Only in government — whether in Washington or Frankfort — is a “spending cut” a spending increase. The “cuts” under sequestration are, in fact, not spending cuts at all. A short video produced by yours truly, Austin Bragg and Lester Romero.
In a previous blog, we discussed why minimum wage laws in a competitive labor market result in unemployment among low-skilled Kentuckians.
But what if it’s true, as some have recently claimed in the wake of President Obama’s State of the Union Address, that the market for unskilled labor is in fact not competitive? What if the market for unskilled labor is in fact “monopsonistic.”
The economic concept of a monopsony is the flipside of that for a monopoly. Whereas a monopolistic market is one with few sellers and many buyers, a monopsonistic market exists when there are few buyers and many sellers.
In the case of unskilled labor markets, the claim is that there are too few buyers of unskilled labor (employers), but many sellers (teenagers and other low-skilled workers just entering the job market). This results in employers being able to enjoy a non-competitive advantage over their low-skilled employees. They are able to pay their employees less than their labor is actually worth since there is no bidding war among employers to ensure wages rise to competitive market levels (where marginal costs equal marginal revenue – for all you economic junkies out there).
The problem with this argument is that there is no earthly reason to believe that a monopsony exists for unskilled labor. Drive down the streets of almost any town in Kentucky and you’re bound to run into at least three McDonalds, three gas stations, two Wal-Marts, one car wash, and countless other outlets that employ low-skilled laborers – as long as the price is right.
The idea that there is some sort of cartel among all these employers of low-skilled workers (the most non-specific factor of production in the commonwealth) is about as ridiculous as the idea that Wal-Mart supports the minimum wage law out of charity. (The real reason is because they know their smaller competitors can’t afford increased labor costs, but that’s a story for another day.)
Driving labor costs above the revenue generated from that labor will result in unemployment, either through outright downsizing or through the substitution of capital machinery for previously cheap labor.
And that’s why Kentucky business-owners no longer employ elevator operators or gas station attendants: capital machinery replaced these low-skilled employees who were too expensive for employers to justify hiring – because of minimum wage laws.
Because there is no monopsony in Kentucky for unskilled labor, the minimum wage law cannot benefit the most vulnerable among us. Further, because the cost-of-living in Kentucky is one of the lowest in the nation, increasing the minimum wage will hurt Kentuckians that much more. The purchasing power of a dollar in Kentucky is already greater than that of a dollar in cities like New York or Chicago. Therefore, the real value of a wage of $7.25 is already higher in Kentucky than in New York.
To raise the legal level which you must be paid even higher in order to accept a job would be disastrous for the most vulnerable among us.
Taxpayers should be outraged that the House State Government Committee extracted what few teeth exists in Senate Bill 2, which largely is a bill designed to offer the illusion of politicians taking meaningful action on Kentucky’s public pension crisis.
Today, the committee voted to approve a watered-down version of the bill that fails even to rise to the low bar established by the legislature’s own task force on pensions, which spent most of last year meeting about the problem.
While SB 2 didn’t even come close to the heart of the problem by leaving out a lack of transparency while failing to address overspending and over-promising of benefits to public workers and the corrupt legislators’ pensions for current lawmakers, it at least proposed move public employees to a hybrid cash balance plan.
But the big-government leaders in the House removed that provision, even though it guarantees a 4-percent return on invested funds (Heh…wouldn’t we ALL like to have such a guarantee?)
One question: Why did 10 of the Republicans on the committee “pass” today instead of vote not only “No,” but “you-know-what NO!?”
While too many Kentucky’s children languish in under-performing schools, students in 42 states around the country now have the additional school choice of charter schools to expand their educational options.
In fact, a recent Air Force Times news article reports that you can even find charter schools on some of the nation’s major military installations. Here is the breakdown:
* Belle Chasse Academy – Naval Air Station/Joint Reserve Base New Orleans
* Sonoran Science Academy – Davis-Monthan AFB Arizona
*Wheatland Charter Academy – Beale AFB, California
* Sigsbee Charter School – Naval Air Station Key West, Florida
* Imagine Andrews Public Charter School – Joint Base Andrews, Maryland
* Jacksonville Lighthouse Charter School: Flightline Upper Academy – Little Rock AFB, Arkansas
* Manzanita Public Charter School – Vandenberg AFB, California
So, while even military kids, elsewhere, benefit from charters, our here-at-home students in Kentucky are left out in the cold.
Some of Kentucky’s public schools – especially some in Louisville – perform so poorly that education commissioner Terry Holliday told the Kentucky Senate’s Education Committee today that he doesn’t think the situation “could get any worse.” Holliday told the committee he wants to add public charter schools to the mix of tools he has to fight this serious problem.
Even Holliday’s backing didn’t stop Maryann Blankenship, Executive Director of the Kentucky Education Association, from testifying before the committee in opposition to Senate Bill 176, however. SB-176 would add a badly-needed charter school option for Kentucky to cope with continuing failure to improve in too many of Kentucky’s Persistently Low-Achieving Schools.
Desperate to derail this badly needed legislation, Blankenship boldly proclaimed to the committee, “More students actually do worse in charter schools than do better.”
Pressed by a doubting committee member for research supporting her comment, Blankenship mentioned a several-years-old report from a Stanford University research group.
Well, I think Kentuckians deserve something better than out-of-date data. How about current charter research from “Who Attends Charter Schools and How Are Those Students Doing?” a December 2012 report from the National Assessment Governing Board (NAGB).
This new report analyzes data from the National Assessment of Educational Progress. NAGB’s study shows students in charter schools in inner cities around the country have been making advances and now outperform their public school counterparts. The differences in favor of charter schools are particularly pronounced for black students, who are of special concern in Louisville, where Kentucky’s most troubled schools are located.
A few of the new NABG report’s findings:
• …the findings tend to favor charter schools when one focuses on black, Hispanic, and low-income students within the large cities. In many subject/grade combinations students in these subgroups in charter schools performed significantly better in 2011 than those in regular public schools. By contrast, in 2003/2005 these subgroups performed similarly in charter and regular schools, and in one case (low-income students in grade 4 math), the regular schools were ahead.
• The performance of black low-income students attending charter schools in large cities is particularly striking. This group has shown a large increase in scores. In 2011 their achievement was significantly higher than that of similar students in regular large-city schools in grade 8 reading and grades 4 and 8 math.
• In the large cities, the only significant subgroup findings in favor of regular schools in 2011 were for Asians (in grade 4 math) and whites (in grade 4 reading).
• When we look more closely at a few large urban districts, the 2011 results clearly favor charter schools. In the four cities where NAEP data permitted comparisons (DC, Atlanta, Chicago and Milwaukee), students in charter schools significantly outperformed their peers in regular public schools in many of the subjects/grades analyzed. In those four districts, there are no subjects/grades where regular schools significantly outperformed charter schools.
We need educational performance like this in Louisville. We don’t need a lot of union self-serving standing in the way of our kids finally getting that performance.