Alan B. Krueger wants the United States to raise the minimum from $7.25 an hour to $12 (“phased in over several years”) but not to $15 an hour.


Research suggests that a minimum wage set as high as $12 an hour will do more good than harm for low-wage workers, but a $15-an-hour national minimum wage would put us in uncharted waters, and risk undesirable and unintended consequences. . .

Although the plight of low-wage workers is a national tragedy, the push for a nationwide $15 minimum wage strikes me as a risk not worth taking, especially because other tools, such as the earned-income tax credit, can be used in combination with a higher minimum wage to improve the livelihoods of low-wage workers.

Economics is all about understanding trade-offs and risks. The trade-off is likely to become more severe, and the risk greater, if the minimum wage is set beyond the range studied in past research.

While conservative mainstream economists want to abolish (or at least not raise) the minimum wage and to rely on the earned-income tax credit (which, remember, places all the burden on taxpayers and none on employers), liberal mainstream economists (like Krueger) suggest mixing the earned-income tax credit with a slightly higher minimum wage.

What both wings of mainstream economists share is a view of the labor market shown above, characterized by an equilibrium wage rate and the existence of unemployment at a minimum wage above that equilibrium rate. That, for them, is the trade-off: a higher minimum wage that will benefit the workers who keep their jobs versus the workers who will be laid off if the minimum wage is increased.

What Krueger and other mainstream economists don’t explain is a different tradeoff: between doing nothing and adopting measures to increase the demand for labor. As all of my Principles of Microeconomics understand, it’s possible to increase both the minimum wage and the demand for labor. As a result, all workers (including those who are currently earning more than the minimum wage) will be better off.

How is that possible? Well, the demand for labor on the part of employers can increase as a result of increases in the minimum wage itself, as poorly paid workers have more money to spend on goods that are produced by other minimum-wage workers. It can also increase through public jobs programs, if government revenues are used to hire unemployed and underemployed workers. (Together, those two effects would shift the demand for labor out to the right, through the point marked B on the chart.)

When mainstream economists like Krueger don’t present that possibility, of hiring the workers private employers are unwilling to take on at a higher minimum wage, they’re failing to present the real tradeoff we as a society face: on one hand, continuing to allow private employers to pay low wages to workers and to lay off any workers they don’t want to keep on if the minimum wage is actually increased and, on the other hand, making sure all workers are paid a decent wage and are guaranteed a job at that wage.

The only risk of doing the latter is to the standing of mainstream economists themselves—and, of course, to the private employers whose profit-making decisions they take as given.

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Every time I see an exhibit of paintings from the so-called Golden Age of Dutch art (or teach about them, especially Vermeer’s, in my Commodities course), I am struck by the extent to which they provide a window on the changing class nature of Dutch society at the time.

That’s why I am intrigued by the new show, at Boston’s Museum of Fine Arts, “Class Distinctions: Dutch Painting in the Age of Rembrandt and Vermeer” (see also this review [ht: ja]). The content of the individual paintings, at least the ones I am familiar with, as well as the economic status of the painters themselves and the new art markets that developed (and ultimately crashed) during the seventeenth century can tell a rich story about the emergence of capitalism in a heretofore noncapitalist economy and society.

And, of course, here we are in 2015, when the United States is characterized by obscene and still-growing levels of inequality. Perhaps, then, we are ready to see and think about class distinctions, at least in seventeenth-century Dutch society.

So, I am intrigued by this show—but also worried. That’s because, according to what I have read, the paintings are arranged in separate rooms according to class. Low, middle, and upper-class, “a bit like airplane seating.”

The exhibit follows a logical sequence by grouping paintings of the wealthiest ranks in one room and then moving down the social strata in the following sections. The final room ties the exhibit together by depicting paintings of ferries and public squares where members of each class intersect.

The question is, what is the notion of class that informs the Boston show?

As I see it, you can’t have one class without the others. It’s a class system—the different classes are related to one another, through performances and flows of necessary and surplus labor—not just different displays of clothing, interior furnishings, and activities. And the emergence of capitalism within the Netherlands created a new pattern of performances and flows compared to what had existed before and what existed even at that time throughout much of the rest of Western Europe.

If the paintings of the period are going to be utilized to illustrate those new class relations, then perhaps it would have been better to group them differently—for example, to show within the same room how the surplus labor that was captured by some households, and then utilized to relinquish members of those same households from the need to work and, in addition, to hire milkmaids and other servants and to purchase items of conspicuous consumption from abroad, was also deployed to make sure additional surplus labor continued to be performed by the other members of Dutch society.

That’s the exhibit of Dutch paintings that, in my view, could have been organized in Boston.


Urban Outfitters has asked salaried workers at the company’s home office to “volunteer” for extra weekend shifts at a new fulfillment center.

In an email, the company asked for weekend workers to “pick, pack and prepare packages for shipment.”. . .

Volunteers would work six-hour shifts in exchange for lunch and transportation, if required. The email advises participants to wear “sneakers and comfortable clothing” to prepare for this “team building activity.”. . .

Hourly-wage workers were excluded from the email, though the company said some of them responded. ”Many hourly employees also offered to pitch in—an offer which we appreciated, but declined in order to ensure full compliance with all applicable labor laws and regulations,” the company said in a statement.


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Pony up

Posted: 9 October 2015 in Uncategorized
Tags: , , , ,


A week or so ago, I described the Republican campaign for president as a one-trick pony. It’s only about tax cuts for the wealthy, and let the revenue chips fall where they may.

Apparently, Bobby Jindal has jumped on that same pony with only one discernible feature.

In a sprawling, largely detail-free plan released Wednesday, Jindal tried his hand at the tax-cut buzz saw. On a static basis, the Tax Foundation estimates, Jindal’s proposal would cut revenue by $11.3 trillion over the next decade.

That’s in the same ballpark as Trump. Yet rather than denying or trying to draw attention away from the gigantic hole he intends to blow in the budget (as Trump and Bush, respectively, have done), Jindal touts it with pride.

Jindal’s plan is also, impressively, even more regressive than Trump’s. While Trump would raise the after-tax incomes of the top 1 percent by a mere fifth (21.6 percent), Jindal would increase their incomes by a full quarter (25 percent).

Then, in addition to lowering taxes on the rich, Jindal — but not Trump — would raise taxes on the poor.

Yes, you read that right. Jindal wants to engineer a reverse Robin Hood, taking money from the poor to give to the rich.


Many faculty members in Texas are opposed to SB 11, also known as the “campus carry” law [ht: sm]. The law, which was signed in June by Texas Governor Greg Abbott, provides that license holders may carry concealed handguns in university buildings and classrooms, extending the reach of a previous law that allowed concealed handguns on university grounds.

One of them has now taken his opposition to the law a step further.

A longtime economics professor at the University of Texas at Austin is leaving the school, saying  the state’s new campus carry law — which makes it legal for some Texans to carry concealed handguns into college classrooms beginning next August — has “substantially enhanced” the chances of a shooting.

“With a huge group of students my perception is that the risk that a disgruntled student might bring a gun into the classroom and start shooting at me has been substantially enhanced by the concealed-carry law,” economics professor emeritus Daniel Hamermesh, who has been at UT since the mid-90s, wrote in a letter announcing his departure. “Out of self-protection I have chosen to spend part of next Fall at the University of Sydney, where, among other things, this risk seems lower.”


Special mention

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