Tag Archives: jobs

Regulation and Inflation

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Here’s one example of how regulation drives inflation, in the milieu of corporate CEO compensation. Charles Murray, at AEIdeas, provides it.

On multiple occasions the SEC [Securities and Exchange Commission] amended its rules to increase the disclosure of compensation data and to force boards to explain their rationale for the amounts. That, combined with the influence of the arbiters of corporate governance, created an inviolable requirement for compensation committees to be advised by consultants. A perfect recipe for increasing compensation.

Thusly:

In 70’s and even the 80’s the compensation of the CEO seemed to be mostly a matter arrived at between the board and the CEO that resulted from discussions and negotiations and the public disclosure was a matter of a few pages. But there was then nothing like the pressure to conform to best practices backed up by the reliance upon the advice of consultants and the concomitant availability of market data that there is today.
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You can guess how it works. No board that isn’t about to fire its CEO really wants to admit that their CEO is a less-than-average performer by paying him or her less than average. But if the lowest-paid CEO’s are always being brought up to the average, then the average increases every year. Then for the high performers to be paid well, their compensation needs to be increased, but that raises the average…and so on every year. And the compensation committee and the board always have this market data before them, the recommendations of their consultants and “best practices” to adhere to. These influences are not easily resisted. You see the result.

It’s hard to believe the enormously intelligent regulators didn’t see this coming from the jump. The apparent abuse—that obscene CEO compensation—seems just another excuse to justify their jobs.

Get Off My Lawn

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The union looking to organize workers at Boeing’s South Carolina plant has put its plans in a holding pattern, claiming workers are so opposed to signing up that they chased labor leaders off their porches at gunpoint.

Poor babies. That’s private property you’re trespassing on. Get off. Stay off until you have the owner’s permission. How is that so hard to understand? Even by a union hack.

More importantly, though: how did those union hacks get these workers’ home addresses? Who gave up that private information without the workers’ permission?

It also appears the union is making all of this up. The police say they’ve received no reports of any such behavior either in North Charleston, the location of the plant, or in the surrounding areas.

The hacks did go crying to their momma though.

The union filed an unfair labor practice with the National Labor Relations Board in which it alleged that “two organizers were threatened at gunpoint and others reported hostile and near-violent confrontations,” according to a union press release.

It’ll be interesting to see President Barack Obama’s NLRB make the case that ejecting trespassers from private property is somehow unfair.

Wages

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Democratic Party Presidential candidate Hillary Clinton has been making a big deal about what she claims is the outrageous pay of company CEOs compared to their employees. Here’s a graph, via AEIdeas‘ Carpe Diem and Mark Perry that indicates how well she’s walking that talk.ClintonWage

Or is this fact just another of campaign season distraction and attack from the Hillary Truth?

Hmm….

More on the Minimum Wage

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Ronald Bailey at Reason had this iteration of “more.” He brought this item up, even though it’s been described before:

In the absence of the higher minimum wage, employers would generally hire more workers to meet an increased demand for fast food. Boosting the minimum wage means that the revenues that would have otherwise been used to hire new workers is not available. The end result: fewer jobs created and more folks unemployed.

But then he cited some actual research:

…published in the December 2014 issue of the Journal of Labor Research, Andrew Hanson of Marquette University and Zack Hawley of Texas Christian University analyzed how low-wage employment would be affected in each state by the imposition of the national $10.10 per hour minimum wage supported by President Obama. The Hanson/Hawley study takes into account how wages relate to the varying cost-of-living levels among the states. First they report the number of workers in a state who earn less than $10.10 per hour. Next they apply the widely agreed upon formula that for every 10% increase in wages there is a corresponding 1 to 2 percent decrease in demand for labor. They then straightforwardly estimate that boosting the federal minimum wage from $7.25 per hour to $10.10 per hour would result in the loss of between 550,000 and 1.5 million jobs.

And this study, by Jeffrey Clemens and Michael Wither of the University of California, San Diego and published by the National Bureau of Economic Research in December, which used different methodology and reached a similar result.

[J]ob losses were considerably higher in states where unskilled workers had been earning less than the new minimum and employers were now forced to pay more. Overall, the authors estimate that the minimum wage increase “reduced the employment-to-population ratio of working age adults by 0.7 percentage points.” Stated otherwise, not raising the minimum wage would have boosted the 2012 employment-to-population ratio from 58.6 to 59.3, which implies that we actually had 1.4 million fewer jobs than we otherwise would have had.

Thus: on the one hand, raising the minimum wage will cost a million people, more or less, their jobs, and on the other hand, an additional 1.4 million jobs weren’t created in the first place.

Beyond that, there’s this. Raising wages raises prices, as even the Left acknowledges. What gets ignored in this is that those higher prices are paid by those who got the pay raise. Those who got the pay raise, also, are those who work low-skill jobs. Those low-skill jobs exist almost exclusively in commodity industries: food service, extraction, and so on. The goods produced in those commodity industries are the ones most susceptible to production costs like labor, yet those costs are most completely reflected in prices despite price competition. These are the goods with whose higher prices those low-skill workers will be confronted. Wage increase leading to price rise equals no net improvement for the low-skilled. That, though, also represents net harm for everyone else in our economy, who also are faced with those same higher prices.

It’s hard to believe those who claim to be so much smarter than us don’t get this. Which makes me wonder about their motive. Against the backdrop of why minimum wage laws were made national laws in the first place, back in the mid-30s.

 

Hanson and Hawley’s paper can be read here, and Clemens and Wither’s paper can be read here (paywall alert).

Liberals and Unions

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In December 2014, the NLRB passed a final rule on a partisan 3-2 vote that greatly shortens the time for a workplace union-organizing election. … Mr. Obama issued a “memorandum of disapproval”—essentially a veto—to kill the Congressional measure [to overturn the rule] and preserve the NLRB rule.

From now on unions will have unlimited time to prepare their campaigns to organize a workplace, springing the election paperwork on an employer when they figure they have the best chance to prevail. By reducing the time before an election to as little as two weeks from the current average of 38 days, unions will be able to lobby workers and make their case before a company can counter with its own argument.

Because with Liberals and unions, there’s only one side to a story. No need to hear from anyone else.