Friday, March 1, 2013
Which V-P's wife do you think sleeps better at night?
The picture of Dick Cheney on the left comes from a t-shirt I bought on 6th Street in Austin, Texas. I saw the picture of VP Biden and could not resist putting the two together to make this meme.
See this graphic on "Big Bank" profits and how much of those profits are from Taxpayer Subsidies. Have a nice Sequestration Day. Meh!!
Bloomberg Online recently published this article and graphic showing "Big Banks" stated profits AND the amount of Federal Government subsidies (money transfers from Govt (Taxpayers!!) to private entities). Those are the first two bubbles, respectively.
The tiny bubble to the left of the big bubbles represents the difference between the two. In other words if you subtract the subsidies from the bank profits, you find that MOST of the profits were due to the subsidies. To put it ANOTHER way, tax money accounted for virtually ALL the profits Big Bank earned. Meh!
Crony Capitalism. To make a baseball analogy, the banks listed below form a Farm System for appointees to high level Federal Govt positions--"the Big Leagues". Unlike baseball, the ones who make it to the Big League of regulation and policy making NEVER forget the farm team. In fact, they are anxious to get back, once their tour of duty is over in D.C.
The tiny bubble to the left of the big bubbles represents the difference between the two. In other words if you subtract the subsidies from the bank profits, you find that MOST of the profits were due to the subsidies. To put it ANOTHER way, tax money accounted for virtually ALL the profits Big Bank earned. Meh!
Crony Capitalism. To make a baseball analogy, the banks listed below form a Farm System for appointees to high level Federal Govt positions--"the Big Leagues". Unlike baseball, the ones who make it to the Big League of regulation and policy making NEVER forget the farm team. In fact, they are anxious to get back, once their tour of duty is over in D.C.
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| Bloomberg Online |
Terrific interactive resource on migration patterns for just about every country on earth. Great for a term paper, debate class or Model UN for background info.
Go HERE for the website. Click on a country and see where people are migrating to and fro. Nice resource for basic demographic research for a term paper, debate class or Model UN.
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| Source: Peoplemovin' |
Thursday, February 28, 2013
Nice graphic showing jobs losses and job gains in the last 4 years cross-referenced by wage level. Where did the Middle Class go??
Here is a nice summary of job losses and jobs gained since the advent of the Great Recession.
They are broken down into wage categories (High, Mid and Low) and by losses (dark blue bar) and gains (light blue bar).
High wage jobs are back to even. Mid-wage jobs have taken a beating. Low wage jobs have come back with a vengeance.
Is this a textbook case of "hollowing out of the middle class"?
They are broken down into wage categories (High, Mid and Low) and by losses (dark blue bar) and gains (light blue bar).
High wage jobs are back to even. Mid-wage jobs have taken a beating. Low wage jobs have come back with a vengeance.
Is this a textbook case of "hollowing out of the middle class"?
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| Source: Washington Post |
My summary of the impending "Federal Budget Sequestration" in 9 sentences plus a "Have a good day!"!
The "Good News"---The actual amount that agencies need to cut THIS budget year amounts to approx $45Billion, about half the $85Billion we have heard so much about. The $85Billion number we see bantied about includes cuts that can be delayed into future budget year(s). I dont say this, the Congressional Budget Office says as much. Such is the corrupt nature of Federal Budgeting/Accounting.
The "Bad News"---The cuts are "across the board"cuts. In other words, ALL Federal Agencies affected (not all are) have to cut a few percentage points off ALL programs under their purview, regardless of the merits of the program. If one program is GREAT and very effective, then it has to cut the same percentage as a program that may be ineffective or redundant. A more significant cut in one area cannot be made to subsidize no cut in another. Such is the corrupt nature of the way the law was phrased.
Have a good day!!
The "Bad News"---The cuts are "across the board"cuts. In other words, ALL Federal Agencies affected (not all are) have to cut a few percentage points off ALL programs under their purview, regardless of the merits of the program. If one program is GREAT and very effective, then it has to cut the same percentage as a program that may be ineffective or redundant. A more significant cut in one area cannot be made to subsidize no cut in another. Such is the corrupt nature of the way the law was phrased.
Have a good day!!
Saturday, February 23, 2013
Nice Graphic showing the results of a recent poll on Americans attitude about cutting Federal Govt spending in light of the upcoming mandatory budget cuts. Interesting results!!!
Here are the results of a very recent Pew Research Poll on Americans attitude toward cutting Federal Spending in light of the looming "sequester".
While not a perfect correlation, Americans want to cut spending on the things we spend the least amount on and want to increase spending on the things where we already spend the most.
The 4 major areas that consume a preponderance of the Federal budget (Social Security, Medicare and Healthcare (Medicaid) and Defense) and really overwhelm the other spending categories show the public has little stomach for reducing those programs.
Pretty amazing that 30% or more people want to increase spending in just about all the categories.
While not a perfect correlation, Americans want to cut spending on the things we spend the least amount on and want to increase spending on the things where we already spend the most.
The 4 major areas that consume a preponderance of the Federal budget (Social Security, Medicare and Healthcare (Medicaid) and Defense) and really overwhelm the other spending categories show the public has little stomach for reducing those programs.
Pretty amazing that 30% or more people want to increase spending in just about all the categories.
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| Pew Research Poll February 2013 |
Nice map showing State by State comparison of Minimum Wages. Why does it vary from State to State? Find out why HERE.
I think there is some confusion regarding the way the minimum wage is set in the US.
The Federal Government, through the Federal Fair Labor Standards Act, sets a uniform minimum wage which applies to all 50 US States. Currently that is $7.25 per hour. It is lower for some other classes of workers (see excerpts below the map for examples).
However, each individual State has the discretion to set it ABOVE the Federal mandate if they so desire. This map shows a State by State comparison of the prevailing minimum wage.
There are LOTS of interesting exceptions to the minimum wage law. Here is a link to the Dept of Labor FAQ page that explains these exceptions.
There are LOTS of interesting exceptions to the minimum wage law. Here is a link to the Dept of Labor FAQ page that explains these exceptions.
Here is the most common one I hear from students:
What is the minimum wage for workers who receive tips?
An employer may pay a tipped employee not less than $2.13 an hour in direct wages if that amount plus the tips received equal at least the federal minimum wage, the employee retains all tips and the employee customarily and regularly receives more than $30 a month in tips. If an employee's tips combined with the employer's direct wages of at least $2.13 an hour do not equal the federal minimum hourly wage, the employer must make up the difference.
Some states have minimum wage laws specific to tipped employees. When an employee is subject to both the federal and state wage laws, the employee is entitled to the provisions of each law which provide the greater benefits.
What minimum wage exceptions apply to full-time students?
The Full-time Student Program is for full-time students employed in retail or service stores, agriculture, or colleges and universities. The employer that hires students can obtain a certificate from the Department of Labor which allows the student to be paid not less than 85% of the minimum wage. The certificate also limits the hours that the student may work to 8 hours in a day and no more than 20 hours a week when school is in session and 40 hours when school is out, and requires the employer to follow all child labor laws. Once students graduate or leave school for good, they must be paid $7.25 per hour effective July 24, 2009.
Must young workers be paid the minimum wage?
A minimum wage of $4.25 per hour applies to young workers under the age of 20 during their first 90 consecutive calendar days of employment with an employer, as long as their work does not displace other workers. After 90 consecutive days of employment or the employee reaches 20 years of age, whichever comes first, the employee must receive a minimum wage of $7.25 per hour effective July 24, 2009.
Other programs that allow for payment of less than the full federal minimum wage apply to workers with disabilities, full-time students, and student-learners employed pursuant to sub-minimum wage certificates. These programs are not limited to the employment of young workers.
The Federal Government, through the Federal Fair Labor Standards Act, sets a uniform minimum wage which applies to all 50 US States. Currently that is $7.25 per hour. It is lower for some other classes of workers (see excerpts below the map for examples).
However, each individual State has the discretion to set it ABOVE the Federal mandate if they so desire. This map shows a State by State comparison of the prevailing minimum wage.
There are LOTS of interesting exceptions to the minimum wage law. Here is a link to the Dept of Labor FAQ page that explains these exceptions.
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| Source: MinimunWage.org |
Here is the most common one I hear from students:
What is the minimum wage for workers who receive tips?
An employer may pay a tipped employee not less than $2.13 an hour in direct wages if that amount plus the tips received equal at least the federal minimum wage, the employee retains all tips and the employee customarily and regularly receives more than $30 a month in tips. If an employee's tips combined with the employer's direct wages of at least $2.13 an hour do not equal the federal minimum hourly wage, the employer must make up the difference.
Some states have minimum wage laws specific to tipped employees. When an employee is subject to both the federal and state wage laws, the employee is entitled to the provisions of each law which provide the greater benefits.
What minimum wage exceptions apply to full-time students?
The Full-time Student Program is for full-time students employed in retail or service stores, agriculture, or colleges and universities. The employer that hires students can obtain a certificate from the Department of Labor which allows the student to be paid not less than 85% of the minimum wage. The certificate also limits the hours that the student may work to 8 hours in a day and no more than 20 hours a week when school is in session and 40 hours when school is out, and requires the employer to follow all child labor laws. Once students graduate or leave school for good, they must be paid $7.25 per hour effective July 24, 2009.
Must young workers be paid the minimum wage?
A minimum wage of $4.25 per hour applies to young workers under the age of 20 during their first 90 consecutive calendar days of employment with an employer, as long as their work does not displace other workers. After 90 consecutive days of employment or the employee reaches 20 years of age, whichever comes first, the employee must receive a minimum wage of $7.25 per hour effective July 24, 2009.
Other programs that allow for payment of less than the full federal minimum wage apply to workers with disabilities, full-time students, and student-learners employed pursuant to sub-minimum wage certificates. These programs are not limited to the employment of young workers.
Hans Rosling as a "Myth Buster" on the issue of Child Mortality Rates. Worth a couple of minutes of your time.
Here is Hans Rosling "clarifying" the issue of historical Child Mortality Rates around the world.
This is really terrific! Watch and Learn. The world is getting BETTER in so many categories of quality of life. Yes, even for the most poorest amoung us.
This is really terrific! Watch and Learn. The world is getting BETTER in so many categories of quality of life. Yes, even for the most poorest amoung us.
One easy graph that illustrates all you need to know about the future of Retail Stores and Employment in that sector.
Here is a bar chart showing the decline in jobs in various "brick and mortar" retail stores. "Brick and mortar" is a metaphor for physical stores that you can walk into and buy stuff.
Keep in mind, this is the decrease JUST SINCE 2001!
What is the cause of this decline?
Almost everything sold in a physcal stores represented by the above retail categories (some more than others) can be found in one of these devices you can hold in the palm of your hand.
Take a moment to look at your phone and list the things it can do (while in the palm of your hand) that in a prior and relatively recent time you had to have a separate and distinct device to perform that same task.
This is an example of an economic game-changer that is the result of "distruptive technology" (also known as disruptive innovation):
Luddites of the World are weeping...
Keep in mind, this is the decrease JUST SINCE 2001!
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| Source: EMSI |
Almost everything sold in a physcal stores represented by the above retail categories (some more than others) can be found in one of these devices you can hold in the palm of your hand.
Take a moment to look at your phone and list the things it can do (while in the palm of your hand) that in a prior and relatively recent time you had to have a separate and distinct device to perform that same task.
This is an example of an economic game-changer that is the result of "distruptive technology" (also known as disruptive innovation):
""A disruptive innovation is an innovation that helps create a new market and value network, and eventually goes on to disrupt an existing market and value network (over a few years or decades), displacing an earlier technology. The term is used in business and technology literature to describe innovations that improve a product or service in ways that the market does not expect, typically first by designing for a different set of consumers in the new market and later by lowering prices in the existing market.""This comes at a cost. "Brick and Mortar" stores produce jobs locally. The Smartphones produce DIFFERENT jobs and don't have the local, physical retail impact that the Best Buys, Barnes and Nobles, Office Depots, Virgin Record Stores, of the world do.
Luddites of the World are weeping...
Tuesday, February 19, 2013
Saturday, February 16, 2013
My defense for an increase in the Minimum Wage to $9.00. I speak of one element of the labor market I don't hear ANYONE refer to and I think it is important to understand...
There is lots of talk, for and against, regarding the recent proposal by the President to increase the minimum wage from $7.25 to $9.00 per hour.
Economic theory suggest that when you increase the price of something (wages) the quantity demanded (workers) decreases, hence unemployment increases and if the price (wages) decreases the quantity demanded (workers) increases, hence unemployment decreases.
Graph #2 shows the imposition of a new $9.00 per hour
minimum wage ABOVE the current wage.
This would establish a new PRICE FLOOR. This is a 24% increase in the
wage rate. The quantity demanded for labor DECREASED to 75 workers. This is a
25% decrease in Quantity Demand for Labor.
Using our formula for Price Elasticity of Demand (%chg in Qd/%chg in P)
this suggests the Demand for Labor in this market is slightly ELASTIC, just
over 1. If we apply the Total Revenue
Test (in this case Total Income), we find that as the wage increased the Total
Revenue (Income) DECREASED to $675.00. This suggests the Elasticity of Demand
is ELASTIC—as the price increases the Quantity Demanded decreases by a greater
amount.
The policy implication of this increase in the minimum wage is
we have REDUCED the income of these workers overall. Less income, less spending in the economy
overall, less GDP, hence less employment.
If Demand for Labor is relatively INELASTIC, then an
increase in the Minimum Wage (+24%) will reduce employment to 90 workers from
100, or 10% LESS than before. Using the
formula for Price Elasticity of Demand (%chgQd/%chgP) will yield a number LESS than 1 (-10%/+24%= -.41). Performing the Total Revenue (Income) test,
we find total income earned by these workers is $810.00, $85.00 MORE than
before. Fewer workers, higher overall income, in spite of the decrease in employment.
Assuming Demand for Labor is relatively INELASTIC, even for low skilled workers in the short run, by increasing the minimum wage will increase total income earned by these workers.
If total income increases these workers have more money to spend. An increase in income will tend to move them to buy more “normal” goods and fewer “inferior” goods. Normal goods tend to be higher value goods purchased as income increases. Spending more money will create an increase in demand for new “normal” goods and services. Hence, businesses will sell and produce more goods and services. They will likely need to hire additional workers (at the margins) to produce and sell those additional goods and services.
Elasticity of Demand for low-skilled minimum wage workers seems to me mirrors the condition of the economy. If the economy is doing well and unemployment is relatively low, then an increase in the minimum wage may actually be productive for the economy, as the demand for that labor will be relatively inelastic.
However, in an economic downturn it seems to me the demand for low-skilled labor becomes relatively elastic and an increase in the wage rate will have a higher negative impact on employment.
Bottom line for me: Gotta pay attention to Elasticities and less to politics when it comes to this issue.
Economic theory suggest that when you increase the price of something (wages) the quantity demanded (workers) decreases, hence unemployment increases and if the price (wages) decreases the quantity demanded (workers) increases, hence unemployment decreases.
Even with an increase in the minimum wage I believe
I can make the case that employment will INCREASE rather than decrease using
the principles of Price Elasticity of Demand and the Total Revenue (Income) Test for
Elasticity of Demand.
It might be a "stretch" but I think Elasticity of Demand for Labor factors into the equation.
It might be a "stretch" but I think Elasticity of Demand for Labor factors into the equation.
I will use a series of graphs to illustrate my case.
The first graph shows a labor market in equilibrium at an
hourly wage of $7.25 and the current level of employment at that wage 100
workers (obviously a made up number for simplicity). $7.25 is the current minimum wage
in the US. I will use this wage rate as my base and compare it to the new minimum
wage of $9.00 proposed by President Obama in his State of the Union Address. It also shows the TOTAL amount of income
earned by these workers at that wage rate--$725.00 PER HOUR
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However, I think we have to look closer at the Elasticity of Demand (even for low income workers) in the SHORT RUN. The Short Run is the operative 2 words.
I don’t believe businesses will significantly change their
hiring or lay-off decisions in the immediate after-math of the increase in the
minimum wage. They must serve current
customers and fill current and future orders.
Given this condition, In Graph #3 I suggest the Demand for
Labor is relatively INELASTIC. Business
will NOT reduce their Quantity Demanded for Labor by more than the Increase in
the Price of Labor.
Assuming Demand for Labor is relatively INELASTIC, even for low skilled workers in the short run, by increasing the minimum wage will increase total income earned by these workers.
If total income increases these workers have more money to spend. An increase in income will tend to move them to buy more “normal” goods and fewer “inferior” goods. Normal goods tend to be higher value goods purchased as income increases. Spending more money will create an increase in demand for new “normal” goods and services. Hence, businesses will sell and produce more goods and services. They will likely need to hire additional workers (at the margins) to produce and sell those additional goods and services.
As illustrated in the graph below, the Demand for Labor will
INCREASE. The Demand Curve (D2 for Labor) will shift to the RIGHT. As represented by Point “D”, at $9.00 the
Quantity Demanded for Labor is 110 workers, a level of employment HIGHER than
before.
Elasticity of Demand for low-skilled minimum wage workers seems to me mirrors the condition of the economy. If the economy is doing well and unemployment is relatively low, then an increase in the minimum wage may actually be productive for the economy, as the demand for that labor will be relatively inelastic.
However, in an economic downturn it seems to me the demand for low-skilled labor becomes relatively elastic and an increase in the wage rate will have a higher negative impact on employment.
Bottom line for me: Gotta pay attention to Elasticities and less to politics when it comes to this issue.
Friday, February 15, 2013
Price Floor Powerpoint---You can bet the Farm on this one!!!
Price Floors are another example of government intervention into the "free" market. It is an effort to set a price for a good or service ABOVE what the marketplace dictates/suggests the price should be.
The two prominent examples are the Minimum Wage and prices received by farmers for their commodity in the market.
Here is my Powerpoint presentation trying to illustrate this concept in the simplest terms possible.
I use an agricultural commodity as an example---Corn.
Let me know what you think, and more importantly, any egregious errors I might have made. THANKS!
The two prominent examples are the Minimum Wage and prices received by farmers for their commodity in the market.
Here is my Powerpoint presentation trying to illustrate this concept in the simplest terms possible.
I use an agricultural commodity as an example---Corn.
Let me know what you think, and more importantly, any egregious errors I might have made. THANKS!
Price Ceilings explained as simply as possible. Must know info for when the Mayhem Guy from AllState comes to visit your community...
When disaster looms or when it strikes there can be a significant disruption in the delivery of goods to that area. We have learned about this from the recent natural disasters in the Northeast US (Hurricane in the Summer and Snow just recently).
When this happens there are usually price increases on vital goods, such as water, basic food staples, gasoline, batteries, etc. When the prices rise there is the inevitable cry of "PRICE GOUGING!!" and people demand the government do something about it.
The obvious action would be for the government to impose Price Ceilings. A Price Ceiling prevents sellers of goods from raising prices above "reasonable" levels---whatever that means exactly.
The imposition of Price Ceilings do have consequences. I put this powerpoint presentation to help you (or your students) understand how they work to serve AND under serve the marketplace.
Let me know what you think. Thanks!
When this happens there are usually price increases on vital goods, such as water, basic food staples, gasoline, batteries, etc. When the prices rise there is the inevitable cry of "PRICE GOUGING!!" and people demand the government do something about it.
The obvious action would be for the government to impose Price Ceilings. A Price Ceiling prevents sellers of goods from raising prices above "reasonable" levels---whatever that means exactly.
The imposition of Price Ceilings do have consequences. I put this powerpoint presentation to help you (or your students) understand how they work to serve AND under serve the marketplace.
Let me know what you think. Thanks!
Thursday, February 14, 2013
My Powerpoints to teach the Foreign Exchange Market in AP Macroeconomics.
My Powerpoints to teach the Foreign Exchange Market in AP Macroeconomics.
The first one is a long version to teach the "nuts and bolts". The second is a quick(er) review of the first. The third is an explanation of the Interest Rate Effect on in the FOREX (very important for the AP Macroeconomics test).
The first one is a long version to teach the "nuts and bolts". The second is a quick(er) review of the first. The third is an explanation of the Interest Rate Effect on in the FOREX (very important for the AP Macroeconomics test).
Tuesday, February 12, 2013
Can you see me (Powerpoint) now?
My detailed powerpoint on curve shifting in a Basic Supply and Demand graph. This is a test to see if it embeds properly and people can see it without having to sign up at the site where it is posted.
Let me know in the comments if you can view it freely. Thanks!
Let me know in the comments if you can view it freely. Thanks!
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