Daily Clips: March 31st, 2016

100 CEOs have more saved up for retirement than 41 percent of US families combined: Inequality is not inherently bad, but this level of wealth inequality is absolutely horrific. Especially when you consider that growth is a consequence of the middle class and that most Americans’ wages have hardly grown. Speaking of which…

US jobs market is firming up, manufacturing regaining footing:

Labor market strength, however, has not been accompanied by robust wage growth, making it unlikely the Federal Reserve will raise interest rates soon. The U.S. central bank is also keeping a cautious eye on international developments.

Women are already punished for trying to end their pregnancies: After Trump’s despicable comments on abortion yesterday, finally the 2016 contest has turned its gaze towards this vital right.

Donald Trump doesn’t speak for the pro-life movement. Yeah, but he most certainly speaks for the party which represents the pro-life movement.

Tweet of the day:

In America, Cities Are Increasingly for the Rich

Welcome to the city! Pay me.

Welcome to the city! Pay me.

Sometimes you bump into two news pieces that seem as though they’re the flip side of one story. Today was one of those days for me. First, I read this Atlantic piece by Derek Thompson about how people moving to cities are white, child-free, wealthy, and in their 20s and 30s:

If the U.S. is returning to any previous period, it’s looking like another Gilded Age—one based on geography. The richest 10 percent of households were most likely to move into dense urban areas between 2000 and 2014. The poorest 10 percent fled cities the fastest. Meanwhile, the U.S. is becoming much more urban for the white childless elite, and much more suburban for everybody else. The fastest growing suburbs are the most prototypically suburban: They have the lowest density, the greatest need for cars, and the most single-family neighborhoods. Meanwhile, the fastest growing urban areas among this privileged demographic are the most dense—places like Manhattan and Brooklyn, San Francisco, Boston, Washington, D.C.

And then I ran across this Vox story by Soo Oh about how low-income Americans can no longer afford food, transportation, and, most importantly, housing:

A new Pew Charitable Trusts analysis of data from the Bureau of Labor Statistics shows that in 2013, low-income Americans spent a median of $6,897 on housing. In 2014, that rose to $9,178 — the biggest jump in housing spending for the 19-year period of data that Pew studied.

This is why raising the minimum wage to livable levels is important, especially in urban areas: inequality has tipped over to a point where cities have become a battleground between the wealthy few and everyone else. Further, cities are losing diversity and catering to a shrinking pool of high-income spenders. This is antithetical to what a city is: cities, by definition, need lots of people. They cannot be exclusive; cities need lots of people from diverse backgrounds in order to survive and thrive. Right now, poor Americans are being forced out into the suburbs, where transportation is difficult and sparse. By paying them more, we’re helping to bring them—and their newfound spending power—back inside city limits.

Daily Clips: March 30th, 2016

ACA’s newest policy holders are sicker and costlier: Good thing they have health care now.

Kansas tried tax cuts. Its neighbor didn’t. Guess which one worked? As many of you know, Kansas Governor Brownback is big a trickle down proponent. After he promised 25,000 jobs a year after enacting extensive tax cuts, “Kansas actually lost 5,400 jobs over the 12 months ending in February.”

Vermont could change the marijuana legalization movement: Up until now, all of the states which have legalized marijuana have done so via the ballot. Vermont is looking like it could be the first state to buck this trend.

Here are some interesting differences between Vermont’s approach and Washington State:

There are a few other ways Vermont’s bill stands out: After watching Colorado struggle with how to regulate edibles, Vermont won’t be legalizing those at all. Lawmakers also resisted marijuana advocates’ lobbying to allow people to grow marijuana plants in their own homes. And if you want to invest in one of Vermont’s marijuana stores, you’ll have to move to the state and become a resident; no out-of-state funding is allowed.

Tweet of the day:

What Happens in California Stays in California; Why $15 Will Boost Employment Statewide

A promotional image from Sony Picture's 2012, which imagined the total devastation California might suffer from a $15 minimum wage.

A promotional image from Sony Picture’s 2012, which imagined the total devastation California might suffer from a $15 minimum wage.

Experienced bloggers know that if you provide a block quote, few readers will click through the cited link — a rule of thumb that less scrupulous bloggers sometimes exploit to devious effect.

For example, take this recent post from Forbes economic blogger Tim Worstall: “California’s $15 Minimum Wage Deal Will Cause Unemployment–And We Have Proof Of This.” Worstall’s claim (as always!) is that a $15 minimum wage will cost many low-wage workers their jobs. Only this time, he kvells, he’s got a lefty economist to back him up:

And we actually do have proof of this: a report about what a $15 minimum wage will do to employment in Los Angeles City. This is not, by the way, a report by some from market fundamentalist like myself. This is from Michael Reich et al at Berkeley, stout supporters of a rise to $15. And yet even their report states that the net effect will be fewer jobs.

Go ahead. Click through the link above and read this Worstall quote in its full context. The “proof” mentioned in Worstall’s headline, that $15 “will cause unemployment,” is a cited study by Berkeley economist Michael Reich. That is the main thesis of Worstall’s post. There is absolutely nothing misleading or unscrupulous about my block quote.

Alas, the same can’t be said for Worstall’s out-of-context quoting of Professor Reich:

Los Angeles City: Combining costs and benefits and taking into account multiplier effects,we estimate a cumulative net reduction in GDP of $135 million by 2017 and $315 million by 2019, or 0.1 percent compared to a scenario with no city minimum wage increase.

These effects on the level of economic activity correspond to a cumulative net reduction in employment in Los Angeles City of 1,552 jobs by 2017 and 3,472 jobs by 2019, or 0.1 and 0.2 percent of all employment, respectively.

Yes, according to Reich’s model, it is true that a $15 minimum wage hike — in the City of Los Angeles — would result in less growth and fewer jobs — in the City of Los Angeles — than there might have otherwise been had the city not raised its minimum wage. But if you click through the provided link and read the Reich quote within its full context (as Worstall presumed you wouldn’t), you’d come to a very different conclusion about the State of California as a whole:

  • The costs of the proposed minimum wage law will be concentrated in Los Angeles City, but the full benefits will be realized throughout Los Angeles County, because more than half of the affected workers live, and therefore spend most of their increased earnings, outside the city.
    1. Los Angeles City: Combining costs and benefits and taking into account multiplier effects, we estimate a cumulative net reduction in GDP of $135 million by 2017 and $315 million by 2019, or 0.1 percent compared to a scenario with no city minimum wage increase.
      These effects on the level of economic activity correspond to a cumulative net reduction in employment in Los Angeles City of 1,552 jobs by 2017 and 3,472 jobs by 2019, or 0.1 and 0.2 percent of all employment, respectively. These employment changes are quite small when compared to projected job growth of 2.5 percent a year in the city.
    2. Los Angeles County: Combining costs and benefits and taking into account multiplier effects, we estimate a cumulative net increase in employment of 3,666 jobs by 2017 and 5,262 jobs by 2019 at the county level.

That’s actually a net increase of jobs throughout Los Angeles County that more than offsets the tiny projected loss within the city proper!

What Reich is describing above is a kind of economic “leakage,” in which the costs of higher wages are borne entirely within the city while the benefits are shared countywide. This is especially pronounced due to Los Angeles’ relatively high concentration of low-wage jobs. The smaller and more local the minimum wage jurisdiction, the greater the potential leakage effect might be.

But California as a whole is a virtual economic island with none of its job centers a reasonable commute from state borders; almost every minimum-wager who works in California lives in California. There would be little if any economic leakage from a statewide $15 minimum wage. Indeed, as Reich explains: “Just as minimum wage increases in Los Angeles will benefit surrounding areas, higher minimum wage levels in those areas would also boost economic activity within the city, allowing Los Angeles to realize its full share of the benefits of a minimum wage increase.”

What Worstall has done is cleverly deceptive: he selectively quotes a study on Los Angeles as “proof” that $15 “will cause unemployment” statewide. But Reich’s model actually suggests the opposite: a statewide $15 minimum wage would provide an economic boost to Los Angeles proper and to California as a whole.

Let’s Talk About the Real Issue with Bathroom Safety

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The backlash to the latest spate of anti-transgender “bathroom laws” has begun, and Seattle Mayor Ed Murray is right at the forefront:

Seattle Mayor Ed Murray signed an executive order Monday banning travel to North Carolina for official business by City of Seattle employees. It is a response to that state’s passage of a bill that revoked civil rights protections for the LGBTQ community.

Mayor Murray is absolutely doing the right thing here. (So is the governor of Georgia, who announced he would veto a similar law in his state.) These bathroom laws are not only hateful and anti-civil-liberty—they’re also likely unenforceable. What they do is they target and single out trangender individuals, who are already at grave risk for violence, and they give business owners the right to confirm anyone’s gender at any time. (How? Unclear. Very unclear.) And by forcing trans people to use the opposite gender bathrooms, the law is creating some very uncomfortable situations:

These are the kind of exclusionary tactics that bring damage upon economies like North Carolina. (Nick Hanauer wrote about this last year.) Boycotts like Mayor Murray’s are a great way to get the attention of a governor who puts hate before inclusion, and I expect North Carolina will find itself to be the recipient of a whole lot of boycotts by the time this story ends.

And besides, there are plenty other pressing issues of bathroom safety to address than the fallacious concern of LGBT-on-straight-person violence that anti-trans groups have been peddling to the media. I’m talking, of course, about guns.

Today, NRA Family published a blog post by Brad Fitzpatrick titled “Concealed-Carry Safety…In the Bathroom.” It’s all about what to do when you’re out on the town with your gun and nature calls. Fitzpatrick’s first suggestion? Put the gun on the bathroom floor in front of you while you’re doing your business. He acknowledges there are some problems with this scenario:

As simple as it is to place the gun on the floor of the stall, there are also several compelling reasons not to do so. If the bathroom is clean, the gun is pointed in what you know to be a safe direction, and no one else is going to come in and see a gun on the floor of the stall, then this is a fine option. But if you’re like most, the thought of putting the gun on the floor of a public restroom and then handling it and putting back into your holster is enough to make you cringe.

So instead of getting icky germs all over your instrument of death, Fitzpatrick offers a “better” solution:

There is a better option for securing the firearm in the bathroom, and that is to place the gun in your dropped pants. That’s a secure position and you’re almost certain not to forget it is there after you have completed your duty. In addition, the pants work well to hide the firearm from others who happen to glance under the stall to see if it is occupied. Again, be sure to place the firearm so that the barrel is pointed in a safe position.

This is advice from the National Rifle Association: put your gun on the trousers around your ankles while you poop. Never mind that if someone in the next stall over wanted to grab your gun, they’d probably get to it before you. Never mind that if you forget the gun’s there and pull your pants up, you’ve just dropped a gun on the ground, possibly pointed at your crotch.

I don’t know what the Venn Diagram of NRA supporters who also support anti-LGBT bathroom laws looks like, but I suspect the overlap is significant. How many of those gun-loving Americans are fine with the pants-on-the-ground method of bathroom gun safety but against the idea of trans people using the proper bathroom? Because I know which side I’d rather share a bathroom with, and it’s sure not the guy in the NRA t-shirt who’s feverishly rubbing hand sanitizer all over his Smith & Wesson.

Say What? Trump Criticizes Scott Walker for NOT Raising Taxes

If you would have sat me down a year ago and told me that the Republican frontrunner for president would be lambasting another Republican for not raising taxes, well, I would have questioned your political acumen. Yet here’s a headline I awoke to:

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Yes, this is actually happening. The very party that told you that raising taxes was a confirmed “job killer” is now under the sway of a man who is deriding others for not raising taxes enough. Here’s what the frontrunner had to say about Walker’s trickle-down tenure in full:

There’s a $2.2bn deficit and the schools were going begging and everything was going begging because he didn’t want to raise taxes ’cause he was going to run for president. So instead of raising taxes, he cut back on schools, he cut back on highways, he cut back on a lot of things …

So what does this mean for the future of trickle down economics? Before I get into that, let me first define what I mean by trickle down. This is how we define it here at Civic Skunk Works:

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Trump’s criticism, therefore, signals that it is no longer popular for a Republican presidential candidate to openly run on the first aspect of a trickle down economic platform. (Unfortunately, the same cannot be said for #2 and #3.) Certainly, Trump is still intending to perpetuate obscene tax cuts for the rich, but he’s just not telling people about it. As a member of the one percent, he clearly has a vested interest in continuing favorable tax rates for the wealthy. However, he’s not dumb enough to actually be caught peddling this stuff during an era of pitchforks. After all, it’s tough to sell tax cuts for the rich when over 60 percent of Americans believe we are still in a recession. Just ask Mitt Romney and Jeb Bush. So Trump has repackaged the platform—and done so brilliantly.

Nick Hanauer and Nicholas Confessore have both recently identified this sleight of hand from Trump, noting that he is superficially distancing himself from the Republicans’ old economic program stubbornly “centered on tax cuts for the affluent.” Unlike establishment figures, Trump recognizes that if you’re going to run on trickle down in the 21st century, you need to at least veil it with economic populism and nationalism. And by not being honest with his constituents, he is demonstrating that he can read the mood of Americans better than any conservative politician today.

Trump’s Janus-faced approach could very well be the next trick used by conservatives to package trickle down nonsense. Which is a victory for liberals. At least we have progressed past the stage in American politics where a presidential candidate could honestly run on this BS. However, if liberals are to stay ahead of the opponent, we must acknowledge their change of tactics and devise new ways to unveil their tricks and lies.

California’s Minimum Wage Increase Is Totally Reasonable

Just a few days after California’ minimum wage initiative officially qualified for to go before voters, lawmakers in the Golden States announced that they’d skip the fight at the ballot box fight and instead, start working on a plan to increase the minimum wage to $15 over the next six years. Naturally, immediately, opponents began telling their tall tails about how the decision would definitely lead to a loss of jobs, because of course, that’s exactly what’s happened before!

Which is not true; if raising the minimum wage necessarily resulted in job loss, Washington State’s border towns, like Spokane, would be lined with empty storefronts—but of course, that hasn’t happened. And, statistically, it won’t.

But I was curious about California’s increase, specifically, because unlike its neighbor to the north, California will only be phasing in their increase, but won’t be staggering them by the size of the city or county, or by cost of living. The entire state will be seeing an increase of a dollar each year between 2019 and 2022. Which sounds like a lot, but is it, really?

From the Los Angeles Times:

The NFIB called the California deal “reckless” and observed, that “small businesses in California are still struggling to cope with the 25% minimum wage hike over just the past two years.” This is a huge exaggeration: California’s minimum wage increased to $10 this year after being raised to $9 on July 1, 2014, and to $8 on Jan. 1, 2008; the proper math would place the increase at 25% over eight years, or 11.1% over the last year and a half.

An increase of 25% over eight years might even still sound steep to a small business owner watching their bottom line, and heaven knows opponents of the minimum wage love to call any and all increase “an experiment,” but just how much is a typical minimum wage increase—and, historically, how does California’s plan factor in?

Often, when we talk about the minimum wage, we talk about the dollar amount of the increase—50 cents here, $1 there—without calculating what percent increase that represents. But it’s important to not just consider at how much it’s gone up in cents, but what percent that is of the existing minimum wage.

california minimum wage

Hello, yes, I do things quite professionally.

For example, historically, the minimum wage has gone up by 20 cents more than once. But when wages were lower (say, when the wage went up from $1.40 to $1.60 between 1967 and 1968), the change was about 14%. It also went up 20 cents between 1975 and 1976, but by that time, that same 20 cents represented just a 9.5% increase.

Since 1938, the minimum wage has been increased just 22 times, though within cities and states, it’s moved quite a bit more. The last federal minimum wage increase was between 2008 and 2009, when the wage was raised  from $6.55 to $7.25, or an increase of about 10.68%. That puts California’s increase of about 11% over the course of a year right in line with the existing data.

Looking back even farther, we can see a few key pieces of data:

  • The highest increase ever was in 1950 when the minimum wage was raised from 40 cents to 75 cents, or about 87.5%
  • The lowest increase ever was in 1975 when the minimum wage was raised from $2.00 to $2.10, or about 5%
  • The average minimum wage increase is 17.48%

As you can see, California’s last few minimum wage increases, then, aren’t that divergent from previous instances of wages going up. And, looking forward, we can see that the proposed plan isn’t that wild, either. In fact, it’s pretty conservative. Here’s the plan as proposed by Governor Jerry Brown:

  • 2017: $10.00 to $10.50 = 5% increase
  • 2018: $10.50 to $11.00 = 4.6% increase
  • 2019: $11.00 to $12.00 = 9.09% increase
  • 2020: $12.00 to $13.00 = 8.33%
  • 2021: $13.00 to $14.00 = 7.69%
  • 2022: $14.00 to $15.00 = 7.14%

Going up a full dollar a year—and four whole dollars over four years—seems like a lot, because $4 over four years sounds high. But as a percentage of the total wage a worker is making, that $1 each year is actually relatively in line with other cost increases, like rents (which go up between 2.5% and 5% each year, depending on where you live), food (which increases year over year by more than a percent), and health care costs (an annual increase of 3% was so low that it was notable).

The idea of a dollar increase sounds like a lot—a whole dollar!—until you compare it to the historical minimum wage increases, and the fact that a dollar is buying less and less. At present, minimum wage workers haven’t seen a raise, nationally, since 2009.

In that time, the cost of living has increased substantially; if the federal minimum wage had caught up with that alone, it’d be over $8.00—but that’s only an increase of just about 10%. Within the existing framework of minimum wage increases, a federal increase to $10.10 over three to four years would be completely in line. In fact, even an increase to $12 over six years would be perfectly reasonable, given the data available for what’s historically been done.

Raising the minimum wage a modest amount over time has yet to prove catastrophic for the total economy, nor has it been directly linked to unemployment among teens, people of color, or any of the other groups that opponents like to point to as potentially hurt. What it has done, though, and what it will continue to do, is to increase the earning power of regular folks in a substantial and tangible way.

Daily Clips: March 29th, 2016

A narrow escape for public-sector unions: As Goldy said this morning, “God works in mysterious ways.” Indeed He does. Due to Scalia’s death earlier this year, the US Supreme Court split 4-4 in Friedrichs v. CTA. This tied thwarted “a legal challenge that labor activists feared would deal a crippling blow to public-sector unions throughout the country.”

“The Other Washington” gets a great review: As our avid readers know, here at Civic Skunk Works we’ve started a new podcast series, “The Other Washington.” Listen to these kind words we received from The Billfold!

The Other Washington is the podcast arm of Seattle’s Civic Ventures, and I’m going to recommend it if you don’t live in Washington State because I think you’ll identify with much of what’s being discussed.

Why aren’t campaign ads working? It’s a topic that Paul Constant has touched on before. Clearly, the logic behind political ads has utterly failed during this campaign cycle. Could it be because of the rise of social media? It’s an interesting explanation brought up by this Atlantic video.

Tweet of the day: