Minimum Wage Part I: For and Against

More than 3 out of 4 Americans support raising the minimum wage to $9 an hour. In a time when Congress has been in constant gridlock, raising the minimum wage has bipartisan support with more than 50% of republicans and democrats supporting a minimum wage increase.

• 76% of Americans support raising the minimum wage to $9 (Nov. 2013)
• Gallup Poll
• 80% of Americans support raising minimum wage to $10.10 (July 2013)
• National Employment Law Project

Historically, minimum wage was first enacted by Franklin D. Roosevelt with passage of the Fair Labor Standards Act in 1938 and has been increased 22 times. Minimum wage in 1938 was set at $0.25 an hour.

How does today’s minimum wage of $7.25 compare to 1938? At $7.25 an hour, today's minimum wage is higher than the inflation adjusted wage in 1938 ($4.08) and the 1938 - 2013 average inflation adjusted wage ($6.60) per hour respectively. Today’s minimum wage is however lower than its peak inflation adjusted wage of $8.67 realized in 1968.

Before expounding upon my beliefs on minimum wage, I want to clearly state what I am for and against. 

I support:

• Increased economic prosperity for all, especially those given the label as low income earners by the U.S. Government
• Equal treatment
• I support men and women of all races, ages, religious preference, etc. be given fair compensation for their contributions, as well as equal opportunity to maintain and improve their standard of living
• Greater local influence
• I support state, regional, and local enactment of public policies rather than a one size fits all system as our federal government prescribes. I believe the State of Minnesota has a better idea what is good for its constituents than politicians in Washington D.C. Similarly, I believe public officials in Bemidji, MN have a better idea what will best serve residents of Bemidji compared to state politicians.
• Freedom
• I support individuals having the opportunity to decide for themselves what is best for them. Similar to greater local influence, I believe individuals are in a better position to decide what is best for them rather than politicians miles away.
• Long term sustainable growth
• I support sustainable initiatives designed to create long term economic prosperity. Short term prosperity can be achieved at the expense of long term growth, however I believe this is unsustainable and foolish. 
• A good example is consumer debt. You can acquire any number of products and services on credit. Here you agree to short term gains (car, house, phones, TVs, etc.) in exchange for reduced long-term growth (any growth will be going to your debtor plus interest). This is great in the short term, but, ask anyone with large student, credit card, and housing debt their outlook on their long term growth and you will likely see this principle first hand.
• Wages linked to current and potential productivity

• I believe a worker's wage should rise and fall based on his/her productivity. For example, if George can make 20 widgets per day while Fred constructs only 5 widgets per day, I believe Joe should be given a higher wage than Fred even though they are technically doing the exact same work.
• NFL draft picks are an example of potential productivity. They are paid millions of dollars with the hope they will perform in the NFL. Thus, they are being compensated for their potential (rather than actual or current) productivity.
• The voluntary exchange of labor for wages will only be sustained while a worker’s productivity (current or potential) is equal or greater than the worker’s wage.
• If it costs Widget Workshop $10 to make a widget (excluding labor costs) it can sell for $20, Widget Workshop will not be able to pay Joe more than $200 per day (20 widgets x $10 profit = $200) nor Fred more than $50 per day. If Widget Workshop paid higher wages than these, it would operate at a loss and eventually become insolvent.

What I am against:

• A person’s value linked to their income or wealth
• I believe a person’s value is God given. I believe all people have been created in the image and likeness of God (see disclaimers) and therefore have been graced inherent value. A value or love from God that cannot be increased nor decreased. For this reason, I am against linking a person’s income, net worth, fame, etc. to their societal or individual value.
• Social engineering/Central planning
• As a general rule (some exceptions do exist such as pollution) I believe federal government involvement should be minimized in the affairs of individuals and private businesses. (See freedom above)
• Social engineering effectively tells people: “You do not know how to manage your affairs, but I do. Therefore live your life as I tell you.”
• American entitlement
• Please remember I am for increased economic prosperity for all, especially those who the U.S. Government has defined as low income earners. This being stated, I am against Americans being entitled to higher wages and standard of living on the sole basis we are an American.
• I find it ironic how passionate Americans are to remove the income inequality between men and women, yet there is little passion to remove the income inequality between Americans and citizens of other countries. Similar to supporting a woman receiving equal compensation for doing the same work as a man, should not an Eritrean receive the same cost of living adjusted wage as an American for completing the same task?
  
• Politicians in Washington D.C. believing they can successfully run a business
• From what I’ve seen they spend more time spinning issues and spending money we don’t have ($17+ trillion in national debt and rising) than promoting sustainable growth.
• Politicians acting as demagogues
• Politicians should not be acting under the influence of lobbyists, political elites, and faulty public opinion. Rather, politicians should be making well researched and informed decisions that benefit a super majority (75+% of the people).

Whether you are part of the majority who support a minimum wage increase, or the minority who does not, I encourage you to take the additional step to determine what effects you believe the minimum wage has on individuals, businesses, and society. A large body of conflicting research already exists. My next post will attempt to summarize my own findings.

Next Blog Post: Minimum Wage Part II: Individual, Business, and Societal Effects

League of Legends Growth Explosion

An individual is expected to live 700,000 hours (80 years). I estimate a person has ~300,000 productive hours in their lifetime (take out sleep, infant, and elderly years).

Given the great accomplishments of individuals with far less than a million productive hours, what could be accomplished with 1.3 billion man hours (> 3000 lifetimes of productive work)?

Almost incomprehensible, individuals collectively spend 1.3 billion hours each month playing League of Legends, an online, multiplayer video game.

Assuming phenomenal organization, League of Legends players in 2 months could construct:

• Panama Canal – 1.9 billion hours
• Transcontinental Railroad – 0.5 billion hours
• Hoover Dam – 0.2 billion hours

Surprisingly I was unable find a comprehensive timeline plotting the growth of League of Legends. I was, however, able to piece together information from multiple sources.

• I admit my blog is an odd place to find a League of Legend’s timeline, but as you may notice from browsing other posts, I have many interests :)

League of Legends Growth Explosion

Data Links -

October 2009 – League of Legends Officially Launched in North America and Europe

July 2011 – Riot Games Press Release

October 2011 – Riot Games Infographic

October 2012 – Riot Games Infographic

January 2014 – Wall Street Journal

Growth Graphs -

My LoL Timeline and History

Why I decided and continue to play League of Legends (LoL) –

• Friends
• Video games are an accessible medium to spend time with friends across the world. As I value developing these friendships, I decided to transition from Starcraft 2, largely single player game few of my friends play, to LoL, a multiplayer game many of my friends play.
• Fun
• While a grind in the beginning, I have more fun playing LoL today than at any other time.
• Competition and Multiplayer
• There is something in me desiring competition and measuring myself against the pool of other players. Single player games do not provide the level of competition or accurate feedback required to fulfill my desire.
• I find team games also provide greater rewards, albeit greater frustration at times.
• Popular
• As terrible as it is to be a bandwagon player, I prefer mainstream games. As stated in my inaugural blog post, I have a difficult time engaging in conversation with people, popular video games have a greater potential to build conversational bridges.

Why others play LoL –

• Free :)
• Low performance PC/Mac platform. Does not require an additional $400 video game console purchase or a super computer to run. My 6 year old laptop runs the game.
• Heavily rewards time invested
• It is difficult for a naturally skilled player to understand all the champions and game dynamics. Thus less skilled players can gain a knowledge advantage allowing them to compete with higher skilled, less knowledgeable players.
• Random events
• Random events keep players interested for longer as there are always opportunities to learn and improve.
• Team Play
• Life is better together. (picture)
• So happy together?
• Variety of play styles
• Allows for everyone to find a niche. Myself for instance, I avoid squishy champions and gravitate towards more forgiving top, mid, and support roles.

What I don’t like about LoL –

• Promiscuous images
• I do not support the objectification of women. I am all about freedom, but as Lord Acton stated, “Freedom is not the permission to do what we like, rather, it is the power to do what we ought."
• Games can take too long with no means of breaking them up
• Sometimes it would be nice to leave the game without ruining it for 9 other people, answer the phone, or take a 1-2 minute break. Not possible with LoL.
• Large Learning Curve (double edged sword)
• A large learning curve also keeps players interested, however, finding a combination of simple to pick up, yet difficult to master is a fine line.

Season 4 SMART Goals –

• Ascend to Silver V or above
• Purchase a 3rd Rune Page with hybrid penetration or attack speed runes
• 50%+ win rate on 5 champions
• 2 mid, 2 top, 1 support
• Own 22+ champions
• Need additional support champion

While I do enjoy playing League of Legends, I do find video games can be an unproductive and foolish way to spend time and energy. It amazes me how much time (1.3+ billion hours per month) is invested into a single video game (LoL). 

The average user invests ~8 hours per week playing LoL. I am surprised it is this low. In fact, according to Business Insider, the average American spends ~3 hours playing video games per week, which is surprisingly similar to the amount of time spent reading, exercising, relaxing, and socializing (3 hours for each of the afore mentioned activities). In fact, the only outlier is time spent watching television: ~19 hours per week.

I encourage all to consciously decide how to best invest their time, talents, and treasures. I have determined during my current season of life I am willing to allocate ~5 hours per week playing video games for the reasons cited above. This will look differently for all individuals. I am not here to judge values or how people spend their lives, I simply do not want anyone to be ignorant or foolishly invest their 300,000 productive hours, talents, and resources.

Next Post Topic: Minimum Wage Part I: For and Against

Unemployment Assistance Part VII: Payment Specifics

What could be more confusing that determining if someone is eligible for unemployment assistance? Determining the amount of assistance they may receive.

The complexities of modifying, not even initially designing, a national unemployment system has further driven me to believe a one size fits all, national unemployment assistance program should be the quinary safety net in event of reduced or lost employment.

Ideally, rather than an impersonal set of rules, formulas, and flowcharts found in a one size fits all national unemployment insurance program (public funds), private funds would be collected and dispersed by an actual competent person reviewing each individual case. The highly variable and personal nature of each case creates endless complexities in designing a one size fits all system to meet the specific needs of > 300 million U.S. citizens.

I encourage you to grasp the spirit or heart of my proposed changes rather than the actual calculations. However, for those with great perseverance and endurance I have laid out the extensive calculation process.

I will attempt to answer the second question in my original series of questions:

1) Who qualifies for unemployment assistance?

• Unemployment Assistance Part VI: Eligibility Specifics

2) How are benefits calculated?

• Based on income from last month? year? years? Based on another metric other than income such as poverty level?

3) How long may a recipient receive benefits?

• Weeks? Months? Years?

4) Who pays for unemployment benefits?

• State taxes? Federal taxes? Employees? Employers?

To answer this question I will present:

• General framework for disbursement amount calculation
• Goofy Case Study
• Bob the Builder Case Study

General disbursement calculation framework -

Maximum weekly benefit is lower of:

1. Hard cap of $600 per week
2. Calculated cap of 90% of individual’s calculated loss of average weekly wage (AWW)

Calculated cap is determined utilizing two separate methods. One for loss of all hours, and a second for a reduction in hours, or loss of some hours.

Disbursements will be taxed the same as other sources of income.

• The decision to have benefits treated as taxable or tax exempt income has been difficult to answer. Currently I support taxing unemployment benefits, a stance the U.S. Government has currently adopted as well.
• Reasons I support treatment as taxable income
• As mentioned in Unemployment Assistance Part VI, I believe those who have been given much, much will be expected. Thus in the setting of our progressive income tax brackets, I support those individuals making greater incomes to have a greater responsibility as individuals to protect themselves from needing national unemployment insurance. I see individuals as the primary safety net in the event of a loss of income. By taxing disbursements, higher income individuals will be taxed at a higher rate and be responsible for repaying a larger percentage of disbursements to cover taxes as opposed to individuals with lower incomes.
• Without taxing unemployment assistance, an individual could have a greater income while receiving unemployment assistance than when was working. A scenario I do not believe is wise, nor desired by the majority.
• Reasons against treatment as taxable income
• Due to progressive nature of tax scales, individuals will not receive an equal proportion of assistance as those with higher incomes will bear a greater tax burden. Again, I am in support of this, but it could be considered unfair treatment.

Goofy Case Study (easy)

What is the maximum unemployment assistance Goofy is eligible for each week? 

• Important Dates -
• Today’s Date: February 6th, 2014
• Last Pay Day: August 31st, 2013
• First Pay Day: June 1st, 2009
• Look back period: 52 weeks
• August 31st, 2012 – August 31st, 2013
• More recent of 12 months prior to last pay date (8/31/12) or first pay date (6/1/09)
• Total gross earnings in look back period from all employment (August 31st, 2012 – August 31st, 2013)
• Springfield Nuclear Power Plant (NPP): $20,800
• Other employment: $0
• Average weekly wage (AWW_initial) = $20,800 / 52 weeks = $400
• Reduce AWW_initial by 10% (calculated cap)
• $400 x 0.9 = $360
• Maximum Weekly Disbursement = $360
• Lower of hard cap ($600) and calculated cap ($360)
• Thus, until Goofy finds new employment, he would qualify for up to $360 in unemployment assistance per week until reaching maximum lifetime benefit of $7200 (see Unemployment Assistance Part VI)
• Goofy had previously utilized the national unemployment system and has an outstanding balance of $1600. Thus, Goofy would be eligible to receive a total of $5600 ($7200 - $1600) amounting to 15 weeks of unemployment benefits at maximum weekly disbursements ($5600 / $360 = 15 weeks)
• Flexibility
• Since Goofy will be required to repay all benefits plus a surcharge, he is free to choose the amount he will receive each week, up to his maximum of $360 per week. Goofy has cut his living expenses and chooses to only receive $200 per week.
• By taking a reduced amount, Goofy is still able to receive a total of $5600 in unemployment payments. Thus, by taking $200 a week, Goofy would be able to receive 28 weeks of unemployment benefits at $200 per week: $5600 / $200 = 28 weeks.
• My next unemployment assistance post will detail when Goofy is no longer eligible to receive further payments including:
• Reemployment
• Last pay date > 1 year ago
• Reached maximum lifetime limit

Bob the Builder Case Study (difficult)
Meet Bob the Builder. Bob the Builder presents more difficulties in determining a maximum weekly benefit amount. Although he is still employed by Acme Construction, his hours have been cut in half secondary to a severe reduction in new home starts. Hopefully Bob the Builder will further highlight the need for higher level safety nets to provide individualized unemployment assistance, thus supporting a one size fits all national unemployment system as a quinary safety net.

• Important dates
• Today’s Date: February 6th, 2014
• First Pay Date: June 1st, 2011
• Self defined “last pay date before reduced hours”: January 1st, 2014
• Individual selects date when wages were reduced. Selected date is labeled as “last pay date before reduced hours”
• Look back period: November 6th, 2014 – January 1st, 2014 (8 weeks)
• Look back period is 8 weeks prior to self defined “last pay date before reduced hours”
• Total gross earnings at all places of employment in look back period (8 weeks)

• Acme Construction: $1600
• Menards: $512
• Gross earnings at all places of employment since look back period (5 weeks: January 1st, 2014 – February 6th, 2014)
• Acme Construction: $500
• Menards: $320
• Initial Average Weekly Wage (AWW_initial) = Gross earnings in look back period / 8 weeks
• ($1600 + $512) / 8 weeks = $264 per week
• New Average Weekly Wage (AWW_new) = Gross earnings since look back period / number of weeks since look back period
• ($500 + $320) / 5 = $164 per week
• AWW_new will be recalculated each week
• AWW_diff = AWW_initial – AWW_new = $100
• $264 - $164 = $100
• AWW_diff will also be recalculated each week
• Total projected lost wages: (AWW_diff) x (weeks since “last pay date before reduced hours”) = $500
• Number of weeks since “last pay date before reduced hours”: 5 weeks (January 1st, 2014 – February 6th, 2014)
• $100 x 5 weeks = $500
• Check eligibility
• Unemployment assistance balance < $7200: $0
• First pay date is > 8 weeks from “last pay date before reduced hours”
• Projected yearly loss of income > $2600 : AWWdiff x 52 weeks
• $100 x 52 = $5200
• Total projected lost wages  x 0.9 > Unemployment assistance received since “last pay date before reduced hours”
• Projected wages lost since "last pay date before reduced hours" x 0.9 = $450
• Unemployment assistance received since "last pay date before reduced hours = $0
• $450 > $0 - Bob the Builder may receive up $450 in unemployment assistance as of current week
• Each week total will be recalculated
• This prevents individuals from having a greater income than they were making prior to lost wages through addition of unemployment assistance to new employment or extra hours at other employment.
• To be expanded upon in future blog post
• Actual payment = AWWdiff - 10%
• AWWdiff = $100 x 0.9 = $90 per week
• Bob the Builder would be eligible to receive up to $90 in weekly unemployment assistance

As demonstrated by Goofy and Bob the Builder, I believe the benefits of moving away from a one size fits all, national unemployment assistance system outweighs the risks. Impersonal rules, formulas, and flowcharts cannot meet individual needs in a satisfactory and equal manner without adding extreme complexities and confusion to determination of benefits. Applying my proposed changes to fictional examples has reinforced my belief a nationalized unemployment system should function as the quinary safety net behind individuals, friends/family, private charities, and state/local governments.

Next Post Topic: League of Legends