Minimum wage. Should it be $15?

[Bella]

Wall Street bonuses are another example being at record levels since the 2008 crash.  I should double check; however, I believe that it was 2013 that New York’s state comptroller indicated these bonuses were the third highest on record and highest since the crash.  On the surface with some of the logic being thrown about, “they must be worth it, if that is what they are getting;” however, the aspect that most do not realize is that how do you factor in the various “hidden subsidies” flowing to the big Wall Street banks that ever since the bailout of 2008 have been considered too big to fail?

 

The 'hidden subsidies' are billions of dollars that were available at discount windows opened by the Federal Reserve to the banks at zero interest rates. The thinking was that the government would make these funds available at no cost and then the banks would loan it out to kick start the economy again. It didn't work. The banks took that free money and gambled it in the markets and didn't loan it out since they calculated they could make more on investments than they could providing Joe Dirt a loan for a motorcycle. They were right. That's why the bonuses are high; that's why the DJI is pushing into 18,000. And that's why mainstreet America and the elderly are getting screwed with this 'recovery.' 

[Jim Naseum]

If you continue to drive wages down

Biggest problem going on right now is that wages are stale, not necessarily being driven down. Which, shouldn't be as big of a problem, but inflation is kicking everybody's butt, giving the same effect.

Here's how wages are "driven down." Joe makes $30 an hour at the machine shop. The shop decided it is cheaper to buy finished parts in China, and fires all the $30 an hour machinists. Soon, all machine work is gone and Joe can only find a lesser job in warehouse for $20 an hour. Ergo, Joe's wages have been driven down by the unfolding of a process known as creating surplus labor. It's the whole purpose behind trade agreements.

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[Fjd]

 

Wall Street bonuses are another example being at record levels since the 2008 crash.  I should double check; however, I believe that it was 2013 that New York’s state comptroller indicated these bonuses were the third highest on record and highest since the crash.  On the surface with some of the logic being thrown about, “they must be worth it, if that is what they are getting;” however, the aspect that most do not realize is that how do you factor in the various “hidden subsidies” flowing to the big Wall Street banks that ever since the bailout of 2008 have been considered too big to fail?

 

The 'hidden subsidies' are billions of dollars that were available at discount windows opened by the Federal Reserve to the banks at zero interest rates. The thinking was that the government would make these funds available at no cost and then the banks would loan it out to kick start the economy again. It didn't work. The banks took that free money and gambled it in the markets and didn't loan it out since they calculated they could make more on investments than they could providing Joe Dirt a loan for a motorcycle. They were right. That's why the bonuses are high; that's why the DJI is pushing into 18,000. And that's why mainstreet America and the elderly are getting screwed with this 'recovery.' 

 

 

 

 

Interesting. I fully realize that corporations function to make a profit; however, where is the line drawn regarding the duty and responsibility toward society (read about the Ford Pinto)? 

 

In some respects it would appear from your posts that Wall Street was worth the bonus because they were paid it so they must have been worth it, although from the last part, it would seem at the expense of the tax payers since Wall Street used the subsidies for purposes other than intended, and at the expense of mainstreet America and at the expense of the elderly?  Where is the ethics in that or is this just another disparate situation we should just accept since we are not as smart as they are?

 

On a side note, I'm actually talking about the research paper by Kenichi Ueda of the International Monetary Fund and Beatrice Weder di Mauro of the University of Mainz that puts a discount number at about 0.8 percentage point where this discount applies to all the liabilities, including bonds and customer deposits.  Without this, the too big to fail Wall Street banks would barely break even.

 

http://www.imf.org/external/pubs/ft/wp/2012/wp12128.pdf

Edited November 7, 2015 by Fjd

[prerich]

One of these was subsidized by her husband I suspect.  And why you want to keep bringing politics into an economic discussion is a window into your brain.   Yes  lifestyle choices are made every day, I agree completely with you on that.C

Can't argue with that point

[Paducah Home Theater]

The banks took that free money and gambled it in the markets and didn't loan it out since they calculated they could make more on investments than they could providing Joe Dirt a loan for a motorcycle. They were right.

I don't get this example, mainly because consumer loans are stupid cheap and easy to get right now.

[Jim Naseum]

Fifty years ago the "wealth pie" was $21 and split in a manner of CEO $20 and median workers $1. Today the $301 of the "wealth pie" is now split CEO $300 and median workers still $1.

And this is immoral and nothing but greed run amuck.

I don't care who you is you ain't worth $100 million a year, sorry your job is not 2 thousand times harder than mine.

Just my $.02

Just a very simplistic example if you take the "wage/salary/benefits" as a "pool of funds" in a corporate budget to be divided and distributed amongst everyone in the corporation.

It makes sense why the NFL players association will bargain for wages to be a percentage of the gross revenues. We also know that it is very lucrative to be an NFL owner even with roughly 2/3 of the total NFL revenues going to the players and having a wage structure with a minimum salary for the players that increases each year.

I find it interesting that in the 1970's Peter F. Drucker (during this time, a well-respected American management guru) had endorsed the 20 to 1 ratio for CEO to median worker in sustaining robust growth. Up until this time the U.S. was very prosperous with this 20 to 1 ratio, yet, look where we are today. A survey of the S&P 500 index companies, during 2012 the compensation received by the CEO was 354 times that of the median of the rank-and-file worker and look at the general downward trends in prosperity.

I agree with your point, but it's not actually "CEOs" which are the trouble. It's the billionaires who often are just speculators, hedge fund runners, and raiders, where most of the wealth is going. Not to minimize the CEO pay, but making $50M a year isn't the troouble spot. It's he guy making $2B a year through other means, which is the problem.

I do realize that the CEO pay isn't the trouble spot and have some familiarity with the speculators, hedge funds and the leveraged-buyout business and I agree with your other posts on the bigger picture.

In general I'm "starting small and working my way up" as I have been highlighting the CEO pay disparity in trying to draw a few illustrations to try to make some sense of the logic that many have that "minimum wage workers are only worth the $7.00 that they now earn and that if they were worth more, they would earn more;" and by extension that "if the CEOs are making over 300 times of the median worker, the CEO must be worth it or companies wouldn’t pay this much."

To me this whole idea of we are only “paid what we are worth” because that is the market force at work or whatever reason seems to be a very dangerous and slippery slope since there are too many disparate situations that can never be factored in correctly.

Given the types of statistics I presented in a few of the posts, I just can’t buy into the argument that the huge disparity with the median worker and overall rise in CEO compensation that far outpaces other economic metrics is really related to the competition for scare CEO talent that will be a benefit to the stockholders' long-term value.

I suspect that a good portion is the result of manipulation of the system by the conflict of interest that arises in a 'self-dealing' situation where the CEO is in a position to greatly take advantage of the position in transactions and acting in his or her self-interest rather than in the best interests of the shareholders.

For example, it seems plausible that CEOs get these enormous pay packages in part because they are often the persons that hire the compensation consultant, appoint the compensation committees on the boards that decide executive pay. I suppose that in other instances to “appear competitive” the boards may not want to be seen by investors as not having hired a “top-tier” CEO and may not want to be seen as paying less than the CEOs of their major competitors.

Wall Street bonuses are another example being at record levels since the 2008 crash. I should double check; however, I believe that it was 2013 that New York’s state comptroller indicated these bonuses were the third highest on record and highest since the crash. On the surface with some of the logic being thrown about, “they must be worth it, if that is what they are getting;” however, the aspect that most do not realize is that how do you factor in the various “hidden subsidies” flowing to the big Wall Street banks that ever since the bailout of 2008 have been considered too big to fail?

http://www.bloombergview.com/articles/2013-02-20/why-should-taxpayers-give-big-banks-83-billion-a-year-

Very good thoughts there. Let me posit another cause for the disparity in pay. Another reason why "market worth" is just propaganda.

The real cause is CLASS. The work of Domhoff, C. Wright Mills, and others have shown clearly that class is where the cause of inequality lies. There is a distinct "rich class"** in the USA where progeny are groomed from birth to hold special status in the establishment which is responsible for the management of the nation.

Members carefully and explicit supply advantage, training, ethics, support, training, opportunity, introduction, to each of its members. There is a prosperity path for this class which includes key posts in government, corporate boards, and key institutions, that bring them directly into the flow of wealth, because it is the main job of these people to hold, preserve, manage (as in ownership) the assets of the nation.

Class is everything, which is why it is a verboten subject for public discussion. You will NEVER hear an introduction of these people that includes any comment about their class. We train kids in school for 16 years that America is a classless society to prevent any possible understanding of this most important phenomenon.

**doesn't matter what name is applied. Ruling class, upper class, etc

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[Bella]

 

 

Wall Street bonuses are another example being at record levels since the 2008 crash.  I should double check; however, I believe that it was 2013 that New York’s state comptroller indicated these bonuses were the third highest on record and highest since the crash.  On the surface with some of the logic being thrown about, “they must be worth it, if that is what they are getting;” however, the aspect that most do not realize is that how do you factor in the various “hidden subsidies” flowing to the big Wall Street banks that ever since the bailout of 2008 have been considered too big to fail?

 

The 'hidden subsidies' are billions of dollars that were available at discount windows opened by the Federal Reserve to the banks at zero interest rates. The thinking was that the government would make these funds available at no cost and then the banks would loan it out to kick start the economy again. It didn't work. The banks took that free money and gambled it in the markets and didn't loan it out since they calculated they could make more on investments than they could providing Joe Dirt a loan for a motorcycle. They were right. That's why the bonuses are high; that's why the DJI is pushing into 18,000. And that's why mainstreet America and the elderly are getting screwed with this 'recovery.' 

 

 

 

 

Interesting. I fully realize that corporations function to make a profit; however, where is the line drawn regarding the duty and responsibility toward society (read about the Ford Pinto)? 

 

In some respects it would appear from your posts that Wall Street was worth the bonus because they were paid it so they must have been worth it, although from the last part, it would seem at the expense of the tax payers since Wall Street used the subsidies for purposes other than intended, and at the expense of mainstreet America and at the expense of the elderly?  Where is the ethics in that or is this just another disparate situation we should just accept since we are not as smart as they are?

 

 

I make a distinction between Wall Street/banks and corporations that produce products that are useful or desired. Banks are predatory and get away with their antics because they have the politicians in their pockets. I consider them outright fraudulent. I do not consider McDonald's fraudulent (I personally would not and have not eaten there in probably a decade) as they provide a product and service that is in demand. Apple provides a product that is in demand. That demand requires management and that management is entitled to whatever compensation it and the board and the shareholders agree is fair.

 

To be clear, I do not consider these people smarter than me, or you, or anybody else for that matter. What they have that most do not, is the gene that drives them for success, no matter the cost. Their talent, their focus, their drive, their ability to get things done...do you know any CEOs? If so then you know what I am trying to make clear. These people are rare and have gifts and frankly deserve every dime they are paid for the most part (there are some bad ones and they are quickly dealt with by their boards and the ship is quickly righted). The only people that do not think they are worth that much are the people that haven't a clue of what they do or what they are or what running a fortune 500 company requires. 

 

It really is simple. Corporate boards do not throw darts at a dart board to determine who they are going to hire to lead their company. The process is arduous and very detailed. Likewise, a CEO's compensation package is carefully crafted to both reflect the value of the individual being offered the position AND so that the company can recruit the top talent in a competitive market. To me, it is comical that a certain percentage of the population vehemently disagrees and thinks that somehow they have the wisdom to declare it unfair.

[Travis In Austin]

Distribution of wealth is out of control!!!!

Is it Germany where the top executives of a company can only make a certain percentage more than the lowest paid worker? We need to do something like that.

Where is it out of control? I must have missed that.

[Travis In Austin]

Just what is a human worth?

Whatever another human is willing to pay because they themselves are unwilling and/or unable to do that job.

You have no understanding of labor economics. What you have stated only occurs occurs in theory, that being from the greatest Scottish economist of all time.

In reality it only occurs with collective bargining or civil service.

[Bella]

Connect the dots:

 

When you play a winner takes all game, the winner will eventually take all. That's precisely what you see in the worst of the 3W countries, a small cadre of ruling thieves and masses of poverty. If you continue to drive wages down for 90M working people, so that a few thousand can increase their wealth from $40 Billion to $40 Trillion, what will the economy look like if not feudalism? Just connect the dots. 

 

The U.S. cannot be compared to a 3W country on any level. But I'm interested. Have there been any dynastic level civilizations that failed in the manner you describe?

[Travis In Austin]

It's humorous to me that so much attention is fixed on 1969 as a measurement stick. A much more meaningful consideration should be the 'rate of new wealth creation'. The higher the RATE, the higher should be the minimum wage. After all, what we are talking about is cutting up a pie that we all bake. Whatever end of the machinery you work on, the more the machine makes, the more you should share in the result.

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What happens when the rate of new wealth creation goes down? Do newly hired young people take a pay cut from the previous years new hires? And then what if it goes up the next year? Do newly hired young people make more than the previous years new hires?

I think you have aptly pointed out that is an unworkable yardstick.

Where a wage is as a percentage of poverty level seems much more workable to me.

[Travis In Austin]

I'm not certain on where you obtained the numbers in your post.

Type in the basic questions like "how many employees does McDonalds have" and Google displays an answer in the top left. I just didn't feel the need to study it in more depth.

Than use qualifiers or cite your source. Your lack of interest in being in depth is already apparent.

[Travis In Austin]

Your idea of fairness seems to be that these guys should be paid the same.

Wrong. I never said that or even implied it. It boils down to a simple economic concept, which has repercussions for our society. Do we pay as little as possible while then subsidizing through taxes the difference? Or do we remove the subsidization which brings its own consequences, one of which is that now workers will refuse to work for the little being offered? Why should some companies who pay many very little get subsidized over other companies which cannot due to the nature of their businesses?

Part of the issue here is lifestyle choices. Again, two people, works for the same company:

1. My wife, who worked at Wal-Mart for $4.25 an hour. She put herself through law school doing this, unloading tractor trailers full of junk all night.

2. My ex, a single mother who has multiple kids from multiple fathers out of wedlock who she needs to support. She's not really a go-getter, and doesn't want more hours because she'd lose her earned income credit and who knows what else. On a good year she might make 5 figures. Maybe.

One of these was subsidized by the government. The other wasn't. Both are lumped into the same class for some reason, when liberals try to justify this stuff. Just because a low'ish paying job is available and somebody agrees to do it, doesn't automatically mean they're making up the difference by leaning on the government.

Unfortunately this is a little worse now because of inflation. The Obama economy has diluted everyone's spending power somewhat.

Really? You were doing better under Bush? Well here's your chance, you can bring in his brother.

Wait, do you even know the inflation rates for the last 7 years, and the 8 years before that?

I guess you can juat google "inflation"

[Bella]

 

The banks took that free money and gambled it in the markets and didn't loan it out since they calculated they could make more on investments than they could providing Joe Dirt a loan for a motorcycle. They were right.

I don't get this example, mainly because consumer loans are stupid cheap and easy to get right now.

 

 

There was a period of time between 2008-2011 (give or take) where banks were cautious to lend. You are right, loans are returning to their ridiculously 'can you fog a mirror' low level of scrutiny.

[Paducah Home Theater]

Just what is a human worth?

Whatever another human is willing to pay because they themselves are unwilling and/or unable to do that job.

You have no understanding of labor economics. What you have stated only occurs occurs in theory, that being from the greatest Scottish economist of all time.

In reality it only occurs with collective bargining or civil service.

If that were true, there would be no such thing as individual contractors and consultants. There's lots of consultants making bank that have zero collective bargaining power. Hell as far as that goes, anywhere that is not unionized would be paying slave wages to everyone. I can assure you that this is not the case.

Edited November 7, 2015 by MetropolisLakeOutfitters

[Coleman]

Completed

[Bella]

 

 

Is this research published in any respected journals?  The caricature presented using bunnies and wolves seems to be more of a personal view or judgment that could be driven by stereotyping, personal bias or personal experience. 

 

 

The research of how empires rise and what ultimately causes their demise can be found in numerous sources. It's not disputed that every great civilization has a beginning and end. Why they end should be of great interest so as to possibly avoid the same pitfalls. However, it seems nobody ever learns from history.

 

The conceptual theories used to describe those rises and falls are more colorful and in fact, quite confrontational and not suitable for these forums. I chose the bunnies and wolves version as I had read about it and it seemed the least confrontational here. The identities could be substituted through any number of descriptive properties I suppose. Such as type A and type B personalities in place of wolves and bunnies. Although I can't relate to any negative connotations to either of the caricatures as both have their redeeming qualities, and therefor appropriate.

 

Ultimately, the question isn't who the bunnies are, and who the wolves are. The question is WHY great civilizations follow these paths that always result in their collapse. Rome didn't fall as the result of outside forces, contrary to popular belief that they were conquered by the barbarians. Rome fell from within and this allowed the barbarians to finish them off, if you will. Rome was well on its way before the barbarians came around. 

 

Spain of the middle millennia is the same story. The Greeks of ancient. The Egyptians. They all became great civilizations from an adherence to a certain set of values. Then at some point that all changes and they begin their inevitable slide.

 

For our own precarious situation I think Alexander Tyler described it best with his 8 phases of democracy:

 

1. From bondage to spiritual faith;

2. From spiritual faith to great courage;

3. From courage to liberty;

4. From liberty to abundance;

5. From abundance to complacency;

6. From complacency to apathy;

7. From apathy to dependence;

8. From dependence back into bondage

 

Personally, I see us between 7 and 8.

 

 

 

 

Interesting.  At what point do you believe the U.S. slipped into 7?

 

Here is a chronological list of fairly significant events that many should be aware of that starts with the industrial revolution.  Are there any correlations that can be made here or is something else the determining factor?

 

Industrial Revolution

Alexander Graham Bell invents the telephone

General Electric founded

Spanish American War

U.S. Steel founded

Airplane invented

Automobile invented

Federal Reserve created

World War I

Great Depression

New Deal programs implemented by FDR

Golden Gate Bridge completed

World War II

Holocaust

Atomic bomb used to end war with Japan

Marshall Plan rebuilds Europe & Japan

US emerges from the war as the only great economic power

Cold War

Korean War

Interstate highway system built

Civil Rights Movement

John F. Kennedy assassinated

Vietnam War

Great Society programs implemented

Civil Rights Act of 1964

Martin Luther King assassinated

Neil Armstrong walks on the moon

Roe vs Wade

Oil embargo

Military buildup and tax cuts

Fall of the Soviet Union

Gulf War

Stock market boom

Gridlock between Congress & President leads to budget surpluses

NASDAQ stock bubble bursts

9/11 attack

Alan Greenspan lowers rates to 1%

Invasion of Afghanistan

Department of Homeland security created

Invasion of Iraq

Hurricane Katrina

Home prices double

Financial derivatives grow to over $100 trillion

Housing prices collapse

Financial firms collapse

Government and Federal Reserve intervene to prop up the worldwide financial system

Government bailouts of financial firms and auto manufacturers

Federal Reserve & U.S. Treasury commit over $8 trillion of taxpayer funds

Immediate borrowing & stimulus packages exceeding $1 trillion are discussed

Federal Reserve lowers rates to below 1%

 

 

 

 

Without a doubt, in my mind, we entered 7 with the new deal. 

[Jim Naseum]

Connect the dots:

When you play a winner takes all game, the winner will eventually take all. That's precisely what you see in the worst of the 3W countries, a small cadre of ruling thieves and masses of poverty. If you continue to drive wages down for 90M working people, so that a few thousand can increase their wealth from $40 Billion to $40 Trillion, what will the economy look like if not feudalism? Just connect the dots.

The U.S. cannot be compared to a 3W country on any level. But I'm interested. Have there been any dynastic level civilizations that failed in the manner you describe?

The USA can be compared to a 3W country at the level of GINI Coefficient, indicated a a wealth distribution out of balance.

To your second question, your phrasing transcends my hypothesis about the effects in a winner take all economy. First, we are not a reflection of history. This is a new condition, with new rules, new circumstances unfolding. Capitalism is an almost brand new phenomena in the history of mankind. Its realization or end point has never been seen. We are not in a replay of Rome, Spain, or Egypt. This is new and unique.

There is an explicit logic to capitalism that leads directly to a winner takes all conclusion. For a look at the process, see the consolidation of airlines, banks, autos, fast foods, retail drugs, brokerage, utilities, oil, insurance, and the internet. This is happening globally, and the effect is accelerating. It's inarguable. As it accelerates, global wealth is moving upward steadily - consolidating. At some point in that process there is not enough wealth at the bottom to drive the nominal 3% growth that is mandatory in a debt based economic system. At that point, with severe concentration of wealth, deflation and collapse occurs.

A healthy economy must feature growth at the bottom masses which drive growth in demand. Tom, Dick and Sally, have to have more money each year, not less, which is the trajectory of the last 35 years. The growth which should be organic by wages, has been replaced by offering every higher credit. Interest rates are already at zero. So the debt expansion is nearing the end. The only opportunities remaining for the largest corporations is more consolidation.

So, sooner or later, as we near winner takes all, collapse of the US economy occurs.

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[Paducah Home Theater]

I think you may be looking at the total employees in McDonald's corporation and all of the franchise operations (not owned by McDonald's corp) combined.

Hang on a second, if we're going to decry CEO pay then decry the treatment of humans in general, it almost sounds like you'd like to take that CEO pay and redistribute it to all the minimum wage workers that wear a Mickey D's hat. With this mindset in mind, why are you stopping at 420,000 if you know there are MANY more workers who would continue to receive crap wages? What's the point of mentioning CEO pay if you're fine with this?

 

Than use qualifiers or cite your source. Your lack of interest in being in depth is already apparent.

Let's be super in depth then even round up then. How about we take the McDonald's CEO's highest wages in the past few years then round it up to $14 million, then only stop at the 420,000 employees mentioned in the annual report. You can do basic math right? Friggin $33 a year per person if he gave up his entire salary. Tell me, how exactly are you guys going to change the world by doing this again? My lack of interest in being in depth is because IT DOESN'T MATTER. No matter how you calculate this stuff, CEO pay is typically not the issue.

You can even take that $33 and multiply it by 10 and it still doesn't matter in the grand scheme of things. Take it and multiply it by 100 even, and we're still nowhere close to the wage increase that is being requested for a typical 32 hour work week.

The only time I've seen CEO pay be a significant questionable issue in terms of what you guys are getting at is a couple of smallish drug companies where the CEO was getting ridiculous checks comparatively. But, they weren't exactly a minimum wage based company either, pretty much everybody on board was getting a decent salary, but the CEO was like $200 million or something ridiculous. Actually seems like that's the oracle guy but seems like it was in the 6 digit range. Really has nothing to do with the minimum wage conversation though.

Edited November 7, 2015 by MetropolisLakeOutfitters

[Jim Naseum]

Henry Ford was a crypto fascist and a real bastard of a human being. But, he had an understanding of economic principles we don't see in many CEOs today. He knew that he had to sell cars to the masses, and the masses were his workers. Therefore, he had to pay his workers enough to become car customers.

The wealth must circulate to create heat. As wages continue down, and credit limits are tapped the economy will collapse.

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