US employment stuff

A story from PBS.

http://www.pbs.org/newshour/making-sens ... so-slowly/

One of the graphs breaks out the participation rate for 25-54 year olds. Which would be nice if he broke it out to historical more than 10 years.

https://research.stlouisfed.org/fred2/graph/?g=3mGA

One of things that confuses me. Lack of wage increase in the current US employment numbers. Everyone talks about it. This year there is no cost of living increase in my USN retirement last year according to BLS wages increased ~2.5%.

The mitigating thing is that the price of oil. It factors into this a lot. But price of oil factors into the cost of just about everything I (or anyone) buy.

Continuing to wonder about a lot of things including if based on biochem's Forbes post about productivity and "real" hourly compensation rates if too much participation is really a good thing.

Matching graphs is interesting.






Which is probably a rather simplistic view on things, I think but the comparison seems to sort of leap out at me.

Looking forward to someone telling me why it isn't.

Enjoy,
T2M

T2M,

Its not the size of the workforce so much as it is the shifting incentives for engaging in business. As the cost of employing a single worker rises, businesses are incented to find ways to increase productivity. The most current trend is automation in services. McDonalds are coming up with automated systems for preparing their meals. Fewer and fewer people are being used to produce the same or more meals. We know manufacturing has been automating for decades.

The jobs that remain in those automated industries are higher paid, but are fewer. The new jobs are that have been created are lower paid jobs. Keeping in the restaurant industry; cooks, dishwashers and other restaurant workers have seen wages stagnate as illegal labor and downward pressure on prices forced by a slow economy inflate the supply of these workers and stifle what costs can be passed on.

Reduce the regulatory cost of employment per employee and the median income will rise as the economy will take more chances at hiring those lower wage workers. Hammer companies that hire illegal immigrants and the supply of lower skill workers stabilize. Combined, the effect will increase the median wage without increasing the minimum wage and at the same time increase employment.

PeterZ wrote:Reduce the regulatory cost of employment per employee and the median income will rise as the economy will take more chances at hiring those lower wage workers. Hammer companies that hire illegal immigrants and the supply of lower skill workers stabilize. Combined, the effect will increase the median wage without increasing the minimum wage and at the same time increase employment.

You are assuming that savings in overhead costs would be passed on to the worker as a wage increase.

This assumption is wrong.

The E wrote:

PeterZ wrote:Reduce the regulatory cost of employment per employee and the median income will rise as the economy will take more chances at hiring those lower wage workers. Hammer companies that hire illegal immigrants and the supply of lower skill workers stabilize. Combined, the effect will increase the median wage without increasing the minimum wage and at the same time increase employment.

You are assuming that savings in overhead costs would be passed on to the worker as a wage increase.

This assumption is wrong.

I agree with The E, employers will only increase wages if compelled to by either regulators or a scarcity of workers. I've been in business and have shares in a number of businesses which I expect to legally maximise profits on my behalf. You only incur additional expense like wage rises if you have to.

At the same time I'm puzzled as to why you would regard increasing the median wage as a positive thing, but not the minimum wage? Is it the old discredited theory that low minimum wages allow employers to hire more unskilled workers?

Daryl wrote:I agree with The E, employers will only increase wages if compelled to by either regulators or a scarcity of workers. I've been in business and have shares in a number of businesses which I expect to legally maximise profits on my behalf. You only incur additional expense like wage rises if you have to.

At the same time I'm puzzled as to why you would regard increasing the median wage as a positive thing, but not the minimum wage? Is it the old discredited theory that low minimum wages allow employers to hire more unskilled workers?

Part of the problem is I believe Peter phrased that badly I think he was referring to Mandated Minimum Wage.

There are a whole lot of things involved. Say there are 11 million illegal aliens in the US. More or less 3% of our population. Unemployment is currently at 4.9%.

Now I am betting that most of these folks are actually working. Much higher than the 62.7% participation rate according to BLS.gov estimates. I would figure it would be 80%. SWAG based on a bunch of things including foreign born participation rates and that it is arguably harder to collect welfare.

So if 80% of 11 million ~9 million workers disappear. How many are in the gray economy(not reported to the Government)? How many are working under a false tax id? <shrug>

Still the total number of people working as of December was 150 million. We just removed 9 million workers (some working below minimum wage). That works out to ~6% of the jobs currently held.

It would seem that basic supply and demand problem. 3% of the population or 6% of the works is really unimportant. If you want someone to work you have to pay the money. Same reason that one of less than a thousand people working in a major sport at the highest level are almost all in the .1%. There just aren't that many people who can do their job at a basic level much less a super star level.

As far as regulations that is a much more difficult to prove ... for me at least. Not a straight forward thing. But if it costs money to comply with regulations then that money has to come from somewhere.

Of course the danger of decreasing regulations and codes is then things like the difference fatalities between a 6.7 earthquake striking North Ridge, CA and Mexico City. A simplistic example.

T2M

[edit]PS I would disagree with the The E's. No surprise there.

No. Limiting illegal immigration will increase the Median wage. Lowering regulatory overhead will increase employment.

The E wrote:

PeterZ wrote:Reduce the regulatory cost of employment per employee and the median income will rise as the economy will take more chances at hiring those lower wage workers. Hammer companies that hire illegal immigrants and the supply of lower skill workers stabilize. Combined, the effect will increase the median wage without increasing the minimum wage and at the same time increase employment.

You are assuming that savings in overhead costs would be passed on to the worker as a wage increase.

This assumption is wrong.

Sorry, Daryl. The only studies that made such a claim about the minimum wage had serious problems with its data set. That study did not rely on payroll records but interview reports from businesses. So long as demand is elastic, the increase wages cannot be passed on to customers without reducing unit sales. Businesses get hit with both increased costs and lower sales, which further reduces profits.

The minimum wage sets artificial barriers to entry. The Median wage is a measure the sorts of jobs being created. In a robust economy functioning in a nation with effective border enforcement, the minimum wage is unnecessary as employers will compete for workers. If the economy falters, wages fall until the economy recovers.

Imposing a minimum wage but leaving borders uncontrolled simply increases the supply of illegal workers competing for those low skilled jobs. Pressures rise to hire illegally below that artificial minimum. When illegal workers are no longer a problem and regulatory overhead is reduced, the minimum wage becomes immaterial as the supply if labor is no longer artificially inflated while the economy expands.

Daryl wrote:

The E wrote:You are assuming that savings in overhead costs would be passed on to the worker as a wage increase.

This assumption is wrong.

I agree with The E, employers will only increase wages if compelled to by either regulators or a scarcity of workers. I've been in business and have shares in a number of businesses which I expect to legally maximise profits on my behalf. You only incur additional expense like wage rises if you have to.

At the same time I'm puzzled as to why you would regard increasing the median wage as a positive thing, but not the minimum wage? Is it the old discredited theory that low minimum wages allow employers to hire more unskilled workers?

Don't forget the outsourcing part of the equation. When companies can outsource jobs for pennies on the dollar, that also exerts downward pressure on the median wage. The elites couldn't of cared less when it was factory jobs. Now it is STEM jobs and at least some of them are starting to pay attention. Most still don't care and just want to increase the numbers of STEM visas. My guess is that they won't care until it is THEIR OWN JOB being affected.

That's part of the same issue with immigration, isn't it Biochem? We have elitists in both parties wanting to import second class resident workers. Much of the chamber of commerce wants to have cheap labor, legal or otherwise. We have those running political machines wanting to inflate the population with people dependent on them for their livelihood. Election fraud comes to mind. Anyone that doesn't believe that has never seen a Chicago election. To be fair, republicans run the same sorts of shenanigans where they are the only party in control.

I have no issues with immigration. I do have an serious issue with people wanting to come here yet won't learn how to integrate into our society. I also have serious issues with those work visas. If someone is allowed to work here, he should be allowed to immigrate here. Creating visas that let companies import workers completely dependent on that one company is tantamount to encouraging serfdom.

Sarah Hoyt came out with this piece on immigration and integration.


http://accordingtohoyt.com/?s=Immigration&submit=Search

biochem wrote:Don't forget the outsourcing part of the equation. When companies can outsource jobs for pennies on the dollar, that also exerts downward pressure on the median wage. The elites couldn't of cared less when it was factory jobs. Now it is STEM jobs and at least some of them are starting to pay attention. Most still don't care and just want to increase the numbers of STEM visas. My guess is that they won't care until it is THEIR OWN JOB being affected.

The true "minimum wage" is ZERO - as in, nobody wants to hire you. The statists and leftists do not seem to understand the self-evident truth that if they make it harder for businesses to hire employees, they will hire fewer of them. And their "solution" to the "job crisis" is....more regulation, more obstacles to business, more taxes....more government, when that is the cause of the problem.
---------------------
It is not within the power of any government to increase the value of unskilled labor, only to raise its cost. Nor is it within the power of any government to compel employers to pay unskilled workers some arbitrary "minimum wage", only to punish them for paying less.