A billionaire explains the middle class

Nick Hanauer, a multi-billionaire who made his money in the new economy, explains the financial situation we middle-class folks are
in, and why our real incomes are falling; who the real job-creators are; and why the stock market is going through the roof.
This will either make your head spin or make you punch a hole in your drywall. Unka' George, this is for you:
http://tinyurl.com/n2x5ajb
--
Ed Huntress


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I find that reasoning to be ridiculous. According to its proponent, the reason for disappearance of middle class, is that a certain arcane "federal overtime rule" was not adjusted for inflation.
This makes no sense. We live in a capitalist society where wages, for the most part, are formed in a labor marketplace.
If workers bring a certain incremental additional value to employers, then their wage would reflect that additional value (the extra amount that the employer would earn from hiring an additional worker).
Workers with scarce skills or who are highly profitable, would command appropriate wages, that would rise as the marginal effect of workers on profits increases. That happens with or without overtime rules.
Overtime rules were not designed to distort hourly wages. They were designed to push working hours closer to 8 hours per day and to increase employment. It is more profitable for almost all employers to have 4 workers work 10 hours per day, than to have 5 workers work 8 hours per day, with the fifth worker bring unemployed. The overtime rules push employers more towards employing five workers at 8 hours a day.
All kinds of regulations, of labor, salaries, wages etc, brings about distortions in the marketplace that cost the economy money. It is possible that the value of good social changes offset that cost, but we should be clear on the existence of that cost.
In addition, when costs of transportation of goods or services are low, jobs can move to countries with less regulations or lower costs.
I can emotionally understand why that billionaire campaigns for $15 minimum wage, but his reasoning does not stand up to scrutiny.
i
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On Thu, 25 Dec 2014 20:24:55 -0600, Ignoramus11791

I'm going to guess you didn't read the whole article, nor the other articles and the TED talk that Nick Haneur has given.
The overtime thing was just a response to what PBS was interviewing about. Read the rest of the article and you'll have a better picture.

The "labor marketplace" is hugely biased against labor, and has been throughout history, with a couple of exceptions: the World Wars and a couple of bubbles, in which labor gained an advantage.
The study of Labor Economics is worth a Master's degree of study -- and often is.

Not if the workers are bidding each other down. That's the most usual state in any industrial economy.
BTW, this is not something that's worth debating. Any study of the history of the Industrial Revolution makes it clear what happens in reality.

"Appropriate wages" are competitively determined. In general, workers will work for whatever they can earn; if someone else will work for less, they have to take less.
There is no "natural ratio" or natural wage. Labor is almost never in a position to bargain much.
Think about it: How do employers decide what to pay a given worker? It's competition between workers, with the marginal rate of return set by competition with other companies who are in the same market. If everyone pays $20/hour, then the worker is worth $20. But if the competitors are paying $10/hour, then the worker is worth $10, on a rate-or-return basis.
Management is almost always in the stronger position.

Right.

One thing that must be agreed at this point or the discussion will go off the track: The market for labor is, and has been since the beginning of the Industrial Revolution, heavily biased, disadvantaging labor. The "distortion" is a function of labor's relative weakness. There is no -- absolutely no -- evidence to contradict this.
The growth of the American middle class, and our great economic success, is the result of legislation in favor of labor that attempted to establish a more realistic balance. Our economic growth over the past 70 years is largely the result of re-balancing that drove up consumption. Our economy is 70% domestic consumption.

That's true. Once a country goes all-in for globalization and offshoring, they've lost control of the balancing controls on their labor market. And the result, for the US, is a 30-year decline in the real wages of the middle class and a struggle to keep unemployment down to a balancing level.

The alternative is a race to the bottom.
--
Ed Huntress

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On Thu, 25 Dec 2014 20:38:07 -0600, "David R. Birch"

Many businesses have multiple "managers" on salary making this little. Food service and chain retail stores are prone to having a day manager, an evening manager, a night manager, etc. with no authority to decide anything, and no employees they supervise. Two prong approach: (1) The employee gets a title instead of a raise; and (2) the employee is overtime exempt. What's not to like?
--
Unka' George

"Gold is the money of kings,
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On 12/25/2014 10:58 PM, F. George McDuffee wrote:

For the employee, what's to like?
This means there are lots of people who have risen to their level of incompetence with a meaningless title and poverty level salaries. Not really middle class.
Which explains the service we get in the food and retail industries, but is only a small part at the low end of the middle class. Anyone with anything on the ball can do better when they see a title and no overtime is a dead end.
David
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On Thu, 25 Dec 2014 16:43:27 -0800 (PST), " snipped-for-privacy@krl.org"
<snip>

=============And many don't, even though they are required to do so. http://tinyurl.com/ksa3kyk
http://tinyurl.com/bsdkhvj
To even the playing field between the honest employers, and those who cut their labor costs by not paying overtime, it should be mandatory that every employee punches in and out, and working time off site is recorded. [random spot checks and significant fines (treble FICA and back pay to the employees?) should help implementation] The spot checks should concentrate on just before starting time, just after quitting time, and lunch/break time. Most likely this should be augmented by random surveys of the employees to determine how many hours of "voluntary" and required overtime was worked, and with or without time-and-a-half pay to identify the "bad apples" for on-site spot checks. This was too much record keeping before computers and the smart phone, but is entirely possible now.
While it is not reflected in the compensation data, the average American is now working at least 181 hours per year *MORE* than they were a generation ago. This is 4_1/2 weeks, or more than a month. http://tinyurl.com/cxywjng http://tinyurl.com/2p45cf
some time and attendance software and terminals, some with cloud storage, and some using cell phones http://tinyurl.com/qbv42uu http://tinyurl.com/o8zh6uv http://tinyurl.com/d3bvxad http://tinyurl.com/pvora7a
We have to tools to correct this abuse, what we lack is the will to use these tools to do so...
--
Unka' George

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On Friday, December 26, 2014 12:37:12 AM UTC-5, F. George McDuffee wrote:

Thank god we do not have the will to impose more regulations on businesses. Under your plan every employee would have to punch a time clock. In my entire working life , I never had to punch a time clock. And yet I did work a reasonable amount of overtime.
Dan
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Would George also support monitoring and restrictions on excessive domestic energy consumption to reduce CO2 emissions? There is already the legal precedent of municipal water use restrictions.
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On Fri, 26 Dec 2014 09:00:56 -0500, "Jim Wilkins"
<snip>

=============Several questions wrapped up in this strawman, such as "are CO2 emissions a problem," and "how do you define excessive?" Use restrictions may be well required where there is a limited supply such as not watering the lawn during a drought, or when electricity demand exceeds supply.
--
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On 12/26/2014 8:00 AM, Jim Wilkins wrote:

I would support monitoring and restrictions when we can do it in China and India as well as the US.
David
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I tossed that out as another example of how punishing restrictions imposed on "them" (businesses, gun owners, et al) will boomerang back on "us". -jsw
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On Sat, 27 Dec 2014 06:39:25 -0600, "David R. Birch"

Yes, those evil doers in the 3rd world countries. Of course China has a energy use (calculated in million BBL oil equivalent) of 10.2 per capita, Indian 2.9 per capita and the U.S., 57.2 so we can tell that them primitive places need to cut down!
--
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On Fri, 26 Dec 2014 05:04:49 -0800 (PST), " snipped-for-privacy@krl.org"

</snip> ===================I also fell for this scam.
It is a carefully nurtured myth that people who do not punch a time clock are some how superior to those that do. In too many cases it simply means that instead of real cash money, the employee got a title or classification change (possibly with a token raise), e. g. from salary to salary exempt, and more work for no (or very little) more pay.
I see no reason why everyone from the CEO down to the sweeper should not punch in and out when they are working. We see there is an apparent problem but there is no "hard" data, and the only way to acquire it is to require all employees to "punch the clock."
I am sure many of us will be shocked, both by how much we are working, and the extent un-paid (or straight time) over-time is required, and how much money is being diverted by unethical or ignorant employers.
--
Unka' George

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On Friday, December 26, 2014 11:51:37 AM UTC-5, F. George McDuffee wrote:

I did not fall for this scam. I just never worked at a place that required me to punch a time clock.

I do not think there is any constitutional argument for requiring all employees to punch a time clock. You can't justify making requirements on just wanting more data for the government.
Dan
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On 12/26/2014 11:28 AM, snipped-for-privacy@krl.org wrote:

No need for a constitutional argument, it's just a condition for employment. No salaried positions, all on the clock. It would give a new perspective on how much actual value is in many management jobs(as in, not much).
David
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wrote:

I've discussed that with my father, who had been an Air Corps company commander during WW2 and held a high position in NH State government. He made a good case that an effective manager can run an operation smoothly enough that he doesn't have to be present to keep his thumb on it all the time.
He took me on a lot of his trips around the state to visit his local state park and ski resort managers, compliment them on their good work, get in some fishing (and observing) and by the way show that he was always paying attention to detail, like if a vehicle suspiciously needed tires too often. -jsw
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On Sat, 27 Dec 2014 09:56:14 -0500, "Jim Wilkins"

True, but look what has happened to a nearly unrestricted Congress... Talk about a 'poster child' against Democracy.

You got the talk, eh?
"Son, just because my GTO has a 389cid with a six-pack on top, a Borg Warner T-10 close-ratio gearbox, and a 4.11 posi rear end, =doesn'tmean that when you borrow it..."
--
Learn the art of patience. Apply discipline to your thoughts when they
become anxious over the outcome of a goal. Impatience breeds anxiety,
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wrote:

Dad never owned anything like that. My high school buddies, the sons of doctors and lawyers, had the hot cars.
He was watching the purchase records for state-owned vehicles to catch people selling the tires. Corruption was very limited in NH, the ambitious crooks just moved to Massachusetts.
He knew the tricks because his Air Corps company had been in the South Pacific where "repurposing" government equipment without authorization was standard practice, to gain an edge on the Japs and improve the primitive living conditions. The natives in New Guinea had no money to buy stolen goods so MacArthur looked the other way and sent complaining supply officers home for "combat fatigue".
Their Officers' Club had a beer chiller made from a misplaced Jeep engine. His first mission on arriving in the Phillipines was to drive his Jeep onto an 'available' cargo plane for a two-barrel booze run to Manila.
http://wargamer.com/article/3437/historical-article-pappy-gunn,-wild-flying,-buccaneer-pilot-genius-of-the-5th-air-force Accounts vary on whether the Dutch B-25 bombers were reassigned or stolen.
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On Sat, 27 Dec 2014 18:02:37 -0500, "Jim Wilkins"

Oh, I thought you were referring to his catching you doing burnouts with his car. <g> (Mine, either, BTW. His hottest was an Austin Healey 100-4 he raced in Autocrosses and Gymkhanas, and it's on that very vehicle which I honed my auto-mechanic's eye teeth.) My hottest was a 1970 AMC Javelin w/ a 390cid putting out 400+hp and 425+ft/lb after rebuilding with a mild cam. That was a very, very fun car.

OK, got it. Good for your dad!

Way to go, Mac!

Ingenious!

Good story/great man! Was this your dad (wrong name), or did he just know him, or what? He sounds a lot like Pappy Boyington. (loved that TV series, ya darned college kid.)
My dad flew a Mitchell in several missions over Germany and France, then was shot down over France and held in a stalag for 10 months, 'til the Russian tanks rolled over the fences.
--
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On Sat, 27 Dec 2014 06:47:19 -0600, "David R. Birch"

=================Good suggestion!
May want to exempt the true small family business to avoid undue administrative burden.
The first step in correcting any problem is the collection of adequate and reliable data. Until this is done you can't be sure you even have a problem, or its scale. If it becomes a U.S. labor standard that all employees are "on the clock," as it is in some other developed countries, the "stigma" of being on the clock will disappear.
--
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