Posted on 02/17/2013 10:11:40 AM PST by whitedog57
I am almost afraid to ask students (or my in-laws) what they think of President Obama’s State of the Union plea for raising the minimum wage from $7.25 to $9.00. I will ask my students this week, but not my in-laws (I already know their answer – YES!). The Wall Street Journal has an excellent article on the minimum wage and its impact on employment. While raising the minimum wage sounds “fair,” it is really grossly unfair.
University of California at Irvine economist David Neumark has looked at more than 100 major academic studies on the minimum wage, and he says the White House claim of de minimis job losses “grossly misstates the weight of the evidence.” About 85% of the studies “find a negative employment effect on low-skilled workers.”
So, raising the minimum wage could actually INCREASE unemployment or decrease partial employment. Even Mort Zuckerman admits that we already have an employment nightmare on our hands (which I call the unemployment serpent).
Which brings me to the housing recovery. True, an increase in the minimum wage from $7.25 to $9.00 is likely to impact the housing market. But the employment depression that we have in the US already clearly has an impact on the recovery.
According to John Walsh, the President of DataQuick, “A lot of today’s housing demand is fueled not by spectacular job growth and soaring consumer confidence, but by super-low mortgage rates and unusually high levels of investor and cash purchases. Take away any one of those elements and it will matter.“
Doggedly high unemployment, BAD economic policies and investor/all-cash purchases are not motivating a traditional household housing recovery. This is an INVESTOR recovery. From Dr Housing Bubble, you can see the high percentage of all-cash purchases in Phoenix and Orlando.
As investors scramble to purchase distressed properties, they compete with FHA borrowers. And tie up distressed properties for 3-4 years.
“New York-based JPMorgan, whose private bank oversees $877 billion, started pooling investments from its clients in mid-2012 into a partnership to purchase distressed properties, betting that prices will rise over the next several years and provide investors with income from renters along the way, said Lyon. The firm uses a third-party manager to find homes, buy and manage them, he said, declining to name the firm.
The goal is to sell the houses within three to four years in one of three ways: through an initial public offering of a real estate investment trust, a sale to an existing REIT or to an institutional buyer such as a pension fund, Lyon, who’s based in San Francisco, said. Clients will receive a share of any price appreciation depending on the size of their investment.”
Alas, this is the aftermath of a classic credit bubble that Austrian economists warn about. According to von Mises, “There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of the voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”
Sounds right.
How true.
One of the great misunderstandings about our society and this view of minimum wage....is that prices are different everywhere you go. A guy making $18k a year in southern Alabama....can sustain himself and the family because of the low-cost of living there.
A guy in Myrtle Beach, SC....probably needs at least $22k a year to make it locally.
A guy in Chicago....probably needs $26k a year to make it locally.
This is where this entire discussion over minimum wage disconnects from reality.
It’s the same if you discussed rich people. A guy making $200k a year in Manhattan....really isn’t rich, by local standards. A guy in Orlando making $200k is barely rich....by local standards. And a guy in Red Bay, Bama making $200k is filthy rich and drinking his beer from a crystal glass. We haven’t grasped reality yet.
Nobody in this wage group can afford to buy a house, so it won't impact the housing market in that way.
What it will do is shrink the employment market. Companies already strapped, that WERE thinking of hiring lower tier employees will scrap those ideas.
There are generally more lower pay employees than higher pay. So for companies that MIGHT have been thinking of giving raises to any employees above the $9.00 per hour mark, they can scratch that idea. For every entry level job that would now have to pay up to $1.75 an hour more, that COULD have been a raise for somebody deserving. 10 entry level jobs requiring this higher pay, wipes out chances for others getting raises who EARNED them.
Those WOULD have been the people in the housing market.
Imagine an employer like a McDonalds franchise. 10 brand new employees currently make $7.25 an hour, suddenly get bumped up to $9.00 an hour. Thats a 24% increase for them.
Multiply 10 employees times 40 hours a week, times $1.75, that equals an extra $700 in pay. PLUS employer contributions to FICA taxes of 7.65% = another $53.55. Some states require unemployment insurance benefits to be paid in while employees are employed, so that would also raise costs for the employer.
On the flip side, I wonder how many small companies already strapped for cash would actually cut back their currently sub $9.00 work force.
I have come to the conclussion that liberals have ZERO critical thinking skills.
Set the minimum wage at the same level it is in Switzerland - SF 0.00. Unemployment rate there, 3%.
Or raise it to about the level of France’s minimum wage, about Euro8.86. Unemployment rate there, 10%.
Minimum wage rates set by law are there to support the formation of unions, and their further growth, by providing a benchmark to build upwards from.
Unions exist to DENY employment to prospective workers, unless they have some pre-existing affinity (either family or a sponsor of some kind.
Those WOULD have been the people in the housing market.
exactly!
Voluntary abandonment of further credit expanison = NOT GOING TO HAPPEN. Oh boy, thanks incompetent ones.
Want to really kick these people in the crotch?
Learn what businesses are libtard and libtard-supporting, and stop buying from them.
It is time to do the final thing short of the last resort.
Economic starvation of libtards and their policies.
Buy from friends, barter, find stores and chains that aren’t total leftwing nutjob companies giving your money to politicians you’d never support, or for bills that take away your rights.
Total economic libtard embargo.
Not saying you stop buying everything, just maybe limit it and get what you need from friendlier sources where you can.
If you smoke, maybe now is the time to stop paying extra voluntary taxes for unclesugar to give to people in the form of obamaphones and ebt cards they buy lobster and prime cuts of meat with, while you’re buying the ground meat special.
Pro-gay marriage? Sorry not gonna give you money anymore. Anti-2A? Nope, no more, you’re done. Pro-Obamacare, see ya, no dinero for you. Pro-amnesty and “don’t call them illegals?” Finished financing you people. Big media? Cancel my subscriptions. My bird is dead. Big pro-Obama union shop? Sorry I can’t afford to bail out your pensions. Can’t keep your mouth shut about free contraceptives for everyone? Sorry you’re too stupid for me to waste one cent of my money on. Got a sign saying “We’re a gun free zone” on your store window? Thanks for the warning, I don’t enter into a potential bloodbath zone voluntarily.
Starve them. The less you buy, the less taxes are collected. The less you spend at libtard businesses the harder they will be hit. Some may not make it. The owners can’t collect unemployment, they were the owners.
They don’t have a right to your money anyway. There are consequences for stupid actions in the business world. Small libtard businesses are not considered too big to fail. Obama ain’t gonna be there bailing them out. Municipalities won’t either.
Cut them off at the knees and let them bleed out. Economically speaking. It’s not like they aren’t already in the libtard camp. Nothing would get them over to our side. The goal isn’t to convert but to remove their power and control. To let them fully experience what life under libtard policies are like.
If my wife and I made $200k a year in central Mo. We would be very rich. Yea, I would be drinking my beer out of frosty cut crystal glasses too. :^)
This was the first thing the dems passed when they took over in the second half of Bush’s last term. It set off an inflationary wave that we are still coping with. Get ready to ride that whirlwind again.
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