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Auto Workers and the Minimum Wage

Tuesday, 02 July 2013 04:58

The Washington Post had a piece noting the rapid growth of automobile production in Mexico that raised the possibility that it would come at the expense of production in the United States. The piece points out that the auto companies now hire new workers in the United States at wages between $14 and $18 an hour.

It is worth noting that if the minimum wage had kept pace with productivity growth over the last 45 years it would be almost $17.00 an hour today. This means that newly hired workers would in many cases be working for less than a productivity indexed minimum wage. The minimum wage had largely tracked productivity growth in the three decades from 1938 to 1968. (The unemployment rate in the last 1960s was less than 4.0 percent.)

Comments (8)Add Comment
American Workers Can Compete With Any Workers in the World in the Race to the Bottom
written by Last Mover, July 02, 2013 6:14

Funny how the competition-substitution thing works according to WaPo about how foreigners can reduce the American output of autos with lower wages. You know, like in 2001-09 when Asians "took" about 5 million American jobs into their countries yet unemployment in America remained around 5-7%.

And who was it who "took" those jobs? Why it was the MNCs wasn't it? It's not like Asians produced more of X in Asia for which nothing replaced it in America. Instead, in came the service jobs with lower wages, hours and benefits.

So you see, America remains competitive in the race to the bottom, not just by producing less of X due to higher wages than earned by foreigners who produce more of X at lower wages.

It's all about producing more with more of Y jobs at the bottom of the economic food chain to maintain the semblance of "full employment" as the pillaging and plundering proceeds.

That's how America "competes" globally at the macro, not micro level, by shedding entirely any connection between productivity output of labor and total output.

Go ahead Mexico, cut those wages and make more X output of cars than us. We've been there and done that. We'll kick your economic ass far and wide when it's over with even more output of Y crap jobs at even lower wages.
wages and unemployment, Low-rated comment [Show]
written by Ann, July 02, 2013 12:50

Evenn in the 1860s, immigrants had to come through a procedure.

(1) Since 1790, citizenship had been restricted to ""Free white persons" of "good moral character"

(2) Residency was required - changed several times

1790 = 2 years

1795 = 5 years + renounce their birth citizenship

1798 = 14 years

1802 = 5 years

(3) Undesireables (any considered 'dangerous' in any way) could be deported per the 1798 law

(4) recordkeeping was imposed in 1819. When a ship docked, the captain had to submit a manifest that listed all immigrants on board. In an annual report to Congress, the Secretary of State would then disclose the number of immigrants admitted during the previous year.

So NO your great great (whatever) grandfather did NOT just waltz in across the ocean without the authorities knowing about his arrival and take up residence and start working and then voting as a citizen.

written by John Emerson, July 02, 2013 3:33
Samuelson just called for the internet to be abolished. Presumably that's because his stupid articles are always refuted in the internet before the ink is dry.
Link to Samuelson
written by John Emerson, July 02, 2013 3:40
Fair Pay?
written by James, July 02, 2013 4:40
Someone complained that workers should not expect living wages given his self-reported high unemployment rate.

The pay of $200K a year for working three hours a week will not be offered to any blue collar worker or a public university professor but a true influential one: former 4-Star General & CIA Director.

The New York-based website made this comparison in describing the public university's hiring of the former four-star general:

A first-time adjunct professor teaching a full course load at the City University of New York can expect to pull in around $25,000 per year. If you recently resigned as C.I.A. director over a long-time affair with your biographer, however, you can expect to be paid eight times as much for a fraction of the work.

Like Dean said, when someone in DC makes a mistake, they don't lose much.
The unemployment rate in the last 1960s was less than 4.0 percent.
written by John Q, July 03, 2013 12:32
And the top marginal income tax rate was 70%
70% marginal rate deceptive
written by pete, July 03, 2013 9:31
hmmm a 70% should have paid for everything from the top 50%...what happened? well, car interest was deductible, credit card interest was deductible, etc. etc. A high rage with a bunch of deductions...get the picture. There were all kinds of crazy partnership schemes to avoid taxes by the 70% raters. In other words, a lot of unproductive investment. Today we have lower rates with much fewer deductions, though the tax code is unbelievably complex.

Re: Ann, citizenship (voting) is completely different than the right to be here working. E.g., DC residents do not have full citizenship rights today, no voting congressperson representing them. They still work. My great grandfather absolutely walked off the boat and could work. There was no IRS, no I-9, etc., no check of id. Only later did the anti Irish, anti Chinese folks lead to restrictions on entry. Much like today's racism or the middle 20th centuries racism in the unionized north against migrating southern blacks.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.