Category Archives: The destruction of the middle class

Can Fast Food Afford a $15 Minimum Wage Without Cutting Jobs?

Yves here. One of the oft-made assertions is that increasing wages in low-wage positions will lead to job losses. But in many industries, direct labor is a not all that large a proportion of total product cost. And with corporate profits at record highs, the immediate impact would normally be to trim profit levels, which have risen to be such a high proportion of GDP as to be deemed by Warren Buffet as well higher than sustainable levels.

Moreover, as this Real News Network segment points out, businesses that pay only minimum wage or barely above it have lots of turnover. That is costly in terms of managerial time. Having a minimum wage that was more like a living wage would reduce employee churn, offsetting some of the cost of the pay increase. Costco has demonstrated that this approach works. It pays more than other discount retailers, and not only does it have less turnover, but it enjoys another gain: less inventory shrinkage, which is often due to theft by employees.

Syriza Walks Back Initial Defiance

Victims of austerity and their allies around the world may be placing too much hope in Syriza.

Greece Shows the Limits of Austerity in the Eurozone. What Now?

Mario Seccareccia, professor of economics at the University of Ottawa, has been outspoken in his warnings that austerity policies have the potential to smash economies and spread untold human misery. He has challenged deficit hawks and emphasized the need for strong government investment in things like jobs, education, health care, and infrastructure if economies are to prosper. Here he talks about why what happened to Greece was entirely predictable, why the Greeks were right to reject austerity in the recent election, and what challenges the country faces in forging a sustainable path forward with the left-wing Syriza party at the helm.

Mathew D. Rose: Hope for Greece, and Perhaps for Europe Too

Monday morning I encountered a word in a number of newspapers that I have not read regarding the European Union for years: Hope. The occasion was the election in Greece. I suddenly became aware of how long much of this continent has been living in what appears to be a never ending-crisis.

How More and More U.S. Corporate Profits Escape the Corporate Income Tax

Yves here. This post makes an important and simple point about one big source of the fall in the relative importance of corporate income as a source of Federal tax revenue that is often ignored in official discussions: the rise in the use of pass-through entities.

How Wall Street Killed Entrepreneurs

Since it conflicts with Americans’ widely-held image of self-reliance, the fact that new business creation has fallen to the point that even Hungary has a higher rate of starting new ventures than the US hasn’t gotten the attention it warrants in the mainstream media.

Unfortunately, many of the explanations for why that happened are more than a bit off.

Clyde Prestowitz on the Destructive Effects of TPP on American Workers

By Lambert Strether of Corrente. In last week’s State of the Union speech, Obama (again) pressed Congress to give him “fast track” negotiating authority (Trade Promotion Authority): I’m asking both parties to give me trade promotion authority to protect American workers, with strong new trade deals from Asia to Europe that aren’t just free, but […]

Getting Out of Our Lanes: Understanding Discrimination in the Digital Economy

How digital surveillance reinforces socioeconomic hierarchies.

Bill Black: The Triumph of Radical Right Economics in Greece – At the Hands of “Socialists”

In my January 18, 2015 column, I explained that German Prime Minister Angela Merkel’s sweetest triumph was successfully extorting George Papandreou, Greece’s Prime Minister, head of the Greek Socialist Movemnt (PASOK), and President of the Socialist International, to inflict austerity and a war on workers’ wages on the Greek people.

In this column I explain how radically right-wing the Papandreou Plan was and the completeness with which it embraced rather than resisted the troika’s theoclassical nostrums that forced Greece, Italy, and Spain into gratuitous second Great Depressions. In Greece’s case, the Merkel Great Depression has proven more severe and longer in duration than the Great Depression of 80 years ago. The EC’s Economic Adjustment Programme for Greece description of the Papandreou Plan was accurate. The Greek leaders “strongly own and support the [austerity] programme policies and objectives.”

Michael Hudson: The War on Pensions – The US Budget Anti-Pension Law

On the Senate’s last day in session in December, it approved the government’s $1.1 trillion budget for coming fiscal year.

Few people realize how radical the new U.S. budget law was. Budget laws are supposed to decide simply what to fund and what to cut. A budget is not supposed to make new law, or to rewrite the law. But that is what happened, and it was radical.

Walter Dean Burnham and Thomas Ferguson: Americans Are Sick to Death of Both Parties: Why Our Politics Is in Worse Shape Than We Thought

The 2014 results were as bad for Democrats as the Democrats are pretending they aren’t

Joseph Stiglitz: Economics Must Address Wealth and Income Inequality

Yves here. This interview with Joesph Stiglitz is pretty subversive for a talk with a Serious Economist. Stiglitz doesn’t simply talk about the problem of inequality, but the drivers that most mainstream economists choose to ignore, such as the rise of monopoly/oligopoly power, worker exploitation, and how central banks have allowed banks to engage increasingly in speculative rather than productive lending.