Tag Archives: Education

Who Earns Minimum Wage

Fast Food Minimum Wage

One of my favorite arguments against the minimum wage is that so very few people earn it.  And those that do make the minimum wage are learning much more than the value of any money they might be making.

In short, working for free is darn near worth it at some level – think my young child who would prefer the experience over the money.

Anyway, it turns out that I am not ALWAYS right:

“I personally think we need to get more workers involved and shut these businesses down until they listen to us,” perhaps even by occupying the restaurants, said Cherri Delisline, a 27-year-old single mother from Charleston, South Carolina, who has worked at McDonald’s for 10 years and makes $7.35 an hour.

Now, to be strictly honest making $7.35 is earning more than the Federal minimum (South Carolina has no State minimum wage) but I will stipulate that after 10 years a dime doesn’t make a difference.

But here’s the rub – why is Ms. Delisline still working at McDonald’s ten years on?  In the last ten years what has she done to increase her marketability?  This, especially in light of the fact that she has, in essence, never been given a raise?

Another example:

“I don’t think $15 will make me rich. … I just want an apartment for my family and be able to have my kids in their own room, to not have to wait for the washing machine or the bathtub, and I don’t want to be behind on bills if I take time off or get sick,” said Salgado, who earns minimum wage after 12 years with the company.

Twelve years making minimum wage – how is that possible?

** Though notice that mandatory 35% wage cut die to Obamacare **

What set of circumstances has taken place that prevents even modest skill improvement that would warrant a raise or a change in jobs/careers?  How much more valuable would these young ladies time be spent learning than protesting?

Finally, whatever the case that may be preventing an ever increasing career progression, there are other life decisions that are being made that is not helping but only compounding the problem:

Delisline said she and her four girls live with her mother…

Nancy Salgado of Chicago said she and her two children…

Given that an individual is making the minimum wage, the idea that they would make the decision to start a family is incredulous.


From Poverty To Middle Class

Middle Class

A conversation on my Facebook feed brought me here today:

In addition to the thousands of local and national programs that aim to help young people avoid these life-altering problems, we should figure out more ways to convince young people that their decisions will greatly influence whether they avoid poverty and enter the middle class. Let politicians, schoolteachers and administrators, community leaders, ministers and parents drill into children the message that in a free society, they enter adulthood with three major responsibilities: at least finish high school, get a full-time job and wait until age 21 to get married and have children.

Our research shows that of American adults who followed these three simple rules, only about 2 percent are in poverty and nearly 75 percent have joined the middle class (defined as earning around $55,000 or more per year).

Three things.  Simple things.  Not hard to do things.

Go to school and finish it.

Get a job.  Any job.

Wait to have children.

Another Government Creation, Another Bailout?

In the same way that government created the housing bubble, the government has created the college-loan bubble.

Once upon a time, government officials decided it would help them keep their jobs if they could claim they had expanded the middle class.  Unfortunately, none of them really understood economics or even the historical factors that led to the emergence of the middle class in the first place.  But they did know two things:  Middle class people tended to own their own homes, and they sent their kids to college.

So in true cargo cult fashion, they decided to increase the middle class by promoting these markers of being middle class.  They threw the Federal government strongly behind promoting home ownership and college education.  A large part of this effort entailed offering easy debt financing for housing and education.  Because the whole point was to add poorer people to the middle class, their was a strong push to strip away traditional underwriting criteria for these loans (e.g. down payments, credit history, actual income to pay debt, etc.)

We know what happened in the housing market.  The government promoted home ownership with easy loans, and made these loans a favorite investment by giving them a preferential treatment in the capital requirements for banks.  And then the bubble burst, with the government taking the blame for the bubble.  Just kidding, the government blamed private lenders for their lax underwriting standards, conviniently forgetting that every President since Reagan had encouraged such laxity (they called it something else, like “giving access to the poor”, but it means the same thing).

What are the chances that we bail out all those kids who’ve majored in such “in demand” course work as Art History, Religious Studies, Women’s Studies and others?

I’d say pretty high.

The Power Of A Word

From The Economist - True Progressivism

I was going through my edition of The Economist the other day.  It was a treat really, in the “old days” I used have lunch across from the Barnes and Noble, buy the print edition and read it over Thai food.  I’ve long given that ritual up in favor of a subscription and electronic reading but hey….

So, anyway, there I was with my Phad Thai and the print version of the Economist.  I flipped to the “Leaders” section and just shook my head when I say this title:

True Progressivism

I’ve come to see The Economist as a more moderate magazine than I used to, but every now and then I hit an article that makes me wonder.  I nearly just turned the page and walked away.

But I read on.  And boy am I glad that I did!

To be sure they came out of the gate pretty slowly:

BY THE end of the 19th century, the first age of globalisation and a spate of new inventions had transformed the world economy. But the “Gilded Age” was also a famously unequal one, with America’s robber barons and Europe’s “Downton Abbey” classes amassing huge wealth: the concept of “conspicuous consumption” dates back to 1899. The rising gap between rich and poor (and the fear of socialist revolution) spawned a wave of reforms, from Theodore Roosevelt’s trust-busting to Lloyd George’s People’s Budget. Governments promoted competition, introduced progressive taxation and wove the first threads of a social safety net. The aim of this new “Progressive era”, as it was known in America, was to make society fairer without reducing its entrepreneurial vim.


But the plot improves quickly:

Thus, on America’s campaign trail, the left attacks Mitt Romney as a robber baron and the right derides Barack Obama as a class warrior. In some European countries politicians have simply given in to the mob: witness François Hollande’s proposed 75% income-tax rate.

I’m willing to trade a whole bunch of ideology to someone who’s willing to admit that the left is nothing more than class warriors.  So anyway, the article moves along and then comes some true gems:

In the rich world the cronyism is better-hidden. One reason why Wall Street accounts for a disproportionate share of the wealthy is the implicit subsidy given to too-big-to-fail banks. From doctors to lawyers, many high-paying professions are full of unnecessary restrictive practices. And then there is the most unfair transfer of all—misdirected welfare spending. Social spending is often less about helping the poor than giving goodies to the relatively wealthy. In America the housing subsidy to the richest fifth (through mortgage-interest relief) is four times the amount spent on public housing for the poorest fifth.


The Economist is calling out the label, “Too Big To Fail.”  And then the truly Libertarian line of logic that begins to pin back the lawyers and the docs.  Who WOULDN’T love the racket that allows barristers and snake oil salesmen to restrict competition?  And how about that fact regarding the mortgage-interest?

So, ideas?

Compete, target and reform

The priority should be a Rooseveltian attack on monopolies and vested interests, be they state-owned enterprises in China or big banks on Wall Street. The emerging world, in particular, needs to introduce greater transparency in government contracts and effective anti-trust law. It is no coincidence that the world’s richest man, Carlos Slim, made his money in Mexican telecoms, an industry where competitive pressures were low and prices were sky-high. In the rich world there is also plenty of opening up to do. Only a fraction of the European Union’s economy is a genuine single market. School reform and introducing choice is crucial: no Wall Street financier has done as much damage to American social mobility as the teachers’ unions have. Getting rid of distortions, such as labour laws in Europe or the remnants of China’s hukou system of household registration, would also make a huge difference.

Next, target government spending on the poor and the young. In the emerging world too much cash goes to universal fuel subsidies that disproportionately favour the wealthy (in Asia) and unaffordable pensions that favour the relatively affluent (in Latin America). But the biggest target for reform is the welfare states of the rich world. Given their ageing societies, governments cannot hope to spend less on the elderly, but they can reduce the pace of increase—for instance, by raising retirement ages more dramatically and means-testing the goodies on offer. Some of the cash could go into education. The first Progressive era led to the introduction of publicly financed secondary schools; this time round the target should be pre-school education, as well as more retraining for the jobless.

Last, reform taxes: not to punish the rich but to raise money more efficiently and progressively. In poorer economies, where tax avoidance is rife, the focus should be on lower rates and better enforcement. In rich ones the main gains should come from eliminating deductions that particularly benefit the wealthy (such as America’s mortgage-interest deduction); narrowing the gap between tax rates on wages and capital income; and relying more on efficient taxes that are paid disproportionately by the rich, such as some property taxes.

Thoughts on paragraphs 1, 2 and 3:

1- A gigantic FU to the teacher’s unions and labor laws!  What I wouldn’t do to compromise if the deal included teacher’s union destruction and the loosening of labor laws.  I mean, holy shit – “No Wall Street financier has done as much damage to American social mobility as the teacher’s unions!”

2- Welfare reform.  We can only hope to slow the increase, but we should!   Though they do slip on early education; there isn’t any data that suggests the gains last beyond 3rd grade.

3-  This sounds exactly like Romney’s tax plan.

And to think, I almost passed this by because of the word Progressivism.

Education: Socioeconomic Impacts – The Bell Curve

Last week I posted on the impact that socioeconomic status had on childhood poverty.  I don’t think anyone was surprised to see that children who come from parents/mothers with a lower standard of living have a greater chance of growing up poor than children whose parents/mother had a higher standard of living:

The data is hard to argue with.  The “well off-ness” of the parents seems to have a powerful impact on the chance of poverty of a child.

The book continues this investigation as it relates to education, both high school and college.

First, the authors discuss high school and the rate of drop-outs.  That is, what is the probability of a kid finishing high school?  And they took a look at this through the lens of the socioeconomic status of the child’s parents.  Again, the scale is broken into 5 parts; the median is in the middle and from the center the scale moves on by 1 standard deviation and then another.

When everything else is held constant, the probability of dropping out of school based on the socioeconomic status of the parents looks like this:

The data is striking.  Kids from poorer households dropout of high school a very higher rates than kids from wealthier households.  If you look at the extremes, the poorest kids drop out at a rate ~10x as high as the kids from the wealthiest households.

Now take a minute and consider college education and obtaining a 4 year degree.  Consider what you might expect the data to show.  If the data is consistent with our previous peeks into the impact that SES has on aspects of kids, we might make a pretty good guess.

Here’s the data:

Just as we might expect.  The role of the socioeconomic status of the parents is a powerful one for kids who wanna obtain a college degree.  Everything else being equal, there is almost no chance that a kid coming from the poorest families will achieve the the thrill of obtaining a diploma while the same kid from our wealthiest families has near a 40% of graduating.

As we close this section I’m struck by two things:

1.  Even our richest families are producing college graduates at a less than 40% clip.

2.  The wealth of a kids family continues to play a powerful role.

The Chairman’s Weekly Radio Address: March 21, 2009

Barack Obama’s Weekly Radio Address

March 21, 2009

Last week, I spent a few days in California, campaigning talking with Jay Leno ordinary Americans in town halls and in the places where they work.  We talked about their struggles, and we talked about their hopes.

Ahhh yes, hope.  Whoda thunk it; campaign trail and hope.

At the end of the day, these men and women weren’t as concerned with the news of the day in Washington as they were about the very real and very serious challenges their families face every day:  whether they’ll have a job and a paycheck to count on; whether they’ll be able to pay their medical bills or afford college tuition;

Look Sparkey, you are talking to “ordinary Americans” in California.  Of COURSE they’re worried about these things!!  I mean, come on, have you seen what the Democrats have done to that state?

What, YOU are a Democrat that supports all of these things?  Oh my.

whether they’ll be able to leave their children a world that’s safer and more prosperous than the one we have now.

Maybe they think you are going to release the Gitmo innocents into Cali?  Then again, maybe not.  Just sayin’.

Those are the concerns I heard about in California.  They are the concerns I’ve heard about in letters from people throughout this country for the last two years.

Dude, serious.  Are you TRYING to make it obvious that you are campaigning?

And they are the concerns addressed in the budget I sent to Congress last month.

Um, no.  No it’s not actually.  What concerns me [heh heh, I kill me] about your budget is that you are going to turn all of us into California.

With the magnitude of the challenges we face,

Don’t look now, but the recovery appears to have begun.  And again, whoda thunk it, not one dime of bailout money has been spent.

I don’t just view this budget as numbers on a page or a laundry list of programs.

It’s an economic blueprint for our future – a vision of America where growth is not based on


real estate bubbles or overleveraged banks,

Yo, over leveraged banks?  Umm yeah, not so over leveraged if when this new accounting method is restored.

but on a firm foundation of investments in energy,

Short for tax and economic hardship.


We’ll see.

and health care

You just can’t stop wading in markets you don’t understand.

that will lead to a real and lasting decade long recession prosperity.

These investments are not a wish list of priorities that I picked out of thin air – they are a central part of a comprehensive strategy to grow this economy by attacking the very problems that have dragged it down for too long:

  • High taxes
  • Over regulation


the high cost of health care and our dependence on foreign oil; our education deficit and our fiscal deficit.

Sigh.  I didn’t think so.

Now, as the House and the Senate take up this budget next week, the specific details and dollar amounts in this budget will undoubtedly change.  That’s a normal and healthy part of the process.

But when all is said and done, I expect a budget that meets four basic principles:

First, it must reduce our dependence on dangerous foreign oil and finally put this nation on a path to a clean, renewable energy future.

On the one hand you mention dangerous foreign oil.  Then on the other hand, you mention clean and renewable energy.  Which is it?  Cause we gots lots of domestic energy if you would just let us go get it.

There is no longer a doubt that the jobs and industries of tomorrow

We may differ in the definition of tomorrow here.

will involve harnessing renewable sources of energy.  The only question is whether America will lead that future.  I believe we can and we will, and that’s why we’ve proposed a budget that makes clean energy the profitable kind of energy, while investing in technologies like wind power and solar power; advanced biofuels, clean coal, and fuel-efficient cars and trucks that can be built right here in America.

Second, this budget must renew our nation’s commitment to a complete and competitive education for every American child.  In this global economy, we know the countries that out-educate us today will out-compete us tomorrow, and we know that our students are already falling behind their counterparts in places like China.  That is why we have proposed investments in childhood education programs that work; in high standards and accountability for our schools; in rewards for teachers who succeed; and in affordable college education for anyone who wants to go.  It is time to demand excellence from our schools so that we can finally prepare our workforce for a 21st century economy.

I think I agree with all of this.  But it’s a turd.  Who hasn’t sad this?

Third, we need a budget that makes a serious investment in health care reform – reform that will bring down costs,

With ya.

ensure quality,

Right there.

and guarantee people their choice of doctors and hospitals.

Wow.  Three for three.

Right now, there are millions of Americans who are just one illness or medical emergency away from bankruptcy.

Oh oh.

There are businesses that have been forced to close their doors or ship jobs overseas because they can’t afford insurance.  Medicare costs are consuming our federal budget.  Medicaid is overwhelming our state budgets.  So to those who say we have to choose between health care reform and fiscal discipline, I say that making investments now that will dramatically lower health care costs for everyone won’t add to our budget deficit in the long-term – it is one of the best ways to reduce it.

See, but you don’t wanna reduce costs.  You wanna give health insurance to everyone.  If you wanted to reduce costs, you would be doing a whole different set of things.

Finally, this budget must reduce that deficit even further.  With the fiscal mess we’ve inherited and the cost of this financial crisis,

Ok dude, so, if you are going to keep at it, I am.  You voted for it and in part were responsible for the crisis.  Senator.

I’ve proposed a budget that cuts our deficit in half by the end of my first term.  That’s why we are scouring every corner of the budget and have proposed $2 trillion in deficit reductions over the next decade.

Not wholly true.  But at this point, I’ve lost count.

In total, our budget would bring discretionary spending for domestic programs as a share of the economy to its lowest level in nearly half a century.

What do you mean by discretionary?

And we will continue making these tough choices in the months and years ahead so that as our economy recovers, we do what we must to bring this deficit down.

I will be discussing each of these principles next week, as Congress takes up the important work of debating this budget.  I realize there are those who say these plans are too ambitious to enact.  To that I say that the challenges we face are too large to ignore.  I didn’t come here to pass on our problems to the next President or the next generation – I came here to solve them.

The American people sent us here to get things done, and at this moment of great challenge, they are watching and waiting for us to lead.  Let’s show them that we are equal to the task before us, and let’s pass a budget that puts this nation on the road to lasting prosperity.

I agree.  So throw this one away and go back to the drawing board.  Thanks, and God bless America!