Sunday, December 22, 2013

Disconnect -- College Cost Inflation vs. Household Median Income Growth in Free Trade Environment






We have known for a long time that the amount of education directly impacts wages, and, as far back as 1994, in light of movement towards free trade pacts,  economists highlighted surging income gap between those with and those without college education:

(See "Trade and Income Distribution Panel: The Debate and New Evidence" delivered by William R. Cline, Institute of International Finance at Yale University Alumni Meeting, 1994)

So it's easy to justify education as one of the best investments a nation can make.

We Americans claim to view extensive public education as essential to healthy democracy, equal opportunity, expanding economy, scientific advancement, and military preparedness ... or so we say. In practice, we no longer make it affordable to every citizen ... only the wealthy.

Back in 2002, professional association research on American public education found unequal funding of education but, most interesting to supporting the value of public elementary and secondary education, is the finding that each time affluent Americans migrate to a new (usually suburban) community, they support highly funded schools.

Education has been the great economic equalizer throughout our history. American founding fathers spoke often and clearly in favor of free public schools. For example:

"If Virtue & Knowledge are diffused among the People, they will never be enslaved. This will be their great Security." -- Samuel Adams (Letter to James Warren, February 12, 1779)

"A Bible and a newspaper in every house, a good school in every district--all studied and appreciated as they merit--are the principal support of virtue, morality, and civil liberty." -- Benjamin Franklin



"I think by far the most important bill in our whole code is that for the diffusion of knowledge among the people. No other sure foundation can be devised, for the preservation of freedom and happiness...Preach, my dear Sir, a crusade against ignorance; establish & improve the law for educating the common people. Let our countrymen know that the people alone can protect us against these evils [tyranny, oppression, etc.] and that the tax which will be paid for this purpose is not more than the thousandth part of what will be paid to kings, priests and nobles who will rise up among us if we leave the people in ignorance." 

                                                         -- Thomas Jefferson (to George Wythe, August 13, 1786)




Remember when NASA selected a school teacher, Christa McCaulif, to be the first civilian as well as the first woman in space?

Now some, such as N.J. Governor Chris Christie, belittle teachers, professors, and universities, belittling the value of learning, of education. 


Embedded image permalink College costs, including tuition, books & supplies, and room & board (or commuter transportation) have risen far faster than and far higher as a percent of average family income than the costs of other citizen essentials. Also the cost of borrowing for college far exceeds that of other essential costs, such as mortgages, and that which the U.S. government charges banks to borrow. 

The U.S. government should charge college students the same interest rate that it charges banks to borrow -- the Federal Reserve Bank's Discount Rate, which happens to be 0.75%. The current U.S. government "Stafford Loan" rates are 3.86% for undergraduate school and 5.41% for graduate school.  

The interest rate the U.S. government guaranteed loans charge to college students is more than 5 times the discount rate for undergraduate school and more than 7 times the discount rate for graduate school. 

Again, U.S. government guaranteed student loans for college education costs more than 5 times for undergraduate and more than 7 times for graduate school than the interest rate as U.S. government Federal Reserve guaranteed borrowing by banks.

Do you see the wrongness of charging 5-7 times more for a college student loan than a Fed bank loan? Do you see the inconsistency with our stated national values? And, don't you see the consistency argument for all-out government support for college education in a free market global economy?

U.S. college tuition rose more than 10-fold ... more than 1,000% ... during the past 30 years. The consumer index rose about 250%. 



But U.S. median household income only rose approximately 20% during this same period.  



Clearly, a college tuition has been growing out of reach for a long time. The historical tuition prices charts are in nearly every article on the subject of college. That said, I'm glad to hear the issue rising to the top of voters' concerns and, perhaps, getting serious initiatives to eliminate the college cost problem without gutting the college education. 



However, President Obama and Congress's legislation -- to make student loans directly from the government at annual repayment rates that cannot exceed 10% of a student's annual income during the repayment years -- only covers a small share of the total student loans outstanding and, going forward, available to new students and the interest rates are nearly 10-times the rate paid by banks to the FED. Furthermore, these Stafford Loans have annual loan limits that do not cover the cost of college. 

Let's increase government Stafford Loans amounts to realistic college and graduate school tuition costs and charge interest at the same rate that banks pay to the Federal Reserve. Our democracy and free trade global economy demand it.

Let's get real!



Saturday, December 21, 2013

Republican Governors' Hippocracy on ObamaCare Medicaid Expansion

In total, only 12 of the 27 Republican state governors have outright rejected any form of participating in an ObamaCare approved Medicaid expansion. That means that 15 of the 27 either have committed to participation or remain undecided.

Specifically, accoding to research by The Advisory Board (30-year consulting company):

Fully 11 of the 27 Republican governors deciding to take ObamaCare's additional Medicaid federal funds and 4 are undecided officially at this point.

Of these 11 Republican governors who definitely will participate in the program, 8 plan to participate with the Medicaid expansion program as-is and 3 support some alternative versions of the plan specifics (which is permitted under ObamaCare if approved by CMS). 

Monday, August 26, 2013

U.S. Companies Profiting From Foreign Forced Labor Not New to Current Generation -- WARNING: Actual Photos

"There is a kind of market determinism in the air, which easily meshes with the techno-determinism of unconsidered speech, a tendency to treat the Market as the Marxists treat History—as a force overriding human choice and responsibility. There is no such thing as "business ethics," Peter Drucker has pertinently observed, only ethics." 

The Atlantic Magazine, April 4, 2001


Starting 100 Years Ago

Dangerous, even inhumane, working conditions in American factories first burst onto the national press in coverage of the Triangle WaistShirt Factory Fire (The PBS American Experience documentary video available for free viewing on this tragedy is well worth watching.) on March 25, 1911 killed 146 woman garment workers (mostly by burning or jumping out windows) locked into an unsafe factory floor in NYC. 



The Triangle Waistshirt Company was the biggest, most successful, most profitable women's shirt business in America ... so could have afforded better conditions.

Although the fire led to NYC workplace safety laws, some of America's biggest companies still didn't get the message. But they did start looking outwards.



"NOBODY MADE A GREATER MISTAKE THAN HE WHO DID NOTHING BECAUSE HE COULD ONLY DO A LITTLE" 

Yes, that was then. But, as recently as 2001, IBM was sued for its blatant dealings with Hitler in the form of doing profitable business, such as conducting the census that Nazi Germany used to identify Jews. 

UK's Daily Telegraph newspaper reported ("IBM Sued as 100 Companies Accused of Nazi Links", Tony Paterson & David Wastell, February 18, 2001) that as many as 100 American companies did business in Nazi Germany, mostly profiting from forced labor.

The New York Times story "A Fund is Planned by US Companies for Nazi Victims" published (a year earlier) on April 29, 2000 supports the Daily Telegraph report: "The fund, to be set up under the auspices of the United States Chamber of Commerce, is at least partly intended to head off class-action lawsuits against well-known American companies that had subsidiaries in Germany during the war or later purchased companies that had operations there."

THE BUSH FAMILY and NAZI SLAVE LABOR


Even President George W. Bush's grandfather -- and President George H.W. Bush's father -- the late U.S. Senator (and one time Wall Street financier) Prescott Bush was implicated, as a Director of a company using forced labor in Nazi Germany. 


The US Holocaust Museum online resources on all types of Nazi era slave-forced labor.

As reported by UK's The Guardian newspaper "How Bush's Father Helped Hitler's Rise to Power"
"George Bush's grandfather, the late US senator Prescott Bush, was a director and shareholder of companies that profited from their involvement with the financial backers of Nazi Germany.


"The Guardian has obtained confirmation from newly discovered files in the US National Archives that a firm of which Prescott Bush was a director was involved with the financial architects of Nazism.
"His business dealings, which continued until his company's assets were seized in 1942 under the Trading with the Enemy Act, has led more than 60 years later to a civil action for damages being brought in Germany against the Bush family by two former slave labourers at Auschwitz and to a hum of pre-election controversy.
"The evidence has also prompted one former US Nazi war crimes prosecutor to argue that the late senator's action should have been grounds for prosecution for giving aid and comfort to the enemy."
Perhaps, The Guardian chose to publish that expose in connection to George W. Bush's support for using the Nuremberg Defense to protect U.S. interrogators of suspected terrorists. 

The following excerpt is from a classified report prepared by Pentagon attorneys for Defense Secretary Donald Rumsfeld, as reported in The Wall Street Journal in "Pentagon Report Set Framework for Use of Torture" (by Jess Bramin, June 07, 2004):

To protect subordinates should they be charged with torture, the memo advised that Mr. Bush issue a "presidential directive or other writing" that could serve as evidence, since authority to set aside the laws is "inherent in the president." 

CLICK for a partial list of companies in Germany using Nazi concentration camp and prisoner of war camp forced labor.

The Nuremberg Defense is defined as:  "Many of those defendants claimed that they were not guilty of the charges against them as they were "only following orders."


IN THE PRESENT. 


Photo: Tony Law

Reports had been leaking out since the 1990's about dangerous, callous and un-American workplace conditions in China, Bangladesh, and other outsourcing havens. But they didn't seize the attention of American public until the 2011 exposes by several media sources on Foxconn where Apple outsourced iPhone and iPad production.

Wired Magazine published this story "1 Million Workers. 90 Million iPads. 17 Suicides. Who's to Blame?" (by Joel Johnson, February 28, 2011):

"The nets went up in May, after the 11th jumper in less than a year died here. And they seem to have worked. Since they were installed, the suicide rate has slowed to a trickle.
"Foxconn, the single largest private employer in mainland China, manufactures many of the products—motherboards, camera components, MP3 players—that make up the world’s $150 billion consumer-electronics industry. Foxconn’s output accounts for nearly 40 percent of that revenue. Altogether, the company employs about a million people, nearly half of whom work at the 20-year-old Shenzhen plant. But until two summers ago, most Americans had never heard of Foxconn.
"That all changed with the suicides. ... Some saw the Foxconn suicides as a damning consequence of our global hunger for low-cost electronics. Reports from inside the factories warned of “sweatshop” conditions; old allegations of forced overtime burbled back to life. Foxconn and its partners—notably Apple—found themselves defending factory conditions while struggling to explain the deaths. “Suicides in China Prompt Damage Control,” blared The New York Times."
50 Chinese workers at Foxconn, threatened to commit suicide by leaping from their factory roof in protest at their working conditions
The Guardian (UK) newspaper published "Mass Suicide Protest at Apple Manufacturer Foxconn's Factory" by Malcolm Moore on January 11, 2012 in which he quoted one employee protest leader:

"We were put to work without any training, and paid piecemeal," said one of the protesting workers, who asked not to be named. "The assembly line ran very fast and after just one morning we all had blisters and the skin on our hand was black. The factory was also really choked with dust and no one could bear it," he said.

The New York Times published "In China, Human Costs Are Built Into an iPad" by Charles Duhigg & David Barboza on January 25, 2012 in which they cited some of the working conditions:


"Employees work excessive overtime, in some cases seven days a week, and live in crowded dorms. Some say they stand so long that their legs swell until they can hardly walk. Under-age workers have helped build Apple’s products, and the company’s suppliers have improperly disposed of hazardous waste and falsified records, according to company reports and advocacy groups that, within China, are often considered reliable, independent monitors.
"More troubling, the groups say, is some suppliers’ disregard for workers’ health. Two years ago, 137 workers at an Apple supplier in eastern China were injured after they were ordered to use a poisonous chemical to cleaniPhone screens. Within seven months last year, two explosions at iPad factories, including in Chengdu, killed four people and injured 77. Before those blasts, Apple had been alerted to hazardous conditions inside the Chengdu plant, according to a Chinese group that published that warning."
With the pressure to produce toys in time for Christmas, factory workers in China are forced to work long hours and sleep in the factory
Human rights campaigners have frequently raised concerns over the conditions of Chinese factory workers who make an estimated £150 a month
in which they point out:  "A report in 2009 revealed that 1 million Chinese factory workers suffered industrial accidents in that year alone (among 3.5 million workers in 8,000 toy factories)" And ... "Mostly female workers, aged 18-25, work from 7:45 AM to 10:55 PM, sometimes with as many as 1,000 workers crammed into one 105-foot by 105-foot room." 
Chinese factory workers in the country which makes 75 per cent of the world¿s toys in an estimated 8,000 toy-making factories employing 3.5 million people

The New York Times reported "Report on Deadly Factory Collapse in Bangladesh Finds Widespread Blame" (by Jim Yardley, May 22, 2013) about 1,127 garment workers killed and building owner and tenant factories' owners indicted: 
"The factory owners urged workers to return to their jobs despite evidence that the building was unsafe, the report said. “They compelled them to start,” said Main Uddin Khandaker, a high-ranking official in Bangladesh’s Home Ministry, who led the investigation."
Then, on June 5, 2013, The Guardian Newspaper (UK) published "Bangladesh Police Open Fire on Collapsed Factory Protest" reporting about a peaceful demonstration by former employees and families of the killed with the demand for the government and their employers to make good on promises of care and back-pay. 
Protest over Savar Rana Plaza building collapse

COMPLETING THE 100-YEAR CIRCLE
Finally, on July 15, 2013, Reuters could report that the Bangladesh government passed labor laws that ensure the right to form labor unions, and:
"The legislation puts in place provisions including a central fund to improve living standards of workers, a requirement for 5 percent of annual profits to be deposited in employee welfare funds and an assurance that union members will not be transferred to another factory of the same owner after labor unrest."
So nothing has changed, except where American companies locate the factories. And we let them do it. "Out of site, out of mind."
102 years after the Triangle Waistshirt Factory Fire (in 1911), the same horrendous working conditions in Bangladesh and China garment, toy, and electronics factories are suddenly ... but at least ... being recognized with high-profile press coverage. 

"The only thing necessary for the triumph of evil is for good men to do nothing." 
Why did I write this post and write it this way ... long, photos, and in red ...? 

I wrote it long and with startling photos so that you look in the mirror. 
Every time we buy one of the products made by forced labor like this, feel the guilt and shame ... because the company executives won't and because your actions are the only way things will get better for these people.
Think about your grandparents, great-grandparents and other relatives who worked in the sweatshops and workhouses 6-7 days per week, 15+ hours per day. This is what you are supporting every time you buy those products ... and remain silent.
I wrote this post in red (rather than my usual teal) to reflect the blood shed for those who likely made this computer and the blood money profits earned from it.
Stand up. Speak up. 
by Steve Reichenstein

Friday, August 16, 2013

Why ObamaCare Makes Sense: Some Different Facts About the Affordable Care Act

I support ObamaCare -- the Affordable Care Act -- because it reduces health care spending without reducing actual patient care and it provides health insurance coverage to include more than 30-million more Americans so that we near universal health insurance coverage. 

My support for ObamaCare is not ideological, it's practical. "This is not personal; it's business." And, healthcare reform clearly is an urgent priority. 

We all agree that the United States spends the largest share of the largest economy in the world on healthcare ... even more than other members of the Organization of Economic Cooperation and Development, a group of developed industrialized nations of which U.S. is a member. More than 10% of American citizens and permanent residents are uninsured.



(Above graphs compare U.S. healthcare spending versus the complete Organization for Economic Cooperation and Development ... of which the U.S. is a member)


Uncompensated Care: Health care for the uninsured and under-insured.


Currently, we pay for the health care of the non-insured and under-insured in our own higher health insurance premiums due to charity care at hospital emergency rooms and lost economic productivity.

In it's healthcare reportingJustFacts.com : Uncompensated care spending amounted to 6% of hospitals' 2009 total costs. The U.S. Federal Reserve Bank estimated that, in a 2003 bulletin "Overview of Consumer Data and Credit Reporting", that 52% of all collections by agencies and creditors was for healthcare bills.

The 2008 Kaiser Family Foundation (www.kff.org) study "Covering the Uninsured: Key Facts" estimates spending on the uninsured was $57.4-billion -- of which $42.9-billion (or 75%) was paid by federal and state funds, mainly through Medicaid payments to hospitals, and that $14.5-billion (or 25%) was paid by private funds, mainly  physicians and hospitals, and that this $14.5-billion represented nearly 2% of the $829.9-billion spent by insurance plans. 

McKinsey & Company, a major consulting firm as published several research articles on the health care trends and technologies -- here now and emergent -- that support the premises of the Affordable Care Act on continual, significant cost savings through productivity and outcome savings. 

Industry association America's Health Insurance Plans (AHIP) reports that "A 2009 study by Families USA (a health care consumer group) found that uncompensated care costs in 2008 imposed a "hidden tax" on family health coverage of $1,017 (per family)."

The 2009 study goes on to say: "As more people join the ranks of the uninsured, the hidden health tax is growing,' said Ron Pollack, Executive Director of Families USA. “That tax hits America’s businesses and insured families hard in the pocketbook, and they therefore have a clear financial stake in expanding health coverage as part of health reform.”

Together, the point might be made that we already pay for uncompensated care -- health care for the uninsured -- through higher taxes and insurance premiums. Also, the current spending on health care for the uninsured is not cost-effective (inefficient) because it's so heavily weighted on hospital use for primary care and late-stage care for undetected & untreated care.

ObamaCare is not a government take-over of our health care system.

The Affordable Care Act actually is a boon to private insurance companies -- in terms of the numbers of paying insureds and in terms of more efficient application of the basic premise of insurance: Based on the statistical Law of Large Numbers, many people pay premiums so that those among them who happen to need expensive treatment will be able to afford it.

The Basic Premise of Insurance in Health Insurance.

During the Great Depression of the 1930's, physicians and hospitals suffered, as did American families, because most people could not afford to pay out-of-pocket for sick care treatments ... because of the depression. So, Blue Cross and Blue Shield were born: Originally, one for physician insurance and the other for hospital insurance. 

However, a comprehensive insurance system like the Affordable Care Act has to work fully in order to work efficiently ... as soon as possible. 


       

I question why the Obama Administration continually issues waivers and delays implementation of the Affordable Care Act. And this is the central issue of this post. 

Comparison of Implementation Time for ObamaCare vs. Y2K


Compare the ObamaCare situation to the challenge presented by Y2K -- just 15 years ago. every company had to change the dates part of every software from a 2-digit year to a 4-digit year by the year 2000 because, during the 1960's and 1970's, in order to be minimize development costs, software was programmed to accept the last 2 digits of the year and start again at 1900 ("00") after 1999 ("99"). Government feared nuclear launch glitches and companies feared erasing of all their records since 1900!!

Updating for Y2K became a high-profile only 2 years prior to the big day!! The big software investments and rush to prepare for Y2K began in earnest in 1998

                                                  

Changing the software for nearly every computer in America (perhaps the world) was achieved in just 2 years!!!!!!!!!!!!! 

Health insurers and employers have had 3-4 years to prepare software and decisions for implementation the Affordable Care Act ... Obamacare ... yet all businesses, worldwide, had 2 years to prepare software for Y2K. Even the governments, like our Defense Department, raised the Y2K issue in 1998 and their 1999 budget requests.    



The Y2K "bug" was a huge issue and challenge!! It dominated the news from 1998-2000. Jobs and spending to repair-prepare legacy systems directly boosted the economy. For example, even supermarkets, like Whole Foods, spent a fortune on it.

So why has 3+ years for health insurers and employers not been enough time for simple, available software programs to be implemented for Affordable Care Act ... Obamacare ... ??



Think about it. Personal health records and physician-hospital-insurer-employer electronic medical records (EMS software) have been around ... and booming businesses for several years!!! 



Healthcare providers have been living with the federal mandate to implement electronic medical records.

Since 2011, the federal government also has imposed penalties as of 2014 but also immediately offered financial incentives ... up to $44,000 for a family medical practice ... to help the millions of physician practices afford to implement "significant use" of electronic medical records EMR.

So what's the real problem?



My opinion

Rescind all of the waivers. The Affordable Care Act ... Obamacare ... should continue to implement as enacted.

by Steve Reichenstein




Thursday, August 15, 2013

Not sure about Latino-Hispanic immigration reform? Read these statistics.

The United States Hispanic population is the fastest growing group, fastest growing first-time home buyers, and fastest growing in education and income attainment, according to a National Association of Hispanic Real Estate Professionals's study.



Specifically, Hispanics formed 1 million new households 2010-2012 and comprised 51% of all new-owner buyers of homes in 2012. Fully 40% of Hispanic households earned more than $50,000 in 2012. (The median U.S. household income 2007-2011 for all American households was $52,762 annually.)


In 2009, even at the depths of the Great Recession, according to the U.S. Census Bureau, 40% of American Hispanic families and 58% All American families earned more than $50,000 annually.

Marketers are quite aware of these trends.


"As recently as 2000, fewer than half of Latinos enrolled in college within months of finishing high school. But in 2012, the figure was 69 percent, compared with 84 percent for Asians, 67 percent for whites and 63 percent for blacks." (New York Times, May 9, 2013)

By 2012, Latino high school graduates were more likely than their white peers to believe that a college education is essential to getting ahead in life, according to a Pew Research Center survey. And, Latino high school graduates are more likely to go to college than their white peers. Overall, Latinos have made bigger gains than other groups in high school completion and college attendance.

PHC-2013-05-college-enrollment-01

Also according to Pew Research Center studies, as of 2009, 88% of Hispanics aged 16 and older believed that a college education is necessary to get ahead in life versus 74% of all Americans aged 16 and older.

American Hispanics are an upwardly mobile ethnic group by all measures. 



Sunday, August 11, 2013

What is a Congressman / Congresswoman?

        

The U.S. Congress includes both the Senate and House of Representatives. So both Senators and Representatives are Congressmen.

So why do to Representatives and the media refer to Representatives as “Congressmen”? What’s the problem with the title “Representative”? Not important-sounding enough?

My Representative, my Member of the House of Representatives, Rodney Frelinghuysen, even signs his correspondence to constituents:  

Sincerely, 
Rodney P. Frelinghuysen 
Member of Congress

I don't know whether this bothers me more or the fact that he begins his robo-responses:

Dear Friend: 

What's your opinion: Member of the House of Representatives, Member of Congress, or Your House Representative?

By Steve Reichenstein

Sunday, August 4, 2013

Drug Laws: Prisons, Health, and Economics

The United States joined other nations in calling the War on Drugs a Failure and signing a 2011 Global Commission on Drugs Report with recommendations that include decriminalization of drug possession, regulated distribution of marijuana, and treating drug addiction as a health issue -- fight the War on Drugs with health care tools.



One of the health issues related to drug use and prison that pop out in the statistics is a growing epidemic of hepatitis-C, a potentially fatal variant of hepatitis that's mostly treatable but at substantial cost to our health care ... and prison ... system.

The explosion of incarcerating American citizens ... with nearly all of the increase attributed to drug offenses ... raises another issue but one that is inseparable from the War on Crime. 

In 1980, the U.S. incarcerated 150 per 100,000 citizens in prison and, in 2012, 30 years later, the U.S. incarcerates 760 per 100,000 citizens in prison. That's a five-fold ... 500% ... increase. That's the incarceration-driven War on Drugs.

By comparison, according to Fareed Zakaria's article "Incarceration Nation" (Time Magazine, 2012-April-02), Mexico only incarcerates 208 per 100,000 ... Brazil 242 per 100,000 ... England 153 per 100,000 ... South Korea 97 per 100,000 ... France 96 per 100,000 ... Germany 90 per 100,000 ... and Japan 63 per 100,000. The United states incarcerates 3-times more citizens per 100,000 than Brazil and 5-times more than England.



In dollars, during 2009, 1.3-million Americans were arrested for drug possession. At an estimated $45,000 each, the incarceration-driven War on Drugs cost our economy an estimated $60-billion annually to incarcerate (if all were jailed).

In total, the United States now incarcerates 6-million citizens ... and, as Adam Gopnik cites in his article "The Caging of America" (The New Yorker magazine, 2012-January-30), that's more than Stalin held in the Soviet Union's Gulags!!   

According to the United States Justice Department's Bureau of Prisons, drug offenses ranks first with 47% of all federal inmates there for drugs ... That's 3-times more than the second ranked of 16% there for weapons, explosives, and arson ... 4-times more than third ranked 11% imprisoned for immigration offenses ... 6% imprisoned for sex crimes and 6% for extortion, fraud, and bribery ...  4% each for robbery and for burglary, larceny, and property offenses ... and less than 1% each for any other crimes.



According to sources focused on this issue like Conscious Life News, whereas the United States federal prisons incarcerate nearly 90,000 on drug offenses, the states incarcerate an additional 240,000 Americans in prison on drug offenses. That's 330,000 Americans incarcerated for doing drugs ... and very often serving long, mandatory sentences.

And, each of those indicted and/or imprisoned on drug offenses will be marked for life as a criminal when applying for jobs. In some states, they are banned for life from voting.

AOL JOBS reports that people with a drug possession conviction have a 50% less chance of being called back after an interview or getting the job. 

NPR reports: "While it's generally illegal for employers to indiscriminately deny all applicants with criminal records, many still do. A quick look at New York job postings on Craigslist, for example, reveals common caveats: "absolutely no felony convictions" or "must have clean criminal record." 

So what are we waiting for? Let's decriminalize drug possession, allow for regulated sale of marijuana (like we do with liquor), release all those now incarcerated for drug possession, and expunge the criminal records of any mention of drug possession offenses.

What do you say?

by Steve Reichenstein

Wednesday, July 31, 2013

A Bell-Shaped Curve Reflects a Healthy Middle Class, We Don't Have One

Do you remember from school the Bell-Shaped Curve? 

Investopedia defines the Bell-Shaped Curve as:  "The most common type of distribution for a variable. The term Bell Curve comes from the fact that the graph used to depict a normal distribution consists of a bell-shaped line. The highest point in the curve, or the top of the bell, represents the most probable event. All possible occurrences are equally distributed around the most probable event, which creates a downward-sloping line on each side of the peak."

In a democratic society with a healthy market economy, we would expect to see most of the people earning approximately the middle income. So our Bell-Shaped Curve would show that middle income is the most frequently occurring income and most incomes surround the middle. Most incomes fit under the domed part of the bell. 

In an ideal Bell-Shaped Curve, shown below, the most normal income distribution expected, the closer we get to the middle income, the more people earn it: Both above and below. And, the further we get from the middle income, the fewer people earn it: So the fewest number of people are very poor or very rich. 




According to the IRS, in 2010, the U.S. income distribution, presented as number of personal income tax returns by income range, of all Americans was not a Bell-Shaped Curve -- quite far from it. The chart from the IRS below shows the share of personal income tax returns by income group. It shows an income distribution skewed heavily towards the lower income groups. In 2010, extremely few earned high incomes, the largest percentage was in the middle income region, and nearly an equally large number of Americans earned low incomes. As the trend line indicates, this reflects an economy with a bulging low-income population.



The appropriate economic policies for a democratic society with a healthy market economy would be those that greatly reduce the number of people at the low income side of the curve -- moving them into the middle class "dome of the bell" -- and greatly the number of people at the high income side of the curve, so we move towards a normal income distribution and evolve the society more democratic and economy more healthy: A Bell-Shaped Curve.

Charts below from the IRS, show U.S. income distribution, based on number of income tax returns at income ranges in the 2 years prior to 2008 Wall Street Crash ... and that there was NO Bell-Shaped Curve even distribution of income. In fact, distribution of income was even worse when U.S. economy was humming along.





The Chart below compares number of IRS individual income tax returns filed in 1985, 2006, and 2007. The U.S. dollar inflation calculator estimates that $1 in 1985 would be worth nearly double in 2006 and 2007. (Inflation 1985-2006 totaled 87.4% and inflation 1985-2007 totaled 92.7%.) 


This impacts the chart below by explaining the decrease in number of tax returns by those earning incomes under $10,000: Noted inflation of 87.4-92.7% would have pushed most of them into the $10,000 to < $30,000 income range. Half as many of individuals in that range would be pushed up into $30,000 to < $50,000. But the yet higher income ranges are much wider, hence less influenced by the inflation. 

Therefore, this chart below shows increase in constant dollars among upper income ranges while the lower and middle remained mainly unchanged.



This final chart, below, shows U.S. median income in constant dollars (all adjusted to 1975 dollars) since the end of World War II as it actually rose and, the dotted line, as it would have risen if the median income rose at the same rate as GDP. 

Notice that median income and per capita GDP rose in proportion until the late 1970's, when median income grew at a far slower, lower rate than per capita GDP rose. During the period discussed above, 1985-2007, the divergence in growth rate worsened. 

All in 1975 constant dollars: Median income was approximately $50,000. It rose to approximately $60,000 by 2007, but could have risen to approximately $90,000 if median income growth had kept pace with per capita GDP growth.  Median income grew by 20% during this period, but could have grown by 80% during this period.


This chart also indicates that, historically, the U.S. bell-shaped curve shift to today's non-bell-shaped curve began approximately in 1970-1980. 

Also starting approximately at that time were financial deregulation, repealing or not enforcing workplace conditions rules, and significantly lowering the tax rates on the upper end of the income population.

Does a rising tide lifts all boats ... and do so proportionately at about the same percentage? Well, it depends upon having a fair playing field. Clearly, tax policy, workplace conditions rules, and financial transaction regulations seem to significantly influence which boats rise. 

by Steve Reichenstein




Tuesday, July 30, 2013

Minimum Wage, GDP Growth, and Walton-omics

The OECD

Australia's economy has had 20 years of uninterrupted economic growth, low inflation, and low unemployment. Australia even maintained positive GDP growth during the 2008-2010 global recession! 

The chart below shows GDP for Australia and a sample of other nations in the OECD Organization of Economic Cooperation and Development. Australia and the United States are among the members. Australia is regularly among the top performers.

And ... Australia's federal minimum wage is $16.37 per hour ... which is more than $15.00 per hour in U.S. dollars. Minimum wage in the United States is just $7.25. 




The U.S. Federal 

The United States economy has been on a roller coaster of growth and unemployment (but steady at low inflation) for 40 years ... at a U.S. federal minimum wage that has declined in real (constant) dollars and, currently, stands at $7.25 per hour. NOTE that this is the U.S. FEDERAL minimum wage, meaning that employers can pay less in states with lower STATE minimum wages. 

In a 40-hour per week work week, a minimum wage job  at $7.25 per hour pays less than $15,000 per year and at $15.00 per hour pays $20,000 per year. In context, the official United States poverty level is $15,000 per year. 

Yes, minimum wage employees are paid less than the poverty rate. In the United States, the richest nation in history, minimum wage employees literally are "The Working Poor". Is job creation at less than the poverty rate the kind of job creation we want?

Taken together, all of the above and below facts show that in today's global market the minimum wage in an industrialized country does not suppress economic growth or push up inflation and unemployment.

On the contrary, a higher minimum wage likely would expand the economy by an amount greater than a 1:1 ratio -- meaning that for every dollar added to minimum wage the GDP would grow by more than one dollar -- because the velocity of money is highest among the lowest paid. 

Velocity of money is one way of measuring the degree of income sufficiency and of economic health. 

The more personal income you earn, the larger the percentage of that income you are likely to save or invest, rather than spend. And, visa-versa. The more of you your income that you spend, the more that dollar is passed from employee to baker to landlord to auto dealer ... and so on. 

Additionally, the facts -- U.S. Department of Labor economic statistics, since 1938, show that U.S. federal minimum wage has been increased just prior and during economic booms, meaning that minimum wage hikes did not suppress growth in GDP or job creation.


Minimum hourly wage of workers in jobs first covered by
Effective Date1938 Act 11961 Amendments 21966 and Subsequent
Amendments3
Nonfarm
Farm
Oct 24, 1938
$0.25
Oct 24, 1939
$0.30
Oct 24, 1945
$0.40
Jan 25, 1950
$0.75
Mar 1, 1956
$1.00
Sep 3, 1961
$1.15
$1.00
Sep 3, 1963
$1.25
Sep 3, 1964
$1.15
Sep 3, 1965
$1.25
Feb 1, 1967
$1.40
$1.40
$1.00
$1.00
Feb 1, 1968
$1.60
$1.60
$1.15
$1.15
Feb 1, 1969
$1.30
$1.30
Feb 1, 1970
$1.45
Feb 1, 1971
$1.60
May 1, 1974
$2.00
$2.00
$1.90
$1.60
Jan. 1, 1975
$2.10
$2.10
$2.00
$1.80
Jan 1, 1976
$2.30
$2.30
$2.20
$2.00
Jan 1, 1977
$2.30
$2.20
Jan 1, 1978
$2.65 for all covered, nonexempt workers
Jan 1, 1979
$2.90 for all covered, nonexempt workers
Jan 1, 1980
$3.10 for all covered, nonexempt workers
Jan 1, 1981
$3.35 for all covered, nonexempt workers
Apr 1, 19904
$3.80 for all covered, nonexempt workers
Apr 1, 1991
$4.25 for all covered, nonexempt workers
Oct 1, 1996
$4.75 for all covered, nonexempt workers
Sep 1, 19975
$5.15 for all covered, nonexempt workers
Jul 24, 2007
$5.85 for all covered, nonexempt workers
Jul 24, 2008
$6.55 for all covered, nonexempt workers
Jul 24, 2009
$7.25 for all covered, nonexempt workers

The U.S. States

The table below pulls a sample of U.S. states to look for a correlation, a relationship, between states' minimum wage and GDP economic growth in 2012 and per capital income rankI selected states from each geographic section of the nation as well as each range of per capita income in the nation. 

The actual 2012 data shows no relationship between a state's minimum wage, GDP annual economic growth, and/or per capital personal income rank

For example, Washington state had one of the highest gains in GDP and highest minimum wage rate, while Texas had the one of the highest gains in GDP and lowest minimum wage rate. California and Minnesota both had 3.5%, among the highest, gains in GDP, yet California had one of the highest minimum wage rate and Minnesota one of the lowest. 


STATE PER CAPITA INCOME 2012 (RANK) CHANGE IN GDP 2012 (PERCENT)  MINIMUM WAGE 2012 (DOLLARS) 
Washington (state) 13 3.6%  $ 9.19
Connecticut 1 0.0%  $ 8.25
California 11 3.5%  $ 8.00
Minnesota 12 3.5%  $ 7.25
Ohio 26 2.2%  $ 7.85
Florida 21 2.4%  $ 7.79
North Carolina  33 2.7%  $ 7.25
Texas 29 4.8%  $ 7.25

Historical changes in Minimum Wages by State also shows that increases in Minimum Wage have occurred before and during economic booms without impeding, and perhaps improving, GDP economic growth and job creation. The historical table below from the U.S. Department of Labor details specific changes in minimum wage by state by year:  
CHANGES IN BASIC MINIMUM WAGES IN NON-FARM EMPLOYMENT UNDER STATE LAW: SELECTED YEARS 1968 TO 2013
State or other
jurisdiction
1968 (a)1970 (a)19721976 (a)197919801981
Federal (FLSA)$1.15 & $1.60$1.30 & $1.60$1.60$2.20 & $2.30$2.90$3.10$3.35
Alabama
Alaska2.102.102.102.803.403.603.85
Arizona18.72 - 26.40/wk(b)18.72 - 26.40/wk(b)18.72-26.40/wk(b) 
Arkansas1.25/day(b)1.101.201.902.302.552.70
California1.65(b)1.65(b)1.65(b)2.002.902.903.35
Colorado1.00 - 1.25(b)1.00 - 1.25(b)1.00 - 1.25(b)1.00 - 1.25(b)1.901.901.90
Connecticut1.401.601.852.21 & 2.312.913.123.37
Delaware1.251.251.602.002.002.002.00
Florida
Georgia1.251.251.231.251.25
Hawaii1.251.601.602.402.652.903.10
Idaho1.151.251.401.602.302.302.30
Illinois1.402.102.302.302.30
Indiana1.151.251.251.252.002.002.00
Iowa
Kansas1.601.601.60
Kentucky.65 - .75(b).65 - .75(b).65 - .75(b)1.602.002.152.15
Louisiana
Maine1.401.601.40 - 1.802.302.903.103.35
Maryland1.00 & 1.151.301.602.20 & 2.302.903.103.35
Massachusetts1.601.601.752.102.903.103.35
Michigan1.251.251.602.202.903.103.35
Minnesota.70 - 1.15(b).70 - 1.15(b).75 - 1.601.802.302.903.10
Mississippi
Missouri
Montana1.601.802.002.002.00
Nebraska1.001.001.001.601.601.601.60
Nevada1.251.301.602.20 & 2.302.752.752.75
New Hampshire1.401.45 & 1.601.602.20 - 2.302.903.103.35
New Jersey1.401.501.502.202.503.103.35
New Mexico1.15 - 1.401.30 - 1.601.30 - 1.602.002.302.652.90
State or other
jurisdiction
1968 (a)1970 (a)19721976 (a)197919801981
New York1.601.601.852.302.903.103.35
North Carolina1.001.251.452.002.502.752.90
North Dakota1.00 - 1.251.00 - 1.451.00 - 1.452.00 - 2.302.10 - 2.302.60 - 3.102.80 - 3.10
Ohio.75 - 1.25(b).75 - 1.25(b).75 - 1.25(b)1.602.302.302.30
Oklahoma1.001.001.401.802.002.003.10
Oregon1.251.251.25`2.302.302.903.10
Pennsylvania1.151.301.602.202.903.103.35
Rhode Island1.401.601.602.302.302.652.90
South Carolina
South Dakota17.00 - 20.00/wk1.001.002.002.302.302.30
Tennessee
Texas1.401.401.401.401.40
Utah1.00 - 1.15(b)1.00 - 1.15(b)1.20 - 1.35(b)1.55 - 1.70(b)2.20 - 2.45(b)2.35 - 2.60(b)2.50 - 2.75(b)
Vermont1.401.601.602.302.903.103.35
Virginia2.002.352.352.65
Washington1.601.601.602.20 - 2.302.302.302.30
West Virginia1.001.001.202.002.202.202.75
Wisconsin1.25 (b)1.30 (b)1.45 (b)2.102.803.003.25
Wyoming1.201.301.501.601.601.601.60
District of Columbia1.25 - 1.401.60 - 2.001.60 - 2.252.25 - 2.752.46 - 3.002.50 - 3.502.50 - 3.75
Guam1.251.601.902.302.903.103.35
Puerto Rico.43 - 1.60.43 - 1.60.65 - 1.60.76 - 2.501.20 - 2.501.20 - 2.501.20 - 3.10
U.S. Virgin IslandsNANANANA2.903.103.35
State or other
jurisdiction
1988199119921994199619971998
Federal (FLSA)$3.35$3.80$4.25$4.25$4.25$4.75$5.15
Alabama
Alaska3.854.304.754.754.755.255.65
Arizona
Arkansas3.253.353.654.254.25[c]4.25[c]5.15[c] 
California3.354.254.254.254.254.755.15
Colorado3.003.003.003.003.004.755.15
Connecticut3.754.254.274.274.274.775.18
Delaware3.353.804.254.254.655.005.15
Florida
Georgia3.253.253.253.253.25(d)3.25(d)3.25(d)
Hawaii3.853.853.855.255.255.255.25
Idaho2.303.804.254.254.254.255.15
Illinois2.303.804.254.254.25[c]4.75[c]5.15[c] 
Indiana2.003.353.353.353.35(e)3.35(e)3.35(e)
Iowa4.254.654.654.654.755.15
Kansas1.602.652.652.652.652.652.65
Kentucky3.353.804.254.254.254.254.25
Louisiana
Maine3.653.854.254.254.254.755.15
Maryland3.353.804.254.254.254.755.15
Massachusetts3.653.754.254.254.755.255.25
Michigan3.353.353.353.353.35(e)3.35(e)5.15(e)
Minnesota3.55 & 3.50(f) 4.25(g)4.25(g)4.25(g)4.25(g)4.25(g)5.15(g)
Mississippi
Missouri3.804.254.254.254.755.15
Montana3.353.804.25(g)4.25(g)4.25(g)4.75(g)5.15(g)
Nebraska3.353.354.254.254.25[c]4.25[c]5.15[c] 
Nevada3.353.804.254.254.254.755.15
New Hampshire3.553.854.254.254.254.755.15
New Jersey3.353.804.255.055.055.055.05
New Mexico3.353.353.354.254.254.254.25
New York3.353.804.254.254.254.254.25
North Carolina3.353.353.804.254.254.255.15
State or other
jurisdiction
1988199119921994199619971998
North Dakota2.80 - 3.103.404.254.254.254.755.15
Ohio2.303.80(g)4.25(g)4.25(g)4.25(g)4.25(g)4.25(g)
Oklahoma3.353.80(g)4.25(g)4.25(g)4.25(g)4.75(g)5.15(g)
Oregon3.354.754.754.754.755.506.00
Pennsylvania3.353.804.254.254.254.755.15
Rhode Island3.654.254.454.454.455.155.15
South Carolina
South Dakota2.803.804.254.254.254.255.15
Tennessee
Texas3.353.353.353.353.353.353.35
Utah2.50 - 2.75(b)3.804.254.254.254.755.15
Vermont3.553.854.254.254.75(e)5.00(e)5.25(e)
Virginia2.652.653.654.254.25[c]4.75[c]5.15[c]
Washington2.304.254.254.254.904.904.90
West Virginia3.353.353.804.254.25 (d)4.25 (d)4.75 (d)
Wisconsin3.353.803.804.254.254.755.15
Wyoming1.601.601.601.601.601.601.60
District of Columbia3.50 - 4.853.70 - 4.853.90 - 5.454.255.25 (h)5.756.15
Guam3.353.804.254.254.254.755.15
Puerto Rico1.20 - 3.351.20 - 4.25(i)1.20 - 4.25(i)1.20 - 4.25(i)1.20 - 4.75(i)1.20 - 4.75(i)1.20 - 5.15(i)
U.S. Virgin Islands3.354..65(g,,j)4..65(g,,j)4..65(g,,j)4.65(g)4.65(g, j)4.65(g, j)
State or other
jurisdiction 
2000200120022003200420052006
Federal (FLSA)$5.15$5.15$5.15$5.15$5.15$5.155.15
Alabama
Alaska5.655.655.657.157.157.157.15
Arizona
Arkansas5.15[c]5.15[c]5.15[c]5.15[c]5.15[c]5.15[c]5.15 [c]
California5.756.256.756.756.756.756.75
Colorado5.155.155.155.155.155.155.15
Connecticut6.156.406.706.907.107.107.40
Delaware5.656.156.156.156.156.156.15
Florida6.40
Georgia3.25(d)3.25(d)5.15(d)5.15(d)5.15(d)5.15(d)5.15(d)
Hawaii5.255.255.756.256.256.256.75
Idaho5.155.155.155.155.155.155.15
Illinois5.15[c]5.15[c]5.15[c]5.15[c]5.50[c]6.50[c]6.50[c]
Indiana5.15(e)5.15(e)5.15(e)5.15(e)5.15(e)5.15(e)5.15(e)
Iowa5.155.155.155.155.155.155.15
Kansas2.652.652.652.652.652.652.65
Kentucky5.155.155.155.155.155.155.15
Louisiana
Maine5.155.155.756.256.256.356.50
Maryland5.155.155.155.155.155.155.15
Massachusetts6.006.756.756.756.756.756.75
Michigan5.15(e)5.15(e)5.15(e)5.15(e)5.15(e)5.15(e)5.15(e)
Minnesota4.90 - 5.15(g)4.90 - 5.15(g)4.90 - 5.15(g)4.90 - 5.15(g)4.90 - 5.15(g)4.90 - 5.15(g)5.25 - 6.15(g)
Mississippi
Missouri5.155.155.155.155.155.155.15
Montana4.00 - 5.15(g)4.00 - 5.15(g)4.00 - 5.15(g)4.00 - 5.15(g)4.00 - 5.15(g)4.00 - 5.15(g)4.00 - 5.15
Nebraska5.15[c]5.15[c]5.15[c]5.15[c]5.15[c]5.15[c]5.15[c]
Nevada5.155.155.155.155.155.155.15
New Hampshire5.155.155.155.155.155.155.15
New Jersey5.155.155.155.155.155.156.15
New Mexico4.254.254.254.255.155.155.15
New York4.255.155.155.155.156.006.75
North Carolina5.155.155.155.155.155.155.15
State or other 
jurisdiction
2000200120022003200420052006
North Dakota5.155.155.155.155.155.155.15
Ohio2.80 - 4.25(g)2.80 - 4.25(g)2.80 - 4.25(g)2.80 - 4.25(g)2.80 - 4.25(g)2.80 - 4.25(g)2.80 - 4.25(g)
Oklahoma2.00 - 5.15(g)2.00 - 5.15(g)2.00 - 5.15(g)2.00 - 5.15(g)2.00 - 5.15(g)2.00 - 5.15(g)2.00 - 5.15
Oregon6.506.506.506.907.057.257.50
Pennsylvania5.155.155.155.155.155.155.15
Rhode Island5.656.156.156.156.756.756.75
South Carolina
South Dakota5.155.155.155.155.155.155.15
Tennessee
Texas3.353.355.155.155.155.155.15
Utah5.155.155.155.155.155.155.15
Vermont5.75(e)6.25(e)6.25(e)6.25(e)6.75(e)7.00(e)7.25
Virginia5.15[c]5.15[c]5.15[c]5.15[c]5.15[c]5.15[c]5.15[c]
Washington6.506.726.907.017.167.357.63
West Virginia5.15(d)5.15(d)5.15(d)5.15(d)5.15(d)5.15(d)5.15(d)
Wisconsin5.155.155.155.155.155.155.70
Wyoming1.601.605.155.155.155.155.15
District of Columbia6.156.156.156.156.156.607.00
Guam5.155.155.155.155.155.155.15
Puerto Rico3.61 - 5.15(i)3.61 - 5.15(i)3.61 - 5.15(i)3.61 - 5.15(i)3.61 - 5.15(i)3.61 - 5.15(i)3.61 - 5.15(i)
U.S. Virgin Islands4.30 - 4.65(g,j)4.30 - 4.65(g,j)4.30 - 4.65(g,j)4.30 - 4.65(g,j)4.30 - 4.65(g,j)4.30 - 4.65(g,j)4.30 - 4.65 (g)
State or other
jurisdiction 
2007200820092010 20112012  2013
Federal (FLSA)5.155.856.557.257.257.257.25
Alabama............
Alaska7.157.157.157.757.757.757.75
Arizona6.756.907.257.257.357.657.80
Arkansas6.25[c] 6.25[c]  6.25[c] 6.25[c]6.25[c]6.25[c]6.25[c]
California7.508.008.008.008.008.008.00
Colorado6.857.027.287.247.367.647.78
Connecticut7.657.658.008.258.258.258.25
Delaware6.657.157.157.257.257.257.25
Florida6.676.797.217.257.257.677.79
Georgia5.15(d)5.15(d)5.15(d)5.15(d)5.15(d)5.15(d)5.15(d)
Hawaii7.257.257.257.257.257.257.25
Idaho5.155.856.557.257.257.257.25
Illinois6.50[c]7.50[c]7.75[c]8.00[c]8.25[c]8.25[c]8.25[c]
Indiana5.15(e)5.85(e)6.55(e)7.25(e)7.25(e)7.25(e)7.25(e)
Iowa5.157.257.257.257.257.257.25
Kansas2.652.652.657.257.257.257.25
Kentucky5.155.856.557.257.257.257.25
Louisiana............
Maine6.757.007.257.507.507.507.50
Maryland6.156.156.557.257.257.257.25
Massachusetts7.508.008.008.008.008.008.00
Michigan6.95(e)7.15(e)7.40(e)7.40(e)7.40(e)7.40(e)7.40(e)
Minnesota5.25-6.15(g)5.25-6.15(g)5.25-6.15(g)5.25-6.15(g)5.25-6.15(g)5.25-6.15(g)5.25-6.15(g)
Mississippi............
Missouri6.506.657.057.257.257.257.35
Montana4.00-6.15(g)4.00-6.25(g)4.00-6.90(g)4.00-7.25(g)4.00-7.35(g)4.00-7.65(g)4.00-7.80(g)
Nebraska5.15[c]5.85[c]6.55[c]7.25[c]7.25[c]7.25[c]7.25[c]
Nevada6.156.336.55-6.856.55-7.557.25-8.257.25-8.257.25-8.25
New Hampshire5.156.507.257.257.257.257.25
New Jersey7.157.157.157.257.257.257.25
New Mexico5.156.507.507.507.507.507.50
New York7.157.157.157.257.257.257.25
North Carolina6.156.156.557.257.257.257.25
State or 
other jurisdiction
2007200820092010 201120122013
North Dakota5.155.856.557.257.257.257.25
Ohio6.857.007.307.307.407.707.85
Oklahoma2.00-5.15(g)2.00-5.85(g)2.00-6.55(g)2.00-7.25(g)2.00-7.25(g)2.00-7.25(g)2.00-7.25(g)
Oregon7.807.958.408.408.508.808.95
Pennsylvania6.257.157.157.257.257.257.25
Rhode Island7.407.407.407.407.407.407.75
South Carolina............
South Dakota5.155.856.557.257.257.257.25
Tennessee............
Texas5.155.856.557.257.257.257.25
Utah5.155.856.557.257.257.257.25
Vermont7.53(e) 7.68(e)8.06(e)8.06(e)8.15(e)8.46(e)8.60(e)
Virginia5.15[c]5.85[c]6.55[c]7.25[c]7.25[c]7.25[c]7.25[c]
Washington7.938.078.558.558.679.049.19
West Virginia5.856.557.257.257.257.257.25
Wisconsin6.506.506.507.257.257.257.25
Wyoming5.155.155.155.155.155.155.15
District of Columbia7.007.007.558.258.258.258.25
Guam5.155.855.857.257.257.257.25
Puerto Rico3.61-5.15(i)3.61-5.15(i)4.10(i)5.08 – 7.25 (i2)5.08 – 7.25 (i2)5.08 – 7.25 (i2)5.08 – 7.25 (i2)
U.S. Virgin Islands4.30-6.15(g,j)4.30-6.15(j)4.30-6.15(j)4.30-7.25(j)4.30-7.25(j)4.30-7.25(j)4.30-7.25(j)



This is not a "blue state - red state" phenomenon either. Using a comparable statistic, people receiving Food Stamps, note that, in 2011, 46 million Americans were receiving Food Stamps.

In 2011, reported by Reuters, the states of Mississippi, Tennessee, New Mexico, and Oregon all had at least 20% of their population on the U.S. Department of Agriculture's "Supplemental Nutrition Assistance Program (SNAP)... or Food Stamps . And, topping it off, one-third (more than 30%) of people living in Alabama were receiving Food Stamps.

Republican members of the House overwhelmingly passed an Agriculture Department budget that slashes the SNAP program. Yet, in 8-12% of all Constituents in nearly 1/2 of the Republican Congressional Districts are on Food Stamps.       

Who & How Many 

How many U.S. employees would be affected by a change in minimum wage?

The U.S. Bureau of Labor Statistics estimates that 75.3-million -- or nearly 60% of all -- employees are paid on an hourly basis. Among hourly-paid employees, 4.7% earn at or below the U.S. federal minimum wage, or approximately 3.5-million employees are paid $7.25 per hour or less. 

Only 2.1% of full-time employees earn at or below the U.S. federal minimum wage, or 1.6-million employees. But 11.1% of part-time employees earn at or below the U.S. federal minimum wage. So most of those affected are part-time employees, and that pushes up the overall percentage of hourly wage earners who are paid at or below the minimum wage.


Table 9. Employed wage and salary workers paid hourly rates with earnings at or below the prevailing Federal minimum wage by usual hours worked on primary job, 2011 annual averages
Usual hours worked per week on primary jobNumber of workers
(in thousands)
Percent distributionPercent of workers paid hourly rates
Total paid hourly ratesAt or below minimum wageTotal paid hourly ratesAt or below minimum wageAt or below minimum wage
TotalAt  Minimum  WageBelow  Minimum WageTotalAt  Minimum WageBelow  Minimum Wage TotalAt  Minimum WageBelow minimum wage
Total, 16 years and over
73,9263,8291,6772,152100.0100.0100.0100.05.22.32.9
Hours vary
4,9624911982936.712.811.813.69.94.05.9
0 to 34 hours
18,1272,2511,0291,22224.558.861.456.812.45.76.7
0 to 4 hours
4115922370.61.51.31.714.45.49.0
5 to 9 hours
99214663831.33.83.83.914.76.48.4
10 to 14 hours
1,550211128832.15.57.63.913.68.35.4
15 to 19 hours
2,2843631841793.19.511.08.315.98.17.8
20 to 24 hours
5,2726733373367.117.620.115.612.86.46.4
25 to 29 hours
2,6103141211933.58.27.29.012.04.67.4
30 to 34 hours
5,0064841733116.812.610.314.59.73.56.2
35 hours or more
50,8371,08745063768.828.426.829.62.10.91.3
35 to 39 hours
6,0503431342098.29.08.09.75.72.23.5
40 hours or more
44,78774331642760.619.418.819.81.70.71.0
40 hours
39,23165328636753.117.117.117.11.70.70.9
41 hours or more
5,5579030607.52.41.82.81.60.51.1
41 to 44 hours
65912390.90.30.20.41.80.51.4
45 to 48 hours
1,885319222.50.80.51.01.60.51.2
49 to 59 hours
2,038266202.80.70.40.91.30.31.0
60 hours or more
975201191.30.50.70.42.11.10.9
NOTE: Data exclude all self-employed persons whether or not their businesses are incorporated. Estimates of usual hours worked presented in this table differ from usual full- or part-time status (as shown in table 1) because of a sizable number of workers whose usual hours vary on the primary job.

Also according to the U.S. Bureau of Labor Statistics, an estimated 25% of U.S. private sector employees earn less than $10 per hour (as opposed to all employees which would be a much lower percentage, because public employees tend to be full-time and paid above minimum wage). 

Employees in the Services Sector, our fastest growing sector over the past 30 years ... represent most of those earning at or below the $7.25 federal minimum wage

Within the Services Sector, the leisure & hospitality industry -- mainly hotels and restaurants -- are the biggest employers paying less than $10 per hour. Retail is next, but not too far behind. 

Fully 19% of all leisure & hospitality employees earn at or less than the federal minimum wage. Leisure & hospitality employees represent nearly 52% of all hourly employees paid at or below minimum wage.

Retail trade employees represents 16.8% of all private sector hourly employees paid at or below minimum wage. Combined retail and wholesale represents 17.5% of all hourly employees paid at or below minimum wage.

Together, the leisure & hospitality and retail & wholesale hourly employees represent 70% -- nearly all -- of employees paid at or below minimum wage. 


Table 4. Employed wage and salary workers paid hourly rates with earnings at or below the prevailing Federal minimum wage by occupation, 2011 annual averages
OccupationNumber of workers
(in thousands)
Percent distributionPercent of workers paid hourly rates
Total paid hourly ratesAt or below minimum wageTotal paid hourly ratesAt or below minimum wageAt or below minimum wage
TotalAt minimum wageBelow minimum wageTotalAt minimum wageBelow minimum wageTotalAt minimum wageBelow minimum wage
Total, 16 years and over
73,9263,8291,6772,152100.0100.0100.0100.05.22.32.9
Management, professional, and related occupations
15,5241958910621.05.15.34.91.30.60.7
Management, business, and financial operations occupations
4,3004811375.81.30.71.71.10.30.9
Professional and related occupations
11,224147786915.23.84.73.21.30.70.6
Service occupations
17,8002,3227421,58024.160.644.273.413.04.28.9
Healthcare support occupations
2,7009852463.72.63.12.13.61.91.7
Protective service occupations
2,0286122392.71.61.31.83.01.11.9
Food preparation and serving related occupations
6,7101,6534221,2319.143.225.257.224.66.318.3
Building and grounds cleaning and maintenance occupations
3,6182111111004.95.56.64.65.83.12.8
Personal care and service occupations
2,7452991351643.77.88.17.610.94.96.0
Sales and office occupations
19,98785661723927.022.436.811.14.33.11.2
Sales and related occupations
7,81360044115910.615.726.37.47.75.62.0
Office and administrative support occupations
12,1742571778016.56.710.63.72.11.50.7
Natural resources, construction, and maintenance occupations
8,22196484811.12.52.92.21.20.60.6
Farming, fishing, and forestry occupations
6754224180.91.11.40.86.23.62.7
Construction and extraction occupations
4,3322813155.90.70.80.70.60.30.3
Installation, maintenance, and repair occupations
3,2142611154.30.70.70.70.80.30.5
Production, transportation, and material moving occupations
12,39436018117916.89.410.88.32.91.51.4
Production occupations
6,48510053478.82.63.22.21.50.80.7
Transportation and material moving occupations
5,9092601281328.06.87.66.14.42.22.2
NOTE: Data exclude all self-employed persons whether or not their businesses are incorporated. Effective with January 2011 data, occupations reflect the introduction of the 2010 Census occupational classification system into the Current Population Survey, or household survey. This classification system is derived from the 2010 Standard Occupational Classification (SOC). No historical data have been revised. Data for 2011 are not strictly comparable with earlier years.

Table 5. Employed wage and salary workers paid hourly rates with earnings at or below the prevailing Federal minimum wage by industry, 2011 annual averages
IndustryNumber of workers
(in thousands)
Percent distributionPercent of workers paid hourly rates
Total paid hourly ratesAt or below minimum wageTotal paid hourly ratesAt or below minimum wageAt or below minimum wage
TotalAt minimum wageBelow minimum wageTotalAt minimum wageBelow minimum wageTotalAt minimum wageBelow minimum wage
Total, 16 years and over
73,9263,8291,6772,152100.0100.0100.0100.05.22.32.9
Private sector
64,5253,6251,5772,04887.394.794.095.25.62.43.2
Agriculture and related industries
7754120211.01.11.21.05.32.62.7
Nonagricultural industries
63,7503,5841,5572,02786.293.692.894.25.62.43.2
Mining
4893210.70.10.10.00.60.40.2
Construction
4,3044115265.81.10.91.21.00.30.6
Manufacturing
8,55691474411.62.42.82.01.10.50.5
Durable goods
5,2644118237.11.11.11.10.80.30.4
Nondurable goods
3,2925029214.51.31.71.01.50.90.6
Wholesale and retail trade
12,42366946320616.817.527.69.65.43.71.7
Wholesale trade
1,6892717102.30.71.00.51.61.00.6
Retail trade
10,73464244619614.516.826.69.16.04.21.8
Transportation and utilities
3,0694622244.21.21.31.11.50.70.8
Information
1,2733618181.70.91.10.82.81.41.4
Financial activities
3,2284025154.41.01.50.71.20.80.5
Professional and business services
5,85715785727.94.15.13.32.71.51.2
Education and health services
12,63635518517017.19.311.07.92.81.51.3
Leisure and hospitality
8,9431,9636101,35312.151.336.462.922.06.815.1
Other services
2,97018386974.04.85.14.56.22.93.3
Public sector
9,40120410010412.75.36.04.82.21.11.1
Federal
1,770201282.40.50.70.41.10.70.5
State
2,6046537283.51.72.21.32.51.41.1
Local
5,02611950696.83.13.03.22.41.01.4
NOTE: Data exclude all self-employed persons whether or not their businesses are incorporated.

Minimum Wage "Enabling" Subsidies?                   

Whereas in 1989 more Food Stamps recipient households did not have anyone working, twenty years later, in 2009 the majority of Food Stamps recipient households had jobs, according to a release by Atlantic Newswire.

Couple this Food Stamp recipient job-status information with the fact that job growth throughout the past decade primarily has been low-income jobs: 2002 = 3% ... in 2009 = 4.9% ... and 2011 = 6% of Americans were paid at or below minimum wage. 

And, most of the jobs created since 2008 have been low-paid jobs, according to recent research report by the National Employment Law Project. And, since first quarter 2001, 8.7% of new jobs have been low-paid and 6.6% have been higher-paid jobs.

In 2011, the Food Stamp program cost $68-billion. That's more than one-third of corporate income tax receipts that year. 

Some would suggest, and I agree, that our Food Stamp program has enabled businesses to pay employees at or below minimum wage: The SNAP "Food Stamp" program has become a business subsidy ... especially to the leisure & hospitality and other retail industries.

Health Impact Project Releases White Paper Examining Impacts of Proposed Changes to SNAP


The growth in the number, and percentage, of Americans without health care insurance -- hence showing up in hospital emergency rooms with late stage illnesses --- is also costing state and federal governments increasing amounts of tax dollars.

State and federal Medicaid spending also might be a minimum wage "enabling" subsidy, as is suggested frequently about Food Stamps.

Facts about Food Stamp program and Medicaid and hospital charity care belong in any serious reporting and debate on Minimum Wage: The lower the wages, the higher the cost to government spending ... government subsidies to business ... that costs us in personal income taxes. It's all related.

The Employers

As the nation's largest private employer and market-influencing player in the retail and wholesale trade, Walmart hourly wage employee pay policy serves as a template for the sector. 

The Walmart - Sam's Club Pay Plan Fiscal Year 2013 states that the Facility Starting Rate (FSR) at the minimum Position Pay Grade (PPG) adjustment stands at $8.00 per hour. 

According to a 2010 ABC News report "Walmart CEO Pay: More in an hour than employees get all year", the Walmart CEO made more than 20% higher in an hour than a entry-level Walmart or Sam's Club store employee made in a whole year.

The ABC News report went on to point out that in the 1970's, CEO's of the S&P 500 were paid 3 times that of the average American employee, and by 2010 the CEO's of the S&P 500 were paid 319 times that of an average American employee: That's from 3-to-1 up to 319-to-1. 

The point of mentioning the pay of CEO's of top companies paying employees minimum wage is to show how successful companies are and the degree to which the CEO's have grown distant from their employees during some of America's biggest boom years and greatest productivity gain years. At 319-to-1 and being paid more in an hour than your basic employee makes in a year, that distance is vast.

Summary

What's the bottom line on raising the U.S. federal minimum wage from to $10 per hour?

A lot of restaurant, hotel, and other retail employees will earn about $20,000 per year instead of less than $15,000: They will be raised above the official U.S. poverty level and they will live with more dignity. The U.S. economy would get a stimulus without costing local, state, or federal governments more. And, the state and federal governments would save some of the money now spent on Medicaid and Food Stamps for these employees and their families.

Let's do it.

by Steve Reichenstein