Wintery Knight

…integrating Christian faith and knowledge in the public square

New study: minimum wage hikes hurt low-skill workers during last recession

The American Enterprise Institute reports. (H/T Jay Richards tweet)

Higher unemployment:

A new NBER working paper from Jeffrey Clemens and Michael Wither of the University of California, San Diego, suggests that the 30% increase in the average effective minimum wage over the late 2000s “reduced the national employment-to-population ratio — the share of adults with any kind of job — by 0.7 percentage point” between December 2006 and December 2012.

That works out to 14% of the total working-age decline during that period. Clemens and Wither basically looked at what happened to workers in states that were affected by federal minimum wage hikes versus what happened in states that weren’t. They also adjusted for the differing state-level impact of the Great Recession.

Low-skill workers hurt the most:

Now what’s particularly interesting in what Clemens and Wither found is that the minimum wage hikes made it harder for low-income workers to climb the ladder. From “The Minimum Wage and the Great Recession: Evidence of Effects on the Employment and Income Trajectories of Low-Skilled Workers“:

 … we find that binding minimum wage increases had significant, negative effects on the employment and income growth of targeted workers. Lost income reflects contributions from employment declines, increased probabilities of working without pay (i.e., an “internship” effect), and lost wage growth associated with reductions in experience accumulation….

We also present evidence of the minimum wage’s effects on low-skilled workers’ economic mobility. We find that binding minimum wage increases significantly reduced the likelihood that low-skilled workers rose to what we characterize as lower middle class earnings. This curtailment of transitions into lower middle class earnings began to emerge roughly one year following initial declines in low wage employment. Reductions in upward mobility thus appear to follow reductions in access to opportunities for accumulating work experience.

But this paper is one of several recently that have outlined the negative employment effect of minimum wage hikes. In “More on Recent Evidence on the Effects of Minimum Wages in the United States,” researchers David Neumark, J.M. Ian Salas, William Wascher conclude “the best evidence still points to job loss from minimum wages for very low-skilled workers – in particular, for teens.”

And the nonpartisan Congressional Budget Office find that a $10.10 federal minimum wage option would reduce total employment by about 500,000 workers, or 0.3 percent” in 2016.

So that’s 3 studies from 3 different sources, that all agree that raising the minimum wage will definitely cost jobs. The real minimum wage is, of course, zero. That’s what you get paid when your employer can’t afford to pay you what government tells them to pay you.

Filed under: News, ,

Obama’s unemployment: 11,472,000 Americans left the workforce since January 2009

CNS News reports.

Excerpt:

11.4 million Americans age 16 and over have left the workforce since President Obama took office in January 2009, according to data released today from the Bureau of Labor Statistics (BLS).

In July 2014, there were 92,001,000 Americans, 16 and over, who were classified as “not in the labor force,” meaning they not only did not have a job, but they didn’t actively seek one in the last four weeks.

This number has increased by 11,472,000 since January 2009, when the number of Americans not in the labor force was 80,529,000.

The number of Americans not in the labor force dropped slightly in July, down 119,000 from the 92,120,000 Americans not in the labor force in June.

The participation rate, which measures the percentage of the civilian non-institutional population that participated in the labor force by either having a job or actively seeking one, increased from 62.8 percent in June to 62.9 percent in July.

In July, the number of unemployed Americans increased by 197,000 (from 9,474,000 in June to 9,671,000 in July), meaning they did not have a job even though they were actively seeking one.

While the number of unemployed increased in July, so did the number of employed Americans: In June, there were 146,221,000 employed Americans, and that number climbed to 146,352,000 in July, a one-month increase of 131,000.

By contrast, George W. Bush created 8.1 million jobs after his 2003 tax cut.

Excerpt:

Obama and other critics of Bush’s tax cuts argue that they did little to boost economic growth or jobs. But they tend to start their count when Bush signed the first tax cut bill into law in mid-2001.

The problem is that much of that tax plan — including reductions to most of the income tax brackets — wasn’t scheduled to take full effect until 2006.

Bush’s second tax cut, signed in May 2003, accelerated those tax cuts, letting them kick in retroactively to the beginning of that year. The 2003 law also cut taxes on capital gains and dividends.

It turns out that the month after Bush signed that 2003 law, jobs and the economy finally started growing again.

From June 2003 to December 2007, the economy added 8.1 million jobs, according to the Bureau of Labor Statistics. The unemployment rate fell to 5% from 6.3%. Real GDP growth averaged close to 3% in the four-plus years after that, and the budget deficit fell steadily from 2004 to 2007.

And despite Obama’s claim, Bush’s policies did not increase income inequality. In fact, inequality was the same when Bush left office as when he came in, according to theCensus Bureau. A study by University of California economist Emmanuel Saez found that inequality has climbed much faster under Obama.

What’s more, the rich ended up paying a larger chunk of the federal income tax burden after Bush’s tax cuts went into effect, with the share paid by the top 1% rising to 40% by 2007, up from 37% the year before Bush took office, according to IRS data.

The Congressional Budget Office, meanwhile, found that the federal income tax was more progressive in 2007 than it was back in 1979.

Recall that these tax cuts didn’t cost us a thing – the 2007 deficit was $160 billion dollars, which was down from the previous year. Economic growth raised tax revenues.

When you let job creators keep more of their own money, they create jobs. When you tax and regulate job creators more, you destroy jobs. You can’t argue with the Bureau of Labor Statistics numbers. These are the official numbers and they show that Obama failed where Bush succeeded.

Filed under: News, , , , , , ,

Young people who voted for Obama are holding fewer and fewer jobs

Youth labor force participation

Youth labor force participation

Stephen Moore writes about Investors Business Daily.

Excerpt:

Economists are scratching their heads trying to figure out a puzzle in this recovery: Why are young people not working? People retiring at age 60 or even 55 in a weak economy is easy to understand. But at 25?

The percentage of adult Americans who are working or looking for work now stands at 62.8%, a 36-year low and down more than 3 percentage points since late 2007, according to the Labor Department’s May employment report.

This is fairly well-known. What isn’t so well-known is that a major reason for the decline is that fewer and fewer young people are holding jobs. This exit from the workforce by the young is counter to the conventional wisdom or the Obama administration’s official line.

The White House claims the workforce is contracting because more baby boomers are retiring. There’s some truth to that. About 10,000 boomers retire every day of the workweek, so that’s clearly depressing the labor market. Since 2009, 7 million Americans have reached official retirement age. The problem will get worse in the years to come as nearly 80 million boomers hit age 65.

But that trend tells only part of the story. The chart above shows the real problem: The largest decline in workforce participation has been those under 25.

[…]We do no favors to the young by teaching them that they can consume or have a good time without first earning the money they spend.

I think young people are often brainwashed at a young age to think that bashing the free enterprise system and voting for socialism isn’t going to take away their jobs. But if you vote to tax and regulate the businesses who may employ you later, you’ll find that they are too busy groaning under the strain of big government to employ you.

If young people were serious about getting jobs, they’d be voting to cut subsidies on universities to lower tuition costs, to lower corporate taxes, to cut environmental regulations, to repeal Obamacare, and so on. They would be more concerned that schools teach them actual skills instead of politically correct views, and so they would be voting for school choice and for right-to-work laws, to weaken the teacher unions who are not accountable to them. They should be voting against the minimum wage hikes that will price them out of an all-important first job. They should be voting against the (more than) doubling of the national debt in the 5.5 years under Obama. Job offers are not just there independent of the legal and economic environment. And just reaching a certain age doesn’t mean that you are qualified for a job.

Filed under: News, , , , , , , , , ,

Millenials voted for Obama and now they’ll have to live with less than their parents

Moderate conservative George Will writes about in Investors Business Daily. This is a good review of what’s happening in the economy.

Excerpt:

The reason why unemployment fell by four-tenths of a point (to 6.3%) in April while growth stalled is that 806,000 people left the labor force.

The labor-force participation rate fell by four-tenths of a point to a level reached in 1978, which was during the Carter-era stagflation and early in the surge of women into the workforce.

There are about 14.5 million more Americans than before the recession but nearly 300,000 fewer jobs, and household income remains below the pre-recession peak.

[…]The more than $1.1 trillion of student loan debt — the fastest-growing debt category, larger than credit-card or auto-loan debt — is restraining consumption, as is the retirement of baby boomers. In 2012, more than 70% of college graduates had student loan debts averaging about $30,000.

This commencement season’s diploma recipients enter an economy where more than 40% of recent graduates are either unemployed or in jobs that do not require a college degree. This is understandable, given that 44% of the job growth since the recession ended has been in food services, retail clerking or other low-wage jobs.

In April, the number of persons under 25 in the workforce declined by 484,000. Unsurprisingly, almost one in three (31%) persons 18 to 34 are living with their parents, including 25% who have jobs.

[…]There is, however, something new under the sun. The Pew Research Center reports that Americans 25 to 32 — “millennials” — constitute the first age cohort since World War II with higher unemployment or a greater portion living in poverty than their parents at this age.

Now it’s not just that the young people are having trouble paying off their loans and leaving the nest, it’s that they also are going to inherit a debit that has more than doubled since they elected Obama the first time. This is serious, now. If you are a young person, you’d better have a plan to be borrowing as little as possible, working as much as possible, saving as much as possible, and studying only what can get you a job. Things have changed since the time of your parents. You will have to work harder to achieve less. You voted for it.

Filed under: Commentary, , , , , , , ,

Income inequality: men who work full-time earn less than 40 years ago

From CNS News.

Excerpt:

The real median income of American men who work full-time, year-round peaked forty years ago in 1973, according to data published by the U.S. Census Bureau.

In 1973, median earnings for men who worked full-time, year-round were $51,670 in inflation-adjusted 2012 dollars. The median earnings of men who work full-time year-round have never been that high again.

[…]Ny “earnings,” the Census Bureau means money someone earns as an employee, which “includes wages, salary, armed forces pay, commissions, tips, piece-rate payments, and cash bonuses earned, before deductions are made for items such as taxes, bonds, pensions, and union dues.” It also includes “net income” from self-employment.

And in another CNS News article, we learn something worse.

Excerpt:

In 20 percent of American families in 2013, according to new data released by the Bureau of Labor Statistics (BLS), not one member of the family worked.

A family, as defined by the BLS, is a group of two or more people who live together and who are related by birth, adoption or marriage. In 2013, there were 80,445,000 families in the United States and in 16,127,000—or 20 percent–no one had a job.

The most troubling thing about these two findings for me is that I believe that a man’s authority to lead in the home comes from his special role as provider. It is because he works to fund the family operations that the wife and kids respect him. But what if we have policies that are more focused on making women work, and men’s salaries decline or go to zero? Well, in that household, it will be a lot more difficult for men to lead on moral and spiritual issues. Men should work, and they should earn enough to provide for a family.

Filed under: News, , , , ,

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