The Economy's Real Problem IS THAT YOU ARE OVERPAID!!
What is the economic plan for American workers that the majority of US companies espouse?
In a word- serfdom!
The RepubliKlan party is eager to further facilitate the complete destruction of what’s left of the middle class. Most of the Democrats are so “cash-whipped” by the huge corporate cash being spent against them and the 24/7 media lie that “democrats are anti-business” that they have abandoned the American worker as the nation slides into neo-feudalism.
Former John McCain economic advisor shamelessly makes the case on Bloomberg.com for neo-feudalism. Can you hear the laughter on the Gulfstream jets as the richest 1/10 of 1 percent contemplate whether the “unwashed masses” will slit their own throats?????
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The Economy's Real Problem Is That You're Overpaid
by Tom Petruno
Sept. 7, 2010
http://latimesblogs.latimes.com/mon...in-hassett-american-enterprise-institute.html
<br>Kevin Hassett thinks he has the solution to America’s employment problem: Pay cuts all around.<br>
“The biggest problem with the labor market right now is that wages are too high,” Hassett, director of economic-policy studies at the conservative American Enterprise Institute, writes in his latest column for Bloomberg News.<br>He concedes that his proposal is the kind that is “perfectly at home in economics textbooks” but “so beastly in practice that nobody is willing to mention them.”<br>
But he’s willing. He writes:<blockquote><br>Economics teaches that full employment would be reached if wages adjust downward, to a level that better reflects current circumstances. At lower wages, employers would desire more workers. Labor markets generate persistent unemployment only if wages are sticky, failing to fall as demand declines.</blockquote><br>Many workers’ wages already would be lower, Hassett says, except for government policies that keep them elevated. Not surprisingly he singles out federal and state minimum wage laws, long a source of intense debate regarding their effect on employment.<div align="left">
<!-- MSTableType="layout" --><br><img src="http://i54.tinypic.com/dfeet5.png" align="left" style="margin: 0px 10px 10px 0px;" border="1"></div> He notes that since July 2007 the federal minimum wage has risen three times, to the current $7.25 an hour from $5.15, a 41% jump.<br>
To bring down the 26.3% teen unemployment rate, Hassett says, Congress should scale back the minimum wage to $5.85, its level when the recession began in December 2007.<br>
He also goes after union workers, arguing that “unions should be willing to reopen collective bargaining agreements and accept lower wages.”<br>
Government can do more to abet lower wages as well, Hassett writes: "Government policies should induce workers to take the plunge and accept lower wages. These policies could include carrots -- tax credits that offset large wage declines, for example -- and sticks, such as a reduction in the duration of unemployment insurance benefits."<br>
Putting aside that Hassett seems to be specifically targeting middle- to lower-class wage earners for pay cuts (as opposed to the salaries of Fortune 500 CEOs or PhD economists), he could at least have acknowledged that many Americans already have seen their income and/or benefits reduced since the recession began. He also might have mentioned that companies remain reluctant to hire even though they can easily force reduced salaries on new hires, given the massive labor glut.
<br><strong>But most puzzling is that he say nothing about the risk that his wage-hacking proposal could fuel a broad-based deflation in the U.S. economy -- exactly the nightmare that Federal Reserve Chairman Ben S. Bernanke wants to avoid.</strong>
<br>Consumer spending accounts for more than two-thirds of gross domestic product. Spending derives from income. Add millions more people overnight to the ranks of those who are earning less than they were a couple of years ago and you surely would reduce spending.<br>
Wouldn’t that force many businesses to cut prices to try to stoke demand? Note that smaller firms already say their biggest problems are weak sales and uncertainty about the future.<br>
And if consumers spend less, and corporate earnings fall because of price-cutting, what incentive would companies have to hire more workers to expand their output? Just because workers are cheap?<br>
In short, Hassett writes about across-the-board wage cuts as if they would magically restore job growth and economic growth with no risk of serious adverse consequences.<br>
In some parallel universe, maybe?
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Your Fat Paycheck Keeps Your Neighbor Unemployed
by Kevin Hassett - Sep 6, 2010
http://www.bloomberg.com/news/2010-...s-your-neighbor-unemployed-kevin-hassett.html
Some observations perfectly at home in economics textbooks can be so beastly in practice that nobody is willing to mention them.
Ignoring the facts, though, leads to bad policies, and with the U.S. unemployment rate at a stubborn 9.6 percent, we don’t need more of those.
So here comes the leap into ice-cold water: The biggest problem with the labor market right now is that wages are too high. As Washington again turns to government spending as a cure for unemployment, some against-the-grain thinking is in order.
Economics teaches that full employment would be reached if wages adjust downward, to a level that better reflects current circumstances. At lower wages, employers would desire more workers. Labor markets generate persistent unemployment only if wages are sticky, failing to fall as demand declines.
A number of reasons help explain why wages don’t and won’t drop, beginning with federal and state minimum-wage laws.
Second, because union contracts generally cover multiple years, adjusting wages in response to economic circumstances would require a return to the bargaining table, which rarely happens.
Third, the natural reluctance of workers to accept lower pay is amplified by how their wage helps define their identity. A $60,000-a-year office worker might have an extra-hard time coming to terms with becoming a $40,000-a-year worker.
Finally, workers and jobs might be mismatched, either geographically or occupationally. Workers might be needed in places they don’t want to move to, or can’t afford to live.
Bad Timing
There are ample signs that these obstacles to lower wages are helping drive high unemployment today.
In an example of poor policy timing, Democrats chose to lift the minimum wage during the worst possible time, just as wages should have been reduced.
Since 2007, the year the recession began, the federal minimum wage has risen to $7.25 an hour from $5.15 -- an increase of 41 percent. Democrats in Congress proposed the three-stage increase, and Republican President George W. Bush enacted it, as part of a spending measure that focused mainly on financing the war in Iraq.
Increasing labor costs via higher minimum wages at any time poses a risk of higher unemployment; doing so during a recessionary labor market is policy negligence. It would be nice, and perhaps fanciful, to think that had Democrats seen the recession coming in 2007, they might have cut back on their minimum-wage blowout.
Hard on Teens
Teenage workers, who as a group fill many minimum-wage jobs, have been hit disproportionately hard by the recession. The teen unemployment rate has increased to 26.3 percent from 16.9 percent in December 2007.
In a similar vein, evidence shows that union workers are harmed, in terms of employment rates, by their generally higher wages. In 2009, the percentage of union members among the employed dropped to 7.2 percent -- the lowest rate in postwar history.
That Americans in large numbers aren’t pulling up their roots to follow jobs is made clear by the disparity in state unemployment rates. Nevada suffers the highest unemployment at 14.3 percent, while North Dakota weighs in at a surprisingly low 3.6 percent, a rate any state would be bragging about even in the best of economic times.
So why isn’t there a traffic jam of job-seekers trekking from Las Vegas to Fargo, and from other high-unemployment areas to high-employment ones?
99 Weeks
One reason is unemployment insurance. State unemployment insurance programs usually limit benefits to 26 weeks. However, between various state and federal programs to extend benefits during the recession, unemployment benefits can continue up to a total of 99 weeks, giving people less incentive to pick up and move on when they lose their jobs.
Another complication is the American culture of homeownership. In today’s market, lots of people couldn’t sell their house and relocate even if they wanted to. So chalk one up for renting.
If, as we’ve seen, wage stickiness is driving unemployment higher, the challenge is to enact the public-policy equivalent of Goo Gone. A few ideas come to mind.
First, the minimum wage should be scaled back to $5.85, its level when the recession began in December 2007. There were about 980,000 minimum-wage workers in 2009, half of them more than 24 years of age. This change could have a big impact on aggregate employment.
Tax Credits
Second, government policies should induce workers to take the plunge and accept lower wages. These policies could include carrots -- tax credits that offset large wage declines, for example -- and sticks, such as a reduction in the duration of unemployment insurance benefits.
Finally, unions should be willing to reopen collective bargaining agreements and accept lower wages.
While painful, and perilous for a politician even to discuss, these measures would do a lot to move the economy back toward full employment.
(Kevin Hassett, director of economic-policy studies at the American Enterprise Institute, is a Bloomberg News columnist. He was an adviser to Republican Senator John McCain in the 2008 presidential election. The opinions expressed are his own.)
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[FLASH]http://www.youtube.com/v/rPh-qGcYruw&hl=en_GB&fs=1[/FLASH]
What is the economic plan for American workers that the majority of US companies espouse?
In a word- serfdom!
The RepubliKlan party is eager to further facilitate the complete destruction of what’s left of the middle class. Most of the Democrats are so “cash-whipped” by the huge corporate cash being spent against them and the 24/7 media lie that “democrats are anti-business” that they have abandoned the American worker as the nation slides into neo-feudalism.
Former John McCain economic advisor shamelessly makes the case on Bloomberg.com for neo-feudalism. Can you hear the laughter on the Gulfstream jets as the richest 1/10 of 1 percent contemplate whether the “unwashed masses” will slit their own throats?????
<hr noshade color="#333333" size="4"></hr>
The Economy's Real Problem Is That You're Overpaid
by Tom Petruno
Sept. 7, 2010
http://latimesblogs.latimes.com/mon...in-hassett-american-enterprise-institute.html
<br>Kevin Hassett thinks he has the solution to America’s employment problem: Pay cuts all around.<br>
“The biggest problem with the labor market right now is that wages are too high,” Hassett, director of economic-policy studies at the conservative American Enterprise Institute, writes in his latest column for Bloomberg News.<br>He concedes that his proposal is the kind that is “perfectly at home in economics textbooks” but “so beastly in practice that nobody is willing to mention them.”<br>
But he’s willing. He writes:<blockquote><br>Economics teaches that full employment would be reached if wages adjust downward, to a level that better reflects current circumstances. At lower wages, employers would desire more workers. Labor markets generate persistent unemployment only if wages are sticky, failing to fall as demand declines.</blockquote><br>Many workers’ wages already would be lower, Hassett says, except for government policies that keep them elevated. Not surprisingly he singles out federal and state minimum wage laws, long a source of intense debate regarding their effect on employment.<div align="left">
<!-- MSTableType="layout" --><br><img src="http://i54.tinypic.com/dfeet5.png" align="left" style="margin: 0px 10px 10px 0px;" border="1"></div> He notes that since July 2007 the federal minimum wage has risen three times, to the current $7.25 an hour from $5.15, a 41% jump.<br>
To bring down the 26.3% teen unemployment rate, Hassett says, Congress should scale back the minimum wage to $5.85, its level when the recession began in December 2007.<br>
He also goes after union workers, arguing that “unions should be willing to reopen collective bargaining agreements and accept lower wages.”<br>
Government can do more to abet lower wages as well, Hassett writes: "Government policies should induce workers to take the plunge and accept lower wages. These policies could include carrots -- tax credits that offset large wage declines, for example -- and sticks, such as a reduction in the duration of unemployment insurance benefits."<br>
Putting aside that Hassett seems to be specifically targeting middle- to lower-class wage earners for pay cuts (as opposed to the salaries of Fortune 500 CEOs or PhD economists), he could at least have acknowledged that many Americans already have seen their income and/or benefits reduced since the recession began. He also might have mentioned that companies remain reluctant to hire even though they can easily force reduced salaries on new hires, given the massive labor glut.
<br><strong>But most puzzling is that he say nothing about the risk that his wage-hacking proposal could fuel a broad-based deflation in the U.S. economy -- exactly the nightmare that Federal Reserve Chairman Ben S. Bernanke wants to avoid.</strong>
<br>Consumer spending accounts for more than two-thirds of gross domestic product. Spending derives from income. Add millions more people overnight to the ranks of those who are earning less than they were a couple of years ago and you surely would reduce spending.<br>
Wouldn’t that force many businesses to cut prices to try to stoke demand? Note that smaller firms already say their biggest problems are weak sales and uncertainty about the future.<br>
And if consumers spend less, and corporate earnings fall because of price-cutting, what incentive would companies have to hire more workers to expand their output? Just because workers are cheap?<br>
In short, Hassett writes about across-the-board wage cuts as if they would magically restore job growth and economic growth with no risk of serious adverse consequences.<br>
In some parallel universe, maybe?
<hr noshade color="#0000FF" size="8"></hr>
Your Fat Paycheck Keeps Your Neighbor Unemployed
by Kevin Hassett - Sep 6, 2010
http://www.bloomberg.com/news/2010-...s-your-neighbor-unemployed-kevin-hassett.html
Some observations perfectly at home in economics textbooks can be so beastly in practice that nobody is willing to mention them.
Ignoring the facts, though, leads to bad policies, and with the U.S. unemployment rate at a stubborn 9.6 percent, we don’t need more of those.
So here comes the leap into ice-cold water: The biggest problem with the labor market right now is that wages are too high. As Washington again turns to government spending as a cure for unemployment, some against-the-grain thinking is in order.
Economics teaches that full employment would be reached if wages adjust downward, to a level that better reflects current circumstances. At lower wages, employers would desire more workers. Labor markets generate persistent unemployment only if wages are sticky, failing to fall as demand declines.
A number of reasons help explain why wages don’t and won’t drop, beginning with federal and state minimum-wage laws.
Second, because union contracts generally cover multiple years, adjusting wages in response to economic circumstances would require a return to the bargaining table, which rarely happens.
Third, the natural reluctance of workers to accept lower pay is amplified by how their wage helps define their identity. A $60,000-a-year office worker might have an extra-hard time coming to terms with becoming a $40,000-a-year worker.
Finally, workers and jobs might be mismatched, either geographically or occupationally. Workers might be needed in places they don’t want to move to, or can’t afford to live.
Bad Timing
There are ample signs that these obstacles to lower wages are helping drive high unemployment today.
In an example of poor policy timing, Democrats chose to lift the minimum wage during the worst possible time, just as wages should have been reduced.
Since 2007, the year the recession began, the federal minimum wage has risen to $7.25 an hour from $5.15 -- an increase of 41 percent. Democrats in Congress proposed the three-stage increase, and Republican President George W. Bush enacted it, as part of a spending measure that focused mainly on financing the war in Iraq.
Increasing labor costs via higher minimum wages at any time poses a risk of higher unemployment; doing so during a recessionary labor market is policy negligence. It would be nice, and perhaps fanciful, to think that had Democrats seen the recession coming in 2007, they might have cut back on their minimum-wage blowout.
Hard on Teens
Teenage workers, who as a group fill many minimum-wage jobs, have been hit disproportionately hard by the recession. The teen unemployment rate has increased to 26.3 percent from 16.9 percent in December 2007.
In a similar vein, evidence shows that union workers are harmed, in terms of employment rates, by their generally higher wages. In 2009, the percentage of union members among the employed dropped to 7.2 percent -- the lowest rate in postwar history.
That Americans in large numbers aren’t pulling up their roots to follow jobs is made clear by the disparity in state unemployment rates. Nevada suffers the highest unemployment at 14.3 percent, while North Dakota weighs in at a surprisingly low 3.6 percent, a rate any state would be bragging about even in the best of economic times.
So why isn’t there a traffic jam of job-seekers trekking from Las Vegas to Fargo, and from other high-unemployment areas to high-employment ones?
99 Weeks
One reason is unemployment insurance. State unemployment insurance programs usually limit benefits to 26 weeks. However, between various state and federal programs to extend benefits during the recession, unemployment benefits can continue up to a total of 99 weeks, giving people less incentive to pick up and move on when they lose their jobs.
Another complication is the American culture of homeownership. In today’s market, lots of people couldn’t sell their house and relocate even if they wanted to. So chalk one up for renting.
If, as we’ve seen, wage stickiness is driving unemployment higher, the challenge is to enact the public-policy equivalent of Goo Gone. A few ideas come to mind.
First, the minimum wage should be scaled back to $5.85, its level when the recession began in December 2007. There were about 980,000 minimum-wage workers in 2009, half of them more than 24 years of age. This change could have a big impact on aggregate employment.
Tax Credits
Second, government policies should induce workers to take the plunge and accept lower wages. These policies could include carrots -- tax credits that offset large wage declines, for example -- and sticks, such as a reduction in the duration of unemployment insurance benefits.
Finally, unions should be willing to reopen collective bargaining agreements and accept lower wages.
While painful, and perilous for a politician even to discuss, these measures would do a lot to move the economy back toward full employment.
(Kevin Hassett, director of economic-policy studies at the American Enterprise Institute, is a Bloomberg News columnist. He was an adviser to Republican Senator John McCain in the 2008 presidential election. The opinions expressed are his own.)
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[FLASH]http://www.youtube.com/v/rPh-qGcYruw&hl=en_GB&fs=1[/FLASH]
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The market tries to purge the malinvestment but more stimulus is always appropriated to the "Too Big To Fails"
This post coming from an "Analyst" that supports right wing billionaire corpitist'spolicies!
