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On his Thursday Fox Business show, John Stossel took aim at ten government policies that he claimed have unintended consequences and are causing more harm than good. Included in his top-ten list, which ranged from health care reform to parity for women’s sports, was the minimum wage. Stossel, a TV personality who probably brings in more in a week than a minimum wage earner does in an entire year, opined that our nation’s lowest-paid workers get paid too darn much — and that’s why unemployment is so darn high.
As Stossel tells it, he doesn’t oppose the minimum wage because he’s in the pocket of Wal-Mart, Pizza Hut and the other national chains that profit by keeping wages low. Instead, he cares deeply about workers who fill low-wage jobs, and wants what’s best for them. Home health aides, restaurant workers, and janitors may think they’d be better off if they got paid more. But Stossel explains that many of them will be out of work if the minimum wage goes up — and that therefore they’re better off working for lower pay and getting experience. His sympathetic guest, Russell Roberts, a professor at George Mason University delivers the Stossel message quite clearly: “What can be more cruel than to raise your wage artificially, and then have no wage?”
But even the most casual examination of Stossel’s critique reveals that it’s long on rhetoric but short on facts.
Myth Number 1: Minimum wage earners are mostly teens.
Minimum wage opponents like to claim that low-wage workers earning near the minimum wage are mostly teenagers working for pocket change. They therefore characterize low-wage jobs as valuable learning opportunities for kids — rather than a job that needs to deliver a fair paycheck. Says Stossel, “Low wage jobs used to be a way for kids and the unskilled to get into the labor force; to prove themselves.” He continues, “The construction industry used to be a place teens could get a foot in the door, learn the discipline of regular work. Minimum wage has left many teens without a job.”
Not counting the fact that construction is a relatively high-paying industry with few minimum wage jobs, there are two major problems with this argument. First of all, according to the Bureau of Labor Statistics, three quarters of minimum wage earners are 20 or older. In fact, many of the largest growth occupations in the low-wage economy, like home health aides, are generally worked by older adults, many of them in their forties and fifties. So when we’re talking about minimum wage jobs we are overwhelmingly talking about adults. Period.
And about those teens. While Stossel’s kids may not need the money, many of the small share of low-wage workers who are teens come from low and middle income families who rely on their wages to make ends meet and cover growing tuition bills.
In addition, the rationale perpetuated by Stossel that teens should be happy with any job — no matter how low paying — is deeply troubling. Stossel presents minimum wage jobs as almost a social service, repeating over and over again how minimum wage jobs provide critical work experience for youth. In this context, any pay for these jobs seems generous. But while they are gaining experience, minimum wage earners are carrying out critical jobs that keep businesses operating and profiting. When they serve food, watch a child or ring up a customer, they are doing valuable work that keeps businesses depend on to thrive.
Myth Number 2: Minimum wage increases kill jobs.
Stossel claims that low-paid workers are actually hurt by the minimum wage because businesses cut jobs when the minimum wage goes up. “Minimum wage left many teens without a job,” said Stossel. “No wonder teen unemployment is 26%.”
It’s true that teen unemployment is disturbingly high, and we need to work hard to bring that number down so that teens who are trying to help contribute to their families or pay for their education can get back into the labor market. But Stossel’s claim that minimum wage has created the crisis in teen unemployment is just not true.
Lest we forget, we are currently experiencing the highest unemployment since the Great Depression because of the wreckage caused by the bursting of the housing bubble and the financial crisis. Teens, who have less experience than their older coworkers, are generally the first fired and last to be rehired when jobs are scarce, and are therefore suffering from even greater joblesssness.
Furthermore, more than a decade and a half of academic research has shown that the minimum wage raises the incomes of the lowest paid workers without reducing employment. The effects of the minimum wage have been studied in the real world for years, and the most rigorous science on the subject shows that increases in the minimum wage don’t cut jobs.
The latest contribution to this body of work is a comprehensive new study recently published in the prestigious Review of Economics and Statistics. A team of economists from the University of Massachusetts, University of California and University of North Carolina compared every pair of neighboring counties in the United States that straddle a state border and had a different minimum wage at any time between 1990 and 2006. Their analysis of employment in over 500 counties across the nation found that minimum wage increases did not lead to job loss.
And another study, to be published in April in the journal Industrial Relations, specifically examines teen employment and finds that even during times of high unemployment, minimum wage increases have not lead to job loss.
While Stossel claims that the minimum wage cuts jobs, the real experience on the ground shows otherwise. That’s because while employers give their lowest-paid employees a little bump up in pay when the minimum wage increases, they also benefit from lower turnover and higher morale and productivity. Better-paid workers are better employees.
While Stossel’s recycled attacks on the minimum wage don’t hold water, expect to see these arguments for gutting the paychecks of the lowest paid workers gathering steam. Business interests are poised to take advantage of high unemployment and decreased worker bargaining power to try to shred decades-old worker protections.

Source:www.huffingtonpost.com

Here’s another reason to vote in the mid-term elections this November: Conservatives think you need a pay cut. As I’ve said once or twice before, conservatives’ bottom line message is simple: America has economic problems because too many people have had it good for too long; and when they’re worse off again, the nation and its economy will be better off. The people they think had it too good for too long are you and me, and almost anyone who punches a clock to pull a paycheck.
Of course, right now they’re focused on people who earn minimum wage; Republican candidates like Alaska senate hopeful Joe Miller and West VA Senate wannabe John Raese want to abolish the minimum wage because they say it’s unconstitutional, while Connecticut Senate candidate Linda McMahon can’t make up her mind.
Never mind that the constitutional arguments are apparently due to conservatives constitutional inability to comprehend the constitution. Never mind that it seems they want to turn back time to 1787 when the constitution was ratified, or 1792 when the Bill of Rights was ratified. Never mind that, according to their logic they should shut down their campaigns, because even though the Constitution establishes Congress as a legislative body, it doesn’t give congress anything to do since it can’t do anything that the constitution doesn’t literally include. That is, it has to literally “say” the words — like “minimum wage” — or we’re limited to only those solutions and ideas that existed in 1987.
Never mind that two thirds of Americans support raising the minimum wage, which hasn’t kept pace with inflation for years.
Never mind the obvious insanity of all that. Their economic reasons for wanting to abolish minimum wage don’t add up either. Both Miller and Raese claim that abolishing minimum wage will create jobs, presumably because businesses will be spurred to hire more workers because they can pay them (even) less. Reality is actually quite the opposite.
And that’s where the rest of us come in. First, they’re coming for the paychecks of minimum wage orders. But yours and mine are next.
Even if we earn less than the minimum wage — like servers in the food industry, for example — conservatives like Minnesota candidate for governor Tom Emmer want to make sure we earn less, by even abolishing tips.
Seriously.
Even if we earn far more than minimum wage, conservatives believe you and I earn way more than we should. They rarely say so, but everyone in a while of them tests the water by saying things like what Bloomberg columnist Kevin Hassett did recently: “Your fat paycheck is keeping your neighbor unemployed.”
Seriously.
Never mind that millions of Americans have already had their wages reduced though unpaid furloughs and reduced working hours.
Never mind that wages for working Americans have stagnated for decades while the wealthiest Americans saw their income skyrocket.
Many of those who are lucky enough to still have work have seen their hours and benefits cut back, or have been forced to take unpaid furloughs. Twenty percent of companies have suspended their contributions to 401(k) plans or other pensions.
And wages are stagnant, and have been for some time.
Going all the way back to 2000, wages have grown less than 1 percent a year, adjusted for inflation, according to the Economic Policy Institute.
Meantime, the richest Americans have seen their wealth skyrocket, so much so that now we have widest gap between the rich and the poor since 1929.
Never mind that companies long ago figured out they can increase productivity without hiring, by increasing productivity without increasing wages — provided that workers are desperate enough to kept their job and they paychecks no matter how little they make in comparison to how hard they work.
The median hourly wage for American workers has declined 2 percent since 2003, after factoring in inflation. The drop has been especially notable, economists say, because productivity — the amount that an average worker produces in an hour and the basic wellspring of a nation’s living standards — has risen steadily over the same period.
As a result, wages and salaries now make up the lowest share of the nation’s gross domestic product since the government began recording the data in 1947, while corporate profits have climbed to their highest share since the 1960′s. UBS, the investment bank, recently described the current period as “the golden era of profitability.”
Never mind that corporations have found that layoffs can even pay for executive bonuses.
Corporate America. CEOs in one company after another are throwing workers onto the unemployment rolls and dodging taxes to boost short-term profits and fatten their own paychecks. They are shifting the burden of a poor economy onto the public purse — while continuing to line their own pockets.
According to a new report by the Institute for Policy Studies, CEOs from the 50 firms that have laid off 3,000 or more workers since the onset of the crisis took home nearly $12 million on average in 2009. That’s 42 percent more than the average for CEOs of S&P 500 firms as a whole.
On this side of the looking glass, what the rest of us call “reality,” corporations and businesses are sitting on tons of capital — some $1.8 trillion in cash, at present.
But anyone looking closely at the American economy today would see this is nonsense. American corporations have an unprecedented $1.8 trillion of cash. The Fed, meanwhile, has slashed interest rates to essentially zero – a record low – and is still holding over $2 trillion in securities that it said last week it will keep from shrinking. And a Federal Reserve survey released earlier this week showed that banks have been making it easier for businesses of all sizes to get loans. Credit standards for small firms have been loosened for the first time since late 2006.
In other words, businesses have all the capital they need. They’re sitting on it or can borrow it more cheaply than ever. But they aren’t using it to create jobs.
Why not? Because there’s not enough demand for their products or services. Consumers aren’t buying.
They’re using it to their give executives bonuses instead of investing in their businesses or hiring more workers.
Corporate executives, in reality, are not suffering at all. Their pay, to be sure, dipped on average in 2009 from 2008 levels, just as their pay in 2008, the first Great Recession year, dipped somewhat from 2007. But executive pay overall remains far above inflation-adjusted levels of years past. In fact, after adjusting for inflation, CEO pay in 2009 more than doubled the CEO pay average for the decade of the 1990s, more than quadrupled the CEO pay average for the 1980s, and ran approximately eight times the CEO average for all the decades of the mid-20th century.
American workers, by contrast, are taking home less in real weekly wages than they took home in the 1970s. Back in those years, precious few top executives made over 30 times what their workers made. In 2009, we calculate in the 17th annual Executive Excess, CEOs of major U.S. corporations averaged 263 times the average compensation of American workers. CEOs are clearly not hurting.
It’s clear enough that wage cuts don’t help boost unemployment, because lack of capital isn’t what’s keeping corporations from hiring. In fact, wage cuts will likely make them even less likely to hire, if workers are desperate to hold on to their jobs at any cost, in the midst of record-high unemployment.
Companies don’t hire because they have extra money lying around. They hire because demand for their products and services rise, and they need more workers to meet that demand with an adequate supply. Wage cuts, for those making minimum wage and above, will only serve to further reduce demand, because it takes money out of the pockets of people who are more likely to spend it.
Conservatives, on the other hand, want to put more money in the hands of people who probably won’t spend it.
Give the wealthiest Americans a tax cut and history suggests they will save the money rather than spend it.
Tax cuts in 2001 and 2003 under President George W. Bush were followed by increases in the saving rate among the rich, according to data from Moody’s Analytics Inc. When taxes were raised under Bill Clinton, the saving rate fell.
…When tax legislation was signed by Clinton in 1993 — raising the top tax rate to 39.6 percent from 31 percent — the saving rate fell from 12.1 percent in the second quarter to 9.5 percent in the first quarter of 1994. The Standard & Poor’s 500 Index rose 1.9 percent from July through September, after little change the previous three months.
When the first Bush tax cuts were signed into law in June 2001, pushing the top rate down to 35 percent, the wealthy boosted savings. The saving rate climbed to 2.8 percent in the first quarter of 2002 from minus 2 percent in the second quarter of 2001. The increased savings coincided with a 1.1 percent decline in the S&P 500 index.
Maybe that’s why they fought so hard to protect bonuses and compensation for Wall Street banksters. They will likely fight as hard to reduce your paycheck and mine as they did to protect Wall Street’s excesses.
It’s not hard to figure out why.
It’s not just that conservatives are opposed to minimum wage. It’s like with Social Security. It’s not that conservatives are opposed to Social Security, the program. They are, of course. It’s that their really opposed to the idea of social security (with a small “s”) for any American who work for a living and make less and a few $100K a year, at least. What they’re in favor of is social security only for those whose bank statements prove they deserve it.
It’s not that conservatives are opposed to a minimum wage. They are, of course. What they’re in favor of minimal wages for everyone. Or almost everyone, anyway.

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Source:www.huffingtonpost.com