Minimum Wage Part VI: Blind Dart Throwers

While blindly throwing darts at moving targets may make for an exciting (albeit dangerous) personal hobby, it is a destructive practice the federal government uses when enacting anti-poverty programs.

Success is frequently ill-defined and continually redefined. Such ambiguity creates a moving target politicians haphazardly throw poverty reduction programs at, often resulting in collateral damage.

In 2012, Michael Tanner with the CATO Institute found the federal government alone has at least 126 anti-poverty programs. Furthermore, Robert Rector and Rachel Sheffield with The Heritage Foundation found since 1964, $22 trillion have been spent on anti-poverty measures by federal and state governments (2012 dollars). Furthermore, this $22 trillion excludes Medicare, Social Security, and measures such as minimum wage which is primarily paid for by consumers rather than direct government expenditures.

That’s a lot of darts… Especially considering $22 trillion is more than 3x the amount of money (clearly not human life and disabilities) of all military wars in U.S. history since the American Revolution in 1775.


Today, minimum wage is the anti-poverty drum of choice. Following Tuesday's elections, four states (Alaska, Arkansas, Nebraska, and South Dakota) easily passed legislation increasing minimum wage. It is anticipated more states, cities, and perhaps the nation will follow.

Please read previous posts for a complete understanding of why I see a need for alternatives to minimum wage legislation:

• Minimum Wage Part I: For and Against
• Minimum Wage Part II: Cited Effects
• Minimum Wage Part III: American Samoa, The Face of Minimum Wage, and Sound Cited Effects
• Minimum Wage Part IV: Uncle Rico, Buzz Lightyear, and Questionable Claims

Disclaimer: I have moved from minimum wage to poverty alleviation efforts as I believe minimum wage proponent’s actual desire is to eliminate poverty and increase prosperity rather than to simply see wages rise. Proponents desire an increase in standards of living which they see being achieved through wage increases.

In the midst of a multiyear recession, the call for poverty alleviation resonates loudly. While I desire increased long term prosperity for all (Part I), I believe minimum wage has few benefits to those it is intended to help (Part V). Having a lack of faith in minimum wage, my search for alternative poverty alleviation measures yielded numerous other programs including: 

• Earned Income Tax Credit (EITC), Child Tax Credit (CTC), negative income tax, guaranteed basic income, public work programs, public funded training/education programs, targeted credits/subsidies (food assistance, housing assistance, medical assistance), private charity efforts, and others.

Of the many poverty alleviation programs, is there an ideal program or magical combination that will lead to success? Is there a way to discover what program(s) to promote other than blindly throwing darts at a moving target? I encourage you to read the books How Helping Hurts and The Tragedy of American Compassion for further insights into reducing poverty.

It is said the poor will always be with us. Will we choose to continue the status quo of hundreds of programs and trillions of dollars with limited success? Or will we choose to change our approach to poverty? Next post, I will share my convictions on how to improve our approach to reducing poverty.

Next Post: Minimum Wage Part VII: Chaos in the States

Minimum Wage Part V: The Titanic Meets Minimum Wage

The majority believed the Titanic was unsinkable. The majority also believes the potential benefits of minimum wage outweigh the potential drawbacks. Will minimum wage, like the Titanic, hit a proverbial hidden iceberg causing grave injuries?

• Disclaimer
• The Titanic was a sudden tragic disaster. It is not my intent to diminish or minimize the catastrophe in any way. I am suggesting a similar, albeit slower and less grotesque, tragedy of pain and suffering is occurring to millions of individuals and families struggling to persevere through America’s Great Recession.

After detailing cited effects of minimum wage legislation, it is time to contemplate the question of who benefits and who is harmed by minimum wage laws.

Please do not short circuit a thorough understanding of minimum wage effects. It is important you understand why there is support and opposition to increase the minimum wage. Much has been written about the perceived effects of minimum wage and Part II includes a list of articles: 

• Minimum Wage Part I: For and Against
• Minimum Wage Part II: Cited Effects
• Minimum Wage Part III: American Samoa, The Face of Minimum Wage, and Sound Cited Effects
• Minimum Wage Part IV: Uncle Rico, Buzz Lightyear, and Questionable Claims

Prior to any discussion, it is critical to understand the assumptions thoughts are built upon.

• Assumption #1: Minimum wage has been set above the market wage in certain occupations
• A minimum wage below market wages has no effect. For example, applying a minimum wage of $10 an hour to neurosurgeons will affect nothing. (other than wasting tax payer resources paying officials to enact a useless law)
• Assumption #2: Long term, sustainable growth is preffered
• Prosperity can also be short circuited resulting in immediate gains at the expense of long term, sustained growth and prosperity.
• Assumption #3: I am for increased prosperity for all (including equal treatment of all ages, genders, race, income status, etc.)

Who Benefits?

1. Politicians
• Gain votes by giving people what they are asking for (minimum wage) instead of what they truly desire (increased prosperity).
2. Foreign Countries
• Increasing production/service costs at home increase the competitiveness of other countries who enter the market (China, India, Mexico, SE Asia).
• Tariffs are the next peddled action, but tariffs hurt all of America by forcing us to buy higher priced, poorer quality goods and services (in terms of subjective value).
3. Some low wage workers
• Benefits workers who receive a wage increase who otherwise would not have (assuming their work hours are maintained)
• Macpherson and Evans found ~2/3 minimum wage workers received a raise within one year. Thus ~1/3 of low wage workers who retain prior levels of employment and hours may benefit from minimum wage increases after 1 year.
• These findings do depend on the level minimum wage

Who is Hurt?

1. Middle class
• Receive none of the benefits (increased wages) yet pay a large share of the costs (higher product and service costs). A double whammy.
2. Low wage workers
• While some will benefit, more will find it increasingly difficult to find long-term employment (see Part III).
• Companies will choose to take business overseas 
• Some find this unpatriotic, however often the choice becomes move the business or go out of business. I’m not sure it is patriotic to shut down business entirely.
• Low wage workers will bear the brunt of increased consumer prices. They both consume a greater percentage of low cost goods and services compared to the middle and upper class, and have less discretionary income to cover the increased costs.
3. Upper class (least affected)
• While they will pay increased consumer costs, they consume less low end products than the lower and middle class. In addition they are able to withstand increases in consumer prices more than low and middle class workers due to greater incomes.
4. Domestic Producers
• Less able to compete in the global marketplace
5. Economy
• GDP will likely fall due to less production occurring at home secondary to businesses moving operations to foreign countries.
6. Law abiding citizens
• Favors under the table cash payments which hurts job prospects and increases the tax burden of law abiding citizens.

Good intentions have no guarantee to produce desired outcomes. While I believe many passionate and well-meaning individuals support increases in minimum wage, I believe it will fail to produce their desired results. 

As some Titanic passengers found safety in lifeboats, some will escape increases in minimum wages unscathed. However, I believe more will find themselves fighting for economic survival rather than floating safely in a lifeboat.

Next Post: Minimum Wage Alternatives

Fantasy Football 2014: Draft Recap

A fantasy football draft is akin to building a house and the season a time of weathering. Time will tell if I built a house of straw, sticks, or bricks. My initial impression is my planning, preparation, and discipline enabled me to build a brick house to endure the winds of injuries, suspensions, depth chart changes, and a world of unknowns.

Please refer to Draft Prep for league details and draft strategy.

LDF -

Overall: A

• Missed on Brandon Cooks

Individual Picks: A-

• Minor mistake in round 10 (Cooks)

Team: A-

• A little too much risk with young RBs

Good:

• First 7 rounds went as good as could be expected
• Pulled trigger on Patterson at 37 overall.
• Patterson highlights the need to know your league’s scoring system. I see lots of mediocre WRs between picks 30 and 60. This league is non-ppr, gives points for kickoff returns and punt returns, and allows for 2 keepers per year. All of these factors increase Patterson’s value.
• Took value when it fell to me (Brady at 79 overall)
• Solid RB core with Ball, Ellington, and Jennings

Bad:

• Took Mark Ingram (who I like) rather than Brandon Cooks (who I really like). The points for return yards and keeper potential make Cooks a better option at 109.

Ugly:

• Teams left without RBs
• 1 team forced to start Sankey with no third. Another starting Lamar Miller with no backup (prior to Moreno injury), a third team starting Joique Bell with Mike Tolbert as third
• I have Heath Miller as my TE. I would have preferred better, however, I made the decision to trade for one later
• Out of my control but I lost Andre Williams as a handcuff to Jennings prior to my pick at 108

Final thoughts:

• Lots of risk in unknown players: Ball, Ellington, Patterson, Rashad Jennings  
• I need to remember the majority of people take a backup TE and take my starting TE earlier in the draft

Bemidji -

Overall: A+

• Stacked team. I will be shocked if I don’t make the playoffs. I anticipate a 55% win rate in non-bye weeks and a 60% win rate during bye weeks as my bench is amazing (Ellington, Rashad Jennings, Michael Floyd, Wright, Pierre Thomas)

Individual Picks: A+

• Limiting to factors in my control, I would not have done a single pick different.

Team: A+

• Difference makers in Calvin, Dez, Murray, Stafford, and Gronk. Additionally, I have a very deep bench that should allow me to make and have a small edge in the playoffs.

Good

• Every pick starting in round 7 (overall pick 53) I was saying, “how in the world is this player still here.”
• Gronk, Brady, Ellington, Michael Floyd, Kendall Wright, Pierre Thomas, Golden Tate, Rashad Jennings, Roethlisberger, Cooks

Bad

• Inaugural year of the league. Rule voting left rosters with only 1 flex position (rather than 2). A meager 72 skill position players (QB, RB, WR) are started each week. This means every team is stacked to some degree.
• Lots of overlapping players – 3 patriots, 2 Lions, 2 NYG, 2 Cardinals, 2 Cowboys
• Fortunately none of these teams share bye weeks

Ugly

• 6 kickers taken before the final 2 rounds
• Too many good players left on the waiver wire will bail out the teams who drafted poorly
• Kelvin Benjamin, Reuban Randle, Sankey, Steven Jackson, Carlos Hyde, Justin Hunter, Boykin
• After the first 2 weeks does not seem many of these are that great…
• Although more on the wire: Gerhart, Terrance West, Bernard Pierce, Lamar Miller, Zac Stacey, Jeremy Hill
• Someone dropped T.Y. Hilton who is tied for 5th in targets after week 2. As much as I like Cooks, I had to drop Cooks to pickup Hilton.

Final Thoughts

• 1 pick away from landing Antonio Brown at pick 28 (4th round) 
• Taking Stafford at 21 overall (3rd round) was my least favorite selection. Part of me wishes I went Antonio Brown. I could have chosen to roll the dice with Brown and hoped Stafford fell back to me. I will never know. I think Stafford was the safer pick rather than going 3 straight WRs (consistent with valuing flexibility as discussed in Draft Prep). 
• Taking Stafford still allows me to rotate Cruz, Michael Floyd, Wright, and Golden Tate in my WR3 and Flex position.

While I felt and still feel great about my drafts, results after 2 weeks have been okay:

Overall Record: 2-2

• Bemidji League: 1-1
• Week 1: Scored 188 points, second most in the league and lost.
• Week 2: Scored 147 points, 4/8 in the league and won thanks in large part to opposing team having both Charles and A.J. Green who were injured
• LDF: 1-1
• Week 1: Won my LDF league by scoring 116.5 points (3/12 teams in total points).
• Week 2: Put up 64 points, the least in the league...

Although I am off to an okay start, there are many more weeks and headlines to shake things up. I anticipate my deep benches will allow me to hit my stride during the 9 weeks teams have their bye weeks and will reveal who has houses built of straw, sticks, or bricks.

Next Post Topic: Minimum Wage Part V: Politicians, Middle Class, and Foreigners