Nick Hanauer, a multi-billionaire who made his money in the new
economy, explains the financial situation we middle-class folks are
in, and why our real incomes are falling; who the real job-creators
are; and why the stock market is going through the roof.

This will either make your head spin or make you punch a hole in your
drywall. Unka' George, this is for you:

http://tinyurl.com/n2x5ajb

--
Ed Huntress

On Wed, 24 Dec 2014 02:20:00 -0500, Ed Huntress
wrote:

Nick Hanauer, a multi-billionaire who made his money in the new
economy, explains the financial situation we middle-class folks are
in, and why our real incomes are falling; who the real job-creators
are; and why the stock market is going through the roof.

This will either make your head spin or make you punch a hole in your
drywall. Unka' George, this is for you:

http://tinyurl.com/n2x5ajb

Key take away:

"Only Americans who make less than $23,660 a year are
automatically eligible for time-and-a-half pay after working
40 hours a week. "

Shows that thresholds like these, as well as the minimum
wage, should be inflation indexed, and possibly linked to
the productivity index.

Possible palliative actions, at least from the lost tax
perspective:

(1) Make the employer pay their share of the FICA tax [c.
7.5% of the wages] that would have been collected if the
overtime had been paid.

(2) As the IRS code says you must pay income tax on anything
of value received, make the employer pay income tax on the
value of the uncompensated labor at the full corporate
income tax rate (c. 35%)

(3) the IRS could also collect and remit the state taxes,
work mans comp, etc. the employer "saved" by forcing their
employees to work unpaid overtime.

(4) Name and shame the companies by publishing league tables
of the biggest exploiters. (would require reporting
uncompensated overtime, which may already be done.)

FWIW: Compensatory "time off," common at one time in the
aerospace industries, is a complete swindle due to the
frequent "lay-offs," and restrictions on when it can be
used.
http://tinyurl.com/m8pj74d
http://tinyurl.com/ojo2nnj


--
Unka' George

"Gold is the money of kings,
silver is the money of gentlemen,
barter is the money of peasants,
but debt is the money of slaves"

-Norm Franz, "Money and Wealth in the New Millenium"

On Thursday, December 25, 2014 6:32:34 PM UTC-5, F. George McDuffee wrote:
i
Key take away:

"Only Americans who make less than $23,660 a year are
automatically eligible for time-and-a-half pay after working
40 hours a week. "

Shows that thresholds like these, as well as the minimum
wage, should be inflation indexed, and possibly linked to
the productivity index.


--
Unka' George

Much easier to just work for a company that pays more for overtime. Just because a company is not required to pay more for overtime work, does not mean that they can not pay more. And many companies do pay for overtime even though they are not required to do so.

Dan

On Thu, 25 Dec 2014 16:43:27 -0800 (PST), "
wrote:
snip
And many companies do pay for overtime eve=
n though they are not required to do so.
==============
And many don't, even though they are required to do so.
http://tinyurl.com/ksa3kyk

http://tinyurl.com/bsdkhvj

To even the playing field between the honest employers, and
those who cut their labor costs by not paying overtime, it
should be mandatory that every employee punches in and out,
and working time off site is recorded. [random spot checks
and significant fines (treble FICA and back pay to the
employees?) should help implementation] The spot checks
should concentrate on just before starting time, just after
quitting time, and lunch/break time. Most likely this
should be augmented by random surveys of the employees to
determine how many hours of "voluntary" and required
overtime was worked, and with or without time-and-a-half pay
to identify the "bad apples" for on-site spot checks. This
was too much record keeping before computers and the smart
phone, but is entirely possible now.

While it is not reflected in the compensation data, the
average American is now working at least 181 hours per year
*MORE* than they were a generation ago. This is 4_1/2
weeks, or more than a month.
http://tinyurl.com/cxywjng
http://tinyurl.com/2p45cf

some time and attendance software and terminals, some with
cloud storage, and some using cell phones
http://tinyurl.com/qbv42uu
http://tinyurl.com/o8zh6uv
http://tinyurl.com/d3bvxad
http://tinyurl.com/pvora7a

We have to tools to correct this abuse, what we lack is the
will to use these tools to do so...


--
Unka' George

"Gold is the money of kings,
silver is the money of gentlemen,
barter is the money of peasants,
but debt is the money of slaves"

-Norm Franz, "Money and Wealth in the New Millenium"

On Friday, December 26, 2014 12:37:12 AM UTC-5, F. George McDuffee wrote:

To even the playing field between the honest employers, and
those who cut their labor costs by not paying overtime, it
should be mandatory that every employee punches in and out,
and working time off site is recorded.

We have to tools to correct this abuse, what we lack is the
will to use these tools to do so...


--
Unka' George

Thank god we do not have the will to impose more regulations on businesses.
Under your plan every employee would have to punch a time clock. In my entire working life , I never had to punch a time clock. And yet I did work a reasonable amount of overtime.


Dan

wrote in message
...
On Friday, December 26, 2014 12:37:12 AM UTC-5, F. George McDuffee
wrote:

To even the playing field between the honest employers, and
those who cut their labor costs by not paying overtime, it
should be mandatory that every employee punches in and out,
and working time off site is recorded.

We have to tools to correct this abuse, what we lack is the
will to use these tools to do so...


--
Unka' George

Thank god we do not have the will to impose more regulations on
businesses.
Under your plan every employee would have to punch a time clock. In
my entire working life , I never had to punch a time clock. And
yet I did work a reasonable amount of overtime.
Dan

Would George also support monitoring and restrictions on excessive
domestic energy consumption to reduce CO2 emissions? There is already
the legal precedent of municipal water use restrictions.

On Fri, 26 Dec 2014 05:04:49 -0800 (PST), "
wrote:

On Friday, December 26, 2014 12:37:12 AM UTC-5, F. George McDuffee wrote:

To even the playing field between the honest employers, and
those who cut their labor costs by not paying overtime, it
should be mandatory that every employee punches in and out,
and working time off site is recorded.

We have to tools to correct this abuse, what we lack is the
will to use these tools to do so...


--
Unka' George

Thank god we do not have the will to impose more regulations on businesses.
Under your plan every employee would have to punch a time clock. In my entire working life , I never had to punch a time clock. And yet I did work a reasonable amount of overtime.


Dan
When I ran Cincinnati TIme, here in the Central Valley..hourly
employees ALWAYS got time and a half for anything over 40 hours.
Federal/state law.

More than 8 hours a day was time and a half AND more than 40 hrs/week
was time and a half. More than 12 hrs/day AND more than 60 hrs/week
was double time.

Holiday pay was always the same as above. If the employer offered to
pay "holiday pay" it was up to the employer..UNLESS it fell into the
over 8/40 or the 12/60 hours

Management....which can be the tool/killer...was allowed to work more
without paying overtime..up to a certain point...often decided by a
trip to the Labor Board.

Gunner

"At the core of liberalism is the spoiled child,
miserable, as all spoiled children are, unsatisfied,
demanding, ill-disciplined, despotic and useless.
Liberalism is a philosophy of sniveling brats."
PJ O'Rourke

On Fri, 26 Dec 2014 05:04:49 -0800 (PST), "
wrote:

snip
In my entire working life , I never had to punch a time clock.
/snip
====================
I also fell for this scam.

It is a carefully nurtured myth that people who do not punch
a time clock are some how superior to those that do. In too
many cases it simply means that instead of real cash money,
the employee got a title or classification change (possibly
with a token raise), e. g. from salary to salary exempt, and
more work for no (or very little) more pay.

I see no reason why everyone from the CEO down to the
sweeper should not punch in and out when they are working.
We see there is an apparent problem but there is no "hard"
data, and the only way to acquire it is to require all
employees to "punch the clock."

I am sure many of us will be shocked, both by how much we
are working, and the extent un-paid (or straight time)
over-time is required, and how much money is being diverted
by unethical or ignorant employers.


--
Unka' George

"Gold is the money of kings,
silver is the money of gentlemen,
barter is the money of peasants,
but debt is the money of slaves"

-Norm Franz, "Money and Wealth in the New Millenium"

On 12/26/2014 7:04 AM, wrote:
On Friday, December 26, 2014 12:37:12 AM UTC-5, F. George McDuffee
wrote:

To even the playing field between the honest employers, and those
who cut their labor costs by not paying overtime, it should be
mandatory that every employee punches in and out, and working time
off site is recorded.

We have to tools to correct this abuse, what we lack is the will to
use these tools to do so...


-- Unka' George

Thank god we do not have the will to impose more regulations on
businesses. Under your plan every employee would have to punch a time
clock. In my entire working life , I never had to punch a time
clock. And yet I did work a reasonable amount of overtime.


Dan

I punched a clock at both the best and worst jobs I've had, with lots of
overtime at both. Both were 40 hours straight time and 10 OT every week,
often 20 hours OT. Neither were union jobs, BTW.

And never any talk of working when NOT punched in.

Time clocks are NBD, at least I knew what to expect on payday.

David

On Thu, 25 Dec 2014 23:37:11 -0600, F. George McDuffee
wrote:

On Thu, 25 Dec 2014 16:43:27 -0800 (PST), "
wrote:
snip
And many companies do pay for overtime eve=
n though they are not required to do so.
==============
And many don't, even though they are required to do so.
http://tinyurl.com/ksa3kyk

http://tinyurl.com/bsdkhvj

To even the playing field between the honest employers, and
those who cut their labor costs by not paying overtime, it
should be mandatory that every employee punches in and out,
and working time off site is recorded. [random spot checks
and significant fines (treble FICA and back pay to the
employees?) should help implementation] The spot checks
should concentrate on just before starting time, just after
quitting time, and lunch/break time. Most likely this
should be augmented by random surveys of the employees to
determine how many hours of "voluntary" and required
overtime was worked, and with or without time-and-a-half pay
to identify the "bad apples" for on-site spot checks. This
was too much record keeping before computers and the smart
phone, but is entirely possible now.

While it is not reflected in the compensation data, the
average American is now working at least 181 hours per year
*MORE* than they were a generation ago. This is 4_1/2
weeks, or more than a month.
http://tinyurl.com/cxywjng
http://tinyurl.com/2p45cf

some time and attendance software and terminals, some with
cloud storage, and some using cell phones
http://tinyurl.com/qbv42uu
http://tinyurl.com/o8zh6uv
http://tinyurl.com/d3bvxad
http://tinyurl.com/pvora7a

We have to tools to correct this abuse, what we lack is the
will to use these tools to do so...
It's still cheaper for an employer to pay overtime than it is to
hire another body to do the extra work.

On Thursday, December 25, 2014 at 7:43:29 PM UTC-5, wrote:

"Only Americans who make less than $23,660 a year are
automatically eligible for time-and-a-half pay after working
40 hours a week. "

Shows that thresholds like these, as well as the minimum
wage, should be inflation indexed, and possibly linked to
the productivity index.


--
Unka' George

Much easier to just work for a company that pays more for overtime. Just because a company is not required to pay more for overtime work, does not mean that they can not pay more. And many companies do pay for overtime even though they are not required to do so.

Dan

http://www.wsj.com/articles/the-140-...job-1420659586

He does make more than $23,000 a year, but still gets overtime pay.

Dan

On 12/25/2014 5:32 PM, F. George McDuffee wrote:
On Wed, 24 Dec 2014 02:20:00 -0500, Ed Huntress
wrote:

Nick Hanauer, a multi-billionaire who made his money in the new
economy, explains the financial situation we middle-class folks are
in, and why our real incomes are falling; who the real job-creators
are; and why the stock market is going through the roof.

This will either make your head spin or make you punch a hole in your
drywall. Unka' George, this is for you:

http://tinyurl.com/n2x5ajb

Key take away:

"Only Americans who make less than $23,660 a year are
automatically eligible for time-and-a-half pay after working
40 hours a week. "

As I read it, this applies to salaried employees, not hourly employees.
Lots of hourly workers are making much more than $23,660 a year.

Are there salaried employees working full time and making only $23,660?

That amount over 52 40 hour weeks is $11.375 an hour.

David

On Thu, 25 Dec 2014 20:38:07 -0600, "David R. Birch"
wrote:

Are there salaried employees working full time and making only $23,660?

That amount over 52 40 hour weeks is $11.375 an hour.

Many businesses have multiple "managers" on salary making
this little. Food service and chain retail stores are prone
to having a day manager, an evening manager, a night
manager, etc. with no authority to decide anything, and no
employees they supervise. Two prong approach: (1) The
employee gets a title instead of a raise; and (2) the
employee is overtime exempt. What's not to like?


--
Unka' George

"Gold is the money of kings,
silver is the money of gentlemen,
barter is the money of peasants,
but debt is the money of slaves"

-Norm Franz, "Money and Wealth in the New Millenium"

On 12/25/2014 10:58 PM, F. George McDuffee wrote:
On Thu, 25 Dec 2014 20:38:07 -0600, "David R. Birch"
wrote:

Are there salaried employees working full time and making only $23,660?

That amount over 52 40 hour weeks is $11.375 an hour.

Many businesses have multiple "managers" on salary making
this little. Food service and chain retail stores are prone
to having a day manager, an evening manager, a night
manager, etc. with no authority to decide anything, and no
employees they supervise. Two prong approach: (1) The
employee gets a title instead of a raise; and (2) the
employee is overtime exempt. What's not to like?

For the employee, what's to like?

This means there are lots of people who have risen to their level of
incompetence with a meaningless title and poverty level salaries. Not
really middle class.

Which explains the service we get in the food and retail industries, but
is only a small part at the low end of the middle class. Anyone with
anything on the ball can do better when they see a title and no overtime
is a dead end.

David

On 12/25/2014 5:32 PM, F. George McDuffee wrote:
On Wed, 24 Dec 2014 02:20:00 -0500, Ed Huntress
wrote:

Nick Hanauer, a multi-billionaire who made his money in the new
economy, explains the financial situation we middle-class folks are
in, and why our real incomes are falling; who the real job-creators
are; and why the stock market is going through the roof.

This will either make your head spin or make you punch a hole in your
drywall. Unka' George, this is for you:

http://tinyurl.com/n2x5ajb

Key take away:

"Only Americans who make less than $23,660 a year are
automatically eligible for time-and-a-half pay after working
40 hours a week. "

Shows that thresholds like these, as well as the minimum
wage, should be inflation indexed, and possibly linked to
the productivity index.

Possible palliative actions, at least from the lost tax
perspective:


Is it a big concern for you that the government doesn't take enough
money out of the economy?

(1) Make the employer pay their share of the FICA tax [c.
7.5% of the wages] that would have been collected if the
overtime had been paid.

Which increases their cost so they charge the customer (YOU) more.

(2) As the IRS code says you must pay income tax on anything
of value received, make the employer pay income tax on the
value of the uncompensated labor at the full corporate
income tax rate (c. 35%)


Which increases their cost so they charge the customer (YOU) more.

(3) the IRS could also collect and remit the state taxes,
work mans comp, etc. the employer "saved" by forcing their
employees to work unpaid overtime.


Which increases their cost so they charge the customer (YOU) more.

(4) Name and shame the companies by publishing league tables
of the biggest exploiters. (would require reporting
uncompensated overtime, which may already be done.)


Ya, Then YOU, could boycott, the company would lose business and
layoff the employees. So YOU, are responsible for them losing their job.

FWIW: Compensatory "time off," common at one time in the
aerospace industries, is a complete swindle due to the
frequent "lay-offs," and restrictions on when it can be
used.

Are you really worried about people earning $75,000 a year?





---
This email has been checked for viruses by Avast antivirus software.
http://www.avast.com

On 12/27/2014 1:41 AM amdx wrote:

On 12/25/2014 5:32 PM, F. George McDuffee wrote:*
On Wed, 24 Dec 2014 02:20:00 -0500, Ed Huntress*
wrote:*
*
Nick Hanauer, a multi-billionaire who made his money ...
Possible palliative actions, at least from the lost tax*
perspective:*
*
Is it a big concern for you that the government doesn't take enough*
money out of the economy?*

First, describe exactly how much "enough" would or wouldn't be. And even try proving it.

(1) Make the employer pay their share of the FICA tax [c.*
7.5% of the wages] that would have been collected if the*
overtime had been paid.*

* Which increases their cost so they charge the customer (YOU) more.*

But "they" accept this risk, or these fluctuations in value as a natural part of doing business.

(2) As the IRS code says you must pay income tax on anything*
of value received, make the employer pay income tax on the
value of the uncompensated labor at the full corporate*
income tax rate (c. 35%)*

* Which increases their cost so they charge the customer (YOU) more.*

They accept this risk, or these fluctuations in value as a natural part of doing business.

(3) the IRS could also collect and remit the state taxes,*
work mans comp, etc. the employer "saved" by forcing their*
employees to work unpaid overtime.*
*
Which increases their cost so they charge the customer (YOU) more.*

They accept this risk, or these fluctuations in value as a natural part of doing business.

(4) Name and shame the companies by publishing league tables*
of the biggest exploiters. (would require reporting*
uncompensated overtime, which may already be done.)*
*
* Ya, Then YOU, could boycott, the company would lose business and*
layoff the employees. So YOU, are responsible for them losing their job.*

They accept this risk, or these fluctuations in value as a natural part of doing business.

On 12/27/2014 1:41 AM amdx wrote:

On 12/25/2014 5:32 PM, F. George McDuffee wrote:*
On Wed, 24 Dec 2014 02:20:00 -0500, Ed Huntress*
wrote:*
*
Nick Hanauer, a multi-billionaire who made his money ...
Possible palliative actions, at least from the lost tax*
perspective:*
*
Is it a big concern for you that the government doesn't take enough*
money out of the economy?*

First, describe exactly how much "enough" would or wouldn't be. And even try proving it.

(1) Make the employer pay their share of the FICA tax [c.*
7.5% of the wages] that would have been collected if the*
overtime had been paid.*

* Which increases their cost so they charge the customer (YOU) more.*

But "they" accept this risk, or these fluctuations in value as a natural part of doing business.

(2) As the IRS code says you must pay income tax on anything*
of value received, make the employer pay income tax on the
value of the uncompensated labor at the full corporate*
income tax rate (c. 35%)*

* Which increases their cost so they charge the customer (YOU) more.*

They accept this risk, or these fluctuations in value as a natural part of doing business.

(3) the IRS could also collect and remit the state taxes,*
work mans comp, etc. the employer "saved" by forcing their*
employees to work unpaid overtime.*
*
Which increases their cost so they charge the customer (YOU) more.*

They accept this risk, or these fluctuations in value as a natural part of doing business.

(4) Name and shame the companies by publishing league tables*
of the biggest exploiters. (would require reporting*
uncompensated overtime, which may already be done.)*
*
* Ya, Then YOU, could boycott, the company would lose business and*
layoff the employees. So YOU, are responsible for them losing their job.*

They accept this risk, or these fluctuations in value as a natural part of doing business.

I find that reasoning to be ridiculous. According to its proponent, the
reason for disappearance of middle class, is that a certain arcane
"federal overtime rule" was not adjusted for inflation.

This makes no sense. We live in a capitalist society where wages, for
the most part, are formed in a labor marketplace.

If workers bring a certain incremental additional value to employers,
then their wage would reflect that additional value (the extra amount
that the employer would earn from hiring an additional worker).

Workers with scarce skills or who are highly profitable, would command
appropriate wages, that would rise as the marginal effect of
workers on profits increases. That happens with or without overtime
rules.

Overtime rules were not designed to distort hourly wages. They were
designed to push working hours closer to 8 hours per day and to
increase employment. It is more profitable for almost all employers to
have 4 workers work 10 hours per day, than to have 5 workers work 8
hours per day, with the fifth worker bring unemployed. The overtime
rules push employers more towards employing five workers at 8 hours a
day.

All kinds of regulations, of labor, salaries, wages etc, brings about
distortions in the marketplace that cost the economy money. It is
possible that the value of good social changes offset that cost, but
we should be clear on the existence of that cost.

In addition, when costs of transportation of goods or services are
low, jobs can move to countries with less regulations or lower costs.

I can emotionally understand why that billionaire campaigns for $15
minimum wage, but his reasoning does not stand up to scrutiny.

i

On Thu, 25 Dec 2014 20:24:55 -0600, Ignoramus11791
wrote:

I find that reasoning to be ridiculous. According to its proponent, the
reason for disappearance of middle class, is that a certain arcane
"federal overtime rule" was not adjusted for inflation.

I'm going to guess you didn't read the whole article, nor the other
articles and the TED talk that Nick Haneur has given.

The overtime thing was just a response to what PBS was interviewing
about. Read the rest of the article and you'll have a better picture.


This makes no sense. We live in a capitalist society where wages, for
the most part, are formed in a labor marketplace.

The "labor marketplace" is hugely biased against labor, and has been
throughout history, with a couple of exceptions: the World Wars and a
couple of bubbles, in which labor gained an advantage.

The study of Labor Economics is worth a Master's degree of study --
and often is.


If workers bring a certain incremental additional value to employers,
then their wage would reflect that additional value (the extra amount
that the employer would earn from hiring an additional worker).

Not if the workers are bidding each other down. That's the most usual
state in any industrial economy.

BTW, this is not something that's worth debating. Any study of the
history of the Industrial Revolution makes it clear what happens in
reality.


Workers with scarce skills or who are highly profitable, would command
appropriate wages, that would rise as the marginal effect of
workers on profits increases. That happens with or without overtime
rules.

"Appropriate wages" are competitively determined. In general, workers
will work for whatever they can earn; if someone else will work for
less, they have to take less.

There is no "natural ratio" or natural wage. Labor is almost never in
a position to bargain much.

Think about it: How do employers decide what to pay a given worker?
It's competition between workers, with the marginal rate of return set
by competition with other companies who are in the same market. If
everyone pays $20/hour, then the worker is worth $20. But if the
competitors are paying $10/hour, then the worker is worth $10, on a
rate-or-return basis.

Management is almost always in the stronger position.


Overtime rules were not designed to distort hourly wages. They were
designed to push working hours closer to 8 hours per day and to
increase employment. It is more profitable for almost all employers to
have 4 workers work 10 hours per day, than to have 5 workers work 8
hours per day, with the fifth worker bring unemployed. The overtime
rules push employers more towards employing five workers at 8 hours a
day.

Right.


All kinds of regulations, of labor, salaries, wages etc, brings about
distortions in the marketplace that cost the economy money. It is
possible that the value of good social changes offset that cost, but
we should be clear on the existence of that cost.

One thing that must be agreed at this point or the discussion will go
off the track: The market for labor is, and has been since the
beginning of the Industrial Revolution, heavily biased, disadvantaging
labor. The "distortion" is a function of labor's relative weakness.
There is no -- absolutely no -- evidence to contradict this.

The growth of the American middle class, and our great economic
success, is the result of legislation in favor of labor that attempted
to establish a more realistic balance. Our economic growth over the
past 70 years is largely the result of re-balancing that drove up
consumption. Our economy is 70% domestic consumption.


In addition, when costs of transportation of goods or services are
low, jobs can move to countries with less regulations or lower costs.

That's true. Once a country goes all-in for globalization and
offshoring, they've lost control of the balancing controls on their
labor market. And the result, for the US, is a 30-year decline in the
real wages of the middle class and a struggle to keep unemployment
down to a balancing level.


I can emotionally understand why that billionaire campaigns for $15
minimum wage, but his reasoning does not stand up to scrutiny.

i

The alternative is a race to the bottom.

--
Ed Huntress

On 2014-12-26, Ed Huntress wrote:
On Thu, 25 Dec 2014 20:24:55 -0600, Ignoramus11791
wrote:

I find that reasoning to be ridiculous. According to its proponent, the
reason for disappearance of middle class, is that a certain arcane
"federal overtime rule" was not adjusted for inflation.

I'm going to guess you didn't read the whole article, nor the other
articles and the TED talk that Nick Haneur has given.

I read the article, and that was what I was responding to, but did not
listed to the TED talk and I am not planning to listen.

The overtime thing was just a response to what PBS was interviewing
about. Read the rest of the article and you'll have a better picture.


This makes no sense. We live in a capitalist society where wages, for
the most part, are formed in a labor marketplace.

The "labor marketplace" is hugely biased against labor, and has been
throughout history, with a couple of exceptions: the World Wars and a
couple of bubbles, in which labor gained an advantage.

The study of Labor Economics is worth a Master's degree of study --
and often is.

I have not immersed myself into the arcana of it, however all studies
about various "biases", "flaws", and other real shortcomings of human
decision making, only look at short term effects. In the long run,
prices take care of those biases nicely. Same likely applies to those
"biases against labor".

For example, take China, with labor protection nonexistent. Simply due
to economic development, their wages increased severalfold, simply
because labor became more marginally profitable to employ, and
scarcer.


If workers bring a certain incremental additional value to employers,
then their wage would reflect that additional value (the extra amount
that the employer would earn from hiring an additional worker).

Not if the workers are bidding each other down. That's the most usual
state in any industrial economy.

There is always two sides to price discovery, labor bidding itself
down, and employers bidding themselves up.

The growth of the American middle class, and our great economic
success, is the result of legislation in favor of labor that attempted
to establish a more realistic balance. Our economic growth over the
past 70 years is largely the result of re-balancing that drove up
consumption. Our economy is 70% domestic consumption.

However much you legislate, if computers and robots and websites
replace that middle class, it will not be employed at previously
customary wages.


In addition, when costs of transportation of goods or services are
low, jobs can move to countries with less regulations or lower costs.

That's true. Once a country goes all-in for globalization and
offshoring, they've lost control of the balancing controls on their
labor market. And the result, for the US, is a 30-year decline in the
real wages of the middle class and a struggle to keep unemployment
down to a balancing level.


I can emotionally understand why that billionaire campaigns for $15
minimum wage, but his reasoning does not stand up to scrutiny.

i

The alternative is a race to the bottom.





To believe that the market prices for, say, car oil changes is self
regulating, but that market prices for employees doing oil changing is
not, is kind of crazy and inconsistent.

Employees seek higher wages, employment contracts can be terminated at
any time, and employers seek profitable employees. That causes wage
prices to clear.

If computers and robots can replace employees, they should not hope
for higher wages.

I do not have anything to add to what I said.

i

On Fri, 26 Dec 2014 21:48:17 -0600, Ignoramus22953
wrote:

On 2014-12-26, Ed Huntress wrote:
On Thu, 25 Dec 2014 20:24:55 -0600, Ignoramus11791
wrote:

I find that reasoning to be ridiculous. According to its proponent, the
reason for disappearance of middle class, is that a certain arcane
"federal overtime rule" was not adjusted for inflation.

I'm going to guess you didn't read the whole article, nor the other
articles and the TED talk that Nick Haneur has given.

I read the article, and that was what I was responding to, but did not
listed to the TED talk and I am not planning to listen.

The overtime thing was just a response to what PBS was interviewing
about. Read the rest of the article and you'll have a better picture.


This makes no sense. We live in a capitalist society where wages, for
the most part, are formed in a labor marketplace.

The "labor marketplace" is hugely biased against labor, and has been
throughout history, with a couple of exceptions: the World Wars and a
couple of bubbles, in which labor gained an advantage.

The study of Labor Economics is worth a Master's degree of study --
and often is.

I have not immersed myself into the arcana of it, however all studies
about various "biases", "flaws", and other real shortcomings of human
decision making, only look at short term effects. In the long run,
prices take care of those biases nicely. Same likely applies to those
"biases against labor".

No, they don't. It's an unequal "market," and wages reach an
equilibrium based on that labor/management inequality. The equilibrium
has no necessary or "natural" level; there is a wide range for the
equilibrium to establish, except when it prevents the economy from
growing. I don't remember the details, but IIRC, that has never
happened on the wage upside, but it arguably can happen on the
downside, and has been identified as a source of declining consumption
and resulting recessions in the latter part of the 19th century in the
US and the UK.

You don't need the arcana to see the research that has been done on
this. It's Labor Economics 101.


For example, take China, with labor protection nonexistent. Simply due
to economic development, their wages increased severalfold, simply
because labor became more marginally profitable to employ, and
scarcer.

China is approaching the Lewis Turning Point (look it up -- it's basic
labor economics for rapidly-developing economies). Economists predict
it's about six or eight years away. Some say it's already been
reached. Whether it's been reached or not, China is at a stage where
extremely rapid growth has put great pressure on the supply of
qualified labor, and driven up wages (BTW, they have fairly strong
minimum wages in China, which are enforced in the major cities but not
in the rural areas.)

Labor is LESS marginally profitable to employ in China than at any
time in the past. It's more a matter of employers having to be
satisfied with smaller margins. This is part of the complex of things
that is causing China's growth to slow down.

So your point is generally right, with one exception and one caveat.
The exception is the marginal profitability of labor. It's declining
sharply. The caveat is that it only applies to underdeveloped
countries as they go through a subsistence/capitalist transition and
then reach a labor shortage that drives wages up sharply and hampers
growth because of the labor shortage -- not because of the higher
wages.

Specifically, it applies to countries that fit the Lewis Model, which
traces the transition from a "subsistence" (agricultural) economy to a
"capitalist" economy, in which investment returns flatten out as the
labor supply falls behind the demand.

This is what China is going through now. We reached that point in the
first half of the 20th century. The UK reached it in the mid-19th
century.

BTW, Arthur Lewis's models, for which he won the Nobel Prize, are not
theoretical. They're based on a lengthy analysis of actual economies
throughout modern history, organized with classical economics values
and variables.



If workers bring a certain incremental additional value to employers,
then their wage would reflect that additional value (the extra amount
that the employer would earn from hiring an additional worker).

Not if the workers are bidding each other down. That's the most usual
state in any industrial economy.

There is always two sides to price discovery, labor bidding itself
down, and employers bidding themselves up.

And, as in all price determinations, the equilibrium depends on the
relative negotiating strength of the two sides.

When you're negotiating the price of potatoes, you can walk away and
go looking for turnips instead. g For most labor, at most times,
choices are more limited. At a high stage of industrialization, where
companies are much larger than they were in the first few decades of
the Industrial Revolution, choices become constrained by limitations
on labor mobility. That's when wages sink to a low equilibrium. That's
what happened several times before labor unions gained strength early
in the last century. That's the bias that balances wages below what
they would be in a classical market, with both sides having equal
negotiating strength.


The growth of the American middle class, and our great economic
success, is the result of legislation in favor of labor that attempted
to establish a more realistic balance. Our economic growth over the
past 70 years is largely the result of re-balancing that drove up
consumption. Our economy is 70% domestic consumption.

However much you legislate, if computers and robots and websites
replace that middle class, it will not be employed at previously
customary wages.

Well, that's worth a discussion in itself. And that's a crisis in the
making. I wrote a brief editorial about part of the situation last
month, with a graph that is a little alarming:

http://tinyurl.com/mov7x8a



In addition, when costs of transportation of goods or services are
low, jobs can move to countries with less regulations or lower costs.

That's true. Once a country goes all-in for globalization and
offshoring, they've lost control of the balancing controls on their
labor market. And the result, for the US, is a 30-year decline in the
real wages of the middle class and a struggle to keep unemployment
down to a balancing level.


I can emotionally understand why that billionaire campaigns for $15
minimum wage, but his reasoning does not stand up to scrutiny.

i

The alternative is a race to the bottom.





To believe that the market prices for, say, car oil changes is self
regulating, but that market prices for employees doing oil changing is
not, is kind of crazy and inconsistent.

No, it's observation of the real history of labor markets.


Employees seek higher wages, employment contracts can be terminated at
any time, and employers seek profitable employees. That causes wage
prices to clear.

You have a good understanding of this, so you know that
well-functioning financial markets depend on perfect information, but
there is nothing like perfect information on the part of buyers. So
that market is seriously biased against buyers.

Labor markets depend on perfect worker mobility. But there's isn't
very much of that. You missed the perfect example of that in the
1970s, when the steel industry collapsed and workers couldn't move
because entire towns were suddenly out of work and they couldn't move,
because they couldn't sell their houses, because they were suddenly in
a depressed housing market and they were upside-down on their
mortgages.

Markets for goods and consumer services generally work well. Other
markets sometimes don't work well. Markets "clear" at a levels that
often cause some group to be seriously screwed. Sometimes it's their
lives that wind up being screwed.

If you depend on market forces to regulate labor, you wind up with a
system so fraught with risk that, at the very least, you wind up with
workers who are underemployed because they won't take the excessive
risk to change or move. The upshot is risk-induced abor inefficiency
and suppression of economic vitality and growth. This isn't theory.
It's well-researched fact.


If computers and robots can replace employees, they should not hope
for higher wages.

We'll see what happens. My guess is, like what happened in the 1930s,
the people of the United States are not going to let their lives be
ruined because free-market theorists think they're economic market
objects to be "cleared." It's not a settling thought.


I do not have anything to add to what I said.

You will. You're young enough that you'll see what unfolds. I may not.

--
Ed Huntress

"Ed Huntress" wrote in message
...

We'll see what happens. My guess is, like what happened in the 1930s,
the people of the United States are not going to let their lives be
ruined because free-market theorists think they're economic market
objects to be "cleared." It's not a settling thought.

Ed Huntress

Seems there is already a big push in many states to implement right
to work legislation, now that repbulicans have control in washington
i believe they will try to revise federal labor laws to benifit the job
creators. Depending on who becomes president in 2016 things could
get much worse for labor. Iggy is correct technology will replace
much of the unskilled labor we use today. For example in near future
people that depend on driving for thier income will become obsolete,
same thing will happen with the airline industry, pilotless planes are in
our future. If AI ever becomes a reality the entire global ecconomy
will change, even ecconomists will be unemployed. G

Best Regards
Tom.

On Thursday, December 25, 2014 9:24:57 PM UTC-5, Ignoramus11791 wrote:

I can emotionally understand why that billionaire campaigns for $15
minimum wage, but his reasoning does not stand up to scrutiny.

i

+1

Dan