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View Diary: Thoughts on the Minimum Wage: Evidence, Opposition, and Historical Context (23 comments)

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  •  The $16.54 figure (4+ / 0-)

    Is from the latest 2013 February report by Baker at the CEPR:

    This is what inspired me to write the entry.

    This is from the 2013 February report using CPI deflator/core CPI:

    If the minimum wage had kept pace with productivity growth it would be $16.54 in 2012 dollars. It is important to note that this is a very conservative measure of productivity growth. Rather than taking the conventional data published by the Bureau of Labor Statistics for the non-farm business sector, it uses the broader measure for economy-wide productivity.[1] This lowers average growth by 0.2-0.3 percentage points.

    This measure also includes an adjustment for net rather than gross output. It also uses a CPI deflator rather than a GDP deflator, which further lowers the measure of productivity growth.[2]

    The disparity comes from using CPI-U instead of core CPI in the March 2012 CEPR report to demonstrate the point of inflation-adjusted value for comparative purposes.

    The study from March 2012 cited in that HuffPo article linked here:

    Which talks about how they use the CPI-U, not the deflator/coreCPI:

    By all of these benchmarks, the value of the minimum wage peaked in 1968. If the minimum wage in that year had been indexed to the official  Consumer Price Index (CPI-U), the minimum wage in 2012 (using the  Congressional Budget Office’s estimates for inflation in 2012) would be at $10.52. Even if we applied the current methodology (CPI-U-RS) for calculating inflation – which generally shows a lower rate of inflation than the older measure – to the whole period since 1968, the 2012 value of the minimum wage would be $9.22.
    The difference between CPI-U and core CPI is enough to create the difference of $16.54 for core and $21.72 cpi-u for productivity, and $9.22 and $10.52 respectively as well.


    Good point re: executive compensation. There's a massive bubble in that labor submarket, too many MBA management types rode the wave of stock bubbles and used inflated share prices to get disproportionate compensation, beyond that justified by managerial acumen alone. There's plenty of qualified individuals out there, but once a good manager is given a huge contract, it starts this heard mentality of "we have to pay for talent!" and then suddenly everyone is overpaying for managers.

    To add insult to injury, plenty of failed corporate types go on to have illustrious careers hopping from Board membership to board membership, collecting 7-figure salaries to do nothing but show up and put their name to something, because  as long as you've held some kind of executive position in a multi-national enterprise, you're considered qualified and "in", regardless of how badly the company was screwed. Cases in point: Carly Fiorina of HP and Eugene Isenberg of Nabors. Angelo Mozilo at Countrywide.

    That bubble needs to pop if there's ever going to be sanity in corporate governance and executive remuneration ever again!

    Deficits don't matter, jobs do.

    by aguadito on Fri Feb 15, 2013 at 07:42:54 AM PST

    [ Parent ]

    •  btw (1+ / 0-)
      Recommended by:
      Words In Action

      the tl;dr is:

      there's two (actually more) ways to measure productivity

      and there's two (actually more) ways to measure inflation

      So there's any number of permutations that can be used (since productivity adjustment also requires an inflation adjustment anyway).  But they all tell the same story: working class getting screwed, and working poor getting super screwed.

      Deficits don't matter, jobs do.

      by aguadito on Fri Feb 15, 2013 at 07:48:17 AM PST

      [ Parent ]

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