The Other McCain

"One should either write ruthlessly what one believes to be the truth, or else shut up." — Arthur Koestler

Math Is Hard

Posted on | June 10, 2019 | 2 Comments

 

Part One:

The Seattle Minimum Wage Study, a study supported and funded in part by the Seattle city government, is out with a new NBER paper evaluating Seattle’s minimum wage increase to $13 an hour and it finds significant disemployment effects that on net reduce the incomes of minimum wage workers.
It is the first study of a very high city-level minimum wage, with administrative data that has much more detail than is usually available. The first wave (examining the increase to $11/hr) last year was a mixed bag, with fairly imprecise estimates.
These findings, examining another year of data and including the increase to $13/hr, are unequivocal: the policy is an unmitigated disaster. The main findings:
– The numbers of hours worked by low-wage workers fell by *3.5 million hours per quarter*. This was reflected both in thousands of job losses and reductions in hours worked by those who retained their jobs.
– The losses were so dramatic that this increase “reduced income paid to low-wage employees of single-location Seattle businesses by roughly $120 million on an annual basis.” On average, low-wage workers *lost* $125 per month. The minimum wage has always been a lousy income transfer program, but at this level you’d come out ahead just setting a hundred million dollars a year on fire. And that’s before we get into who kept vs lost their jobs.

How many times do we have to explain basic economics to these people? Governments cannot mandate demand — for labor, or for anything else — and thus the attempt to artificially inflate wages by establishing an arbitrary minimum will have the effect of reducing the number of jobs for entry-level workers. This in turn will have ripple effects, acting as a disincentive to capital investment, as companies will seek out less-regulated markets. In a rapidly-growing economy, where there is high demand for labor, the statutory minimum wage will become irrelevant, as the vast majority of workiers are earning more than the minimum. However, artificially “raising the floor” underneath this free-market equation will always negatively impact both employment and business growth, by reducing opportunities for less-profitable companies to continue operations by hiring marginal workers for low-skill jobs, and by pricing these marginal workers out of the market.

Everyone who knows anything about economics understands this, but politicians are under pressure to pander to ignorant voters, a problem exacerbated by liberal journalists who don’t understand arithmetic. And speaking of liberal journalists . . .

Part Two:

ThinkProgress, the website that is a project of the Democratic Party’s primary think tank, is facing dire financial troubles and bleeding staff, according to primary-source documents viewed by The Daily Beast.
A budget document provided to ThinkProgress management and obtained by The Daily Beast showed that the website was expecting a roughly $3 million gulf between revenue and expenses for 2019. ThinkProgress has never been a revenue generator, and has often made up for its deficits through fundraising efforts and funds from its mothership entity, the Center for American Progress (CAP). But the current outlook is significantly worse than ever before.
According to the document, advertising revenue is projected to fall $350,000 short of what was budgeted this year, and online contributions are expected to fall short by nearly $180,000. The site is projected to have about $64,000 in grant revenue (money derived from donations to CAP and meant for coverage by ThinkProgress) in 2019. That’s roughly $60,000 short of what it had budgeted for the year and roughly $540,000 less than it received in 2018. . . .
“Unfortunately, ThinkProgress has had a large and growing budget gap for going on two years now,” Navin Nayak, executive director of the Center for American Progress Action Fund, told The Daily Beast. “Like most media organizations, ThinkProgress has relied on advertising revenue as a major source of funding, increasingly subject to the behavior of social-media platforms and their decisions on news distribution. As with many other digital media organizations, 2017 and 2018 were particularly challenging years in this regard, as ThinkProgress experienced a 40 percent drop in ad revenue over just one year, creating an inevitable budgetary strain.”
Management for ThinkProgress held a two-hour meeting with Nayak on Wednesday afternoon to discuss financial matters, according to a source at the outlet who requested anonymity. In a Thursday morning email to staff, viewed by The Daily Beast, management stressed that the “financial outlook has not improved in 2019 as CAP hoped it would” and that leadership at CAP plans to provide additional information about a path forward this month. According to the email, Nayak said he did not want to provide a lot of specifics at this current moment, so as not to “speculate.”
Sources at CAP and ThinkProgress told The Daily Beast that Nayak has had to engage in a series of “blunt” conversations with staffers at the website, telling them they should be looking for other jobs. These conversations took place even as the site’s union negotiated a contract at the end of 2018.

“Learn to code!”

The Obama years were a boom time for the Center for American Progress, but CAP’s founder John Podesta left to join the Hillary Clinton campaign, and her defeat tarnished their brand, since peddling access to powerful Democrat politicians (which, let’s face it, was Podesta’s stock in trade) only works when those politicians actually have power.

Much of the rage against Trump has been orchestrated by such people, to whom the election of a Republican president represents a loss of income opportunities. If what you’re selling is political influence, losing an election can have a devastating impact on demand for your services.



 

Category: Economics

Comments

2 Responses to “Math Is Hard”

  1. Saturday Links | 357 Magnum
    June 15th, 2019 @ 10:18 am

    […] The Other McCain – Math Is Hard […]

  2. News of the Week (June 16th, 2019) | The Political Hat
    June 16th, 2019 @ 7:10 pm

    […] Math Is Hard How many times do we have to explain basic economics to these people? Governments cannot mandate demand — for labor, or for anything else — and thus the attempt to artificially inflate wages by establishing an arbitrary minimum will have the effect of reducing the number of jobs for entry-level workers. This in turn will have ripple effects, acting as a disincentive to capital investment, as companies will seek out less-regulated markets. In a rapidly-growing economy, where there is high demand for labor, the statutory minimum wage will become irrelevant, as the vast majority of workiers are earning more than the minimum. However, artificially “raising the floor” underneath this free-market equation will always negatively impact both employment and business growth, by reducing opportunities for less-profitable companies to continue operations by hiring marginal workers for low-skill jobs, and by pricing these marginal workers out of the market. […]