by | ARTICLES, BLOG, BUSINESS, ECONOMY, FREEDOM, GOVERNMENT, OBAMA, POLITICS, TAX TIPS, TAXES
Government wage increases vastly outpaced the public sector, and the number of government jobs have soared. For the federal government alone, there are 2.1 million workers, “costing over $260 billion in wages and benefits this year.” according to recent data analysed by the US Bureau of Economic Analysis (BEA).
There is no justification for government workers to earn more than the private sector. What was once a noble profession — the idea of ‘public service’ — has been replaced by as system that allows for and encourages the economic imbalance because the government is not market-driven. Structures such as arbitration and non-firing allow public service employees to continue to receive their benefits and artificial pay raises regardless of the outside economic conditions.
Because of this, public sector wages eventually exceed the normal market-based wages. Negotiations in the public sector should never be “how much of an increase will I receive from before”, but rather, “can we justify these wages and benefits at all?” We should not be paying more than the private sector, which responds and adjusts to the mitigating economic factors; the government does not, and the result is what we see today: sprawling wages, busted pensions, and bloated budgets.
In essence, government workers have stronger job security because they are not dependent on the economy to keep them going. What’s even more sobering is the fact that the private sector marketplace is beginning to lose the best and brightest people, because the government is paying more, and providing employment with better benefits. This will have long-lasting detrimental effects. It was never intended for the government to compete with the private sector. This phenomenon has turned the entire system on its head.
by | ARTICLES, BLOG, BUSINESS, ECONOMY, GOVERNMENT, OBAMA, POLITICS, TAXES
The question of raising the minimum wage keeps getting pushed at the federal level, as well as across many states. If we are to educate the populace on the pitfalls of arbitrary “minimum wage” hikes, we must be sure to argue the inherent flaws of suggestion that minimum wage hikes help some people and therefore are good for everyone.
This was illustrated recently on an episode of CNBC’s “On the Money” with Becky Quick. On one side was Dan Mitchell of CATO, who has done admirable work on fiscal policy and economics over there for many years. Opposite him was Jared Bernstein, a former Chief Economist and Economic Adviser to Vice President Joseph Biden. Mitchell’s appearance on the show, however, was a bit of a disappointment on the issue of minimum wage.
There were two major points he seemed to miss. The first was in regard to the effect of a minimum wage hike on workers. Mitchell pointed out, correctly, that 500,000 people would lose their jobs, to which his opponent, Jared Bernstein, countered that 24 million people would gain more money (“get out of poverty” per the CBO), and therefore, quantitatively, people would benefit in a 50-1 ratio. But that is wrong!
Those 24 million, though they may benefit from a raise, will really one see a few cents more an hour. Those that lose their jobs, will lose not only $7.50 an hour in comparison, but also the opportunity to learn working skills and actually have a job from which they can advance in the workforce. Even if Bernstein’s figures were perfectly accurate – which they were not – having 24 million people earn a few more cents per hour versus the entire loss of jobs and livelihood do not make raising the minimum wage worthwhile.
But that point is secondary. The primary issue – and the one that Mitchell (as well as all of us who understand the economics of minimum wage) seem to be unable counter to the Jared Bernsteins of the world – relates to the economic cost of a minimum wage. He needed to explain to Mr. Bernstein that the apparent extra money going to those getting the higher minimum wage is, in fact, detrimental to the economy as a whole, and therefore ultimately to even those people it was intended to help.
Economics 1a would explain (looking for “what is unseen” ) that the extra money going to those benefiting must be coming from somewhere (though providing no extra result). It is coming from either a) lower wages paid to other employees, b) lower profits to the business, which lowers rate of return directly reducing new investments in that business and reducing the likelihood that new businesses will be started, or c) higher prices to the consumer, which (Economics 1a again) shows will reduce total sales volume, and therefore GDP as a whole..
Though Mitchell did successfully argue the merits of how minimum wages certainly shouldn’t be a federal law, but rather a state consideration, he missed entirely the ability to counter the false argument concerning the minimum wage altogether. If we don’t oppose and expose the core flaws, we will certainly continue to lose in the public square on the issue of minimum wage.
by | ARTICLES, BLOG, ECONOMY, HYPOCRISY, OBAMA
Can you believe it — a bigger lie than “you can keep your doctor”?
President Obama’s comments regarding the gender pay gap and discrimination are as vicious a lie as his statements that you can keep your doctor. The idea that women earn $.77 for every $1.00 that men earn, for equal work, has never been true, never in the slightest.
That $.77 comparison is not for equal work. It strictly represents the reality that women, more often than men, work at jobs that are lower paying. The reason for such jobs might include school and family situations, flexibility of schedule, and their desires to be able to be use work secondarily for their needs for their families or a source of discretionary income.
There is actually no evidence of any discrimination for women doing the same work an being paid less. If the world of labor could indeed pay women less (23% less) for equal work, why isn’t virtually every company hiring only women as a means to curb costs and increase profit?
A more full and excellently written description was put forth in the WSJ on April 7th. It is a must read.
The most incredible thing about Obama’s statements is that Obama appears to have his own “pay gap disparity” at the White House (women earn $.88 cents per $1.00 for men). Interestingly, the White House takes great pains to discuss the discrimination variables that cause this disparity.
“An analysis of staff salaries done last fall by the conservative American Enterprise Institute found the president’s female aides were paid 88 cents for every dollar paid to men, about $65,000 to $73,729 annually. On Monday, Carney argued the comparison is based on aggregate wages that include the lowest salaries at the White House “which may or may not be — depending on the institution — filled by more women than men.”
He said men and women in equivalent roles at the White House earn the same amount and that 10 of 16 department heads are women, earning the top White House salary of $172,200″.
Here we have the Obama administration admitting that more women are in jobs that include the lowest salaries at the White House.
So, it is not gender discrimination at the White House, which is what Obama has tried to claim in his “$.77 cents” missive and new Executive Order. He wants to apply that label when discussing the “gender pay gap” to all other businesses (as a means to appeal to his female base), but then when the spotlight is shined on the White House pay scale, Obama retreats from that rhetoric.
As he should. Because the gender pay gap is truly a myth. And Obama’s own White House data and discussion prove it.
