http://www.nytimes.com/2015/07/27/business/economy/scale-of-minimum-wage-rise-has-experts-guessing-at-effect.html?ref=topics
The issue expressed in this New York Times article is that the promise of a new fifteen dollar minimum wage might not be as good of an idea as it sounds. In theory, it is golden. A living wage for all! Down with the wage gap between the rich and the poor! Equality! But, it's not that simple. And even within party lines, there is some disagreement. The main issue is how little we know.
There has not been a study done that could give us any real indication of what lifting the minimum wage nationwide to fifteen dollars would do. Even proponents of this change have expressed that there is a certain amount that we just can't know unless we try. The most relevant studies for this case indicate that a small amount of increase on the minimum wage in a controlled area is beneficial without a whole lot of people losing their jobs.
Fear related to unemployment comes from the hypothetical that if the minimum wage increases, and companies have to spend more money on labor, that they will cut these costs by getting rid of employees so that the amount they spend on labor stays the same, and they will not have to change any other part of how they operate. Job loss because of an increased minimum wage has the potential to harm the very people the change would be intended to help. However, at this point, there is no data to support this anxiety that unemployment rates (which are tentatively rising) would skyrocket if this change were made. We don't have much proof either way.
Even among Democrats, there is some disagreement about what the direct course about raising the minimum wage should be. There is no dispute about whether or not it needs to be raised, it is the amount that is in question. Bernie Sanders stands in favor of a nationwide fifteen dollar minimum wage, while Hillary Clinton argues that it should not be the same across the board, but that it should have some flexibility from location to location.
On this issue, I agree more with Clinton. A dollar is not worth the same in every state. Prices vary and so should wage. Additionally, the current minimum wage in several Southern states, including Texas, is currently $7.25. Almost doubling the minimum wage is more likely to have an undesirable and unintended effect.
In companies where cost and labor could be offset by raising prices, it's not as big of a deal. However, for smaller companies, job loss is a very real threat. We can help combat that threat by not raising all minimum wages nationwide to fifteen dollars drastically. It would be terrible if a plan created to help the working class ended up putting individually owned companies into debt, and set the unemployment rate back to where it was a couple years ago.
Tuesday, August 18, 2015
New "Uber" Economy
http://www.nytimes.com/2015/07/13/business/rising-economic-insecurity-tied-to-decades-long-trend-in-employment-practices.html?ref=topics
The issue outlined in this New York Time article is the creation of a new economic structure, which centers around new "Uber-like" businesses. Uber is a company that provides rides through smartphones. Independent drivers who work for the company pick people up and they can pay on the app. Businesses like this one are not like the traditional workplace environments of the past. In most cases, it is possible to work from home or away from the central location of the company.
These businesses are those that are more independently contracted, and have been steadily growing every year since the 1970's. A major part of this trend is outsourcing jobs which are less essential to the core purpose of the company. These include jobs in human resources, customer support, and other technology related departments. I had assumed that saving money would be the only reason for these changes. However, it turns out that another main motivation for this new kind of business structure is to get back to what they are best at.
For example, a company which manufactures cars would be less interested in the day to day management, and so could outsource these jobs in order to return to their original purpose: manufacturing cars. With the new business model that is cropping up everywhere, they do not have to waste time or resources on tasks they consider to be less essential.
The article explains that the inciting incident of the new "uber-like" economies as dating back to the hospitality industry, specifically hotels. Motels began being managed independently instead of being owned and operated by a larger company. Since then, the state of United States businesses has become even more franchised and segmented.
The argument expressed by the New York Times is that this new structure is not beneficial for workers, especially the middle class. More and more people are worrying about retaining stable wages and enough hours to live on. Days of the nine to five work day just might be over. More and more people are working more flexible jobs, in jobs like Uber, or are only employed part-time.
My initial reaction is agreement that this setup is not good for the US economy as it stands right now. Outsourcing jobs, especially overseas, seems like it would increase the unemployment rate here at home. People here would still appreciate these jobs, it just hasn't positively improved the outlook for companies to keep them here.
When there is not a traditional boss, all of the rules change. Workers may not, for instance, have the same access to benefits or insurance. However, in a court ruling, it was decided that Uber drivers deserve the same workplace protections that others have. Uber is expected to fight for an overturn of the ruling. At this moment, the new structure of companies does not have the government support to be able to positively impact American workers. I expect this won't last for long, and will become a major issue, along with the middle class, in the 2016 presidential election.
The issue outlined in this New York Time article is the creation of a new economic structure, which centers around new "Uber-like" businesses. Uber is a company that provides rides through smartphones. Independent drivers who work for the company pick people up and they can pay on the app. Businesses like this one are not like the traditional workplace environments of the past. In most cases, it is possible to work from home or away from the central location of the company.
These businesses are those that are more independently contracted, and have been steadily growing every year since the 1970's. A major part of this trend is outsourcing jobs which are less essential to the core purpose of the company. These include jobs in human resources, customer support, and other technology related departments. I had assumed that saving money would be the only reason for these changes. However, it turns out that another main motivation for this new kind of business structure is to get back to what they are best at.
For example, a company which manufactures cars would be less interested in the day to day management, and so could outsource these jobs in order to return to their original purpose: manufacturing cars. With the new business model that is cropping up everywhere, they do not have to waste time or resources on tasks they consider to be less essential.
The article explains that the inciting incident of the new "uber-like" economies as dating back to the hospitality industry, specifically hotels. Motels began being managed independently instead of being owned and operated by a larger company. Since then, the state of United States businesses has become even more franchised and segmented.
The argument expressed by the New York Times is that this new structure is not beneficial for workers, especially the middle class. More and more people are worrying about retaining stable wages and enough hours to live on. Days of the nine to five work day just might be over. More and more people are working more flexible jobs, in jobs like Uber, or are only employed part-time.
My initial reaction is agreement that this setup is not good for the US economy as it stands right now. Outsourcing jobs, especially overseas, seems like it would increase the unemployment rate here at home. People here would still appreciate these jobs, it just hasn't positively improved the outlook for companies to keep them here.
When there is not a traditional boss, all of the rules change. Workers may not, for instance, have the same access to benefits or insurance. However, in a court ruling, it was decided that Uber drivers deserve the same workplace protections that others have. Uber is expected to fight for an overturn of the ruling. At this moment, the new structure of companies does not have the government support to be able to positively impact American workers. I expect this won't last for long, and will become a major issue, along with the middle class, in the 2016 presidential election.
Buying Now, Paying Later
http://www.nytimes.com/2015/07/09/business/economy/consumer-borrowing-hits-a-record-3-4-trillion.html?ref=topics
The issue identified in this New York Times business briefing is that consumer borrowing has risen higher than it has been in recent years. Consumer borrowing refers to people who take out loans: money that they do not currently have, but sign a contract to return, often with interest. The reason for this increased consumer borrowing as identified by the Federal Reserve is an increase in people taking out student loans as well as car loans.
Responses from economists to these data releases are surprising. The general consensus seems to be that it's a healthy practice. They assert that it is good for the United States economy when people are borrowing as well as spending money. They also suggest that as employment rates, which are decidedly good for the economy, providing jobs and then as a result, money, rise, consumer borrowing rates rise. By association, the rate of borrowing is declared positive.
My question: is borrowing really as good for the economy as spending? Or, are they only good when they are connected? Loans seem like they would hold up the economy rather than allow it to be liquid. The total borrowing rate, according to the Federal Reserve, has increased to a record-breaking amount of $3.4 trillion. However, the economists quoted in the article still do not seem to be alarmed.
I seem to remember bad housing loans as being one of the major components that pushed us into the 2008 recession. I wonder if it can be said that there is not the same risk now that people will not be able to pay the bank back for what they bought earlier with intentions to pay later.
As long as employment rates continue to rise, and consumer spending does not waver, I don't believe that also taking out loans will be a problem. In this way, borrowing is simply another version of consumer spending and will have positive effects in keeping the economy flowing. After all, taking out loans still pays money to the companies distributing the product or service. The money usually finds its way to its rightful owner, anyway. Banks determine who they will loan to, and when they do an honest job of determining that, we have nothing to worry about.
Indicators of a healthy economy, as expressed by this article, include a vast majority of the population hanging on to jobs in order to spend what they earn as well as to take out loans for reasons such as cars or tuition.
A population with billions of dollars of consumer borrowing in student loans has to be successful, right? Because it is always worth it to spend thousands of dollars on a college education which will always land you a better job in life?
I sure hope so.
The issue identified in this New York Times business briefing is that consumer borrowing has risen higher than it has been in recent years. Consumer borrowing refers to people who take out loans: money that they do not currently have, but sign a contract to return, often with interest. The reason for this increased consumer borrowing as identified by the Federal Reserve is an increase in people taking out student loans as well as car loans.
Responses from economists to these data releases are surprising. The general consensus seems to be that it's a healthy practice. They assert that it is good for the United States economy when people are borrowing as well as spending money. They also suggest that as employment rates, which are decidedly good for the economy, providing jobs and then as a result, money, rise, consumer borrowing rates rise. By association, the rate of borrowing is declared positive.
My question: is borrowing really as good for the economy as spending? Or, are they only good when they are connected? Loans seem like they would hold up the economy rather than allow it to be liquid. The total borrowing rate, according to the Federal Reserve, has increased to a record-breaking amount of $3.4 trillion. However, the economists quoted in the article still do not seem to be alarmed.
I seem to remember bad housing loans as being one of the major components that pushed us into the 2008 recession. I wonder if it can be said that there is not the same risk now that people will not be able to pay the bank back for what they bought earlier with intentions to pay later.
As long as employment rates continue to rise, and consumer spending does not waver, I don't believe that also taking out loans will be a problem. In this way, borrowing is simply another version of consumer spending and will have positive effects in keeping the economy flowing. After all, taking out loans still pays money to the companies distributing the product or service. The money usually finds its way to its rightful owner, anyway. Banks determine who they will loan to, and when they do an honest job of determining that, we have nothing to worry about.
Indicators of a healthy economy, as expressed by this article, include a vast majority of the population hanging on to jobs in order to spend what they earn as well as to take out loans for reasons such as cars or tuition.
A population with billions of dollars of consumer borrowing in student loans has to be successful, right? Because it is always worth it to spend thousands of dollars on a college education which will always land you a better job in life?
I sure hope so.
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