Bernie Sanders chases higher wages

Via The Guardian:

Leftwing senator tells Guardian the chances of raising the federal minimum are better than ever with new president in White House

Senator Bernie Sanders says the widespread suffering caused by the pandemic-induced economic crisis has made it “morally imperative” to increase the US’s minimum wage to $15 an hour. And in an interview with the Guardian, Sanders and other lawmakers pushing for a higher minimum wage say the chances of enacting a $15 minimum are better than ever before now that President Joe Biden has called for a $15 federal minimum as part of his emergency Covid legislative package.

Raising the minimum to $15 would more than double the current $7.25-an-hour federal minimum wage, but many Republicans oppose the move, saying it would hurt business.

In an interview, Sanders, who championed a $15 minimum wage as a presidential candidate in 2016 and 2020, voiced excitement about the prospects of raising the minimum wage, which hasn’t increased since 2009, the longest stretch without an increase since Congress first enacted a minimum wage in 1938.

“This country faces an enormous economic crisis that is aggravated by the pandemic,” Sanders said. “We’re looking at terrible levels of unemployment. We’re looking at growing income and wealth inequality. What concerns me as much as anything is that half our people are living paycheck to paycheck. Millions of people are trying to survive on starvation wages. For me, it’s morally imperative that we raise the minimum wage to a living wage that’s at least $15 an hour.”

The House voted last July to raise the minimum wage to $15 in steps through 2025, but then Senate majority leader Mitch McConnell blocked a vote on it. With the White House, Senate and House under Democratic control, Sanders said the chances are good to enact a $15 minimum, although he said it would be hard to attract 10 Republican Senators to support it, making it hard to overcome a filibuster.

Sanders, the incoming chairman of the Senate Budget Committee, sees another route to passage, saying it could be done under the “budget reconciliation” – a process where measures deemed to have budgetary impact can be approved by simple majority vote.

Bravo Bernie, MB’s favourite US pollie. This will strike a blow against the inequality driving the rise of Trumpism so it is very much in the Dems interests.  Via VOX:

In introductory economics courses, students are typically taught that setting price floors — be it milk, oil, labor, or whatever else — causes supply to exceed demand. In the case of labor, what that means is that if there’s a minimum wage, employers’ demand for workers falls (because they cost more), and the supply of workers increases (because they’re promised more money) — causing unemployment, with all the costs and suffering that entails.

For a long time, that’s how the theory went. But in 1993, economists Alan Krueger and David Card brought hard data to bear on the question and published a groundbreaking paper that forced economists to reconsider the issue. They surveyed more than 400 fast-food restaurants in New Jersey and eastern Pennsylvania to see if employment growth was slower in New Jersey following an increase in the minimum wage. They found no evidence that it was.

Card and Krueger expanded their results into a well-regarded book, Myth and Measurement (1995), and the empirical literature on the question exploded after that.

In the ensuing quarter-century, economic research has put to rest what had been a fundamental assumption — that even relatively small minimum wages always cause major disemployment in the short run. Instead, researchers have discovered a gamut of results. Some have found real employment effects (if short of seriously disruptive effects as previously assumed), but a recent comprehensive evidence review finds that most studies have found small or no effects.

That review of the evidence on minimum wages, conducted by Arindrajit Dube for the British government and released in November 2019, is the most comprehensive recent summary of the literature. Dube, a professor of economics at UMass Amherst and a leading expert on minimum wage laws, has found employment effects, if any, are typically small.

In his 2019 review, Dube finds that the average effect on employment across the studies he reviews is very close to zero — that is, in most of the high-quality studies he reviews, a few outliers aside, the number of jobs cost by minimum wage laws is negligible. In other words, minimum wages raise wages without much downside.

Dube’s review certainly didn’t put to rest the debate over minimum wage studies. Skeptics remain, and plenty of new studies have been released since. There is still disagreement about the scale of employment effects, and about what new minimum wage laws setting minimums as high as $15 an hour could do. We also don’t know everything about why minimums don’t seem to cause a huge amount of job loss.

In some ways, this is the most vital research field at the moment. “It’s much more interesting to think of the minimum wage as a flashlight into the labor market than to always wind up debating the employment effect,” Suresh Naidu at Columbia said in a 2019 interview. Researchers are also learning more about how higher minimum wages affect compliance with minimum wage laws, the level of education minimum wage employers demand, and Black workers specifically.

But we do know a fair bit more than we did in 1993, and the evidence we have now suggests that in many cases minimum wages are a net good for workers. Even if a few workers lose jobs, those costs are significantly outstripped by increased wages for workers who keep their jobs. Whether that will remain true with minimums of $15 or more, especially in rural areas, remains to be seen — and if $15 per hour passes nationally, we’ll soon learn a lot more about the policy, and about how labor markets work in general.

Our own view is that when the price floor is so low, there is plenty of scope to lift it without causing job losses because it also lifts demand from the cohort with the largest marginal propensity to consume. So long as you don’t start to overwhelm the real exchange rate. Moreover, the US polity needs it badly:

There are other good reasons for higher wages growth. It motivates businesses to invest in automation which advances income more broadly via rising productivity. That may seem contradictory but it’s not. It’s the creative tension between labour and capital that drives living standards higher.

In Australia we can expect no such class consciousness from Labor’s fake left Albo:

JOURNALIST: Just back on this speech, what are you going to be doing in the next couple of months to win the working class war? Bill Shorten has said that the oxygen the Party’s been taken out of focusing on work and workers and it’s more environmental issues. What are you going to do to win back the working class believer?

ALBANESE: You’ll see a range of policies rolled out. I am focussed on looking outwards, not focused on internals. And that’s the way that we’ll be successful. If we focus on ourselves, then we won’t be successful. And I note that the Labor Party review was handed down more than a year ago at the end of 2019. There’s nothing that I’ve seen put forward in recent times that wasn’t contained in that review that I spoke at the National Press Club and outlined there, the strategy going forward that was unanimously adopted by the National Executive, those recommendations. And I’ve been following that. What we need is more strategy, less day-to-day tactics.

That is the emptiest gobbledygook I can recall on class inequality from any Labor leader ever. Labor has made some constructive noises on reducing temporary work visas but, in the next breath, it always argues for more international students and mass immigration, so it remains unconvincing on faster wage rises than the Coalition.

Likewise, although The Guardian has reported on Bernie’s goals, it also breathlessly supports mass immigration of cheap foreign labour, resulting in lower wages for everyone.

COVID restrictions at the national border may be Australian worker’s best hope of a wage rise.

 

Houses and Holes
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Comments

    • Note that anyone involved in service jobs with tipping will receive substantially less than that, as well.

    • SoCalSurfCreeperMEMBER

      States and even individual cities have the power to set their own minimums. Most do. So basic wages can vary by a factor close to 3 depending on where you happen to be. This will have zero impact in California where teenagers working at in-n-out already make $14 and change. It will have a big impact in a place like Mississippi or Alabama. That said, you can probably buy a house in Mississippi for the price of a nice car so it’s relative.

      • the highest minimum wage rates in the nation are found at the municipal level, with Seattle leading the pack at $16 per hour

      • The land taxes in many states makes home ownership pointless. You can buy some houses for $1 so long as you can pay the land tax

  1. Jumping jack flash

    “Labor has made some constructive noises on reducing temporary work visas but, in the next breath, it always argues for more international students and mass immigration, so it remains unconvincing on faster wage rises than the Coalition”

    It is torn between the ultimate goal of inflation triggered by the COVID stimulus wad solving everything, or the resumption of wage theft as a poor substitute.

    We are at a crossroads. What happens next depends on the debt growth being at the correct rate.

    • I suspect labor just want to get rid of the ‘temporary’ part, at least that’s what I thought Keneally was getting at.

      • Jumping jack flash

        “But tonight I say, we must move forward, not backward; upward, not forward; and always twirling, twirling, twirling towards freedom! ”

  2. Mexicans aren’t paid the minimum wage. This potential increases undocumented workers.

    Australia doesn’t have mexicans. With no land border we are forced to import international students to function as the mexicans of our economy.

    • chuckmuscleMEMBER

      Bingo. I was about to comment “thank dog, there aren’t millions of people on their door step ready to undercut the minimum wage illegally rendering any minimum wage increase neutered”

      Think tech also has a role to play here. Perhaps discussing the full range of redistributive policies, rather than just picking a winner (that is obviously full of holes) would have been better. No?

      • in my view tech has been increasingly enabling the undercutting (think ubereats / deliveroo – no one asks for their papers).

        maybe the USA could licence the chinese facial recognition technology to move undocumented workers back home (maybe we should do it too.

    • ErmingtonPlumbingMEMBER

      Any Law is meaningless if it isnt enforced.
      Enforcement means more than just catching people out.
      Ya gotta make it cost real bad esp for the employer breaking the rules.
      I’d zero them

    • Yep, Biden is planning to grant amnesty to upwards of 14 million people.

      FAIR:

      “In addition to numerous orders and policy directives that cripple immigration enforcement, the Biden administration, on its first day in office, made mass amnesty and massive increases in immigration their first legislative priority. Legislation prepared by the Biden White House:

      – Grants amnesty and expedited citizenship for upwards of 14 million illegal aliens. Everyone, including people who arrived in the U.S. less than three weeks before the president took office or were deported under President Trump, would receive immediate work authorization (during an unemployment crisis) and a pathway to citizenship.

      – Promotes large increases in both family and employment-based immigration. Despite overwhelming public support for maintaining limits on new immigration for the foreseeable future, the administration’s proposed legislation responds to the demands of radical open borders advocates and cheap labor interests.

      – Offers no enforcement measures to prevent future large-scale illegal immigration. None. The legislation will merely seek to address the “root causes” of migration from the sending countries, essentially making U.S. immigration policies hostage to corrupt and incompetent governments around the world.”

      https://www.fairus.org/press-releases/biden-administration-wastes-no-time-adding-immigration-crisis-other-crises-facing

  3. “Bravo Bernie, MB’s favourite US pollie. “. And for good reason. Shame your average douche bag MB commentor’s favourite is/was Trump.