Job Skills About half of college grads underemployed => disaster?

[NTL2009]

... I feel that it is everyone's responsibility to ensure that all citizens have access to a livable wage ... . And why I am also open to the idea of a guaranteed minimum income (with caveats in terms of how it can be implemented). ...

I actually don't believe that you think that at all. I've heard people say this, but back off when it applies directly to them.

The problem is in those "caveats in terms of how it can be implemented". We end up with someone (who? A bureaucracy far removed from the supplier/consumer?) deciding what something is worth to someone else, instead of two people freely deciding between themselves what something is worth (the free market). Just like a recent discussion on the price of a stock - as long as people are trading a stock at around, say $26, then that stock has been determined to be worth $26. Or should we have someone in an office in a Government position determining what all stock prices should be? Same thing, really.

So I decide that my calling in life is to play electric guitar through a large Marshal Stack, outside your home from 1 AM to 6 AM each day. And I need to be paid a 'living wage' for my work. You'd go along with this?

Of course not, and it is a silly example, but really not so silly when you see what some people think is of value. Where do you draw the line? Who decides what is of value and what isn't and how much? They can do what they want (within the law), but if no one wants to pay them for it, they need to deal with it.

Bottom line, if I have a business and can find workers willing to for the job for $10/hour, and I'm willing to pay them $10/hour, then we both agreed it is 'worth it'. We don't need you or anyone else stepping in and deciding they should be paid $5/hour or $15/hour. If we apply it to wages, we need to apply it to everything, and then you have a centralize government micro-managed situation that can't and doesn't work.

Hey, I think you should be charged $50 for every post! It's what I think, so you must comply! Who am I to say? I'm the centralized planner, you must comply!

Not such an attractive idea, is it?

 

[256bits]

I A union is a labor cartel. It can increase wages (price) by reducing supply. As such, you can reduce unemployment or you can increase wages, but you can't do both simultaneously.

Just an additional comment,
Cartels, or unions, guilds, closed shops, Societies, Colleges do attempt to do both. For their members. If you are not a member then for them you do not exist. Memberships is restricted to those having a certain skill, for example tradespeople, education, for example engineers or lawyers, or labour, for example being in actual employment with an enterprise. They exist not to solve problems in society at large, though in some sense tit can be argued that they provide a means to ensure public confidence, but as a means through which their members, and not others, are guaranteed employment for tasks that are deemed possible to be performed only by their members. Fluidity exists for the in and out movement of members; in other cases membership is permanent. Overlap is possible. Exceptions also possible.

Government decrees and laws back up their existence - doctors can practice medicine, lawyers can practice law, actors can act, pilots can fly. Anyone not designated to be a member of the group can be liable for actions performed as being outside their expertise just by simple non-association. Exclusion by law is accepted,

Blue color unions seem to bear some wrath for society's problems regarding labour. White color unions, societies, including professional, much less so. Reasons varied and at times erroneous and irrational.

 

[Vanadium 50]

Cartels, or unions, guilds, closed shops, Societies, Colleges do attempt to do both. For their members.

Right, but only for their members. Not society as a whole. I can't get a job as a barber without the permission of the state. This is good news for today's barbers, but not for me, an aspiring barber.

 

[Vanadium 50]

Well, if the students take such a huge financial loss, that damages their purchasing power.

But that money didn't just vanish in a puff of smoke. It went into the pockets of professors and school administrators - sadly, more of the latter than the former - where it was presumably spent.

If you are arguing "no, no, I'm not talking about the immediate cost of tuition, I'm talking about lifetime earnings", then you are talking about wealth creation. In that case, the complaint is that a civil engineer creates more wealth than an art history major. I'm not sure I see this as a problem, but even if I did, I don't think the solution is, to borrow Russ' example, to subsidize art history majors.

Now, let me go against the grain and say that I support liberal arts majors. (!) I think there is a great deal of value in a classical liberal arts education, because it exposes the student to a wide variety of ideas, and a student spends four years debating and critiquing these ideas. The successful student is well suited to analyze and create arguments, starting with "why you should give me a job". The problem is that the classical liberal education is going the way of the dodo.

1. The time spent studying in college has fallen a factor of ~2 in the last 50 years.
2. Majors like "philosophy" are becoming less popular, as majors in "film studies" and their ilk are becoming more popular.
3. Postmodernism has infected many colleges' programs, and with it claim that an argument's merit depends on who is making it. This allows the lazy rebuttal to an argument "of course he would say that" rather than a detailed attack on the argument itself.
4. The twin notions of college as a "safe space" and "ideas are violence" together mean that students are no longer subject to a wide variety of ideas.

In 1965, a college degree, even in liberal arts, was seen as a valuable commodity. Once you squeeze out everything of value - something that has been happening over the last 50 years - the sheepskin itself is shown to be worthless.

I was once asked how much my brass rat (MIT class ring) cost. My answer was "more than you could possibly imagine". On the other hand, anyone with $600 can buy one from the manufacturer. Which is the correct answer?

 

[gleem]

About half of college grads underemployed=>disaster?

So where did this stat come from. http://www.epi.org/publication/class-of-2016/
says that only 1 in 8 colleges graduates are underemployed with about 1 in 10 unemployed.

As for the value of a degree College grads College grads are about 28% more employable the HS only grads.and make about 70% more than a HS grads. These are averages and a HS grad can make substantially more that a college grad depending on the occupation.

If young workers are confused/clueless then they haven't spent much time in planning for their future. The internet if full of information on occupations, jobs, qualifications prospects etc. Our educational system is dropping the ball. The counseling services in the HS are not doing a very good job in assisting them or providing resources or guidance in this very important aspect of their life. They should have drummed into their heads that companies are only interested in what you can do for them. Any well motivated HS student can do this on his/her own and if done will have a great advantage over those who wait until college to start thinking about what to do.

College is a great experience even if it does't lead to the job of your dreams and it does give you an advantage in the workplace.whether you take it or not.

 

[StatGuy2000]

But that money didn't just vanish in a puff of smoke. It went into the pockets of professors and school administrators - sadly, more of the latter than the former - where it was presumably spent.

If you are arguing "no, no, I'm not talking about the immediate cost of tuition, I'm talking about lifetime earnings", then you are talking about wealth creation. In that case, the complaint is that a civil engineer creates more wealth than an art history major. I'm not sure I see this as a problem, but even if I did, I don't think the solution is, to borrow Russ' example, to subsidize art history majors.

Now, let me go against the grain and say that I support liberal arts majors. (!) I think there is a great deal of value in a classical liberal arts education, because it exposes the student to a wide variety of ideas, and a student spends four years debating and critiquing these ideas. The successful student is well suited to analyze and create arguments, starting with "why you should give me a job". The problem is that the classical liberal education is going the way of the dodo.

1. The time spent studying in college has fallen a factor of ~2 in the last 50 years.
2. Majors like "philosophy" are becoming less popular, as majors in "film studies" and their ilk are becoming more popular.
3. Postmodernism has infected many colleges' programs, and with it claim that an argument's merit depends on who is making it. This allows the lazy rebuttal to an argument "of course he would say that" rather than a detailed attack on the argument itself.
4. The twin notions of college as a "safe space" and "ideas are violence" together mean that students are no longer subject to a wide variety of ideas.

In 1965, a college degree, even in liberal arts, was seen as a valuable commodity. Once you squeeze out everything of value - something that has been happening over the last 50 years - the sheepskin itself is shown to be worthless.

I was once asked how much my brass rat (MIT class ring) cost. My answer was "more than you could possibly imagine". On the other hand, anyone with $600 can buy one from the manufacturer. Which is the correct answer?

@Vanadium 50 , it sounds to me from your above quote (with the bolded highlight) that you seem to be arguing how much better things were "back in the old days", essentially wallowing in nostalgia (something that always irks me). As if a college/university degree, even in liberal arts, was seen as a valuable commodity. But this ignores the crucial fact that fewer people in the past those graduated from college/university in liberal arts and humanities degrees (of which I place film studies in the same category).

So the question I would pose to you is this -- do you regard a college/university degree of any type as worth the investment?

 

[StatGuy2000]

I actually don't believe that you think that at all. I've heard people say this, but back off when it applies directly to them.

The problem is in those "caveats in terms of how it can be implemented". We end up with someone (who? A bureaucracy far removed from the supplier/consumer?) deciding what something is worth to someone else, instead of two people freely deciding between themselves what something is worth (the free market). Just like a recent discussion on the price of a stock - as long as people are trading a stock at around, say $26, then that stock has been determined to be worth $26. Or should we have someone in an office in a Government position determining what all stock prices should be? Same thing, really.

So I decide that my calling in life is to play electric guitar through a large Marshal Stack, outside your home from 1 AM to 6 AM each day. And I need to be paid a 'living wage' for my work. You'd go along with this?

Of course not, and it is a silly example, but really not so silly when you see what some people think is of value. Where do you draw the line? Who decides what is of value and what isn't and how much? They can do what they want (within the law), but if no one wants to pay them for it, they need to deal with it.

Bottom line, if I have a business and can find workers willing to for the job for $10/hour, and I'm willing to pay them $10/hour, then we both agreed it is 'worth it'. We don't need you or anyone else stepping in and deciding they should be paid $5/hour or $15/hour. If we apply it to wages, we need to apply it to everything, and then you have a centralize government micro-managed situation that can't and doesn't work.

Hey, I think you should be charged $50 for every post! It's what I think, so you must comply! Who am I to say? I'm the centralized planner, you must comply!

Not such an attractive idea, is it?

If we follow the logic you are presenting here, you could just as readily argue against the very concept of a minimum wage. After all, according to your logic above, if you have a business and can find workers who are willing to do the job for, say, $2/hour, and you're willing to pay that, then you both "agreed" that it is "worth it".

The fallacy here is the case of information assymetry (a term from economics where among two parties, one has more or better information than the other). In such a scenario, it is not hard to see that you, the business owner, have more information available as to the worth of the business and the worth of labour, something that workers may not have. This creates an imbalance in power and thus reduces the workers' ability to better negotiate wages. A minimum wage thus serves to "level the playing field" so to speak, by placing a floor and thus communicating a bound to which employees know that employers cannot go below. Raising that floor essentially ensures that no worker essentially falls into utter destitution while working.

 

[NTL2009]

If we follow the logic you are presenting here, you could just as readily argue against the very concept of a minimum wage. After all, according to your logic above, if you have a business and can find workers who are willing to do the job for, say, $2/hour, and you're willing to pay that, then you both "agreed" that it is "worth it". ...

It's not a matter of "you could just as readily argue against the very concept of a minimum wage", it's implicit in what I'm saying. If I didn't agree with that, I'd be inconsistent and hypocritical. So no, I do not approve of a minimum wage law.

The fallacy here is the case of information assymetry (a term from economics where among two parties, one has more or better information than the other). In such a scenario, it is not hard to see that you, the business owner, have more information available as to the worth of the business and the worth of labour, something that workers may not have. This creates an imbalance in power and thus reduces the workers' ability to better negotiate wages. A minimum wage thus serves to "level the playing field" so to speak, by placing a floor and thus communicating a bound to which employees know that employers cannot go below. Raising that floor essentially ensures that no worker essentially falls into utter destitution while working.

It is irrelevant. This is much like the recent discussion about the "right" price of a stock. Let's look at a free market exchange that isn't labor:

You and I have no idea what goes into producing a bag of apples (land costs, fertilizer, replanting, new tractors, insurance, etc, etc), but the farmer knows all this. It makes no difference to us, we comparison shop, and if those apples are of value to us at the offer price, we buy them. If not, we don't.

An hour of labor is something a business owner needs to buy. A laborer can offer it. They can agree on the price, just like we do on nearly everything else. It's not knowledge of the costs that are important, it is a matter of what your competitors for that labor are willing to work for. If a business can't make a profit on a job paying more than $20/hour for labor, but he also can't find workers willing to do the work for $20/hour, he just can't make a profit on the job. OTOH, if he can get more than enough workers at $10/hour, you won't get hired asking $15/hour, just because you know his 'break-even' is $20/hour. It doesn't make any difference what anybody "knows". It's simple supply/demand.

A couple points to show this isn't all black & white: A $/hour rate is transparent, I say leave that up to the individuals to settle on. But it isn't easy for a potential employee to know if the business owner is providing a reasonably safe working environment. The business owner (should) know more about the chemicals they use, the equipment, etc. So in the case of less transparent parts of the compensation, I think some form of outside oversight and minimum standards is a good thing. It doesn't necessarily need to be the government, but it could be, if they are the ones who can do it best.

I also don't like any situation where one party has a monopoly type power. But I'm consistent on this as well - that can be a union with strike power, or a company that controls a large part of the local labor market. But just having "inside knowledge" is irrelevant.

 

[StatGuy2000]

It's not a matter of "you could just as readily argue against the very concept of a minimum wage", it's implicit in what I'm saying. If I didn't agree with that, I'd be inconsistent and hypocritical. So no, I do not approve of a minimum wage law.

I will commend you for being consistent on this matter. That being said, I still respectfully agree, based on the empirical evidence, that a minimum wage law is negative, since the preponderance of recent evidence suggests that increasing the minimum wage in the US would have relatively little effect on unemployment, and may have stimulative impacts on the economy, as low-wage workers are more likely to spend their earnings. Nobel Prize winning economist Paul Krugman has suggested as such back in 2013. See the link below to his post in the New York Times:

http://www.nytimes.com/2013/02/18/opinion/krugman-raise-that-wage.html

 

[NTL2009]

I will commend you for being consistent on this matter. That being said, I still respectfully agree, based on the empirical evidence, that a minimum wage law is negative, since the preponderance of recent evidence suggests that increasing the minimum wage in the US would have relatively little effect on unemployment, and may have stimulative impacts on the economy, as low-wage workers are more likely to spend their earnings. Nobel Prize winning economist Paul Krugman has suggested as such back in 2013. See the link below to his post in the New York Times:

http://www.nytimes.com/2013/02/18/opinion/krugman-raise-that-wage.html

I don't feel that Krugman saying we should have/increase a minimum wage because some studies have shown "little, if any negative effect" on unemployment is very convincing (or to spin those words the other way - some studies did show negative effect, and none showed a positive effect, or Krugman would have mentioned it!).

I think cause/effect studies on matters like this are exceedingly difficult, everything is in motion all the time. An analogy that I make is, that I know if I have sub-standard insulation in my house here in the Midwest, that my energy usage will be decreased with proper insulation. But I might put in insulation and have my energy bills increase because of annual temperature swings, more/less people in the house, lifestyle changes that had me running the HVAC more, etc. These things are difficult to control in any study across a wide group. But we can understand how insulation helps, so we do it at the right price, even though the results might not be exactly what we expect all the time. Since Krugman was awarded a Nobel prize, I assume he did exemplary work in adjusting for these factors. But they still seem like weak effects?

But regardless, I go back to basics, just like our knowledge of insulation. In our everyday dealings, we make free-market decisions on so many things. I think price fixing is morally wrong, and overall just bad for buyers/sellers. As I said earlier (and you did not address it), how can some distant bureaucrat determine what something is worth to the buyer/seller, better than the buyer/seller? I don't want someone else dictating what I pay for things or what I can sell them for. I see that as a violation of my freedom. Again, not totally black&white, that doesn't apply if I have undue influence (like if I can use monopoly powers, or strike threat power).

If someone is willing to do a job for $10/hour, and a business owner is willing to pay $10/hour, I don't think anyone should stop them. As in my earlier example, if the business can't get the workers it needs/want for $10, they need to offer more, or decide not to hire anyone. If workers can't find work for $20, they better think about the $10 offer. It's a transaction like we all make everyday, why should this transaction be any different?

 

[russ_watters]

The fallacy here is the case of information assymetry (a term from economics where among two parties, one has more or better information than the other). In such a scenario, it is not hard to see that you, the business owner, have more information available as to the worth of the business and the worth of labour, something that workers may not have. This creates an imbalance in power and thus reduces the workers' ability to better negotiate wages.

You are accidentally arguing that workers' time is worthless and insulting the workers -- I don't think you really believe this. The value of the workers' time is not just how much production the company gets out of the worker, it is how much *the worker* values his own time! You're totally ignoring the human capital part of the equation. The owner of a business may know better than I what production value I bring to the company, but I will always know better than him what value I place on my time.

A minimum wage thus serves to "level the playing field" so to speak, by placing a floor and thus communicating a bound to which employees know that employers cannot go below. Raising that floor essentially ensures that no worker essentially falls into utter destitution while working.

That is a fairly accurate description of the historical purpose of the minimum wage, though it is more about exploitation than a "destitute" worker (though there is a commonality there). Please note that changing the purpose to be a "living wage" and doubling it is a very big deal and not something to be taken lightly or over-simplified. We need to do better than just handwaving and saying it will be ok.

The number of people who actually make minimum wage is pretty small (3.3 million or 2.6% of workers) and half are age 16-24 -- which also means a minimum wage increase is very poorly focused if the goal is to reduce poverty. And frankly, if fewer teenagers have summer jobs because of a higher minimum wage, not many people will really care. So quite obviously, small increases can be made with little effect, but the more you raise it, the more workers/employers will be affected and the more disruptive it will be.
http://www.pewresearch.org/fact-tank/2014/09/08/who-makes-minimum-wage/

Here's a study that says raising the federal minimum wage to $15 would cost 6.6 million jobs (and to $12, 3.8 million jobs); twice as many as there are people making minimum wage!
https://www.manhattan-institute.org/pdf/ib_36.pdf

That being said, I still respectfully agree, based on the empirical evidence, that a minimum wage law is negative, since the preponderance of recent evidence suggests that increasing the minimum wage in the US would have relatively little effect on unemployment, and may have stimulative impacts on the economy, as low-wage workers are more likely to spend their earnings. Nobel Prize winning economist Paul Krugman has suggested as such back in 2013. See the link below to his post in the New York Times:

http://www.nytimes.com/2013/02/18/opinion/krugman-raise-that-wage.html

Would you agree that the large the increase in minimum wage, the larger the job losses? If you look at the numbers in that article, you will see it is arguing against your point, not for it:

One major proposal, however, wouldn’t involve budget outlays: the president’s call for a rise in the minimum wage from $7.25 an hour to $9, with subsequent increases in line with inflation. The question we need to ask is: Would this be good policy? And the answer, perhaps surprisingly, is a clear yes.

Why “surprisingly”? Well, Economics 101 tells us to be very cautious about attempts to legislate market outcomes. Every textbook — mine included — lays out the unintended consequences that flow from policies like rent controls or agricultural price supports. And even most liberal economists would, I suspect, agree that setting a minimum wage of, say, $20 an hour would create a lot of problems.

Krugman was supporting a 25% increase when we're talking about a 200% increase. And if "even most liberal economists" would be against a $20 minimum wage, $15 is closer to $20 than $9...

Here's a prominent economist saying $12 would be fine, $15 probably counterproductive:
https://www.nytimes.com/2015/10/11/opinion/sunday/the-minimum-wage-how-much-is-too-much.html

 

[UsableThought]

The fallacy here is the case of information assymetry (a term from economics where among two parties, one has more or better information than the other). In such a scenario, it is not hard to see that you, the business owner, have more information available as to the worth of the business and the worth of labour, something that workers may not have. This creates an imbalance in power and thus reduces the workers' ability to better negotiate wages.

A minimum wage thus serves to "level the playing field" so to speak, by placing a floor and thus communicating a bound to which employees know that employers cannot go below. Raising that floor essentially ensures that no worker essentially falls into utter destitution while working.

I agree that "information asymmetry" is a useful concept for examining the harmful social consequences that can arise out of corporations (a) having more information & thus in effect more power than individuals, and (b) without this imbalance being properly recognized in our laws. A dated but still useful book that discusses this at some length is The Asymmetric Society, by the sociologist James Coleman. (I like this book so much that when I found myself wanting a soft copy of it, I bought a second copy, took the binding off, and ran the entire book through my double-sided OCR scanner.) However Coleman focuses not on labor disputes as such, but on the changing nature of individual identity and freedom in the era of the corporation; also on how increasingly long chains of production have shaped the distribution of wealth differently for different industries. With this as background, I'm skeptical that information asymmetry is really a significant factor when it comes to wage negotiations or to proponents of a minimum wage believing that it will "level the playing field."

One consideration is that many employers who object to raising the minimum wage too high aren't giant corporations but small businesses and their industry lobbying groups; their whole argument is probably quite simple, i.e. rising costs lead to rising prices and so on. Not much to be concealed from the worker here.

Even with large corporations it still doesn't seem that we have something involved that could be called an information asymmetry. Imagine an individual low-wage or middle-wage worker who has a shrewd, possibly inside knowledge of the value of his or her labor to the corporation; would this really help negotiate a higher wage? I doubt it; because the asymmetry here isn't information, but relative need: where an individual acting on their own may badly need a job as soon as possible, the company doesn't need that particular individual (nor any other particular individual) to fill low-level or mid-level work roles. Hence unions. Certainly there is a large body of studies, analyses, and anecdotal reports that assert information asymmetry is real; but generally this comes up not in discussion of company-labor relations but company-consumer relations - at least in my experience.

Most importantly, it seems to me that the problem with wages being too low for low-wage workers is a complex one with many factors - e.g. changes in the nature of low-wage work; the rise of global capital; high costs of living for housing, health care, and food; and so on. There are some heart-breaking stories out there though I don't know what the stats are; but this complexity seems to argue against casting the problem as merely the result of adversarial labor relations.

 

[NTL2009]

...
Krugman was supporting a 25% increase when we're talking about a 200% increase. And if "even most liberal economists" would be against a $20 minimum wage, $15 is closer to $20 than $9...

Here's a prominent economist saying $12 would be fine, $15 probably counterproductive:
https://www.nytimes.com/2015/10/11/opinion/sunday/the-minimum-wage-how-much-is-too-much.html

And for me, this is the crux of the problem. Who gets to say what the minimum wage should be? One economist will argue for $12, another $15, and another $20. Why not $100 and everyone can be upper middle class? Oh, shouldn't we adjust for local COL? Or maybe the job pool and opportunities in the area? etc, etc, etc. And maybe if a businessperson gets in control of this, it is dropped to $3, because they think that is the "right" number to compete with offshore labor, and stimulate the economy and create jobs?

We should not try to use a "one size fits all" approach, and it is price fixing. I suspect many that propose fixing the price of wages for businesses would cry out at attempts to price fix the things they buy.

While the studies that seem to say we would overall benefit from a higher minimum wage seem rather weak (and likely biased), I still object on the grounds that they are using an "the ends justify the means" approach. There are often unintended/unforeseen consequences when this is done. Just let the free-market work this out. It does all the things I listed above, in real time, with no oversight.

I'm waiting for @StatGuy2000 to reply to these arguments. So far, it seems to me he is diverting the topic each time, and/or using "appeal to authority" (Krugman says...).

 

[russ_watters]

And for me, this is the crux of the problem. Who gets to say what the minimum wage should be? One economist will argue for $12, another $15, and another $20. Why not $100 and everyone can be upper middle class? Oh, shouldn't we adjust for local COL? Or maybe the job pool and opportunities in the area? etc, etc, etc. And maybe if a businessperson gets in control of this, it is dropped to $3, because they think that is the "right" number to compete with offshore labor, and stimulate the economy and create jobs?

There are two separate questions/issues here:
The first is to decide what the goal is for the policy and the second is to design the policy to meet the goal. You're focused on step 1(fine), but when a liberal economist acknowledges that $15 an hour is probably un or counterproductive, it's within the context of his goal of maximizing poverty reduction.

 

[gleem]

Maybe we should be looking at actual numbers.

The value of the minimum wage i.e., the buying power has been decreasing since it reached a maximum in 1968 and reached a low in 1990. In terms of 2014 dollars the current minimum wage of $7.25 is worth $7.80 vis-a vis the 1968 dollar which was worth $10.75. To bring the current MW up to the buying power of 1968 would require a 38% increase or $10.00.

Looking at the history of the increase in the MW we see that the buying power doubled in about 30 years from 1938 to 1968. In the 80"s it remained constant slightly less than the maximum and in the 90's is decreased markedly. I believe the rising value of the MW was meant also to account for the rising standard of living that we experienced during this time. If that is true then the 38% increase is inadequate. Since 1968 the standard of living has increased by a factor of 8.6 based on the Social Security wage index which supposedly shows how the average national wage increases of time.

So if the MW was $1.60 in 1968 then based on this index to keep pace with the average national wage increase a MW of $ 13.75 would be reasonable.

Looking at the effect of the MW on poverty level. In 1968 the poverty level for a family of 3 (single working mom/2 kids) was $2600. At the then MW of $1.60 she made $4160 with a FT job. In 2014 the poverty level for the same was $19790 but she took home only $15070. So what in 1968 would have been considered a living wage the same cannot be said for 2014. Thus it seems more people have been driven into poverty since 1968.. To normalize a new living wage MW to that in 1968 the MW should be $15.22.

Now let's debate these numbers.

 

[NTL2009]

Maybe we should be looking at actual numbers.

The value of the minimum wage i.e., the buying power has been decreasing since it reached a maximum in 1968 and reached a low in 1990. ...

Now let's debate these numbers.

My first comment is that there is no justification for having MW keep up with inflation, if there wasn't justification for the original number. I think that's still being debated. To be clear, I do want safety nets for people who need them, go ahead and tax me for it, I want that. I'm questioning whether a MW is even a reasonable/desirable way to go about it.

Second - those are numbers. They need context. Here's an article from 2011, taken from census records:

http://www.heritage.org/poverty-and...nditioning-cable-tv-and-xbox-what-poverty-the
bold mine...

... in 2005, the average household defined as poor by the government lived in a house or apartment equipped with air conditioning and cable TV. The family had a car (a third of the poor have two or more cars). For entertainment, the household had two color televisions, a DVD player, and a VCR. If there were children in the home (especially boys), the family had a game system, such as an Xbox or PlayStation. In the kitchen, the household had a microwave, refrigerator, and an oven and stove. Other household conveniences included a clothes washer, clothes dryer, ceiling fans, a cordless phone, and a coffee maker.

The home of the average poor family was in good repair and not overcrowded. In fact, the typical poor American had more living space than the average European. (Note: that’s average European, not poor European.) The poor family was able to obtain medical care when needed. When asked, most poor families stated they had had sufficient funds during the past year to meet all essential needs.

By its own report, the family was not hungry. The average intake of protein, vitamins, and minerals by poor children is indistinguishable from children in the upper middle class, and, in most cases, is well above recommended norms. Poor boys today at ages 18 and 19 are actually taller and heavier than middle-class boys of similar age in the late 1950s, and are a full one inch taller and 10 pounds heavier than American soldiers who fought in World War II. The major dietary problem facing poor Americans is eating too much, not too little; the majority of poor adults, like most Americans, are overweight.

Those are averages, so what concerns me is there are probably a portion of those who really need more help, and may not be getting it if we are spreading things too thin?

 

[UsableThought]

Second - those are numbers. They need context. Here's an article from 2011, taken from census records:

That's not an "article"; that's the executive summary of the 2011 Heritage Foundation report on poverty, which according to Wikipedia's article on Poverty in the United States drew heavy criticism upon its release; not a surprise given that Heritage is not neutral in any sense, but right-wing. Here are footnotes from that Wikipedia article, listing several published criticisms of the report:

105. Jonathan Rothwell (November 8, 2011). Why Heritage Is Wrong About Poverty in America. The New Republic Retrieved November 18, 2014.​

106. Melissa Boteach and Donna Cooper (August 5, 2011). What You Need When You're Poor; Heritage Foundation Hasn't a Clue. Center For American Progress. Retrieved November 18, 2014​

107. Courtland Milloy (September 13, 2011). Study dismisses poverty, but try telling that to the poor. The Washington Post. Retrieved November 18, 2014.​

108. Katrina vanden Heuvel (July 28, 2011). Colbert Challenges the Poverty Deniers. The Nation Retrieved November 18, 2014.​

A short read of any these sources will show that they accuse Heritage of data-twisting and unsupported ideological assumptions. Of course the critics will have biases of their own. Reading through all of this to see who is arguing what would take a lot of time for everyone in this thread; I would suggest finding a more reliably neutral source of information if you can.

 

[NTL2009]

That's not an "article"; that's the executive summary of the 2011 Heritage Foundation report on poverty, which according to Wikipedia's article on Poverty in the United States drew heavy criticism upon its release; not a surprise given that Heritage is not neutral in any sense, but right-wing. Here are footnotes from that Wikipedia article, listing several published criticisms of the report:

105. Jonathan Rothwell (November 8, 2011). Why Heritage Is Wrong About Poverty in America. The New Republic Retrieved November 18, 2014.​

106. Melissa Boteach and Donna Cooper (August 5, 2011). What You Need When You're Poor; Heritage Foundation Hasn't a Clue. Center For American Progress. Retrieved November 18, 2014​

107. Courtland Milloy (September 13, 2011). Study dismisses poverty, but try telling that to the poor. The Washington Post. Retrieved November 18, 2014.​

108. Katrina vanden Heuvel (July 28, 2011). Colbert Challenges the Poverty Deniers. The Nation Retrieved November 18, 2014.​

Sure, Heritage is a conservative "Think Tank", and all the criticisms you listed are from liberal/'progressive' sources. That's OK. I won't have time now and probably for the next few days, but what I would like to do is go to the source documents (Census) and see if the Heritage reporting was off base, or did others just not like the message?

 

[UsableThought]

what I would like to do is go to the source documents (Census) and see if the Heritage reporting was off base, or did others just not like the message?

Well, if you can; that's brave. Reports of this sort tend to be clever at manipulating figures, so you can't just check whether such-and-such a number is accurately drawn from the Census. If the Census were that easy to interpret, we wouldn't need interpreters; which means it is not that easy to interpret. If I were to do such a reading I would look at more than just "facts" but how they are presented; same for reading the critical accounts. But I'd be handicapped by not having the education for it.

Beyond that, in terms of good sources to cite for evidence in PF threads, I wouldn't recommend Heritage. I spent a half-hour or so doing some brief checking up, and they sound like they follow the agenda of their ultra right-wing funders, rather than anything resembling independent thought.

First and most discouraging: I went to SourceWatch, which is considered a liberal or progressive watchdog nonprofit. Their page on Heritage notes that Heritage got initial funding from Joseph Coors among others, and has gotten funding in recent years from the Koch brothers as well. Among various controversies they list is one that jumps out to me as a red flag: Heritage has been accused of denying climate change on behalf of the fossil fuel industry. This accusation seems likely to be true, I'd say, given that Heritage's page on environment shows a long list of "commentary" pieces in favor of "business as usual" fossil fuel consumption, and vehemently opposing both EPA policy and climate change policies such as the Paris Accords. Here are a couple of "Key Takeways" that lead off a piece titled "Good Riddance to the Paris Accords," by Nicholas Loris:

The Paris Protocol was a losing proposition for American taxpayers and households and businesses that rely on affordable, reliable energy.

Energy poverty is a clear, immediate concern, and the role that fossil fuels have played in making peoples’ lives easier, healthier and cleaner is undeniable.​

In the body of the piece, Loris makes clear he is a climate change denier, of the "clever" kind:

Sure, man-made emissions are affecting the climate. But it doesn’t say anything about how much man-made emissions are affecting the planet, the rate at which the climate is changing.​

Granted this is an opinion piece and not something claiming to be a "report." But it says something about Heritage that they are willing to have this on their web site. My guess is they are probably willing to purvey misleading views on other issues as well, e.g. poverty.

I also went to a second watchdog outfit, Media Bias/Fact Check, who I hadn't heard of them before; here's their "about" page. They claim to track both right and left wing bias. On their page for Heritage, they list the foundation as belong to the "extreme right"; they describe that category as follows:

These media sources are moderately to strongly biased toward conservative causes through story selection and/or political affiliation. They may utilize strong loaded words (wording that attempts to influence an audience by using appeal to emotion or stereotypes), publish misleading reports and omit reporting of information that may damage conservative causes. Some sources in this category may be untrustworthy.​

By comparison they list the Wall Street Journal as "Right-Center" as "Left-Center," which seems pretty accurate. They list the Christian Science Monitor in the middle as "Least Biased."

Another on the "Least Biased" list is The Financial Times; and guess what, the FT writes about U.S. inequality as a "theme"! For those who have a subscription, the articles listed under this theme might make interesting reading relative to this thread: https://www.ft.com/topics/themes/US_Inequality Or if that is too dear, here is the full list of publications and sources claimed to be "Least Biased" - might be a good place to look for other relatively unbiased sources: https://mediabiasfactcheck.com/center/

 

[UsableThought]

One last thing before I sign off for the night: I took some time to go through that poverty report, and I would suggest treating it with extreme caution.

The executive summary is not worth even bothering with, as it is just a rant; download the full PDF and read through that. Yes, they do quote family spending figures drawn from the Census and elsewhere; but they use these figures only to concoct an argument that aside from rare emergencies such as homelessness, the poor have it easy:

While substantial hardship does occur in U.S. society, it is limited in scope. At any given time, only a small portion of the more than 35 million “poor” Americans will experience the sort of dramatic deprivation presented in the above newscasts. Moreover, when dramatic hardship does occur, it is generally temporary or caused by multiple behavioral problems in the home . . .

Poor families clearly struggle to make ends meet, but in most cases, they are struggling to pay for air conditioning and cable TV while putting food on the table. The current recession has increased the number of Americans who are poor, but it does not appear to have greatly reduced the living standards of the average poor family.
​

Thus Heritage claims, over and over, that with all the amenities reported by poor families via the Census, poverty must be a fairly comfortable existence; even, they seem to imply, a scam. However as the Center for American Progress points out in their critique of the report, Heritage is cherry-picking the data so as to misrepresent not just how but why the poor spend their money; and what it is like to be poor even when not experiencing an acute emergency such as homelessness:

The report relies on old data from before the Great Recession of 2007-2009 to pitch the argument that the poor are doing just fine because they have it all—refrigerators, microwave ovens, window unit air conditioners, televisions, and cell phones.​

These arguments are mean and misleading on several accounts. First, the electronic devices that Heritage cites are everyday necessities today. Who has iceboxes anymore? Who doesn’t need a cell phone to find a job or keep one? Fortunately, these appliances are all significantly cheaper these days, but not so the real everyday basics such as quality child care and out-of-pocket medical costs, both of which have risen much faster than inflation, squeezing the budgets of the poor and middle-class alike . . .

Indeed, the rising cost of paying for electricity for the very appliances that Heritage thinks are indicators of luxury are eating a bigger and bigger hole into the pockets of the poor. Today struggling families are spending at least 15 percent of their household budget to pay their electric bills, and the poorest of the poor shell out an even higher percentage of their income for this basic expense. Somehow Heritage manages to completely ignore the fact in America, the U.S. Department of Agriculture found in 2008 that half (50.3 percent) of poor households with children said there were days when they didn’t know how or if they could pay for their next meal.​

Readers should ask themselves, what would have to be true for the Heritage Report to be accurate - i.e. for the poor to secretly be well-off, with assertions to the contrary being merely part of an enormous hoax invented by liberal politicians. Does such a scenario seem likely? All it would take to dispel this report's conclusions is a visit to a real-life poor neighborhood; or a visit to a school in a poor part of a major city, followed by a visit to a school in any nearby suburb. Rational debate in this country usually centers on something other than a flat denial that poverty is even a problem (e.g. whether and/or why welfare policies don't work, etc.).

Finally, if you read the report through to its end, you will find that its goal is political, not informational; it does not aim to be a neutral document; it was intended among other things to argue against a proposed redefinition of poverty by the Obama administration. It is partisan propaganda, not a "study" or "report." It could be possible that the U.S. definition of poverty is overly inclusive; but this paper is not making a genuine argument in that regard.

 

[gleem]

[QU117795OTE="NTL2009, post: 5809743, member: 599596"]My first comment is that there is no justification for having MW keep up with inflation,[/QUOTE]

Then there is no justification for any type of remuneration to keep up with inflation.

I'm questioning whether a MW is even a reasonable/desirable way to go about it.

MW has been accepted for 79 years.

http://www.heritage.org/poverty-and...nditioning-cable-tv-and-xbox-what-poverty-the Really, you believe what you are lead to conclude? I would really like to see their data/analysis. In 2005 the average wage was $35449 per person. The threshold for poverty for a family of four was $19971.

In 2014 typical families having two wage earners have an average AGI (not total) income of about $117,795 for those filing jointly and for those filing a separate tax return had an AGI of $64,819 ( therefore $129,638 household). Adjusting for the increases in wages between 2014 and 2005 which was 1.26 the three numbers above are $93,648 (household filing jointly), $51,531 (filing separately), $103,062 (household filing separately). These numbers are only for families and do not include singles or heads of households. The median household AGI in 2014 was $35,000 while the average was $73,298. Adjusting to 2005 the median should have been about $28,000 and the average $58,600.. When the median is half the average there is a problem.

 

[NTL2009]

OK, I get it, you don't like what Heritage presented! Like I said, I hope to review it more in depth, but it will be a few days before I get to that. Maybe their take on it is garbage, I hope to find out.

Now, I'm not trying to back-peddle out of that, but it really was just a little side-diversion (does MW really need to keep up with inflation?), from the overall topic of should we have MW at all. And I think that questions still stands, regardless of the inflation adjustment issue or whether the article I linked is garbage or not.

MW has been accepted for 79 years.

That doesn't mean it's right. You don't want examples, do you (no, you really don't!)?

 

[NTL2009]

... When the median is half the average there is a problem.

OK, I really do need to be moving on for a while, and maybe you were trying to say something else, but...

As I said before, I do believe in safety nets. But a safety net, IMO, has nothing to do with 'keeping up with the Joneses". It means, to me, to provide a reasonable level of comfort and safety for people who cannot manage that for themselves.

edit/add: Or, if that wasn't in reference to MW, but just to the shift in the spread of income, well, just like I don't think it is up to anyone else to determine the 'right' price for anything, I also don't think it is up to us to determine the 'right' spread of income. But there I go with that 'consistent' thing again.

I've witnessed a huge spread in capability and motivation across people at the high school and college level. Compare the top 5% in a graduating class to the bottom 5% of those who started (some/many of that lower 5% never made it to HS graduation, some are incarcerated). When you observe that, how can you be surprised in the difference in outcomes? Or even compare the top 5% to the 'average' or 'median' student. Big difference!

 

[olivermsun]

does MW really need to keep up with inflation?

Presuming that at some point in time it was determined that x is a minimum acceptable wage, then I think you'd have to explain why, after falling to keep pace with inflation, it wouldn't fall below minimum.

the overall topic of should we have MW at all. And I think that questions still stands, regardless of the inflation adjustment issue or whether the article I linked is garbage or not.

That doesn't mean it's right. You don't want examples, do you (no, you really don't!)?

Actually, I think examples would be helpful to the discussion.

 

[NTL2009]

OK, last call!

Presuming that at some point in time it was determined that x is a minimum acceptable wage, then I think you'd have to explain why, after falling to keep pace with inflation, it wouldn't fall below minimum. ...

But I am not "Presuming that ... x is a minimum acceptable wage". I'm saying that is for a free market to decide (not a free-market w/o some controls and regulations, not the 'wild-west', which is a common rebuttal).

MW has been accepted for 79 years.
That doesn't mean it's right. You don't want examples, do you (no, you really don't!)?

Actually, I think examples would be helpful to the discussion.

Oh boy. Slavery. And since this is a physics forum: belief that the Earth is flat and is the center of the universe. Spontaneous generation (two millennia > 79 years).

Is that enough? It's not a comparison, it's a logic test. Something existing for a long time does not make it right. Other things are needed to make it right.

 

[jack action]

Do people not see how dire this situation is? Hundreds of billions are burned without any return. Sure, plenty of people profit. But with such a big portion that doesn't, it's scary. That's 4 extra years that these grads could have spent contributing to the workforce. That's also billions of dollars wasted by government investment.

It also shows that a large amount of people are easily willing to gamble on 50/50 chances, which might be more telling than the dollar amount lost. Is this a bubble waiting to burst?

What would resolve this situation? I'm thinking that borderline students(those that are not already great academically) should probably just wait out the storm and go to college at the right time when a profit appears to be highly probable; certainly better than just a coin flip, actually, they should go when it's much better. Well, we wouldn't even know if this is a viable solution since people's tendency to overreach mean that not enough would listen. The advice is probably already out there.

Just to set back this thread to the original - and very interesting - subject, let me add my 2¢.

People nowadays have this very weird vision that (higher) education must be linked to a job. It shouldn't be. It's about developing skills, increasing your knowledge and shaping your critical thinking. Yes, those should help you find a job, but that should not be the goal. Sadly, it has become the sole objective with this era of mandatory education for everyone. An investment that must pay back in short term.

Also education in itself is a business that employs people who give a service. Thus, on an economic viewpoint, there is no waste. If people stop «buying» education, they will only buy something else. So I don't see a bubble bursting. Anyway, nothing society wouldn't recover economically speaking.

How come if I take guitar, dance or italian lessons, nobody accuses me of wasting my time and money because I don't have the intention of make a living out of it? (Although it doesn't mean it won't help me in my work either.) How come if someone spends more time and money studying whatever, it is suddenly considered a waste of resources? How much knowledge and education is too much knowledge and education?

Although I must agree that if someone puts himself in huge debt for it or the government finances blindly everyone, that becomes a problem.

That kind of thinking - studying in hope of a better pay instead of the pleasure of learning something new - defies the purpose of getting an education in the first place. It becomes only a race to get a diploma to fill an empty space on a CV. You must appreciate what you learn, otherwise you will never see what you can do with it. That is why we have so many professionals today that don't deserve their title; Worrying more about how much they make rather than producing a quality good or service.

I remember the countless people, when I was at university, that were telling me that I didn't need to know something because a computer or a «less skilled» worker would do it for me; Or when I was told that I could blindly copy someone else's work to pass a course. But I want to learn this stuff! I like it! Why would I try to not learn it? I guess I was odd that way. I remember than in engineering, we had to take some courses from a list of subjects out of the engineering curriculum. There was a chemistry course that was in the list by mistake, a class meant for people in the «non-science» studies, which was some entry level stuff for engineering students. Most engineering students took that course because it was an easy pass, maybe even an easy «A» to boost up their GPA. I refused to take that course because, from my point of view, I wasn't learning anything and I would've wasted my time and money taking it. I better wanted to learn something new that was more interesting (I finally chose an American history class).

What would resolve this situation? People will have to set their values to something else than always making more money. People will have to learn to share their knowledge with one another rather than selling it to the highest bidder, sometimes at an inflated value. Do parents charge their kids for teaching them to speak or potty-trained? That would be silly. So why sharing higher knowledge becomes a business?

 

[olivermsun]

OK, last call!
But I am not "Presuming that ... x is a minimum acceptable wage". I'm saying that is for a free market to decide (not a free-market w/o some controls and regulations, not the 'wild-west', which is a common rebuttal).

Given that a certain minimum wage was originally agreed upon as a safety net, it seems logical that such a wage would need to keep up with inflation to continue to fulfill whatever its purpose as a safety net. Contrary to your earlier argument, the safety net would in fact need to "keep up with the Joneses," if by "Joneses" what you mean is the dollar amount corresponding to the same level at which the safety net needed to kick in.

Oh boy. Slavery. And since this is a physics forum: belief that the Earth is flat and is the center of the universe. Spontaneous generation (two millennia > 79 years).

These are really strange examples. Are you saying that a minimum wage is like slavery? Or that the minimum curvature of the Earth is flat? Actually, I have no idea what argument you're trying to make with these examples.

Is that enough? It's not a comparison, it's a logic test. Something existing for a long time does not make it right. Other things are needed to make it right.

The logical argument here is that, assuming that a minimum wage was agreed upon earlier (it was) and it worked before, at that level, without wreaking havoc upon the economy (seemingly it did), then it would need to be adjusted according to inflation for the same situation to continue...

 

[olivermsun]

Just to set back this thread to the original - and very interesting - subject, let me add my 2¢.

People nowadays have this very weird vision that (higher) education must be linked to a job. It shouldn't be. It's about developing skills, increasing your knowledge and shaping your critical thinking. Yes, those should help you find a job, but that should not be the goal. Sadly, it has become the sole objective with this era of mandatory education for everyone. An investment that must pay back in short term.

...

How come if I take guitar, dance or italian lessons, nobody accuses me of wasting my time and money because I don't have the intention of make a living out of it? (Although it doesn't mean it won't help me in my work either.) How come if someone spends more time and money studying whatever, it is suddenly considered a waste of resources? How much knowledge and education is too much knowledge and education?

An education is a wonderful thing, and one that pays in the long term instead of being focused on near-term profit is a true luxury. However, between now and Nirvana, one still has to eat. If you can afford guitar lessons, then more power to you, but if you starve as a result then it might be fair to criticize you for wasting your time and money. Finding the right balance is a personal decision, but it's also a choice that society can influence. you want people to think deep thoughts and solve hard problems (or just live happy, fulfilling lives) you might want to reduce the chance that they starve halfway through a really good thought...

 

[jack action]

but if you starve as a result

you might want to reduce the chance that they starve halfway through a really good thought...

Not being able to buy a Porsche is not starving, though.

 

[olivermsun]

Not being able to buy a Porsche is not starving, though.

That's starvation of the soul!