Friday, April 17, 2015

Tax Day Protests Demanding a $15 Minimum Wage

Once again, thousands of fast food workers, side-by-side union organizers, and agents are picketing fast food restaurants in 200 cities across the United States demanding that the minimum wage be raised from the current $7.25 an hour to $15.   The TV cameras and radio microphones will once again be out in force to hear stories about people not being able to live on $7.25 an hour and that many, if not most, are living in poverty.  Thus, the listeners of those broadcasts will be left with the opinion that millions of minimum wage workers are poverty stricken. But, as you will see, that is not the truth.

According to the Health and Human Services Department, you are in poverty if you, as an individual, earn less $11,770 dollars a year or less than $5.66 an hour; well below the current minimum wage.   As such, the federal government thinks that $7.25 an hour is more than adequate to live on.  Of course, if you are a sole provider with children and only earning $7.25 an hour, you would definitely be in poverty.  But, that fact would qualify you for assistance, which varies by state, but would be at least $16,984 or $8.61 an hour in additional benefits; assuming that you live in the least generous welfare state of Mississippi.

You also have to understand that only 1.5 million workers actually earn the exact minimum wage.  Out of which, 1.1 million of that number (or 71%) work part time and have no other job.  Again, not a fact that supports the claim that most people can't live off of $7.25 an hour.  In fact, if we did up the minimum wage to $15, a lot of high school students, working part time, will get big fat raises.  After all, you probably don't see too many "grey beards" working the counters at your local fast food store.

So, that leaves us with about 450,000 minimum wage employees who are working full time and of which some -- certainly not all -- may need federal or state financial assistance.  It's ridiculous to raise the minimum wage for all 1.5 million workers when, in fact, there is no rational argument to the poverty claim. 

Also understand this.  One in seven Americans or 45 million people are in poverty in this country and raising the minimum wage can ultimately hurt them since they will be forced to pay higher costs as retailers raise their prices to accommodate the increased salaries  When you double the wage at the bottom, everyone above must also have their wages increased in fairness to seniority.  So, if the average labor cost for a fast food restaurant is 32%, the doubling of the minimum wage means that a meal that used to cost $10 will now cost $13.20; putting dining at these businesses out of the reach of millions of Americans in poverty and millions more who solely live off of social security or disability checks.

The claim that substantial numbers of people will be raised out of poverty is, quite frankly, bull.  In 2006, before the minimum wage was raised 40% by 2009, there were 36 million Americans in poverty.  Today, 9 million more than that share that same distinction. 

Here is another fact that most people aren't aware of.  We have whole states of people who, on average, aren't even close to making a $15 wage.  According to the Census Bureau, statistically half of Mississippi's nearly 3 million people make less than $20,618; or, less than $9.91 on the basis of a 40-hour work week.  The average in Arkansas it's $10.66.  Worse, the average American only makes a per capita income of $28,155 or $13.54 an hour; but somehow, only the fast food workers need a wage of $15 in order to survive.

Finally, because salaries vary so much by state, there should never be a one-size-fits-all national minimum wage mandated by the federal government.  That is, unless, the federal mandate is based on some percentage of each state's average hourly wage.  That would be fair, and that would also stop this incessant political tinkering with the minimum wage.  This would permanently index it.


References:

U.S. fast-food workers mark Tax Day demanding higher wages: https://ca.news.yahoo.com/u-fast-food-workers-plan-rallies-demanding-higher-090346999--business.html

Characteristics of a Minimum Wage Worker: http://www.bls.gov/cps/minwage2013.pdf

2015 Poverty Guidelines:  http://aspe.hhs.gov/poverty/15poverty.cfm

Work or Welfare: What Pays More? - Real Time Economics:  https://www.google.com/search?q=Work+or+Welfare%3A+What+Pays+More%3F+-+Real+Time+Economics+...&ie=utf-8&oe=utf-8

45 Million Stuck Below The Poverty Line: http://www.huffingtonpost.com/2014/09/16/poverty-household-income_n_5828974.html

The Tightwire Act of Living Only on Social Security: http://www.nytimes.com/2012/09/12/business/retirementspecial/living-only-on-social-security-is-a-tightwire-act.html

Common Food & Labor Cost Percentages: http://smallbusiness.chron.com/common-food-labor-cost-percentages-14700.html

Mississippi - State and County QuickFacts: http://quickfacts.census.gov/qfd/states/28000.html

Arkansas - State QuickFacts: http://quickfacts.census.gov/qfd/states/05000.html

Persons Below Poverty Level in the U.S., 1975–2010: http://www.infoplease.com/ipa/A0104525.html




Thursday, April 16, 2015

Why the Saudis Fear ISIS and Iran

To most people, Saudi Arabia represents a wealthy country based on decades of being the world's leader in the extraction of oil.  But, within the religion of Islam, they have something of much greater value than oil. Saudi Arabia is home to the most holy cities of Mecca and Medina.   Mecca is where the Prophet Mohammed was born and began writing the Qur'an. It is the responsibility of every Muslim to make a pilgrimage to this holiest of places within their lifetime.  Medina is where the Prophet is buried and was, when he was alive, the capital of the Muslim empire.

So, if you are ISIS and want to create a true Islamic State or Caliphate, it must include Mecca and Medina.  Also, Iran believes in the coming of the 12th and final Imam and, as such, Shia and Sunni Muslims must be unified under Shia rule.  This is why Iran is actively supporting a Shia takeover in Iraq, Yemen, Syria, and Libya.   And, for sure, and at some point, Iran will set their sights on Sunni Saudi Arabia and Jordan; a goal that is only solidified if Iran has nuclear weapons because having the bomb insulates them from attacks by stronger Sunni countries such as Saudi Arabia.  Also, understand that Iran having control of Iraq, Yemen, Syria, and Libya is, in a way, attempting to surround both Sunni countries of Saudi Arabia and Jordan.


The Saudis clearly understand this threat.  Currently, they are building an extremely fortified  600-mile wall along the Iraq border to protect themselves from an ISIS invasion.  A similar wall is being built  along the Yemeni border to shield themselves from a possible Houthis Shia invasion from Yemen.   It is also the reason that Saudi Arabia has created a coalition of 10 countries to restore Sunni control of Yemen and beat back the Shia Houthis.

At issue, now, is whether or not that same coalition will eventually turn on Iran in an attempt to keep them from ever getting the bomb.  In fact, Obama's nuke deal may have just solidified that very possibility.  But, even if the Saudis don't lead a war against Iran, there is a very real possibility that the  President's deal will create a rush of Sunni countries, lead by Saudi Arabia, to have their own nuclear weapons as a matter of self defense.

Simply, there has never been a worse time for peace in the Middle East because the United States has created a vacuum for ISIS and Iran to walk all over Sunni countries in the region.  It is possible that in less than two years, an all out Middle East war could ensue, or as rumored, the Saudis may allow Israel access to their airspace to launch a defensive attack on Iran's nuclear facilities.   A fact that previously would have never been possible had Iran not been given a pathway to the bomb under the current nuke deal.

References:

Medina: http://en.wikipedia.org/wiki/Medina

Mecca: http://en.wikipedia.org/wiki/Mecca

Caliphate: http://en.wikipedia.org/wiki/Caliphate

Criticism of Twelver Shia Islam: http://en.wikipedia.org/wiki/Criticism_of_Twelver_Shia_Islam

Iran Now Controls Four Middle Eastern Capitals: https://www.thetrumpet.com/article/12414.18.0.0/united-states/iran-now-controls-four-middle-eastern-capitals

Saudi Arabia Builds Iraq Border Wall To Protect Against ISIS:  http://www.npr.org/2015/01/20/378660034/saudi-arabia-builds-iraq-border-wall-to-protect-against-isis

Saudi Arabia builds giant Yemen border fence - BBC News: http://www.bbc.com/news/world-middle-east-22086231

Saudi Arabia to allow Israel use of its airspace to strike Iran: http://rt.com/news/235923-saudis-airspace-israel-iran/

Sudanese army says ground troops to join Saudi-led coalition in Yemen: http://www.sudantribune.com/spip.php?article54415

Turkey-Pakistan reaffirm support for Saudi Arabia: http://www.worldbulletin.net/turkey/157367/turkeys-domestic-security-law-enters-into-force




Wednesday, April 15, 2015

Hillary Clinton's Selective Outrage Over CEO Pay

Last week, the New York Times reported that Hillary Clinton sought the advice of more than 200 experts on how to solve the problem of income inequality.  After all that advice, her solution to the  is to express her outrage over CEO pay.

Rather than come up with any ideas that would give 156 million workers better pay by creating better jobs, her solution is to somehow reduce the salaries of the roughly 19,000 CEO's who head up publicly traded corporations and who are paid, on average, $153,000 a year.  In expressing her outrage she claims that the average CEO is paid 300 times what the average worker is paid.  Well, try dividing $153,000 by 300 and you get a average of $510 a year. 

The fact is, that Hillary, once again, is distorting the facts.  Her "300 times" claim is based on a published work of a liberal think tank called the Economic Policy Institute.  Their claim is that the top 350 CEO's make an average of $15.2 million in annual compensation (salary and benefits, incentives, and forward stock options).  So, were supposed to be angry at every CEO in America because 350 make more than what Hillary and a bunch of other liberals think they should.

But, one has to wonder why that liberal study only looked at the top 350 and not the top 400 or, even the top 500 CEO's.  Well, the reason is that the top 350 are the exception and not the rule.  For example, Mary Barra, the head of General Motors, received $4.4 million in total compensation (salary and incentives) last year.  Apple's CEO got paid $4.2 million.  The new head of Ford just received a compensation package of $5.25 million.

But, where is Hillary's outrage over the insane salaries in Hollywood where the top stars make between 20 and 30 million dollars per movie.   Or, the NBA where the average basketball player is paid $5.5 million.  And, what about her own salary?  Since leaving the State Department, she has average 3/4 of million dollars in income per month.   That's $9 million a year, or the equivalent of the combined incomes of the CEO's of General Motors and Apple Computer.

We are in a country where the working class is hurting.  The middle class makes less now than they did in 2010 at the height of post-recession unemployment.  Instead of spending time talking to a bunch of liberal economists and academics on how to fix the inequality problem, maybe she should spend time with the CEO's who are real job creators; and, stop bashing them about their salaries.  If she's going to be outraged about incomes, Hillary should try looking in the mirror before she lectures anyone else.


References:

New York Times: With advice from more than 200 policy experts, Hillary Rodham Clinton is trying to answer what has emerged as a central question of her early presidential campaign strategy: how to address the anger about income inequality without overly vilifying the wealthy: http://www.nytimes.com/2015/02/08/us/politics/economic-plan-is-a-quandary-for-hillary-clintons-campaign.html?_r=1

Hillary Clinton surprises with early attack on CEO pay: http://news.yahoo.com/hillary-clinton-surprises-early-attack-ceo-pay-190527044--finance.html

Average CEO Pay in America: http://www.payscale.com/research/US/Job=Chief_Executive_Officer_%28CEO%29/Salary

Number of Publicly Traded Corporations in U.S.: https://www.google.com/search?q=publicaly+traded+corporations&ie=utf-8&oe=utf-8#safe=off&q=number+of+publicly+traded+companies&revid=1307038320

Economic Policy Institute: CEO Pay Continues to Rise as Typical Workers Are Paid Less: http://www.epi.org/publication/ceo-pay-continues-to-rise/

Since exiting the Obama administration in February 2013, she has raked in an estimated $750,000 per month with her nonstop speaking appearances and the advance for her new book, according to an analysis by Bloomberg: http://www.nydailynews.com/news/politics/hillary-clinton-brought-12-million-16-months-leaving-state-department-article-1.1874339

Mary Barra Salary: https://www.google.com/search?q=mary+barra+salary&ie=utf-8&oe=utf-8

The New Ford CEO Pay: http://www.usatoday.com/story/money/cars/2014/07/02/ford-ceo-mark-fields-pay/12085859/

Apple CEO Pay: https://www.google.com/search?q=Apple+CEO+pay&ie=utf-8&oe=utf-8

Average NBA Pay: https://www.google.com/search?q=average+nba+salary&ie=utf-8&oe=utf-8

List of highest paid film actors: http://en.wikipedia.org/wiki/List_of_highest_paid_film_actors

Real Median Household Incomes: https://research.stlouisfed.org/fred2/series/MEHOINUSA672N

Tuesday, April 14, 2015

Have You or Your Tax Preparer Read All 70,000 Pages of the Federal Tax Code Yet?

Last year, about 170 million Americans had to file a tax return at a cost of 1.35 billion (billion with a "b") man hours in preparing those returns.  On average, that's about 8 hours per person or the equivalent of one long business day per filer spent putting numbers in little boxes, adding them up, and checking off things he or she may not understand.  Then, at the end, you sign and date the thing swearing that its totally correct or you may be subject under penalty of law.

Up until ObamaCare, only those who reasonably made any income had to file tax returns.   But, this year, because of the new healthcare law, even those, who in the past, made too little to pay taxes  must file a return anyway in order to prove they have official ObamaCare approved health insurance and avoid paying a penalty.  According to the nation's leading tax service, H and R Block, only about 1 in 4 low income families even knows this; leaving 3 out of 4 in violation of IRS rules and regulations by not filing the up to 3 forms associated with proof of insurance.  Of course, the friendly IRS has whipped up a handy 21-page single-spaced guide to help you understand how to fill out those three forms.  Unfortunately, for most people reading the guide, it will seem like it was written by some alien being; especially for low income families with limited education.  Of course, this means millions more tax returns and it also means thousands of new IRS agents to handle all that new paperwork.

In 1989, when the tax code was about 30,000 pages long, the LA Times found that the IRS help line was 30.8% wrong in the advice they gave someone with regard to their tax preparation. Today, with more than 70,000 pages of tax code, it's anyone's guess how accurate (or inaccurate) the help line is.  But, this we do know.  The IRS has already said that it will only be able to handle half the calls to its help line and 87% of those who do get connected will have to wait 2-1/2 hours for the call to be answered.

My purpose in explaining all this is to say that the current tax code is beyond human comprehension.  It would be like remembering page-by-page every book you ever read plus all future rewrites.

Simply, the tax code needs to be abolished and a simplified system installed in its place.  After all, the original income tax was a flat tax.  Then, it morphed into a progressive tax in which the more money you made the higher your taxes were.  Ever since then, each political party has attempted to curry favor by modifying the code to give special exemptions to garner votes.  Taxes have become both punishing and incentivizing; always with the voter in mind. No one should have to wait 2-1/2 hours to get an answer about trying to pay their taxes without the threat of fines or jail time.

References:

The Cost of Tax Compliance: http://taxfoundation.org/blog/cost-tax-compliance

H&R Block: ‘No One Can Understand’ New Obamacare Tax Code: http://dailycaller.com/2015/01/19/hr-block-no-one-can-understand-new-obamacare-tax-code/

IRS seeks 4,000 agents, $303 million for Obamacare: http://www.washingtonexaminer.com/irs-seeks-4000-agents-303-million-for-obamacare/article/416051

IRS Help Line Has Error Rate of 30.8% - Los Angeles Times:  http://articles.latimes.com/1989-03-11/business/fi-777_1_irs-employees

The IRS will answer less than half your calls this filing season: http://www.washingtonpost.com/blogs/wonkblog/wp/2015/01/14/the-irs-will-answer-less-than-half-your-calls-this-filing-season/


Monday, April 13, 2015

Hillary Should Not Be Seen or Heard

Over the last three decades, the Gallup polling organization has been able to track Hillary Clinton's approvals; first as First Lady; then, as a person running for the Senate; also, as a Presidential contender; and now with another run at the presidency.  Here's the result of that polling:
As First Lady, she eventually achieved a 62% approval rating by 1994. Two years later, her favorability numbers were down almost 20 percentage points to 43%.  This was because, to many, Hillary was seen as untruthful.  In fact, in 1996, the late Bill Safire, a New York Times opinion writer for a very liberal newspaper, made that quite clear by calling her a "congenital liar".

Then, as Hillary sunk back into hiding, her approval numbers rose again until, by 1999, she stood at an all time of 67%.  However, following her and Bill's exit from the White House, she  decided to run for U.S. Senator from New York in 2000.  By 2001, her numbers had fallen to 44%  and, if she hadn't been running against such a weak GOP candidate as Rick Lazio she probably wouldn't have won.  After her senate victory, her approval numbers climbed back to 58%, until she ran for President against Barack Obama in 2007 and 2008.  Then, her rating plummeted again, to just 46% and Obama won.

Now, since 2013 -- when she started her ill-fated book tour and it was presumed that she was pursuing the Presidency again -- she's gone from a 66% approval down to the current 48%; which, I am sure, will be going even lower in the future.

Essentially, all this proves is that Hillary is a bad candidate.  The more people hear from her, the less they like her.  Bill Safire had her accurately pegged in 1996 as a liar.  Her explanation of her private email server is more proof of that.  Then there's her claim that she and Bill were "dead" broke when they left the White House after they had just spent $2.85 million for a new home in Washington D.C..  And, then, there was a little matter of that $8 million book deal advance in 2000.

No one should ignore history; especially when it comes to Hillary Clinton.  She opens her mouth and people develop negative attitudes towards her.  She is not a good campaigner and the Democrats would be wrong to anoint her as their Presidential candidate.  But, as a Republican, all I can say is "Run, Hillary, Run!"

References:

Gallup: Clinton's Favorable Rating at 48%, But Dems Still Like Her: http://www.gallup.com/poll/182351/clinton-favorable-rating-dems.aspx?utm_source=Politics&utm_medium=newsfeed&utm_campaign=tiles

Bill Safire: A Blizzard of Lies: http://www.nytimes.com/1996/01/08/opinion/essay-blizzard-of-lies.html

Clintons Buy $2.85 Million Washington Home - NYTimes.com:  http://www.nytimes.com/2000/12/30/us/clintons-buy-2.85-million-washington-home.html

Hillary Clinton Book Advance, $8 Million, Is Near Record: http://www.nytimes.com/2000/12/16/nyregion/hillary-clinton-book-advance-8-million-is-near-record.html



Friday, April 10, 2015

High Prices: The Beef Over Beef

Americans like hamburgers, but maybe, not so much anymore.  The numbers are in and ground beef again, has hit another all-time high of $4.24 a pound in February.  That's twice the price of late 2009 when it was selling for $2.19 a pound.

Ground Beef Prices - Bureau of Labor Statistics

The problem with beef prices is that there is less being produced while the demand is still high.

Until demand falls, or the supply increases, prices will continue to rise. So, theoretically, cattle ranchers should want to increase production to take advantage of this.  So why do beef supplies just keep falling? This drop in supply has actually been accelerating since late 2012.  In actuality, more cattle farmers are giving up raising cattle because energy and feed prices are increasing too fast.  Also, the severe 2014 winter and the drought in the Southwest have taken their toll; but only in the last couple of years.  Additionally, some ranches have to be sold off to land developers in order to pay the government its 40% estate tax (death tax).  Often a price too high for any of the heirs to pay and still operate the ranch profitably.

The truth is that the tax policies and the cost of fighting climate change are killing the beef market.  Feed corn has become more costly due to the increased production of ethanol for fuel.  Energy prices -- especially under Obama -- have increased faster than inflation as producers of electricity move to abandon coal ahead of harsh restrictions.  The real worry for U.S. beef producers is that high prices in this country may attract an onslaught of imported beef which, in turn, could only further decimate our own beef production.   

Lastly, a crustacean alert!  Lobster, at just $2.89/lb (in 2013), may quickly replace that Saturday afternoon BBQ'd hamburger. 


References:

BLS: Ground Beef Prices: http://data.bls.gov/pdq/SurveyOutputServlet

US Beef - Bloomberg: Another Year of the Chicken: U.S. Beef Supply Will Fall Again in 2015: http://www.bloomberg.com/bw/articles/2014-11-18/us-beef-supply-will-fall-again-in-2015-chicken-demand-will-rise

Ethanol pumping up food prices - USATODAY.com: http://usatoday30.usatoday.com/money/industries/food/2011-02-09-corn-low_N.htm

Food and Electricity Prices Rise to RECORD HIGH AGAIN!: https://www.youtube.com/watch?v=AKOHJTijgsY

Cost per pound of lobster: https://www.google.com/search?q=cost+per+pound+of+lobster&ie=utf-8&oe=utf-8
 

Thursday, April 9, 2015

March's Horrible Jobs Report Was Clearly Expected

I'm always amazed how shocked economists are when the real numbers substantially miss their projections.  Last month's job's report was no different. The estimate for job creation was 250,000.  The economists at Briefing.com had theirs even higher at 260,000.  The actual number came in at 126,000.  A monumental miss.

Why did the economic community get it so wrong?  Well, all too often, economists work in a vacuum.  First, they were fooled into believing that the jobs number would be strong because of February's 295,000 total.  This after another strong number in January.

In doing so, economists were ignoring a simple economic principal: Job creation is a direct a result of increased business activity.

Primarily, this means that jobs are created if consumers are buying and spending more than they had in the past. Usually, because their incomes are rising. Also, any increased business activity means job creation as a result of new businesses being formed.  A new beauty shop with 5 new employees. A new fast food restaurant could add as many as 52 new jobs to the economy. 

There were several indicators that none of these things were happening.

In the three months of December 2014, and January and February of 2015, retail sales fell.  The reason for this is simple.  People haven't received enough of an increase in wages to drive retail sales.  For example, in the December jobs report, the average hourly wage for all employees in the labor market actually decreased by 7 cents.  Weekly earnings only increased by a whopping $21 from $829.03 to $850.12.  That's just two one-hundreds of a percent increase in income in a year's time.  Hardly enough to drive the economy and create jobs.  Then in a recent poll by Deutsche Bank, it was determined that 47% of Americans save nothing and, as such, are probably living paycheck to paycheck. The lack of retail sales is why businesses like Target are laying off 3,100 workers and why an untold number may be laid off as a result of the Radio Shack bankruptcy and store closures.

Additionally, business creation is in decline due to the lack of small business lending.  Newer and younger companies create more jobs than older companies, and much of this decline is a direct result of policies from the Obama Administration.

Simply, we are in a period of economic decline.  Without good wages, there won't be enough people buying things to drive the economy.  Proof of this comes from the Atlanta Federal Reserve's GDPnow computer algorithm projecting that the first quarter economic output will be near zero growth.  No growth equals no jobs.

References:

March 2015 Nonfarm Payrolls: http://www.briefing.com/investor/calendars/economic/2015/4/3

THE EMPLOYMENT SITUATION—MARCH 2015: http://www.bls.gov/news.release/pdf/empsit.pdf

The Employment Situation - February 2015: http://www.bls.gov/news.release/archives/empsit_03062015.pdf

the employment situation—january 2015: http://www.bls.gov/news.release/archives/empsit_02062015.pdf

The Employment Situation - December 2014: http://www.bls.gov/news.release/archives/empsit_01092015.pdf

Retail Sales Down for Third Straight Month, Automobiles Put Brakes On: http://www.industryweek.com/finance/retail-sales-down-third-straight-month-automobiles-put-brakes

Target eliminates 3100 jobs - MPR News: http://www.mprnews.org/story/2015/03/10/target-layoffs

Target layoffs will hit 1,700 today, with another 1,400 jobs going unfilled: http://www.startribune.com/lifestyle/295752841.html

These are the stores RadioShack is closing - CNNMoney: http://money.cnn.com/interactive/technology/radio-shack-closings-map/

Half America Doesn't Save: http://www.businessinsider.com/half-of-america-doesnt-save-any-money-2015-3

GOP presidential contenders need to start talking about ways to reverse the decline of entrepreneurship: http://www.usnews.com/opinion/blogs/opinion-blog/2015/02/19/decline-of-small-business-hurts-economic-recovery-jobs-growth

Who Creates Jobs?: http://www.nber.org/digest/feb11/w16300.html

The consequences of the anti-business Obama administration: http://www.washingtonpost.com/blogs/post-partisan/wp/2015/04/06/the-insiders-the-consequences-of-the-anti-business-obama-administration/

GDPNow - Federal Reserve Bank of Atlanta: https://www.frbatlanta.org/cqer/researchcq/gdpnow.cfm