A couple of months ago, Fox News host Neil Cavuto went on a rant against fast-food workers striking for higher wages, explaining that when he was but a wee pup of 16, he went to work at an Arthur Treacher's restaurant for a mere $2 an hour, setting him on the road to becoming the vigorous and well-remunerated cheerleader for capitalism he is today. For all his economic acumen, Cavuto seemed to forget that there's a thing called "inflation," and the two bucks he earned in 1974 would today be worth $9.47. That's less than the striking fast-food workers are asking for (they want $15 an hour), but significantly more than the $7.25 today's minimum-wage workers make. Not to mention the fact that so many of them are not teenagers but adults trying to survive and support families. (According to the Economic Policy Institute, 88 percent of those who would benefit from an increase in the minimum wage are over the age of 20; that and much more data on the topic can be found here.)
Yesterday, the California legislature passed a bill raising the state's minimum wage to $10 an hour, which would make it the highest in the nation. Governor Jerry Brown intends to sign it. Of course, business interests howled that paying people such a handsome wage would destroy the state's economy, which is what they always say whenever the minimum wage is raised, despite the fact that it never seems to happen. The California increase is going to be phased in over two and a half years; the minimum in the state will rise from its current $8 to $9 next summer, then to $10 at the beginning of 2016. Since this issue seems to be coming back to the fore as it does periodically—the mayor of Washington, DC just vetoed a living wage bill that was aimed primarily at Walmart—I thought it might be worthwhile to compare the value of the minimum wage today to what it has been in the past:
It is said that the late economist Milton Friedman was once asked how much money it would take for him to change his position that humans are primarily motivated by greed, which was at the core of Friedman’s free-market fundamentalism. Friedman wisely dodged the question. He understood that if he said he could not be bought, it would undercut his economic theory. In order to avoid undercutting his theory, he would have had to admit that he, like everyone else, had his price.
Yesterday, Apple released its new iPhones, one a slightly updated version of the iPhone 5 with a fingerprint reader, and one a cheaper version ("unapologetically plastic," in the term the PR wizards came up with) meant to attract new customers in developing countries. In case you didn't catch any of the eight zillion articles written about the release, minds remained rather unblown. Apple may still be an unstoppable engine of profit, but there are only so many times you can tweak a product and convince people it's totally revolutionary (not that that will stop Apple cultists from standing in line to get the latest version). In any case, this is as good a time as any to step back and look at the remarkable spread of mobile phones across the Earth. There are few other technologies that have found their way into so many hands in so short a time.
Welcome home. You have several immense challenges in the coming days and weeks, including of course marshaling support for the Syria attack, dealing with the next artificial budget crisis contrived by the Republicans, and continuing to move forward with implementation of the Affordable Care Act against fierce partisan opposition.
Jesse Bonds graduated from high school in 2002 in Clinton, Arkansas, a town of 2,600 people on the southern edge of the Ozarks. He tried college for half a semester, but found the computer-programming courses he enrolled in too advanced. After that, he worked for the state’s power utility for about six months building substations, but his crew was laid off once the work was complete. He was looking for a new career when he was hired as an electrician at a new hospital being built in 2003, and when the work was done he realized he wanted to continue working as an electrician. He decided to enroll in ITT Technical Institute to get a two-year degree in electronics engineering. “I saw all the commercials and stuff,” he says. “And I got into the admissions office and they’re like, ‘Oh you scored the highest of anybody that’s come through here on this test in the last couple of years. You’ll be perfect for this program.’” In retrospect, Bonds realizes they were doing a hard sell on the program, but at the time he decided it was a chance to go back to college and make it on his own. “That turned out to be a disaster.”
At the Institute for Policy Studies, we’ve tallied the top 25 highest-paid CEOs for each of the past 20 years.
That’s a total of 500 richly rewarded executives—each one of whom made more in a week than average workers could make in a year. We’re told CEOs deserve these massive rewards because they add exceptional “value” to their businesses. They’re getting “paid for performance.”
Since the Great Recession began in 2007, no one’s had more trouble finding work than low-income Asian, black, and Hispanic male teenagers. That’s the main idea in two recent articles in TheWall Street Journal (available here and here) that rely on research from Andrew Sum, a professor who produces a remarkable number of papers for Northeastern University’s Center for Labor Market Studies (CLMS).
Late last month, the Associated Pressran a report about economic insecurity that managed to gain some traction in certain parts of the political internet, and since then, again and again in certain relevant debates. The statistical bomb dropped in the first sentence of the report really says it all:
Four out of 5 U.S. adults struggle with joblessness, near poverty or reliance on welfare for at least parts of their lives, a sign of deteriorating economic security and an elusive American dream.
Over at the Weekly Standard blog, Jeryl Bier raised an alarm on Friday about the rise of food stamp (aka SNAP) fraud. The howler in the piece is that although the headline says food stamp fraud is up 30 percent, you soon realize that the fraud rate only rose from 1.0 percent to 1.3 percent. Bier rightly deserves a ding for a ridiculously misleading use of statistics.
Lord help us, is the balanced budget amendment—one of the dumbest policy ideas the right ever cooked up (and that's saying something)—actually back? Only time will tell, but today on the New York Times op-ed page today, two prominent conservative economists, Glenn Hubbard and Tim Kane, try to revive it with an argument so unconvincing that I worry it's going to be embraced by every Republican in sight. If you think the sequester was a terrific idea and worked out great for everyone, have they got a deal for you.
While the state of Michigan appears to have no interest in “bailing out” Detroit, it is giving a substantial boost to the Red Wings, the city’s professional hockey team. Less than a week after the city filed for the largest municipal bankruptcy in history, a press conference revealed a deal that will transform 45 blocks of the city with a new hockey arena (or “events center,” as the jargon goes) and a mixed-use entertainment district meant to link two of the city’s healthiest neighborhoods—downtown and Midtown.
Speaking in Phoenix on Tuesday, President Obama associated himself with a bipartisan proposal to slowly get Fannie Mae and Freddie Mac out of the business of backing mortgages. According to the plan, formulated in the Senate, a new federal agency called the Federal Mortgage Insurance Corporation would backstop banks and other private investors against catastrophic mortgage losses, but only after they had run though their own substantial capital first.