Posts tagged with: labor

boss moneyIn light of the latest hubbub over the minimum wage, I recently wrote that “prices are not play things,” arguing that we do ourselves and our neighbors no favors by trying to subvert and distort market signals according to arbitrary whims. Instead, I argue, we should reach beyond such low-ball thinking, focusing on creation and contribution rather than sitting and settling.

Over at Think Christian, Jordan Ballor offers some related thoughts, including a helpful reminder that while prices matter, wages do not represent a “commentary on the value of the human person as such.” Tying our self-worth to marketplace value, he argues, “can be a misleading and potentially destructive identification.”

In Work: The Meaning of Your Life, Lester DeKoster pushes heavily in this same direction, going so far as to say that although work and wages move on “parallel tracks,” “neither track is the cause of the other or the goal of the other”:

What is a just wage? It is a paycheck that recognizes the personal relationships that underlie work and civilization. Involved are both the needs of the worker – at all levels – and success of the enterprise – in which all are involved…[T]hose whose work is concerned with the creation and administration of wage and price scales must be economic artists whose jobs bear heavy moral responsibility. What the traffic will bear or wage scales that only grim necessity will oblige the poor to accept are artistic guidelines that enjoy no endorsement from heaven. The search for just wage and fair price is never-ending, for the market is always changing and so are the forms required of work. Economic justice is by no means universal even in the best of civilizations.

How, then, do they relate? (more…)

Wizard of Id - Minimum WageThe protests organized by labor organizations to advocate for an increase in the minimum wage have garnered attention, most recently from the NYT, which editorialized in favor of such moves. Over at Think Christian, I weigh in with an attempt to provide some more of the complex context behind the moral evaluation of such mandates.

In the piece, I’m really less interested in the plight of current-minimum wage workers relative to those who might become minimum-wage workers with an increase, those who are currently priced-out of labor markets because of minimum-wage legislation, and those who will be priced out with an increase.

Earlier this week, Joseph Sunde discussed the issue with an eye towards the price of labor: “Prices are not play things.” I largely agree with Joseph about the significance of the price associated with various kinds of labor. The signal that minimum-wage workers should be receiving is that their work is not that specialized or valuable in the marketplace. You can rage against the values of the marketplace all you like, but that’s what the prices signal.
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Blog author: ehilton
posted by on Wednesday, August 7, 2013

Last week, we took a look at what distributists get right in terms of economics, through the eyes of David Deavel at Intercollegiate Review. Now, Deavel discusses where distributism goes off the rails in that same series. It is a rather long list, rube goldbertbut here are the highlights.

First, Deavel says that simple economics escapes distributists. Despite the fact that economics teaches that actions in the real world have real world consequences, distributists tend to ignore this fact.

They scoff at the notion that there might be predictive laws of economic behavior, such as supply and demand.  But if there are such predictive laws, then it behooves us understand them.  Distributists want third parties, such as governments or guilds, to arbitrarily set wages and prices according to abstract notions of justice.

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McDonald’s has been under fire over its Practical Money Skills Budget Journal, a planning tool designed to help employees organize their personal finances. The tool’s sample budget fails to account for a variety of first-world expenses, leading to a predictable cacophony of folks calling for newer, fresher, more enlightened price-fixing tricks. Stephen Colbert channels the sentiments well.

McDonald's Budget

Sample Budget for McDonald’s Employees

On the finer points, it can be tempting to get into the weeds, and many already have. Some have focused on the budget itself, debating everything from the actual cost of heat to the necessity of a $100 cable bill. Others have aimed to play the CFO, imagining how Big Mac prices might be impacted if McDonald’s paid its workers the $15 per hour they demand. It’s all been thoroughly deconstructed, but rest assured, the next hypothetical is well on its way.

Yet as fun as all this back-and-forth may be, it misses the larger reality: Prices are not play things.

As economist Art Carden has pointed out, raising the minimum wage is likely to lead to a host of deleterious effects: (more…)

A mere recital of the economic policies of governments all over the world is calculated to cause any serious student of economics to throw up his hands in despair. What possible point can there be, he is likely to ask, in discussing refinements and advancements in economic theory, when popular thought and the actual policies of governments…have not yet caught up with Adam Smith? – Henry Hazlitt, Economics in One Lesson.

These words continue to echo in the District of Columbia as legislators and activists once again choose to listen to their well-intended intuition over the lessons of basic economics.

6858535588_84f27f81ca_bOn Wednesday, D.C. Council approved the Large Retailer Accountability Act (LRAA), a bill which requires “big-box” retailers to pay their employees a minimum wage of no less than $12.50 an hour. The bill is backed by labor activists and some religious leaders who claim that employees who are paid the city’s minimum wage of $8.25 (a dollar higher than the federal minimum wage) are not being paid a ‘living wage.’ Should the LRAA be signed by Mayor Vincent C. Gray (D) and pass a congressional review period, all D.C. retailers that work in a space of 75,000 square feet or more and exceed $1 billion in corporate sales will be forced to pay their employees this higher minimum wage.

Wal-Mart has warned the city that the company will abandon plans for three planned stores in the district should the bill be passed into law. Such a statement is being taken as an ultimatum by labor activists.  Among the most outspoken is Rev. Graylan Hagler, a senior pastor of the Plymouth Congregational United Church of Christ and a leader of Respect DC – a local activist group that fights for what they call living wages.  In response to Wal-Mart’s proposal, Hagler stated, “If you allow a bully to bully you, it’s never going to end. There will be something else. There will always be another agenda. We’ve got some work to do.” (more…)

Once upon a time, America was a country where a young adult would jump at an opportunity to learn new skills so that he or she could increase their options later. They were grateful. Those days are over thanks to a new ruling against unpaid internships. Thanks to an America that fertilizes Millennial narcissism in new ways, combined with the federal government undermining how employers develop their employees with minimum wage laws, everyone is worse off in the long run. Someone should have talked to Eric Glatt and Alexander Footman about this because these former interns sued Fox Searchlight Pictures for an unpaid internship where they “performed basic administrative work such as organizing filing cabinets, tracking purchase orders, making copies, drafting cover letters and running errands,” according to the Associated Press. A federal judge ruled in favor of Glatt and Footman.

Instead of these two young men being thankful for simply having an opportunity to have access to skills learned and the network of contacts they would make during their short stay, they decided to sue because they were not being paid for doing the same work as the hired employees. What Glatt and Footman seem to be unaware of is that if they had applied for those jobs outright they probably would not have been hired. So they should be thankful that they were given a spot to view operations from the inside at all. Where’s the rub? These young people believe that they are entitled to be compensated for work for an advertised “unpaid” internship. (more…)

Blog author: jcarter
posted by on Wednesday, June 5, 2013

trip_hurdles_400_clrOne of the most basic concepts in economics and business is marginal or incremental cost, the additional cost needed to produce or purchase one more unit of a good or service. For example, if a business can produce 100 widgets at a total cost of $5,000 and 101 widgets for $5,500, the marginal cost of the 151st unit is $500. At that rate, the company has a disincentive to produce more than 100 widgets since the cost rises sharply (an average additional cost of $4.45 per widget).

The same principle applies to the cost of labor. Imagine a worker who makes $16 an hour for 29 hours per week but whose incremental cost for the 30th hour of work each week rises to $112.15. For the 29 hours of labor, the cost is $464 while for 30 the cost is $576.15. That sharp increase would prevent many employers from hiring workers for more than 29 hours per week.

According to Jed Graham at Investor’s Business Daily, that is exactly what effect Obamacare will have on wages.
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Anyone who’s been to Detroit in recent years knows it’s a mess. Acres and acres of abandoned houses, a population decline of 25% in the past 10 years, an astronomical crime rate, and the city is literally leaking money to the tune of some $200 million in two months. Back in March, Gov. Rick Snyder appointed bankruptcy attorney Kevyn Orr as the city’s emergency financial manager, and Orr has just released his report on the city’s financial state.

farrier toolsBefore we begin weeping about the death of the Motor City, there are bright spots. Fast Company did a piece in April highlighting entrepreneurs who are taking advantage of low-rent and housing prices and the need for creative work to boost Detroit’s economy. Dan Gilbert is a real estate broker working on filling office space downtown. Andy Didorosi has created a bus service that takes patrons from night-spot to night-spot in safe, fun and comfortable buses. Alicia George has opened a coffee house, and is optimistic that several new businesses have opened near-by.

Now for the bad news. The city of Detroit is paying a farrier (that’s a person who shoes horses) $56,000 in pay and benefits. Right now, in 2013. Let’s just say that he’s not really earning his pay in today’s downtown Detroit. The Detroit Water & Sewer Department is telling the cash-strapped city they need more employees – union employees. And the city’s unionized teachers? They want to cash in unused sick days for over $14 million. (more…)

“Retirement as a cultural concept needs to go away.” So says Pascal-Emmanuel Gobry in a thought-provoking piece today over at Forbes.

I agree with the sentiment, in large part because good work never ends.

But as Gobry also illustrates, we need to rethink our conceptions of work as well as retirement, which for many is just another way of talking about the end of work.

A recent CNBC article by Mark Koba notes the bleak outlook for 2013 college grads looking for work:

A survey released last week from the National Association of Colleges and Employers (NACE) reported that businesses plan to hire only 2.1 percent more college graduates from the class of 2013 than they did from the class of 2012.

That’s way down from an earlier NACE projection of a 13 percent hiring rate for 2013 grads.

There is good reason for this bad news, however. As Koba notes, “One reason there may not be so many grads hired is that many employers don’t believe college graduates are trained properly.” He goes on: (more…)