Posts tagged with: labor

Participant in the Doe Fund, New York City

Participant in the Doe Fund, New York City

No one wants to be poor. No one enjoys figuring out how to stretch meals to last just three more days. No parent wants to tell their child they can’t play a sport or get a new backpack because there is simply no money. No one wants to be evicted. Poverty in America is a reality; so what are we going to do about it?

The American Enterprise Institute has a few ideas. They’ve taken a look at where we are 50 years after the War on Poverty was declared. The conclusion is that we’ve not been successful in that war. Poverty in America—and What to Do About It is a compilation of essays on the topic.

Aparna Mathur says the talk of late about “income inequality” is misleading. We must address poverty, not differences in individual income.

We are now in the fifth year of an economic recovery that does not seem like a recovery to most people in the labor market. There are more than 10 million unemployed workers, of which nearly 4 million have been jobless for longer than 27 weeks. In addition, there are another 10 million who are either in involuntary part-time jobs, or are too discouraged to look for work. Therefore, I would argue that the focus on income inequality is somewhat misplaced. This is essentially a problem of poverty.

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Blog author: jcarter
Monday, July 28, 2014
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Labor unions can be a force for good, especially in protecting the interest of workers against exploitation. But as with any human institution, unions can become harmful to the common good. That is particularly true with teachers unions, which often promote the self-interests of their members even when they are antithetical to the interests of students.

In this 5 minute video, Terry Moe, Professor of Political Science at Stanford University, outlines the problem of teachers unions and offers solutions to how it can be fixed.

What just happened with Obamacarehealthcaregov site?

In a two-to-one decision, the U.S. Court of Appeals for the District of Columbia Circuit dealt a serious blow to Obamacare by ruling the government may not provide subsidies to encourage people to buy health insurance on the new marketplaces run by the federal government.

What did the court decide?

Section 36B of the Internal Revenue Code, enacted as part of the Patient Protection and Affordable Care Act (Obamacare) makes tax credits available as a form of subsidy to individuals who purchase health insurance through marketplaces—known as “American Health Benefit Exchanges,” or “Exchanges” for short.

This provision authorized low-income Americans to receive tax credits for insurance purchased on an Exchange established by one of the fifty states or the District of Columbia. (The credits were for household incomes between 100 and 400 percent of the federal poverty line.) But the Internal Revenue Service interpreted the wording broadly to authorize the subsidy also for insurance purchased on an Exchange established by the federal government.

The court ruled that a federal Exchange is not an “Exchange established by the State,” and section 36B does not authorize the IRS to provide tax credits for insurance purchased on federal Exchanges.

Can you explain that without the legalese?
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TipsMillions of Americans who work for tips have now been dragged into the political battle over the federal minimum wage and whether it should be raised to $10.10 per hour. Since 1991, the federal minimum wage has been adjusted 5 times, increasing three dollars to its current $7.25. These changes have been made while the minimum wage for America’s largest workforce, tipped workers, has remained unchanged at $2.13 for 23 years.

Although tips are meant to be a gratuity that shows appreciation for good service, they have become the difference between poverty and a living wage for nearly 20 million Americans. Saru Jayaraman, founder of the labor advocacy group Restaurant Opportunity Centers United, says that abolishing the tipped minimum wage in favor of one fair wage will help reduce poverty, especially in families.

But the National Restaurant Association has a different view. In response to a study on tipped wages by the left-leaning Economic Policy Institute, the NRA states:

Ninety percent of restaurants are independent or franchisee owned and operate on razor thin profit margins. Drastic increases to the minimum wage will only hurt restaurants ability to continue to create jobs and provide real opportunity to young people looking to step into the workforce and those who are finding their economic footing.

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single-payerFor those on the left side of the political spectrum, single-payer health care — a system in which the government, rather than private insurers, pays for all health care costs — is one of the most popular policy proposals in America. But the recent Hobby Lobby decision is reminding some liberal technocrats that giving the government full control over health care funding also gives the government control over what medical services will be funded.

As liberal pundit Ezra Klein explains:
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gaplogoThe furniture store Ikea has announced they will begin to base their minimum pay on what’s considered to be a “living wage” in each local area, rather than on what competitors are paying. Similarly, the clothing retailer Gap says it will set $9 as the minimum hourly rate for its United States work force this year and then establish a minimum of $10 next year.

This makes good business sense — but will lead to a lot of bad economic reasoning.

A prime example is the latest column by Slate’s business and economic writer, Jordan Weissmann:

Notably, Ikea isn’t raising prices on its furniture to pay for the raise. Instead, the company’s management says it believes the pay hike will help them compete for and keep talent, which is of course good for business. The Gap used a similar justification when it announced it would raise its own minimum to $10 by 2015.

Which I think hints at something about what would likely happen if the U.S. raised the federal minimum. Conservatives who argue that higher pay floors kill jobs tend to assume that businesses are already running at pretty much peak efficiency, and so forcing them to spend more on labor will lead to less hiring. But left-leaning economists see it differently. They tend to argue that increasing wages can lead to savings for business by reducing worker turnover, for instance, and forcing managers to make better use of their staff.

Both the conservatives and the left-leaning economists are largely correct. Higher pay floors do tend to kill jobs and increasing wages can lead to savings for business by reducing worker turnover. But where Weissmann and other liberals go wrong is in assuming that businesses can still prevent worker turnover when the minimum wage is increased.
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starbucksWhen most people think of Starbucks they think of overpriced coffee, free wifi, and omnipresence. Starbucks are everywhere. The company was founded in 1971 and since 1987 they’ve opened an average of two new stores every day. In the U.S. alone there are 12,973 locations.

When most people think of “big business”, though, they don’t often think of the Seattle-based coffee company. But they should. Starbucks has 151,000 fulltime employees, $15 billion in annual revenues, and three times as many locations as Walmart. Starbucks is one of the biggest of big businesses. And, not surprisingly, a big proponent of cronyist policies.

Cronyism occurs when an individual or organization colludes with government officials to create legislation or regulations that give them forced benefits they could not have otherwise obtained voluntarily. Those benefits come at the expense of consumers, taxpayers, and everyone working hard to compete in the marketplace. A prime example is minimum wage laws. Almost without fail, big businesses tend to support higher minimum wages.

Since they could just choose to pay higher wages, why would they support federal mandated wage floors? One reason is because it helps to eliminate the competition from small business who don’t have the size and scale to absorb higher-than-market wage increases.

In a recent interview with CNN, Starbucks CEO Howard Schultz said he supports an increase to federal minimum wage even though he admits the $15 wage in Seattle could have “traumatic effects” on small business owners and employees.
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