Washington Post Fact Checker Calls Out Obama’s “Minimum Wage Increase Doesn’t Cost Jobs” Claim

The Washington Post’s
Fact Checker
 called out President Obama for his recent
claim that there is “no solid evidence that a higher minimum wage
costs jobs.”  

Obama delivered the
questionable remarks at a
Center for American Progress-hosted event
in the nation’s
capital on Wednesday. His speech touched on the importance of
upholding Social Security and Medicare entitlements, the insiduous
threat of growing inequality, the 1 percent, and minimum wage
increases. 

The president applauded both New Jersey’s
voter-approved minimum wage raise
and the D.C. City Council’s

recently announced support
 for an increase in the city’s
minimum wage to $11.50/hour. He followed up with a
proclamation
of his own support:

I agree with those voters, and I’m going to keep pushing until
we get a higher minimum wage for hard-working Americans across the
entire country.  It will be good for our economy. It will be
good for our families.  

He then assured the audience that enacting such a policy would
not result in the unintended consequences for the poor that they
might have heard about:

Now, we all know the arguments that have been used against a
higher minimum wage.  Some say it actually hurts low-wage
workers — businesses will be less likely to hire them.  But
there’s no solid evidence that a higher minimum wage costs jobs,
and research shows it raises incomes for low-wage workers and
boosts short-term economic growth.  

The Post Fact Checker, which is a non-partisan blog
checking politicians’ claims for accuracy, said they approached the
president’s statement with caution:

The Fact Checker generally hesitates to wade into messy economic
debates [since economists have a hard time reaching a
consensus]…But here’s the president of the United States,
essentially saying that the debate has been settled. Is that really
the case?

The Fact Checker’s conclusion? No,
it’s not really the case

The White House, in support of the president’s comment, pointed
to a section of the 2013 Economic Report of the President (pages
120-121
). The report noted that most economists had once
believed an increase in the minimum wage would reduce employment
but that “the consensus view among economists has since
shifted as more evidence has accumulated.”  It also
cited a
2009 meta-analysis of 64 studies of the minimum wage
 that
found “no evidence of a meaningful adverse employment effect” of
the minimum wage.

The problem is that while there may be a new consensus emerging
on the left-leaning side of economic theory, there is an equally
fierce response from other economists.

In 2006, economists David Neumark and William Wascher
published a
survey of more than 100 studies
, and came to an opposite
conclusion, directly contradicting the results of the so-called New
Minimum Wage Research. They found that the majority of the studies
showed that “raising the minimum wage leads to economic distortions
and often has unintended adverse consequences for the employment
opportunities of low-skilled workers.”

Economist Arindrajit Dube and others came up with a new
approach in 2010
, looking at the impact in counties adjacent at
different states, that bolstered the findings of the new minimum
wage forces. But economists Jonathan Meer and Jeremy West this
yearfired
back with a study
 that found that minimum wage hikes
reduce net job growth because of the effect on expanding companies.
(In October, Dube responded that
their supposed job losses were occurring in the sectors without
minimum wage workers, which in turn prompted this
rebuttal
 by Meer and West.) And a 2011
study
 from economists at the London School of Economics
and the Central Bank of Turkey found higher minimum wages increased
unemployment.

In conclusion, the Fact Checker, said, “To flatly declare the
debate is over is misleading.  He did not quite say there was
no evidence–but he came close.” They awarded Obama two
“Pinocchios.”

The president also implied that higher wages wouldn’t result in
higher prices for consumers:

Others argue that if we raise the minimum wage, companies will
just pass those costs on to consumers. But a growing chorus of
businesses, small and large, argue differently. 

The Post did not tackle this claim, but it is also
dubious. At least one meta-analysis
on the price effects of the minimum wage found that a 10% minimum
wage increase in the US raises food prices by 4% and overall prices
by 0.4%. Other recent
research
found that a 10% minimum wage increase raised prices
by .7%.

Obama’s remarks come in light of
fast food strikes
for higher wages, multiple local and
state-wide minimum wage
increases across the country
, and his own support for the
congressional Democrats’
proposal
to raise the federal minimum wage to $10.10/hour and
peg it to inflation. 

Watch a Reason TV interview with a few of this week’s fast food
strikers in New York City:

from Hit & Run http://reason.com/blog/2013/12/06/washpost-fact-checker-calls-out-obamas-m
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Ikea's Spanish Servers Crash When 20,000 People Apply For 400 Jobs

A few years back, we were stunned when we reported that as a result of McDonalds’ first hiring day in 2011, the company retained the services of 62,000 very qualified line cooks and other minimum wage workers. What was stunning is that one million Americans applied for these jobs, or a 6.2% success rate, or just a fraction above the 5.8% admission rate at Harvard. Alas, as we speculated at the time, this was merely the first of many such indications of the historic mismatch between labor supply and demand, both domestically and globally. Sure enough, today we find an even more glaring example of just how unprecedented the New Normal demand for labor is in a world drowning with unemployment, courtesy of an NPR report according to which on Monday, Spain’s Ikea’s started taking applications for 400 jobs at a new megastore set to be opened near the Mediterranean coast town of Valencia.

As NPR says, “The company wasn’t prepared for what came next. Within 48 hours, more than 20,000 people had applied online for those 400 jobs.” It gets better, as Spain experienced its own mini Obamacare: the volume of applicant promptly “crashed Ikea’s computer servers in Spain.”

“We had an avalanche of applicants!” Ikea spokesman Rodrigo Sanchez told NPR in a phone interview. “With that quantity, our servers just didn’t have the capacity. They collapsed. After 48 hours, we had to temporarily close the job application process. We’re working on a solution, to reopen the as soon as possible.”

And since the analogies to Obamacare never end, one has no idea how many additional applicants would have tried to get a job had the servers continued to run:

… that’s factoring in only the applicants in the first 48 hours, who managed to apply online before Ikea’s servers crashed. Once Ikea gets its servers back up and running, the job application window will still stay open until Dec. 31, allowing potentially tens of thousands more job seekers to file applications, Sanchez said.

 

“I feel lucky to have a job. Ikea is a great company. In this case we have 20,000 initial people who want to work with us,” he said. “But we know we’re in this situation at least in part because of the state of the Spanish economy.”

Why the deluge of applicants? Simple: Spain’s record high unemployment rate of 26.7% is the second highest in the eurozone, matched only by Greece’s 27.3%. What’s worse: Spain’s youth unemployment is also a record high 57.4%: nearly two out of every three people under 25 have no job. But that’s ok: according to the Spanish prime minister, Spain’s economy is growing and the recovery is so bright everyone’s ECB rehypothecated shades will be made available shortly (together with the latest batch of Spiderman towels).

In the meantime, it is three times more difficult to get a minimum wage job at Ikea in Spain than it is to get into Harvard.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/hUggJK9-lgs/story01.htm Tyler Durden

Ikea’s Spanish Servers Crash When 20,000 People Apply For 400 Jobs

A few years back, we were stunned when we reported that as a result of McDonalds’ first hiring day in 2011, the company retained the services of 62,000 very qualified line cooks and other minimum wage workers. What was stunning is that one million Americans applied for these jobs, or a 6.2% success rate, or just a fraction above the 5.8% admission rate at Harvard. Alas, as we speculated at the time, this was merely the first of many such indications of the historic mismatch between labor supply and demand, both domestically and globally. Sure enough, today we find an even more glaring example of just how unprecedented the New Normal demand for labor is in a world drowning with unemployment, courtesy of an NPR report according to which on Monday, Spain’s Ikea’s started taking applications for 400 jobs at a new megastore set to be opened near the Mediterranean coast town of Valencia.

As NPR says, “The company wasn’t prepared for what came next. Within 48 hours, more than 20,000 people had applied online for those 400 jobs.” It gets better, as Spain experienced its own mini Obamacare: the volume of applicant promptly “crashed Ikea’s computer servers in Spain.”

“We had an avalanche of applicants!” Ikea spokesman Rodrigo Sanchez told NPR in a phone interview. “With that quantity, our servers just didn’t have the capacity. They collapsed. After 48 hours, we had to temporarily close the job application process. We’re working on a solution, to reopen the as soon as possible.”

And since the analogies to Obamacare never end, one has no idea how many additional applicants would have tried to get a job had the servers continued to run:

… that’s factoring in only the applicants in the first 48 hours, who managed to apply online before Ikea’s servers crashed. Once Ikea gets its servers back up and running, the job application window will still stay open until Dec. 31, allowing potentially tens of thousands more job seekers to file applications, Sanchez said.

 

“I feel lucky to have a job. Ikea is a great company. In this case we have 20,000 initial people who want to work with us,” he said. “But we know we’re in this situation at least in part because of the state of the Spanish economy.”

Why the deluge of applicants? Simple: Spain’s record high unemployment rate of 26.7% is the second highest in the eurozone, matched only by Greece’s 27.3%. What’s worse: Spain’s youth unemployment is also a record high 57.4%: nearly two out of every three people under 25 have no job. But that’s ok: according to the Spanish prime minister, Spain’s economy is growing and the recovery is so bright everyone’s ECB rehypothecated shades will be made available shortly (together with the latest batch of Spiderman towels).

In the meantime, it is three times more difficult to get a minimum wage job at Ikea in Spain than it is to get into Harvard.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/hUggJK9-lgs/story01.htm Tyler Durden

Why 97 Percent of Federal Drug Offenders Plead Guilty

A
couple of years ago The New York Times noted
that the percentage of criminal cases ending in plea bargains has
increased during the last few decades as mandatory minimum
sentencing laws have raised the potential penalty for going to
trial. A
new report
from Human Rights Watch highlights the tremendous
leverage that such laws give federal prosecutors in negotiating
plea deals with drug offenders. Under Title 21, Section 841(b)(1),
for example, prosecutors have complete discretion in deciding
whether to mention prior felony convictions in connection with a
drug offender’s sentencing, which can have a jaw-dropping impact on
the penalty he receives:

If a prosecutor decides to notify the court of one prior
conviction, the defendant’s sentence will be doubled. If the
prosecutor decides to notify the court of two prior convictions for
a defendant facing a 10-year mandatory minimum sentence on the
current offense, the sentence increases to life.

That is what happened to Sandra Avery, who in 2005 was
arrested for possessing 50 grams of crack cocaine—less than two
ounces—with intent to deliver. That amount alone triggered a
10-year mandatory minimum sentence, and that is the penalty she
would have received if she had pleaded guilty. Instead she went to
trial, was convicted (as are 90 percent of federal drug offenders
who insist on their right to trial), and received a life sentence
after the prosecution called the court’s attention to Avery’s three
prior convictions in Florida for possessing small amounts of crack.
The crack involved in those earlier offenses was for personal use,
and it was worth less than $100 all together. “
Among
defendants who were eligible for a sentencing enhancement because
of 
prior convictions” in 2012, Human Rights Watch
found, “those who went to trial were 8.4 times more likely to have
the 
enhancement applied than those who pled
guilty.”

Another powerful source of prosecutorial leverage is Title
18, Section 924(c), which prescribes mandatory minimums for
possessing a gun in connection with a drug offense. The first such
offense triggers a five-year sentence, each additional instance
triggers a 25-year sentence, and the sentences must be served
consecutively. That is how
Weldon Angelos
ended up with a 55-year mandatory minimum
sentence for three small-time marijuana sales during which he
possessed a gun, even though he never threatened or hurt anyone.
Before Angelos was convicted and received what may well amount to a
life sentence, prosecutors offered him a plea deal that would have
resulted in 40 fewer years behind bars. “
Among drug
defendants with a weapon involved in their offense,” Human Rights
Watch reports, “those who went to 
trial were 2.5
times more likely to receive consecutive sentences for §924(c)
charges 
than those who pled guilty.”

The impact of such disparate treatment is dramatic:

In 2012 the average sentence of federal
drug offenders convicted after trial was three times higher
(16 
years) than that received after a guilty plea
(5 years and 4 months)….
Among first-time drug
defendants facing mandatory minimum sentences who
had 
the same offense level and no weapon involved
in their offense, those who went to 
trial had
almost twice the sentence length of those who pled guilty (117.6
months 
versus 59.5 months).

Prosecutors have always offered lenience in exchange for
guilty pleas; that is what makes such arrangements possible. But
the huge differences in punishment documented by Human Rights Watch
make demanding a trial so risky that almost no one chooses that
option. “Only three percent of federal drug defendants go to
trial,” the report notes. “P
lea agreements, once
a choice to consider, have for all intents
and 
purposes become an offer drug defendants
cannot afford to refuse.”

In the July 2011 issue of Reason, Timothy
Lynch explained the
pernicious impact of plea bargaining, noting that the popular
understanding of American justice “is wildly off the mark” because
only a small percentage of cases actually go to trial.

from Hit & Run http://reason.com/blog/2013/12/06/why-97-percent-of-federal-drug-offenders
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Obamacare's Hidden Tax on Your Health Insurance

Healthcare.govOn November 29, as most
Americans staggered through a tryptophan-induced haze, the federal
government published
final rules
(PDF) for the Health Insurance Providers Fee—or
Health Insurance Tax, to be more honest. It’s a strange fee; one
for which the amount to be collected is predetermined, and then
parceled out among each “covered entity” that charges premiums for
health coverage, proportionate to the insurer’s share of net
premiums. Which is to say, it’s a tax that hits individuals, and
small-to-medium-sized businesses that have to pool risks, but
explicitly excludes the sort of “self-insured plan” offered by
large employers. Unless you work for a large company that
self-insures, you can expect the fee to be passed on and to add a
couple of percent to the cost of your health coverage.

Health Insurance TaxHow much the tax will add to your bill is a bit
of a guessing game, since the government has already decided how
much it will collect, but the size of the market is a bit up in the
air in the age of crashing government Websites and legally required
policy cancellations. Buried on page 832 (yes, really) of the
Patient
Protection and Affordable Care Act
(PDF) is Section 9010(e),
which announces, bluntly, that the IRS will collect:

  • $8 billion in 2014
  • $11.3 billion in 2015
  • $11.3 billion in 2016
  • $13.9 billion in 2017
  • $14.3 billion in 2018

After that, “the applicable amount shall be the applicable
amount for the preceding calendar year increased by the rate of
premium growth.”

It’s good to have confidence in how much revenue you’ll collect,
isn’t it? I’ll bet the health insurance providers who will be
passing this tax on to their customers wish they had the same
confidence.

In fact, the new tax is enough of a concern that insurers, like
Aetna, are
distributing brochures
(PDF) explaining why premiums are
subject to a somewhat unpredictable new levy. “Because the new
federal fee will impact the cost of plans going forward,” cautions
Aetna, “we feel it’s important for you to understand this fee. By
doing so, you can better anticipate and plan for the expected
impacts.”

How much will the new tax add to the average health coverage
bill? The Heritage Foundation’s David R. Burton
says
it “will increase individual and small group health
insurance premiums by an additional 2–3 percent.”

Douglas Holtz-Eakin, president of the American Action Forum and
former director of the Congressional Budget Office, performed

detailed calculations of the costs Obamacare is likely to inflict
on health care
, and
predicts
the “anticipated impact is as much as 3 percent or
nearly $5,000 per family over a decade.”

When the Obama administration promised us cost control on health
care, we should have realized that meant upwards.

from Hit & Run http://reason.com/blog/2013/12/06/obamacares-hidden-tax-on-your-health-ins
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Obamacare’s Hidden Tax on Your Health Insurance

Healthcare.govOn November 29, as most
Americans staggered through a tryptophan-induced haze, the federal
government published
final rules
(PDF) for the Health Insurance Providers Fee—or
Health Insurance Tax, to be more honest. It’s a strange fee; one
for which the amount to be collected is predetermined, and then
parceled out among each “covered entity” that charges premiums for
health coverage, proportionate to the insurer’s share of net
premiums. Which is to say, it’s a tax that hits individuals, and
small-to-medium-sized businesses that have to pool risks, but
explicitly excludes the sort of “self-insured plan” offered by
large employers. Unless you work for a large company that
self-insures, you can expect the fee to be passed on and to add a
couple of percent to the cost of your health coverage.

Health Insurance TaxHow much the tax will add to your bill is a bit
of a guessing game, since the government has already decided how
much it will collect, but the size of the market is a bit up in the
air in the age of crashing government Websites and legally required
policy cancellations. Buried on page 832 (yes, really) of the
Patient
Protection and Affordable Care Act
(PDF) is Section 9010(e),
which announces, bluntly, that the IRS will collect:

  • $8 billion in 2014
  • $11.3 billion in 2015
  • $11.3 billion in 2016
  • $13.9 billion in 2017
  • $14.3 billion in 2018

After that, “the applicable amount shall be the applicable
amount for the preceding calendar year increased by the rate of
premium growth.”

It’s good to have confidence in how much revenue you’ll collect,
isn’t it? I’ll bet the health insurance providers who will be
passing this tax on to their customers wish they had the same
confidence.

In fact, the new tax is enough of a concern that insurers, like
Aetna, are
distributing brochures
(PDF) explaining why premiums are
subject to a somewhat unpredictable new levy. “Because the new
federal fee will impact the cost of plans going forward,” cautions
Aetna, “we feel it’s important for you to understand this fee. By
doing so, you can better anticipate and plan for the expected
impacts.”

How much will the new tax add to the average health coverage
bill? The Heritage Foundation’s David R. Burton
says
it “will increase individual and small group health
insurance premiums by an additional 2–3 percent.”

Douglas Holtz-Eakin, president of the American Action Forum and
former director of the Congressional Budget Office, performed

detailed calculations of the costs Obamacare is likely to inflict
on health care
, and
predicts
the “anticipated impact is as much as 3 percent or
nearly $5,000 per family over a decade.”

When the Obama administration promised us cost control on health
care, we should have realized that meant upwards.

from Hit & Run http://reason.com/blog/2013/12/06/obamacares-hidden-tax-on-your-health-ins
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College and Pro Football: A Massive Waste of Taxpayer Dollars

My new col at Time.com is about
the huge amounts of public dollars that are shoveled at college and
pro football.

As someone who enjoys following both levels of competition, it
pisses me off that people who never bought a ticket or even watched
a game are on the hook for something that is in no way a core
function of government.

Here’s the start of the col:

As we enter the drama-filled final week of the regular college
football season and the final month of the National Football
League’s schedule, forget about GM and Chrysler, Solyndra, or even
cowboy poetry readings. Fact is, nothing is more profitable, more
popular, and more on the public teat than good old American
football. That’s right. You, dear taxpayer, are footing the
bill for football through an outrageous series of giveaways to
billionaire team owners and public universities that put pigskin
before sheepskin.

It’s just not right when governments shovel tax dollars at
favored companies or special interests, even when those firms are
called, say, the Minnesota Vikings or the Scarlet Knights of
Rutgers University. …

Especially in an age of busted government budgets, even the most
rabid sports fan should agree that it’s an outrage that the
highest-paid public employee in
a majority of states
 is a college football coach (in
another 13, it’s a basketball coach).


Read the whole thing

And here’s hoping that Ohio State murderlizes Michigan State in
the Big 10 champeenship game.

from Hit & Run http://reason.com/blog/2013/12/06/college-and-pro-football-is-a-massive-wa
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6 Things To Ponder: Bulls, Bears, Valuations & Stupidity

Submitted by Lance Roberts of STA Wealth Management,

 


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/Oa78cOTMv8o/story01.htm Tyler Durden

6 Things To Ponder: Bulls, Bears, Valuations & Stupidity

Submitted by Lance Roberts of STA Wealth Management,

 


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/Oa78cOTMv8o/story01.htm Tyler Durden