Tuesday, June 28, 2011

What Kind Of Day Has It Been

International
  • Attackers stormed the Intercontinental Hotel in Kabul today--the hotel is popular with international visitors. Afghan security forces are fighting to retake the hotel; suicide bombers are believed to be among the attackers. At first blush, the attack reminds this Editor of the attacks in Mumbai in November 2008.
  • Expectedly and disappointingly, Lagarde it is. She begins by urging the Greek conservatives to accept the Socialists' austerity plan. The Christian Science Monitor explains the global reach of Greek debt default.
  • Libyan rebels continue to make slow but steady progress.
  • The Dutch moved a step closer to banning the ritual slaughter of animals required for production of Kosher and Halal meats. This move will assuredly be challenged before the European Court of Human Rights -- this, unlike the Burqa ban and the prohibition of crucifixes in Italian schools, will likely be overturned.

Domestic
  • Harold Koh, State Department Legal Adviser, testified before the Senate Foreign Relations Committee today on the Obama administration's view of the U.S. role within NATO's intervention in Libya vis-a-vis the War Powers Act. Robert Chesney summarizes it.
  • Jon Stewart does a good job of explaining Fox's success (and, to some extent, the conservative mindset).
  • Michele Bachmann wants to lower the minimum wage. No, I'm not kidding.


17 comments:

Colin said...

That's great news about Bachmann -- I only wish she would call for the abolishment of the minimum wage entirely. It's terrible economic policy, as evidenced by the fact that 79% of economists agree it raises unemployment among the young and unskilled.

I'm curious as to whether the editors, if they favor a minimum wage, also think unpaid internships should be illegal. Because it's totally incoherent to think that it should be permissible to sell one's labor for free but illegal to sell it for a wage less than the minimum specified by government.

As the New York Times famously editorialized -- in a rare moment of clarity -- the proper minimum wage should be $0.00.

Ben said...

Well, as moved as I am by your citation to a block quotation from a conservative blog that points to a list of numerous textbooks with no actual data . . . .

In general, yes, I think unpaid internships are exploitative.

Ben said...

Incidentally, I wonder which of the two alternatives to the minimum wage proposed by the famous New York Times op-ed you endorse: wage supplements for the poor or an enlarged earned income tax credit?

Colin said...

Erm, the link was to textbooks authored by Mankiw himself. I am guessing the cites for the data are presented there. Mankiw's textbook is widely used and he himself is a Harvard econ prof. Last I checked no one has accused himself of making stuff up.

That's interesting you find unpaid internships exploitative. I had an unpaid internship -- why would I voluntarily submit myself to be exploited?

I did it because while I was not given money, I was certainly compensated in the form of experience that then allowed me to get a paying job in a field I liked. Why would you want to prohibit me -- as I assume you would, given you favor a minimum wage and unpaid internships pay zilch -- from engaging in a voluntary relationship such as this?

As for your question, I think the EITC (which, incidentally, is a right-wing idea based on Milton Friedman's proposed negative income tax) is the superior method. Since that editorial was written the EITC has been increased three times. Rather than being abolished, however, the minimum wage is still with us and has also been increased.

Jason said...

To chime in on this issue. I would support altering the minimum wage so that it excludes employees under the age of 18, provided they are not the head of household. As to Mankiw's point, I wonder what is actually defined as "young and unskilled."

I tend to think unpaid internships are exploitative and creates barriers of entry for those lacking the means to offer their services uncompensated for an extended period of time.

Colin said...

I would support altering the minimum wage so that it excludes employees under the age of 18, provided they are not the head of household.

So if you are 18 and the head of a household you should be prohibited from selling your labor for less than $7.25? How does that help anyone? If I am 18 and the head of a household and a 17 year applies for the same job but is willing to work for $6/hour, who do you think has the better chance of getting the job?

I tend to think unpaid internships are exploitative and creates barriers of entry for those lacking the means to offer their services uncompensated for an extended period of time.

The unpaid internship I had was with a non-profit that didn't pay me because they couldn't. I worked in exchange for experience. I was able to do with because I had savings from previous summer jobs working fast food and at a factory and also lived quite cheaply (I think rent was only $300/mo or so). But because I saved and had access to money and others didn't then I should have been prevented from taking the internship? How does that make any sense? And again, how was I exploited? How is anyone who takes an unpaid internship exploited? Obviously they do it because they think they are getting something out of it.

Colin said...

Whoops, sorry, in my example I realized it is actually irrelevant if the 18 year old is the head of a household. So the better question is: why should a 17 year old be allowed to charge whatever price he/she wants for their labor, but the 18 year old can only do so at $7.25 or more, thus making them less attractive to employers relative to the 17 y/o?

Jason said...

Creating additional regulations would distort compensation between 17 and 18 year olds, but my overriding concern is ensuring people can make a living wage. That's why I support a minimum wage. Of course the current minimum wage doesn't represent a living wage, but that should be the goal. Does that distort the price of labor? Yes, but the distortion of an economic principle seems more agreeable to me then to have someone work for a salary that won't sustain them.

It's great that you were able to take an unpaid internship through what appears prudent fiscal planning, but not everyone has the same level of access of money.

Clearly there is a benefit to any work experience, paid or unpaid, but unpaid internships can make certain experiences unattainable for class inferior groups of people. My objection is not to you, as the individual, offering your services free of charge, but rather it's an objection to an institutional structure that does not allow for equal access.

And was this unpaid internship in DC? If so, what neighborhood at $300 a month rent? That's crazy.

Colin said...

Creating additional regulations would distort compensation between 17 and 18 year olds, but my overriding concern is ensuring people can make a living wage. That's why I support a minimum wage.

So you admit that the very regulations you propose will harm 18 year olds (and really, other young people who compete for the same jobs as a 17 year old) who will be placed at a competitive disadvantage, but then justify this by noting your concern for a living wage, which you then admit does not exist. I don't get this at all.

Of course the current minimum wage doesn't represent a living wage, but that should be the goal. Does that distort the price of labor? Yes, but the distortion of an economic principle seems more agreeable to me then to have someone work for a salary that won't sustain them.

What about pricing people out of the labor market? Does that agree with you? If I am an unskilled worker whose productivity is $7/hour, and a living wage is mandated of, say, $12/hour, then employers will not hire me. Your good intentions have made my labor incredibly unattractive. But if I could start off at a lower wage and then gain more skills I could then command a higher wage. But because minimum and living wages remove the bottom rungs of the economic ladder, that won't be a possiblity under your scenario. How does that help people?

To put this in less abstract terms, the book The Power of Productivity notes that in European countries such as France, where the minimum wage is €9.00/hour, grocery stores do not employ baggers. Rather than employing low productivity workers such as baggers at some minimal wage, they simply aren't employed at all. If the goal is helping people, especially the poor, how is this laudatory policy?

Also, your quote about someone working for a salary that won't sustain them makes no sense to me. If a salary won't sustain someone, why would they take it? That would be borderline suicidal by definition.

It's great that you were able to take an unpaid internship through what appears prudent fiscal planning, but not everyone has the same level of access of money. Clearly there is a benefit to any work experience, paid or unpaid, but unpaid internships can make certain experiences unattainable for class inferior groups of people. My objection is not to you, as the individual, offering your services free of charge, but rather it's an objection to an institutional structure that does not allow for equal access.

So, to clarify, do you think unpaid internships should be illegal? I am confused as to whether you simply find them distasteful or whether you think they should be outright banned. If you do not think they should be banned, how do you square this with your support for a minimum wage (as I can't understand why someone should be able to work for nothing but prohibited from working for, say, $5/hr)? If you do think they should be banned, why is it any of your business whether I want to work for free or not? Why should you come between a voluntary transaction that both sides think will make them better off?

And was this unpaid internship in DC?

It was not.

Jason said...

I never said it was a good idea, and all the reasons you cite are probably reasons it isn't policy.

As to your second point, I think you're talking out of both sides of your mouth. You would like to see people negotiate a price for their service without the floor a minimum wage supplies, and yet don't think people would take a job that paid less then they could live on.

So what happens in Washington, DC if there is no minimum wage? Let's say an individual takes a grocery bagger job at $6/hr. That individual gets fired because another individual will do the job for $5.75/hr. But here's the trouble, the hourly living wage in DC on average is $11.92 (source: http://www.livingwage.geog.psu.edu/states/11) or nearly double what that person is earning per hour. Suddenly we've triggered a race to the bottom. People are employed, but impoverished. I don't think that's a step forward, despite its capitalist purity. And so a minimum wage, though not a living wage prevents such a race to the bottom.

I'm not prepared to say unpaid internships should be illegal, but I maintain they are exploitative and create barriers for individuals to climb the socio-economic ladder more then they create rungs. I find them unsatisfactory, but I'm not convinced they should be banned.

There is a grey in this world where reasonable men and women find next best solutions that fail to adhere to any particular camps ideological/philosophical worldview and I think we're all better for it as no one holds a monopoly on ideas or providence.

Colin said...

I never said it was a good idea, and all the reasons you cite are probably reasons it isn't policy.

Wait, you said that you support the goal of a living wage and added that "the distortion of an economic principle seems more agreeable to me then to have someone work for a salary that won't sustain them" -- which seems like a reference to the living wage. If you don't support the living wage and think it is bad policy then at least you can appreciate my confusion.

As to your second point, I think you're talking out of both sides of your mouth. You would like to see people negotiate a price for their service without the floor a minimum wage supplies, and yet don't think people would take a job that paid less then they could live on.

There is no contradiction. Obviously people wouldn't take a job they can't live on. Who would? Why would anyone take a job that would result in their demise? It makes no sense. But that is no argument for a floor, because different people have different requirements. For someone with three kids, $5/hour isn't enough to live on and they will have to find something else. For a 16 year old that could provide some spending money, or -- combined with the income mom brings home -- help put food on the table and pay the rent.

So what happens in Washington, DC if there is no minimum wage? Let's say an individual takes a grocery bagger job at $6/hr. That individual gets fired because another individual will do the job for $5.75/hr. But here's the trouble, the hourly living wage in DC on average is $11.92 (source: http://www.livingwage.geog.psu.edu/states/11) or nearly double what that person is earning per hour. Suddenly we've triggered a race to the bottom. People are employed, but impoverished. I don't think that's a step forward, despite its capitalist purity. And so a minimum wage, though not a living wage prevents such a race to the bottom.

Why engage in theorizing when we can simply turn to reality? Hong Kong never had a minimum wage until just last year. A hellhole where workers made a pittance? No, an oasis of prosperity that workers have traditionally flocked to, not away from. This is just as we should expect, as under a free market for labor companies must compete for talent, which is a scarce resource just like any other. Or look at China more broadly, where labor scarcity has pushed up wages, particularly along the coasts. Indeed, the Boston Consulting Group notes that wages are increasing at such a rapid pace that the manufacturing costs in the US and China are expected to converge around 2015. The observable reality we see is that companies compete for talent which in turn pushes wages up, not down. The real world disproves this absurd theorizing of yours. It's the miracle of capitalism, which brings prosperity everywhere it is tried.

Colin said...

I'm not prepared to say unpaid internships should be illegal, but I maintain they are exploitative and create barriers for individuals to climb the socio-economic ladder more then they create rungs. I find them unsatisfactory, but I'm not convinced they should be banned.

So I was exploited? The non-profit that offered me a chance to build my resume exploited me? Where do you get this from? They don't create barriers, they remove them. Without the valuable experience I gained it would have been more difficult for me to find the job I wanted. If you think that they provide an unfair advantage, then do you also think cars are unfair? After all, I have been on an interview where I was asked straight up if I had access to a car to make sure I could get to work on time. Not everyone has access to a car just like not everyone can afford the unpaid internship.

There is a grey in this world where reasonable men and women find next best solutions that fail to adhere to any particular camps ideological/philosophical worldview and I think we're all better for it as no one holds a monopoly on ideas or providence.

This strikes me as an excuse for arbitrary and incoherent thinking that is ungoverned by principle and unmoored from the laws of economics.

Ben said...

Without the valuable experience I gained it would have been more difficult for me to find the job I wanted.

But that's precisely the problem--and precisely how unpaid internships build barriers to entry. We--the three of us in particular--are operating in an environment where to achieve an entry level position, experience in an internship (almost universally unpaid) is required. But if you're unable to afford such an internship--due to lack of family or spousal support, or reality--then despite your education level you are unable to work in the positions you desire and for which, nominally, your education prepares you. Thus, these fields are relegated to those with sufficient means to work for nothing for extended periods of time.

What's worse is that a whole economy has been built around this model. And it has become exploitative.

Colin said...

Ben, by your same rationale, college is a barrier to entry as getting hired without at least a BA is increasingly difficult in today's economy. Are colleges exploitative? Indeed, not only do colleges not pay you in exchange for the skills you gain, you have to pay them!

I'm also curious as to what your preferred solution is. Should unpaid internships be banned? What is your position?

Ben said...

Well, college is certainly a barrier to entry. I don't think anyone would dispute that. I would say that in general, colleges are not exploitative but there's a reasonable argument to be made that for-profit schools are exploitative, and that maybe some professional education programs are, as well.

No, I don't think unpaid internships should be banned. And I don't have some grand solution to their proliferation. I do however think that people should be paid a fair, living wage for their work.

I would like to make a note about something you said before, about the minimum wage. The minimum wage does not prohibit you from selling your labor for less than the minimum wage, as you said. Instead, it bars employers from paying you less than the minimum wage--these are not the same things, and as much as you'd like to conceive it as such, the minimum wage is not an intrusion on your individual liberty. You are perfectly free to go sell your labor for less than the minimum wage to any employer willing to break the law. I can't speak for your experience growing up, but I knew plenty of people in high school who did just that. If you do so, however, I urge you to report the income--it is taxable even if it's illegal.

Colin said...

Why are colleges not exploitative? Why would for-profits be more so? If a for-profit charges less than a non-profit for a BA, is it still exploitative? What is the rationale?

I do however think that people should be paid a fair, living wage for their work.

Really? So if my job is sweeping the sidewalk in Manhattan it should pay enough for me to live there? And what is "fair"? Who decides?

But I will do you one better: I think everyone should get paid enough to afford two homes, European vacations and an expensive car. But my wishes won't make it so. The only way to get there, however, is to raise worker productivity, not by government decree. After all, we can't consume more than we produce, and thus workers can't be paid more than the value of what they make.

Instead, it bars employers from paying you less than the minimum wage--these are not the same things, and as much as you'd like to conceive it as such, the minimum wage is not an intrusion on your individual liberty.

Are you kidding me? So if people are prohibited from buying what I am selling this is not an infringement on my liberty? By this rationale, if I open a store and people are prohibited from buying the products I sell, this is only an infringement on their liberty and not mine. Even while possibly technically correct, for all intents and purposes it is absolutely a restriction on me. It's legalese that doesn't pass a common sense test.

Colin said...

In addition, given that you do not think unpaid internships should be banned, why do you think employers should be allowed to offer unpaid work but not work that pays less than the minimum wage?