Dr. Stephanie Kelton’s keynote address to the students, faculty, and visitors at Augustana College’s (Sioux Falls, SD) Undergraduate Research Symposium on Saturday, April 12, 2014 at 10am.
Entries Tagged 'economy' ↓
April 17th, 2014 — economy
Image courtesy of the Center for Economic and Policy Research.
I found this interview with economist Dean Baker very interesting. I agree with him that in some cases, a tighter job market can increase pay, it just hasn’t happened yet in Sioux Falls. I think that the work ethic, people holding multiple jobs, high productivity and the wealthy and corporate interests hoarding their profits has contributed to the fact that wages haven’t increased ‘YET’ in Sioux Falls. Workers are starting to become ‘wise’ to the fact that their employers are doing better after the recession and I think if the minimum wage increase passes in November, you will see other sectors raising their wages also;
Baker: This is one of the main points that Jared and I wanted to emphasize in writing this book. For large segments of the workforce, their ability to get pay increases, to share in the benefits of economic growth, really depends on having a tight labor market. And what really opened our eyes on this was our experience in the late 1990s. Jared and I were both working here in Washington at the Economic Policy Institute. At that point, they thought around six percent unemployment was the best we could do. We got down to four and half percent, and then four percent as a year-round average. And then we saw real wage growth up and down the income ladder — even people at the bottom end of the labor force were actually seeing good real wage growth during that period. And the basic story was that in a tight labor market, there was an increase in demand for people to work as checkout clerks at Wal-Mart, or to work at McDonald’s. When there’s tight demand for those people then they’re in a position to actually get wage increases, and that’s what we saw in the late ’90s.
We’ve done a lot of work on this, and you can’t make that result go away. So in this sense, it’s not just the unemployed, or even the underemployed — underemployment is a big deal as well, because a lot of people at the bottom also don’t get as many hours as they want — but it’s also about people who do have a job getting more pay because they’re in a position to bid up their wages.
When you have tight labor markets, Wal-Mart’s going to have to pay people $15 dollars an hour. It’s not a question of them just being nice guys or anything. If they want workers, they’ll have to pay them $15 bucks an hour.
He also brings up the fact that many people are so happy to just have a job, that they will work for crumbs without complaining for a pay increase;
Holland: A few weeks ago, Ezra Klein wrote that inequality isn’t the defining economic issue of our time. He said underemployment and unemployment were, and that launched a big debate. So was that a false choice, if I understand what you’re saying now?
Baker: On my own blog I said it missed the issue to make them separate points, because a big chunk of the story with inequality is the fact that you have so much unemployment. And, again, the reason why people are working at Wal-Mart for $7.25 an hour is because they don’t have alternative employment.
It’s really kind of a striking — if you go back and look from ’38, when we first created the national minimum wage, the Fair Labor Standard Act, until 1968, the minimum wage actually tracked toward activity growth. It didn’t just increase with inflation. Workers at the bottom were getting their share of productivity growth, so they were sharing in the gains of growth over those three decades. If the minimum wage had continued to keep pace with productivity growth from ’68, when it was at its purchasing power peak, until the present, it’d be about $17 dollars an hour today. And it’s not that I think we could raise the minimum wage to $17 dollars per hour tomorrow and not effect employment. Of course it would. But the point is that we had an economy that could support jobs that paid the equivalent of $17 dollars an hour for the person working as a checkout clerk at Wal-Mart.
So you can have a much higher wage economy, and a big part of that story is having low rates of unemployment.
He also brings up a curious, radical approach, to increasing wages and spending by those wage earners-work less hours;
The last point is hugely important. We can control the number of hours people work. The thing people should realize is that the story of unemployment is actually a story of us being too rich. That sounds strange to people, because we know we have an awful lot of people who aren’t too rich and don’t have enough money. But the point is that we’re producing the things that we’re consuming. People for the most part have housing, they have food, they have medical care, and we still have somewhere around 10 percent of the workforce unemployed, underemployed, [or] out of the labor force altogether.
So, in effect, what’s happened is, because we’re so productive, we end up with a situation where we don’t have enough work for people. Rather than that being a source of poverty for those people who are unemployed or underemployed, wouldn’t it be much better if we all just worked fewer hours?
Now, it’s not that easy to get from here to there, but the comparison that we make in the book — and I think it’s worth people keeping in mind — is that if you look at Western Europe — Germany, France, the Netherlands, Denmark, pick a country in that list — they work about 20 percent fewer hours than we do in the United States on average. And if you just snapped your fingers and said, ‘okay, we all work 20 percent fewer hours, it would result in 20 percent more jobs.
Now, in the real world, it will never be that simple, but that’s more or less what we’re talking about. So, to my view, a great way of dealing with unemployment is encouraging people to work fewer hours. It’s a great way to increase employment, and also make people’s lives better. People value having paid vacation, they value having paid sick days when they’re not feeling well or they have a family member who’s not feeling well. They like paid family leave when they have newborn kids or an elderly family member they have to care for. So that’s a really good way to try to deal with the problem of not having enough jobs.
I like this last suggestion the most. I know after I changed my part-time job last month (I work half the part-time hours I did before, make just as much money at my new part-time job, and have my weekends entirely off) that I am happier, less stressed, not as tired, and way more creative. Imagine that, working less would actually help the economy, or at least make happier Americans.
Connecting the dots on this investigation is going to be interesting, while the parties involved are trying to separate themselves from each other. Many media outlets and blogs (except Dakota War College) have covered many details on the case, but until the Federal investigators release their findings, these quagmires exist;
1) Benda is dead. Did he commit suicide, was he accidentally shot or murdered? Who did it?
2) Governor Rounds led a very secretive, tight-knit, state government, he is now running for Senate with challengers in his in own party, how will this affect is bid for senate if he is found guilty of wrong doing? And why did the State GOP chair give such a large donation to his opponent Larry Rhoden? Remember, Craig Lawrence was co-founder of L & S, one of the state’s most prestigious ad agencies who basked in the state tourism contracts to the tune of millions each year during the Rounds years. Why the sudden change of heart, Craig?
3) What was the current governors involvement in all this? He seems to be distancing himself from Rounds, as his spokesman last night on KELO said that ‘Dennis is more transparent then Rounds was when it comes to economic development (sic)’ This is also strange that Dennis is quickly distancing himself from Rounds, remember Rounds bailed Dennis’ ass out on a couple of occasions (Millions in state contracts when he ran Children’s Home Society, and the Mette Indian case cover up.)
4) Which brings us to AG Jackley, what was his involvement? He obviously worked closely with Dennis and Rounds. He’s the state’s lead attorney with many tentacles and connections.
5) Then there is the SOS of state debacle, Gant throwing in the towel and Shantel Krebs stepping in. Who is Rounds communications director? None other then Mitch Krebs, Shantel’s husband.
6) And lastly, why so much infusion of money from the Chinese and Koreans?
Lots of dots, lots of tentacles, lots of secrets, lots of deception. I have a feeling this is going to get very messy, very soon.
Guest Poster contributed;
It appears the state Treasurer’s office has joined the effort to make on-line access even dumber. The lack of ergonomic design in website development shows those of us who have to use their sites, how little they themselves actually use them. Let’s explain, the state of South Dakota, in an effort to collect funds from unsuspecting individuals and businesses decided to make it harder for the owners of lost funds to actually reclaim them. The excellent State Treasurer at the time actually fought all the way to the Supreme Court to protect the average citizens against the greedy hands of bankers and the Governor’s office.
As a result, the state, bankers and other keepers of our assets have collected millions of dollars through hard to use processes. Recently I had to use the SD State Treasurer’s Unclaimed Property website to assist in reclaiming a savings account.
What we found was amazing.
No wonder so little is returned to the rightful owners. The state actually used to actively assist and find the owners – but no more. They now have this cute website where it only allows you to only search by exact spelling. Do you know what is wrong about this? This takes data from many databases where the names are misspelled. In our Scandinavian land of *sen and *son plus the Irish apostrophe names leaves us with no way to accurately find lost assets Why can’t we search by address? Why can’t we search by city? Zip code County? Phonic spelling?
How about searching by the bank or business name where deposit was made? If there was an ability to search by business where property was found, we citizens and customers could actually discover how bad their databases are. So why isn’t there an ability to search by business?
Treasurer Sattgast must have asked SOS Gant how to design an ALEC based website. This is an insider’s website for insiders. The design of this site is not for the average user to use. Try it for yourself and see how bad it is.
This is how you help local businesses expand in South Dakota without giving a handout;
Gov. Dennis Daugaard recently announced the state Board of Water and Natural Resources has approved an $860,000 low-interest loan from the Solid Waste Management Program for Millennium Recycling in Sioux Falls to purchase equipment.
“These funds will help Millennium Recycling obtain equipment to accept additional recyclables, which will reduce the waste stream to regional landfills,” Daugaard said.
The project involves adding equipment to allow Millennium Recycling to sort plastic containers, such as milk, juice and broth cartons, for recycling. Additionally, Millennium will reconfigure sections of its single-stream recycling process to add the new capability and increase the efficiency of its operation.
The estimated cost of the equipment is nearly $1.2 million. The loan terms are 2.25 percent interest for 10 years.
Giving low interest, or even no interest loans to businesses that are beneficial to citizens is the smart way to go. When you give a loan instead of a handout, it is sending a message to taxpayers that this business intends to be around for awhile and make good on the loan, and better yet, improving our quality of life.
On his show Thursday night, The Daily Show host Jon Stewart mocked members of the Senate Banking Committee for going soft on JP Morgan Chase CEO Jamie Dimon after his firm lost at least $2 billion gambling on derivatives.
South Dakota Voters Express Increasing Confidence in their Personal Economic Situation
In a February survey, when Nielson Brothers Polling asked South Dakota registered voters about their personal economic situation, 41 percent responded that they are “more confident” than they were at this time last year. 29 percent are “less confident,” and 30 percent answer “about the same.” These answers show a significant rise in confidence compared to the December 2011 NBP survey in which 23 percent said “more confident,” while 49 percent said “less confident,” and 28 percent said “about the same”.
When NBP asked for views on the national economy, respondents expressed a more modest increase in optimism. 57 percent of South Dakota voters describe the U.S. economy as “excellent” or “good,” compared with 54 percent in the December. More specifically, in the February NBP poll, 8 percent said the nation’s economy is “excellent,” 49 percent said “good, 30 percent said “fair”, and 13 percent said “poor.” In the December 2011 NBP Survey, 12 percent said “excellent.” 42 percent said “good,” 26 percent said “fair,” and 20 percent said “poor.”
Personally I still think we are in a strange holding pattern, and will be for awhile.
Maybe I don’t know WTF I am talking about, but am I the only one that thinks this is happening because prices continue to rise?
Despite an uncertain national economy, city officials say Sioux Falls’ economy continues to gain strength, evidenced in part by steady sales tax growth above 4 percent the past several months.
City sales tax receipts ended the third quarter up 4.6 percent over the same period a year ago. That makes six consecutive months with year-to-date growth above 4 percent, according to the most recent sales tax information.
“Month by month, we continue to see improvements in our economic indicators here locally,” City Finance Director Tracy Turbak said.
While it is very nice to see tax revenue is up, that small percentage is telling me it has to do with inflation. When the economy hit rock bottom last year, there was actually deflation, which resulted in revenue being down. You should always be at a positive, even when there is a recession due to increasing prices and costs.
Councilman Dean Karsky said he’s optimistic the momentum will continue through the end of the year, especially on the brink of the holiday shopping season.
Thanks Dean for that valuable information. Who knew? Is there anything you would like to share with us about the Easter Bunny?
October 7th, 2011 — economy
Get used to it. I have always contended that the rich in SD are using the recession to pay less in wages while lining their pockets. They say the economy is doing good when they want you to buy their goods and services but when you ask for a raise, they say it is going poorly. Just look at the numbers;
South Dakota’s per capita personal income grew by 3.5 percent from 2009 to 2010, according to data recently released by the Bureau of Economic Analysis.
Sounds great right? But look at these numbers;
For example, Nesiba said, median household income in South Dakota has dropped 11.5 percent from 2008 to 2010, according to U.S. Census Bureau figures.
Basically the working stiffs are taking it in the shorts and the rich taking your shorts.
That’s a change from $51,600 in 2008 to $45,669 last year, Nesiba said.
“Even if the average per capita income in South Dakota is going up, those gains must be concentrated at the top,” he said. “What we’re seeing is that South Dakota per capita personal income is being boosted by higher farm incomes, but because of layoffs, lower wages and fewer hours, the median household income is actually falling.”