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Progress Journals & Experimental Routines / Re: Eric's Journal:Dad Bod to God Bod
« on: December 01, 2015, 09:27:40 pm »I lied about sticking to just lifting
Adarq: Thoughts on the fast food workers who want 15 an hour? Also, the vet who works at KFC, his main argument is he can't afford to provide for his family which is acceptable, but he loves cooking for KFC. I have a response to both but before I get burned at the stake.....mmmm steak, I want to hear what ya'll have to say.
The issue of the minimum wage always creates a predictable argument along the lines of ‘you cannot have a minimum wage rise because it will cause unemployment among the low-skill ranks of the workforce’. However, if you took that logic there would never be a minimum wage rise!!!
Mass unemployment arises from a lack of aggregate demand. Firms will not hire people if they cannot sell the goods and services that the workers produce because they don’t want to accumulate inventories. No matter how cheap wages are firms will not employ people as there is nothing for them to do. The only way that real wage cuts would increase employment would be if they boosted private spending and reduced the desire to save. However, people already living on the minimum wage don’t have the desire or capacity to save much anyway so they tend to spend their earnings anyway. Therefore, by cutting the wage all it is doing is reducing aggregate demand in the economy. Hence this method of stimulating employment will always fail at the macroeconomic level. Workers rely on real wages growth to fund consumption growth and without it they borrow or the economy goes into recession.
This is a briefing paper (#406) from the US Economic Policy Institute.
http://www.epi.org/files/2015/understanding-productivity-pay-divergence-final.pdf
The EPI concluded that for the US:
1. “wages did not stagnate for the vast majority because growth in productivity (or income and wealth creation) collapsed. Yes, the policy shifts that led to rising inequality were also associated with a slowdown in productivity growth, but even with this slowdown, productivity still managed to rise substantially in recent decades. But essentially none of this productivity growth flowed into the paychecks of typical American workers”
2. “pay failed to track productivity primarily due to two key dynamics representing rising inequality: the rising inequality of compensation (more wage and salary income accumulating at the very top of the pay scale) and the shift in the share of overall national income going to owners of capital and away from the pay of employees.”
3. “although boosting productivity growth is an important long-run goal, this will not lead to broad-based wage gains unless we pursue policies that reconnect productivity growth and the pay of the vast majority.”
When the EPI released the report, the accompanying Press Statement said that:
The fact of the matter is, for decades, a typical worker’s pay rose alongside productivity—but since the 1970s, as a hugely disproportionate share of income generated by rising productivity has gone to extraordinarily highly paid managers and owners of capital … The relationship between rising productivity and worker pay has broken down because workers’ bargaining power has been intentionally hamstrung by a series of intentional policy decisions, made on behalf of those with the most income, wealth, and power …Our problem is not a lack of growth. For the past 40 years, productivity has gone up substantially, but these gains have not reached working people … The problem is that wages have been suppressed by a restructuring of rules on behalf of those with wealth and power.
The EPI also noted that “If the hourly pay of typical American workers had kept pace with productivity growth since the 1970s, then there would have been no rise in income inequality during that period”. That is a stunning conclusion in itself.
This is not only in America where this is the case it’s pretty much worldwide.
In the 2006 OECD Employment Outlook entitled “Boosting Jobs and Incomes”, which is based on a comprehensive econometric analysis of employment outcomes across 20 OECD countries between 1983 and 2003. The OECD found that:
There is no significant correlation between unemployment and employment protection legislation;
The level of the minimum wage has no significant direct impact on unemployment; and
Highly centralised wage bargaining significantly reduces unemployment.
In my opinion the US minimum wage is too low and we can see that with the massive income inequality that exists and all the socio-economic problems that arise from it. Do fast food workers deserve 15 an hour? Well do CEOs deserve their extravagant salaries when usually it is these very people who lead the cheer squad when it comes to the claims that workers have to take pay cuts and surrender penalty rates and that the minimum wage should be abandoned! Of course they will always justify their own salaries with the line that it’s essential to award these salaries to attract top quality executives, yet we know that a companies performance is not closely linked at times to the pay that the CEO gets, which puts a hole in that argument. The top CEO (from JC Penny Co) earned 53.3 million in the fiscal year to 2012 compared to the average worker in 2012 in his company who earned $29,688. You don’t need to be an economist to work out that raising the pay of the average worker and reducing executive pay would also lead less income inequality and also boost private spending and aggregate demand. Without question the minimum wage could be raised in the US without affecting unemployment so ultimately I support raising it.
