Food Deserts or Just Deserts? by Stewart Dompe, Adam C. Smith

The regulatory consequences of the farm bill and other interventions.

According to the United States Department of Agriculture, 23 million Americans live in so-called food deserts. A food desert is defined as an urban neighborhood or rural town without access to fresh, healthy, and affordable food. The argument goes that lack of access leads to poor dietary choices and a higher incidence of obesity, diabetes, and heart disease.

The proposed solution is a series of government grants (i.e., subsidies) that will be given to anyone, including residents, businesses, non-profits, colleges and universities, and community development corporations. There are at least 19 programs from three departments (Treasury, Health and Human Services, and Agriculture) that offer grants and other resources to combat food deserts. To the rescue!

The reality, however, is that this new policy is an attempt to redress the unintended consequences of existing policy. The stated problem of a food desert is that fresh fruits and vegetables are unavailable at affordable prices in low-income areas. The issue here is not low prices but relative prices. Low-income consumers have a choice of how to spend their food budget and obviously want the most caloric bang for their buck. Even if fruits and vegetables were available at lower prices, they must compete against heavily subsidized processed foods containing carbohydrates and corn syrup.

Where do these subsidies come from? Meet America’s favorite barrel of pork, the farm bill. Whenever someone bemoans partisan gridlock, gently remind them that the farm bill always passes with bipartisan support and, in its 2014 iteration, has a price tag of nearly $1 trillion. For years the farm bill has heavily subsidized the production of wheat, corn, and soybeans with the intended consequence of lowering the prices of products containing those goods.

So it’s no surprise—at least for anyone who recalls from their principles of economics class that demand curves slope downward—that Americans’ consumption of carbohydrates has increased substantially over time. Indeed, we eat 25% more carbohydrates today as part of our daily diet than we did 30 years ago. All sweet treats and candy are cheaper because of corn subsidies, as are breads, cereals, crackers, and everything else containing wheat. A USDA program of farmers markets and community gardens will do little to offset the literal billions spent on corn and wheat subsidies.

Another important issue affecting food availability in rural areas is population density. Those living in far-flung rural communities have to drive many miles to reach a supermarket. Supermarkets compete by offering a wide selection of goods at low prices. Without the population to generate a high turnover, they cannot justify their business model. Supermarkets, however, are not the only source of food services. In several prominent studies, stores with fewer than 20 employees were not counted. This methodology was employed because smaller stores, typically bodegas operating in ethnic neighborhoods, are less likely to have the space for fresh produce or refrigeration. This is a strong bias against smaller, family-owned businesses that operate in areas not traditionally covered by so-called big-box retailers.

Lack of population might explain the problem in rural areas, but regulation is the blight of the urban poor. Cities like New York and Washington, D.C., have made it very hard for companies like Walmart to operate in their cities. They have even passed discriminatory legislation with the express purpose of making it harder for Walmart to do business in those communities. The standard claim against Walmart is that its prices are so low that other businesses can’t compete. But if we’re trying to offer affordable produce to large numbers of people, isn’t that sort of the point? Cities that make it hard for big-box stores to operate hurt their poorest residents. Affluent suburbanites can afford to drive to (and purchase from) Whole Foods and other high-end grocers. For everyone else, zoning laws hurt those that lack the mobility to travel outside the zone or otherwise fail to meet the sticker price of these privileged establishments.

Finally, there is already an existing technological solution to the problem of availability: frozen and canned fruits and vegetables. These goods are high in nutritional content, and their packaging means that stores don’t have to worry about spoilage the way they do for their fresh produce. Fresh food has desirable qualities when it comes to taste and presentation, but it comes at a cost. Consumer demand decides whether a store carries fresh produce or not. Intervening in the market on aesthetic grounds is unlikely to create a good result for those who must actually live with the results.

Food deserts are a result of market forces being channeled through bad regulation. If the government wishes to change how people eat, it would be better off ending farm subsidies and inviting supermarkets into the cities. More generally, we as food consumers should recognize that what’s on the shelf is not just a product of poor consumer choices, but of poor government policies as well.

ABOUT STEWART DOMPE

Stewart Dompe is an instructor of economics at Johnson & Wales University. He has published articles in Econ Journal Watch and is a contributor to the forthcoming Homer Economicus: Using The Simpsons to Teach Economics.

ABOUT ADAM C. SMITH

Adam C. Smith is an assistant professor of economics and director of the Center for Free Market Studies at Johnson & Wales University. He is also a visiting scholar with the Regulatory Studies Center at George Washington University and coauthor of the forthcoming Bootleggers and Baptists: How Economic Forces and Moral Persuasion Interact to Shape Regulatory Politics.

EDITORS NOTE: The featured image is courtesy of FEE and Shutterstock.

An Increased Minimum Wage Equals Greater Unemployment

It’s June, a month famed for marriages, but it is likely to be remembered for the high rate of teen unemployment which has been soaring for a long time. By February, the national unemployment rate for youth, age 16 to 19, had reached 20.7%. By November 2013 it was three times higher than the national average of 6.6% according to the Bureau of Labor Statistics.

Teens are rivaled by the number of American men in their prime working years, a record 1-in-8,who are not in the labor force. These men, age 25-54, represent 61.1 million who are either not working or no longer looking for work. The Weekly Standard reported that “This is an all-time high dating back to when records were first kept in 1955.”

The non-partisan Congressional Budget Office released a report in February that said the wage hike to $10.10 could result in a net loss of about a half a million workers at the same time in increased wages for 16.5 million others.

So, naturally, President Obama in his State of the Union speech, called on Congress to raise the national minimum wage from $7.25 to $10.10 an hour. Soon after, he signed an Executive Order to raise the minimum wage for individuals working on new federal service contracts. That means that taxpayers will pay more for those services as the cost gets passed along. Does he have the power to impose the increase? Probably not.

Meanwhile in California where countless businesses are fleeing thanks to the insanity of its liberal legislature and Governor, as May ended its senate approved a measure that would lift the state pay floor to $13.00 an hour by 2017. If it becomes law, Californians will be interacting with machines for everything from banking to filling their gas tank to having a fast-food meal. Even more insane, Seattle has become home to the highest minimum wage in the nation, $15.00 an hour!

Minimum wage laws have been around a long time. Their original goal was to raise the income of the working poor, but the fact that there is still talk of raising them suggests they don’t work as intended. Letting the job market determine wages holds a greater promise of increased wages because businesses have to remain competitive and that means paying a wage that attracts skilled and even unskilled workers.

As Thomas E. Hall, the author of “Aftermath: The Unintended Consequences of Public Policies” (Cato Institute, $24.95, due in August) notes, “The living wage concept moved to the forefront during the Industrial Revolution, along with calls to end practices such as child labor and conditions poor working women faced. Massachusetts passed the nation’s first minimum wage law in 1912.

One of the outcomes of the Great Depression, 1929 to 1941, was the inclusion of a minimum wage as part of the New Deal’s National Industrial Recovery Act. Suffice to say, the NIRA, which actually encouraged businesses to collude together to set prices, failed to promote economic recovery. It was very unpopular and in 1935 the Supreme Court declared it unconstitutional.

Because liberals never learn anything from experience, the NIRA was resurrected later in the 1938 Fair Labor Standards Act that raised the minimum wage to 40 cents in 1945. “The United States has had a federal minimum wage ever since.”

Politicians and even some demented economists like the minimum wage. Every time it is raised, it appears to the general public that working people benefit. The problem is that the wage increases also include increases in unemployment as businesses try to contain costs in order to remain competitive and make a profit.

As Hall, a professor of economics at Miami University in Oxford, Ohio, notes, “The minimum wage’s first significant impact on national labor market conditions occurred in 1956, when the hourly rate was raised from 75 cents to $1.00.” The increase had its “greatest impact on teenagers because they possess the fewest marketable skills among the working-age population. Also, teens often do, or have in the past, worked at jobs easily replaceable with machinery or by conducting business in a different manner.”

The minimum wage rate, nonetheless, has continued to increase since the 1950s and, “By the early 1990s, these changes had caused to minimum wage to apply to over 90 percent of the U.S. workforce.”

Here’s the fundamental lesson about the minimum wage that continues to be ignored. “President Ronald Reagan, who occupied the White House from 1981 to 1989, did not support further increases because he believed that raising the minimum wage would discourage employment growth…during that decade, the U.S. economy created 18 million new jobs.”

As Hall succinctly points out “Remember that the minimum wage is just a government-imposed price-fixing scheme that creates winners and losers.”

Teens that stayed in school and will either be facing a summer vacation or graduating are particularly disadvantaged by a minimum wage law.

“The effects of high unemployment among this demographic group,” says Hall, “should not be discounted. One reason is that the lack of employment opportunities for young people deprives them of valuable work experience in the form of learning the responsibility of showing up for a job on time, learning to follow directions and complete tasks, learning to work with others…these skills can prove to be beneficial later in life.”

It is likely that the minimum wage is also a factor in why many men in the 25-54 age cohort are not working either. This is hardly the time to be increasing the rate unless you want to see the rate of unemployment increase for all ages and both sexes.

By contrast, in addition to the energy sector, the sector that builds machines to replace human workers is likely to do very well over the coming years.

© Alan Caruba, 2014

RELATED ARTICLE: Consumers Hit With Surcharge to Cover City’s $15 Minimum Wage

Grover Norquist — Trust me! I’m a Lobbyist!

If Grover says that crops are rotting in the fields, then damn it, crops are rotting in the fields and its time to let illegal aliens into America to harvest those crops so that we can end world hunger.

Hey America, how in the world can this guy get away with these comical policy statements and actually get Members of Congress to support his nonsense?

As we move through this micro-series you will see how Norquist’s nefarious work impacts YOU on a daily basis on the four “I”s of: Immigration, Islam, Israel and Iran.

Watch this short video and see if you can figure it out.

[youtube]http://www.youtube.com/watch?v=4r3SreAxQy0[/youtube]

Grover Norquist: Veni Vedi Visa (I came, I saw, I took your Job)

In this episode we break Grover’s immigration H1-B, VISA scam.

[youtube]http://youtu.be/6jGe9npilCw[/youtube]

Actually, it’s a brilliant scam where Wizard Norquist and his minions construct a false premise, then conceptually sell this bogus idea as the next best conservative idea to hit Washington. He then secures his target clients, collects eye-popping retainers and does the “K” Street shuffle on the heads of spineless politicians, who mechanically sign the law that the Wizard puts in their power-loving hands.

What a mess this guy has made out of the formerly honorable Conservative movement in America. Norquist has made a bit of a name for himself as a Beltway stand-up “comedian.” But none of his jokes have ever reached the level of side-splitting yuck, yucks, as when he says, with a straight face no less… “Immigration is the number one economic asset for America!”

Now, that IS funny…and destructive for serious Constitutional Conservatives… of which, the Wizard of “K” Street is not one.

As we move through this micro-series you will see how Norquist’s nefarious work impacts YOU on a daily basis in the areas of: Immigration, Islam, Israel and Iran (the Four Is).

Combat Veterans creating memorial statue to honor Benghazi heroes Glen Doherty and Tyrone Woods

scantyroneglenn

Artist’s rendering of the Glen Doherty and Tyrone Woods Memorial Statue courtesy of VeteransArt.org. For a larger view click on the image.

Glen Doherty and Tyrone Woods, the two heroes from the Benghazi attack to whom many owe their lives, will be honored in a monument created by their fellow US military combat veterans. Doherty and Woods selflessly gave their lives on September 11, 2012 knowing that there would be no reinforcements. They sacrificed their lives in service to their nation. Honoring them is both fitting and proper.

This idea of combat veterans honoring their fallen brothers in arms via the fine arts is something new and unique. It helps honor the fallen while providing meaningful and creative jobs for former combat veterans.

Veterans from VeteranArt.org under the guidance of renowned sculptor Greg Marra, who made and donated the Chris Kyle statue, are doing just that, honoring these two men in everlasting bronze; these two warriors immortalized the warrior spirit and military ethos—it is only fitting these two brothers in arms, close in life and death, be immortalized together in bronze for eternity, by their fellow combat veterans.

Mr. Woods said “Thank you for honoring my son in a bronze statue.”  Kate Doherty Glenns sister stated, “ she wishes us success and luck in the process, that she is so pleased the statue will help veterans.

VeteranArt.Org received the final graces they needed to start a statue of Tyrone Woods and Glenn Doherty.

Greg Marra, founder of VeteranArt.org, has enlisted the help of local Sarasota veterans, like Jason Collins, Army Military Intelligence and Michael Scelia former US Army forward observer, for the project. Mr. Marra has a pool of veteran talent, and he can hire more veterans as he is commissioned to do other projects. Marra is training US military veterans to represent themselves in the memorial process. Marra stated “Warriors honoring warriors in bronze for eternity is my life long mission.”

Marra, who sculpted the Chris Kyle Memorial Statue, has started the sculpting process and hired veterans to help sculpt this fitting tribute of these two warriors. “I’ve  run into more vets daily that wanted to pursue art and that understood the power of art than I would ever fathom; empowering them with fine arts training, and encouraging themselves as gallant warriors instead of victims is god’s work.” What a better tribute then to have brothers in arms, immortalize two of their own who made the ultimate sacrifice protecting life.

Jason Collins and Mike Scelia veteran artists have a pet name for the statue “Dueling machine guns, which they feel fits the statue because of its heavy guns and all the casings which lay at Tyrone’s and Glenn’s feet. They added that, “Veteran art is an amazing concept and gratitude is an understatement toward how we feel about Mr. Marra, his actions show that people actually care about us, and our service to this nation.”

Veteran Art/Sculpting Our Heroes is in need of donations to make this fitting tribute a reality. The cost of this memorial, fair market value, would be $85,000 total for two life-size statues to the bronze stage. More funding might be required to get these statues bronzed. These statues will employ up to four veterans, full time—Mr. Marra is donating his time and expertise as a thank you gesture to all veterans.

This is a groundbreaking organization. No other veteran organization has a renowned artist opening his studio-for free, donating his time and services, and paying veterans to come and learn how to sculpt without taking any money for himself-only for supplies; while simultaneously—those veterans are making memorials to other veterans who have died heroically serving or helping their own countrymen and women.

Donations can be made at: SculptingOurHeroes.com  or by calling the Veteran Art studio at (941) 993-1772 or cell (267) 885-9203 or via email: veteranartorg@gmail.com. NOTE: Donations are not tax deductible. 

The View from the Bottom

It tells you everything you need to know about the utter contempt those in the White House and the circles of power that the announcement of 0.01% economic growth thus far this year was blamed on—wait for it—the weather! Specifically, a cold winter.

AA - Blame the Weather

If you have been paying any attention of late, the weather and the climate have become the reason foreverything in general and for tornadoes, floods and forest fires, in particular. The fact that these natural events have always been subject to whatever the weather is or the larger climate trends seems to have escaped the notice of too many people. If winter automatically drives down the economy to a point of invisibility, that is news to me.

I’m surprised some economist hasn’t blamed winter for the major decline in home ownership. It has hit its lowest level since the mid-1990s according to the Census Bureau. As the Wall Street Journal reported, “despite two years of recovery in the housing market there are still fewer homeowners than there were before the recession.”  Oh? The recession is over? You could have fooled me.

It is no surprise, however, that China is poised to pass the United States as the world’s leading economic power this year. The U.S. has been the global leader since 1872 when it replaced the United Kingdom and now “most economists previously thought China would pull ahead in 2019 according to the Financial Times.

Bear in mind that the U.S. has survived financial crises in the past, but the 2008 meltdown has persisted since around January 20, 2009 when a new President was sworn into office. It didn’t take him long to receive a Nobel Peace Prize that year and to preside over the first reduction in the nation’s top ranked credit rating in 2011.

Could the economic decline have something to do with the insane increase of federal government regulation? As John Merline asked in Investor’s Business Daily, “After years of rapid growth during the Obama administration, the cost of federal regulations is now bigger than the entire economics of all but nine countries in the world.” He was reporting on the annual report. “Ten Thousands Commandments”, issued by the Competitive Enterprise Institute. Compiled by Clyde Wayne Crews, this year’s report found that the “regulation tax” imposed on the economy now tops $1.86 trillion. “By comparison, Canada’s entire GDP is $1.82 trillion and India’s is $1.84 trillion.”

“The problem, Crews notes, is that the combined cost of this ‘tax’ never shows up anywhere in the federal budget—or any other official report—even though it is now bigger than individual and corporate income taxes combined.” The CEI report noted that federal regulatory costs average $14,974 per household “which is more than the typical household spends on just about anything else.”

So you don’t have to have an economics degree to figure out what is wrong. “Last year,” Merline reported, “regulators issued 3,659 rules. That’s equal to one new rule every 2 l/2 hours of every day7 or nearly two federal rules issued every business hour.” Why is this happening? Because the 2013 Federal Registered contains 79,311 pages, the fourth highest ever and the top two all-time totals were both under President Obama. Big government? No, TOO BIG Big Government.

A new poll surveying young Americans’ political attitudes was released at the end of April by Harvard University’s Institute of Politics. As indoctrinated as those 18 to 29 have been in our public schools, they are not brain-dead. The survey found that the millennials have less trust in government than ever before in the President, Congress, the Supreme Court, the military, and federal government as a whole. There is a comparable lack of confidence in Wall Street and the United Nations. Unfortunately, less than one-in-four (25%) of Americans under 30 said they would definitely vote in the forthcoming midterm elections, a decrease since last autumn, though more Republican millennials will vote than Democrats.

It’s not just the youth who are unhappy. A Wall Street Journal/NBC News poll taken in late April revealed “a marked change from past decades” as “nearly half of those surveyed wanted the U.S. to be less active on the global state, with fewer than one-fifth call for more active engagement—and anti-interventionist current that sweeps across party lines.”

This is hardly a surprise as one looks back on the years since 9/11 in which engagement in Afghanistan and Iraq turned out to be failures. In this regard Obama has his finger on the pulse of Americans who are weary of military interventions, but it is equally true he has used this to impose vast reductions on the U.S. military. If they are needed, there will be far less of them and the arsenal they will need.

The poll showed that approval of Obama’s handling of foreign policy has sunk to the lowest level of his presidency with 38% approval. His overall job performance now pulls in 47% or so. Both are below half the population of likely voters. The poll also demonstrated how disenchanted they are with the economy “that many believe is stacked against them.” The views expressed correlated with income and education, rather than party affiliation.

The state of the economy reflects the factors noted; too much regulation, Obamacare’s attack on one sixth of the economy, replete with dozens of taxes within it, as well as the serious disruption of the healthcare system.  What it has also done is cause many businesses to put a cap on how many they employ, a dagger in the heart of those coming out of college with few real prospects, those seeking employment after having been laid off due to Obamacare and other factors—some 90 million still.

If the nation does survive Obama, historians will express wonder that he was reelected and that his approval ratings weren’t considerably lower. He is still being defended by the mainstream media, so that might account for the latter, but recent revelations about the Benghazi cover-up may have an impact.

The people I talk with are “hanging on”, struggling to get by on what money comes in. They are not happy and I suspect they reflect a general unhappiness from the millennials to the senior set.

They are observing the nation and the world from the bottom of the barrel.

We’re Americans. We don’t like being number two.

© Alan Caruba, 2014

EDITORS NOTE: The featured photo is by Angie Schwendemann. This file is licensed under the Creative Commons Attribution-Share Alike 2.0 Generic license.

Obamacare and minimum wage push connected?

The US Department of Labor map (above) shows minimum wage laws in the various States as of January 1, 2014. Where Federal and state law have different minimum wage rates, the higher standard applies. Minimum wage and overtime premium pay standards are applicable to non-supervisory non-farm private sector employment under state and federal laws.

  • Green States with minimum wage rates higher than the Federal
  • Yellow States with no minimum wage law
  • Blue States with minimum wage rates the same as the Federal
  • Red States with minimum wage rates lower than the Federal
  • Brown American Samoa has special minimum wage rates

We know many people are now being hired to work less than 30 hours a week so employers don’t have to provide Obamacare. Think that move has anything to do with the push by Democrats to dramatically increase the minimum wage from $7.25 to $10.10?

Well, if you do the math you will find someone working at the minimum wage of $7.25 for 40 hours grosses $290.00 a week. Someone working 29 hours a week at $10.10 an hour would gross $292.90 per week!

Not bad, work 25% less and make the same amount of money. For entry level workers this must sound like a dream come true.

How do you think the Democrats arrived at $10.10 an hour, by coincidence?

When I grew up minimum wage jobs were filled primarily by high school and college kids, , until illegal aliens took them.

Illegal aliens are excited to have a job paying $7.25 an HOUR since a worker at the Ford plant back in Mexico (thanks to Nafta) makes $7.50 per DAY.

Obama administration chooses environmentalists over unions on Keystone XL and fracking

While some environmental groups applauded the latest delay of the Keystone XL pipeline, unions whose members would be building it ripped the administration. Sean McGarvey, President of North America’s Building Trades Unions, AFL-CIO, called it “a cold, hard slap in the face for hard working Americans who are literally waiting for President Obama’s approval and the tens of thousands of jobs it will generate.”

Laborers’ International Union of North America (LIUNA) general president Terry O’Sullivan was more colorful, saying, “It’s clear the administration needs to grow a set of antlers, or perhaps take a lesson from Popeye and eat some spinach.”

The Keystone XL pipeline isn’t the only energy issue dividing anti-energy environmental groups and unions who want jobs for their members. Over the weekend, the Associated Press reported that development of shale energy using hydraulic fracturing had strong union support in Pennsylvania:

“The shale became a lifesaver and a lifeline for a lot of working families,” said Dennis Martire, the mid-Atlantic regional manager for the Laborers’ International Union, or LIUNA, which represents workers in numerous construction trades.

Martire said that as huge quantities of natural gas were extracted from the vast shale reserves over the last five years, union work on large pipeline jobs in Pennsylvania and West Virginia has increased significantly. In 2008, LIUNA members worked about 400,000 hours on such jobs; by 2012, that had risen to 5.7 million hours.

In contrast, environmental groups like the Natural Resource Defense Council who patted the administration on the back for the Keystone XL delay, strongly oppose hydraulic fracturing.

In his Keystone XL statement, McGarvey head of the building trades union asked a good question:

Why does President Obama continue to side with radicals instead of the middle class that, twice, put him office, and supports this project by a significant majority?

Out of work American union members would like to know.

[H/T Lachlan Markay at the Washington Free Beacon.]

EDITORS NOTE: The featured photo of a rig drilling for natural gas at a hydraulic fracturing site in Pennsylvania is courtesy of photographer Ty Wright/Bloomberg.

A Teachers’ Union Speaks Power to Truth: Children suffer, but they aren’t the point by Wendy McElroy

On March 22, Joshua Pechthalt delivered a “state of the union” address at the 72nd convention of the California Federation of Teachers (CFT). Union Watch, an organization that monitors California’s unions, called it “refreshingly candid.” It bluntly revealed the union’s political and social goals without wrapping them in rhetoric about educating children. Pechthalt declared:

[The CFT is] a beacon of progressive, social justice unionism. . . . That’s why we have consistently supported single payer health care reform and progressive tax reform measures. . . . The CFT is committed to the vision articulated by the civil rights movement and efforts to ensure class, race and gender equity and the just demands for comprehensive immigration reform. We understand that central to the mission of public education is the need to advocate for a different kind of society.”

Could the teachers have been any clearer?

Pechthalt also pointed to “the Vergara lawsuit” as “the latest attack on public education.” On January 27, the non-jury trial of Vergara v. California began before Los Angeles Superior Court Judge Rolf Treu. In the suit, nine public school students and their parents accuse state statutes of protecting the jobs of grossly incompetent teachers, which amounts to an unconstitutional denial of education. In California, students have a constitutional right to “substantially equal opportunities for learning,” which the Vergara plaintiffs claim was abrogated.

The Washington Post explained, “In states such as California, there are so many legal and procedural hurdles before a tenured teacher can be fired, they say, that it’s difficult to shed even the worst teachers.” Moreover, California school districts have an unusually short time—about 18 months—before tenure is granted. “The complaint also attacks seniority rules and ‘last in, first out’ policies, which say the newest teachers are the first to be laid off when jobs are cut, regardless of performance.”

In short, the legislature and teachers’ unions are accused of putting the interests of their members above the educational interests of children as encoded in law.

Vergara has attracted national attention and passionate debate because the judge’s ruling could change the manner in which California educators are hired and fired. It could also set a precedent for other states.

The teachers’ unions have reason to fear the ruling, which explains why the two largest ones—the CFT and the California Teachers Association (CTA)—joined the suit as defendants. Many reporters believe Judge Treu has repeatedly signaled his sympathy toward the plaintiffs. In a March 31 article, “Vergara Time Bomb: Will a Judge Tear Down California Teacher Protection Laws?,” the LA Weekly stated, “One couldn’t help but notice how Treu repeatedly interrupted the defense attorneys representing the state and teachers’ unions who intervened in the case. He probed their reasoning, after having listened silently to the plaintiffs.” Pechthalt commented on the judge’s behavior, “Unfortunately, I think that may be quite telling about where he’s going.” The arguments closed on April 1 and the decision is expected in a matter of months.

One theme that binds Pechthalt’s speech and Vergara together is the high priority that teachers’ unions have given to their own interests rather than to the goal of quality education. But equally questionable is the priority they are giving to political and social causes rather than to quality education. Even though the plaintiffs are poor minority children and their parents, the unions are casting Vergara as a “class” conflict in which they are the underdog being persecuted by rich people and corporate interests (sound familiar?). In other words, the unions wish to appear as David against Goliath. Who is cast as Goliath? Billionaires David Welch and Eli Broad as well as the corporate-friendly law firm of Gibson Dunn and Crutcher—all of whom are backing Vergara.

In his speech, Pechthalt said,

The super wealthy and their swollen circle of reactionary think tanks and echo chamber conservative media are committed to eradicating what remains of the labor movement. . . . The egalitarian mission of public education that was given new life by the social movements a half century ago now stands as an obstacle to a corporate world committed to keeping wealth and education in the hands of a few. . . . The largest corporate interests use the media and the politicians they help elect to create a narrative that attacks hard earned pensions, worker rights—including the right to unionize—and the right to vote.

In newspaper statements, union officials have hurled similar accusations of class warfare.

It is difficult to give any credence to such accusations, flowing as they do from massive, state-privileged, taxpayer-funded organizations. California’s teachers’ unions are among the most powerful in America, representing some 400,000 educators. The state’s statutes are so favorable to the unions that it is next to impossible to dismiss even educators who behave egregiously; indeed, the legislature is sometimes referred to as “union controlled.”

The Washington Post (Dec. 15) cited the average yearly salary of teachers in California at $69,324—the third highest in America. The salary does not reflect other benefits such as healthcare and pensions. Estimates of those benefits vary widely, and predictably so; the unfunded mandate of teachers’ pensions may well be the most heated political conflict in California and statistics are weapons. The Los Angeles Times gave the low end: “The average retiree last year left his or her job at age 62 with a monthly pension of $3,980 after working 25 years.” The Voice of San Diego gave the high end: “Every district employee gets a guaranteed pension, which . . . will pay them 80–90 percent of their highest salary every year until they die . . . That teacher making $73,000 today will get 80–90 percent of their final salary number which will be as high as $95,000. They are eligible for retirement beginning at the age of 55.”

A standard counter to citing the plush union pensions is that teachers do not receive Social Security; of course, neither do they pay into it. The Voice of San Diego continued, “This retirement program is dramatically more generous than Social Security, which most Americans receive. Current middle-age working Social Security recipients are slated to receive only 76 cents for every dollar taken from their paycheck. However because teachers’ unions negotiated a guaranteed pension amount, they are receiving 10–20 times any contribution they make in future retirement payments.”

There is a more fundamental reason for tearing the cloak of David off the shoulders of the union, however. It has been almost a century since the labor movement had any claim to being an underdog or the voice of workers’ rights. The New Deal turned unions into state-sponsored organizations with such legal privileges as state certification (that is, a monopoly within specific industries) and the “right” to collective bargaining. Interestingly, the new unions were championed by leaders of industry such as Gerard Swope, then-president of General Electric. Big business may not have liked the “new union,” but it was vastly preferable to wildcat strikes, slowdowns and other disruptive tactics pursued by their grassroots counterparts.

Some put an earlier date on the death of the genuine labor movement. The libertarian Karl Hess said, “We used to have a labor movement in this country, until I.W.W. leaders were killed or imprisoned. You could tell labor unions had become captive when business and government began to praise them.”

There is no measure by which California teachers’ unions are an underdog; they are a politically privileged and legally protected class. It is not clear if the wealthy supporters of Vergara are politically objectionable. Nor does it need to be. The entire issue should be educating children.

Unfortunately for them, children do not vote, nor do they send lobbyists to the legislature. In their response to Vergara, the CFT and CTA have displayed a wanton disregard for children, preferring instead to argue for their own interests and to play “class” politics to smear opponents. By contrast, the Vergara supporters have focused on the children and the quality of education. If it were up to the unions, no one would know that it was children and parents suing them for an opportunity being denied by the unions—namely, the opportunity to learn.

ABOUT WENDY MCELROY

Contributing editor Wendy McElroy is an author and the editor of ifeminists.com.

RELATED STORY: Common Core’s Validation: A Weak Foundation for a Crooked House

EDITORS NOTE: The featured image is courtesy of FEE and Shutterstock. 

Keep Unions Out of College Athletics

We’ve been raised to compete, to want more! More! More! It’s a way of life. It’s about greed. — Sandy Duncan, actress, singer

And so, the label “amateur” will likely be lifted from college football players very soon. No more is it about earning scholarships, attaining a college education, and working hard at a sport in order to pay for that education. It’s all about greed.

Gimme, gimme, gimme.

The National Labor Relations Board issued a ruling in March declaring football players from Northwestern as “employees” of the university and therefore the right to form a union.

What?

That’s like saying tuba players in the band are employees of the college. Maybe even swimmers, cheerleaders and chess players. After all, they all compete, they all enhance the “sporting” events and they all work hard.

Yes, football players work hard at their sport. But they are not employees! They are students of a college or university who – in most situations – must maintain a particular grade average in order to be granted the privilege to compete.

Now, a mighty foot has wedged into the proverbial door for unions to take over college sports. It may start with football, but don’t think for a minute this won’t spill over to basketball, baseball, soccer, lacrosse, wrestling and more, even beyond sports.

For their hard work and training, many football players have earned scholarships at institutions of higher learning, which is worth a lot of money, not only in tuitions but in achieving an education that will prepare them for profitable careers in later life. There’s the reward.

Some outstanding players are often cherry-picked into the big leagues where millions of dollars are bestowed upon them as a pro. That’s another reward for being great at their sport.

But until then, the kids are primarily students. Other than teachers, there is no place in amateur/university sports for unions. Union power will eventually translate in to sport domination, collective bargaining and if they deem necessary, strikes and sit-downs. And it will reach out to all other extra-curriculum activities on campus.

Talk about opening Pandora’s box.

Collective bargaining will translate to higher and higher salaries, which will create the need for new sources of funding. Network television is already established and on board. So where will that come from?

Ticket sales. Vendor costs.

Today’s pro baseball and football, ticket prices have soared out of sight to where the average family can barely afford a day at the ball game, unless they sit in the bleachers over center field or the end zone. The bulk of good seating is reserved for corporations, politicians, and clients of all sizes and shapes of money bags.

Fortunately, prices for attending amateur school games have not hit the stratosphere – yet. But wait until the costs of ball players generate the need for revenue – revenue which the average Joe cannot afford.

Going to college is first and foremost about attaining education. Sports and their associated events are an important element of college life, but it’s not a “profession.” If kids wish to dodge education and go for the big bucks, they can always apply for the pros once out of high school.

Amy Perko, Executive Director of the Knight Commission on Intercollegiate Athletics said, “Universities and the NCAA, not unions, need to be the ones to guarantee benefits, like multi-year scholarships.”

When it comes to students, regardless of their extra curricula, unions should be kept out of the universities and colleges. To say that students who play sports are an “employee” of the school, is not only absurd, it’s nothing but a money-grubbing ploy to destroy the spirit of school sports now and forever…not only for the kids, but the families and spectators as well.

Amy Perko enunciates many of the benefits that college athletes should be entitled to, outside of being paid “salaries” as an employee. Watch the video:

RELATED STORIES:

College Players Granted Right to Form Union – NYTimes.com

College Athletes Granted the Right to Unionize—Is This the End of the NCAA? | Alternet

The UAW Against the Volunteer State: Labor politics is desperate, thanks to capital mobility by Wendy McElroy

The United Automobile Workers (UAW) recently failed to unionize the Volkswagen assembly plant in Chattanooga, Tennessee. The campaign—and failure—revealed the desperation and changing dynamics of modern labor unions.

The UAW is the richest union in North America, with assets of reportedly more than $1 billion at the end of 2012. It is arguably also the most politically influential, because it donates large amounts of money to Democrats. Like most unions, however, its membership and dues are in decline while its costs, such as pension benefits, are climbing. According to the Bureau of Labor Statistics’ Union Members Summary (Jan. 24, 2014), there were 14.5 million members in 2013, compared with 17.7 million in 1983, and 11.3 percent of workers belonged to a union in 2013, compared to 20.1 percent in 1983.

For the UAW and, perhaps, labor unions in general, the Chattanooga vote was a pivotal event: Foreign manufacturers employ a huge—and non unionized—workforce.

The stumbling block: Foreign auto manufacturers such as Nissan, Volkswagen, Toyota, and Mercedes-Benz have set up plants in
Southern “right-to-work” states. These states defend a worker’s right not to join a labor union; other states allow closed shops in specific industries, meaning that they exclude non-union workers. A February 15 Forbes article explained, “In more than 30 years, none of the free-standing assembly plants owned by foreign manufacturers in the United States have ever been organized. (This doesn’t include factories that originally began as joint ventures.)”

According to CBC News, the UAW isn’t alone in its concern: “Detroit’s three automakers—Ford, Chrysler and General Motors—are increasingly anxious about the 78-year old union’s future.”

Why would the UAW’s future worry Detroit’s big three? Unions and corporate executives, though they’re usually cast as enemies, share a vested interest in keeping the union strong.

“For them, it’s a ‘devil you know’ situation. They worry that the 382,000-member UAW could be absorbed by a more hostile union. Such a merger could disrupt a decade of labour-management peace that has helped America’s auto industry survive the financial crisis and emerge much stronger, according to a person with knowledge of executive discussions,” CBC News reported.

A standard method by which to unionize an American workplace is to have at least 30 percent of employees request a union, usually in the form of signing a card or a petition. After the National Labor Relations Board (NLRB) approves the request, a secret-ballot election is held. If more than 50 percent of the employees vote for unionization, then a union is usually formed unless there are circumstances such as an appeal. A second procedure called a “card check” offers a different route; that’s when over 50 percent of workers request unionization. National Review explained what happens next: “The employer can choose to recognize the union, and it’s formed without a secret ballot. If the employer declines . . . a secret ballot election is held that requires majority support.”

The secret ballot has become a flashpoint, with surprising advocates and opponents. In decades past, unions pushed for secret ballots because they perceived a need to protect pro-union workers from threats or retaliation by employers. In short, secret ballots were a consciously pro-union measure to ensure workers could vote freely. Now, depending upon the politics of particular states and industries, unions want to make obsolete the secret ballot, which can function as an anti-union measure. That is, employees who vote secretly do not experience peer pressure or blowback from coworkers and union organizers. In some situations, this makes employees less likely to vote for unionization.

In recent years, Democrats have repeatedly introduced legislation into Congress that would automatically create a union without the step of a secret ballot or the need for employer consent. The only requirement would be for 50 percent of workers to request unionization. The legislative attempts have been unsuccessful so far. If the unionization in Chattanooga had succeeded, however, it would have established precedent, bypassing legislation altogether. It would have also made a crack in the barrier that has prevented the unionization of foreign manufacturers in the South. Unfolding the Chattanooga event reveals modern labor-union strategy.

The Pivotal Event

In February, the UAW seemed poised for victory in Chattanooga. A month earlier, it had publicly declared a victory by claiming that card check had demonstrated that a majority of workers wanted the union. It asked Volkswagen’s management for official recognition. But eight workers complained to the NLRB, reporting that the UAW had used thug tactics and misrepresentation in the ballot-casting. They also accused the management in Germany of threatening to cut the flow of work to the Chattanooga plant unless unionization occurred.

That might be the most interesting aspect of the story. As the Washington Post asked, “The German company is campaigning for the UAW, not against it, in a kind of employer-union partnership America has seldom seen. What gives?” Most foreign manufacturers oppose unionization of their American plants because it would usher in expensive benefits packages and weaken their control of workplace practices, such as hiring and firing. But labor practices in Germany are union-friendly. Volkswagen was undoubtedly targeted because the company is open to establishing a German-style works council, which would have been the first of its kind in America. A works council consists of blue- and white-collar employees who are partners in management decisions on issues such as productivity and workplace conditions. American labor laws, though, make this arrangement illegal without unionization. Specifically, federal NLRA statute section 8(a)(2) prohibits so-called “company unions,” which the VW works council would be categorized as.

The most powerful pushback against the UAW came from state officials who believed unionization would harm Tennessee’s economy and make the state far less attractive to business. One of the obstacles officials erected was a 2011 state law on secret ballots and the “selection of exclusive bargaining representative(s).” The law states,

Should employees and employers seek to designate an exclusive bargaining representative through an election, they have the right to a secret ballot election; if a secret ballot election is chosen, no alternative means of designation shall be used.

The state law has been called unconstitutional because it may contradict federal rules on unionization. Nevertheless, the state law clearly indicates Tennessee’s opposition. State Sen. Mark Green, the vice chairman of the Senate Commerce Committee, also called for Volkswagen to facilitate a secret ballot to protect workers’ privacy and shield them from intimidation. The likelihood of intimidation increases because most petition signatures are generated employee to employee, face to face. Green argued, “You’ve got seven guys standing around you who work with you every day and they’re saying, ‘hey, sign this card.’” Green concluded, “We don’t elect the governor that way, we don’t elect our representatives that way, the ballot is secret. That’s democracy.” The senator also claimed to know of four large manufacturers that were monitoring the Chattanooga situation before committing to expansion within Tennessee.

Gary Casteel, the UAW’s regional director, denied the charges of union intimidation and threw the accusation back at the state government. A secret ballot, he argued, would give “outside interests” a 40-day window in which to take out ads and otherwise communicate anti-union messages to VW workers. By contrast, Casteel claimed the cards in the card check would carry a simple, self-explanatory message and not be confusing.

On February 14, the Chattanooga Volkswagen workers cast a secret ballot. They defeated unionization by a vote of 712 to 626. The defeat occurred even though Volkswagen had signed a neutrality agreement, pledging not to interfere with the UAW’s efforts; such agreements are considered to be endorsements of unionization. Volkswagen workers also defeated unionization despite a strong drive by the UAW that included public support voiced by President Obama. They defeated it even though the NLRB facilitated the election by fast-tracking it.  An anti-union campaign headed by Sen. Robert Corker, Jr., and Tennesseans’ concern about unemployment, prevailed.

Conclusion

Predictably, the UAW has appealed the February 14 results and seeks a revote. The union accuses state officials of “dirty politics.” For example, it argues that officials threatened to withdraw state-financed incentives if Volkswagen workers unionized. As of this writing (March 27), the NLRB has set a hearing for April 21, but delays are probable. Rejecting the vote would mean rejecting the solid precedent of siding with the voice of workers. Accepting the vote would mean undercutting labor unions on a matter that may be key to their future. Whatever the decision, union politics in America is changing.

ABOUT WENDY MCELROY

Contributing editor Wendy McElroy is an author and the editor of iFeminists.com.

EDITORS NOTE: The featured photo is courtesy of FEE and Shutterstock.

Blue State Blues

Two headlines on Tuesday, March 18, are bound to give Democrats across the country a really bad case of heartburn. The Washington Free Beacon headline read: “Born to Run Away From High Taxes,” while a New York Times headline read, “Businessman Wins Republican Primary for Governor in Illinois.”

The Free Beacon story details the extent to which “New Jersey’s high taxes may be costing the state billions of dollars a year in lost revenue as high earning residents flee (the state).” According to the Free Beacon story, the study,” titled Exodus on the Parkway, was completed last year by Regent Atlantic, of Morristown, New Jersey, but held for publication until after the 2013 elections. The study stated it intentionally withheld its results because 2014 is not an election year for state legislators… and the dire findings of the study would “hopefully encourage a serious and objective dialogue aimed at addressing and solving the challenges that New Jersey currently faces.”

The study found that, since the Democrat-controlled legislature passed the “millionaire’s tax” in 2004, signed into law by Democratic Governor Jim McGreevey, New Jersey has been steadily losing high-net-worth residents. That ill-advised and counter-productive approach to revenue enhancement, which presupposes that the rich will just sit still forever and allow themselves to be taxed back into the middle class, or worse, imposed a 41 percent increase in the state income tax on those with annual incomes of $500,000, or more.

Lacking the capacity to understand basic economic principles, and having no ability to learn from their mistakes, New Jersey Democrats have continued to push for even higher taxes on the wealthy. Under threat of veto by a tough-minded Republican governor, Chris Christie, they have failed on three successive attempts.

According to the Regent Atlantic study, New Jersey collects $10 billion annually in personal income taxes, $4.2 billion of which is paid in by just one percent of the population. Before the millionaire’s tax was enacted, the aggregate net worth of New Jersey residents increased by $98 billion over a four year period. However, in the four year period following the tax increase, 70 percent of that aggregate increase in net worth has fled the state. Because New Jersey residents have learned how to vote with their feet, the state lost taxable income of $5.5 billion in 2010 alone because residents moved to more tax-friendly states.

However, it’s not just the wealthy that New Jersey Democrats wish to bilk in their never-ending quest to buy enough votes to maintain themselves in power. Democrats in the legislature have also proposed a five-cent-per-gallon increase in the gasoline tax, a tax on water consumption, a tax on plastic bags, a tax on plastic water bottles, and yet another increase in the income tax. These are increases that would damage everyone who lives in or drives through the Garden State.

Apparently New Jersey Democrats believe that they have reached nirvana when a majority of the people are on food stamps, AFDC, Medicaid, unemployment compensation, and workman’s compensation, while the state confiscates 100 percent of the incomes and assets of those foolish enough to continue working… those for whom a job offer in Detroit would look like the opportunity of a lifetime.

Some 800 miles to the west, in Illinois, the state that currently resembles Detroit more than any other, wealthy private equity manager, Bruce Rauner, has won the Republican nomination for governor. Rauner, who spent $6 million of his own money in a four-way race for the GOP nomination, won 40.1% of the vote in defeating three better known GOP candidates, all long-time GOP officials in Springfield.

If Rauner is elected… and it looks as if he has the right stuff to get the job done… he will be taking on the toughest job of any Republican governor in the nation. Illinois is, after all, an economic basket-case, the worst run, most corrupt state in the nation.

On January 12, 2011, Investors Business Journal reported that the State of Illinois faced a budget deficit of $15 billion, “equivalent to more than half the state’s general fund.” According to the report, “(Illinois) officials warned that state government might not be able to pay its employees. It certainly would fall further behind in paying the businesses, charities, and schools that provide services on the state’s behalf.”

In response to that economic tsunami, the Governor of Illinois, Democrat Pat Quinn, and the Illinois legislature, controlled by Democrats (35-24 in the Senate and 64-54 in the House), developed a response that only a bunch of Democrats would see as a viable solution. In the midst of a major national recession they increased personal income taxes by 66% and corporate taxes by 46%, increases that were expected to produce an additional $6.8 billion per year… assuming, of course, that every employer then in Illinois, would remain in Illinois.

A year later, the Illinois Comptroller’s Office estimated that the backlog of unpaid bills was nearly $8 billion… and this after Democrats in Springfield placed a crushing load of new taxes on the shoulders of taxpayers and corporations.

Reactions were predictable. According to the Journal, neighboring states immediately began plotting to “lure business away from Illinois.” Governor Scott Walker (R-WI) said, “Years ago, Wisconsin had a tourism advertising campaign targeted to Illinois with the motto, ‘Escape to Wisconsin.’ Today we renew that call to Illinois businesses, ‘Escape to Wisconsin.’ You are welcome here.”

Then-Governor Mitch Daniels (R-IN) said, “It’s like living next door to the ‘Simpsons’ – you know, the dysfunctional family down the block.” Gov. Daniels may have mixed a metaphor. To say that living next door to Illinois is like living next door to the Adams Family may have been a more apt comparison.

But now it appears that Republicans are about to field a candidate with some business sense who is not afraid to tell the people of Illinois what they need to hear, while Democrats continue to insist on telling them whatever is necessary to get their votes on Election Day. And while union leaders in Illinois could not have failed to notice that their state is now surrounded by states where right-to-work was once thought to be impossible… Indiana, Iowa, Michigan, Ohio, and Wisconsin… right-to-work is probably not something that will happen in Illinois until a hard-nosed Republican governor can make Republicanism respectable everywhere in the state except in America’s most corrupt city… Chicago.

Bruce Rauner may be that man. According to the Times story, Rauner has already angered the public sector unions. He has criticized union leaders, advocated charter schools, and suggested that recent reforms in the public employee pension system… with unfunded liabilities of about $80 billion… were far too timid.

Never in American history has a political party been as vulnerable to resounding defeat as is the Democrat Party in 2014. The only thing the Republican Party needs is leadership. With John Boehner (R-OH) as Speaker of the House, with Mitch McConnell (R-KY) as Minority Leader of the Senate, and with Eric Cantor (R-VA) as House Majority Leader, the GOP is in great danger of wasting the opportunity to literally devastate the Democratic Party. Never before have there been three political leaders more capable of snatching defeat from the jaws of victory.

Although most pundits agree that Republicans will maintain their majority in the House of Representatives, many hedge their bets by saying that the party could actually lose a few seats in the House. I believe the Republicans will maintain their majority in the House, picking up an additional five to ten seats in the process.

In the Senate, most pundits hedge their bets by predicting that Republicans have a shot at taking control, but with a slim majority of only one or two seats. I believe that those predictions are far too conservative and fail to take into account the foul mood of the American people and the intense unpopularity of Barack Obama, Harry Reid, and Nancy Pelosi.

Republicans have 15 Senate seats at stake. I believe Republicans will retain all of those seats. On the other hand, the Democrats have 21 seats at stake, only eight of which are all but certain to remain in Democrat hands. The remaining 13 seats are either leaning heavily Republican or are vulnerable to Republican takeover. A net gain of 10 seats by the GOP is not outside the realm of possibility.

All we need are leaders and candidates who are willing to take the battle to the enemy in a most forceful and straightforward way. At a recent rally in Illinois, Bruce Rauner shouted, “Let’s shake up Springfield! Let’s go get ‘em!” Republicans should never doubt that we have the people and the issues on our side. And if we can get Republicans across the country to adopt that same rallying cry, to say, “Let’s shake up America! Let’s go get ‘em!” we can win a victory in November that will make the Republican Revolution of 1994 pale by comparison.

EDITORS NOTE: The featured map is courtesy of Theshibboleth. This file is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license.

Advice to Young, Unemployed Workers by Jeffrey A. Tucker

We are now in the fifth year of very choppy hiring markets for young workers. The latest unemployment numbers once again leave them out from posted gains. Not even the boom in temporary employment included them.

The United States has one of the highest rates of unemployment among 20-to-26-year-olds in the world. Nearly half of the U.S. army of unemployed is under the age of 34. As for those who are hired, there is a huge gap between wage expectations and paycheck realities, which is exactly what you would expect in a post-boom world. A survey by Accenture finds that more than 41 percent of recent U.S. college graduates are disillusioned, underemployed, and not using their college degrees in their work.

The young generation faces challenges unlike any that most people alive have seen. This situation requires new adaptive strategies.

What follows, then, is my letter of advice to young workers.

Dear Young Workers:

Even if it weren’t for the economic stagnation, you would already be facing a tough market. That’s because you are showing up at the job marketplace nearly empty-handed. Our society long ago decided it was better for you to sit in desks for 16 years than to gain any real work experience in the marketplace that is likely to hire you later.

Even if it were legal for you to work when you are capable of doing so—from the age of maybe 12 or 13—the government has imposed these wage-floor laws that price your services out of the market. Then you are told that if you stay in school, you will get a great, high-paying job right out of college. Then it turns out that employers aren’t interested in you. You are beginning to sense that employers think you have few marketable skills and have no demonstrated predisposition to produce.

Here’s the root of the problem: People have been lying to you all your life.

As a young child you were repeatedly fed slogans about the equality of everyone. The urges to compete and win were suppressed in your childhood games, while sharing and caring for others were exalted above all other values.

Then at some point—somewhere between the ages of 7 and 10—something changed. All that caring/sharing stuff ended and a world of dog-eat-dog began. You were expected to get perfect grades, to excel at math and science, to be perfectly obedient, to stay in school for as long as possible. You were told that if you did that, everything would work out for you.

It does work out for some. But only a small minority of people are disposed to both compliance and rote learning. And even for those people, not everyone gets what he’s been promised. As for the rest, there is no plan in place. Those who fall through the cracks are expected to make it on their own somehow.

How do you make it? It all comes down to remunerative work. And there’s the barrier you face right now. You have the desire and you are looking for some institution that values what you have to contribute. But you can’t find the match.

Consider: Why does any business hire an employee? It happens based on the belief that the business will make more money with the employee than without it. The business pays you, you do work, and, as a result, there are greater returns coming in than there would otherwise be.

But think through what this means. It means you have to add more value than you take out. For every dollar you earn, you have to make it possible for the business to earn a dollar plus something extra. This task is not easy. Businesses have costs to cover in addition to your salary. For example, government mandates that businesses be insured. You have to be trained. There could be healthcare costs, too. There are uncertainties to deal with. All of these add to the burden that you place on the business, which adds to the costs of hiring you.

What this means is you have to be more valuable than you think. Why are minimum wage jobs so hard? Because it’s difficult for an inexperienced worker to be worth paying that much. The employer has to extract as much value as possible from the relationship with you just to make that relationship happen at all. That can’t happen right away because odds are you are losing the company money in the first months of employment simply because you are untrained. You end up scrambling like crazy just to earn your keep.

If you already understand this rule—that you must add more value than you take out—you now know more than vast numbers of young workers. And this gives you an advantage. While everyone else is grumbling about the workload and low pay, you can know why you are having to hustle so much and be happier for it. You are producing more for the company than you take out. Doing that consistently is the way to get ahead. In fact, it’s the key to life.

But in order to get ahead, you have to be a player in the first place. It does little good to sit around and wait for the right job at the right pay. Forget all your expectations. If something, anything, comes along, you should jump on it immediately. No job is too menial, despite what you have been told. The goal is just to get in the game. Yes, you have much higher salary expectations, and those might be met someday. But not yet.

The first step is to get into the game at some wage, just something, somewhere. The fear that such work, whatever it is, is somehow beneath you is a serious source of personal undoing. Those who are willing to perform the most “menial” of jobs are the people who can make a good life for themselves. Just because you perceive the job as “menial” does not mean it is not valuable to others and especially, ultimately, to you.

You learn from every job you have. You learn how to interact with others, how a business runs, how people think, how bosses think, and how those who succeed get ahead versus those who fail. Working is a time for learning, as much as or more than school.

People’s number-one fear is that their job will somehow define their lives. Hence, they conclude that a job stocking shelves at Walmart will redefine or dumb down who they are. This notion is absolutely untrue. That job is a brick in your foundation.

In order to get any job, you have to do more than drop off a resume or file one online. You have to emerge from the pack. That means that you have to sell yourself like a commodity. You have to market yourself (and marketing is the least-appreciated and yet most-crucial feature of all commercial acts). That is not degrading; it is an opportunity. Find out everything you can about the company and its products. After you apply, you need to go back and back, meet the managers, meet the owners, all with the goal of showing them how much value you will add to their enterprise.

In this new job, success is not hard, but it requires discipline. Just follow a few simple rules. Never be late. Do first whatever your immediate supervisor tells you to do. Do it much more quickly and thoroughly than he or she expects. When that is done, do some unexpected things that add value to the environment. Never complain. Never gossip. Never partake in office politics. Be a model employee. That’s the path toward thriving.

It’s not just about adding value to the company. It’s about adding value to yourself. The digital age has given us all amazing tools for accumulating personal capital. Get a LinkedIn account and attach your job to your personal identity. Start putting together that essential network. This network is something that will grow throughout your life, starting now and lasting until the end. It could be the most valuable commodity you have outside your own character and skills. Take possession of your work experience and make it your own.

While doing all this excellent work, you need to be thinking about two possible paths forward, each of them equally viable: advance within this one firm or move to another firm. You should go with whichever is to your best advantage. Never stop looking for your next job. This is true now and always throughout your life.

A huge mistake people make is to embed themselves emotionally in one institution. The law encourages this attitude by tying all sorts of advantages to the status-quo job you currently hold. You get health benefits, time off, scheduled raises, and it is always easier to stick with what you know. To do so is a mistake. Progress comes through disruption, and sometimes you have to disrupt yourself to make that progress happen.

To be willing to forgo the security of one job for the uncertainty of another gives you an edge. Average people around you will sacrifice every principle and every truth for the sake of security. People, with very few exceptions, fear the uncertainty of an unknown future more than the seeming security of a known status quo. They will give up every right and every bit of their souls for the promise of security (whether it be through a paycheck or an armed police officer), even to the point of personal misery or obeying a wicked despot (whether it be a boss or a dictator). You can break free of this tendency, but it takes courage, risk-taking, and a conscious act of defying convention.

You should always think of yourself as a productive unit that is always on the job market. You can go from institution to institution, always upgrading your skills and hence your wages. Never be afraid to try something new or to plunge into a new work environment.

Clever finance management here is crucial. Never live at the level that matches your income. Your standard of living, instead, should match your next-best employment opportunity, the one you have forgone or the one you might take next. If you stick with this practice—and it requires discipline—you will be free to choose where you work and to take greater risks. You will also develop a cushion should something go wrong.

At the same time, there could be advantages to sticking around one place, even as everyone else around you is moving from here to there. Even if that happens, you should still think of yourself as being on the market. You are governing yourself. Don’t let yourself be beholden to anyone, but understand also that no one owes you a living. That’s the only way to make clear judgments about your career path.

At every job, you are going to learn so much about human ethics, psychology, emotions, and behavior. Most of what you will learn will be enlightening and encouraging. Some of it, however, is not pretty and might come as a shock.

First, you will discover that people in general are extremely reluctant to admit error. People will defend an opinion or an action until the end, even if every bit of logic and evidence runs contrary. Sincere apologies and genuine admissions of error and wrongdoing are the rarest things in this world. There is no point at all in demanding apologies or in becoming resentful when they fail to appear. Just move on. Neither should you expect to always be rewarded for being right. On the contrary, people will often resent you and try to take you down.

How do you deal with this problem? Don’t get frustrated. Don’t seek justice. Accept the reality for what it is. If a job isn’t working out, move on. If you get fired, don’t seek vengeance. Anger and resentment accomplish absolutely nothing. Keep your eye on the goal of personal and professional advancement, and think of anything that interrupts your path as a diversion and a distraction.

Second, we all want to believe that doing a great job and becoming excellent at something will lead to personal reward. This is not always or even often true. Excellence makes you a target of envy from those around you who have failed by comparison. Excellence can often harm your prospects for success. Meritocracy exists, and even prevails, but it is realized through your own initiative, and it is never just granted freely by some individual or institution. All personal and social progress comes about because you alone push through the attempts of everyone around you to stop it.

Third, people tend to possess a status-quo bias and prefer to follow orders and instructions; most people cannot imagine how the world around them might be different through initiative and change. If you can train yourself to imagine a world that doesn’t yet exist—to exercise the use of imagination and creativity in a commercial framework—you can become the most valuable person around. You might be among those who can be real entrepreneurs. You might even change the world.

As you develop and use these talents, and as they become ever more valuable to those around you, remember that you are not infallible. The commercial marketplace punishes pride and arrogance and it rewards humility and the teachable spirit. Be happy for your successes, but never stop learning. There is always more to know because the world is ever-changing, and none of us can know all things. The key to thriving in this life is to be prepared to not only change with it but to get in front of the change and drive it.

From where you are now, unemployed with few seeming prospects, your future might look hopeless. This perception is not true. There are barriers, to be sure, but they are there to be overcome by you and you alone. The world does not work like you were told it works when you were a kid. Deal with it and start engaging the reality around you right now just as it is, using intelligence, cunning, and charm. You are the decision-maker, and whether you succeed or fail ultimately depends on the decisions you make.

In many ways, you are a victim of a system that has conspired against you. But you get nowhere by acting like a victim. You don’t need to be a victim. You have free will and the capacity for self-governance; indeed, you possess the human right to choose. Today is the day to start exercising it.

Find a Portuguese translation of this article here.

20121129_JeffreyTuckeravatar (1)ABOUT JEFFREY A. TUCKER

Jeffrey Tucker is a distinguished fellow at FEE, CEO of the startup Liberty.me, and publisher at Laissez Faire Books. He will be speaking at the FEE summer seminar “Making Innovation Possible: The Role of Economics in Scientific Progress.”

EDITORS NOTE: The featured photo is courtesy of FEE and Shutterstock.

Wages Are Like Love by Jeffrey A. Tucker

“The circumstances of time and place are no different for employers and employees.” – Jeffrey Tucker.

All this talk about raising the minimum wage has very little to do with reality. Raising it will not create a single job—if you aren’t earning a wage, making yourself more expensive is not going gain you a job—and will not likely cause anyone’s wages to rise. It’s hard to find anyone who is actually willing to contradict those claims, because they stem from basic price theory: Less of the same good will be purchased at a higher price than a lower price.

The timing is also incredibly bad. Business is already dealing with huge cost increases because of Obamacare. Many businesses are in full protest mode. Plus, employment markets are soft.

Economic growth in general is under downward pressure, with even past growth rates being revised downward. Economic growth is so pathetic now that Janet Yellen, the new head of the Fed, took a page from the Soviet playbook and suggested the bad weather itself is what is to blame—a line still used by Zimbabwe to explain its perpetual woes. It’s a heck of a time to force higher wages on businesses.

But wait. The New York Times has another view.

The writers and editors are arguing for President Obama to increase the minimum wage by executive fiat. And they use a novel argument based on 2013 research published by the Institute for Research on Labor and Employment at Berkeley University. This new research, based on data from many regions and time periods, suggests one clear effect of higher minimum wages. The labor force that remains after the wage hike tends to stick around longer because people don’t tend to move from job to job.

Now, in some way, this conclusion follows intuition. Once a business has trained someone and then gets coerced into paying that person more than he or she would otherwise earn, the business is going to be ever more dedicated to squeezing every bit of actual labor out of the person.

Business is less inclined to hire expensive new people and more inclined to press existing labor for performance. Workers are going to be less willing to risk leaving a crummy job that they are overpaid for doing because the job options have become tighter and muddier thanks to an increased wage.

In other words, higher minimum wages more deeply entrench what has come to be called “job lock.” Whether the employee and employer are happy with the arrangement or not, jobs tend to be frozen in place as a result of less fluid markets. People cling to what is known and what exists—the devil you know. This makes sense. Markets are synonymous with change. The less markets are allowed to work, the more stagnation you can expect in every area of life.

That doesn’t sound so hot, does it? But there’s another way to spin this effect, and The New York Timeseditorial page does its best to provide just such a spin. In fact, the editorial treats all of this research regarding job lock as wonderful news. It shows that “workers were less likely to leave on their own, and managers were more likely to keep the workers they had on staff to avoid the cost of recruiting and training replacements.”

Remarkable, isn’t it? In this rendering, business is saving money by raising wages, so what’s not to like? To be sure, there is nothing wrong with business doing this on its own. Retaining employees is sometimes good and sometimes bad, depending on a forecast of the future. It all depends, and surely it should be up to business and its labor force to make these decisions without bureaucratic fiat intervening.

What the editorial suggests is that higher wages need to be forced on business because otherwise managers would not understand their own interests. Businesses makes thousands of decisions every week regarding inventory, real estate, websites, accounting, product development, marketing, research and development, and vastly more, but, according to the minimum wage idea, they are clueless about how to manage the wages and salaries of their own workforce with an eye to profit maximization. For this, businesses need government to tell them what to do.

Do you see the presumption here? It is that the Department of Labor—not a profit-making firm but one run by people whose wages and salaries are dictated by law rather than markets—is in a better position than the private sector to know what the market demands. That’s implausible on the face of it, unless you fundamentally believe that markets are dumber than governments and that the price system is nonfunctioning.

That lack of basic economic understanding is only the beginning of the frustrations that economists have when looking at these debates. The urge to boost the minimum wage is driven not by economic considerations but political ones. It is a favor thrown toward unions and large corporations—institutions that already enjoy or pay high wages—at the expense of smaller companies or unemployed/marginal workers who have a hard time gaining any kind of foothold in the market.

The minimum wage also provides public relations benefits to politicians who are more readily seen as people who help people live better lives.

The cited research and the editorial are probably right that higher wages mandated by law tend to lock down existing jobs. But how they can argue that this is a good thing is a real puzzle.

In the real world, wages and salaries are like love; they’re complex and personal matters determined by concerns tied to the peculiarities of time and place. So they’re impossible to legislate from the outside without doing harm. For example, it might be to the advantage of a young person to work for very low wages as a way of getting in the door. Or there might be a benefit to working for free as a way of gaining necessary training.

In the real world, there are occasions when it makes sense to accept a much lower wage than you are currently getting as a way of earning a stake in a company on the rise.

Consider the culture of a startup, for example. Most of the workers are working for free or even negative wages in the hopes of creating something wonderful for the future. This has become a way of life for many people who are living in the tech world. They are making a bet that they can apply their own “sweat equity” to create something marvelous for the future. This is not a small issue, since these are the companies creating our future for us. They do not conform to the minimum-wage model of enterprise.

A consistent effort to impose minimum wages would rule out the startups that are creating the new technologies and services that are making the future possible. These startups ignore the law, which is the only way these enterprises work.

Our central planners tell us all what we should earn and what we should pay. In the end, these are intimate details of life that are unique to our lives, to time, to place. Central plans will always miss the mark and end up forcing inapplicable models upon us that do not meet the needs of a free-enterprise economy. That they believe they know is an expression of arrogance and an expression of an underlying belief that force is a better system than agreement.

20121129_JeffreyTuckeravatarABOUT JEFFREY A. TUCKER

Jeffrey Tucker is a distinguished fellow at FEE, CEO of the startup Liberty.me, and publisher at Laissez Faire Books. He will be speaking at the FEE summer seminar “Making Innovation Possible: The Role of Economics in Scientific Progress.”

Florida’s 303 public pension systems are unsustainable

Florida has the third highest number of public pension systems in the United States. According to the U.S. Census Bureau the states with the most public pension systems were Pennsylvania (1,425 systems), Illinois (457 systems) and Florida (303 systems).

The U.S. Census Bureau publishes The Annual Survey of Public Pensions: State- and Locally-Administered Defined Benefit Data, which is a census of all 222 state government pension systems and a sample of local government pension systems. The latest report was published in August 2013.

The six states with the largest amounts of total state and local cash and investment holdings in 2011 (the latest year data is available) were California ($600.0 billion), New York ($319.3 billion), Texas ($192.6 billion), Florida ($157.8 billion), Ohio ($152.4 billion) and Illinois ($127.7 billion) in total holdings and investments. Total holdings and investments in these states comprised just over half (51.2 percent) of total holdings and investments for the United States.

The Florida pension system is overseen by the State Board of Administration (SBA), which was created by the Florida Constitution and is governed by a three-member Board of Trustees (Trustees), comprised of the Governor as Chair, the Chief Financial Officer and the Attorney General.

The basic problem is there are fewer paying into public pensions with a growing number taking funds out of the systems. The report looks at active public pension members versus beneficiaries over time. The ratios of member to beneficiaries are: 1991 2.8 to 1, 2001 2.3 to 1 and 2011 1.7 to 1. Public pension systems are unsustainable.

For a larger view click on the chart.

The Florida Retirement System (FRS) carries the bulk of the public pension system load in the sunshine state. Cities, counties, school boards and public hospital employees pay into this system. According to the MyFRS website, “The FRS Pension Plan funding valuation takes place annually, available December 1st and was 86.9 percent funded, as of July 1, 2012. You can view a chart that compares the plan’s actuarial liabilities to the plan’s actuarial assets for the past five fiscal years. The annual benefit payments to FRS retirees and beneficiaries (shown in white on the chart) are a part of the overall plan liabilities. The market value of the total assets of the FRS Pension Plan is updated monthly.”

The Census Department reports the following public pension data for Florida (in thousands of dollars): Total contributions of $4,993,460, total employee contributions of $349,947, contributions from the state government $875,190, and from local government $3,768,323. Contributions from state and local government means from Florida taxpayers.

According to the report in 2011 Florida’s public pension systems payed out between $20,000 to $24,999 on average.

Defined benefit public pension programs are a growing financial burden for cities, counties, school boards and public hospitals. If one pension system fails Florida taxpayers will be left holding the bag.

RELATED: Florida’s public pensions still bleeding taxpayers