Mar
23
Living Wage 2– #10 – Josh Hirth
March 23, 2015 | Leave a Comment
The first possible explanation for the wage gap between pre recession salaries and salaries today is that during the recession many workers were entering the workforce with no jobs available and even today there is a backup of available workers. This causes more workers than jobs available, which obviously would affect wages. Using the 2001-2002 as a reference point is not really so useful because the 2007 recession was so much greater in size and scope. The article mentioned that “In 2012, the latest year for which figures are available, 261 (73%) out of 357 metros had a larger share of poorer households (those making less than $35,000 per year), than upper income households of above $75,000.” I find that fascinating given our discussion of income inequality as it relates to the 1% because this is income inequality as it relates to those below the poverty line and the upper middle class.
The fact that the conference of mayors is so focused on income inequality really says something about the problem. In fact it goes as far to say that “Reducing income inequality and ensuring opportunity for all is nothing less than the challenge of our times.” There has even been a creation of a Mayoral task force to focus on this issue. It is also important to recognize that it appears income inequality is affecting all of American cities and not necessarily just NY, which we have discussed at length. The article also mentions the income growth in the upper quintile of society, but unlike other statistics, these statistics seem to be not as dramatic. “since 1975, the increasing share of income earned by the highest quintile — the 20% of households with the highest incomes – rose from 43.6% in 1975 to 51.0% in 2012. Most of that gain occurred in the highest 5% of incomes, which rose from 16.5% in 1975 to 22.3%” Again this raises the question of which numbers can we really go by…
One of our class’s main critique of the Forbes article last week was that it blamed prospective employees for the lack of jobs. To which the class perhaps rightfully so argued, that it is the employs and the overall economy that is to blame for the lack of jobs. But this weeks NYT articles clams that roughly 3 million workers ages 25-54 have quit the workforce because they have been unable to find jobs, at least thus far. How can we justify that? Although it can be exceedingly frustrating to look for a job and not be able to find one, I don’t think its any justification for leaving the workforce. In fact, us college students especially know how difficult it can be to find entry-level positions and openings. Yet we persist until we find something the suits us. I am not really clear how at least part of the blame can’t be put on those 3 million workers who up and quit the search.
When discussing the FED’s moving up its end to quantitative easing, the article is a little out of date. Just this week Janet Yellen made it clear that it is eminent, although she did make it clear that it will not be happening soon. In my opinion the best explanation for the lower job participation rate, other than workers laziness, has come from the FED. They sight, “structural forces such as the replacement of jobs by new technologies and the loss of skills that make jobs impossible to find for the long-term unemployed.” While those make sense to some degree, I don’t believe that is the only explanation. I truly believe the American workforce has grown tired of looking for work and has found it easier to live with government support rather than going out to look for a job.
The fact that “The GS analysis found that the states where the minimum wage went up had faster employment growth than the states where the minimum wage remained at its 2013 level” is truly appealing. While it may be difficult to say one causes the other, it in all likelihood discounts the idea that increased minimum wage will cause a decline in employment. Again it may be difficult to discuss the exact correlation given we have yet to determine the long-term effect, but still it definitely helps the proponents of an increased minimum wage make their case. After looking at the data more closely I grew more skeptical. For instance Florida was one of the worst hit states by the recession so one would expect a higher than average employment growth regardless of minimum wage. And NJ, which has what I would assume to have many minimum wage earners, actually had their employment go down when minimum wage went up. I really believe we need to give it more time before drawing any conclusions.
