Youngster and teenage employment has fallen sharply since July. A minimum wage hike-like trend may be a factor. Several, but mostly economists expect the minimum wage, if it has any effect to raise and increase employer costs and therefore reduce employment, specially among those who are willing and more likely to work in minimum-wage (min wage) jobs, in this case teenagers and restaurant workers.
In 2007 in the US, the federal minimum wage per hour changed. The wage has for the first time in 10 years, significantly changed, firstly; with a steady increase from $5.15 - $5.85. $6.55 was the later increase, and yet again, this July, it peaked to $7.25.
In addition, a law in the US still permits employers to pay more than the minimum; economists may agree that a low minimum wage has smaller or minor effects than a high min wage.
Inflation-adjusted federal min wage had gotten one could argue, to its lowest in decades by early 2007, so the July 2007 increase should or may have had the smallest effects of the three.
However, in July 2009 when they increased the wage one could argue that the largest effects should have taken place. In this case, mostly because of the 2 previous increases. Also another binding factor would be the deflation, which had gotten the inflation-adjusted min wage high.
For instance, if we would set a seasonally adjusted index in this case: the number of the people between 16 and 19 years old with steady jobs as a benchmark from July 2009. Then, in addition, this would tell that this latter mentioned group would be mostly affected by minimum-wage legislation.
Of course, one has to take into consideration that during recession’s employment will for sure be falling for all groups.
But in conclusion, the 2009 minimum-wage increase did significantly reduce teenage employment.
Something Obama will be praiseful for!
Sunday, December 13, 2009
Thursday, December 10, 2009
Do any of you want to Cut Debt? Well, Work Less.
In most cases one could argue, homebuyers around the world take out and receive mortgages, which cover a part of the value of the houses they are buying. In other words, the house is worth more than the mortgage owed, common sense, one could argue. In an event when a borrower defaults, the lender can, in most cases, be repaid in full by foreclosing on the house and selling it to someone else, this is often what banks do.
However, housing prices is the paradox here. The prices have fallen dramatically since 2006. By 2008, about 12 million mortgages are ‘under water’ with the meaning: the market value of the house had fallen below the amount owed on the mortgage. In this sense the low resale values, foreclosing on any of the homes will not yield lenders their entire principal and therefore; lenders in those situation and cases must rely on the good behavior of the borrowers.
The Federal Reserve, the Treasury, F.Mae and Freddie Mac encouraged lenders ito “modify” mortgages that in this context means basically to accept payments from borrowers which is different from the amounts promised by the banks and signed by the lender according to the contract. These modification programs particularly encourage lenders to reduce mortgage payments so that each individual borrower’s housing payments are 38 percent of the borrowers gross income. This will eventually lead to a five years reduce of payments, or when the mortgage is paid off.
Of course, a borrower can not be harmed by the opportunity to have a mortgage payment reduced. But, what is economically satisfying and worth looking into is the amount of payment reduction that is highly dependent on the borrowers income. So, following the argument listed above, “the less he earns, the more the payment is reduced”. For example, a borrower who has an annual family income of $100,000 and live happily could have the possibility to get housing payments reduced to $38,000 a year, but on the other hand, positively, a borrower whose annual income is $50,000 can have the payments cut to $19,000 a year.
Furthermore, in this case, one could argue that the, implication of the mortgage modification rules is that a family that earns $50,000 less in the year before the modification would stand to save $19,000/year for five years on housing payments and for a total of $95,000, and that is great news for a majority of people!
Once the mortgage has already been modified, the family is absolutely free to earn as much as it wants without affecting its payment rates. That makes 95,000 reasons to hesitate when looking for a new job!
However, housing prices is the paradox here. The prices have fallen dramatically since 2006. By 2008, about 12 million mortgages are ‘under water’ with the meaning: the market value of the house had fallen below the amount owed on the mortgage. In this sense the low resale values, foreclosing on any of the homes will not yield lenders their entire principal and therefore; lenders in those situation and cases must rely on the good behavior of the borrowers.
The Federal Reserve, the Treasury, F.Mae and Freddie Mac encouraged lenders ito “modify” mortgages that in this context means basically to accept payments from borrowers which is different from the amounts promised by the banks and signed by the lender according to the contract. These modification programs particularly encourage lenders to reduce mortgage payments so that each individual borrower’s housing payments are 38 percent of the borrowers gross income. This will eventually lead to a five years reduce of payments, or when the mortgage is paid off.
Of course, a borrower can not be harmed by the opportunity to have a mortgage payment reduced. But, what is economically satisfying and worth looking into is the amount of payment reduction that is highly dependent on the borrowers income. So, following the argument listed above, “the less he earns, the more the payment is reduced”. For example, a borrower who has an annual family income of $100,000 and live happily could have the possibility to get housing payments reduced to $38,000 a year, but on the other hand, positively, a borrower whose annual income is $50,000 can have the payments cut to $19,000 a year.
Furthermore, in this case, one could argue that the, implication of the mortgage modification rules is that a family that earns $50,000 less in the year before the modification would stand to save $19,000/year for five years on housing payments and for a total of $95,000, and that is great news for a majority of people!
Once the mortgage has already been modified, the family is absolutely free to earn as much as it wants without affecting its payment rates. That makes 95,000 reasons to hesitate when looking for a new job!
Wednesday, December 9, 2009
Economic Insecurity and Bad Habits
Since the world faced the financial meltdown and the aftermath of economic recession, a number of people have explored the relationship between vice and economic insecurity. Two interesting studies shows that prostitution increases, but that gambling declines.
But, what about smoking when people face a liquidity shortage?
Several studies show on one hand that smoking and overweight decline during temporary economic downturns will leisure time rises.
Lately, other studies with a different perspective transformed the viewpoint on this matter. They looked on effects of economic insecurity on smoking behavior on a more individual basis. The interesting idea from this viewpoint would be that economic insecurity has a statistically significant positive effect on decision-making to whether continue or resume smoking.
According to Trenton G. Smith of Washington State University, ‘a one percent increase in the probability of becoming unemployed causes an individual person to be 2.4 percent more likely to continue smoking’.
The study focused on working-age smokers and examined their behaviour.
Maybe the takeaway on this point would be that the income insecurity caused by recessions and economic meltdowns compounds existing bad habits, but also interestingly; motivates people to stay away from picking up new ones.
But, what about smoking when people face a liquidity shortage?
Several studies show on one hand that smoking and overweight decline during temporary economic downturns will leisure time rises.
Lately, other studies with a different perspective transformed the viewpoint on this matter. They looked on effects of economic insecurity on smoking behavior on a more individual basis. The interesting idea from this viewpoint would be that economic insecurity has a statistically significant positive effect on decision-making to whether continue or resume smoking.
According to Trenton G. Smith of Washington State University, ‘a one percent increase in the probability of becoming unemployed causes an individual person to be 2.4 percent more likely to continue smoking’.
The study focused on working-age smokers and examined their behaviour.
Maybe the takeaway on this point would be that the income insecurity caused by recessions and economic meltdowns compounds existing bad habits, but also interestingly; motivates people to stay away from picking up new ones.
No Stress – If you excercise?
Researchers at Princeton University recently made a remarkable discovery about the brains of rats, which exercise. Their neurons or some of them respond differently to stress than the neurons of lazy rats. Scientists have known before that exercise stimulates the creation of new brain cells (neurons) but not how, these neurons may be functionally different from other brain cells one could argue.
In the experiment, preliminary results of which were presented last month at the annual meeting of the Society for Neuroscience in Chicago, scientists allowed one group of rats to run for some time. Another set of rodents was not allowed to exercise, but yet stand still waiting. Then all of the rats swam in cold water, which they don’t like to do. Afterward, the scientists examined date on the animals’ brains. They found that the stress of the swimming activated neurons in all of the animals’ brains. (Researchers could tell what neurons that were activated because the cells on specific genes in response to the stress.) But the youngest brain cells in the running rats, the cells that running created scientists assumed, were less likely to express the genes. They remained quiet. The cells born from running, the researchers concluded, appeared to have been “specifically buffered from exposure to a stressful experience.” The rats had created, through running, a brain that seemed biochemically, molecularly, calm.
Exercise, an activity, might directly affect mood and anxiety, psychological states, was unclear. Thanks to improved research techniques and a growing understanding of the biochemistry and the genetics of thought itself, scientists begin to find out how exercise remodels the brain, making it more stress-resistant.
“It looks more and more like the positive stress of exercise prepares cells and structures and pathways within the brain so that they’re more equipped to handle stress in other forms,” says Michael Hopkins, a graduate at Dartmouth.
In the University of Colorado experiments, rats that ran for 3 weeks did not show much reduction in stress-affected anxiety, but those that ran for 6 weeks did. “Something happened between three and six weeks,” says Benjamin Greenwood, Ph.D.
In the experiment, preliminary results of which were presented last month at the annual meeting of the Society for Neuroscience in Chicago, scientists allowed one group of rats to run for some time. Another set of rodents was not allowed to exercise, but yet stand still waiting. Then all of the rats swam in cold water, which they don’t like to do. Afterward, the scientists examined date on the animals’ brains. They found that the stress of the swimming activated neurons in all of the animals’ brains. (Researchers could tell what neurons that were activated because the cells on specific genes in response to the stress.) But the youngest brain cells in the running rats, the cells that running created scientists assumed, were less likely to express the genes. They remained quiet. The cells born from running, the researchers concluded, appeared to have been “specifically buffered from exposure to a stressful experience.” The rats had created, through running, a brain that seemed biochemically, molecularly, calm.
Exercise, an activity, might directly affect mood and anxiety, psychological states, was unclear. Thanks to improved research techniques and a growing understanding of the biochemistry and the genetics of thought itself, scientists begin to find out how exercise remodels the brain, making it more stress-resistant.
“It looks more and more like the positive stress of exercise prepares cells and structures and pathways within the brain so that they’re more equipped to handle stress in other forms,” says Michael Hopkins, a graduate at Dartmouth.
In the University of Colorado experiments, rats that ran for 3 weeks did not show much reduction in stress-affected anxiety, but those that ran for 6 weeks did. “Something happened between three and six weeks,” says Benjamin Greenwood, Ph.D.
Tuesday, November 17, 2009
In the shadow of China's Great Leap Forward
China’s rapidly growing economy which has mastered the recession better than of any large country, tends to garner big headlines. The country’s rise coincides with another development, which receives less attention: its legal institutions.
This week when President Obama visits China, he will find a nation with a legal system far more improved from a generation ago, particularly in the area of business law.
For the United States this issue is critical because the importance in giving assurances that businesses can be carried out effectively. For US, it provides a bilateral and multilateral negotiation framework.
Deng Xiaoping took power in the late 1970s; China lacked standardized legal enforcement mechanisms. Deng, whom opened the door for China’s economic rise, realized a strong legal framework was a must for long-term growth. However, researches believe that there were fewer than 3000 lawyers in the country in 1978, a result of China closing down virtually all universities during the Cultural Revolution.
Here, located in the West we make jokes about the problems of too many lawyers, but too few could be disastrous. Deng recognized that China was in need of legal training and therefore, established a legal infrastructure to support its economic goals. He immediately started to work with international experts. Since, 1979, China graduated hundreds of thousands of lawyers. Passing the bar exam is now a requirement for all new judges; that’s the Chinese Way of dealing with problems…
This week when President Obama visits China, he will find a nation with a legal system far more improved from a generation ago, particularly in the area of business law.
For the United States this issue is critical because the importance in giving assurances that businesses can be carried out effectively. For US, it provides a bilateral and multilateral negotiation framework.
Deng Xiaoping took power in the late 1970s; China lacked standardized legal enforcement mechanisms. Deng, whom opened the door for China’s economic rise, realized a strong legal framework was a must for long-term growth. However, researches believe that there were fewer than 3000 lawyers in the country in 1978, a result of China closing down virtually all universities during the Cultural Revolution.
Here, located in the West we make jokes about the problems of too many lawyers, but too few could be disastrous. Deng recognized that China was in need of legal training and therefore, established a legal infrastructure to support its economic goals. He immediately started to work with international experts. Since, 1979, China graduated hundreds of thousands of lawyers. Passing the bar exam is now a requirement for all new judges; that’s the Chinese Way of dealing with problems…
Humans legacy...
The waste or detritus of us, human life, is collecting in a swirling current so huge that it defies precise measurement. Bottle caps, fish-nets, plastic products, brushes, inhabit the Pacific garbage patch, an area of dispersed trash which doubles every decade and is now twice the size of Texas is an issue, scientist can tell.
An area of currents and slack winds keep the trash swirling in a giant whirlpool. Plastic is the most common material floating around which will do so for years because of its lightweight, durable and is an omnipresent, disposable product in our societies. After years when it splits into pieces, millions, billions and trillions of particles will float around being a danger for fish that feed on plankton and furthermore ingest the tiny plastic particles. PCBs, DDT and other toxic chemicals will be transferred into the food humans consume therefore a threat we’re facing.
Just a reminder that there is nowhere that is not affected by humanity…
An area of currents and slack winds keep the trash swirling in a giant whirlpool. Plastic is the most common material floating around which will do so for years because of its lightweight, durable and is an omnipresent, disposable product in our societies. After years when it splits into pieces, millions, billions and trillions of particles will float around being a danger for fish that feed on plankton and furthermore ingest the tiny plastic particles. PCBs, DDT and other toxic chemicals will be transferred into the food humans consume therefore a threat we’re facing.
Just a reminder that there is nowhere that is not affected by humanity…
Can history catch up with us?
He was washed onto the shores of his island home at Ithaca, after 10 years’ absence in a foreign war and 10 years of hard travel in foreign lands, Odysseus, literature’s most famous veteran, stares around him…. “Now brilliant Odysseus awoke from sleep in his fatherland, and he did not know it, having been long away”. Additionally the goddess Athena has cast an obscuring mist over all the familiar landmarks, making “everything look otherwise than it was”. “Ah me” groans Odysseus, “what are the people whose land I have come to this time”?
This was 2800 years ago but yet, does history catch up with us?
Last Thursday, a U.S. military veteran psychiatrist who had been treating the mental scars of soldiers returning from Iraq and Afghanistan went on shooting rampage at an Army base in Texas.
Who is the veteran, and how does he stand in relation to his native land America?
This question remains relevant to those marching the event of this week for ‘Veterans Day’ in the United States and ‘Armistice Day’ in Europe. In practice, Nov. 11 is clouded with ambiguous symbolism and has become America’s most awkward holiday.
In “The Iliad”, Achilles must choose between kleos or nostos – glory or safe return home. By dying at Troy, Achilles has assured of undying fame as the greatest of all heroes. His choice reflects an uneasy awareness that it is far easier to honor the dead soldier than the soldier that returns.
So, how will America honor this veteran than eventually, drastically went shooting rampage at the Army Base in Texas?
This was 2800 years ago but yet, does history catch up with us?
Last Thursday, a U.S. military veteran psychiatrist who had been treating the mental scars of soldiers returning from Iraq and Afghanistan went on shooting rampage at an Army base in Texas.
Who is the veteran, and how does he stand in relation to his native land America?
This question remains relevant to those marching the event of this week for ‘Veterans Day’ in the United States and ‘Armistice Day’ in Europe. In practice, Nov. 11 is clouded with ambiguous symbolism and has become America’s most awkward holiday.
In “The Iliad”, Achilles must choose between kleos or nostos – glory or safe return home. By dying at Troy, Achilles has assured of undying fame as the greatest of all heroes. His choice reflects an uneasy awareness that it is far easier to honor the dead soldier than the soldier that returns.
So, how will America honor this veteran than eventually, drastically went shooting rampage at the Army Base in Texas?
Subscribe to:
Posts (Atom)
