A Smarter Minimum Wage

Credit: Gabe Souza/Portland Press Herald, via Getty Images
Credit: Gabe Souza/Portland Press Herald, via Getty Images
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A Smarter Minimum Wage

Credit: Gabe Souza/Portland Press Herald, via Getty Images
Credit: Gabe Souza/Portland Press Herald, via Getty Images

EGGS over easy, home fries, bacon and toast. It’s $9.99 at Tops Diner in Newark but $5.79 at Pop’s Diner near Oklahoma City. If the same meal in two parts of the country has such a different price, should America have a single national minimum wage?

As recently as three years ago, Democrats led by President Barack Obama had settled on pushing a national minimum wage increase to $10.10, up from $7.25, which was set in 2009. Since then, a movement working on behalf of low-wage workers has pushed for a $15 national minimum wage in what is known as the Fight for $15. This noble movement has succeeded in several high-cost cities, including New York, San Francisco, Los Angeles and Seattle, where wages are set to rise on a glide path to $15 in several years’ time.

But a wage floor that is right for the high-cost coasts may be the wrong fit elsewhere. After all, in a 2016 report we noted that a typical dentist appointment in Jackson, Tenn., ran $67, but it was $108 in San Francisco. A dozen eggs was $3.99 in Oakland, Calif., but 93 cents in Fargo, N.D. And according to the real estate website Rent Jungle, a two-bedroom apartment in the Los Angeles metro area runs $2,907 per month. In Philadelphia it’s $1,739; in Jacksonville, Fla., it’s $1,112.

Seen in this context, the fight for $15 makes more sense for people living in Brooklyn, where parking can run $30 a day, than it does for people in Cumberland, Md., where a space costs $35 per month. And it explains the very different minimum-wage levels that have been set in different states. In 2014, in addition to Seattle and San Francisco’s vote for $15, Arkansas, Alaska, South Dakota and Nebraska all chose to raise their minimum wages. In these four rural, lower-cost states, the new minimum wages rose to between $8.50 and $9.75.

That is why the national minimum wage should instead be a range of national minimum wages that recognizes the differences in living cost and labor markets in a way that is both flexible and permanent.

Here’s how it can be done in a way that provides a living wage to all regions of the country. To begin with, the average national minimum wage — that is, the minimum wage in regions of the country that experience a cost of living close to the national average — should be pegged to an objective measure that recognizes labor market realities and lifts the maximum number of people out of poverty

We suggest setting this standard to exactly one-half of the median wage for the average hourly, nonsupervisory wage worker in America. In January, that computed to a wage of $10.90 per hour, which would be the highest minimum wage of all time in real dollars. At this level, a full-time minimum-wage earner with two children would surpass the federal poverty level by more than $1,000, even before such federal benefits as the earned-income tax credit are taken into account.

Next, the purchasing power of the minimum wage should be roughly the same across the nation, from Palm Springs, Calif., to Youngstown, Ohio. To do this, regions would be placed in one of five categories based on what the government calls regional price parities, which is a measurement of the difference in prices for similar products between regions. In the highest-cost areas, like New York City and Newark, the minimum wage would be set at 15 percent above the national average, or $12.55.

In low-cost places, like Valdosta, Ga., the minimum wage would climb to $9.25, or 15 percent below the $10.90 national average minimum wage that workers in Flagstaff, Ariz., and elsewhere would earn. Each January, the minimum wages would rise based on the new median wage for hourly workers.

Could America handle a tiered minimum wage? We already do. Twenty-nine states now set their wage floor above $7.25, so different minimum wages shouldn’t be a problem. And states and cities would still be free to set a higher wage under this proposal.

The regional minimum wage is not so much a compromise but a modern look at an old problem. We are one country, but hundreds of different micro-economies grappling with the technological forces that are changing the nature of work and replacing low-wage employment with kiosks and machines.

That is why that the political battle for the minimum wage has been as much a regional skirmish as a partisan one.
Under our plan, everyone would eventually get to a $15 minimum wage, but high-cost areas, like many along the Acela Corridor and the Pacific Coast, would reach and quickly exceed that threshold at the right pace for their economies. An approach like this could pave the political path for a substantial and permanent minimum wage increase for millions of Americans, and that’s not nothing.

The New York Times



Trump Says Steep Copper Tariffs in Store as He Broadens His Trade War

A worker makes copper trays inside a workshop in Kolkata, India, October 26, 2017. Picture taken October 26, 2017. (Reuters)
A worker makes copper trays inside a workshop in Kolkata, India, October 26, 2017. Picture taken October 26, 2017. (Reuters)
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Trump Says Steep Copper Tariffs in Store as He Broadens His Trade War

A worker makes copper trays inside a workshop in Kolkata, India, October 26, 2017. Picture taken October 26, 2017. (Reuters)
A worker makes copper trays inside a workshop in Kolkata, India, October 26, 2017. Picture taken October 26, 2017. (Reuters)

US President Donald Trump on Tuesday said he would impose a 50% tariff on imported copper and soon introduce long-threatened levies on semiconductors and pharmaceuticals, broadening his trade war that has rattled markets worldwide.

One day after he pressured 14 trading partners, including powerhouse US suppliers like South Korea and Japan, with sharply higher tariffs, Trump reiterated his threat of 10% tariffs on products from Brazil, India and other members of the BRICS group of countries.

He also said trade talks have been going well with the European Union and China, though he added he is only days away from sending a tariff letter to the EU.

Trump's remarks, made during a White House cabinet meeting, could inject further instability into a global economy that has been shaken by the tariffs he has imposed or threatened on imports to the world's largest consumer market.

US copper futures jumped more than 10% after Trump's announcement of new duties on a metal that is critical to electric vehicles, military hardware, the power grid and many consumer goods. They would join duties already in place for steel, aluminum and automobile imports, though it was unclear when the new tariffs might take effect.

US pharmaceutical stocks also slid following Trump's threat of 200% tariffs on drug imports, which he said could be delayed by about a year.

Other countries, meanwhile, said they would try to soften the impact of Trump's threatened duties after he pushed back a Wednesday deadline to August 1.

Trump's administration promised "90 deals in 90 days" after he unveiled an array of country-specific duties in early April. So far only two agreements have been reached, with the United Kingdom and Vietnam. Trump has said a deal with India is close.

Trump said countries have been clamoring to negotiate.

"It's about time the United States of America started collecting money from countries that were ripping us off ... and laughing behind our back at how stupid we were," he said.

Trading partners across the globe say it has been difficult to negotiate even framework agreements with the US given the haphazard way new tariffs are announced, complicating their internal discussions about concessions.

HIGHEST LEVELS SINCE 1934

Following Trump's announcement of higher tariffs for imports from the 14 countries, US research group Yale Budget Lab estimated consumers face an effective US tariff rate of 17.6%, up from 15.8% previously and the highest in nine decades.

Trump's administration has been touting those tariffs as a significant revenue source. Treasury Secretary Scott Bessent said Washington has taken in about $100 billion so far and could collect $300 billion by the end of the year.

The United States has taken in about $80 billion annually in tariff revenue in recent years.

The S&P 500 finished slightly lower on Tuesday, a day after Wall Street markets sold off sharply following Trump's new tariffs announcement.

Trump said he will "probably" tell the European Union within two days what rate it can expect for its exports to the US, adding that the 27-member bloc had been treating his administration "very nicely" in trade talks.

The EU, the largest bilateral trade partner of the US, aims to strike a deal before August 1 with concessions for key export industries such as aircraft, medical equipment and spirits, according to EU sources. Brussels is also considering an arrangement that would protect European automakers with large US production facilities.

However, German Finance Minister Lars Klingbeil warned that the EU was prepared to retaliate if necessary.

"If we don't reach a fair trade deal with the US, the EU is ready to take counter measures," he said in the lower house of parliament. Japan, which faces a possible 25% tariff, wants concessions for its large automobile industry and will not sacrifice its agriculture sector, a powerful domestic lobby, for the sake of an early deal, top trade negotiator Ryosei Akazawa said on Tuesday.

South Korea, which also faces a possible 25% tariff, said it planned to intensify trade talks over the coming weeks "to reach a mutually beneficial result."

Washington and Beijing agreed to a trade framework in June, but with many of the details still unclear, traders and investors are watching to see if it unravels before a separate, US-imposed August 12 deadline or leads to a lasting detente.

"We have had a really good relationship with China lately, and we're getting along with them very well. They've been very fair on our trade deal, honestly," Trump said, adding that he has been speaking regularly with Chinese President Xi Jinping.

Trump said the United States would impose tariffs of 25% on goods from Tunisia, Malaysia and Kazakhstan; 30% on South Africa and Bosnia and Herzegovina; 32% on Indonesia; 35% on Serbia and Bangladesh; 36% on Cambodia and Thailand; and 40% on Laos and Myanmar.

Cambodia hailed as a big success a reduction in the tariff rate from 49% to 36% and said it was seeking to negotiate a further cut. The tariffs have been an issue for Cambodia's garments and footwear sector, the biggest driver of its economy.

The US is also the main export market for Bangladesh's ready-made garments industry, which accounts for more than 80% of its export earnings and employs 4 million people.