“The Wages Are Too Damn Low”: Hiking The Minimum Wage Has Little Or No Adverse Effect On Employment
As I mentioned in the lunch link roundup, increasing the minimum wage is all the rage in lefty precincts today. DC is considering a raise, and Democrats generally are smelling a winning issue. (For a deeper look, Arindrajit Dube had a long piece on it over the weekend.)
Conventional economists tend to despise minimum wage laws, because they’re a form of price control, and that gives The Market a sad. Setting a minimum price of labor, according to Econ 101, should increase unemployment, because some people won’t have a marginal product above the wage floor. But as Paul Krugman pointed out in his column this morning, the evidence just doesn’t support this conclusion:
Still, even if international competition isn’t an issue, can we really help workers simply by legislating a higher wage? Doesn’t that violate the law of supply and demand? Won’t the market gods smite us with their invisible hand? The answer is that we have a lot of evidence on what happens when you raise the minimum wage. And the evidence is overwhelmingly positive: hiking the minimum wage has little or no adverse effect on employment, while significantly increasing workers’ earnings.
It’s important to understand how good this evidence is. Normally, economic analysis is handicapped by the absence of controlled experiments. For example, we can look at what happened to the U.S. economy after the Obama stimulus went into effect, but we can’t observe an alternative universe in which there was no stimulus, and compare the results.
When it comes to the minimum wage, however, we have a number of cases in which a state raised its own minimum wage while a neighboring state did not. If there were anything to the notion that minimum wage increases have big negative effects on employment, that result should show up in state-to-state comparisons. It doesn’t.
As others have noted, there’s good reason to believe that increased wages at large businesses would work out well for the businesses themselves. Businesses would both reduce turnover—the hiring process is expensive, and there is a great deal of churn at the bottom of the labor market—and increase their employees purchasing power, a hefty fraction of which would likely be spent at their own place of employment or somewhere similar. I’d guess that wages are held down out of class panic and a desire for increased profits for their own sake rather than some strict business reason.
Personally, if I had to choose, I would rather see more broad-based economic stimulus through fiscal and monetary action rather than a minimum wage hike. (Though I would still support one on its own merits.) But if they don’t like it, American elites have no one to blame for this but themselves. If the power structure can’t ensure full employment through normal channels, then demands for economic justice through more easily-understood channels will only become more common.
By: Ryan Cooper, Washington Monthly Political Animal, December 2, 2013
“The Could-Be Columns”: Why The Misogynist Media Are Trying To Create A Hillary Clinton-Elizabeth Warren-Caroline Kennedy Catfight
How terrifying is it to the political establishment that a woman might actually have a clear shot to becoming the next president?
Enough that the parlor game of the moment in Washington is to start listing the Other Women – that is, the scary females (“scary” being a function of “female” in this case) who might end up challenging Hillary Clinton in a Democratic primary. Or a Jell-o fight or mud wrestling match, to go by the absurd speculation in the media.
First, we have Massachusetts Democratic Sen. Elizabeth Warren, who for some reason is seen as Clinton’s dangerous threat from the left. Warren is a real rising star, to be sure, and arrived to the Senate with an already-elevated status, given her knowledge of financial regulation and consistent commitment to consumer rights and other liberal causes. She’s not showy; she’s smart and a solid workhorse –like the senator who pre-preceded her, Edward M. Kennedy. There’s nothing she has said or done to indicate she has her eye on the White House in 2016. Her former national finance chairman has told donors she is raising no cash for a 2016 run, which pretty much ends it there – you can’t run a presidential campaign without money. And Warren herself has told the Boston Globe “no, no, no no” in response to the question.
Ah, but even in politics, when a woman says no, some in the media think she means yes. We have The New Republic speculating about a possible Warren-Clinton showdown. And we have the Washington Post’s Richard Cohen, always up for a woman-bashing column, talking about how a Warren presidency would be, in his mind, even worse than an Obama presidency. At least Cohen has the journalistic integrity to note parenthetically that Warren has expressed no interest in the job.
Then we have Caroline Kennedy, whom Post blogger Jennifer Rubin suggests might also be up for a run, noting Kennedy’s deft start to her new job as ambassador to Japan. That – plus the Kennedy name and experience watching family members in politics – seems to be the only justification for such random speculation. And it’s absurd on its face. Kennedy is indeed deeply committed to public service, but she is a somewhat shy person who does not enjoy being the center of attention. It’s one of the reasons she did not run for the Senate in New York. The idea that she could stomach the nonstop attention and scrutiny of a presidential run is nonsense. She is gracious and diplomatic, which makes her a perfect pick for an ambassadorship – not a presidential candidate.
So why the could-be columns? Part of it is the natural tendency in the media to find someone – anyone – to create a conflict or fight where there currently exists none. Clinton is the clear early front-runner for the Democratic nomination, should she decide to run. Vice President Joe Biden might give her a challenge, if he decides to run. But that’s not enough for the Clinton-wary, who want to diminish her potential candidacy by reducing it to some kind of brewing girlfight. Clinton with a clear path to the nomination is infuriating to this group, and a potential challenge from a man only gives credibility to her as a candidate. Ah, but present her future as one where she has to kick Warren or Kennedy with her kitten heels and scratch out their eyes to be the Democratic nominee – now that’s a storyline misogynist America finds appealing. Fortunately, the three women in question aren’t agreeing to those roles.
By: Susan Milligan, U. S. News and World Report, December 3, 2013
“The Blurred Line Between Caricature And Reality”: Republicans Are Nothing If Not Predictable
It’s become a running joke: when Republican get bored with the latest manufactured outrage of the day, they turn to the Benghazi and IRS “scandals” as a standby. Indeed, it’s been widely assumed over the last several weeks that as the Affordable Care Act improves, GOP lawmakers would have no choice but to return to their favorite faux political controversies.
They are nothing if not predictable. Here’s Senate Minority Whip John Cornyn (R-Texas) yesterday:
“Since the terrible tragedy that took four American lives in Benghazi, we’ve had difficulty, to put it mildly, trying to get to the bottom of this,” the second-ranking Senate Republican said during a Google Hangout session he held while the Senate is on recess. ”Now the goal is to talk to the Benghazi survivors – people who were actually there who could tell the truth and expose what happened and hold the people responsible accountable. This has been a cover up from the very beginning.”
And here’s House Oversight Committee Chairman Darrell Issa (R-Calif.) soon after:
The House’s chief investigator says the FBI is stonewalling his inquiry into whether the agency and the Internal Revenue Service targeted conservative group True the Vote for special scrutiny, and Rep. Darrell E. Issa is now threatening subpoenas to pry loose the information from FBI Director James B. Comey Jr.
Mr. Issa, California Republican, and Rep. Jim Jordan, Ohio Republican, are leading the House Oversight and Government Reform Committee’s IRS inquiry. They also said the FBI is refusing to turn over any documents related to its own investigation into the IRS, which began in the days after an auditor’s report revealed the tax agency had improperly targeted tea party groups for special scrutiny.
The White House should probably consider this a good sign. Remember, as recently as last week, congressional Republicans were reluctant to talk about literally any issue other than the Affordable Care Act, afraid that any distraction from the dysfunctional website might let Democrats off the hook. Even the reaction to the “nuclear option” was muted because Republicans wanted all of the political world’s focus solely on health care – and nothing else.
And it now appears that phase is ending and far-right lawmakers are back to Benghazi and the IRS. If that isn’t affirmation of the White House’s health care initiative getting back on track, nothing is.
By: Steve Benen, The Maddow Blog, December 3, 2013
“$2,229.11 For Three Stitches?”: We Don’t Have To Wonder What The Unfettered Market In Health Care Produces, We’ve Been Living It
Twenty years ago I had my first knee surgery, after tearing some cartilage while skying for a thunderous dunk on the basketball court (or it might have been just falling backward while getting faked out on defense—who remembers the details?). Although I had insurance, I was responsible for a substantial copay, and I vividly recall the one item that stood out among the dozens on the bill. For the two steri-strips that covered an incision—tiny pieces of tape that even today cost about 20 cents retail, and which hospitals buy in bulk so surely cost them just a couple of pennies—I and my insurance company were charged $11, or $5.50 per strip. A miniscule amount in a five-figure bill, but it struck me as the most absurd, since it represented a markup of approximately 10,000 percent, if not more. More recently, I was getting some physical therapy for the same knee, and in what turned out to be a session that wasn’t covered by my insurance, a therapist put a piece of kinesio tape around my kneecap. The retail price for that length of tape is around 40 cents (though again, they buy it in bulk so it’s probably a quarter of that); and there was the therapist’s time to retrieve, cut, and apply the tape, which took about 60 seconds all told. Total tape charge: $75.
My experience is not at all uncommon, as an excellent piece in today’s New York Times explains. The article discusses things like people getting charged thousands of dollars to have a couple of stitches put on a finger, or my personal favorite, the $137 charge for an IV bag that costs the hospital one dollar. There are a number of reasons why they can get away with this, including the fact that nobody tells you what the charges are going to be before you’re treated, and the fact that information is diluted through the insurance system.
But since we’re now talking about what government is and isn’t capable of handling when it comes to health care, allow me to repeat something I’ve argued elsewhere: The government didn’t give us this kind of price-gouging, just like the government didn’t give us 50 million uninsured Americans. Nor did the government give us lifetime and yearly caps on coverage. Nor did the government give us now-outlawed “rescission,” in which your insurer cancels your coverage because you got sick. Nor did the government gave us denials for pre-existing conditions. You know what gave us all that? The free market. Government can certainly cause problems, but just about all the major reasons our health-care system is so expensive and serves so many people so poorly (or not at all) are the result of the free market.
Or more specifically, the health-care market, which is so different from other kinds of markets. The unique features of health care are what makes a far higher level of government involvement than exists in the markets for wristwatches or shoes necessary. If we don’t want to have a system that costs so much more than every other one in the world while giving us crappy results, then we’re just going to have to accept that. In other industrialized countries, the government says, “We can’t sustain a system in which an MRI costs $1,200. So an MRI is going to cost $300.” And guess what? The MRI manufacturers and the hospitals accommodate themselves to that reality, and not only do they manage to survive, but people still get MRIs when they need them.
If maintaining the ability of certain people to suck as much profits from the health-care system as possible is your highest value, you find that unacceptable. But if having a system that serves everyone, maximizes health, and is affordable rank higher for you than making sure there are hospital systems with 28 different executives pulling down salaries of over $1 million a year, you have to make a different choice.
And let’s be clear about this: what conservatives are arguing for is the maintenance of the status quo that gives us the $2,229.11 hospital charge for putting in three stitches. It was their devotion to the primacy of market freedom in health care that put us where we are now. When the government doesn’t work properly, by, say, making a terrible website that took months to fix, the answer is to make it work better. Because we don’t have to wonder whether the alternative is worse. We’ve been living it.
By: Paul Waldman, Contributing Editor, The American Prospect, December 3, 2013
“Will The GOP Ever Be Happy?”: No Matter The Facts, They Just Don’t Care If Healthcare.Gov Works Or Not
Healthcare.gov is well on its way to full stability, but Republicans refuse to acknowledge it. No matter the facts, the GOP is committed to the message that Obamacare has failed.
It wasn’t that long ago when Republicans were deeply concerned over the quality of the president’s healthcare website.
In a letter to Kathleen Sebelius, head of the Department of Health and Human Services, Rep. Darrell Issa and Sen. Lamar Alexander demanded answers for the massive glitches that attended the rollout of Healthcare.gov. “We are concerned by recent comments to the media that the system suffers from architectural problems that need design changes,” wrote the two GOP lawmakers, “We seek information about these problems as well as whether you still expect individuals to suffer a tax penalty if they do no purchase government-approved health insurance.”
Likewise, in a statement, Republican National Committee chairman Reince Priebus said that “Obamacare is collapsing under its own weight.” This was echoed by the Senate Republican Policy Committee, which called the website an “inexcusable train wreck” and wondered “how President Obama can tax uninsured Americans for not having something that they can’t purchase.”
The administration responded to all of this criticism—and more—with a promise that Healthcare.gov would work for the majority of users by December 1st. And it does. According to the administration, a five week “tech surge” has doubled the capacity of the online interface to the health care exchanges that form the core of the Affordable Care Act. As of this month, the website can handle 50,000 simultaneous users, for a total limit of 800,000 users per day. The site is functional more than ninety percent of the time, up from fifty-five percent of the time in October.
There is still a whole host of work to finish, especially on the back-end, where critical communications are made to insurers with regards to subsidies and eligibility. Overall, however, the White House has achieved more than 400 of the 600 fixes on its “punchcard” of repairs. Healthcare.gov is on the fast track to full stability, which will be a significant boost to the law and its prospects.
Given the extent to which Republicans were so concerned with the status of the website, you’d think they would greet this as good news, even as they continue to oppose the law. The message doesn’t have to be extensive. Something as simple as, “We still oppose the law, but we’re glad Americans haven’t been left in the cold,” would suffice.
Even that, however, is too generous for Republicans, who can’t concede any goodwill to the president’s health care law. “[The] website is least of Obamacare’s problems,” tweeted Sen. John Cornyn of Texas. “This isn’t just about a broken website, it’s about a fundamentally-flawed law,” wrote Michael Steel, a spokesperson for Speaker of the House John Boehner. And on ABC’s This Week, Oklahoma Senator Tom Cole said that “You never get a second chance to make a first impression, and the first impression here was terrible.”
The Republican complaints of two months ago were purely opportunistic. For them, it just doesn’t matter if Healthcare.gov is working, since Obamacare is destined to fail, reality be damned! At most, the broken website was useful fodder for attacks on the administration. Now that it’s made progress, the GOP will revert to its usual declarations that the Affordable Care Act is a hopeless disaster. Meanwhile, hundreds of thousands of Americans have gained access to health insurance thanks to the Medicaid expansion or the exchanges, and many more will join their ranks as the deadline for coverage approaches.
Republicans haven’t offered a response to this because, as of this moment, the party doesn’t have a response. Yes, there are conservative intellectuals with ideas for reform, but as an institution, the GOP has little to say about the constellation of problems in American health care. Even in their drive for repeal, Republicans failed to offer an alternative. At most, lawmakers like Bob Corker of Tennessee have tentatively called for “market-driven” reforms, like changes to the tax code, and allowing insurers to sell across state lines. Ironically, the Affordable Care Act allows for these changes, but that doesn’t seem to matter to the GOP.
It’s almost cliché to say that the Democratic Party is gambling its success on the Affordable Care Act. If it works, the party can point to a broad program that delivers needed benefits to millions of Americans. If it doesn’t, it’s hard to imagine how Democrats will re-earn the trust of a skeptical public, to say nothing of the fate of the uninsured and the broader consequences for liberalism.
In the same way, the Republican Party is gambling its fate on the failure of the law, with no attempt to grapple with the possibility of its success. What happens if Obamacare works as advertised? How do GOP leaders salvage a failed crusade? And more importantly, how do GOP voters react when the prospect of repeal is completely, unambiguously off the table?
By: Jamelle Bouie, The Daily Beast, December 2, 2013
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