Art Carden on SOTU

Depending on what UE rate we are using, the 10% number is more or less accurate accounting for the criticism you raise.

Here is the direct link:

http://divisionoflabour.com/archives/006778.php

A Good Rule of Design:
Make blog post titles link to the permalink. It's easier for people than identifying the small, tiny letters reading "permalink" at the bottom of the blog post.

Here is the real link for the post:
http://divisionoflabour.com/archives/006778.php

David identifies the unemployed who turn down work at rates of pay lower than they earned before being laid off. That seems like only one side of the issue.

What about those who grab work at rates of pay lower than they earned before being laid off because they are desperate for income?

Or those who were employed full-time before being laid off, but now take part-time jobs because they are desperate for income?

In Loof's Libertopian view a hungry child could get a job eating the crumbs from the rich man's table - as he's wanton to be ever richer.

David,

Here is the link to Art's post. At that blog, you need to click on the "Permalink" under each particular post, in order to send someone to a particular link.

Thanks for the link. Here's the permalink to my post: http://divisionoflabour.com/archives/006778.php.

For many, unemployment transfers may be more than minimum wage wages. Therefore they would take a job slightly above minimum wage, if they weren't getting paid to look for a even better paying opportunity.

Les asks:

What about those who grab work at rates of pay lower than they earned before being laid off because they are desperate for income?

Or those who were employed full-time before being laid off, but now take part-time jobs because they are desperate for income?

My answer: it would be incorrect to say that they can't find work.

FWIW I know some of these people and I know that some have found work though for lower pay and unsteady but are getting paid in cash and can still collect (as they call it). They are working for themselves but would rather have a regular job.

Libertopian. Ha!

"a large fraction is likely to be workers who would accept a job at less than the minimum wage but cannot be legally paid that amount"

What is the fraction? This is not empirical.

You have a beautiful theory that I am sure you and others have given a great deal of thought.

But there are some 15 million people unemployed right now. Do you have a single bit of evidence that there are businesses willing to hire them at,
for example $1.00 per hour?

I seriously doubt that you can come up with any evidence to show that the demand you beleive exist, actually exist.

I have studied Higgs analysis of the great depression and his claims about investment is clearly rejected by the data.

In the major econometric models business investment is generally a function of three variables:
1. profits
2. capacity utilization
3. cost of capital.

If you regress business fixed investment from 1929 to 1940 as a function of these three variables the regression does an outstanding job of explaining both the 1929-33 collapse of business fixed investment and the 1934-39 rebound in the same series. This analysis shows that Higgs claims about business uncertainty dampening capital spending under FDR are completely unfounded.

P.S. Notice that Higgs presents essentially no data analysis to support his unfounded claims.

I challenge you to show any quantitative analysis supporting Higgs claims.

@Ned Baker
I don't know. That's why I said "likely."

@spencer
By definition, I couldn't have such evidence because, as you know, the minimum wage is well above $1.00 an hour.
As for evidence that there are jobs that people turn down, you would need to do a survey of unemployed people to see what percent have turned down job offers in the last month and what percent have not even looked seriously at jobs paying below, say, 40% of their previous wage.

@ spencer
I don't know the evidence you refer to. But I do know that Higgs did present evidence. He showed the increasing gap between short-term and long-term interest rates in, I believe, the late 1930s, and attributed this to regime uncertainty. He also presented polling data on businessmen's understanding of the business and economic environment. Polling data are always risky, I know, but it's simply not true that he didn't present evidence.

Best,
David

Hello David:

I wrote: What about those who grab work at rates of pay lower than they earned before being laid off because they are desperate for income?

Or those who were employed full-time before being laid off, but now take part-time jobs because they are desperate for income?

Your answer: it would be incorrect to say that they can't find work.

My response: You are absolutely correct. Yesterday a VP at Goldman Sachs. Today, raking leaves or selling apples on a street corner. 10% unemployment? Bah, humbug! They can all find work!

David Henderson is quite correct. President Obama says 'one in ten Americans can't find work' and that just isn't supported by the data. The phrase 'can't find work' is meant to lead us to believe that these are desperate times and desperate measures are required. Those desperate measures are what make tyranny possible.
I am one of those unemployed right now, and I can assure you that I am nowhere near desperation.
I think it would be safe to say that nine of ten North Koreans would enjoy being unemployed in America. Oops! I don't have data to back that up.

This may seem painfully obvious, so I may be missing something. But doesn't that simple phrase in Obama's SOTU speech imply that 30 million Americans are out of work? (300m * .1)

I think only like 65% of Americans are even in the labor force, so the denominator is reduced from that 300m number, making the 1 in 10 American's phrase drastically inflated.