People will make the basic error that a binding minimum wage must necessarily create unemployment. Orthodox and heterodox economics are in agreement that isn't actually the case (and can actually increase employment). But perhaps that is the problem with the minimum wage? It just isn't set high enough to create unemployment! Why could that be deemed to be a problem? In a nutshell, there is too much profit in employing low paid labour. Take away that profit and resources will switch to production involving high wage labour, with employees provided with upskilling to ensure that they are sufficiently productive. Time for the minimum wage to go through the roof!
And if a person is naturally low performing, just is poor in literacy and/or mathematics exactly what higher skills can they pick up? Some people just fall through the cracks you up the minimum wage some will lose out.
There were always low performing people in the 1940's my father knew several slow people they had a good work ethic and did graduate literate and with employability skills most had some skills to do something even if that was fixing engines or working on a farm with skills at the Agricultural High School. Many ended up working in a factory on an assembly line the kind of blue color job one could support a family on. But now what can a slow student do for a career seems to me its not exactly good for them now.
A good proportion of the perceived ability differences is illusionary, typically reflecting the negative consequences of inequality of opportunity. Most developed countries avoid a low skill equilibrium. A crucial part of that is avoiding labour market flexibility
well, how about YOU hire a bunch of people worth $4 an hour and pay them $20 an hour, see how that works out for you. lets us know, maybe we can all dive into this fantasyland of yours.
The likes of the US stand out. Other countries have low working poverty and much greater levels of upskilling. You are essentially assuming that US workers are less productive than their European counterparts. Its an argument that I do not find credible
Increase the wages to decrease the profit and those low skilled jobs vanish overseas. Im pro-choice: allow people to work for what they see fit not what some religious-like zealots want to force upon them.
Note that European countries twin high wages with high export rates. The tendency towards low wage labour ensures labour insecurity (further discouraging firm investment in human capital) and accentuates outsourcing opportunity
European models simply will not work in the U.S. First of all what the average European considers Middle Class....would be considered Low to Medium Low Income in the U.S. Skilled Labor in the U.S. brings home an after tax paycheck almost DOUBLE that of a European. As well European's do not live as HIGH as their U.S. counter parts and they do take much more time on holiday. Funny statistic....because of low energy costs and having the most productive skilled workers in the world ranked #1....more Toyota's are made in the U.S. than in Japan and thus the U.S. is exporting Toyota's to Japan!!! AboveAlpha
That isn't true. For example, if you take the US poverty line and us it for international comparison (eliminating distributional issues associated relative poverty) the US continues to stand out with higher working poverty. Hours worked aren't lower in Europe. Those suggesting otherwise are victims of a myth. The car industry shows great capital mobility. Its not a particularly good comparison industry as mobility is much lower in other industries.
Have you ever BEEN to Europe? Besides being in the Isles? Trying to get a French Waiter to do their job is IMPOSSIBLE....as since by law their tip is included in the price they have no incentive to be a good waiter. Go to Greece and you will see to demographics....RICH AND POOR. Go to Portugal where everything is so corrupt even the BOOKIES have to pay a Vig. Try getting anyone in Spain to work from 12 noon to 2pm...so sorry....SIESTA TIME!!! The damn malls close!!! AboveAlpha
Of course. Sorry, but this is just anti-French whinge. Of course there is a distribution in income. However, you gave a basic falsehood. If you use an absolute poverty line (i.e. fix needs, rather than allowing the threshold to move according to a proportion of median income) then the US has higher poverty than their European counterparts Beautiful country. Never had any problems with my business dealings with them. Average hours worked in 2012 using OECD data: US: 1790 Spain: 1686 Not much in it!
First of all....try discussing the reality. Have you ever had a hard time getting half way decent service from a French waiter because of the fact their tip is built in to the bill and they have absolutely no incentive to do a good job? As far as Poverty in the U.S.....what we consider poverty is not making enough money to pay for Internet and all Cable Channels. I have seen poverty in Europe where entire CARDBOARD BOX AND TENT CITIES EXIST. Portugal is a nice country but corruption of officials is beyond rampant. U.S. Worker hour average weekly 42.2....Average European Worker 36.3 hours. But here's where it changes Additional hours at time and one half for American's....9.6 Hours a week.based on 40 hour work week. Additional European time and one half hours....1.2 Hours a week. based on 35 hour work week. AboveAlpha
That's all I've done. You've gone for cliché, nothing more. Red herring. I've referred to absolute poverty where needs are fixed. The US continues to have high poverty. That the US twins high poverty with low social mobility is just empirical fact. As I said, I've never had any problems There isn't a useful European average. The individual labour markets differ substantially. However, it was interesting how- through reliance on cliché- you chose Spain. Spain has a relatively high number of hours. Germany, for example, was only at 1397 'average annual hours actually worked'.
Deformity And... Active on Facebook Connect |Sign up |Log in Help|AdChoices|Terms|Privacy Tim WorstallTim Worstall Contributor I write about business and technology. FOLLOW TECH 6/01/2013 @ 4:12PM 41,483 views Astonishing Numbers: America's Poor Still Live Better Than Most Of The Rest Of Humanity 20 comments, 2 called-out Comment Now Follow Comments There’s a lot of debate (from certain quarters it’s less debate than whining actually) about the increasing inequality in the United States. Sure, maybe it’s true that the country continues to grow but what about the poor and their incomes? And there might even be something worth worrying about in all of that too. But just as a short reality check, a few charts that show what it’s really like to be poor in America: as opposed to being actually poor that is. The first one is this: That’s from The Economist, their own calculations working off an OECD set of measurements. This isn’t the traditional GDP numbers, nor purely economic numbers in fact. Things like quality of life, civic engagement are included. And there’s nothing really all that surprising about the US numbers. We know very well that the US has both the highest living standards for the rich and also the largest inequality among the large, advanced, nations. However, look at it a little more closely in relation to other countries. We’re often told that to be poor in the US is much worse than being poor in the social democracies of Europe. And the bottom 10% in the US are indeed worse off than the bottom 10% in Sweden. But they’re better off than the bottom 10% in Germany or France: places where we are told that there is indeed that social democracy. Maybe there’s something for this capitalism red in tooth and claw then: given that it does seem to improve the lives of the poor. Take another look as well: we know that Russia is where bloated plutocrats loot everything from the country: and yet the bottom 10% in the US have, by this measure at least, better lives than the top 10% in Russia. And the top 10% in Portugal (where I live) and Mexico. I think we really might have to do some thinking about what is indeed the best system for the poor. Maybe it really is to let rip with capitalism, allow the inequality to grow but make the poor richer at the same time? Then there’s this rather older one. It comes from the EPI’s State of Working America Report (2004 vintage I seem to recall): This is now purely economic numbers: nothing about civic engagement and all the rest. It’s after all taxes and benefits, it using PPP (so we have adjusted for price differences between countries) and it’s incomes of the top 10% and bottom 10% compared to the US median income. And we see very much the same story as we do at the top. The US is a much more unequal place than other countries. But notice also that we’re told that the US bottom 10% have a living standard very similar to those of Finland and Denmark: you know, those icy social democracies where they care more about the poor. They might indeed care but caring doesn’t seem to do all that much to improve their living standards. We might even say that higher economic growth and also higher economic inequality (or, alternatively, limiting economic growth through redistribution as the opposite) leaves the poor just as well off. And the third comes from Branco Milanovic, the World Bank’s main man on global inequality LINK.../sites/timworstall/2013/06/01/astonishing-numbers-americas-poor-still-live-better-than-most-of-the-rest-of-humanity/ AboveAlpha
The US is a harvester of poverty. We know that because of the abundance of cross-country analysis, made possible following the development of data sources such as the Luxembourg Income Study. The researcher now has available to him/her rich micro-data that is harmonised and standardised to enable international comparison of income and wealth variable. As an example of this literature, try Smeeding (2006, Poor People in Rich Nations: The United States in Comparative Perspective, Journal of Economic Perspectives, Vol. 20 Issue 1). This notes that: "n most rich countries, the relative child poverty rate is 10 percent or less; in the U.S., it is 21.9 percent. The only country that can compete is the UK, which has a higher rate but has made a substantial push toward reducing child poverty". The typical “head in the sand” merchant will employ a two fold method to ignore this evidence. First, they will mutter that relative poverty is a Marxist concept and it really only has a practical application to the developing world. For example, folk will crow about how the so-called poor have a car, a computer, an annual holiday and an air conditioning unit. Poverty, according to this view, should be defined as ‘insufficient funds to eat’. A distinction between poverty and a goody-2-shoes general whine about income inequality should be made. Second, they will splutter that the American Dream operates whereby class is irrelevant and the hard worker will succeed. Both arguments therefore stress the importance of referring to mobility, rather than a static account of poverty/income inequality. So does the US do well in the mobility stakes? Can we support the jolliness of the American Dream or is it another myth to add to the ranks of the right wing abuse of economics? The literature on mobility can be broken down into two aspects: social mobility and intergenerational mobility. Social mobility suggests that individuals face a steeper age-income profile, where over time they are able to escape temporary poverty via rapid income growth. Intergenerational mobility, on the other hand, suggests that there are opportunities available such that sons, grandsons and great-grandsons face increasingly lower risk of suffering daddy’s woeful position in the income distribution. However, once we look at these issues, the available cross-country empirical research remains glum and suggests that the US is actually an underperformer. A pertinent example is Gangl (2005, Income Inequality, Permanent Incomes, and Income Dynamics: Comparing Europe to the United States, Work and Occupations, Vol. 32 No. 2, pp. 140-162). This makes the following remark: "n most of Europe, real income growth was actually higher than in the United States, many European countries thus achieve not just less income inequality but are able to combine this with higher levels of income stability, better chances of upward mobility for the poor, and a higher protection of the incomes of older workers than common in the United States”. A bad start methinks! Another offering, to add to this misery, is provided by Corak (2004, Do poor children become poor adults?, Lessons for public policy from a cross country comparison of generational earnings mobility). The assessment is again depressing reading: "The United Kingdom, the United States, and to a slightly lesser extent France, are the least mobile countries with 40 to 50% of the earnings advantage high income young adults have over their low income counterparts being associated with the fact that they were the children of higher earning parents." Next try the article provided by Blanden et al (Intergenerational Mobility in Europe and North America). This makes the following unfortunate comment: "the extent of intergenerational mobility for sons is lowest in the UK and US, is at intermediate levels for West Germany and is highest for the Scandinavian countries" Perhaps we should look at something more specific to the US, given the charge that somehow the US experiences economic problems that fortunate Old Europe escapes from? How do a specific immigration population progress in the good ole USA? The American Dream, given problems such as incompatible human capital and weaknesses such as low English proficiency, would predict that second generation Mexican-Americans will flower. However, the evidence suggests otherwise. Livingston and Kahn (2002, An American Dream Unfulfilled: The Limited Mobility of Mexican Americans, Social Science Quarterly, Vol. 83, pp. 1003-1012), for example, finds that"the wage pattern becomes one of steady decline across generations for men, and stagnation or marginal decline across generations for women". The American Dream, in terms of the ability to progress according to work effort and ability, can therefore be condemned as a myth. The US, if anything, apes the uselessness of their class ridden Limey cousins. But am I indulging in a snitch of ignorant and a snatch of naïve in my use of the concept? Could the American Dream reflect something much more specific to the US economy? Why yes! And here’s why… The origins of the welfare state, in general, can be traced back to two aspects. First, we have failures generated by the evolution of capitalism (i.e. severe inequality, with the extreme example being too little resources going to the low income such that the physical efficiency, and therefore the productivity, of these workers cannot be maintained). Second, we have the pesky rebellious nature of the working classes (i.e. we should give them peanuts in order to eliminate the threat of Bolshevik revolution). Modern labour markets then open up an additional gain. Full employment would ensure the existence of uppity workers that demand a redistribution of available economic rents. Capitalism will therefore naturally find an equilibrium where unemployment continues and worker discipline is maintained. The welfare state supports that process. It is ironically conservative in nature as it supports the status quo and the general income inequalities generated by jolly capitalism. Despite this rationale for the welfare state, the US is notorious in its relatively stingy provision. This, on the face of it, looks irrational. Perhaps the rampant right wingers that inflict this great nation have ensured an under provision of welfare benefits? I suggest not! The answer is in the exact nature of the American Dream. It is neither about social mobility nor intergenerational mobility. The US is characterised by a long tail of low skilled labour such that the majority of the population are condemned to a relatively poor standard of living. The important aspect is then actually the extreme inequalities that exist. Hope, in terms of achieving one of those few high income yielding occupations, keeps the herd in their ‘chewing the cud’ place. The American Dream may be a myth, but it is a myth that ensures compliancy. Whilst high income inequality will normally ensure labour militancy, encouraging the consumerist American Dream ensures that the individual follows a “it could be me” attitude. We do something similar in Britain. We call it the lottery.
