of other groups, particularly Wall Street groups, who are and have been less subject to disclosure and social norms over a long period of time.  In addition, the compensation arrangements at hedge funds, VC funds, and PE funds have not changed much, if at all, in the last twenty-five or thirty years (see Sahlman (1990) and Metrick and Yasuda (2007)).  Furthermore, it is not clear how greater unionization would have suppressed the pay of those on Wall Street.  In other words, there is no evidence of a change in social norms on Wall Street.  What has changed is the amount of money managed and the concomitant amount of pay.

There is a great deal of analysis and information (though to me, not many surprises) in this important paper.  The authors also find no link between higher pay and the relation of a sector to international trade.

It beggars belief when economists at Princeton, Harvard and Berkeley claim that they are lone voices in the wilderness boldly striking heterodox positions against the hegemony of “free market economics.”

David Card, for example, says “You lose your ticket as a certified economist if you don’t say any kind of price regulation is bad and free trade is good.”  Really?  Card and Krueger’s famous paper on the minimum wage was a 1993 NBER working paper published in the AER in 1994.  What happened then in 1995?  Was Card decertified, drummed out of the profession, vilified by his peers?  Hardly, in 1995 David Card was honored (deservedly imho) by the American Economic Association with the John Bates Clark medal.

Dani Rodrik says “I fall into the methods of the mainstream, but not the faith,” which he defines as the belief that more markets and free trade are always good and government regulation is  always bad.  Give me a break.  Let’s go to the data.

Klein and Stern surveyed members of the AEA on a host of policy questions bearing on markets and government regulation.  The result, “Only a small percentage of AEA members ought to be called supporters of free-market principles.”

Even on the minimum wage, support for which Card says gets you decertified, the mean economist position is in between “support mildly” and “have mixed feelings.”  Indeed, even Card has mixed feelings about the minimum wage!   (See his book with Krueger in which he points out that the minimum wage is not a very effective way to help the poor).  On a host of other issues concerning government regulation, like support for OSHA, the FDA, and the EPA, the mean economist is somewhere between strongly and mildly support.

Only on free trade is there strong opposition to government regulation in the form of tariffs.  Thank goodness for small mercies.

…the ambitious plan for the new free-trade zone — nicknamed Zip
Choluteca — rests on a controversial low-wage pact, made in the spring
among the project’s developers, the Honduran government and national
labor unions. In return for luring investors to an untested and
undeveloped region, the agreement guarantees them a minimum profit by
keeping wages below the legal daily minimum for five to 10 years.

Here is the full story, which is about recent attempts to make Honduras a regional economic powerhouse. 

Do maximum wage laws make more or less sense than minimum wage laws?

I love it when Greg Mankiw gets nasty.

Robert
Reich says that, as a requirement for free trade deals, we should tell
developing countries to "set a minimum wage that’s half their median wage." The
proposal raises two questions in my mind:

1. Does Reich pay his nanny,
cleaning person, and gardener more than half the median wage of members of his
family?

2. If not, should I refuse to buy his books?

Via Brad DeLong:

Income inequality soared in the late 1990s.  Why?  A decomposition by
region and sector can tell you pretty much exactly: it was the tech
bubble and the stock boom. Capital gains and stock options
realizations.  Much of it in just five places in the whole country:
Manhattan, King County WA, and Santa Clara, San Francisco and San Mateo
Counties, CA.  Take out those five, as Travis Hale and I showed in a
paper, and the between-counties component of income inequality (which
isn’t all of it, but it isn’t chopped liver, either) doesn’t go up at
all.

Meanwhile, earnings inequality went down in the same time.  Why?  Full
employment.  This component of inequality is closely tied to utilization
rates and unemployment.  It varies with hours worked, and overtime
earned, more than anything else.  It is, in short, a macroeconomic
phenomenon.

Addendum: Here is more wisdom from that blog, on welfare reform, an overrated event in terms of its significance, though I will demur on the minimum wage question.

Andrew Samwick asked a very good question last week: if Paul Krugman says that rising wages at the top are due to nasty Republican policies and not due to rising returns to education/skill how does he explain his own high income?  Unfortunately Mark Thoma interpreted Samwick to be saying that Krugman was hypocritical.  That, however, was not the point at all.

The point is that Krugman is a very good example of someone in the top 1% of income – someone whose earnings have increased tremendously in the 1980s and 1990s thus generating much income inequality.  Krugman wants to say that earnings in the top 1% have gone up because of a reduction in the minimum wage or fewer labor unions.  Huh?  Remember, it’s not just inequality that has increased it’s absolute earnings at the top – where are these earnings coming from?

The idea that reductions in the bottom generate big earnings at the top reminds me of the theory, once popular among theorists of development, that the way to get rich is to steal from poor people.  At best what you can get from lower labor earnings at the bottom is a slightly higher return to capital in general – not a big return to a few people at the top.

Krugman says it’s Republican policies that are generating inequality  Or does he?  Let’s go to the tape.  Here’s what Krugman had to say when it was revealed that Enron paid him $50,000 for a speaking engagement.

My critics seem to think that there was something odd about Enron’s
willingness to pay a mere college professor that much money. But such sums
are not unusual for academic economists whose expertise is relevant to
current events…

Remember that this was 1999: Asia was in crisis, the world was a mess.
And justifiably or not, I was regarded as an authority on that mess. I
invented currency crises as an academic field, way back in 1979; anyone
who wants a sense of my academic credentials should look at the Handbook
of International Economics, vol. 3, and check the index….

And I wasn’t an ivory-tower academic. In 1994 I had published an article… in August 1998 I had advocated temporary
capital controls …in 1998 I had taken on the Japanese
situation, with a series of papers…

I mention all this not as a matter of self-puffery, but to point out
that I was not an unknown college professor. On the contrary, I was a hot
property, very much in demand as a speaker to business audiences: I was
routinely offered as much as $50,000 to speak to investment banks and consulting
firms. They thought I might tell them something useful. For what it’s worth,
Citibank officials said – you can check it out with a Nexis search – that
a heads-up I gave them in 1996 about the risks of an Asian currency crisis
saved them hundreds of millions of dollars.

Now all this is amusing but that’s not my point (really, it’s just a side-benefit.)  My point is that Krugman’s earlier explanation for his high income was all about the rising return to education ("Look at all my papers!")  I would supplement this basic story with a greater winner-take-all market, more economies of scope etc.  (See also Tyler’s comments.)   

I think Krugman’s earlier explanation for his own income is mostly correct.  Where Krugman and I apparently disagree is that I think that the very same explanation Krugman gives for his income also explains why other people in the top 1% are earning more.  Krugman, however, no longer wants to talk about education and skill he wants to talk about nasty Republicans.

So let me rephrase Samwick’s question.  Paul, If you’re not so smart, why are you so rich?

In a shocking op-ed in the NYTimes two well known liberals, Michael Dukakis and Daniel Mitchell (a former price-control Czar), acknowledge that the minimum wage creates unemployment.  Nevertheless, they are in favor of raising the minimum wage.  Why?  Because it will create even more unemployment among immigrants than among natives.

The mean-spirited, Machiavellian nature of their op-ed is chilling but I will give Dukakis and Mitchell this, their logic is impeccable.  The minimum wage creates unemployment among the low-skilled.  As a result, the minimum wage tends to create disproportionate unemployment among teenagers and young African Americans.

Similarly, since many immigrants have lower-skills than natives, Dukakis and Mitchell are correct that a well-enforced minimum wage will put immigrants out of work reducing the pull of the American economy to workers in foreign countries.

I wonder if the NYTimes would have printed an op-ed that advocated minimum wages as a way of creating unemployment among
African Americans and raising white wages?

(Long-time readers will know that the original proponents of the minimum wage had in mind exactly that so Dukakis and Mitchell are true progressives.)

Some husbands in western India are renting out their wives to other
men, cashing in on a shortage of single women available for marriage,
according to a news report Monday.

Atta Prajapati, a farm worker who lives in Gujarat state, leases out
his wife Laxmi to a wealthy landowner for $175 US a month, the Times of
India reported, citing unidentified police officials. A farm worker
earns a monthly minimum wage of around $22. Laxmi is expected to live
with the man, look after him and his house, and have sex with him, the
report said.

Here is the story.  Might we call this temporary polygamy?  For the pointer I thank Pablo Halkyard and also SunCraig.

It is called Bumvertising. 

Bumvertising™, or the use of sign holding vagrants to advertise, is a development of PokerFaceBook.com’s
most recent advertising campaign. Homeless men are able to provide a
valuable and tangible service to a company, while receiving an
additional revenue stream in combination with their normal donations
from begging.

Here is a photo gallery of ads.  Here is the company’s "economic analysis" of the practice.  Here is some nasty language directed against the founders.  And it seems you pay the bums with barter:

Through his own effort and the assistance of his marketing team, Mr.
Rogovy developed signs and accumulated the resources that most bums
would find attractive. Money, sandwiches, chips, apples, water, and
other beverages have all been dispensed in order to compensate the
homeless in the Seattle Bumvertising™ campaign.

I have no direct information on how real this practice is, or if it violates minimum wage laws, but the web site appears legitimate.  Thanks to Curt Gardner for the pointer.  Comments are open if you know more.

"There are a few other factors that might contribute to NZ not being as successful as we should be:

1. Monetary policy. We do have low inflation but the Reserve Bank’s official cash rate is 6.5%, not exactly Greenspanesque. Borrowing money is expensive.

2. Labour markets are only free in the sense that union membership is not compulsory. Instead, pay and conditions are extremely heavily regulated and our Employment Court is weighted heavily against employers. Employers may appear to be acting voluntarily, but actually they are being coerced in all kinds of subtle ways. Our minimum wage is $9 per hour and this also makes entire areas of economic activity unviable.

3.  Welfare benefits are much too generous and little or not effort is made to ensure that the unemployed attempt to find work. Refusing to take a job that is offered is rarely penalized. Every year fruit growers watch some of their product die because they can’t get enough pickers, even though there are people just down the road collecting welfare benefits.

4. There is a serious underinvestment in infrastructure, since the consent procedures allow green and Maori groups to bring about enormous costs and delays in gaining approval. We have had power shortages on several occasions, while at the same time no new dams have been approved and burning coal (or even digging up our massive
stockpiles of it) is out of the question. We even had an extension to a state highway held up because a taniwha (a mythical river-dwelling creature) was angered and had to be appeased (i.e. paid) before contruction could continue.

5. Some of the privatization efforts have since been rolled back. In the last 5 years, the Labour government has nationalized our airline, the railways and accident compensation insurance and established a massive state superannuation fund. They are well on the way to nationalizing kindergartens and have just started on primary healthcare. Where they don’t own businesses they still regulate heavily, e.g. telecommunications.

6. Taxes are not as low as it might appear. The top rate of personal tax is 39% but there is also a 12.5% universal sales tax, property taxes and many others. Recent figures show that over the last four years, average household income has increased by $7700 while average household taxation has increased by $5200. Once you take into account price increases, our purchasing power has dropped. Since education and hospitals are fully state-funded with no voucher scheme, if you want private provision of those you have to pay twice.

7. There is a widespread and irrational dislike of foreign investment. We have always been a country that had land, labour and far too little capital. That is unlikely to change because the public, fuelled by politicians and the media, go on the attack any time an overseas business or individual tries to invest here. At the moment Shania Twain is trying to spend $14 million to buy a farm in a remote area of the South Island. You wouldn’t believe the outrage: it’s front page news and questions have been asked in Parliament.

You might wish to start reading Rodney Hide’ s blog here: http://rodneyhide.com/Diary/  Rodney is the leader of ACT, which is New Zealand’s (maybe the world’s) only classic liberal political party. He was an economics professor before being elected to Parliament."