Democrats want to “help” people even when they don’t need help

Last July, Jeffrey Dorfman discussed the battle that began near the end of 2013 over maintaining extended unemployment benefits for up to 99 weeks. In Forbes Magazine the University of Georgia economics professor explained that during the debate the preceding December and January Congressional Democrats and President Barack Obama insisted that if the benefits were not extended, it would hurt workers who would lose benefits, but the nation’s economy would also suffer.

Adding a little background, he wrote: “After the 2007-2009 recession, Congress repeatedly authorized emergency extended benefits so that the unemployed could collect benefits for as long as 99 weeks [nearly two years]. When the extended benefits finally were allowed to expire in December 2013 they had lasted 20 months longer than following any previous recession. Yet, Democrats wanted to continue them even longer.”

But, he said, six months after the decision not to extend the benefits again, neither the unemployed nor the economy suffered as predicted, and in fact “the results have been quite positive.”

“Economic research seems to be clear that providing such extended unemployment benefits went beyond helping people transition to a new job,” wrote professor Dorfman, “instead allowing them to extend their job search. Instead of taking a job offer that might be suitable, unemployed people who still had some income thanks to Congress’ generosity looked for a great job. Thus, extending unemployment benefits led to higher unemployment and a slower recovery.”

Unemployment benefits are funded by an insurance premium paid by employers to provide benefits for a set period of time, which helps folks cope until they find a new job. In most states employees are covered for up to 26 weeks. During and immediately after a recession when unemployment rates are high, the federal government generally steps in and provides an extended period of benefits. However, in such cases, benefits paid after the period covered by unemployment insurance are paid for out of tax revenue, which is essentially welfare.

A recent study supports the professor’s assertion, this one by the National Bureau of Economic Research (NBER), which indicates that the labor market improvement President Obama so frequently uses to show his policies are working, occurred even though Congress did not follow the president’s wishes and extend the benefits again to 99 weeks. Rather than widespread doom and gloom, when extended benefits were not approved, job creation increased by about 1.8 million. NBER also noted that in 2013 the states with generous unemployment benefits created fewer jobs than the national average, but that job creation in those states increased in 2014 to above the national average when they cut back on benefits.

In examining this situation the Las Vegas Review-Journal opined: “Was long-term unemployment assistance necessary for some people? Yes. But, without question, millions of Americans at the margin — those who rejected offers to work for a little more than jobless benefits were worth, or those who supplemented jobless aid with under-the-table work in the gray economy — saw no point in re-entering the taxpaying workforce when they could be paid for so long to not work. And that simply wasn’t working for our economy.”

There is substantial support in these data for the idea that liberal/Democrat policies that are intended to help people beyond their actual need for help is good neither for the people they intend to help, nor for the best interests of the country at large.

The reality that government policies have failed shows up in the low level of people in the workforce who actually have jobs. The civilian labor force participation rate reflects the proportion of non-institutional civilians 16 to 64 years of age who are working or looking for work. The Bureau of Labor Statistics (BLS) reports that the participation rate hovered between 62.9 percent and 62.7 percent in the eleven months from April 2014 through February 2015, and has been 62.9 percent or lower in 13 of the 17 months since October 2013. 

It has been 37 years since the participation rate was below 63 percent, back in March of 1978. In February, the number of work-eligible civilians not working or looking for work totaled nearly 93 million people. 

BLS reported that the non-institutional population reached 249,899,000 in February, and only 157,002,000 of those were working or looking for work. The rest had become discouraged and stopped looking for a job.

So while job creation has been in positive territory lately, and the unemployment rate has dropped to near 5 percent, the economy has not produced enough jobs to get those 93 million people back to work, and when those numbers get figured in to the employment picture, the unemployment rate doubles.

The job market still has not returned to pre-recession levels nearly six years after the recession ended in 2009.

A vibrant economy depends upon people working and earning money they can spend on needs and wants. Business, not government, creates jobs. But government restricts job creation through over-regulation and high taxation.

Our elected leaders and bureaucrats seem immune from learning that less restrictive market conditions contribute to creating jobs. 

This immunity affects those of the liberal persuasion to a disproportionate degree.

Interesting polls, other than the North Pole, that are in the news

As the year-end draws nearer, polling organizations provide a look into the likes and dislikes of Americans.

**The Gallup organization’s daily tracking poll of December 16-18 shows that only 23 percent of Americans are satisfied with the direction of the country. Not surprisingly, a breakdown shows that 38 percent of Democrats and 21 percent of independents said they were satisfied with the way things were going in the U.S. throughout 2014, compared with just 10 percent of Republicans.

**The U-3 unemployment rate stands at 5.9 percent and the underemployed rate at 14.9 percent, based on Gallup’s thirty-day rolling average, and President Obama’s approval rating stands at 43 percent approval to 52 percent disapproval, having moved from a virtual tie at 46 percent in August of last year.

**Gallup finds Congress just a hair higher than its all-time record low approval rating of 14 percent, at 15 percent. Just 13 years ago Congress was rated at a record 56 percent, but its rating has not been higher than 20 percent in the last five years, or in six of the last seven years.

**A Rassmussen poll found that 86 percent of U.S. adults are proud to be Americans, and 92 percent believe that U.S. citizenship is very important. However, only 40 percent of voters like President Obama’s unilateral amnesty for up to five million illegal aliens to remain in the country. Roughly half think the U.S. will suffer because of the amnesty and that it will increase illegal immigration.

**The Gallup-Healthways Well-Being Index tracks daily how Americans evaluate their lives on the Cantril Self-Anchoring Striving Scale. The Index shows 55 percent are thriving, 42 percent struggling, 4 percent suffering, and 12 percent are under stress.

**A USA Today poll in November asked whether respondents favor approval of the Keystone XL pipeline project. By 60 percent to 25 percent, respondents favor approving the project, with 14 percent unsure.

**On its Website, Gallup notes “U.S. federal government workers are less engaged than the rest of the U.S. workforce. On average, 27 percent of federal government employees are engaged in their jobs in 2014, compared with 31 percent of all other workers in the U.S. With more than 2 million federal employees, this lack of engagement is costing the federal government an estimated $18 billion in lost productivity annually, or approximately $9,000 per employee.”

Gallup says that engaged employees feel connected to their organization and work to move it forward, while those who are not engaged may meet the expectations of their job, but don’t do anything extra for it, and those who are actively disengaged actually undermine their engaged co-workers. “Those federal government employees who are actively disengaged, combined with those employees who are not engaged, translates into 11 percent lost productivity across the government, according to a Gallup analysis. This suggests that nearly $9,000 of the average $78,467 federal employee salary is not producing benefits for the agency or the general public.”

**A Rassmussen Reports poll found that respondents believe America’s Founders would view the nation today as a failure by a margin of 46 percent to 36 percent, with 18 percent being unsure. The Founders, a group that includes Thomas Jefferson, George Washington and James Madison, would not approve of what is going on in America today, according to this poll, and it is comforting to note that contemporary Americans agree with the Founders. But, will this dissatisfaction actually lead to a return to the founding principles of limited government and a high level of personal liberty?

**Fully 78 percent of participants like the health care they received before the Affordable Care Act/Obamacare was passed, but they believe that the health care they have been getting in recent years will get worse under Obamacare.

**Gallup found that among 11 professions nurses have the highest honesty and ethical standards, with 80 percent ranking them high or very high. Doctors, pharmacists, police officers and clergy round out the top five, while Members of Congress rank last at 7 percent.

**A Rassmussen poll in April reflected that 54 percent of participants consider the federal government a threat to individual liberty, while just 22 percent see government as a protector of individual rights, a number that stood at 30 percent five months earlier. Thirty-seven percent actually fear the federal government, while 47 percent do not, and 17 percent are uncertain.

**Gallup asked public school teachers if they have experienced each of seven possible emotional reactions to the Common Core State Standards (Worried, Frustrated, Resigned to it, Hopeful, Confident, Angry, or Enthusiastic), and 65 percent said Worried, 62 percent said Frustrated, and 57 percent said Resigned to it, while only 20 percent said Enthusiastic, 24 percent said Angry, and 27 percent said Confident. Forty-nine percent said they were Hopeful.

Where parents of public school students are concerned, 35 percent view Common Core negatively, 33 percent view it positively, and 32 percent aren’t familiar with it or don’t have an opinion. Gallup found a shift toward negative feelings since April when 35 percent were positive and 28 percent were negative.

Best wishes to all for a Happy Chanukah and a Merry Christmas!

When you are self-absorbed, you can’t see the forest for the trees

Commentary by James Shott

Life provides lessons for us in unusual ways. Occasionally, it is someone totally missing something obvious that provides the lesson. Here is a very good example of that.

A photograph posted on Facebook shows a woman holding up a sign. The sign says: “I have a Master of Arts degree in Women’s Studies. However, the only job I can find is as a bartender at a local restaurant. I owe over 60k in student loans. I am forced to rely on food stamps and WIC to support my son. Is this the ‘American Dream’ I worked so hard for? I am the 99 percent occupywallstreet.org.”

The lesson is there for all to see, but the woman – let’s call her “Ms. OWS,” – not only didn’t learn from her experience, she didn’t even suspect there was a lesson there. That experience was only an opportunity to complain that America hasn’t provided a better life for her.
The lesson that unless you are independently wealthy or have someone to support you while you go to school, you don’t borrow 60 grand to pursue a degree in a subject area that will not equip you to support yourself and your child and pay for the education that you have just received totally escaped her notice.

Like the make-believe class college kids used to joke about, “Underwater Basket Weaving,” Women’s Studies, is not a viable career field. To prepare for supporting yourself you study accounting, engineering, computer technology, law, medicine, chemistry, elementary or secondary education, or one of the other majors where jobs are available. But Ms. OWS, probably without a gun to her head, instead chose Women’s Studies.

The Occupy Wall Street movement with which Ms. OWS so closely identifies, includes some pie-in-the-sky idealism, like:
    •    The right to economic justice, including a living wage for all, regardless of the job, or the level of skills or experience one has
    •    Debt forgiveness for all debts
    •    Free college education
    •    Open borders

These goals are not merely unrealistic; they are dangerous. None would be good either for the country or for its inhabitants. Someone has to pay for the higher wages, the free college education, and the debt forgiveness, and that won’t be the people who think about life like Ms. OWS does; it will be the people who approach adulthood responsibly, and prepare to take care of themselves.

Movements like Occupy Wall Street seem to attract those disaffected souls who, for whatever reason, have not learned what life is about, expect to be provided for, and become indignant when life does not provide to them the rewards to which they believe they are entitled, due to nothing more significant that they were not aborted and draw breath.

Like Ms. OWS, they float through life indulging in the things they like, neglecting to seek out things that will prepare them for life as a responsible citizen, and then contributing to society and the wellbeing of our country.

Perhaps it’s not entirely their fault. We have a segment of our society that imagines it is possible to achieve Utopia, and a large group of pandering vote-seekers all too willing to promise it to them, and who provide a few goodies at taxpayer expense in return for votes and a cushy career in government.

And then there’s government, itself, at all levels. Even in cases where young people show some initiative, and take steps to help themselves, they are often thwarted by bureaucratic absurdity, as in these examples reported by The Daily Signal:

** Chloe Stirling started a business in her kitchen called “Hey, Cupcake!” In addition to selling her goods to friends and neighbors, she donated some to charitable events, including a fundraiser for a student with cancer, and delivered cupcakes to residents in a senior home. Not good enough! Illinois health officials declared that she lacked the necessary permit to operate and told her to close up shop.

** A zoning official in Holland, Mich. shut down a 13-year-old’s hotdog stand because he was supposedly competing with nearby restaurants.  Nathan Duszynski had planned to sell hotdogs to raise money for his disabled parents. The boy’s mom has epilepsy and his dad has multiple sclerosis. Within minutes of opening his stand, a zoning official ordered him to cease operating because he lacked a license.

Bah! Humbug!

Is this a great country, or what? On the one hand there’s a substantial number of people who think they are entitled to whatever they think they are entitled to, and lack the motivation to get off their duffs and earn their rewards, and on the other hand people in government stupidly apply rules to punish young people who take the initiative to earn something through work.

But then there was a pleasant breeze of tolerance and common sense wafting its way north from Dunedin, Fla. where 12-year-old T.J. Guerrero operates a lemonade stand to raise money for summer activities with his friends and family. After one neighbor complained to the city, Mayor Dave Eggers visited the stand, enjoyed some lemonade, and praised the youngster’s initiative.

Perhaps all is not lost. But we must be vigilant.


Cross-posted from Observations

What’s more important, a minimum wage hike, or fixing the economy?

Commentary by James Shott

An analysis by the Congressional Budget Office (CBO), a nonpartisan arm of Congress, shows that both sides in the debate over whether to raise the federal minimum wage from $7.25 an hour to $9.00, $10.10, or even $15 an hour have relevant points to make.

Advocates believe that the wage hike would lift nearly a million people out of poverty, increase productivity, reduce turnover and give those receiving the raise more money to spend, and that would translate to businesses recording higher sales, and an overall improvement in economic activity.

A $10.10 minimum wage, the CBO says, means 900,000 fewer people in poverty, and job losses will comprise only 0.3 percent of jobs affected by the wage hike.

The hike would boost wages for most low-wage workers, as about 16.5 million workers who make less than $10.10 an hour would see higher earnings once the higher minimum is fully implemented, which Democrats in the House and Senate have been calling for. And then, those making slightly more than the new minimum wage may feel they need a raise too, and employers would be virtually compelled to give them one in what the CBO calls a "ripple effect."

Let’s review: Advocates believe we should raise the minimum wage because the more low-wage workers make, the more they'll have to spend, and the better that will be for businesses selling products and services. People move out of poverty and spend more and consequently businesses prosper from greater sales. Our economic problems magically dissolve. Does it get any better than this?

Unfortunately for the advocates, good decision-making requires looking at all the factors, not just the ones that support a particular position.

Opponents point out that higher wages lead to higher prices, and lost jobs, and wages need to be related to the work involved and its value to the company, not artificially determined by Washington bureaucrats.

An essential factor that needs to be considered is what happens inside businesses when their labor costs increase? They must make adjustments in other expense areas, increase productivity or increase prices to maintain profitability and stay in business.

The other side of the CBO job loss estimate is that while only 0.3 percent of minimum wage workers will lose their jobs with the proposed wage hike to $10.10 an hour, and that sounds like a small effect, the number of actual people comprising that 0.3 percent is 500,000. So 900,000 will be lifted out of poverty, but more than half that number will lose their jobs. Thus, the picture painted by the CBO is somewhat less rosy than the advocates believe.

A study for the National Center for Policy Analysis by Richard B. McKenzie, explains that there are other forms of compensation to consider, nonmonetary benefits that may be as much as 30 percent over and above wages of all workers, a substantial percentage of the total compensation employees receive. Faced with higher labor costs, employers may make adjustments to these nonmonetary benefits to balance things. These benefits include relaxed work demands, workplace atmosphere, schedule flexibility, job security, and hours of work. Employers may also have to cut jobs, curb summer hiring, opt not to replace workers who leave; lower their profitability and/or raise prices to customers.

Despite what you may hear, read or think, most employers want the best employees they can get; the most productive, best trained, and most devoted workers they can find. They are willing to pay them to keep competitors from luring them away, however, there are financial limits to what businesses can pay without making other changes.

They may reduce jobs or cut worker hours, increase demands on existing employees and impose a stricter work atmosphere to increase productivity, replace workers with machines, or look for cheaper materials from overseas where labor costs are lower, affecting American suppliers.

The US economy is suffering, as evidenced by, among other indicators, the labor force participation rate, which shows that only 63.2 percent of Americans age 16 or older are participating in the labor force, the rate having fallen over the last several years to 1977 levels.

We need an atmosphere that encourages businesses to create jobs, not artificially raise the wages of the least skilled, least experienced people in the labor force, particularly when doing so will cost 500,000 jobs, and further depress the participation rate.

Among the many stunning failures of the Obama administration is its proclivity to pander to small constituencies to gain political support, all the while ignoring the broader problems facing the nation.

When an administration chooses to implement narrowly focused policies conceived for political gain, you get what the Obama administration has produced: an almost non-existent recovery from the recent recession, millions of Americans who can’t find a job, millions more who are too discouraged to keep looking and have dropped out of the labor force, and still millions more Americans on food stamps and other forms of welfare.

The Obama administration and Congressional Democrats have shown conclusively that the serious problems of the nation are far less important to them than winning the next election.

Cross-posted from Observations

Going Rogue, Part X: Americans just don’t properly appreciate the EPA

Americans do not fully appreciate the efforts of government to protect them from a wide variety of threats to their health and safety. This effort occurs to some degree at the more local levels, but the real champion of this grand effort is the federal government.

While many federal agencies contribute to this effort, one goes far beyond the others at trying to keep us safe: the Environmental Protection Agency, the EPA.

The EPA is so concerned for the safety and protection of the citizens of the U.S. that it has issued thousands of regulations requiring specific steps be taken to reduce or eliminate actual or potential harm. This agency is so concerned for our welfare that it has even required, under penalty of heavy fines, the use of things that are unavailable.

As part of the Renewable Fuel Standard the EPA required gasoline producers to use cellulosic biofuels, and in its paternalistic effort to keep us safe from threats real and imagined, the EPA fines producers for not using the required quantities of biofuel ingredients, even though those quantities are unavailable.

Not everyone is on board with the EPA’s magnificent efforts on our behalf, such as Sen. Joe Manchin (D-WV) and Nebraska Attorney General Jon Bruning, whose office is suing the EPA over greenhouse gas standards for new power plants. These standards are, according to the AG and the Senator, “impossible” to meet.

The U.S. Chamber of Commerce and energy industry groups have jumped on the anti-EPA band wagon by urging the United States Circuit Court of Appeals for the District of Columbia last August to strike down a federal rule limiting mercury and other toxic emissions from coal- and oil-fired power plants, saying the Agency used flawed methods to create unachievable emissions standards.

Even the EPA’s fellow federal agency, the State Department, has shocked Americans by daring to disagree with the ideological environmental dogma of the Obama administration.

When the State Department was performing an environmental review of the Keystone XL pipeline project, the EPA intervened. The pipeline project would carry crude oil from Alberta, Canada to refineries in the U.S., which supporters say would provide a big step toward energy independence. The EPA argued, however, that this pipeline should be treated differently than every other pipeline ever constructed in the country.

The State Department’s report found that the project would create nearly 2,000 jobs lasting for two years and would support more than 40,000 jobs, and further finds that the pipeline provides enough positives to negate whatever negatives the EPA believes may result.

Even the International Brotherhood of Boilermakers found reason to criticize the EPA’s zealous efforts to protect us from every conceivable negative influence in our lives. The Boilermakers’ President Emeritus Charles W. Jones states in a commentary on the union’s Web site, “particle and ozone standards will damage the economy without significantly helping the environment.”

The EPA has moved to make ozone and airborne particle standards so strict, in fact, “that former EPA administrator William Ruckelshaus has called them ‘an impossible standard of perfection,’" the commentary continues. “So strict that many U.S. electrical power plants, pulp mills, cement kilns, chemical plants, smelters, and manufacturing plants are expected to close down rather than try to meet them. Thousands of American workers could lose their jobs. So strict that many of the scientists on the Clean Air Scientific Advisory Committee (CASAC) cannot support them,” Mr. Jones states, citing the effects on his organization’s members.

Thirty-nine Congressional Republicans led by Senate Minority Leader Mitch McConnell (R -KY) are attempting to use a rare legislative tactic to block planned Environmental Protection Agency greenhouse gas standards that would limit the amount of carbon new power plants can emit. The rarely used Congressional Review Act enables the filing of a formal resolution of disapproval that allows Congress to block executive branch regulations that it considers onerous.

Last month, a federal court dealt a serious blow to the EPA's renewable fuels push by ruling that the agency exceeded its authority by mandating refiners use cellulosic biofuels because of their commercial scarcity, a determination that should not require legal action.

It is encouraging to see opposition to the tyranny of the EPA growing, and at last see meaningful opposition coming from Congress. However, the majority of this opposition comes from Republicans, while the timid Democrats mostly sit on their hands, allowing the executive branch to run roughshod over the legislative branch, while their constituents get crushed under the federal boot.

The Democrats simply look the other way, likely because the lead perpetrator of this unconstitutional behavior is one of their own. They ought to think a little (for a change) and realize that someday it may be a Republican in the position to abuse the office, and the Congress.

It is doubtful that any of this will have much of a positive effect on this out-of-control agency, which, because of its ideological blinders and the infection of uncontrolled zealotry that is the hallmark of the Obama administration, ignores the damage its policies and regulations do to the country it is supposed to serve.

As the New Year begins, government’s policies are still failing us

Commentary by James Shott

As the economic non-recovery crawls into 2014, the “good news” on the jobs front – that the unemployment rate dropped .3 percent in December to 6.7 percent – is far less impressive when you look beneath the surface.

The reason the unemployment rate dropped was not that a strengthening economy produced a sharply higher number of new jobs, as should be expected in a true recovery. December showed only a puny 74,000 new payroll jobs were added. Data from the Bureau of Labor Statistics (BLS) indicates that the drop resulted because five times that many people – 374,000 – became discouraged that they couldn’t find work and dropped out of the labor force.

Adding even a small number like 74,000 to a smaller labor force misleads us into thinking things have improved.

The BLS identifies June of 2009 as the official end of the recession, at which time the labor force participation rate was 65.7 percent (162 million workers). At the end of December, the rate stood at a pitiful 62.8 percent (155 million workers).

Using the size of the labor force in 2009 and the adding back into the equation the 7 million who have dropped out, the unemployment rate is just under 11 percent.

We should not celebrate a drop in the unemployment rate to 6.7 percent when 7 million Americans have given up looking for work because the economy still has not produced jobs for them.

Hopefully, the New Year will bring an infection of fiscal responsibility to our national leaders. It is interesting how liberals see global warming/climate change – a widely popular but unproven theory – as a true crisis, but don’t see years of budget deficits near and above a trillion dollars, and a national debt of nearly $17 trillion, as a problem.

President Barack Obama’s first year in office, 2009, saw a deficit of $1.4 trillion, which gets credited to George W. Bush, but contained the contribution of nearly $200 billion from the Obama stimulus. But over the next four years Mr. Obama racked up more than $4.2 trillion in deficits – FY 2010: $1,294 billion; FY 2011: $1,300 billion; FY 2012: $1,087 billion; FY 2013: $680 billion. This fiscal year the projection is a deficit of $744 billion, and the FY2015 deficit is projected at $577 billion.

To help put this in perspective, The Weekly Standard noted back in November of 2012 that, “According to the White House OMB, we ran up $1.8 trillion in real (inflation-adjusted) deficit spending during fiscal years 1942-45,” and that “we’ve now run up $3.4 trillion in real (inflation-adjusted) deficit spending under Obama — in less time than it took us to fight World War II.”

If there is good news in Obama deficit numbers it is that the deficits are coming down, but real good news would be Congress and the president taking concrete steps to get spending under control.

That seems unlikely, given Rep. Nancy Pelosi’s (D-CA) opinion that “The cupboard is bare. There’s no more cuts to make,” a position gleefully adopted by most, if not all, Congressional Democrats.

In her view there is no waste, fraud or abuse, despite more than ample evidence to the contrary, and there’s no unnecessary spending, either.

Senator Tom Coburn (R-OK) issues an annual report on government waste, and in “Wastebook 2013,” he lists 100 examples totaling $30 billion. Heaven only knows the total of all the wasteful spending of the federal government.

* The military has destroyed more than 170 million pounds of useable vehicles and other military equipment, approximately 20 percent of the total U.S. war material in Afghanistan, totaling $7 billion, rather than sell it or ship it home.

* The SuperStop is a $1 million bus stop complete with heated benches and sidewalks, and wireless zones for personal computers. Yet its roof doesn’t protect from the rain, snow, wind or blazing sun.

* One of NASA’s next research missions won’t be exploring an alien planet or distant galaxy. Instead, it is spending $3 million to go to Washington, D.C. and study one of the greatest mysteries in the universe — how Congress works.

* When officials at the Manchester Boston Regional Airport in New Hampshire installed new solar panels costing $3.5 million, they did not anticipate one quarter of them would not be used 18 months later because the reflection from the panels blinds pilots and controllers.

* The Treasury Department’s Inspector General for Tax Administration discovered the IRS paid up to $13.6 billion in false Earned Income Tax Credits in 2012.

* While millions of Americans continue to pay taxes on their hard earned wages, many federal employees are tax cheats, to the tune of $3.6 billion.

* The feds keep the lights on in empty and little used federal buildings, costing $1.5 billion.

* Out of the $33.5 billion in Pell Grants the federal government doled out last year, individuals posing as students took off with $1.2 billion.

When an elected public servant believes there can be no spending cuts in the face of such wanton waste, it speaks volumes about the integrity and motivation of that individual.

Federal spending is a giant problem that we had better address soon.

Cross-posted from Observations

What do minimum wage demographics say about raising the wage?

There has been a lot of uproar in the media lately about raising the minimum wage so that those people earning it would earn a “living wage.” But what do demographics about those earning the minimum wage tell us?

According to the Current Population Survey (CPS), which is a joint effort of the Bureau of Labor Statistics and the Census Bureau, 3.7 million workers reported earning the minimum wage of $7.25 or less per hour. Now 3.7 million is a lot of people, but when looking at the entire workforce, it’s a small portion – only 2.9 percent. Slightly more than half of them are aged 16 to 24, and 62 percent of that group are students.

Nearly 80 percent of those earning the minimum wage work part-time jobs and belong to families that earn nearly triple the poverty level for a family of four at $65,900 a year, while only 22 percent live at or below the poverty line. Three percent have finished college and obtained a degree, and 5 percent are married.

Many of those aged 25 and older work in jobs where they also earn tips, like restaurant workers, so their total pay most nearly always exceeds the minimum wage. While most do not live in middle- and upper-income families, they also are not living in poverty, having an average family income of $42,500, just less than double the $22,350 poverty line level for a family of four.

Advocates of raising the minimum wage – and many minimum wage earners who respond to the hype those advocates produce – complain that you can’t raise a family or even live a decent life on the minimum wage, so therefore it should be raised to provide a “living wage.”

When you realize that only 3 of every 100 workers earn the minimum wage, the problem doesn’t seem as dire as the advocates for a wage hike want you to believe. And when you look at the kinds of work that minimum wage earners perform, and who minimum wage earners are, it seems even less dire. These jobs require little education or training, and are overwhelmingly held by young people living at home.

Based upon the demographics, there’s no economic reason for a higher minimum wage.

You won’t find trained and educated people like electricians, mechanics, carpenters, plumbers, nurses, pilots or teachers, or lawyers, doctors, CPAs, engineers, and others who have gotten an extensive education and additional training making minimum wage, or anything near it.

But more importantly, the number of minimum wage employees who really need a “living wage” because of family or unusual personal needs is very small, and there are better ways to help them.

Assuming all minimum wage employees worked 20 hours a week, a $2 increase in the minimum wage would cost employers $2,080 a year for each employee, plus increased payroll taxes. For all 3.7 million workers, the increase would cost $7.7 billion a year, plus increased payroll taxes. Those working more than 20 hours a week adds even more costs.

Additional costs arise when those making between the old and new minimums get increases to get them to the new minimum, and when those making close to the new minimum get increases to keep them proportionately higher than the new minimum. The costs would be substantially higher than $7.7 billion. And guess who bears that cost? Employers? No.

Consumers will pay higher prices, producing reduced sales, and those higher prices will also affect those who just got a raise.

A Heritage Foundation research report released last February notes that while many advocates of higher minimum wages suggest a higher wage “to help low-income single parents attempting to survive on just a minimum-wage job … just 4 percent of minimum-wage workers – or 148,000 – are single parents working full-time, compared to 5.6 percent of all U.S. workers.”

To add billions in increased consumer costs to benefit a relative few doesn’t make sense. They need to become qualified for better paying jobs, and if that is difficult or impossible for them, and if government is going to provide welfare, those people should receive help.

“Contrary to what many assume,” the Heritage report notes, “low wages are not [the] primary problem [of the poor], because most poor Americans do not work for the minimum wage. The problem is that most poor Americans do not work at all.”

The faction promoting a higher minimum wage consists primarily of two types of people: those who do not understand or don’t care about the most basic concepts of business economics, and politicians who benefit from pandering to minimum wage earners.

Current government policies are designed for purposes other than to help people escape poverty; therefore government needs to start encouraging job creation so that people in poverty have better opportunities to take control of their own lives and work their way out of poverty.

Returning America to the land of opportunity it used to be, where people were able to go as far in life as they were able, should be President Obama’s major goal.

Progressivism transforms “welfare to work” to “welfare to not work”

 Millions of Americans get some kind of financial support from the federal government. Some of them have earned it (Social Security and retirement recipients), some of them really need it (the poor and disabled), some need it temporarily (like those who can’t find a job in the non-recovering economy) and some don’t really need it, but get it anyway.

The widely reported number of Americans in poverty is 46.2 million, about 15 percent of the population. July’s Household Survey revealed that 11.5 million were unemployed; 2.4 million will work but aren’t actively looking; and 8.2 million wanted full-time work but could only a find part-time job. And the Civilian Labor Force Participation rate was a very low 63.4 percent.

Yet CBS News reported that a survey of 2,000 employers showed one-third of them said lots of jobs go unfilled for three months or more. Many of the roughly three million unfilled jobs are in skilled trades and pay good wages, making one wonder about the current “everybody needs a college education” mania that now grips the country.

Another reason that good jobs go unfilled is that the federal government’s assistance programs make it easy to not work, and frequently pay more than some jobs.

The Cato Institute’s Michael Tanner, writing in the Los Angeles Times (Online) notes that, “Contrary to stereotypes, there is no evidence that people on welfare are lazy. Indeed, surveys of welfare recipients consistently show their desire for a job.” Yet the “U.S. Department of Health and Human Services says less than 42 percent of adult welfare recipients participate in work activities nationwide,” he continued. “Why the contradiction?”

“Perhaps it’s because, while poor people are not lazy, they are not stupid either,” he writes. “If you pay people more not to work than they can earn at a job, many won’t work.”

In looking at federal assistance programs, Mr. Tanner noted that most reports on welfare focus on only a single program, the cash benefit program, Temporary Assistance for Needy Families. But he explained that “focusing on this single program leaves the impression that welfare benefits are quite low, providing a bare, subsistence-level income.” However, most get assistance from more than one of the federal government’s 126 separate programs for low-income people, 72 of which provide either cash or in-kind benefits to individuals.

In order to analyze how the federal assistance programs affect recipients, the Cato Institute created a hypothetical family consisting of a mother with two children, ages 1 and 4, and then calculated the combined total of seven of the most common benefits that the family could receive in all 50 states.

In Washington, D.C., and Hawaii, Vermont, Connecticut, Massachusetts, New York, New Jersey, Rhode Island, Maryland, New Hampshire and California, that group of seven programs provide benefits worth more than $35,000 a year. The value of the package in a medium-level welfare state is $28,500.

Since welfare benefits are not taxed, to put the benefits issue in perspective the Cato study calculated how much pretax income the family would need to earn in order to provide the same amount as a 40-hour-per-week job. This calculation took federal and state income taxes, earned income tax credits and the child tax credit into account.

The study found that welfare pays more than an $8-an-hour job in 33 states and the District of Columbia, and that in 12 states and the District of Columbia welfare pays more than a $15-an-hour job. And, in Hawaii, Massachusetts, Connecticut, New York, New Jersey, Rhode Island, Vermont and Washington, D.C., welfare pays more than a $20-an-hour job.

Comparing the results with specific jobs, the Cato study found that in California and 38 other states, it pays more than the starting wage for a secretary and in the three most generous states, welfare benefits exceed the entry-level salary for a computer programmer.

While not every welfare recipient gets these seven benefits, many do, and some receive even more than the package used by the Cato study. “Still,” Mr. Tanner concludes, “what is undeniable is that for many recipients in the most generous states — particularly those classified as long-term recipients — welfare pays substantially more than an entry-level job.”

Welfare is supposed to be a temporary thing for most recipients, not a career. Yet in many cases able-bodied men and women do not look for work because they can do better on welfare.

Such a system discourages people from taking responsibility for themselves and their families. It creates a large faction of government dependents; a status that deprives people of self-respect and the pride of accomplishment that results when one succeeds in life because of their own efforts.

Even a low wage job is better than welfare, as it often is only a first step to better jobs. U.S. Census figures show that only 2.6 percent of full-time workers are poor, while 23.9 percent of adults who do not work are poor.

This country became what it once was not by millions depending upon government to feed and clothe them, but by Americans making themselves successful through determination and hard work. That is the goal our welfare system must have.