You’re Overpaid
Wednesday I wrote about the increasing income disparity in the US.
Kevin Hassett of the American Enterprise Institute (a right wing think tank) and an economic advisor to both George W. Bush and John McCain wants you to know that Your Fat Paycheck Keeps Your Neighbor Unemployed:
Hassett’s views on unemployment:
So here comes the leap into ice-cold water: The biggest problem with the labor market right now is that wages are too high.
Yep, wages that have been stagnant for over a decade are the problem. Hassett’s solution?
First, the minimum wage should be scaled back to $5.85, its level when the recession began in December 2007.
and
Second, government policies should induce workers to take the plunge and accept lower wages. These policies could include carrots — tax credits that offset large wage declines, for example — and sticks, such as a reduction in the duration of unemployment insurance benefits.
Finally, unions should be willing to reopen collective bargaining agreements and accept lower wages.
Notice that he makes no suggestions about lowering CEO, or executive pay. He doesn’t mention his own willingness to take a pay cut that would undoubtedly put a couple of folks to work. No – it’s always the people on the lower end of the wage scale who have to take the hit.
Call me crazy, but – it seems to me that in an economy based on consumer spending, trying to make sure that people have less money to spend is idiotic. Housing, energy, and food costs are not going down – therefore taking money away from those folks most likely to spend discretionary income would appear to go against the very idea of economic recovery. I’m certain I know who is overpaid in this scenario – and it isn’t the folks earning minimum wage.
