Posts Tagged ‘labor’

Senator Warren and the Minimum Wage

March 19, 2013

May God protect us from politicians who are completely ignorant of economics. Here is video from Foxnews in which Senator Warren wonders why the increase in worker productivity since 1960 hasn’t translated to a corresponding increase in the  minimum wage to $22 per hour.

She actually has a point, however you have to consider that a lot of that increase in productivity has been the result of increasing automation. We simply do not require as many people, whether on a factory floor or in an office, to get a job done. This allows resources,  including human resources to be allocated more efficiently but it doesn’t necessarily mean that each person’s labor is worth more and thus deserving of a higher wage. The other point to consider is beyond the actual numerical amount of a person’s salary is what that salary can actually purchase. A person making minimum wage today is, in many ways, far more prosperous than a comparable person in 1960 if you consider the advances in technology, etc. Consider that the laptop that I am writing this on costs about $300, an amount that is affordable enough to anyone who is in the middle class and even many people considered poor. How much would a computer have cost in 1960? A computer in 1960 was a device that filled a room and cost thousands of dollars. What about televisions? Even someone making minimum wage probably has a color television. I don’t think they even make black and white televisions anymore. Yet, that was all they had in 1960. A television in 2013 is of better quality in almost any way conceivable and yet is cheaper in terms of cost measured by the work needed to earn the amount to buy it (I know there is an economic term for this but I forgot what it is.) compared to a television in 1960. I could go on and on but you get the point.

So, what would happen if we did raise the minimum wage to $22 per hour. To start with, it wouldn’t be only people on minimum wage who would be getting an increase in pay. Normally when the minimum wage is increased, it doesn’t have much of an affect, as the one man noted, simply because not that many people actually make minimum wage. Even so there is a sort of rippling effect on wage scales, especially in unionized labor, which is why unions generally support increasing the minimum wage, even though their members may earn far more than that wage. An increase to $22 per hour would set the minimum wage above that of most hourly workers and the effects of such an increase would be more obvious and profound.

What are the effects of raising the minimum wage? Any increase in wages, whether voluntary or not, is an increase in the cost of labor. the money to pay for that increase has to come from somewhere. Either employers must increase the price of their products, or they may choose to make do with fewer employees, either letting some workers go, or simply not hiring. Either way, the long term result is an increase in prices or unemployment, or both.

As I said, since not many people actually work for minimum wage, these effects may not be noticeable, except perhaps in long term trends. Still, the people most likely to be affected are unskilled laborers and young people just entering the job market. By making their labor more expensive and thus less attractive, any minimum wage tends to increase unemployment among precisely those people it is intended to help. An increase in the minimum wage to $22 per hour would probably increase unemployment to depression levels, and cause a temporary surge in inflation.

I hope that answers Senator Warren’s questions, not that she is ever likely to read this, or pay attention to anything I have to say, even if by chance she stumbles across this blog. I wonder if it would be possible to amend the constitution to require that every member of Congress be required to take Economics 101. But then, no Democrat could ever be elected to Congress.

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Right to Work in Michigan

December 11, 2012

I never would have expected it in such a strongly blue, pro-union state as Michigan, but so they did. Here is the story at the Washington Post.

As the chants of angry protesters filled the Capitol, Michigan lawmakers gave final approval Tuesday to right-to-work legislation, dealing a devastating and once-unthinkable defeat to organized labor in a state that has been a cradle of the movement for generations.

The Republican-dominated House ignored Democrats’ pleas to delay the passage and instead approved two bills with the same ruthless efficiency that the Senate showed last week. One measure dealt with private sector workers, the other with government employees. Republican Gov. Rick Snyder signed them both within hours.

“This is about freedom, fairness and equality,” House Speaker Jase Bolger said during floor debate. “These are basic American rights — rights that should unite us.”

After the vote, he said, Michigan’s future “has never been brighter, because workers are free.”

Once the laws are enacted, the state where the United Auto Workers was founded and labor has long been a political titan will join 23 others with right-to-work laws, which ban requirements that nonunion employees pay unions for negotiating contracts and other services.

Supporters say the laws give workers more choice and support economic growth, but critics insist the real intent is to weaken organized labor by encouraging workers to “freeload” by withholding money unions need to bargain effectively.

Right now Michigan’s future could hardly be dimmer. Maybe this will be the first step towards a more pro-business set of policies that will allow Michigan to flourish again. It is interesting that Michigan, a state that went heavily for Obama in the last election has a Republican governor and a State Legislature with a Republican majority in both houses. Could it be that reports of the death of the Republican Party are greatly exaggerated, especially at the state level?

Naturally the unions are fighting this tooth and nail. I would hardly expect them to do otherwise. Of course one might hope that their actions would be non violent and within the law but perhaps that is too much to expect. I suppose that there will be a repeat of the sort of mob violence we saw in Wisconsin last year.

Meanwhile schools in Michigan have had to close today because teachers have been calling in sick to protest. This is from Michigan Capitol Confidential.

At least 26,000 children will miss school today because their teachers called in sick or took a vacation day to protest proposed right-to-work legislation, which is expected to pass today.

Warren Consolidated Schools, Taylor School District and Fitzgerald Public Schools are confirmed to be closed. It is also suggested that schools in Detroit and St. Johns may be missing a significant number of teachers.

“We’ve had an excessive number of teachers call in,” Warren district spokesperson Robert Freehan said Monday afternoon. “We’re concerned about the safety and security of the students, so we’re treating it as a snow day.”

Ben Lazarus is a school board member-elect for Warren Consolidated. He believes the district, but not the teachers, made the right call.

“I think that political agendas shouldn’t take precedence over student learning,” said Lazarus. “I think the superintendent made the best decision with the facts available.”

The Warren district is the 9th-largest school district in Michigan. More than 15,000 students attend Warren Consolidated Schools. Parents will now have to scramble to find alternative care for their children because of the excessive teacher absences.

Warren Consolidated Schools is the second school district to announce closing in anticipation of a large protest in Lansing against proposed right-to-work legislation. Taylor School District Superintendent Diane Allen told WDIV that the district would be closed because so many teachers were taking sick or vacation days to attend rallies in Lansing.

Detroit Federation of Teachers president Keith Johnson anticipates “a huge crowd” in Lansing for the protest. When asked by the Free Press if any Detroit Public Schools would be closed, he said, “Hopefully.”

Some roads near the Capitol building will also be closed on Tuesday, due to anticipated protests and rallies.

At least one other district could be affected by the “sick out.” A parent in St. Johns Public Schools north of Lansing with children in the district said they were warned by their teachers that “most of them would not be at school [on Tuesday] because they were attending the protest and if enough substitutes were not found, they would close school.”

Fitzgerald Public Schools in Warren was is also closed because of staff absences. FPS Superintendent Barbara VanSweden announced on the school website, “FPS is closed on Tuesday, December 11, 2012 due to the number of staff that are absent.  The district will be closed just like a snow day.  My first priority is student safety and without an adequate number of staff, we cannot hold school.”

Freehan estimated that “several hundred” teachers called in sick or said that they would take vacation. The calls began early Monday morning, he said, and continued throughout the day. The district employs about 800 teachers, he said.

“We felt the best approach was to cancel school completely as well as extracurricular activities,” he said. “You can’t have students in school with just two staff members there.”

Lazarus believes right-to-work and other proposed educational reform bills need to be discussed, but that it would be beneficial for legislators to gather more input and information. And a “sick out” is the wrong way to go.

“I do understand that they have a political position,” Lazarus added. “[But] the first priority of a teacher should be student learning and I don’t think this adds to that.”

Just in case you thought that educating your children was their top priority. That is probably true for most individual teachers but certainly not for the teacher’s unions. Students don’t pay the union dues. Of course, it is not certain that this action will actually harm any students, at least not in the Detroit Public Schools.

In the public schools in Detroit, Mich., according to the U.S. Department of Education, only 7 percent of the eighth graders are grade-level proficient or better in reading.

Some public school teachers in the City of Detroit and around the state of Michigan are reportedly taking a vacation or a sick day today to protest right-to-work legislation likely to be approved by the state legislature. Under current law, Michigan public school teachers must pay dues to the teachers’ union. If the right-to-work law is enacted, Michigan public-school teachers will be free to join the union and pay dues to it if they wish, but they will also be free not to join the union and not to pay it dues.

Detroit public-school eighth graders do even worse in math than they do in reading, according to the Department of Education. While only 7 percent scored highly enough on the department’s National Assessment of Educational Progress test in 2011 to be rated “proficient” or better in reading, only 4 percent scored highly enough to be rated “proficient” or better in math.

I have to wonder just what they are actually doing in these schools. Not teaching children what they need to learn it would seem.

 


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