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New Study: Minimum Wage Hurts Low-Skilled Workers

in Business and Economy, Liberator Online Archives by James W. Harris Comments are off

(From the Activist Ammunition section in Volume 19, No. 25 of the Liberator Online. Subscribe here!)

A new paper from the National Bureau of Economic Research brings new weight to the argument that significant minimum wage increases hurt the very people they are intended to help — low-skilled workers, especially teens and minority workers.

minimum wageEconomists Jeffrey Clemens and Michael Wither examine the effects of the minimum wage increases in 2007, 2008 and 2009. They find that minimum wage increases have three devastating effects upon low-skilled workers: “minimum wage increases reduced the employment, average income, and income growth of low-skilled workers over short and medium-run time horizons.”

The study indicates that the minimum wage can keep low-skilled workers from moving up to a middle class income; such workers experience “significant declines in economic mobility.” Charles Hughes of the Cato Institute explains:

“Many of the people affected by minimum wage increases are on one of the first rungs of the economic ladder, low on marketable skills and experience. Working in these entry level jobs will eventually allow them to move up the economic ladder. By making it harder for these low-skilled workers to get on the first rung of the ladder, minimum wage increases could actually lower their chances of reaching the middle class.”

Adding weight to these findings is a report earlier this year by the non-partisan federal Congressional Budget Office estimating that a three-year phase in of a $10.10 federal minimum wage option would reduce total employment by a stunning 500,000 workers.

Diana Furchtgott-Roth, former chief economist of the U.S. Department of Labor, nicely summed up at MarketWatch the massive problems created for low-skill workers by the minimum wage:

“Minimum-wage laws criminalize low-skill work. Imagine being forbidden to work. That is the case for people with skills under $8.25 an hour. The federal hourly minimum wage is $7.25, and additional costs, such as Social Security, unemployment insurance, and workers compensation bring the cost of employment closer to $8.25. The minimum wage is one reason why the teen unemployment rate is 18%, the youth (20 to 24) unemployment rate is 11%, and the African-American teen unemployment rate is 28%. Those groups have markedly lower skills than average. …

“When the minimum wage is set above someone’s skill level, that person is left on the sidelines. If people cannot get their first job, how can they get their second or third? People who take minimum-wage jobs gain entry to the professional world. Once they are in, they can keep rising.”

A short, highly readable summary of the negative effects of the minimum wage is the 2004 booklet “Minimum Wage, Maximum Damage: How the Minimum Wage Law Destroys Jobs, Perpetuates Poverty, and Erodes Freedom” by Jim Cox, published by the Advocates and available at our online Liberty Store.

They Said It…

in Liberator Online Archives by James W. Harris Comments are off

SECRETIVE US SPECIAL OP FORCES DEPLOYED WORLDWIDE: “A review of open-source information reveals that in 2012 and 2013, US Special Operations forces (SOF) were likely deployed to — or training, advising or operating with the personnel of — more than 100 foreign countries. And that’s probably an undercount. In 2011, then-SOCOM spokesman Colonel Tim Nye told TomDispatch that Special Operations personnel were annually sent to 120 countries around the world. They were in, that is, about 60 percent of the nations on the planet. … SOCOM is weaving a complex web of alliances with government agencies at home and militaries abroad to ensure that it’s at the center of every conceivable global hot spot and power center. In fact, Special Operations Command has turned the planet into a giant battlefield…” — award-winning journalist Nick Turse, “Why Are US Special Operations Forces Deployed in Over 100 Countries? That’s over 60 percent of the nations on the planet,” The Nation, January 7, 2014.

JUDGE: FOUNDERS WOULD BE “AGHAST” AT NSA: “[N]o court has ever recognized a special need sufficient to justify continuous, daily searches of virtually every American citizen without any particularized suspicion. … I have little doubt that the author of our Constitution, James Madison, who cautioned us to beware ‘the abridgement of freedom of the people by gradual and silent encroachments by those in power,’ would be aghast.” — from U.S. District Court Judge Richard Leon‘s Dec. 16 ruling that the National Security Agency’s bulk collection of phone records was “almost certainly” unconstitutional. The issue seems headed to the Supreme Court.

SNOWDEN JUSTIFIED: “I acted on mybelief that the NSA’s mass surveillance programs would not withstand a constitutional challenge, and that the American public deserved a chance to see these issues determined by open courts. Today, a secret program authorized by a secret court was, when exposed to the light of day, found to violate Americans’ rights. It is the first of many.” — NSA whistleblower Edward Snowden reacting to U.S. District Court Judge Richard Leon’s Dec. 16 ruling (above).

OUR UNCONSTITUTIONAL GOVERNMENT: “Article I, Section 8 of our Constitution lists the activities for which Congress is authorized to tax and spend. Nowhere on that list is there authority for Congress to tax and spend for: Medicare, Social Security, public education, farm subsidies, bank and business bailouts, food stamps and thousands of other activities that account for roughly two-thirds of the federal budget. Neither is there authority for congressional mandates to citizens about what type of health insurance they must purchase, how states and people may use their land, the speed at which they can drive, whether a library has wheelchair ramps, and the gallons of water used per toilet flush. The list of congressional violations of both the letter and spirit of the Constitution is virtually without end. Our derelict Supreme Court has given Congress sanction to do just about anything for which they can muster a majority vote.” — economist and syndicated columnist Walter Williams, “Parting Company,” Jan. 1, 2014.

JAY LENO STONES CONGRESS:  “In defending the budget deal, Congressman Paul Ryan quoted the Rolling Stones and said, ‘You can’t always get what you want.’ When it comes to Congress, here’s a better Stones quote: ‘Can’t get no satisfaction.’ How about that?” — Jay Leno Dec. 13, 2013.

Libertarian Party: Why Don’t Politicians Apologize When the Stock Market Goes Up?

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Stock Market RisesThe Libertarian Party is asking an unusual and thought-provoking question: Why don’t Democrats and most Republicans apologize to the American people when the stock market goes up?

Think about it. When the stock market drops, politicians invariably exclaim: “Thank goodness we didn’t privatize Social Security! Just look how much people would have lost in the stock market!”

But what about when the market goes… up? Imagine the potential earnings that Americans coerced into Social Security have lost because the government won’t let them control their retirement assets.

“After an almost uninterrupted bull market since March 2009 and six consecutive months of stock market gains, why haven’t politicians who are against any kind of privatization of Social Security apologized to the American people?” asks Libertarian National Committee member William Redpath.

“More than two thirds of workers pay more in payroll taxes than the individual income tax. That is money that is forcibly taken from them by the government that they could invest to build real wealth over the course of their working lives, or money that could be spent to make their lives better today.

“Instead, workers are forced into a system in which their payroll taxes are immediately given to current retirees or spent by the government in other ways.

“People should be free to keep their payroll taxes and use those funds as they see fit. If they choose to save and invest, it doesn’t have to be in the stock market. It could be in more conservative investments. However, the stock market has been the best investment over the long run, and attempts by politicians to demonize it harm the American people.”

In fact, notes Redpath — who is a licensed CPA and a Chartered Financial Analyst (CFA) — during any 20-year period going back to at least 1926, the stock market has never had a negative return. According to Morningstar, $1 invested in a basket of small company stocks at the end of 1925 would have been worth $18,365 at the end of 2012.

Indeed, Social Security is a lousy deal for citizens in many ways, Redpath points out.

“Social Security returns are paltry at best and negative for some people. But the big enchilada that no defender of the status quo will address is this: Americans have no personal property rights in their future Social Security benefits. All Americans are beholden to future Congresses for their benefits. And, benefits can’t be passed onto their children and grandchildren, as private accounts could be,” says Redpath.

Plus, of course, Social Security is headed to insolvency, due to its Ponzi Scheme structure.

“Libertarians call for phasing out the current government-sponsored Social Security system and transitioning to a private voluntary system,” adds Geoffrey J. Neale, current chair of the Libertarian National Committee. “This will remove the looming threat of insolvency while allowing everyone… to be self-sufficient and prosperous in their golden years.”