Job creation faster in states raising the minimum wage

New Jersey arrived at the bottom after Christie vetoed the minimum wage increase

The experience of the 13 states that increased their minimum wage on January 1st of this year might provide some guidance for what to expect here in Washington, DC when the city-wide minimum wage increases to $9.50 on July 1.

At the beginning of 2014, 13 states increased their minimum wage. Of these 13 states, four passed legislation raising their minimum wage (Connecticut, New Jersey, New York, and Rhode Island). In the other nine, their minimum wage automatically increased in line with inflation at the beginning of the year (Arizona, Colorado, Florida, Missouri, Montana, Ohio, Oregon, Vermont, and Washington state).

As CEPR noted in March and April posts, economists at Goldman Sachs conducted a simple evaluation of the impact of these state minimum-wage increases. GS compared the employment change between December and January in the 13 states where the minimum wage increased with the changes in the remainder of the states. The GS analysis found that the states where the minimum wage went up had faster employment growth than the states where the minimum wage remained at its 2013 level.

When we updated the GS analysis using additional employment data from the BLS, we saw the same pattern: employment growth was higher in states where the minimum wage went up. While this kind of simple exercise can’t establish causality, it does provide evidence against theoretical negative employment effects of minimum-wage increases.

In this post, we can now bring these figures up to date with the data from April and May.

Reality has always intervened between conservative ideology and the day-to-day life of people who actually work for a living. All the crappola from Republicans about trickle-down economy, minimum wage, truly democratic elections, third-parties, resolves as turds on the bottom of history’s shoes. None of these inspires truth-telling or informed re-evaluation by Republicans or Blue Dog Democrats.

The consistency of wrong-headed politicos is another resolution of the inevitable political question – on behalf of stupidity rather than ignorance.

The Obama spending binge that never happened

Of all the falsehoods told about President Barack Obama, the biggest whopper is the one about his reckless spending spree. As would-be president Mitt Romney tells it: “I will lead us out of this debt and spending inferno.”

Almost everyone believes that Obama has presided over a massive increase in federal spending, an “inferno” of spending that threatens our jobs, our businesses and our children’s future. Even Democrats seem to think it’s true.

But it didn’t happen. Although there was a big stimulus bill under Obama, federal spending is rising at the slowest pace since Dwight Eisenhower brought the Korean War to an end in the 1950s.

Even hapless Herbert Hoover managed to increase spending more than Obama has. Here are the facts, according to the official government statistics:

• In the 2009 fiscal year — the last of George W. Bush’s presidency — federal spending rose by 17.9% from $2.98 trillion to $3.52 trillion. Check the official numbers at the Office of Management and Budget.

• In fiscal 2010 — the first budget under Obama — spending fell 1.8% to $3.46 trillion.

• In fiscal 2011, spending rose 4.3% to $3.60 trillion.

• In fiscal 2012, spending is set to rise 0.7% to $3.63 trillion, according to the Congressional Budget Office’s estimate of the budget that was agreed to last August.

• Finally in fiscal 2013 — the final budget of Obama’s term — spending is scheduled to fall 1.3% to $3.58 trillion. Read the CBO’s latest budget outlook.

Over Obama’s four budget years, federal spending is on track to rise from $3.52 trillion to $3.58 trillion, an annualized increase of just 0.4%.

What people forget (or never knew) is that the first year of every presidential term starts with a budget approved by the previous administration and Congress. The president only begins to shape the budget in his second year. It takes time to develop a budget and steer it through Congress — especially in these days of congressional gridlock.

The 2009 fiscal year, which Republicans count as part of Obama’s legacy, began four months before Obama moved into the White House. The major spending decisions in the 2009 fiscal year were made by George W. Bush and the previous Congress.

Republicans who aren’t in the Kool Aid Party Ignorance Patrol know enough to activate Keynesian remedies while plunging into the worst recession since the Great Depression. The crap about dribble-down economics may keep meatballs like David Stockman in royalties from book sales at Koch Bros. jamborees – but, when push comes to economic shove, keeping the unemployed from storming the Wall Street Bastille or the Congressional Clown Show requires doing things that actually work.

The Wall Street Journal – the owners of Marketwatch – have a responsibility to provide legit numbers to their subscribers as often as possible. A certain amount of Heritage Foundation agitprop is always icing on the reality cake and the transfer of power to Rupert Murdoch layered the frosting of rightwing lies a bit thicker. But, they can’t afford to dump reality altogether in the face of competition which ain’t about to disappear.

Republicans and the Mittster will crank up Rove-ish lies about these facts as much as they can. And don’t kid yourselves – they know they will be lying. They are part of that investing class the WSJ wants to keep as subscribers. They know this is the real deal. But, ideology is dearer to Tea Party Republicans than to an infomercial peddler offering you abs of titanium from 2 double-A batteries and a patented whirligig.

5 ways that Congress will whack your retirement

If Washington strikes a big deal on deficit reduction to avoid debt default, it’s going to be bad news all around for older Americans.

The debt crisis negotiations may yield no more than a short-term Band-aid and sidestep long-term changes in spending policy. But it’s clear that the Obama Administration and some lawmakers are reaching for a big deal patterned on ideas developed by politicians positioning themselves as bipartisan budget peacemakers.

So, while average Americans worry about the ongoing jobs crisis and vanishing retirement security, lawmakers and the President make plans for deficit reduction that will whack vulnerable older Americans.

Many of the spending cut ideas come from the final non-report of the President’s own deficit commission. (I call this a non-report because co-chairmen Alan Simpson and Erskine Bowles couldn’t muster the votes needed from commission members under their own rules to report out a final document, yet Washington accepts what the co-chairs issued as an official document). Other key ideas are embodied in the bipartisan plan du jour presented by the on-again, off-again Gang of Six.

Watch out for these possible blows to retirement security as the debt default deadline approaches:

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Another useless GOP myth about government spending

It was the British economist John Maynard Keynes who famously wrote that ideas, “both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed, the world is ruled by little else.” Right now, I’m worried about the damage that might be done by one particularly wrong-headed idea: the notion that, in stark contrast to Keynes’s teaching, government spending destroys jobs.

No, that’s not a typo. House Speaker John Boehner and other Republicans regularly rail against “job-killing government spending.” Think about that for a minute. The claim is that employment actually declines when federal spending rises. Using the same illogic, employment should soar if we made massive cuts in public spending—as some are advocating right now…

It is easy, but irrelevant, to understand how someone might object to any particular item in the federal budget—whether it is the war in Afghanistan, ethanol subsidies, Social Security benefits, or building bridges to nowhere. But even building bridges to nowhere would create jobs, not destroy them, as the congressman from nowhere knows. To be sure, that is not a valid argument for building them…

For example, the large fiscal stimulus enacted in 2009 was not “paid for.” Yet it has been claimed that it created essentially no jobs. Really? With spending under the Recovery Act exceeding $600 billion (and tax cuts exceeding $200 billion), that would be quite a trick…In fact, according to Congressional Budget Office estimates, the stimulus’s effect on employment in 2010 was at least 1.3 million net new jobs, and perhaps as many as 3.3 million…

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Higher medication spending doesn’t indicate best prescribing quality

Medicare patients in regions that spend the most on prescription medications are not necessarily getting better quality care, according to a new study of spending practices from the University of Pittsburgh Graduate School of Public Health (GSPH). The findings, published in the Nov. 3 Online First issue of the New England Journal of Medicine, reveal great variation across the country in both drug spending and the rate of inappropriate prescriptions for the elderly.

Lead investigator Yuting Zhang, Ph.D., assistant professor of health economics at GSPH, said that even after demographic characteristics such as age and sex, individual health status and insurance coverage are taken into account, it’s clear that Medicare drug spending varies broadly among hospital-referral regions (HRRs).

“Higher spending can be justified if it’s for drugs that are necessary and appropriate and improve patients’ health,” she said. “But if certain drugs are being incorrectly prescribed to seniors, then that can lead to complications and expensive interventions, such as hospitalization. As we try to reform health care to get costs under control, we need a better understanding of how spending differs regionally to make a positive impact…”

Regions where beneficiaries were more likely to be given prescriptions for high-risk or potentially harmful drugs did not necessarily spend more on drugs overall than regions where beneficiaries were less likely to use high-risk or harmful drugs.
In addition, the researchers found that regions where non-drug medical spending was higher also were the places where there was a greater likelihood of high-risk or harmful drugs being prescribed for Medicare beneficiaries.

That contradicts the idea that high spending leads to better prescription practices,” Dr. Zhang noted.

Computational analysis of a half-million Medicare patients used for the study.

Interesting maps. Interesting study.

Obama sees $40 billion annual savings in spending reforms

Daylife/Reuters Pictures

President Barack Obama says the U.S. government was paying too much for things it did not need and has ordered a crackdown on spending he declared was “plagued by massive cost overruns and outright fraud.”

Obama said wasteful spending was a problem across the whole government but he zeroed in on the defense industry after earlier citing a project to build a new presidential helicopter fleet as an example of the procurement process “gone amok.”

“The days of giving defense contractors a blank check are over,” Obama told reporters. He ordered a reform of the way the government did business, a move he said would save taxpayers $40 billion a year and help cut the budget deficit.

“Far too often spending is plagued by massive cost overruns, outright fraud and the absence of oversight and accountability,” Obama said. “We are spending money on things we don’t need and we are paying more than we need to pay and that is completely unacceptable.”

We will end unnecessary no-bid and cost-plus contracts that run up a bill that is paid by the American people,” Obama said. Critics say cost-plus contracts invite abuse because they allow companies to charge the government costs plus a fixed profit no matter how poor their performance.

“I reject the false choice between securing this nation and wasting billions of taxpayers’ dollars,” he said.

I’ve had personal experience with a couple aspects of this crap. Cost-plus? You betcha. I worked on one weapons system that had the cost doubled. Why not? We had a guaranteed 6% profit on top of whatever the corporation reported as cost. That doubled the total profits.

The same was true back in the day working on nuclear power generation of electricity. GE and Westinghouse and all their grazing buddies could figure out how to make an outhouse cost a million bucks. Run it past Congress and the last thing they wanted to do was take the cost of doing business apart to sift out the lies. Where would they go to be paid as lobbyists after they left Congress?

What the economic stimulus bill does for me

Cripes. Here I am acting like a regular blogger. Usually the focus of these posts is a news article written by one of the very few journalistic sources I have any respect for. Followed by a few or not-so-few lines of comment. Not this time.

I watched President Obama sign the ARRA – the economic stimulus bill – on TV up the road in Denver, this afternoon, and thought I might respond in a couple of stream of consciousness paragraphs about what it means to me and my family. Strictly subjective. Strictly personal.


I turned 72 this past weekend. This is the year I had to cut back on the supplemental insurance I buy to back up what I get from Medicare. Doesn’t matter to the insurance companies that I’ve been paying for this all the years I worked for a living. It’s not adequate. But, the cost of living in America increases faster than I can afford it.

Health insurance actually was the 2nd cut. The first was maintaining a physical presence in my community. I love Santa Fe. I love a lot of its history and architecture. I love the adventurous bits – which are as likely to stem from incomers as True Locals. But, I can’t afford the gasoline for my 15-year-old pickup truck. So, now, I’m more of a True Hermit – going in to town once a week with my wife for grocery shopping. That’s it.

Maybe I’m too old to benefit from buying a new fuel-efficient pickup. And what I’d like to buy – ain’t available in the United States, anyway. I’d love to have something the size of a Dodge Dakota or a little smaller with a small torquey turbo-diesel. Dodge has no clue about building one. Toyota does – but, they haven’t the balls to bring it to the States. Hermit it is.

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Better ways we could have spent Iraq War’s $1 trillion

Rob Simpson is no geopolitical, macro-economic, inside-the-Beltway expert. He’s an armchair analyst and creative director for an advertising agency, a former radio announcer and music critic in Ontario and a one-time voiceover actor.

His alternative spending choices reflect his curiosity and wit.

He calculates $1 trillion could pave the entire U.S. interstate highway system with gold — 23.5-karat gold leaf. It could buy every person on the planet an iPod. It could give every high school student in the United States a free college education. It could pay off every American’s credit card. It could buy a Buick for every senior citizen still driving in the United States.

“As I started exploring, I was really taken aback by some of the things that can be done, both the absurd and the practical,” Simpson said.

America could the double the 663,000 cops on the beat for 32 years. It could buy 16.6 million Habitat for Humanity houses, enough for 43 million Americans…

It’s too recent to make Simpson’s list, but that $1 trillion could also have paid for the Bush administration’s financial bailout plan, with $300 billion to spare. It might not be enough, however, to pay for the war in Iraq. Nobel Laureate Joseph Stiglitz has recently upped his estimate of the war’s cost to $3 trillion.

I have been saying this, plenty of folks have been saying this, since it became clear the nutballs in charge were going to use 9/11 as the core rationale of their new imperialism. Only Simpson has done it with a lot more humor and wit.