Rolling Stone article on the demise of the middle class

[MillCreek]

http://www.rollingstone.com/culture/news/the-sharp-sudden-decline-of-americas-middle-class-20120622?print=true

A very interesting story in Rolling Stone about the demise of the middle class due to joblessness.

[Ben]

I found it interesting that they focused on homeless in Santa Barbara. The median price for homes in the current depressed market is ~$900,000. Average monthly apartment rent is ~$1500. It's a low growth community, so jobs are hard to come by, and service jobs only pay the rent if you're living with roommates (which is quite common here).

They have trouble getting doctors to work here because of the cost of living, yet homeless migrate here. Why? Good weather and a very liberal community that gives them free stuff. Because of the cost of living, it becomes near impossible to "get on your feet" to the point of getting a place to live.

The main person in the story (and the other homeless here that actually want to work) would have a much better chance at getting a job and a roof over their heads in any number of other places in CA, let alone the US, where the cost of living is lower and the income to rent ratio is better.

[just Warren]

Here's another piece of the puzzle, focusing on how our monetary system has turned to crap.

http://www.forbes.com/sites/nathanlewis/2012/06/24/economic-forensics-who-actually-destroyed-the-middle-class/

And to these articles you can in things like minimum wage laws, labor laws in general, payroll and other stupid taxes, the increased ability for the aggrieved to sue and settle for even the littlest thing, high tariffs, quotas and all the other noxious mercantilistic humbuggery. 

In a free market there would be little to no unwilling unemployment. Markets clear. If there is a surplus of a thing, in this case labor, the price falls until most of the item is sold. But with our structure the price cannot go far enough down to clear the market. Minimum wage is $7.25 an hour on top of which the employer has to pay taxes and has to figure in potential costs like lawsuits and so forth.

So the cost of labor is artificially high and is not allowed to fall, so people cannot find work because it is illegal to pay them less what is mandated AND prices are higher because of inflation and taxes and regulations so they need more to live on anyway so that is another gap that hurts people. Sure they might be willing to work for $4 an hour but that won't get them out of their van AND provide them good nutrition AND the other things that being middle class used to mean.

AND you can't pay under the table because you can get in trouble for that legally and you can still be sued so their is no informal day-wage market. Okay, we all know there is for certain people but not for a 56 year-old former business woman who literally lives in a van down by the river. 

The cause of all of these things is people, from union members, to faux-capitalists, to politicians*,  to the sorts of people who work for politicians, feel-gooders and eco-frauds and other pressure groups, AND people who should know better but he get involved in the game out a need to protect themselves from the others.

It all adds up to what we read in the Rolling Stone article.

The answer is easy. Stop asking politicians to protect you from competition. Foreign imports crushing your margins? So what, sack up and find an ETHICAL way to compete. Same with labor. Worried that your workplace is unsafe and something should be done? Find an ETHICAL  way to correct the problem. Don't like your job because of- well, who cares really- get another one.

Also demand and end to the monopolistic provision of currency. Let the market do that as well. Historically, banks have done an excellent job of it overall whereas governments historically have done an abysmal job.





*I had misspelled politicians as plotiticians and spell-check insisted it was wrong but I don't think it is.   

[brimic]

The keynesian economics fixes do tend to work over a very short time frame but this might be the most insidious attribute they have. Their fatal flaw is that noone has figured out to exit from such policies without setting the economy back to its original bad condition or worse, and continuing them means growing government and debt- infinitely or until the system crashes under its own weight.

-----------------------------------------------------------------------
It seems that the people in the article all had marketable skills, but were unwilling to move out of their little bubbles to find work....

There was a recent news article in my state where a shipbuilder needed welders and had put out an offer to send people to tech school to learn welding if the people would then come and work for the shipbuilder for 5-10 years (couldn't remember the exact  time frame, but it was to cover a long term Navy contract) making very good union scale wages.
The shipbuilder only got a few takers.....yet we have more than our share of overeducated morons who A) can't seem to find a job, and B) have plenty of time to show up for whatever the protest of the day is.

[lee n. field]

There was a recent news article in my state where a shipbuilder needed welders and had put out an offer to send people to tech school to learn welding if the people would then come and work for the shipbuilder for 5-10 years (couldn't remember the exact  time frame, but it was to cover a long term Navy contract) making very good union scale wages.

How long is welding school?  As long as there's a pay back option, so you're not indentured to The Man, that sounds like a good deal.

[birdman]

In a free market there would be little to no unwilling unemployment. Markets clear. If there is a surplus of a thing, in this case labor, the price falls until most of the item is sold. But with our structure the price cannot go far enough down to clear the market. Minimum wage is $7.25 an hour on top of which the employer has to pay taxes and has to figure in potential costs like lawsuits and so forth.

Absolutely true, I've tried to explain this to people and they don't get it, even though it s plain as day in history.  Before minimum wage laws there was effectively ZERO structural unemployment.

[Perd Hapley]

And to these articles you can in things like minimum wage laws, labor laws in general, payroll and other stupid taxes, the increased ability for the aggrieved to sue and settle for even the littlest thing, high tariffs, quotas and all the other noxious mercantilistic humbuggery.  

In a free market there would be little to no unwilling unemployment. Markets clear. If there is a surplus of a thing, in this case labor, the price falls until most of the item is sold. But with our structure the price cannot go far enough down to clear the market. Minimum wage is $7.25 an hour on top of which the employer has to pay taxes and has to figure in potential costs like lawsuits and so forth.

So the cost of labor is artificially high and is not allowed to fall, so people cannot find work because it is illegal to pay them less what is mandated AND prices are higher because of inflation and taxes and regulations so they need more to live on anyway so that is another gap that hurts people. Sure they might be willing to work for $4 an hour but that won't get them out of their van AND provide them good nutrition AND the other things that being middle class used to mean.

Yet the federal minimum wage law was instituted by FDR, the man elected to "solve" the Great Depression and its high unemployment.

And what did Obama do, as soon as he was elected (also to "solve" an economic down-turn)? Why, raise the minimum wage, of course.

 

[De Selby]

Before minimum wage laws people lived in hovels and worked to their deaths too.  I suppose getting rid of rules on worker safety would help bring back industry too, but at what cost?

Bringing back an employed but wretched class doesn't seem to me a particularly helpful answer to the economic problems we face.

[Hutch]

I've often heard remarks like De Selby's regarding the 5-day work week, child labor laws, overtime, minimum wage, sick pay, et endless cetera.  My question is: are the maintenance of these conditions dependent on progressivism, the labor unions, or other collectivist intervention?  My assertion is that they are not.  I further believe that these advances, or others substantially equal, would have arisen and be maintained regardless.

Living on the extorted fruits of other people's labor is at least as immoral as any dystopia you believe would arise by the reinstitution of a free market in labor.  Worse, it (Statist intervention) is one of the contributors to an equally immoral mortgaging of future generations' productivity.  From a values-free analysis, it is likely to lead to a monetary, financial, and fiscal catastrophe that will cause far more squalor, suffering, and misery for far more people than the Dickensian picture you paint.

[lupinus]

Before minimum wage laws people lived in hovels and worked to their deaths too.  I suppose getting rid of rules on worker safety would help bring back industry too, but at what cost?

Bringing back an employed but wretched class doesn't seem to me a particularly helpful answer to the economic problems we face.

So you presume one size fits all minimum wage keeps one out of a hovel? And just what is it you have against hovels? Some hovels are kind of nice.

As to safety laws, yes a lot of those could be rolled back completely and help industry while having no negative impact on worker safety.

[grampster]

Being old, one has the benefit of long term observation.  In a nutshell, statists have two flaws that they refuse to acknowledge.  The first flaw is that they never, ever consider that there may be unintended consequences of that which they promote and impose.  The second is they never, ever admit to the unintended consequence when it manifests itself.  

[lupinus]

Being old, one has the benefit of long term observation.  In a nutshell, statists have two flaws that they refuse to acknowledge.  The first flaw is that they never, ever consider that there may be unintended consequences of that which they promote and impose.  The second is they never, ever admit to the unintended consequence when it manifests itself.   

But just how many of those unintended consequences are truly unintended?

[just Warren]

Before minimum wage laws people lived in hovels and worked to their deaths too.  I suppose getting rid of rules on worker safety would help bring back industry too, but at what cost?

Bringing back an employed but wretched class doesn't seem to me a particularly helpful answer to the economic problems we face.

First, just because you happen to exist does not mean you have a right to employed, employed at specific wage or work in a safe environment. You have a right to attempt to find those things but no right to impose your conditions on others. If you do not like the conditions then do not work there. It is obviously not your best option so go do whatever your best option is. Find a place more agreeable to you.

Second, the more regulations and taxes and artificial sundry costs placed on labor the more it costs to hire people and thus the less of them that will be hired. When there is a surplus of labor and thus a lot of competition for jobs employers need not attract workers with higher wages or better conditions. In a labor surplus the employers have the upper hand.

However, lower the costs of employment and more labor is hired, drying up the surplus labor and thus if a new business wishes to start or an existing business to expand they will be faced with a labor shortage which means in order to entice folks to work there they have make an offer that is better than what the workers are already getting. For instance in some places in North Dakota some many level positions are paying $10-11
to start and some are as high as $15 which is more than double the mandated minimum wage. In a labor shortage the workers have the upper hand. And the wages go up and conditions, where possible, get better.

So if you were truly concerned about workers you would want to remove all artificial costs to the price of labor.

The Democrats (and clueless Republicans), in the main, do not do this because they believe, as you do, that freedom in labor pricing would lead to lower wages and thus make high-wage unionized employees less competitive which would piss off said unions. And since unions give a lot of money to Democrats they rationally do not want to upset that apple cart. Also they can still count on many, perhaps most of, the votes of the unemployed as things other than wage laws can be blamed for the labor surplus; overseas competition and greedy businessmen who are no friend of the working class. Plus, they can keep these people mollified with welfare benefits and agitated when the Republicans move to make even tiny changes.

It's a two-fer for the Dems, they get the unions AND the people out of work (plus Nativists) because of the labor restrictions so it would be insane of them to change their direction on this.

And back in the past, they had the racists as well for minimum wage was a way to drive out blacks from jobs that whites "should" have. Since blacks were not well liked and could not get hired at the normal wage they had to compete for jobs by lowering what they would work for. Racists job-givers have a price at which it is too costly to engage in their racism and thus, when the blacks got to that point they would be hired.

Along come minimum wage laws and everybody has to be paid the same. Now a racist job-giver gains nothing by hiring blacks and so does not and the jobs go to whites.


So congratulations dude, you are on the side that prevents economic expansion, keeps people from earning more money and tends to keep poor working conditions from getting better and promoted (the effect of which which is still in effect today) racism and turning people from independent dignified individuals, to state-dependent drones. Good job. 

[just Warren]

Also, I should point out that preventing two people from voluntarily agreeing to a price is, in effect, censorship as you are telling at least one of the participants that they are not allowed to utter a specific set of words because they will be punished for it.

It also treats at least one of the participants as a weak-minded imbecile who cannot fend for himself.

But then again seeing people as either idiots or criminals is what politicians, bureaucrats, do-gooders and their hangers-on are best at.

[Waitone]

Minimum wage laws are nothing less than government mandated minimum level of productivity.  Can't produce goods and services worth $X.YY per hour?  Tough, you can't get a job.

[just Warren]

Yup, apparently you are better off making nothing than making even a penny less than the minimum.

[brimic]

Before minimum wage laws people lived in hovels and worked to their deaths too.  I suppose getting rid of rules on worker safety would help bring back industry too, but at what cost?

That's where the Chinese/Vietnamese/Guatamalans/Pakistanis/<insert country going through industrial revolution here> are gong through.
Yes, they live/lived in hovels and often times work themselves to death, but getting $1/day is such a vast improvement on what they had before that they are willing to for for that.
The labor movement's painting of their history ignores the fact that being employed greatly outweighs the alternative.

[Jocassee]

"They" have been predicting the death of the Middle Class for some years now but I, for one, refuse to die.

[De Selby]

That's where the Chinese/Vietnamese/Guatamalans/Pakistanis/<insert country going through industrial revolution here> are gong through.
Yes, they live/lived in hovels and often times work themselves to death, but getting $1/day is such a vast improvement on what they had before that they are willing to for for that.
The labor movement's painting of their history ignores the fact that being employed greatly outweighs the alternative.

This is exactly the point - do you want America to be a place where people consider living in a hovel and working in dangerous conditions to be an improvement?

Can anyone realistically describe to me how getting rid of minimum wage laws and safety regs wouldn't lead corporations to save money by paying paupers wages and scrimping on safety equipment.

Does anyone honestly believe there isn't any financial incentive to behave that way?  And if there is, what besides regulation is going to prevent it?

[Angel Eyes]

http://www.bls.gov/cps/minwage2011.htm

The proportion of hourly-paid workers earning the prevailing Federal minimum wage or less declined from 6.0 percent in 2010 to 5.2 percent in 2011. This remains well below the figure of 13.4 percent in 1979, when data were first collected on a regular basis. (See table 10.)

Since a repeal of minimum wage would only affect about 5% of hourly workers (and a significantly smaller percentage of all workers), predictions of gloom and doom seem . . . premature?

[just Warren]

This is exactly the point - do you want America to be a place where people consider living in a hovel and working in dangerous conditions to be an improvement?

Can anyone realistically describe to me how getting rid of minimum wage laws and safety regs wouldn't lead corporations to save money by paying paupers wages and scrimping on safety equipment.

Does anyone honestly believe there isn't any financial incentive to behave that way?  And if there is, what besides regulation is going to prevent it?

I've already explained that. Perhaps a closer read of my post is called for.

[agricola]

Absolutely true, I've tried to explain this to people and they don't get it, even though it s plain as day in history.  Before minimum wage laws there was effectively ZERO structural unemployment.

This simply isnt true - our minimum wage over here in the UK only came in in 1997, and we definately had structural unemployment before then. 

[gunsmith]

I've often heard remarks like De Selby's regarding the 5-day work week, child labor laws, overtime, minimum wage, sick pay, et endless cetera.  My question is: are the maintenance of these conditions dependent on progressivism, the labor unions, or other collectivist intervention?  My assertion is that they are not.  I further believe that these advances, or others substantially equal, would have arisen and be maintained regardless.

Living on the extorted fruits of other people's labor is at least as immoral as any dystopia you believe would arise by the reinstitution of a free market in labor.  Worse, it (Statist intervention) is one of the contributors to an equally immoral mortgaging of future generations' productivity.  From a values-free analysis, it is likely to lead to a monetary, financial, and fiscal catastrophe that will cause far more squalor, suffering, and misery for far more people than the Dickensian picture you paint.

Shooting student and other radlibs always claim it was they that delivered the 5 day work week and 8 hour day, it was us anarchist that did all the heavy lifting and bomb throwing , only to have the progressives take over and claim their tactics worked.

They co opted anarchism so bad that now modern people who think they're anarchist are simply unwashed liberal kids with nipple rings