Sunday, December 14, 2014

Republican Presidential Power Rankings

I think two seconds after the election results were coming in, people decided that it was time to speculate about who would run for President of the United States in 2016.  Scott Walker's win in November proved that he could carry a blue state; Rick Scott showed that he could win Florida; something about Lindsey Graham, etc.  .

The traditional Republican narrative in the modern era for being nominated is that you have to fail the first time you run for the Republican nominee and then you run again later.  If 2016 follows the same narrative, you can eliminate any candidate who is running for the 1st time.  That would leave us with a fairly small group of candidates including Rick Santorum, Rick Perry, Newt Gingrich, Herman Cain (oh please, there are few things I would like to see more than Cain run again), Mike Huckabee, and Tim Pawlenty.  There are a few more but I wanted to keep it fairly small.  Out of that group, the most likely would be Rick Perry.  Perry fits the narrative pretty well.  He initially looked like a strong challenger to Mitt Romney in 2012 but had his spectacular flameout where he couldn't remember which federal agency he would like to eliminate.  An election that includes Perry defeating his debate demonds and being the comeback kid is great for media narratives.  On top of that, he's pretty much been running for President in 2016 since he dropped out in 2012.

That is assuming that John Kasich doesn't count.  Kasich formed an exploratory committee in 1999 to see if he could run for President in 2000 but dropped out before the Iowa straw poll and endorsed George W. Bush.  It's looking more likely that Kasich will run after spending nearly $18 million to win re-election against a relative unknown.  It certainly helps Kasich that he is from the only state that matters in presidential elections.  It's tough to see an electoral college victory for Republicans that does not include Ohio going for them.  Perry and Kasich will be two of the strongest nominees for the Republican nomination.

The biggest news for 2016 on election night be that the Kentucky state house stayed in control of the Democratic party.  The Kentucky state constitution prohibits a politician from running for two positions at the same time.  The state house being controlled by the Democratic Party would make it unlikely that the state constitution would capitulate to a man that would have no choice but to filibuster himself if he was nominated for an executive post.  Rand Paul would have to choose between running for re-election as the junior Senator from Kentucky or running for President.  I'm not 100% sure but my guess is that Paul runs for President and when he inevitably fails because of his terribleness, he would try to organize a write-in campaign so that he can become Senator again.  Paul faced an uphill battle to begin with to run for President but this would make it tougher for him.  Marco Rubio is in similar situation where he will most likely have to choose between running for President or Senate.

Scott Walker and Rick Scott won their re-election bids which means I get to hear about how they have the potential to run for President in 2016.  I think Walker's a lot closer to being able to run than Scott and not just because Scott looks like Lex Luthor.    Scott was running against former Florida governor Charlie Crist.  You know how some people say that their vote was the lesser of two evil, people in Florida in 2014 are about the only ones who can honestly say that.  These two candidates were two of the most unpopular candidates in the whole country running for election and somehow Scott got re-elected.  Scott's ability to rub people the wrong way and consistently have scandals follow him is impressive but not something that the Republican Party wants in their Presidential nominee.  Walker, on the other hand, has been running for President since he survived his recall election.  He has consistently shown that he can follow through with trying to crush unions and somehow make it seem that's what we need to do.  Unfortunately for him, first time nominees don't typically do that well during the Republican primary.  My money would be on Walker to be the nominee out of the those who are running for the first time.

The only good news about the 2014 elections for the 2016 presidential nomination process is that I didn't have to hear that much about Chris Christie.  There has been some news in recent days about the bridge scandal and Chris Christie.  The Republicans in New Jersey are saying that the Democrats are playing politics and that the investigation was a sham.  So they have their own separate investigation into the issue.  Seemingly nobody cares but since it's Chris Christie, we have to talk about something.

I actually forgot that Ben Carson was a thing.  Carson is proof positive that if you talk about how the Democrats are the real racists and invoke God into everything you talk about regardless of if it makes sense, you will look really good in early polling and be able to be on Fox News a lot.  You'll probably also get a fat book contract at some point.  Ultimately, the fact that he has never run for office before will not allow him to advance very far in the primary process.

Paul Ryan won't run for President as he has never has faced even a statewide election and received his dream committee chairmanship.  Ted Cruz is comfortable, as far as I can tell, being the Senator who disrupts everything in Washington.  I don't see his end game as being President.  In fact, I don't see Cruz's end game at all.

I think I summed up the last few months pretty well for the potential candidates.

Here are the updated Republican Presidential power rankings, listed from highest probability to being the nominee to lowest:

1. John Kasich, Governor, Ohio
2. Scott Walker, Governor, Wisconsin
3. Chris Christie, Governor, New Jersey
4. Rick Perry, former Governor, Texas
5. Jeb Bush, former Governor, Florida
6. Rand Paul, Senator, Kentucky
7. Marco Rubio, Senator, Florida
8. Rob Portman, Senator, Ohio
9. Kelly Ayotte, Senator, New Hampshire
10. Ben Carson, surgeon
555 (approximately). Rudy Giuliani


Friday, October 10, 2014

Raising the floor: The epic conclusion (except I don't really conclude anything)

Characteristics of minimum wage workers
I wrote a lot about the projections of the CBO for what the minimum wage workforce will look like in 2016.  The BLS data on minimum wage workers is an extremely valuable resource for those who want to discuss the current minimum wage intelligently.  Some of the highlights include that workers who make exactly the minimum wage ($7.25/hour) or less now represents less than 5% of the total workforce.  The data is self-reported and is asked about their income.  Of course, many states have a state minimum wage above $7.25, as do cities, counties, and municipalities.  Because of that and my focus on workers who are earning below $11.50 for the most part, I did not include much of the data that was found in the report. 

This section will just give some more information on those working at exactly the minimum wage or lower.  All information can be found in the BLS data linked above.  About half of those who earn the minimum wage or lower are under 25.  5% of all women who are paid hourly wages make the minimum wage or less compared to 3% of men.  5% of all hourly paid Black workers, 4% of White workers and Latino workers, and 3% of Asian workers earned the federal minimum wage or less.  10% of hourly paid workers without a high school diploma earn minimum wage or less, 4% who have a high school diploma, and about 2% of college graduates do the same.

Conclusion

What are we to do in the face of all this knowledge?  One thing that we definitely will do is argue about raising the minimum wage while building strawmen because we like to do that.  The minimum wage is almost certain to be raised to $10 per hour at some point in the near future.  At some point in the future, we may see the minimum wage even be raised to $15/hour but that is more likely due to inflation and there are not bills on the horizon with this type of provision. 

I remain unconvinced by arguments by critics of the law that it would hurt work ethic to raise the wage, just as pay raises at other jobs do not hurt work ethic, there is not sufficient proof that this will happen.  I did not even address this in the post as I believe the very thought is laughable.
When discussing any policy, there are multiple things that you have to weigh, I do so with a utilitarian bent on most policy issues.  The evidence suggests that there will be a minimal job loss, minimal-moderate increase on consumer price, and a minimal loss of income for those making more than 6 times the poverty level.  For the last point, even if there was a substantial loss of income, I would still probably be ok with it as I believe in a larger redistributive society.  I believe all of that pales into comparison to lifting hundreds of thousands of families out of poverty, increasing educational opportunities for more people, and increasing real income for millions of individuals.  In my mind, I weigh it fairly favorably to raising the minimum wage.


Obviously, raising the minimum wage is not going to be a cure-all for poverty and I don’t believe that anyone is suggesting that.  In my ideal world, we would have an increased Earned Income Tax Credit (EITC) and we would expand it to include more individuals.  Additionally, we would spend more state funding on both two-year public universities and for four year public universities.  As everyone suggests, the best way to avoid poverty is to increase educational opportunities.  Unfortunately, many state budgets have been slashed much to the detriment of four-year and two-year public universities.  I have written about the scourge of for-profit universities who have worked to take their place, in the past.  I believe that the expansion of the EITC in both the amount that is paid out and who it goes to is critical, as well.  If I had to bet on one or the other to happen, it would be on an increased and expanded EITC.  

Raising the floor: The political inevitability

The political inevitability

Raising the minimum wage to $10.10 per hour (or close to that amount) is inevitable. The question is just a matter of when.  In a poll released in March of 2014 by ABC News/Washington Post, 50% of Americans stated that they would be more likely to vote for a candidate who supported raising the minimum wage.  Nearly every poll conducted on the issue shows overwhelming support for raising the minimum wage.   Just a quick rundown on some nationwide polls: Bloomberg found that 69% of Americans favored raising the minimum wage to $10.10 over the next three years.   In June, CNN found that 71% of Americans favored an increase in the federal minimum wage and the New York Times found in September of 2014 that 70% of Americans supported raising the minimum wage to $10.10 per hour.

Support for raising the minimum wage hovers around 70%.  The only poll asking respondents what the minimum wage should be raised to, the CNN poll, found that 52% of Americans supported raising the minimum wage to $10.10 per hour or higher.  19% favored raising the minimum wage but to less than $10.10 per hour.

The polls also indicate what talking points will be used to lower this support.  The Bloomberg poll misrepresented the CBO report and stated that only 16.5 million Americans will see their incomes increase while 500,000 jobs would be eliminated.  Both of these are misrepresentations as we will discuss later.  57% of Americans found this tradeoff to be unacceptable.  This is not surprising since both of the statements are incorrect.   As long as you focus on the total number of jobs lost and lie about who will see their incomes increase, people will not support raising the minimum wage. 
We see that the vast majority of Americans support raising the minimum wage, who does not support raising the minimum wage?  To answer this question, I looked at cross-tabs for 10 statewide polls from Public Policy Polling (PPP).  The nine states that I looked at were Connecticut, Louisiana, Kansas, Florida, North Carolina, Michigan, Kentucky, Mississippi, and Minnesota.  PPP asked if voters would support or oppose a raise in the minimum wage to $10/hour.  I looked at the percentage that stated they opposed the minimum wage.  Then I looked at the percentage of each of the cross tabs that opposed the minimum wage hike.  I subtracted those in the cross tab from the overall percentage who opposed the minimum wage hike.  

If there is a negative in the column it means that there are less people in that cross tab who oppose the minimum wage hike. 
State
Female
Male
Connecticut
-6
7
Louisiana
-8
9
Kansas
-9
10
Florida
-6
8
North Carolina
-7
8
Michigan
-5
6
Kentucky
-8
8
Mississippi
-8
11
Minnesota
-7
7
Average
-7.1
8.2

So on average, women were less likely to oppose a minimum wage hike and men were more likely to oppose the minimum wage hike.  Women are more likely to be making minimum wage (or close to minimum wage) than men.  Next table is by political party. 

Note: Independent also means other in this table
State
Democrat
Republican
Independent
Connecticut
-21
24
9
Louisiana
-23
25
2
Kansas
-22
15
-9
Florida
-14
18
-4
North Carolina
-19
23
3
Michigan
-24
24
6
Kentucky
-15
20
-2
Mississippi
-28
24
4
Minnesota
-26
29
4
Average
-21.3
22.4
1.4

Not even close to surprising is that Republicans are much more likely to oppose a minimum wage hike.  It also gives the appearance that the minimum wage hike is largely a partisan issue. 
The next table was going to be a table looking at racial demographics.  Unfortunately, due to choosing less racially diverse states such as Louisiana, Kansas, Mississippi, and Minnesota PPP lumped racial categories together into an “other” category which makes crossracial comparisons not as accurate.  Whites are more likely to oppose a minimum wage hike at 5.3, meaning that in the average state, whites opposed a minimum wage hike by 5 percentage points above how the state felt.  Blacks opposed the minimum wage hike at about the rate as Democrats (meaning almost none at all).

The last table is an age comparison:
State
18-29
30-45
46-65
65+
Connecticut
-14
4
-1
3
Louisiana
-10
2
0
2
Kansas
-12
5
1
-3
Florida
-15
-4
7
3
North Carolina
-5
-1
3
-2
Michigan
-4
4
1
-2
Kentucky
-3
2
1
-3
Mississippi
-14
-3
0
12
Minnesota
3
5
-2
-8
Average
-8.2
1.6
1.1
0.2

Younger voters are less likely to oppose a minimum wage hike.  This is not surprising but gives us another opportunity to show how millenials are changing politics.  If we take out the outlier in Mississippi, we see that senior citizens are less likely to oppose a minimum wage hike, as well, although it is only by 1.25 points.  Although if you take out Minnesota, as well, it is essentially zero for senior citizens


After looking at the data, those who oppose a minimum wage hike are primarily white, male, Republicans between the ages of 30-65.  The strongest correlation between opposing a minimum wage hike, though, is political party (it would then be followed by race), then gender, then age.   

Raising the floor: The minimum wage, fast food restaurants, and the food service industry

Food service, income inequality, and the minimum wage

Restaurants and food services employ nearly half of all American workers who earn the federal minimum wage or less while restaurants employ nearly 10% of all American workers.  The National Restaurant Association found that there will be nearly $683.4 billion in sales in 2014.   It’s not surprising that thanks to these sales restaurant CEOs are very well compensated.  The average top restaurant CEO was paid $10,872,390 in 2013.  This was more than 721 times what a worker earning minimum wage would make in a year.  To put it into more context, within the first half-day of working, a CEO will have earned as much as a minimum wage worker will earn in a whole year (provided that they work full-time). 

The National Restaurant Association has frequently opposed a raise in the minimum wage.  They state that restaurants would “limit hiring, increase prices, cut employee hours or implement a combination of all three to pay for the wage increase.”  Congress last voted to increase the minimum wage in 2007.  In 2006, the top CEO’s made 609 times what a minimum wage worker made.  While denying a raise in the minimum wage to millions of workers, CEO’s were able to line their own pockets with cash. 

In 1965, a CEO made 20 times more than a typical worker in 1965, growing to 29.1 in 1978, 58.7 by 1989 and reached a peak of 383.4 by the end of the 1990s.  Right now, the average CEO makes 295.9 times more than the typical worker.  All these statistics are courtesy of the Economic Policy Institute.   
It’s a good thing that the CEO’s and others at such corporations, like McDonald’s, produced a handy budget to help those who are unfortunate enough to be stuck working a minimum wage job.  Of course, it assumes that you are working two jobs.  One job is at McDonald’s at minimum wage which gives you $1105 per month and the second job is basically a full time job (over 30 hours a week) if you are working at the minimum wage.  Good luck working those two jobs with your McDonald’s schedule that probably is not very consistent.  The annual compensation for the CEO of McDonald’s, Donald Thompson is $9.5 million.   McDonald’s Corporation spent over $2 million lobbying in 2013.  
The budget that McDonald’s posted was taken down after criticism from many organizations.   

Because of the number of teenagers and high school aged teenagers who are working at restaurants and in the food service industry, many people cite that as the fact that these jobs are only supposed to be for them.  Unfortunately, the hours of operation of these restaurants significantly disproves this.  For some reason they are open late at night and during the day when children are at school. 

Obviously, not all restaurants are comparable to large corporations to McDonald’s or other franchises.  There are many mom and pop restaurants and other small businesses that could be hurt by raising the minimum wage. Of course, they should look at other factors including whether or not additional buying power by their consumers can help alleviate some of the damage.  

Raising the floor: Educating workers

The education of workers

A frequent argument against raising the minimum wage is that those working minimum wage jobs are for those with less education. If these workers were willing to educate themselves, they would find better jobs.  The CBO projects that 58% of all workers without a high school diploma will be low-wage workers (earning less than $11.50/hour in 2016), 30% of all workers with a high school diploma/some college will be low-wage workers, and 7% of workers who earned a bachelor’s degree will be low-wage workers.  Perhaps they have a point.  That is, if you forget that 87% of workers aged 16 to 19 will be low-wage workers and that 12% of low wage workers are under 20.  You know most of those years are spent GOING TO HIGH SCHOOL. You can’t have it both ways; you can’t claim that the vast majority of low-wage workers are young and then say they are also uneducated.
Projecting out to 2016 with the CBO, 70% of low-wage workers have a high school diploma and/or some college and 10% of low-wage workers have a Bachelor’s degree. That leaves about 20% of low-wage workers who have not graduated high school.  That doesn’t leave many uneducated people out there working low-wage (less than $11.50/hour) jobs  who are not younger than 20.  Knowing that, is it possible that raising the minimum wage could help educate these workers?

This is a crazy thought but college is significantly expensive and can be out of reach for those workers who are earning minimum wage.  College is significantly more expensive than in any time in history.  The National Center for Education Statistics (NCES) houses education statistics since 1969 including the price of tuition until the 2011-2012 school year.  For a public four-year institution, the tuition was an average of $7,701.  For someone making the exact federal minimum wage ($7.25/hour) and working 40 hours per week, this tuition would be over 50% of their total income (even if you don’t include any taxes).  Since low-wage workers on average earn half of their family’s income, that’s unfeasible, without taking significant student loans.  Even at California’s current minimum wage ($9/hour), a four year public university would take up 41% of the worker’s income which is still a significant amount of income.  If the worker wants to go to a trade school or a two year college, a public two-year college costs on average $2.647.  How can we compare this against the number of years?  The next table compares how many hours one would have to work at the minimum wage to cover a year of tuition at a four year public university using in-state tuition. The first column is the year followed by the wage, the tuition in its non-inflation adjusted dollars and finally the number of hours it would take at this wage to pay for the tuition.


Year
Wage
Tuition ($)
Hours
1969
1.6
358
223.75
1970
1.6
394
246.25
1971
1.6
428
267.5
1972
1.6
503
314.375
1973
1.6
514
321.25
1974
2
512
256
1975
2.1
542
258.0952
1976
2.3
617
268.2609
1977
2.3
655
284.7826
1978
2.65
688
259.6226
1979
2.9
738
254.4828
1980
3.1
804
259.3548
1981
3.35
909
271.3433
1982
3.35
1031
307.7612
1983
3.35
1148
342.6866
1984
3.35
1228
366.5672
1985
3.35
1318
393.4328
1986
3.35
1414
422.0896
1987
3.35
1537
458.806
1988
3.35
1646
491.3433
1989
3.35
1780
531.3433
1990
3.8
1888
496.8421
1991
4.25
2117
498.1176
1992
4.25
2349
552.7059
1993
4.25
2537
596.9412
1994
4.25
2681
630.8235
1995
4.25
2848
670.1176
1996
4.75
2987
628.8421
1997
5.15
3110
603.8835
1998
5.15
3229
626.9903
1999
5.15
3349
650.2913
2000
5.15
3501
679.8058
2001
5.15
3735
725.2427
2002
5.15
4046
785.6311
2003
5.15
4587
890.6796
2004
5.15
5027
976.1165
2005
5.15
5351
1039.029
2006
5.16
5666
1098.062
2007
5.85
5943
1015.897
2008
6.55
6312
963.6641
2009
7.25
6695
923.4483
2010
7.25
7136
984.2759
2011
7.25
7701
1062.207

From that table, we can see that it now takes about 1000 hours of minimum wage work to be able to afford one year of tuition at a public four year institution.  To kind of tease out the variable of college tuition, the next table shows how many hours it would take if the minimum wage remained at $7.25 in 2012 dollars for each of those years.  The first column is the year, the wage column is what the wage was in comparable dollars to $7.25 in 2012.  So, for instance, $7.25 in 2012 adjusted for inflation was $1.16 in 1969.  The final column is the difference in total number of hours that would have needed to be worked with the real wages compared to the wages with the 2012 minimum wage in inflation adjusted dollars.  The final column is the total number of hours needed to work at the year’s minimum wage compared to the total number of hours needed to work for the 2012 inflation adjusted wage.
Year
Wage
Tuition
Hours
Difference in hours
1969
1.16
358
308.6207
-84.87068966
1970
1.23
394
320.3252
-74.07520325
1971
1.28
428
334.375
-66.875
1972
1.32
503
381.0606
-66.68560606
1973
1.4
514
367.1429
-45.89285714
1974
1.56
512
328.2051
-72.20512821
1975
1.7
542
318.8235
-60.72829132
1976
1.8
617
342.7778
-74.51690821
1977
1.91
655
342.9319
-58.14932848
1978
2.06
688
333.9806
-74.35794101
1979
2.29
738
322.2707
-67.78798374
1980
2.6
804
309.2308
-49.87593052
1981
2.87
909
316.7247
-45.38145509
1982
3.05
1031
338.0328
-30.27159286
1983
3.15
1148
364.4444
-21.75787728
1984
3.28
1228
374.3902
-7.823079723
1985
3.4
1318
387.6471
5.785776997
1986
3.46
1414
408.6705
13.41903201
1987
3.59
1537
428.1337
30.67226541
1988
3.74
1646
440.107
51.23633171
1989
3.92
1780
454.0816
77.26165093
1990
4.13
1888
457.1429
39.69924812
1991
4.3
2117
492.3256
5.792065663
1992
4.43
2349
530.2483
22.45757536
1993
4.56
2537
556.3596
40.58152735
1994
4.68
2681
572.8632
57.96028155
1995
4.81
2848
592.0998
78.01785496
1996
4.95
2987
603.4343
25.40776183
1997
5.07
3110
613.4122
-9.528733651
1998
5.15
3229
626.9903
0
1999
5.26
3349
636.692
13.59924693
2000
5.44
3501
643.5662
36.23964877
2001
5.59
3735
668.1574
57.08529448
2002
5.68
4046
712.3239
73.3071243
2003
5.81
4587
789.5009
101.1787511
2004
5.96
5027
843.4564
132.660129
2005
6.17
5351
867.2609
171.7681862
2006
6.37
5666
889.4819
210.7122281
2007
6.55
5943
907.3282
108.5691916
2008
6.8
6312
928.2353
35.42882802
2009
6.77
6695
988.9217
-65.47343758
2010
6.89
7136
1035.704
-51.42805665
2011
7.1
7701
1084.648
-22.44099077


This table produces more of a need to cut the costs of colleges more than an increase in the minimum wage.  But there are a number of years where the employee would need to work about 2 more weeks of minimum wage to be able to afford a year of tuition with the wage that was constructed compared to the current wage (minimum wage was really stagnant in the 1990s, though).  Although, again, many critics of raising the minimum wage are trying to make it harder for those making minimum wage to be able to afford school by cutting state budgets to schooling, cutting aid programs (such as SNAP, TANF, etc.) or want to make it harder to be able to get those programs.  Finally, many are trying to block Medicaid expansion which would allow these workers to get health insurance and having a greater chance of attending school.