Coyote Blog

Well, the new meme on the Left in favor of higher minimum wages seems to be that since many minimum wage workers also receive government benefits, those benefits "subsidize" the employers paying minimum wage.  Example from Kevin Drum here.  This is utter madness.  A few responses:

• The implication is that the choice is between a job at $8 an hour or a job at $15 an hour.  But this assumes the jobs still all exist at $15 an hour.  Clearly, many would disappear over time, either as companies automate or as consumers reduce purchases at now higher cost establishments.  If the alternative to offering a $8 an hour job is in fact offering no job at all, then minimum wage employers are reducing government benefits payouts.
• The Left has pushed eligibility for many programs (e.g. the changes in Obamacare to Medicaid) into higher income bands of people making more than 100% of the poverty line.  How is this creeping up of transfer program eligibility somehow the fault of employers?
• Does this mean that all right-thinking Americans should oppose any future expansions of transfer programs as crony giveaways?  And if you say no, that they should not be thought of crony giveaways in advance of their passage, why should they be considered such afterwards?
• The whole point of many of these programs, like the EITC which is listed among the programs in Drum's post, is exactly this -- to provide transition assistance from not working to supporting oneself.  The Left's view on this is, as usual, entirely static.  What are the folks who are on benefits and working in food service doing 5-10 years from now?  Would they look back on that time as a stepping stone to something better?
• If you require that all employers pay a salary such that none of its workers are on assistance of any sort, which is the logical conclusion of this meme, then you divide the world into two classes -- those 100% employed and those 100% on benefits, with most people in the latter having little or no prospect of moving to the former.
• My company pays minimum wage to the vast majority of our 300+ campground workers.  But who is subsidizing whom?  Most of these folks are over 60 and on Social Security and find that they need or want more money than their Social Security can provide.  One reason for this is that Social Security is a horrible retirement savings program, essentially paying a negative interest rate on the money contributed to the system in the retiree's name.  If Social Security were a private retirement plan, its proprietors would be in jail by now.  Because Social Security is so lame, older people seek work, and come to me, happy to stay active and earn money to supplement their government checks.  So am I subsidizing the SSA's inability to provide a fair return?

A government job can be a great deal.  Likely it pays more than a comparable private job, it's generally impossible to get fired from, and it has outrageously good medical and pension plans.  And, if you don't shy away from a bit of perjury, can be made to pay off spectacularly:

During the workweek, it is not uncommon to find retired L.I.R.R. [Long Island Railroad]
employees, sometimes dozens of them, golfing there. A few even walk the
course. Yet this is not your typical retiree outing.

These
golfers are considered disabled. At an age when most people still work,
they get a pension and tens of thousands of dollars in annual
disability payments "” a sum roughly equal to the base salary of their
old jobs. Even the golf is free, courtesy of New York State taxpayers.

With  incentives like these, occupational disabilities at the L.I.R.R. have become a full-blown epidemic.

Virtually
every career employee "” as many as 97 percent in one recent year "”
applies for and gets disability payments soon after retirement, a
computer analysis of federal records by The New York Times has found.
Since 2000, those records show, about a quarter of a billion dollars in
federal disability money has gone to former L.I.R.R. employees,
including about 2,000 who retired during that time.

97 percent?  Wow!  And just to demonstrate that year was not some kind of outlier:

In each year since 2000, between 93 percent and 97 percent of employees
over 50 who retired with 20 years of service also received disability
payments.

The article goes on to demonstrate that this is occurring at what appears, from the injury statistics, to be one of the safest railroads in the area.  Say what you will about the NY Times, but when they get their teeth into local corruption they can still do a masterful job, as evidenced by this long article discussing many apparently ridiculous payroll situations at the LIRR.

I can say from experience that there is a group of people in this country for whom getting a lifetime disability payment (e.g. from the Social Security Administration) is as good as hitting the lottery.  I remember one time I got a survey form from the SSA asking about a former employee.  I didn't pay much attention to the form's purpose as I filled it out -- I get all kinds of such government wastepaper with breathless admonishments about the urgency of my reply.  Anyway, about 2 weeks later I got a very threatening letter from the attorney for this former employee, threatening me with all kinds of dire consequences if I did not immediately retract my (honest) answers to the SSA inquiry.  Apparently, I was endangering a lifetime disability determination that this person had been working on obtaining for years. 

Every day, in fact, I get job applicants who try to cut deals with me of one sort or another (e.g. can you pay me under the table in cash?) because they say they are fully able to do outdoor maintenance work but they can't show any income because it might endanger their lifetime disability payments.  In a similar vein, I have three cases I know of in my company today where workers filed workman's compensation claims of injury several days after they were terminated.

I've said it before, but the reckoning is coming on state and local government pensions, which in most cases are unfunded, undisclosed liabilities of startling magnitude.  The disaster that is fast approaching in these state and local government finances will make Social Security's problems look pitiful by comparison.

Postscript:  Railroad labor law is just weird and a total mess.  Being the first major industry, and the first major industry that was regulated, a whole regulatory structure was put in place for railroads that (fortunately) has been applied to few other industries.  Whatever the problems we have with state workman's comp programs, they are models of governance compared to how things work in the railroad industry.

For example, I remember when I worked for a railroad in the 1990's, carpel tunnel claims were common.  By the nature of the comp system, workers got cash payments for injuries in addition to medical treatment (I recall a figure at the time of $7500 per wrist for carpel tunnel, but that may be off).  It was a common piece of advice among railroad workers that if one wanted to get the money together for a down-payment on a new pickup truck, one only had to go to Dr. X or Y and get a carpel tunnel diagnosis.

Arizona state law now requires that employers use the federal e-verify system to screen employees for legal immigrant status.  As I mentioned earlier, state law requires that I use this system in ways that are illegal under federal rules, at the risk of losing my business license.

Right now, I am going through a 6000 screen required tutorial that I have to endure before I can use a system that requires me to fill in about 3 blanks and hit enter.  (Of course, since this is a government system, the tutorial has already crashed twice three five times and I have had to restart it each time).  Somewhere in the midst of the training, I reach this admonition:

You may not discriminate against applicants and employees based upon
their citizenship or immigration status with respect to hiring, firing,
or recruitment or referral for a fee. This includes treating citizens
and non-citizens differently during the hiring process, such as
screening out non-citizens or not hiring lawful immigrants based upon
their immigration status.

WHAT?  Personally, I am all for living by this, but isn't this EXACTLY what the law is requiring me to do?  To discriminate against people, and ban my hiring of them, based on their immigration status?  How can I possibly keep my actions legal if I am required to discriminate based on citizenship status but I am also banned from discriminating in hiring based on citizenship status.  How Orwellian can we get?

To continue the Orwellian theme, as part of this law by the state of Arizona whose sole purpose is to restrict the classes of people I can and can't hire, I must display this poster:

Gee, I would have thought everyone in the world had the right to seek work and to contract with anyone they please for their labor, but in fact the only body taking away the right is the group that made this poster -- ie the government -- which requires that everyone have a special government license called citizenship or a green card before they can sell their labor to willing parties in this country.

Well I wondered, of course, why there were 176 (I counted) training screens just to enter name-social-DOB and hit return.  It turns out that by "agreeing" to join the e-Verify program, which I am forced to do by Arizona law, I have agreed to become a US immigration officer and to do their job for them (without compensation, of course).  Here is an example screen:

There are five options for resolving a case:

• Resolved Authorized. Select this option when employment is authorized.
• Resolved Unauthorized/Terminated. Select this option when
  employment is not authorized (SSA Final Nonconfirmation, DHS Employment
  Unauthorized, or DHS No Show), or when a Tentative Nonconfirmation
  response is uncontested AND employment is terminated.
• Self Terminated. Select this option if an employee quits or
  is terminated for reasons unrelated to employment eligibility status
  while the verification query is in process.
• Invalid Query. Select this option if a duplicate query was discovered after the query was sent or if a query was sent with incorrect data.
• Employee Not Terminated. Select this option to notify DHS
  that you are not terminating an employee who received an SSA Final
  Nonconfirmation, DHS Employment Unauthorized, or DHS No Show response
  or who is not contesting a Tentative Nonconfirmation response.

Got that?

Every campaign year we get these debates with all of these stupid questions, including things like "do you know how much a gallon of milk costs" or "Who is the head of state of Mayanmar?"  I would just love to see someone ask Obama or Clinton "In the largest city of your state, can you name all of the city, county, state, and federal licenses, registrations, tax numbers, certifications and registrations you need to be able to legally run a business with 10 employees?"

Update: OMG I have to pass a 33-page test before it will let me use the system.  LOL.  We can't test government-employed teachers for subject competency but we can test employers on government bureaucratic procedures before we allow them to hire anyone.

Update #2:  Well, there is an hour and a half of my life I will never get back.  It would have gone much quicker if they had a server that wasn't powered by a hamster on a treadmill.  Every several pages the server would take a minute or more to respond with the next page, and every twenty pages it would crash my browser completely.  Incredibly, to continue the Orwell theme, there were several questions where a correct answer required one to confirm government propaganda about the program.  Stuff like "The e-Verify helps every employer by...."

I am now fully empowered to, as required by US and Arizona law, discriminate in hiring based on immigration status just so long as I am careful not to discriminate in hiring based on immigration status.