Friday, September 21, 2018

Six Points Against a Higher Minimum Wage: How Do They Stand Up Almost Five Years Later?

On December 13, 2013 I published a post with the first half of the title above.  It has been read over 2,000 times and has drawn various comments.  Much has changed in the economy and the world since then.  How have these arguments held up?

The first point was that “not every low-paying job is with a large and very profitable company,” and in fact most such positions were and are with small, often struggling local concerns with little in common with the likes of McDonald’s and Walmart, and run real risks of being closed out if the business’s owners were forced to pay more.  Two comments implied that we could tie minimum pay to profitability, which sounds unwieldy but would indeed solve the Burger King-vs.-Joe’s-Bar-and-Grill problem here.  Another stated, correctly, that more money in circulation would help such businesses survive – it would, but in the great majority of cases would not approach being enough.

Second was that the country, then 19 million jobs short, was poorly placed to lose more to higher mandated wages.  Per the AJSN, that number is now 16.6 million, but that is not even a 15% reduction and still shows our surplus of people who would work if given the opportunity.  One commenter mentioned the increased money movement above – again positive, but far insufficient – and suggested that we could help that jobs deficiency with government infrastructure programs.  I heartily agree, as I have in the past – we will need to build, repair, and upgrade numerous bridges, roads, dams, airports, cellular towers, and much more sooner or later, and it may as well be sooner. 

My third point was that higher minimum wages would make employers pay more than they need to, that when they do not get the workers they require, or want to improve their quality and tendency to stay, they can and should raise their offers on their own.  That has been borne out by Walmart and other companies establishing internal minimums higher than the government requirement.  One observer said that the additional competition would be good for customers, which it could be, unless there is plenty as it is.  He also mentioned the problem of “a full time paycheque being less than your rent,” which would only apply to a small share of low-paid workers, as well over half are with parents, sharing living spaces, or have additional household income.

Fourth, I called “the largest inequality” the one between those working and unable to find jobs.  That is less true now than in 2013, but millions of those 16,600,000 would tell you that is how they see it.  No, this is not “fake news” – it isn’t real news or news at all, only my viewpoint – and is necessarily subjective anyway.  In business theory, income is known as a “hygiene factor,” which means that its appeal as it increases does not go up as a straight line but almost levels out.  Sure, $4.5 million or whatever per hour is farther from $15 than $15 is from $0, but a remarkable number of Americans would consider themselves halfway to being rich if they, indeed, earned $30,000 per year – and most people earning $1 million a year would see less change in their lives if their income increased 100-fold than if it went to zero.

Fifth was the limited ability of a higher minimum wage to lift people out of poverty.  That would only work for people experiencing that now who would not once their pay increased, even with no gain in the number of hours they are working.  Vastly more would need additional money or are not poor now, the latter most common among the 45% of minimum-wage workers who are under age 30.  “Increased consumerism” from people being paid more will not solve this problem by itself either. 

Last, our country contains vast variation in costs of living, and getting $7.25 per hour is not the same in Hawaii as in southern Texas.  Over the past five years, many states and cities, most with above-average living costs, have responded by raising the lowest pay themselves, a valid solution not inflicting prohibitively high minimums on others.  I add to that that there are huge individual variations in money wants and needs as well, and it would be an unmitigated loss if those able and willing to work for less than the minimum were legally forced to be unemployed instead. 

I finished with suggestions that, instead of penalizing businesses who need workers, we increase food stamps and unemployment compensation.  Our economy is better, and keeping them the same might be adequate now, but with that 16.6 million there is still no excuse for cutting them. 

One other thing has happened since I first posted here.  Guaranteed income, or universal basic income, has received a lot of attention and a few, usually fatally flawed, trials.  If it comes to pass, and I think it will before 2050, there will be no need for a minimum wage.  That would allow more interesting, fulfilling, and fun work opportunities to pay less, while, fittingly, having little effect on the dirtiest ones.  If everyone were assured of financial survival, I think we as a country could agree, after we had a guaranteed income in place, to abolish minimum wages completely.  Then, and only then, would everyone wanting to work be able to do that.  In the meantime, the ideas above are still valid – we need to let people earn. 

Friday, September 14, 2018

Seven Articles on Modern Employment, Three Clear Conclusions

What has been the underside of the decades-low official jobless rate and the recent 49-year low in unemployment claims?  A septet of widely varying pieces over the past 21 months tells us.

In “Struggling in NJ – 52 percent of all workers earn less than $20 an hour,” published in New Jersey 101.5 on January 16th, 2017, Dino Flammia introduced us to people he called ALICE, or “Asset Limited, Income Constrained, Employed,” or, to use an older and pithier expression, the working poor.  The real person he described, someone who, despite working full-time, seemingly got a car repossessed, “has begun putting several bills on credit cards,” and is “at risk of losing her home,” is hardly the worst off, and is one of millions. 

Next, we get to “Is freelancing the future of employment?” (The Conversation, August 15th, 2017), which discussed both sides of irregular work, not only the gig-economy Uber drivers and TaskRabbit short-propositioners but professionals working without being on regular payrolls.  For the latter, “freelancing is increasingly a choice that people make to escape the 9-to-5 workday,” and are closer to considering it “liberating, empowering, and even glamorous” than ordinary gig workers.  The share of American “freelancers” saying they made that choice from necessity came down from 47% in 2014 to 37% in 2017 and may be “a key visible indicator of the future of work,” though “full-time, company-based work is still the standard for employment in most Western countries.”  Small labor propositions, as I have described before, are still economically inferior goods, but opportunities for the likes of physicians to opt for less continuous employment are not.

We next saw a view, “Global Economy’s Stubborn Reality:  Plenty of Work, Not Enough Pay” (Peter S. Goodman and Jonathan Soble, The New York Times, October 7th), once again expressing surprise that, despite showy unemployment rates, wages are lagging.  When we are over 16 million jobs short due to latent demand, almost two-thirds of which comes from people not officially jobless, pay will stagnate.  As the article correctly points out, the ever-increasing ability of those in other countries, along with rising use of non-company employees as in the previous piece, are factors.  Weaker unions, though, are not a cause but a result, and there is no reason for same-job pay to increase more than inflation.  That also covers most of the subject matter of “The economy is hot, yet many U.S. workers feel left behind.  A new report sheds some light” (Andrew Van Dam, Washington Post, July 5th) – the rest is the insights that “even when Americans do find another job, their earnings don’t recover,” and “U.S. employment benefits provide less support in the first year of unemployment than those in any other country in the study.” 

On we go to a relatively ignored current work problem, that “Employers will do almost anything to find workers to fill jobs – except pay them more” (Michael Hiltzik, Los Angeles Times, July 10th).  Well, they will do something else – they will cry about a “skills gap,” and, per the article, complain that “labor is being paid first again” as, consequently, “shareholders get leftovers.”  Why business owners seem to think that paying market prices for workers is an undue hardship remains mysterious to me.

Much of the material here was put into a book, Temp, written by Cornell labor historian Louis Hyman and released last month, and reviewed by Jennifer Szalai in the August 22nd New York Times “How the ‘Temp’ Economy Became the New Normal.”  As well, Hyman, through Szalai, stunned us with “94 percent of American jobs created between 2005 and 2015 were for “alternative work,” and blamed “Manpower, the temporary staffing agency, and McKinsey, the management consulting company,” which “acted like a vise, with one supplying the labor and the other supplying the ideology.”

The seventh piece came out this week.  Matthew Desmond’s September 11th New York Times “Americans Want to Believe Jobs Are the Solution to Poverty.  They’re Not” spent most of its printed-out 19 pages telling us something we should know already with a sprawling anecdotal account of a woman trying to support herself and three children on a combination of 20 to 30 hours per week as a $10-$14 per hour home health aide and various off-and-on public assistance programs, contrasted with how “these days, we’re told that the American economy is strong.”  Desmond gave us plenty of erroneous reinforcement, such as the implication that wages should match productivity and that $7.25 per hour is a “poverty wage,” but more reasonably showed how this woman’s life is harder than, in a civilized society, it should be.

These articles offer three things we can take away.  First, due to a variety of national and worldwide economic factors, many jobs are low-paying.  Second, accordingly, we should not be cutting back the safety net, that, for example, food stamps and unemployment benefits should be consistently and easily available and, if anything, greater than they are now.  Third, though, we cannot require that all positions meet anyone’s “living wage” diktat, which in real life varies immensely from person to person, place to place, and situation to situation.  Personal choices still matter – if you doubt that, look over the Desmond article and tick off the bad ones the protagonist has made and still makes which affect her prosperity.  We are in Work’s New Age – we can no longer expect everything material our parents and even grandparents had – but we still need to govern ourselves as well as we can. 

Friday, September 7, 2018

Another Strong Jobs Month – AJSN Down 200,000 with Latent Demand for 16.6 Million More Available Positions

In this morning’s Bureau of Labor Statistics monthly Employment Situation Summary, one thing surprised me.  I had just commented that the projected number of net new nonfarm positions was usually too high, so wondered if, at 163,000, the official report would show we failed to cover our population increase. 

We did, though, easily.  The result was 201,000, about a third more than we need to sustain our growing number of adult residents.  The writeup was positive in other ways as well.  The count of those officially jobless was off 100,000 to 6.2 million, those out 27 weeks or longer fell the same amount to 1.3 million, and the total of people working part-time for economic reasons, or holding on to short hours while thus far unsuccessfully seeking full-time ones, dropped another 200,000 even after the previous month’s 100,000 loss, to 4.4 million.  Average private nonfarm payroll wages again increased more than inflation, up 10 cents per hour to $27.16. 

The headline adjusted unemployment rate did not improve, though, staying at 3.9%.  The unadjusted figure was the same, off 0.2% from July and showing August is a neutral seasonal month.  The two disappointing results were in the two figures indicating best how common it is for Americans to be working, the labor force participation rate and the employment-population ratio, each down 0.2% to reach 62.7% and 60.3% respectively.

The American Job Shortage Number or AJSN, which gives in one number how many additional, not-currently-available positions could be filled if all knew that getting one were as easy as getting a pizza, improved 217,000, as follows:

Outside the 324,000 improvement from those officially unemployed, 70,000 from those discouraged, and 33,000 from those pleading family responsibilities, though, the components got larger.  Most noteworthy was the 2 million gain in those claiming no interest in working, a huge jump for one month, adding 100,000 to the AJSN.  Other significant worseners were the number of people in school or training and those also wanting to work but not looking for it for the past year.  The changing outcomes in these three categories show that fewer people not technically counted as jobless tested the waters in August than in July, adding up to a real labor force shrinkage.

Compared with a year before, though, the AJSN is looking great.  The August 2017 figure was 17.6 million, over one million higher, mostly due to the difference in official unemployment.  The only significant gainer since then was those not wanting a job, with cuts in those in the armed forces, institutions, and off the grid and those not looking for the previous year helping the AJSN by about 100,000 apiece.  About 34.5% of the AJSN now comes from those unemployed, down from last month’s 36.1% and continuing a general long-term trend of more and more positions being filled by others.

So how good a month was it?  Although I’m concerned about the fallen participation percentages, and the corresponding increase in people staying on the shelf, it was positive.  There is nothing small about, month after month, our employment gains exceeding the needs of our additional population, or about the key and unheralded figures of long-term jobless and working part-time for economic reasons seeming to fall almost every month.  It is, relatively speaking, a fine economic time, and we’re still improving.  Accordingly, once again, the turtle took a small but clear step forward.  

Friday, August 31, 2018

Resorts World Catskills – A Casino in Trouble? – II

Last week I posted on reports that Sullivan County, New York’s Resorts World Catskills (RWC), though an unqualified success at bringing jobs to its area, was falling way short of financial projections, and was also getting subpar TripAdvisor reviews.  How did it look?  What concerns deserve management attention?  Overall, are these problems as bad as they seem? 

I visited it a week ago Saturday night.  The sign on New York Route 17, an expressway through its area, was clear, but once taking the proper exit not so much.  After one more sign pointing me to a right turn leading into a roundabout, I had to guess the correct way out.  I did, and a stoplight at Resorts World Drive, along with an arrow pointing me left, said I was on the right way.  After two miles through the countryside, isolating RWC from the rest of the county, I was there. 

Thousands of well-lit parking spaces surrounded the impressive and obviously new 18-story hotel and below casino.  I easily walked through and got in. 

My first mission was to join the Player’s Club.  That is the well-established way of getting both communications and complimentary food, beverages, lodging, cash back, and prizes for gambling there, and before even engaging a slot machine anyone should join that or the equivalent.  The line at the desk was about 15 people long, but, with four people working, moved quickly.  I wanted to see if their process was as fast as those in Las Vegas casinos, and it was – they put my driver’s license in a reader and, questions on my email and phone number and about two minutes later, I had my card, preprinted with my name and including $10 worth of free slot play. 

To redeem the latter, I wanted a $5 machine.  Not easy to find – they, with $1 machines, were in the “high limit” area, which, with two sets of directions, sent me through the gorgeously new gaming expanse, which I wandered through more after losing my two attempts.  It was fully up to modern standards – the “slots” (in quotes since you can’t play them with coins, only bills) all with video screens, the table games mostly filled with players including some betting hundreds per play, the restaurants with concentrations at $8 to $20 per meal, people everywhere, well-marked restrooms, and good directional signs.  I also went to the poker room.  No longer can the casual once-a-week-with-friends players expect to survive at casino poker – the modern version is no-limit, with the players’ skills often honed by hundreds or thousands of hours of compressed-time online experience, but, judging by the 15 tables in play, there were plenty of those even in this low-population area.  The room, though comfortable, didn’t have much special to offer its players, with comps set at a minimal $1 per hour with no higher promotional times, but attendance didn’t seem lacking.

Though the RWC facility looked vibrant and beautiful, I found a few other causes for concern.  Room rates, for now seemingly $200 per night and up, were sky-high by casino-hotel standards.  They did not have headline-name entertainment, and, overall, the non-gambling options seemed weak.  The 24-hour diner, while a real and necessary asset, charged the likes of $16 for nachos.  These may not stop those from traveling to visit once but will impede critical repeat business. 

There are still many things about RWC’s viability we don’t know.  Beyond what I saw, here are some questions for their management and ownership. 

First, what has happened with the effort to bring in high-rolling Asian customers?  They themselves could put you in the black.  Are you doing all you can there?

Second, are you marketing RWC aggressively to New York City?  There are hundreds of thousands of people, many quite wealthy now, with memories of childhood Catskills trips.  Are you considering offering them the likes of free hotel stays? 

Third, what can you do to step up your entertainment options?  Last decade, that shortage killed a billion-dollar Las Vegas casino with a storied history, the Aladdin.  I live 20 miles away, get all four local newspapers, and see stories and advertising about oodles of small local concerts elsewhere, but nothing about anything you offer. 

Fourth, are dollar slot machines, common as far back as the 1970s, really “high limit” in 2018?  Is it possible that more of them, even with the modern trend toward playing many multiples of the minimum, would help that strange per-machine shortfall?  If not, with your state-of-the-art machines getting such good reviews, just what is the slot-machine-revenue problem?

Fifth, where is your community involvement?  I expected that you would have the likes of buses to canoeing and fishing providers, not to mention partnerships with community institutions such as WJFF Radio, whose management has heard nothing from you.  You can’t go it alone here, especially when so many locals didn’t want your facility built.

Sixth, how much do you project that legalized sports betting, your Monster golf course, and your $33 million entertainment complex will help your business?  Do you seriously expect a big boost from the Kartrite indoor water park, which is well into Pennsylvania and has its own hotel?  Is it possible you need rooms to compete with Las Vegas’s $50-per-night offerings and nearby Monticello’s $60 ones?

Seventh, can you quantify how much our bad winter and early spring weather hurt your bottom line?

Eighth, is there or is there not a gap between the previous six months’ results and what you expected?

Ninth, is it just my perception, or has your communication, in general, been lacking?  With my blog and WJFF program I qualify as a journalist, and doubt I was the only one whose multiple information requests you did not respond to.

And tenth, the big question.  With casinos now in 44 states, we know they are not automatically travel destinations.  With those in the Silent Generation much larger per-capita gamblers than Boomers, and the Millennials lowest of all, is it possible that the model of people going to gamble, to the exclusion of almost everything else, for a week or weekend is becoming obsolete?  If so, how are you going to deal with that?

Overall, I don’t know how successful Resorts World Catskills will be in five or ten years.  I am inclined to be optimistic.  But it’s nothing that will be given to it.  “If you build it, they will come” may work for cornfield baseball diamonds in the movies, but it’s nothing casino resorts can expect in real life. 

Friday, August 24, 2018

Resorts World Catskills – A Casino in Trouble? – I

Five years ago this fall, New York State had a referendum on the legalization of several new casinos.  I supported it, as did many, and the measure passed.  One result was Empire Resorts’ Resorts World Catskill (RWC) in Sullivan County, near Monticello.  It partially opened February 8th this year, with a large gambling area, a hotel, restaurants, and more promised to follow.  Its first day became a media event, with a lobby-full of customers ready at opening, and all seemed fine. 

For the five months after that, RWC was seldom in the news.  The July 11th Times Herald-Record, though, had a report that those of us here didn’t want to see.  Daniel Axelrod’s “Sullivan casino owner reports $37M loss,” documented that gross earnings were “far below the level needed to cover the business’s expenses,” with a second-quarter deficit of $22.4 million in operations paired with $15 million in interest expense on its half-billion-dollar “debt and other long-term liabilities.”  Not all of that was from the new resort, though, as the parent company also owns the Monticello Casino and Raceway trotters-and-slot-machines racino, which “has been a major money-loser over the past decade.”
The more-detailed figures the company provided, though few, gave further insight into the shortfall.  According to unnamed “gaming experts” Axelrod cited, casinos should avoid their “viability” being “questionable” by having gross revenue of $200 per slot machine per day, and $1,200 per table game.  RWC’s $1,192 for each of the latter was close enough, but the former’s $111 was not. 

Four days later the Record published another Axelrod piece, its cover story, behind the colorful headline “Oh, Craps!”  In “Resorts World Catskills failing to live up to first-year projections,” the author added coverage of an interview with Empire Resorts president and CEO Ryan Eller, in which the executive said that financial worries, given the feather-soft opening during “a brutal winter,” were premature.  A “midmarket hotel, with 15,000 square feet of retail, food, and beverage space” is scheduled for a December opening, and next year will see a new large indoor water park in the Poconos and reopening of a once legendary golf course at the resort itself.  The latter will help them, as Boston College management professor Father Richard McGowan said they need, “to greatly increase the non-gaming revenue.” 

One area in which the resort has not missed expectations, per the New York State Gaming Commission’s spokesman, is in “economic stimulus measures.”  It has added 1,500 jobs to its county of less than 70,000 people, and has made a noticeable dent in local unemployment, once worse than neighboring and larger Orange’s, but now consistently lower.

Six months is long enough for many RWC reviews to appear online.  One major source, TripAdvisor, this week had 201, with an average score a tepid 3.0 out of 5.  Some were completely positive, but most were not.  The quality of the rooms came out highest.  Common complaints were slow restaurant service despite little crowding, a lot of small logistical gaffes such as elevators not working properly, early closing times for some places by casino standards, a lack of combination deals with outside activities, and apathy toward heavily gambling customers.  Oddly, the slot machines, for their newness and variety, got almost all thumbs-up comments.  An RWC public relations manager responded to these remarks and pledged action on the negative ones.  In all, it is noteworthy that these problems were not all due to how new RWC is, and 3.0, with casino-hotels generally 3.5 or higher, does not qualify as a good rating score. 

What did the place look like in person?  I will post what I found during my visit last weekend, along with a list of concerns and questions about Resort World Catskill’s prospects, next week.

Friday, August 17, 2018

For Free Thinkers Only: America’s Sexual Shortcoming – III

Spearheaded but hardly originated by New York Times columnist Ross Douthat’s May 2nd issue, we have had more intelligent, if highly controversial, discussion on a real deficiency of the 1960s-and-beyond sexual revolution, the failure of it to extend to most people, than ever.  In Part I, I introduced this problem and showed it to be real.  Part II named nine points on this situation, explaining not only how it fits, or doesn’t, with other needs and giving it a broader base.  This week I recommend the following courses of action.

First, legalize and regulate prostitution nationwide.  That is certain to happen eventually anyway, would bring its prices down, would make it safe, and would be the most important legal change we could have.

Second, allow incest between consenting adults, and between consenting children of similar ages.  After hundreds of years of consideration, we still have no reason why, between people with reasonably equal power in the relationship, it should be banned.  And as with so many forms of sexual activity, teaching people that what they have done is wrong, not the action itself, is what causes most of the problems we have with it. 

Third, nationally permit sexual relationships between those with less than two-year age differences, even if one or both are under 18. 

Fourth, consider legalizing term marriages with full spousal privileges and protections.  They would facilitate sex, and would be consistent with the reality that most, as it is now, end in divorce.

Fifth, promote and subsidize monogamy, especially marriage.  Above all, remove all financial penalties for being married, such as those built into Social Security payments.  That lifestyle provides the most sex and is constructive for a variety of other societal purposes as well.

Sixth, be truthful about the effects of sexually transmitted diseases.  If the likes of gonorrhea can be cured by a routine prescription, say so.  AIDS has not often been in the news, but many still believe that it can be spread as readily through genital-to-genital intercourse as through anal sex and needle sharing.  That is not the case in this country.

Seventh, sponsor more research to further disconnect sex from reproduction.  For one, we can badly use effective chemical means to indefinitely but not permanently block male fertility. 

Eighth, encourage behavior changes among people.  Remove words such as “slut” and “c*nt” from our vocabularies.  Stop instilling shame and guilt about sex.  Give college-age adults, especially women, more privacy from their parents.  Drop the view that sex is zero-sum, and that if it helps one party it must hurt the other.  Tell sexually unsuccessfully people, especially men, truths about how they can be more likely to have such relationships.  Stop jealousy from causing us to be overly harsh or to lie outright.  Encourage younger men and older women to pair up.  Do not disapprove of older adults having such relationships, or try to stop them.  Avoid what might be called “middle-class” thinking, that everyone is entitled to involvement with someone of above average general desirability.  And above all, treat sex as the natural, uplifting, positive activity it should be for everyone.

Up until about fifty years ago, our dominant sexual ethic was “for reproduction and married couples.”  With the advent of the female birth control pill and other changes, we moved on to “for its own sake.”  The next phase will be “someone for everyone,” which promises not only far greater American happiness but other huge gains from the stability it will foster, such as improved health, longer life expectancy, and lower crime rates.  We can get there without coercion – if we think freely.

Friday, August 10, 2018

For Free Thinkers Only: America’s Sexual Shortcoming – II

Two weeks ago, I started a series based on Ross Douthat’s May 2nd New York Times “Redistribution of Sex.”  It considered whether the peak romantic activity should be more universally available, and how, and whether, the right for people to have it might be achieved.  I, as Douthat, considered it both a real problem, unsolved by any sexual revolution so far, and worthy of assessment.  
Accordingly, how does it fit in?

First, while sex may be immensely valuable and a major part of life, it is not truly a need, and cannot be equated with the likes of food, water, or air.  Therefore, it does not need to be government-assured.

Second, this issue is not political – if you disagree, would you consider it conservative or liberal, and why?  Some opinions are bipartisan, and this is one of them.

Third, the world would be a better place if there were more truly consensual sex. 

Fourth, we have no chance of returning to the pre-1965 sexual atmosphere.  It has added too much to life quality, for those having it, to be rolled back.  And, for example, we can no longer give, as Douthat put it, “special respect” to those choosing not to have it, especially when the best-known group of them, Catholic priests, are now known to make that choice from being gay (and, sadly, from being attracted to boys) instead of from being noble. 

Fifth, there has been in recent years great hostility from many toward the male sex drive.  That is not an appropriate feminist attitude, let alone a worthwhile mainstream one, and is not only sexist but destructive.

Sixth, there are several reasons for what Douthat called the “social and political chasms opening between” males and females.  We are at a historical juncture between women and girls being specially protected (the past), having full equal rights (the present in the law), and drawing expectations consistent with those of boys and men (the future), with different people advocating only one, one and parts of the others, and, even, all three.  Automation has hit men’s jobs, long necessary for sexual success as well as financial survival and prosperity, far harder than women’s.  We steadily get reports on how, over all careers and personal choices, women’s averaging lower pay is indication of discrimination.  There is, overall, a mixture of the past, the present, and the future, causing problems with what males and females expect from each other and, ultimately, with everything else between them.

Seventh, largely because of electronics and overattentive parents, sex between people under 18 is indeed falling.

Eighth, adding up the above, contrary to Douthat, we are hardly consistently “Hefnerian.”  Though guilt is only a tiny fraction of what it was over 50 years ago, too many people’s lives are way out of synch with what was once called “free love.” 

Ninth, pornography, sex robots, and other erotic machines have thus far caused no fundamental change.  Could developing technologies help here?  And what should we do about this overall situation?  See Part III next week.