Tag Archives: unemployment

2020 State Minimum Wages

Raising Minimum Wages, Good So Far

New Orleans       While much of the country is stuck at the level of the federal minimum wage, there are enough states and cities that have nudged the numbers up that economists and others are starting to be able to tell with certainty whether the competing claims are correct.  Opponents argue that raising wages above plantation level reduces the number of jobs.  Proponents, and I’m in that number, have claimed that the benefits of increasing wages, lowering inequality, and putting more money into local economies, wildly offsets any small job loss, if in fact, any jobs at all are lost.

Arindrajit Dube, an economist at the University of Massachusetts at Amherst, did a study of state minimum wage increases in California, Oregon, Washington, Colorado, Massachusetts, and New York.  These states had bumped up the numbers in recent years to at least $10.50 per hour through 2018.  The impact would have been directly felt by 20% of the workforce, not counting the multiplier impact of increases for other workers in order to prevent compression of wages causing non-minimum wage workers to feel crimped and resentful of the increases.  Professor Dube found that the job losses were minimal, although not painless.  He found that some businesses raised prices, others improved production methodology, and some actually absorbed the increases by reducing their profit margins.

All of this is good news for our case.  Additional studies in New York State, as well as reporting by the New York Times, seem to confirm that even in the border counties between New York, with an escalating minimum wage now, and Pennsylvania still stuck at $7.25, there were minimal adverse impacts for workers on job losses.  Obviously, it helps that the economy has been good and unemployment low, making this an ideal time, economically, to push wages up from the bottom.

In the days of ACORN’s living wage campaigns, we have gone back and forth over the years with Professor David Neumark, an economist at the University of California at Irvine, who has long studied minimum wage impacts on workers.  He cautions that the results in these relatively higher wage states might not translate in the South “where low-wage workers aren’t evenly distributed across industries and ‘you have fewer and fewer avenues of adjustment.’”  Since there’s absolutely no immediate danger of Southern states getting the raise wages religion for workers, it will be awhile before we have to struggle with this problem.  Meanwhile we are forced to live through the galloping gap between lower wage and higher wage states that is occurring with no action on the federal minimum wage, meant to cope with this problem.

Now, if only the reason that wages weren’t rising was based on the facts, rather than stone cold ideology, we would be in good shape.

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Full Employment!  Really?

President Carter signing the Humphrey–Hawkins Full Employment and Balanced Growth Act of 1978

New Orleans        In the breathless and world shaking tone common to television and radio broadcasts, economists were trying to parse the numbers in the federal report on jobs and wages for February.  Growth was almost nonexistent at 20,000 new hires, and there was a lot of “he-say, she saying” back and forth on that.  On the other hand, wages were up over 3% compared to February 2018, leading some to hope against hope that workers might finally be getting a share of the robust economy, although that is doubtful.  Others chortled that with statistical unemployment dropping to 3.8%, the US was actually approaching “full employment.”  Interesting, but is that really true?

Not to be negative, but it is worth recalling that statistical unemployment masks a huge number of the unemployed as the formulas are jiggled from administration to administration in the Bureau of Labor Statistics.  So-called “discouraged job-seekers” are a good example since that category is likely a disguise for applicants continuing to roll in for nonexistent jobs in rural areas and some job markets.  Gig workers were also over-counted by many miles for a long time, so it is unclear to me how they fit in this number.  Young, minority, and other workers are also rarely employed fully.

Searching back in distant memory there was a huge fight over full employment and job creation called the Humphrey-Hawkins bill, popularly named after Minnesota Senator Hubert Humphrey and California Congressional Representative, Gus Hawkins.  It is often called the Full Employment act.  The technical name is Full Employment and Balanced Growth Act.  It was more than a fight, it was also a victory, winning passage in 1978, during the recession at that time, and signed into law by President Jimmy Carter.

The most interesting and important part of the mandate is that the Act instructs the Federal Reserve to manage monetary policy with a central objective of creating full employment.  Not surprisingly, conservative Republican forces on a regular basis try to repeal any notion of full employment in order to push the priorities as nothing more than inflation or maybe improved trade balances.

If you think we’ve hit full employment though, think again.  By the definitions of the Act within five years or 1983 “unemployment rates should be not more than 3% for persons aged 20 or over and not more than 4% for persons aged 16 or over, and inflation rates should not be over 4%.”  We’re nowhere close to that figure and have never been whether in 1983 or 2017 after forty year under a full employment policy.

Importantly, the Act mandates that if the private sector cannot achieve these goals, then it is the federal government’s responsibility to create “a reservoir of public employment” to make them real. Now, that’s more than a great idea.  That’s the law.

It’s time to enforce the full employment law fully, not pretend we’re already experiencing it when we all know people who are more fully unemployed, than employed.

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