The Blast will be on hiatus for Thanksgiving and will return either Sunday or Monday. Enjoy the holiday. Hopefully if you are having a turkey for dinner that doesn't mean that a Republican Presidential candidate will be joining your family at the table.
AROUND NEW HAMPSHIRE
1. Odds & Ends
Now it’s the ‘Holiday Season of Trump’
from New Hampshire Primary Source, by John DiStaso, wmur.com, November 25, 2015
IT’S TRUMP, TRUMP AND MORE TRUMP. So the “Summer of Trump” has become the “Autumn of Trump." December is around the corner, and then – finally – it will be decision time.
Can Trump maintain his lead going into the final two months of the primary campaign? A top state pollster, Andrew Smith of the University of New Hampshire Survey Center, doesn’t see why not.
While many other analysts are beginning to predict final results based on current polling, Smith is holding fast to the truism that New Hampshire voters make their final decisions late – really late – in the campaign. The current polling, he said, is still being looked at as a “political side show” by many prospective voters.
Other campaigns are holding out hope that Trump will finally be vulnerable when voters get down to the hard decision of, as Smith puts it, “actually voting for a president.” He of course meant a nominee.
The latest poll, released on Monday from Suffolk University for the Boston Globe, shows Trump’s lead as strong as ever, as Ben Carson fades and Marco Rubio jumps up to the head of the non-Trump pack.
Trump leads with 22 percent, followed by Rubio at 11 percent; Carson at 10 percent; Ted Cruz and John Kasich tied at 9 percent each; and Jeb Bush at 8 percent. Carly Fiorina has fallen back to 4 percent, where she is tied with Chris Christie, who, despite constant campaigning in New Hampshire, has yet to show the breakthrough he continues to predict.
Rand Paul, meanwhile, sits at 3 percent; Mike Huckabee at 1 percent; and Lindsey Graham and George Pataki at .4 (four-tenths of a percentage point) percent each.
Suffolk University added Mitt Romney to the list, just for kicks, apparently -- and it changed everything. If Romney was a candidate, he would be the leader with 31 percent. Trump’s support would drop to 15 percent and no one else would draw more than 7 percent (Cruz).
The terrorist attacks in Paris are playing right into Trump’s wheelhouse, Smith said.
In our early October WMUR Granite State Poll, drug abuse was rated the top issue facing the state. It was the first time in eight years that jobs and the economy did not lead in that category.
Smith believes that the next poll conducted by the survey center will show the threat of terrorism as the top issue.
If so, it will mirror the Suffolk University poll, which asked for the most important issue facing the country (as opposed to the state). It showed terrorism and international security leading by far, named by 42 percent, with jobs and the economy at 18 percent and illegal immigration at 12 percent. The drug abuse and opiod epidemic was at barely 2 percent.
“People often name the most important issue based mainly on what they see on television, not something they deal with themselves on a daily basis,” Smith said.
But in this case, people believe the threat is real, and personal. And they feel that Trump is the best prepared to deal with it.
A separate poll Monday, a national survey, showed that among likely Republican voters Americans who consider terrorism the top issue, Trump was the favorite of an impressive 42 percent.
Smith said the terrorism threat is keeping Trump in the top spot because of his “tough guy” approach.
And overall, he said, “I am a little surprised that he has managed to stay up, but he is tapping into the same vein that Pat Buchanan did in 1996. He is for the ‘little guy,’ and he is even using the term ‘silent majority,’” as Richard Nixon did.
“His message continues to resonate that regular folks are being ignored. And saying things that sound inflammatory and not politically correct only increases his support,” Smith said. “He is expressing the anger that many people feel at the government.”
“He’s the alpha dog on the debate stage,” Smith said. “He even tells other candidates to shush and they actually defer to him. It’s just amazing to watch.”
Smith said there’s still an eternity to go before the primary, at least in terms of voters making up their minds. He predicted that by mid-December, 75 percent of New Hampshire voters still will not have a final decision on who they will vote for.
Still, he said, Trump could be the first protest candidate to win the primary since Buchanan’s victory – by a single percentage point – over Bob Dole and Lamar Alexander in 1996. Smith said Buchanan pulled it off with strong editorial support by the New Hampshire Union Leader, “and Trump is getting the equivalent favorable news coverage in the national press.”
Trump is not campaigning in the Granite State in the traditional, retail-oriented “New Hampshire way.” He comes in for a big rally, and leaves. His next one is scheduled for Dec. 1 "north of Concord," campaign manager Corey Lewandowski told us.
And it’s working well.
Smith does not expect candidates who are campaigning continually in New Hampshire, but with little money for advertising, to make much headway.
“We have created a myth about the importance of grassroots campaigning in New Hampshire,” he contended. “The last to do that was Gary Hart in 1984. Since then we’ve had people like Chris Dodd and Jon Huntsman focusing on New Hampshire almost all the time, but not getting anywhere.”
Of course, Bill Clinton in 1992 and John McCain in 2000 and 2008 spent a huge amount of time in New Hampshire, and it paid off for them..
Smith predicted little change in New Hampshire and national polling through December and the holiday season – or even in the early part of January.
“We will see some of the other candidates bump up and down, but we’re still not in the position in the campaign where people are deciding who to vote for,” he said. “I think that after the holidays, we will see a couple of candidates drop out.
“It’s just a fact that history shows that 35 percent of 45 percent of the voters make their decision in the last three days and more than half are really uncommitted until they actually are about to go into the voting booth,” Smith said.
So, while there is plenty of time for other candidates to make moves, there is also plenty of time for Trump to solidify his support in New Hampshire, where an outright, decisive win could well send him on his way to the nomination.
...SEIU: LOCAL 1984 VS. INTERNATIONAL. The local chapter of the Service Employees International Union last week parted ways with its international leadership and backed Bernie Sanders for president, saying he “has a long history of fighting for working people.”
The New Hampshire local, also known as the State Employees Association, made the decision following a meeting of its board of directors. The local says it represents 11,000 workers in New Hampshire, making it the second largest labor organization in the state.
“The announcement adds major momentum to Sen. Sanders’ campaign, and demonstrates the depth of grassroots support for his message,” the Sanders campaign said.
“No matter what happens inside the Beltway, this news shows without a doubt that the passions of working families are clearly with Bernie,” state campaign director Julia Barnes said.
The SEIU international backed Clinton two days before the New Hampshire local endorsed Sanders, saying, “Working people need a president who can fight, deliver, and win for their growing movement to build a better future for their families.”
Following the local’s endorsement of Sanders, the international issued a diplomatic statement to New Hampshire Primary Source:
“SEIU respects the democratic process and decision of SEIU Local 1984, which has an affiliate agreement with SEIU that allows it to make its own endorsement. SEIU appreciates the participation and leadership of SEIU members in New Hampshire who support Sen. Sanders.
“Together SEIU and Local 1984 will engage in a respectful manner during the New Hampshire primary season. We will both work to advance the interests of the hard-working members who are part of the growing movement to raise wages and rebalance our economy,” the international said.
...QUICK HITS:
TUCKER STILL CONSIDERING CONGRESSIONAL RUN. State Rep. Pam Tucker continues to weigh a run for the 1st District U.S. House seat. Unlike announced candidates Dan Innis, a Republican, and Democrats Carol Shea-Porter and Shawn O’Connor, Tucker told Politico this week she considers current U.S. Rep. Frank Guinta “a nice guy” and won’t criticize him.
SHEA-PORTER FOR HILLARY. Former U.S. Rep. Carol Shea-Porter, by the way, endorsed Hillary Clinton in the Democratic presidential primary campaign, writing in an opinion piece in the Portsmouth Herald that Clinton will defend the Affordable Care Act “and stand up for American families.” Shea-Porter endorsed Barack Obama over Clinton in 2008.
2. Insurance Companies and Substance Abuse Coverage in NH
Insurance department to examine substance abuse coverage
by the Associated Press, nh1.com, November 25, 2015
CONCORD — New Hampshire's Insurance Department is examining whether insurance companies are appropriately covering substance abuse services as required by law.
The probe comes as New Hampshire seeks to expand treatment and recovery services amid a heroin and opioid crisis that's claimed more than 500 lives in two years. The president's health care overhaul law requires insurance companies to provide equal coverage for addiction treatment as they do for physical health.
But some providers and advocates say companies are denying coverage for routine treatment. The investigation will look at coverage from Jan. 1 to Sept. 30, 2015, and the insurance department hopes to release a preliminary report by this coming January. The department has the power to order companies violating the law to correct their actions, pay penalties or leave the state.
3. Protecting NH's Water
Thanksgiving Gratitude in NH on Clean Water
by Mike Clifford, publicnewsservice.org, November 25, 2015
CONCORD, N.H. - Plenty of Granite Staters make a living in the wildlife recreation industry, and some say a vote earlier this month on the Clean Water Act is worthy of Thanksgiving gratitude.
Ron Sowa, a licensed New Hampshire fishing guide, said his business depends on clean water. A 2011 study from the U.S. Fish and Wildlife Service found that outdoor recreation is a booming business, he said, generating more than $500 million in economic impact for New Hampshire "Including $209 million just on the fishing and freshwater fishing.
"It's very important to New Hampshire," Sowa said, "small businesses and large businesses, actually."
Opponents of the act say they are fighting to prevent regulations from applying to every stream and ditch. Sowa credited U.S. Sen. Jeanne Shaheen, D-N.H., for her vote to block Senate Bill 1140, which would have forced the Obama administration to withdraw new federal rules to protect smaller streams.
Eric Orff, a state wildlife scientist for the National Wildlife Federation, said the fight is far from over, since Republicans were just a few votes short of passing the measure and overcoming the Senate filibuster rule. He said this is an important time for those who care about clean water to stand up and be counted.
"This brings protection for the smaller streams, the ones that really are important for our native Eastern brook trout," Orff said. "So, coming up on Thanksgiving, it's certainly worth a thank you to our senator, Sen. Shaheen, for helping to restore the Clean Water Act."
Orff said you don't have to fish to be grateful, because 38 percent of people in the Granite State get their drinking water from sources that are fed by small rivers and streams.
Details of SB 1140 are online at congress.gov
4. TinFoil Hatter for Trump
by William Tucker, miscellanyblue.com, NOvember 25, 2015
State Rep. Al Baldasaro is one of Donald Trump’s most outspoken supporters. The Londonderry Republican, himself no stranger to controversy, had a front row seat for Trump’s rally in Worcester last week and made a cameo appearance. Chris Caesar was on hand to capture the action:
Near the end, Trump did single out one man in the crowd as a winner: New Hampshire State Representative Al Baldasaro, who sat in the front row and helped the GOP front-runner for president publicly call for someone’s death without having to say the words himself. The candidate called Sgt. Bowe Bergdahl — a soldier who was captured in Afghanistan and later rescued after allegedly fleeing duty — a “dirty rotten traitor” and a “bum,” but let Baldasaro take the money shot.“Now in the old days … what do we do with Sgt. Bergdahl 50 years ago?” He asked of the former Marine. Baldasaro gleefully mimics an execution shot to the head, to major cheers from the crowd.“That’s right!” Trump said. “Boom, boom! Great veteran. Boom. He’s gone. He’s gone.”
AND NATIONALLY
5. Blaming-the-Victim Myths
10 Poverty Myths, Busted
by Erika Eichelberger, motherjones.com, November 14. 2015
1. Single moms are the problem. Only 9 percent of low-income, urban moms have been single throughout their child's first five years. Thirty-five percent were married to, or in a relationship with, the child's father for that entire time.*
2. Absent dads are the problem. Sixty percent of low-income dads see at least one of their children daily. Another 16 percent see their children weekly.*
3. Black dads are the problem. Among men who don't live with their children,black fathers are more likely than white or Hispanic dads to have a daily presence in their kids' lives.
4. Poor people are lazy. In 2004, there was at least one adult with a job in 60 percent of families on food stamps that had both kids and a nondisabled, working-age adult.
5. If you're not officially poor, you're doing okay. The federal poverty line for a family of two parents and two children in 2012 was $23,283. Basic needs cost at least twice that in 615 of America's cities and regions.
6. Go to college, get out of poverty. In 2012, about 1.1 million people who made less than $25,000 a year, worked full time, and were heads of household had a bachelor's degree.**
7. We're winning the war on poverty. The number of households with children living on less than $2 a day per person has grown 160 percent since 1996, to 1.65 million families in 2011.
8. The days of old ladies eating cat food are over. The share of elderly single women living in extreme poverty jumped 31 percent from 2011 to 2012.
9. The homeless are drunk street people. One in 45 kids in the United States experiences homelessness each year. In New York City alone, 22,000 children are homeless.
10. Handouts are bankrupting us. In 2012, total welfare funding was 0.47 percent of the federal budget.
*Source: Analysis by Dr. Laura Tach at Cornell University.
**Source: Census
6. Early Education
Within Reach
by CAP Action War Room, thinkprogress.org, November 17, 2015
The New Campaign For Quality Early Education For Working Families
From strollers to diapers, having a child is expensive. And it turns out it’s only getting more expensive: from 2000 to 2012, child care costs for a typical middle class family skyrocketed by 30 percent. Over the same period, wages stagnated further squeezing middle class families. Despite the fact that child care costs are placing an increasingly large burden on the budgets of working families, there has been little forward movement to establish a public solution. That’s why today, the Center for American Progress launched WithinReach, a campaign to put high-quality child care and pre-k within reach for working families.
Child care has often been dismissed as solely a women’s issue and overlooked in the national political conversation. But high-quality child care and pre-k is good for everyone, not just women. It gets children prepared for school, gives families a fair shot to get ahead, and allows parents to fully participate in the workforce, thereby strengthening the whole economy. Here are a few more facts explaining why:
Access to early education is essential in giving children a fair shot:
- 90 percent of brain development happens before age 5, but many families are forced to sacrifice high-quality early education for a paycheck.
- Children who do participate in high-quality pre-k programs gain up to one year of additional learning.
Affordable child care enables parents to stay in the work force, and helps working families get ahead, not just get by:
- From 2000 to 2012, child care costs for a typical middle class family grew by 30 percent. Today, the average annual child care costs for an infant and a four year old is $17,755.
- 65 percent of American children under 6 have both parents in the workforce, and 64 percent of U.S. women with children under age 6 are in the workforce.
- In all 50 states, child care costs more than median rent. In 31 states and DC, it costs more than college. Find out how child care costs add up in your state with thisinteractive map.
Investment in high-quality child care and early education benefits the entire economy:
- Every $1 invested in early childhood education delivers $7 in public benefits.
- Equal access to high-quality child care and pre-k would increase GDP by $551 billion.
- Quality care and adequate wages for child care workers go hand in hand—one can’t exist without the other.
At the campaign’s launch this morning Sen. Shaheen (D-NH) summed up the importance of the issue, “This is a place where the economic and the moral arguments are the same.” Unfortunately, right now our policies are out-of-step with the realities of American families. The majority of American children under 6 have both parents in the workforce, which means parents are often forced to choose between their child’s care and a paycheck. But there are policies that could help put early education within reach. Here are a couple essential proposals from CAP:
High-quality child care tax credit: The high-quality child care tax credit would help low- and middle-income families afford child care by providing a new tax credit to families that make up to four times the federal poverty level.
- The credit would be contingent on quality standards from providers that could be phased in over time. The credit also builds in higher wages for child care workers, meaning child care workers would make an average of $16 an hour./li>
- Families would pay 2-12 percent of their income as a co-payment to the provider. And the credit would be paid in real time on a monthly basis so families do not have to pay out-of-pocket and wait for a tax refund.
- Child Care Development Block Grant funds would continue to support state systems and help to build the supply of quality child care.
Universal pre-k: Universal pre-k would help put quality early education within reach by providing access to voluntary pre-k for all 3- and 4-year old children.
- CAP’s universal pre-k proposal the federal government would, on average, match state pre-k expenditures up to $10,000 per child per year.
- For families at or below twice the federal poverty level, pre-k would be free. And children from families above twice the federal poverty level would pay a tuition co-pay on a sliding scale.
BOTTOM LINE: The combination of sky-rocketing costs and low quality are putting quality child care and pre-k out of reach for too many families, forcing them to make an impossible choice between their pay check and their child’s care. A strong economy starts with strong families. It’s time to put child care and pre-k within reach for all families.
7. What Does It Say About Us?
Donald Trump: Evidence of Our Degeneracy
With his lies about black people and the people of Jersey City, the question is why so many Americans want to believe him.
by Adele M. Stan, prospect.org, November 25, 2015
When my grandfather’s grandparents arrived on the shores of Jersey City, having fled famine in Ireland, the city was joined in an epic battle waged against the immigrants by a nativist party nicknamed the Know-Nothings.
The Irish were not to be trusted, the Know-Nothings said, especially because of their strange religion—Roman Catholicism. Cast as an army of infiltration sent into America by the pope, the Irish were, for a time, barred from employment in the police force and other government offices through the connivance of Know-Nothing state legislators, who conferred a new charter on the city, which was later struck down by the New Jersey Supreme Court.
It’s difficult to imagine today the discrimination faced by the starving Irish at the time of their mass migration to the U.S. Catholicism is now the largest Christian denomination in the country, and Irish Catholics are well represented at the highest levels of society. Somewhere along the way, the Irish became regular white people—so regular, in fact, that I’m guessing we’re amply represented among the supporters of Donald Trump’s candidacy for the 2016 Republican presidential nomination.
I make that assertion looking not only at the polls that gauge the standing of the GOP hopefuls in relation to one another, but also at the general-election polls that match up the various contenders in one party against Hillary Clinton, the likely Democratic nominee. In those polls, Trump and Clinton are running about even. While not predictive a year before the next presidential election, they are a measure of public sentiment.And right now, it looks like nearly half the public is ready to believe any hate-spawned lie that comes out of Donald Trump’s mouth. That’s a lot of hate—and some mighty big lies.
Like the one about Jersey City, for example. After the November 13 terrorist attacks in Paris, Trump saw an opportunity to expand his anti-Muslim, anti-immigrant franchise by uttering this whopper: that on September 11, 2001, the streets of Jersey City were filled with “thousands and thousands” of (presumably Muslim) people celebrating the fall of the World Trade Center towers, which loomed over Jersey City, sometimes called “Wall Street West.”
There were no such street celebrations that dreadful day; Trump has not been able to produce one frame of the television footage of the festivities he claims were broadcast. The best he’s been able to come up with is a Washington Post articlethat reported unsubstantiated rumors of rooftop parties—allegations long since debunked.
But save your efforts, professional fact-checkers. Your Pants-On-Fire rating of Trump’s claim, which is pretty much an incitement to violence, will fall on deaf ears, for it simply confirms the worldview of too many Americans. Never mind that the worldview is based on fear and prejudice and ethnic chauvinism; America has a long tradition of indulging that ugly strain. Just ask a Japanese American, or an African American—or even an Irish American who actually knows some history of her people.
Trump hardly contains his hatred for the mosques he promises to monitor once he’s president and the police state he plans to expand is in place. Anybody who’s not white is ripe for vilification, be they Latin American, Asian, or black.
On November 22, Trump tweeted a graphic making the rounds in white supremacist circles that is filled withfalse crime statistics concocted to impugn African Americans. (Just the day before, several of his supporters beat a black civil-rights activist at an Alabama Trump rally.) The graphic listed the rate of white homicide victims killed by blacks as 81 percent, when the FBI crime states show that, actually, 82 percent of white homicide victims are killed by white people.
The next day, a small group of white menshot five Black Lives Matter protestersin Minneapolis outside the 4th Precinct police station, where the protesters have camped out to protest the November 15 police killing of Jamar Clark, who was unarmed and, according to witnesses, in handcuffs.
Of course, one can’t draw a causal connect between the tweeted Trump lies and the shooting of black people protesting police killings; one wouldn’t dare.
Yet, taken together, they reveal the treachery of the American political landscape in these days of fear and hate. When Trump first uttered his Jersey City lie, Ben Carson, his closest rival for the nomination, said he had seen the same footage that Trump fantasized. (He’s since walked that back.) And what of New Jersey’s governor, also vying for the GOP nomination?
"I do not remember that, and so it's not something that was part of my recollection,” Chris Christie told reporters on Sunday at a campaign stop in New Hampshire. “I think if it had happened, I would remember it, but, you know, there could be things I forget, too.”
Wouldn’t want to piss off all of those big-hearted voters leaning toward the Donald now, wouldja?
Republicans often use the cover of calling their party the Party of Lincoln, as if it were they themselves who emancipated the enslaved Americans of African descent in 1863.
But Abraham Lincoln himself offers an apt description of today’s GOP, in this 1855 letter to his friend Joshua Speed, in which he waxes on the Know-Nothings:
Our progress in degeneracy appears to me to be pretty rapid. As a nation, we begin by declaring that ‘all men are created equal.’ We now practically read it ‘all men are created equal, except negroes.’ When the Know-Nothings get control, it will read ‘all men are created equal, except negroes, and foreigners, and catholics.’ When it comes to this I should prefer emigrating to some country where they make no pretence of loving liberty—to Russia, for instance, where despotism can be taken pure, and without the base alloy of hypocracy [sic].
There’s a toxic fluid in the bloodstream of the American body politic. Trump exemplifies it, but it doesn’t begin and end with him.
Until we’re willing to explore why, when given the choice between the hatemonger and Hillary Clinton, some 44 percent of the U.S. electorate think a President Trump would be a pretty good idea, “our progress to degeneracy,” to borrow Lincoln’s term, throttles into overdrive.
8. When Your Rabid Republican Relative Sounds Off
Updating an annual tradition:Arguing economics at the dinner table
by Josh Bivens, epi.org, November 24, 2015
Last Thanksgiving I wrote a blog post in the “how to argue with your relatives at Thanksgiving” genre, providing some hard numbers for people who didn’t want to let their conservative relatives spout nonsense about economics with impunity at the holiday dinner table. This year, lots of those same arguments are still in the news, so I updated some of the data and points for 2015. Also, another silly argument seems to be making the rounds: the claim that the Fed’s low interest rates have somehow hurt “poor savers,” and hence the Fed should raise rates at its next meeting.
So, here’s an updated list of some of the myths that come up every year, and how to address them.
MYTH: The government’s spending too much—they should tighten their belts the same way households had to following the Great Recession
This “tighten the belts” line is perhaps the worst analogy ever. And yes, it’s bipartisan silliness. Simply put, if everybody (households, businesses, and governments) tightens their belts together (i.e., stops spending money) then the result is just a steep recession. Even with increased federal government spending, tightened household and business spending in 2008-2009 led to a savage economic downturn. Actively cutting government spending would’ve made it worse. Much worse. There really is tons of evidence that the increases in government spending during and right after the Great Recession (the Recovery Act, mostly) made the recession much lighter and the recovery come faster.
But, say you continue to disbelieve the overwhelming evidence that spending cuts slow growth and worsen recessions. Let’s just look at the data on federal spending in the recovery since the Great Recession versus recovery from the previous three recessions (in the early 1980s, early 1990s, and early 2000s) to see if even the premise of “exploding spending” in recent years is right. The figure below shows (inflation adjusted) federal government spending over the full business cycle (centered on the recession’s trough in the middle of 2009.
Notice anything? Yeah, recovery from the Great Recession has been associated with the most austere spending following a recession in decades. And this weak spending is, by the way, the entire reason why recovery has been so slow to come. Put it really bluntly: if federal spending under the Obama administration had risen at the same rate as it did during these previous recoveries—yes, even the one during the Reagan administration—we’d have between $440-890 billion more in federal spending today, and we’d be at full employment.
MYTH: Boosting job growth and wages means getting the government off our backs: we need to cut taxes and get rid of regulations
Yes, this is smuggling in two bad arguments under one title. But while taxes and regulations are different, the theme of “heavy-handed government is holding back growth” is the same. And it’s pretty easy to demonstrate that neither is a candidate for having smothered incentives or business profitability in recent years.
Look below at the figure showing overall federal tax rates for the middle three-fifths (call them the broad middle-class) of American households since 1979. Most of the tax share for these households is actually payroll taxes—the federal income tax share for this group is almost trivially small. There are two things to note in the chart below.
First, contra Mitt Romney, middle class Americans pay taxes—there is no 47 percent here that pay nothing.
Second, taxes for this broad middle class are down a lot over the last decade (note, taxes for the very rich are down a lot as well), and the decline has been steady. Tax rates for this group in 2013 are lower than in 1979, 1989, or 2007. For the middle-fifth of American households, the overall effective federal tax rate is down by more than 40 percent since 1979. And these tax rates even include the employer side of payroll taxes, so the actual tax rates calculated by most households (who might only include the payroll taxes they directly pay) are quite a bit lower.
Meanwhile, the only economic story for how regulation could be holding back the economy that makes any sense is if a clear increase in the scale of regulatory reach had severely damaged the profitability of business, killing their incentive to produce and hire. It would beawfully hard to make the claim that we’re regulating businesses to death if, say, U.S. corporations were experiencing some of the highest profit rates ever. Hard, but that does seem to be the story that the anti-regulation crowd is sticking to. The figure below shows profit rates for the U.S. corporate sector over time. The regulatory strangling of business in recent years is very hard to see here. But feel free to squint away.
MYTH: Raising the minimum wage will just make everything cost more and do other associated bad things
It used to be that arguments against raising the minimum wage centered on job loss for precisely the workers that minimum wage increases were supposed to help. One was supposed to be stunned by the sad irony of it, I guess. But researchers have looked hard to see if minimum wage increases really do cause job-loss in the real-world (and not just in introductory economics textbooks). And they don’t.
So now that the job loss argument has been largely defanged, one often hears claims that raising minimum wages will just boost prices, thereby hurting the living standards of precisely the workers that minimum wage increases were supposed to help. Ah, the sad irony again.
There are two responses to this “it will just cause inflation” argument against raising minimum wages.
First, it is actually true that raising the wage of any group of workers will likely put upward pressure on the stuff that these workers produce. So, an increase in the minimum wage could raise prices in, say, the fast food sector. But it’s odd how this same logic doesn’t make people decide that we should push back on policy decisions that raise wages for highly-paid workers. When the people who argue that minimum wage increases will just raise prices see CEO pay exploding because of poor corporate governance and tax policy, do they generally argue that that will raise prices? Or when they see the warnings at the beginning of DVDs against making copies for commercial resale under penalty of criminal prosecution, do they say “hey, that increases prices?”
They should, because these policies do raise prices and hurt the purchasing power of non-CEOs and those who don’t earn income from copyrights. And yet CEOs and owners of entertainment companies still seem to think these are good policies from their point of view. So, low wage workers should absolutely see efforts to raise the minimum wage as useful even if they do put upward pressure on prices.
This reasoning leads to our second point: the wage increase spurred by a higher minimum wage will absolutely dwarf any potential impact on prices for the living standards of affected workers. Take the increase in wage income estimated to be generated by an increase in the federal minimum wage to $10.10 by 2016—roughly $35 billion. Divide this by the total amount spent on consumption goods in the U.S. economy (about $12 trillion) to get a sense of how much this will raise prices in the economy—0.3 percent. To be clear, this does not mean a 0.3 percent increase in inflation, it means a one-time 0.3 percent increase in prices. So, basically a 0.1 percent increase in inflation for 3 years and then dropping back to zero.
Meanwhile, the typical worker affected by the proposed $10.10 increase would see (roughly) a 20 percent raise in hourly pay. And even if the entirety of the minimum wage increase was financed simply by higher prices (it won’t be), then this worker is still much, much better off.
John Schmitt from the Center for Economic and Policy Research has a great paper the sums up lots of this—showing why lots of things (not just prices or jobs) can change in response to a minimum wage increase, including productivity and profit margins.
MYTH: The real problem with today’s economy is workers don’t have the right skills to keep pace with technology
This one is very widespread and very hard to address seriously in just a few sentences. But, some observations.
First, an appeal to authority. People who have looked very carefully at the evidence here find very little to suggest that demand for high-skilled workers has outpaced their supply and that this gap has driven inequality in wage growth in recent years.
Second, even seven years after the start of the Great Recession, there remain two unemployed workers (and more if you count “missing workers”) for each job opening. Today’s excessively high unemployment (and too-low labor force participation) remains mostly a general job availability problem and not a reflection of any “skills mismatch.”
Third, inflation-adjusted wages—even for workers with a four year college degree—have been flat for over a decade. This doesn’t look like an economy rewarding skill per se. Instead it seems to be rewarding a very narrow slice at the top.
Fourth, since the start of the recession at the end of 2007, more than half of all income gains in the corporate sector have gone to capital owners instead of workers (capital owners have generally claimed well under a quarter of total income gains over the past six decades). Unless one is changing the definition of “skilled” to mean “already owning lots of wealth,” it’s hard to see what skills have to do with this.
Finally, many people point to the recent decade’s obvious technological advances as evidence that the economy has been changed in a way that can’t provide decent living standards to many workers. This is far from clear. After all, technology changes all the time. In fact, the way economists measure technological change, the amount of goods and services that can be produced in an hour of work, actually shows more rapid technological change in the 30 years after World War II—a period of much more egalitarian economic growth.
Explanations for economic changes based on technological change always sound convincing, for a simple reason: At any point over the past century you could have walked into a factory and been told about the big technological improvements that had been made over the past decade. If you’re a business writer who walks into a factory today looking for a root cause of the labor market’s doldrums, guess what? You’ll be told about the big technological improvements made over the past few years, and then you might think, “Hey, that’s why the jobs aren’t here and why wages are flat!” But, if you had walked into a factory in 2000—when the unemployment rate reached 3.8 percent—you also would’ve been told about an amazing decade of technological advancements. And you might think “hey, that’s why things are going so well!”
Technology is always advancing, but it does not have to consistently damage most American’s living standards. The reason American workers haven’t been doing well for most of the past three decades is rooted in policy, not technology.
MYTH: Unions haven’t done anything for us
It is often noted that the rise in American inequality and the beginning of the era of what some have called the Great Wage Slowdown is correlated with the declining share of American workers represented by a union.
Yet few people seem to consider this decline in worker representation the outcome of apolicydecision. Instead they shrug and decide that unions aren’t modern or aren’t suited for the new economy (however you decide to define that). Yet advanced countries around the world, with economies as productive (or more) than ours, have much higher rates of unionization. The share of workers that wanted to be represented by a union before the Great Recession had reached historic highs, even while the share that were in unions reached historic lows. It’s hard to imagine that policy decisions aren’t playing a role in that growing wedge.
And clearly policy has not kept pace with growing employer hostility to unions or kept the playing field level between employers and workers wanting to join a union—as shown by the increased pace of illegal firings of union organizers in recent decades.
Why should today’s workers care whether or not unions thrive or decline? Tom Edsall raised a good point recently in this regard: those who hate unions sure think policy matters. Every chance they get, advocates for the already-rich fight tooth and nail to not just contain, but roll back workers’ ability to bargain collectively.
And in purely self-interested terms they’re right. Unions do not damage productivity or employment growth, but they do distribute income gains more equitably between corporate managers/capital owners and workers. And the gains to workers spurred by unionization do not just accrue to union members. When they have power they set standards which spill over into higher wages and better compensation even for non-union workers. Below is an updated chart first made by Colin Gordon showing the long-run relationship between unionization and top income shares.
So it makes perfect sense for those invested in the economic wellbeing of highly-paid corporate managers and capital owners to hate unions. What makes much less sense is that too many of the rest of us don’t seem to appreciate what they do.
MYTH: By keeping interest rates low, the Federal Reserve hurts “poor savers”
I should start by noting that the whole idea of “poor savers” is odd. Genuinely asset-poor households tend to be net borrowers, not net savers. Net borrowers are hurt—and hurt a lot—when inflation comes in below expectations. Think about a mortgage which comes with a fixed monthly payment of $1,500 per month. When you take out a mortgage, a key variable for how affordable it will be over the life of the loan is what you forecast for the rate of inflation over that time. Say that you made the common-sense assumption that the Fed will meet its 2 percent inflation target in coming years. This means you counted on your monthly payment getting cheaper (by 2 percent) in price-adjusted terms every year over the life of your mortgage. If inflation instead comes in well below this target (the way it has in recent years), then the inflation-adjusted burden of your mortgage erodes much more slowly, and your mortgage has become less affordable.
So, how can the Fed insure that they actually meet their inflation target and help net borrowers? Keep rates low.
Moreover, for those who really do have significant net savings (we should probably tend to refer to them as “wealthy,” by the way), it is true that rates of return on their savings (mostly held as government bonds or private sector stocks and bonds) have been low in recent years. But the arithmetic and the economics of assets and rates of return is clear that low rates of return on assets are essentially always and everywhere associated with high prices for these assets. Take a bond that will pay off $110 in one year. If the price one must pay to obtain this bond today is $100, then the rate of return is 10 percent. If the price one must pay to obtain this bond today rises to $105, then the rate of return falls to (just under) 5 percent.
Yes, it gets more complicated than this pretty quickly, but the fundamental insight remains that rates of return are low today because assets are so expensive. Given this, it is very had to take complaints from significant net savers seriously, when they are essentially complaining that their assets are so valuable (and they themselves are so wealthy today) that rates of return going forward won’t be particularly high.
So, what about “poor savers” who have all their net worth in a cash account (i.e., not stocks or bonds)? Aren’t they hurt by low rates? Conceivably—but nobody with significant assets (say more than $5,000) holds them all in cash. And for $5,000 in cash, the difference between 3 percent returns and zero is about $150. Not nothing, but compare these losses relative to the broader damage done by higher rates and it’s still an awfully weak argument.
Finally, and most importantly, the most important transmission mechanism from Fed interest rate policy to income distribution comes though the labor market. Because low interest rates boost economic growth and lower unemployment, they boost wages for workers—and these wage boosts are most pronounced for low- and moderate-wage workers. These labor market effects swamp the effects on asset prices for the vast majority of Americans, because income for most American households is dominated by their weekly paychecks, rather than what they earn from asset holdings.
FINALLY double serving
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