Is the US economy in recession?

[MrFun]

So you're in favor of more government spending in welfare by keeping the federal minimum wage too low?

[Kidlicious]

None of this is inconsistent with what I believe. His threats had to be credible, first.

We might not be on the same page.

Inflation? Ha! You think that QE leads to higher nominal spending!

I'm talking about targeting a higher inflation rate or nominal gdp. Isn't that what you support?

The evidence, though, is overwhelming that aggregate supply curves are closer to horizontal than to vertical when there's a lot of slack in the economy, so that higher nominal spending will come mostly in the form of new output, rather than inflation.

Well sure, but if the fed doesn't try to do too much too fast. There are structural problems that take time to work themselves out. Of course the fed could encourage people to spend all their dollars but at what cost (how much easing would that take), and then what?

[Jaguar]

Do you feel like people are spending too much? Do you feel like it's too easy to acquire money from people on big spending binges?

If so, how could we possibly be worried about the Fed doing too much?

The structural unemployment idea is bunk. Unemployment is too high in California and it's too high in New York. It's too high among young Hispanic men, and it's too high among middle-aged white women. It's too high among construction workers and it's too high among lawyers.

There's no story to be told about how certain classes of people were working the wrong jobs and got fired. The story here is aggregate demand.

[Jaguar]

So you're in favor of more government spending in welfare by keeping the federal minimum wage too low?

Yes.

[Kuciwalker]

So you're in favor of more government spending in welfare by keeping the federal minimum wage too low?

If we think that some given poor person deserves more money, why should we make it the obligation of whoever gives that person a job to also give them the extra money? How ****ing stupid is that idea? Society thinks the poor person should get more money; society should be the one to pay up.

[Kidlicious]

Do you feel like people are spending too much?
Do you feel like it's too easy to acquire money from people on big spending binges?

No to both.

If so, how could we possibly be worried about the Fed doing too much?

I'm worried that it would be hard for the fed to do more, that by "pushing on a string" they cause harm.

The structural unemployment idea is bunk. Unemployment is too high in California and it's too high in New York. It's too high among young Hispanic men, and it's too high among middle-aged white women. It's too high among construction workers and it's too high among lawyers.

Or course it's too high, but the problem is actually getting those workers their jobs back. We can't get as many construction jobs as we once had, and it's going to take awhile to get many back at all because of the real estate market. The fed can only do so much about the real estate market and other problems in the economy.

There's no story to be told about how certain classes of people were working the wrong jobs and got fired. The story here is aggregate demand.

And that's tied to people's expectations of the job market. I'm not arguing that targeting gdp wouldn't work well if people expect what you want them to expect. I'm saying the problem is going to be that you try to improve their expectations and you fail.

[Aeson]

If we think that some given poor person deserves more money, why should we make it the obligation of whoever gives that person a job to also give them the extra money? How ****ing stupid is that idea? Society thinks the poor person should get more money; society should be the one to pay up.

1) Because we already have plenty of people choosing unemployment/welfare over working due to minimum wage jobs not being high paying enough for their liking. We don't need to increase that number.

2) Because we already have many, many examples of employers in every industry being able to make tons of money while paying their workers more than minimum wage. (A migrant worker picking apples can make ~$25/hr for instance. This in an industry that was decimated by the Alar scare and then China's "reforestation" projects funded by the World Bank.) We shouldn't subsidize incompetence or failure or industries which aren't competitive (outside national security). It would be the good employers subsidizing the poor ones.

3) Because minimum wage (and other worker protections like unions) have been wildly successful to the point where #1 and #2 are not just possible, but are the norm. (To argue the point retroactively.)

[Kuciwalker]

1) Because we already have plenty of people choosing unemployment/welfare over working due to minimum wage jobs not being high paying enough for their liking. We don't need to increase that number.

False.

2) Because we already have many, many examples of employers in every industry being able to make tons of money while paying their workers more than minimum wage. (A migrant worker picking apples can make ~$25/hr for instance. This in an industry that was decimated by the Alar scare and then China's "reforestation" projects funded by the World Bank.) We shouldn't subsidize incompetence or failure or industries which aren't competitive (outside national security). It would be the good employers subsidizing the poor ones.

This is nonsense and no subsidy is involved.

3) Because minimum wage (and other worker protections like unions) have been wildly successful to the point where #1 and #2 are not just possible, but are the norm. (To argue the point retroactively.)

None of these are true.

Politifact says: Pants on Fire.

[Aeson]

False.

It's obviously true that a large number of people choose unemployment and/or welfare over minimum wage jobs. You want to increase this number.

As for the current economic downturn which has resulted in the above statement being a little less obvious than it is when the economy is healthy, need I remind you that your argument as to why we still have high unemployment is "The Fed"? "The Fed" isn't minimum wage. Try to at least be a little consistent in your world view ...

This is nonsense and no subsidy is involved.

Yes, it is a subsidy. In your world we would increase taxes. Taxes largely paid by those businesses who make the most profit ... the ones that generally are already able to pay their workers much more than minimum wage ... and tax those people who earn the most ... those who obviously make more than minimum wage ... to supplement or replace the wages offered by those who are not so adept or humane as to pay their workers well.

[Kidlicious]

This is nonsense and no subsidy is involved.

You DID say society should pay.

[Kuciwalker]

It's obviously true that a large number of people choose unemployment and/or welfare over minimum wage jobs. You want to increase this number.

No, this is clearly false and you are wrong. Minimum wage jobs are not the counterfactual for almost anyone.

As for the current economic downturn which has resulted in the above statement being a little less obvious than it is when the economy is healthy, need I remind you that your argument as to why we still have high unemployment is "The Fed"? "The Fed" isn't minimum wage. Try to at least be a little consistent in your world view ...

The reason for unemployment is the Fed's failure to manage aggregate demand. The reason failure to manage aggregate demand is important is because of wage stickiness. The minimum wage exacerbates that problem heavily when we are faced with a negative demand shock.

I am 100% consistent, you just don't actually know any macro.

Yes, it is a subsidy. In your world we would increase taxes. Taxes largely paid by those businesses who make the most profit ... the ones that generally are already able to pay their workers much more than minimum wage ... and tax those people who earn the most ... those who obviously make more than minimum wage ... to supplement or replace the wages offered by those who are not so adept or humane as to pay their workers well.

No, it is not a subsidy (to the minimum-wage-paying employers). You are wrong and don't know what you are talking about. (What else is new.)

To the degree that you design the welfare system to produce extremely high MTRs on low levels of income, that might be a subsidy to minimum-wage-paying employers, but it is also stupid.

[Aeson]

No, this is clearly false and you are wrong. Minimum wage jobs are not the counterfactual for almost anyone.

No, it is obviously true. There are people who obviously choose welfare, or to collect unemployment while they keep looking for something better, or to simply not try to find work anymore, than to accept minimum wage jobs.

The reason for unemployment is the Fed's failure to manage aggregate demand. The reason failure to manage aggregate demand is important is because of wage stickiness. The minimum wage exacerbates that problem heavily when we are faced with a negative demand shock.

Minimum wage doesn't exacerbate that problem "heavily". We're talking ~1% to 3%* of the workforce that are possibly affected at the 7.50/hr level. Most of these jobs are still there. Many of them have already transitioned from being "pushed" up to $7.50 an hour to moving past it, as is perfectly natural. This in a bad economic environment.

*It's hard to say how many, most at that level are earning tips or commissions which take them above it. Even working in Utah for tips I know $10/hr is possible as a waiter at rural restaurants. That's in poor and sparsely inhabited place with a culture that's not keen on tipping. I knew teen waiters in California who'd pull in $30+/hr, even though their wage is less than minimum wage so they'd be included in that 3% figure.

I am 100% consistent, you just don't actually know any macro.

I guess I had misread your dislike of the minimum wage to be due to it being a reason for unemployment. I'm glad you we can agree it's not a reason for unemployment.

No, it is not a subsidy (to the minimum-wage-paying employers).

It is a subsidy.

To the degree that you design the welfare system to produce extremely high MTRs on low levels of income, that might be a subsidy to minimum-wage-paying employers, but it is also stupid.

What about our welfare system isn't stupid in it's design?

[Ben Kenobi]

The minimum wage exacerbates that problem heavily when we are faced with a negative demand shock.

Yep, exactly so, rather than cut wages, they cut hours which amounts to the same thing. How is a minimum wage worker better off with a paycheck of half what he was getting full time because his employer won't give him more hours?

[Aeson]

Yep, exactly so, rather than cut wages, they cut hours which amounts to the same thing. How is a minimum wage worker better off with a paycheck of half what he was getting full time because his employer won't give him more hours?

It's obviously better from the worker's perspective to work less hours and make the same amount they would have otherwise.

It also incentives the employer to get more productivity per hour out of their workers. This naturally leads to higher paying jobs (over and above the minimum wage) and a more productive workforce in the long run.

[Ben Kenobi]

It's obviously better from the worker's perspective to work less hours and make the same amount they would have otherwise.

Except that they don't, Aeson. They take home half of what they were taking home before. I ask you again - the bills are the same. How does this help the worker if his paycheck is cut in half?

It also incentives the employer to get more productivity per hour out of their workers. This naturally leads to higher paying jobs (over and above the minimum wage) and a more productive workforce in the long run.

It would, if the employer were permitted to fire people who were unproductive and hire and keep on just the productive. My experience has been that they would prefer to cut everyone's hours, rather than just the unproductive. If they have too little work and too many people, it's easier for them to just overstaff and tell people to go home when the work is done. This actually encourages a decrease in production - because workers get to stay on longer the less work that they do. I've seen it happen.

It actually saves the employer considerable money to have a pool twice the size of 20 hour a week people, that they can expand and contract as needed, than it is to have a pool half the size of 40 hour a week people. If their goal was to increase productivity - you'd see them double shifting the productive folks (which is illegal, thanks to labor laws!) and keeping on only the most productive folks. But, the way that labor laws are set up - this is actually more expensive to the employer. Hence the pool of twice the necessary size of 20 hour a week people - that you can hire and fire as needed and don't have to pay any benefits, etc.