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Thread: Increase in minimum wage kicking in ... and so are 'unintended consequences'

  1. #26
    Banned Melonie's Avatar
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    Default Re: Increase in minimum wage kicking in ... and so are 'unintended consequences'

    Fuck the rich Let them pay.
    Ahhh ... you've hit on the 'dirty little secret' that seems to hold true for the very rich in every country, including the USA. They TALK a good game for public consumption i.e. let's increase income taxes on the rich back up to 36% or whatever. But in point of fact, they create/maintain tax rules on capital gains, tax preferred investments, trusts, foreign investments, residency etc. that allow the 'rich' to easily avoid actually paying taxes in amounts that are anywhere near the publicly stated tax rates.

    No political intent (really), but election law required that GWB and John Kerry publicly disclose their tax returns as part of the 2004 election. At that time, John Kerry and family actually paid 12% of their 5 mil of total earnings out in taxes. Yes this amounted to $600,000 or something, but it was still 12%.

    Compare that to your typical dancer earning say $60,000 a year who must pay out 15% in self-employment tax plus another 15% in federal income tax plus a few more percent in state and local income tax for a total of say $20,000. So yes that dancer paid far less dollars in taxes than John Kerry did, but in terms of tax burden that $20,000 amounted to 33% of her total earnings. More significantly, being left with $40,000 after taxes instead of $60,000 had a far more negative effect on the dancer's standard of living than John Kerry being left with $4.4 million after taxes versus $5 million. Of course mainstream media never seems to look at the issue of income taxes from this angle.

    In reality, calls for 'tax the rich' ultimately mutates into 'tax the middle class', while the rich find new methods of legal tax avoidance.

    In the same reality, an increase in minimum wage which results in price increases for low priced restaurant meals, non-premium quality consumer goods, basic food staples, and everything else that has a high percentage of minimum wage labor content will have a far more negative effect on dancers earning $40,000 a year after taxes who typically buys those things. The 'rich' on the other hand won't see any impact whatsoever on the price of five star restaurant meals, top of the line luxury consumer goods, gourmet foods and everything else that has a low percentage or zero minimum wage labor content !

    I guess the financial hypocracy of all this is what really pi$$es me off. Hearing Teddy Kennedy or for that matter every other multi-millionaire gov't figure in Washington DC of BOTH political parties rant about the minimum wage bill being stalled over offsetting tax breaks to small business owners is simply bulls#@t. These people understand exactly who winds up paying for the true costs of a minimum wage increase, and it sure as hell isn't themselves or other members of the multi-millionaire 'rich' !

    ~
    Last edited by Melonie; 01-27-2007 at 05:54 AM.

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    Default Re: Increase in minimum wage kicking in ... and so are 'unintended consequences'

    I think there really isn't a good definition for "rich" in this country.

    I have heard democrats calling people making $50K a year "rich." Given the statistics of income distribution in the country - that might be true.

    But when I hear "rich" - I have something else in mind - like millionaire levels....

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    Banned Melonie's Avatar
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    Default Re: Increase in minimum wage kicking in ... and so are 'unintended consequences'

    I have heard democrats calling people making $50K a year "rich." Given the statistics of income distribution in the country - that might be true.
    based on existing and proposed income tax policies, you're probably close. Looking at the tax brackets, it would appear that $75,000 in annual income for a single person is where the gov't considers a person to be 'rich' enough that they can afford to pay heavy income taxes !

    Curiously, the gov't must not consider people who have millions of dollars worth of annual earnings to be 'rich' though, as long as those earnings mostly take the form of capital gains, muni bond interest payments, or anything else that is not classified as 'ordinary income' !

  4. #29
    Banned Melonie's Avatar
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    Default Re: Increase in minimum wage kicking in ... and so are 'unintended consequences'

    following is one of the better (and totally tactless) analyses of the peripheral effects of minimum wage increases ever published ...


    (snip)'The Congressional action on raising the minimum wage by 40% over two years is perhaps what prompted the article "For $7.93 an Hour, It's Worth a Trip Across a State Line" by Timothy Egan. The essence of the story is that "In Washington State, the minimum wage is 54 percent higher than in Idaho. Businesses at the dividing line are a real-life laboratory for the effects of an increase."

    After a lot of background information, Mr. Egan concluded that "raising prices to compensate for higher wages does not necessarily lead to losses in jobs and profits." I admit that that is true, as few things are "necessarily so" in anything, especially economics.

    But what I know for Freaking Mogambo Sure (FMS) is that if the businesses do not raise prices to cover their higher labor costs, then they will make less profits. It's not economics; it's simple arithmetic. He concludes as much when he admits, "Business owners say they have had to increase prices somewhat to keep up."

    Aha! There! There it is! There is the reason NOT to increase the minimum wage; prices will go up! "Business owners say they have had to increase prices." He admits it! And if you don't think, like little Timmy here obviously doesn't think, that inflation is the thing to be feared above all else, then I know that you are young, or ignorant, or stupid, or else you would know that there is nothing worse than inflation, as it is a killer of economies. It's THE real killer of economies! And nations, too!

    So now get a load of this: The kid even quotes some guy named Fazzari who says "If you look 10 years down the road, we will probably have no minimum wage jobs on this side of the border, and lots of higher-income jobs." Hahaha!

    What he is saying is that everybody else in the whole wide world is so sublimely stupid, that we will voluntarily stay where we are, working at our dumb, dorky job for a hateful, pinheaded boss, all for less money, instead of moving to the Washington/Idaho border where they pay more! Hahaha!

    If not everyone is as stupid as I am, and did move there, then the increasing numbers of job-seekers would drive the cost of labor down to the minimum, by the simple expedient of an oversupply of labor and profit-maximizing employers! Jeez! This stuff seems so obvious to me!

    Timmy-boy, obviously not realizing how utterly ridiculous this whole idea is, chimes in with "Job figures from both states tend to support his point." Hahaha!

    He sees the skepticism in my face and contempt in my voice, and retorts, "Several studies have concluded that modest changes in the minimum wage have little effect on employment." I leap to my feet and exclaim in exasperation "Again, Mr. Egan, employment is NOT the issue! You already concluded earlier, and I admitted, that rising wages doesn't necessarily result in job losses! Inflation is the only issue!"

    I'm thinking to myself "The little moron can't seem to comprehend that inflation has gotten so bad that the minimum wage is practically no income at all, but he blithely ignores the additional inflation that will be caused by raising the minimum wage! He figures it is not even worth talking about, I guess!"

    He ignores me completely, and defensively says that some university egghead named David Holland said "job loss was minimal when higher wages were forced on all businesses." Again with the job loss thing! He's like a broken record! But even so, he admits there WERE job losses! "Minimal" job losses as they may be, we still end up with less jobs and higher prices by raising the minimum wage! My God! I scream anew "What in the hell is the matter with you people?"

    Perhaps at my insane persistence at always bringing inflation into the discussion, he again admits that "business owners have found small ways to raise their prices," but I guess that is all okay with everybody (as ludicrous as that sounds), as "customers say they have barely noticed."

    To prove it, he quotes a Mr. Singleton, who owns a pizza place, who says "We used to have a coupon, $3 off on any family-size pizza, and we changed that to $2 off. I haven't heard a single complaint."

    Memo to Mr. Singleton: the complaining is done in the parking lot and on the way home, where the missus says, "It seems that we used to eat here for $15. Now it's $16, plus another 20 cents on the tip! That's, in total, an 8% price hike! And their pizza just doesn't taste as good as it used to, either, now that I think about it! And I think he is using cheaper ingredients, too, the little illegal-immigrant bastard!

    "And now that I think about it, YOU aren't as good as you used to be, either, buster! And slow down, slow down, slow down, you idiot, or you'll get a ticket, like that's just what we need around here! And let me tell you that you ate your pizza like a disgusting gluttonous pig, making these slobbering noises and yammer, yammer, yammer!" And the husband hears this, and thinks to himself, "Well, a higher price means we can't come here as often, which is good news since I won't have to listen to her irritating voice as much!"

    And it is not just the expense of higher labor costs that will drive prices up and customers away. Other related costs will go up as well, as unemployment compensation insurance and all of that other worker-protection stuff is figured as a percentage of payroll.

    Additionally, the employer is responsible for half of the Social Security/Medicare tax on those wages, so another 40% raise in the minimum wage will cost the employer another 16 cents an hour in higher payroll tax alone for each worker, or about $330 a year.

    All of this, and more, means that a higher minimum wage will result in higher prices, which is the thing that is bedeviling people in the first place! It doesn't stop inflation! It merely temporarily (a couple of years) partially compensates less than 1% of workers for the disastrous declines in their living standards due to the ravages of inflation, while making life more expensive for everyone else in the whole freaking country, further absolutely impoverishing those who do not have a wage to increase! What a cruel trade-off!

    And everybody else up the line will want more money, especially the guy who used to make 40% more than minimum wage, and who will now, thanks to the increase, make only the minimum wage! Hahaha! Welcome to the hell of inflation!

    But this, sadly, is the sorry course that the corrupt, incompetent Congress has decided on, instead of doing the right thing and forcing the Federal Reserve to hold money supply growth (and thus inflation) at a constant of "zero", which is optimal.

    So buckle your seatbelts on the Inflation Express, because it will be a hell of a ride from here on out!"(snip)

    from


    Vitriol aside, when viewed from this perspective, the newly elected Democratic congress' INTENDED CONSEQUENCE of passing a nationwide minimum wage increase could be interpreted as protecting the state economies of Washington, California, New York, Illinois etc. (i.e. states who have already enacted higher minimum wage laws) at the expense of Idaho and other states who have not similarly increased their minimum wage above the federal level (or haven't increased state minimum wage as much), by forcibly reducing their present financial advantage of a differential in minimum wage existing at the state line.

    Also, by implication, another INTENDED CONSEQUENCE may be to reduce the incentive for poor, unskilled people to migrate towards Washington, California, New York, Illinois etc. in search of higher pay rates (on top of the more generous social welfare benefits etc.), as well as reducing the incentive for higher earning residents of Washington, California, New York, Illinois etc. to migrate away from those states in search of lower state taxes and lower costs of living.
    ~
    Last edited by Melonie; 01-28-2007 at 09:18 AM.

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    Default Re: Increase in minimum wage kicking in ... and so are 'unintended consequences'

    and here's a news update some 6 weeks after Arizona raised their state minimum wage from $5.15 to $6.75 ... which centers on the increase in teen unemployment, and raises the question whether it's 'fair' for teens who live with their parents to earn the same amount as older Americans who live on their own and must provide for families.




    (snip)"Some Valley employers, especially those in the food industry, say payroll budgets have risen so much that they're cutting hours, instituting hiring freezes and laying off employees.

    And teens are among the first workers to go.

    Companies maintain the new wage was raised to $6.75 per hour from $5.15 per hour to help the breadwinners in working-poor families. Teens typically have other means of support.

    Mark Messner, owner of Pepi's Pizza in south Phoenix, estimates he has employed more than 2,000 high school students since 1990. But he plans to lay off three teenage workers and decrease hours worked by others. Of his 25-person workforce, roughly 75 percent are in high school.

    "I've had to go to some of my kids and say, 'Look, my payroll just increased 13 percent,' " he said. " 'Sorry, I don't have any hours for you.' "

    Messner's monthly cost to train an employee has jumped from $440 to $580 as the turnover rate remains high.

    "We go to great lengths to hang on to our high school workers, but there are a lot of kids who come in and get one check in their pocket and feel like they're living large and out the door they go," he said. "We never get our return on investment when that happens."

    For years, economists have debated how minimum-wage increases impact the teenage workforce.

    The Employment Policies Institute in Washington, which opposed the recent increases, cited 2003 data by Federal Reserve economists showing a 10 percent increase caused a 2 percent to 3 percent decrease in employment.

    It also cited comments by noted economist Milton Friedman, who maintained that high teen unemployment rates were largely the result of minimum-wage laws.

    "After a wage hike, employers seek to take fewer chances on individuals with little education or experience," one institute researcher told lawmakers in 2004."(snip)


    ... and the following is a virtually perfect example of all of the previously discussed negative side effects ...

    (snip)"Tom Kelly, owner of Mary Coyle Ol' Fashion Ice Cream Parlor in Phoenix, voted for the minimum-wage increase. But he said, "The new law has impacted us quite a bit."

    It added about $2,000 per month in expenses. The store, which employs mostly teen workers, has cut back on hours and has not replaced a couple of workers who quit.

    Kelly raised the wages of workers who already made above minimum wage to ensure pay scales stayed even. As a result, "we have to be a lot more efficient" and must increase menu prices, he said.
    "


    ... and now for the flip side of the new age discrimination 'argument' that, since it is clear that an increased minimum wage must result in layoffs of minimum wage employees, that teens are displacing more 'needy' older Americans who must provide for families - it should therefore be the teens that are the first minimum wage employees to be laid off ...

    (snip)"While most of the state's 124,067 workers between the ages of 16 and 19 made well above $5.15 per hour before the change, the new law has created real-life economic opportunities.

    Liliana Hernandez brings home noticeably more under the new law. The 18-year-old, who attends Metro Tech High School in Phoenix and works part time at Central High School, is saving the extra money, maybe to put towards buying a used car.

    Hernandez said she deserves the raise just like any other Arizona worker even if she still lives with her parents.

    "I'm doing the best I can and working hard like everyone else," she said. "(snip)

    ~
    Last edited by Melonie; 02-11-2007 at 01:16 PM.

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    Default Re: Increase in minimum wage kicking in ... and so are 'unintended consequences'

    Well, like you said Melonie - they better get some education so they can become more valuable employees.

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    Default Re: Increase in minimum wage kicking in ... and so are 'unintended consequences'

    ^^^ ah yes but now 'they' i.e. teens in high school have even less of a chance of earning money for college, as their jobs are being eliminated by minimum wage employers in favor of uneducated minimum wage workers in their 20's with families to support being paid the $1.60 extra per hour!

    In the real world with unintended consequences, this will likely translate into teens from 'rich' families, or from families with 'good credit' being able to finance college, while teens from 'poor' families or from families with 'bad credit' being left out altogether - or attempting to enroll in shitty community colleges at best because the available grant money can come close to covering the majority of the tuition/books cost.

    In the past at least, a teen with ambition who chose to work say 20 hours per week for $5.15 an hour at a fast food place during their junior and senior year in high school could save up $10k or so towards college.

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    Default Re: Increase in minimum wage kicking in ... and so are 'unintended consequences'

    Nickeled and Dimed is a great book. I agree with one review...someone should read it to George W. Bush.

    Raising the minimum wage to $7.25 an hour, the first raise in 11 years since 1996, is a matter of BASIC economic justice. If a worker earns $7.25 and works 40 hours per week, they would make $15,080 per year. Whose honest labor is not worth $15,080 per year?

    This $2 raise will fund much needed health insurance...often for children of min. wage workers, safer places to live, and maybe even contribute (along with grants and loans) to educational pursuits.

    There cannot be "two Americas" and no middle class. This is the start of an honest debate about what we owe each other as Americans.

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    Banned Melonie's Avatar
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    Default Re: Increase in minimum wage kicking in ... and so are 'unintended consequences'

    Whose honest labor is not worth $15,080 per year?
    how about 100 million Chinese, 10 million Vietnamese, 10 million South Koreans, 20 million Mexicans ... who would consider earning $7.25 an hour for their unskilled labor not as basic economic justice but as the misguided charity of a lunatic !

    or the alternate answer ... which is to devalue the US dollar by 2:1 meaning that minimum wage earners getting paid $15,080 per year becomes fair value in terms of the global economy. Of course, this also means gasoline priced at $5 per gallon, rents for 'slum' apartments costing $500 per month, a Happy Meal costing $10, the cheapest new Hyundai or Kia automobile costing $20,000, and tuition at a good college costing $40,000 per year also become fair value in terms of the global economy.

    There cannot be "two Americas" and no middle class. This is the start of an honest debate about what we owe each other as Americans.
    And the first chapter in that debate has to be closing off the US borders to foreign products and foreign labor. Otherwise, the discussion quickly degenerates into how much money needs to be 'forcibly extracted' from the US middle class via higher prices and higher taxes in order to subsidize a US unskilled labor pay rate that is far far above the world market price of unskilled labor. Without that first step, foreigners will continue to cross US borders offering their unskilled labor (illegally) at lower prices to US employers, and foreign industries ship their products across US borders into which lower priced foreign labor is embedded in the product's lower price, etc. guaranteeing that (legal) US unskilled labor costs will remain uncompetitive thus in need of continued subsidies paid for by higher prices and higher taxes.

    The bottom line here is that, on a global economy basis, there simply is not enough productivity coming out of the USA to support the lifestyle to which 'middle class' Americans have grown accustomed and to which 'poor' Americans feel that they are entitled. For quite a while now that US productivity gap has been bridged by borrowing - both by gov't's and by the middle class. However, we have now reached the point where both the gov't's and middle class individuals are running out of credit, meaning that additional borrowing will be increasingly difficult.

    The only choice left at that point is to decrease some Americans' standard of living in order to subsidize the standard of living of different Americans. The 'rich' are certainly not going to allow that to happen to themselves, and they have the resources via tax free bonds / high powered attorneys / political contributions / multiple residences in multiple states and/or countries etc. to make sure of it. That leaves a de-facto choice between the middle class becoming 'poor' or the poor becoming 'really poor'. And given the economic power of the 'rich' and the political power of the 'poor' in de-facto partnership with the 'rich', the future of the 'middle class' doesn't exactly look very bright !

    There is no free lunch - or 'free money' - or 'free benefits' !!! The 'poor' can't afford to pay. The 'rich' can say they will pay but in real world terms have the resources to find ways to avoid paying. Who does that leave to pick up the tab ?

    And from a constitutional standpoint, Americans arguably don't OWE one another anything in the way of financial subsidy. In fact, the Supreme Court left a lot of open-ended territory re the constitutionality of minimum wage laws versus antitrust laws with UMW v. Pennington, such that a fresh look at the issue by the Supreme Court resulting from your 'honest debate' might not turn out in a 'politically correct' manner.

    ~
    Last edited by Melonie; 02-11-2007 at 03:39 PM.

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    Default Re: Increase in minimum wage kicking in ... and so are 'unintended consequences'

    A free and open market led to the Great Depression and robber barons. Capitalism has no sense of democracy when so few own the means of control - capital - it's only destination is despotism. This is why there are restraints on it.

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    Default Re: Increase in minimum wage kicking in ... and so are 'unintended consequences'

    ^^^ nope, not buying that theory ... from

    (snip)"There is no fully satisfactory explanation of why the Depression happened when it did. If such depressions were always a possibility in an unregulated capitalist economy, why weren't there two, three, many Great Depressions in the years before World War II? Milton Friedman and Anna Schwartz argued that the Depression was the consequence of an incredible sequence of blunders in monetary policy. But those controlling policy during the early 1930s thought they were following the same gold-standard rules of conduct as their predecessors. Were they wrong? If they were wrong, why did they think they were following in the footsteps of their predecessors? If they were not wrong, why was the Great Depression the only Great Depression?"(snip)

    (snip)"The Great Depression is the greatest case of self-inflicted economic catastrophe in the twentieth century. As Keynes wrote at its very start, in 1930, the world was "... as capable as before of affording for every one a high standard of life.... But today we have involved ourselves in a colossal muddle, having blundered in the control of a delicate machine, the working of which we do not understand." Keynes feared that "the slump" that he saw in 1930 "may pass over into a depression, accompanied by a sagging price level, which might last for years with untold damage to the material wealth and to the social stability of every country alike." He called for resolute, coordinated monetary expansion by the major industrial economies to "restore confidence in the international long-term bond market... restore [raise] prices and profits, so that in due course the wheels of the world's commerce would go round again."

    Charles Kindleberger has pointed out that such action never emerges from committees, or from international meetings. Before World War I the international gold standard was kept on track because there was a single, obvious, dominant power in the world economy: Britain. Everybody knew that Britain was the "hegemon", and so everyone adjusted their behavior to conform with the rules of the game and the expectations of behavior laid down in London. Similarly, after World War II the "hegemon" for more than a full generation was the United States. And once again, the existence of a dominant power in international finance--a power that had the capability to take effective action to shape the pattern of international finance all by itself if it wished--led to a relatively stable and well-functioning system.

    But during the interwar period there was no hegemon: no power could shape the international economic environment through its own actions alone. Britain tried, attempting to restore confidence in the gold standard by the restoration of sterling, and failed. America might have succeeded had it tried--but successful policy requires that the hegemon recognize its leading position, which the interwar U.S. did not do. Thus "resolute, coordinated" action to expand demand and halt the depression did not emerge from the leading industrial power. And it was very unlikely to be generated by any committee operating via consensus."(snip)

    Thus the alternate theory says that the economic intervention policies by the US gov't which were initially implemented by Herbert Hoover in 1930 but for the most part implemented on a grand scale by FDR in 1932-33 that were, in fact, responsible for the depth of the great depression.

    The alternate theory also strongly implies that great depressions are the natural result of a world which lacks a dominant political / economic power that can 'enforce' a workable balance on the global economy through its own decisions and actions. I tend to support this aspect of the alternate theory given the history of the fall of Rome, the fall of Constantinople, the fall of later European monarchies, the fall of Britain in the aftermath of WW1, the de-facto fall of the USA after the 9/11 attack ...

    ~
    Last edited by Melonie; 02-11-2007 at 04:09 PM.

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    Default Re: Increase in minimum wage kicking in ... and so are 'unintended consequences'

    Melonie, that's a valid point.

    As much as I believe in setting a minimal standard for the labor market (and that $7.25, or maybe a little more, is just about right), The US can't think of living wage in a vaccum. We need to boost our relative productivity as a nation. The answers are not so obvious, as the effects of globalization and technology -- and the march of labor and capital across national boundaries -- are inevitable. But how do we make it work for us?

    Rethinking our educational programs is a big part of it. How, for example, do we train workers to be adaptable? ...to find the next technological opportunity and make it work to create jobs in the US?

    The US still has the most talented workforce. We need to play to our current strengths and build on new ones. We need a national strategy to do so. Not one of command and control, but when the gov't can help in fostering R&D, it should do so. Domestic alternative fuel development is an example.

    Even if we curtail our physical borders to labor, we know that we can never shut off the flow of capital completely...with multinational corporations, internatinal non-governmental organizations, and internet enabled platforms, it's damn near impossible.

    I welcome your ideas. I work in public policy...and am always looking for fresh ideas.

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    Default Re: Increase in minimum wage kicking in ... and so are 'unintended consequences'

    We make it work for us by being a little more fucking fair - as in FAIR TRADE.

    Like a programmer can move to India if he damn well feels like it and can create companies in tax-free zones.

    Or an american can move to Mexico, own a home, demand English, ya da ya da.

    Right now the only thing that can conveniently move across borders is knowledge and capital. Workers are shackled to the geography and society.

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    Default Re: Increase in minimum wage kicking in ... and so are 'unintended consequences'

    Quote Originally Posted by Deogol View Post
    ...Like a programmer can move to India if he damn well feels like it and can create companies in tax-free zones.

    Or an american can move to Mexico, own a home, demand English, ya da ya da.

    Right now the only thing that can conveniently move across borders is knowledge and capital. Workers are shackled to the geography and society.
    I think you've hit upon one of the things which needs to be done here. E.g., a website walking an average middle-class U.S. citizen through renouncing their U.S. citizensip while at the same time helping them find a new country to live in, and also helping them set up some kind of employment/business of their own on the Internet.

    If sufficient numbers of the middle class did this, then the federal government would finally have to actually address the problems currently plaguing the middle class. Either that or see most of the U.S. middle class leave for pastures which are, at least, a tiny bit greener.

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    Default Re: Increase in minimum wage kicking in ... and so are 'unintended consequences'

    ^^^ well, middle class Americans are already leaving for greener pastures in a sense. Californians, New Yorkers, Illinois, Michigan etc. all have a clear population shifts of middle class taxpayers who are pulling up stakes and moving to Florida, Texas, Nevada etc. The primary reasons are avoiding high state income taxes, high state property taxes, and declining profitability / viability of industries that are also saddled with those same high taxes along with expensive environmental compliance costs, expensive workmen's comp / disability costs etc. Of course, part of the population shift is obscured by the fact that new immigrants are moving into these states ... but in general these new immigrants are not net taxpayers and are motivated to move to NY, CA, MI, IL etc. because of generous social welfare program benefits.

    Right now the only thing that can conveniently move across borders is knowledge and capital. Workers are shackled to the geography and society.
    True on the face of it. However, the foreign made PRODUCTS of those workers are able to move very freely across borders ... and along with those products the lower embedded foreign labor costs can move across borders as well. In fact, there are now many services to US customers that can be provided by foreign workers, which allows the lower foreign labor costs to directly move across borders (i.e. telephone service centers, X-ray interpretation, software development, and lately even legal services).

    As long as the lower cost of cheaper foreign labor can be 'exported' into the USA, either by being embedded in a lower cost foreign product or in a lower cost foreign service, then unskilled US labor is still in direct competition with unskilled foreign labor. The only real exceptions to this are direct service industries i.e. fast food cooks, convenience store cashiers, lawn care, dog walkers, pool cleaners, warehouse stock clerks etc. where the unskilled labor service must be provided 'on the spot'.

    We need to boost our relative productivity as a nation. The answers are not so obvious, as the effects of globalization and technology -- and the march of labor and capital across national boundaries -- are inevitable. But how do we make it work for us?
    Unfortunately, America is legislating unproductiveness. Why should an American work his butt off for $7.25 an hour when he can sit home doing nothing and receive a cash equivalent value greater than $7.25 from social welfare programs ? Why should an American company have to pay 8-10 cents/kWh for electricity generated by natural gas when his Chinese competitor pays 2-3 cents/kWh for electricity generated by unscrubbed coal ? Why should an American company have to pay another $3.50 an hour on top of the $7.25 minimum whage for mandatory SSI tax + workmen's comp + disability insurance + other benefits which foreign companies are not required to provide to THEIR employees ?

    The bottom line is that you can't get something for nothing. Building a nice clean natural gas power plant instead of a coal fired power plant has an ongoing premium cost of operation. Providing mandatory benefits to US workers has an ongoing premium labor cost. Providing social welfare benefits to people who won't work creates a premium cost in the form of higher taxes. Ultimately, American businesses and individuals must pay these costs in one way or another. Low skill level American workers cannot afford to pay. 'Rich' Americans agree to pay on paper but in the real world escape the majority of payments. Businesses are not able to pay out of their own profit margins so they'll simply pass on the extra costs to their customers in the form of higher prices, or go out of business. It is therefore the middle class that must pay since they are the only ones left (at least at the moment).

    The US still has the most talented workforce
    this is certainly arguable where younger workers are concerned. But in any case it doesn't matter because the vast majority of US industries that had once required a talented workforce in the past have now simply pulled up stakes and relocated to Mexico, Asia etc. Talent doesn't mean anything if that talent doesn't exist in a place where it can be put to use. Of course, Mexican industries would love to have talented Americans move down there and work for $5.00 an hour ... or unskilled Americans willing to work for $2.00 an hour ! But given America's social welfare system there is zero chance that this would ever happen.

    f sufficient numbers of the middle class did this, then the federal government would finally have to actually address the problems currently plaguing the middle class. Either that or see most of the U.S. middle class leave for pastures which are, at least, a tiny bit greener.
    in reality, the pastures aren't any greener for the middle class, thanks to the US gov't's unique position of taxing the foreign earnings of US citizens. It is only for the 'rich' whose 'incomes' mostly come in the form of capital gains and paper asset inflation that the offshore option becomes bright green !

    Also, arguably, some segment of US politicians are perfectly content with an electorate consisting of their very rich 'friends' plus the very poor who owe their next meal / rent check / utility payment to the gov't ! This system works just fine in other countries, without having to deal with unpredictable middle class voters who can think for themselves and look upon the gov't as a burden rather than a business partner or as their nanny/Santa Claus.

    I welcome your ideas. I work in public policy...and am always looking for fresh ideas
    Well, there is really only one gov't policy that actually seems to have worked in regard to continuing a viable US market for a product which can be imported for a much lower cost. Here I'm speaking of $2.00+ per gallon US corn based ethanol versus $1.00 per gallon Brazilian sugar cane based ethanol. In order to 'preserve' the market, the US gov't has enacted a 51 cent per gallon tariff which Brazilian producers must pay for every gallon that crosses the US border - which of course US producers do NOT have to pay. On top of that the US gov't has enacted a 10% quota, meaning that even if the extra 51 cents per gallon tariff is paid by the Brazilians to the US gov't they are still only allowed to bring an amount of sugar cane ethanol across the US border which is less than or equal to 10% of US corn based ethanol production (which guarantees that the US ethanol industry will survive even though the Brazilians can still underprice them at $1.51 vs $2.00+ per gallon, because the quota only allows the Brazilians to claim a 10% market share).

    If this sort of serious intervention at the US border were to be applied to other products and industries, it would indeed produce a more 'level' playing field in terms of total costs of unskilled labor content in imported products vs domestic products. However, like US corn based ethanol, it would also force US customers to pay a much higher price for both domestic products as well as imported products than the 'rest of the world' has to pay for the same products. Ultimately this is just inflation in a different form I suppose, but at least it doesn't allow US industries to be totally devastated by foreign competition that is able to operate with much lower unskilled labor costs, environmental compliance costs, cost of taxes, electricity costs, mandated employee benefit costs etc. than US industries must pay. Perhaps more importantly, this sort of serious intervention at the US border would also require that the US abrogate its treaty commitments to NAFTA, the WTO etc.

    ~
    Last edited by Melonie; 02-12-2007 at 03:43 PM.

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