The Daily News Byte

Fox News: VW Refuses to Unionize

                Yesterday, the VW plant in Tennessee held a vote on whether or not they were to unionize. Many in big labor thought the vote would pass, causing Republican lawmakers to put pressure on VW by threatening to take away funding incentives. Even with the push from the labor unions and an endorsement from the Volkswagen company, the workers voted to not unionize, dealing a big blow to the UAW's efforts to make inroads in the south.

Fox News: Obamacare Fails to Cover Certain Drugs

                One of the major selling points for Obamacare was that people with preexisting conditions would not have to pay higher premiums for coverage. As it turns out, there is a bit of a loophole when it comes to the prescription medication these individuals may require. There is a list of medicines that are covered under Obamacare, and some people with preexisting conditions like MS don't have their medication covered. They are currently required to foot the bill without any assistance. Also, with an issue like MS, there are no generic drugs, so medication is wildly expensive. This is what happens when you pass a bill before it's read.

Zero Hedge: Real Economic Indicator

                One of the best signs of a stagnant economy, a record number of college graduates (age group 24-34) are still living with their parents. Gallup put together figures of the state of college graduate employment and it doesn't look good for those recent graduate. "Among young adults who live with their parents and are working or actively looking for work, nearly one in three are in a substandard employment situation."

Cato: Minimum Wage

                "Judging by what happened after the 2007-2009 increase in the minimum wage, repeating that failed experiment over the next three years would first reduce the number being paid the minimum wage and then greatly increase the number being paid less than the minimum. It would also result in millions more young people being unable to find any employment even at wages far below the higher minimum wage."

The Foundry: Democrats' Double Standard

                Conservative commentator S.E. Cupp is fed up with democrats trying to shield Hillary Clinton. Given the press around the likelihood of Clinton running for president, conservatives are going to plan questions in regards to Benghazi and Obamacre. The terminology used by RNC Chairman Reince Preibus ("very aggressive") has aggravated some on the left. Cupp's response, “So, Democrats can call Chris Christie fat, George Bush Hitler, Sarah Palin Caribou Barbie, Michele Bachmann crazy, Tim Scott a dummy and Nikki Haley the Seik Jesus – but calling Hillary ruthless?” Cupp remarked sarcastically. “Now, that’s a step too far.”

Libertarianism.org: Stealing from the Poor, Giving to the Rich

                This short video demonstrates the importance of property rights. While it may seem like property rights favor the rich, it actually benefits the poor the most. As demonstrated in the video, when property rights are not protected, those who are already wealthy and politically connected can easily steal the property of the poor, which is what happens in many 3rd world countries.

Minimum Wage

The minimum wage debate has emerged. It appears that every few years there is an outpouring of support to increase the federal set minimum wage. When President Obama announced they he was going to increase the federal minimum wage for government contractors, he set the stage for increasing the minimum wage for everyone. Through executive action, President Obama increase the wage for contractors to $10.10/ hour. When that number is extrapolated out, the least amount of money someone could make for working full-time (40hr work week) is just over $21,000 a year[1]. This isn't to bad for those who are most likely at the beginning of their working career or do not possess the skills to demand higher wages.

The framing of the debate is largely a myth. When you hear about people earning minimum wage by politicians, they typically throw out an example of a single parent trying to raise a family on minimum wage. What typically isn't revealed is that is almost never the case. According to a paper written by Mark Wilson, a former deputy assistant secretary of the US Department of Labor, the percent that fits the description of over 25, making minimum wage, and trying to raise a family is 4.7%[2]. That is not what is largely talked about on campaign trails. When listening to politicians campaigning they typically throw out some excellent one liners about how they will improve quality of life, or income equality. However, this ignores much of the debate and is used to get support from the voting public.

When you look at the entirety of the labor force, the total percentage of people making these low wages is less than 3 percent[3]. According to a report conducted by the Mercatus Institute, the largest group making minimum wage are those working in the food industry. Tracking their income becomes difficult because there is an incentive for not reporting cash tips. If an employee doesn't report their cash tips, the company must pay them at least minimum wage, but they will have earned more due to the unreported income. If the majority of those who work in food industries do not report all tips and make more than minimum wage, the percentage of the population making those wages decreases to 1.6 percent[4].

Many people seem to make it sound like if there wasn't a minimum wage, then people would be making next to nothing. But this ignores the fact that competition between companies drives wages, not the federal government. If it was the law that drove wages, you would expect that a large portion of the working population would make minimum wage. However, when you see that the high estimate of the minimum wage earners is 3%, that means that 97% of workers are earning more than the mandated minimum. Evidently it isn't the law that sets the wages, but competition between employers to hire those with the best skills.

In the Mercatus study, reference is made to one of the most famous empirical studies on the effects of a minimum wage increase. Card and Krueger's study on the effect of restaurant workers who had their wages increased in the state of NJ and PA showed no negative effects on unemployment. Surprisingly, according to their findings, employment figures actually increased after the minimum wage was increased. This sounds too good to be true, and in fact, it is. The methodology used in their study was flawed. Instead of using payroll information to measure the amount of minimum wage employees, they conducted surveys of management. They asked about employees, and their hiring decisions before and after the wage increase. So, they never actually measured real employment numbers, just intentions.

While trying to recreate this student, economists Neumark and Wascher targeted the same area as the Card/ Krueger study. Instead of using survey's though, they used the payroll data and found a large difference between their study and Card/Krueger. In the Neumark/Wascher study, they found what many classical economists expected, after the minimum wage increase, employment decreased[5].

The Mercatus study looking at all these different studies ran their own analysis of the unemployment figures in the state of New Jersey. NJ was planning at that time to increase its minimum wage by $1 per hour. According to the conclusions of the study, for those who do not have a high school education, unemployment is expected to increase by approximately 2 percent, those without a diploma, 1 percent. Those who have college degrees there will be no effect. This fits with the conventional wisdom that raising the minimum wage results in penalizing low skilled workers.

With the current state of the economy as a whole and the level of unemployment we are currently experiencing, an increase of the federal minimum wage is exactly something we don't need right now. Given that there is a correlation between increased minimum wage and a decrease in low skilled employment, increasing wages will only hurt low skilled workers. Also, with the youth unemployment figures already high, it will only make things worse.

In the words of Milton Freidman, when government institutes a minimum wage "employers must discriminate against people who have low skills." This is clearly demonstrated with empirical analysis.

---

[1] $10.10 x 40 x 52 = 21,008

[2] http://www.downsizinggovernment.org/sites/downsizinggovernment.org/files/pdf/negative-effects-minimum-wage-laws.pdf

[3] http://mercatus.org/sites/default/files/unintended-consequences-raising-minimum-wage.pdf

[4] Ibid

[5] Ibid p.15

The Daily News Byte

Politico: House passes Debt Limit extension

                Today the House of Representatives passed a 'clean' debt ceiling extension.  With most of the Republican party voting 'no' on the extension, Boehner was able to muster up enough votes from the leadership of the party to get the bill passed. With each passing day it's evident that the Republican party leadership are just Democrat light.

Zero Hedge: Debt limit Vote

                It appears that Boehner has lost the trust from his own party. With most of them voting 'no' on the bill, there is a clear disconnect between him and the rest of the Republicans. Also, when you get praise from Nancy Pelosi, “I’m grateful to the speaker and the Republican leadership for giving this House this opportunity to act in a way that is consistent with the constitution," you know there's trouble.

NYTimes: Yellen promises more of the same

                Janet Yellen, Bernanke's replacement at the Fed, has promised more of the same old policies. According to her, the Federal Reserve has a positive outlook and expects continuity. She was part of the team that developed the current Fed plan on the economy. While Yellen points to a reduced unemployment rate, the Times are at least giving that credit not to the Fed, but to the discouraged workforce that is no longer seeking employment.

Zero Hedge: Economic Fallacy

                If you're interested in a bit of a rant, this is your article. A guest post on ZeroHedge dealing with the state of economic fallacies we encounter daily. There is a good bit of quoted economists, such as Henry Hazlett. Enjoy.

Washington Post: Syria

                Syria is a disaster.

Zero Hedge: American Imperialism and how to dismantle it

                A guest post by Laurence Vance, from the Mises Institute, about the current state of American foreign policy. Since the Snowden leaks, more and more information has come to the surface in regards to NSA spying of foreign nations. Vance decides we need to go back and take a Jeffersonian approach to our foreign policy.

Politico: Rand Paul sues Obama, NSA

                Rand Paul, the leading non-interventionist in the House, is suing the President as well as the NSA for violating the 4th amendment. Paul cites that the 4th Amendment protects the American people from general warrantless searches.