Monthly Archives: June 2016

Puerto Rico’s minimum wage and statehood

Puerto Rico is in deep trouble and it’s getting worse. Unemployment is at 12%, double the next worst state or territory (Alaska). Tourism is down and poverty is at 41%. US tourists have begun going elsewhere where prices are lower: Bermuda, Haiti, Jamaica, and Cuba. The island is effectively bankrupt and would have filed for bankruptcy last year except that, as a US territory, they legally can’t. But neither can they pay their bills. The territory will go into default in 2 weeks, on July 1, 2016 unless congress creates a new funding mechanism for them. Statehood would allow Puerto Rico to go bankrupt, but there is no way for statehood to be achieved by July 1. Nor will bankruptcy help them, long term.

Puerto Rico's minimum wage is vastly too high; here it is compared with other US states.

Puerto Rico’s minimum wage is vastly too high for its median wage. From Preston Cooper, Economics21.

It is worthwhile to ask why Puerto Rico is in such bad shape. Why are they worse off than Guam, for example; Guam is far more isolated. Puerto Rico is run poorly, but it’s no worse than Guam or  Illinois. One problem particular to Puerto Rico is that their minimum wage is way too high relative to the median wage.

Because of the climate, living expense are low in Puerto Rico, but Puerto Rico’s economy is mostly tourism. It competes for tourist dollars with lower-wage Caribbean countries, Jamaica, Haiti, and Cuba. Neither Alaska nor Guam must compete this way, with a nearby, low cost alternative. Puerto Rico could compete better if they could lower their minimum wage. Tourism would be more attractive, and the government would not have to spend as much either for minimal-skill workers.

With a lower minimum wage, more Puerto Ricans would be able to find jobs, and the government would likely manage to balance its books. But Puerto Rico is part of the US, and we set the minimum wage. I think the federal government should grant them an exemption. Without one, there is no obvious way for Puerto Rico to pay its bills.

Four years ago, in my first blog post, I suggested that Detroit should lower its $15/hour ‘living wage‘, a wage rate that unduly burdened the city budget, and added to Detroit’s rampant unemployment and corruption. A year later, the city dropped it as part of bankruptcy, and saw significant improvementsI’m not alone in suggesting a lower minimum wage. It’s better than state-hood and immediate bankruptcy.

Robert Buxbaum, June 19, 2016.

June 14 1789, First Bourbon whiskey

June 4. On this day, in 1789, the US national version whiskey, Bourbon, was first distilled by Rev Elijah Craig of Kentucky. He named his product “Bourbon whiskey” as a reference to Bourbon County, where he lived. Rev. Craig’s innovation was to use maize (corn) instead of rye or malted barley. Up until this innovation, most US whiskey was made from rye, with some malted barley added as an enzymatic modifier. George Washington, the first US president, made whiskey from rye using very little malt, becoming the largest distiller in the US in the late 1700s.

Corn is cheaper than rye, and Bourbon whiskey has a milder flavor too. Perhaps because of this, US consumption of Bourbon whiskey has come to far surpass that of rye whiskey. Here, in a famous speech, Senator Mitch McConnell tells congress that Bourbon is the spirit of Kentucky, and the spirit of the US. Here, his speech is set to music with other news of the day, and a comment by President Obama saying he’d enjoy having a drink with Senator McConnell. What would that drink be? Straight Bourbon? or Bourbon and water, or perhaps a mint julep, the classic Kentucky concoction, made with Bourbon, sugar, and spearmint.

Related to this topic, I should mention that President Truman liked Bourbon straight, that the favorite drink of Lyndon B. Johnson, was “Bourbon and branch” (branch is water). And that Theodore Roosevelt served mint juleps at The White house (if you played tennis with him) using his own, White-house grown mint, but made with rye, not Bourbon.

GWKuhn outflow point. During a storm this outflow is filled to the roof.

GWKuhn outflow point. During a storm this outflow is filled to the roof.

June 14th is also flag day, though only celebrated as a holiday in Pennsylvania. It’s also the day of the mutiny on the HMS Bounty, and the day of the Marijuana act, 1937. Hawaii joined the union this day, and Paris fell in WWII. This is also the day I first got a tour of the George W. Kuhn sewage retention facility, the main sewage plant in our county. A few days before, I walked into the outflow pipe of the plant, see picture. It was some 60 feet wide by 22 feet tall. I was looking for convenient connection points i could use to separate the storm from the sanitary sewage flow through the facility, assuming I became water commissioner.

Robert Buxbaum, June 14, 2016. Some months ago, I suggested that Michigan might change its state bird to the wild turkey. It’s a common MI bird, and also a type of Bourbon.

Skilled labor isn’t cheap; cheap labor isn’t skilled

Popular emblem for hard hats in the USA. The original quote is attributed to Sailor Jack, a famous tattoo artist.

Popular emblem for hard hats in the USA. The original quote is attributed to Sailor Jack, a famous tattoo artist.

The title for this post is a popular emblem on US hard-hats and was the motto of a famous, WWII era tattoo artist. It’s also at the heart of a divide between the skilled trade unions and the labor movement. Skilled laborers expect to be paid more than unskilled, while the labor movement tends to push for uniform pay, with distinctions based only on seniority or courses taken. Managers and customers prefer skilled work to not, and usually don’t mind paying the skilled worker more. It’s understand that, if the skilled workers are not rewarded, they’ll go elsewhere or quit. Management too tends to understand that the skilled laborer is effectively a manager, often more responsible for success than the manager himself/herself. In this environment, a skilled trade union is an advantage as they tend to keep out the incompetent, the addict, and the gold-brick, if only to raise the stature of the rest. They can also help by taking some burden of complaints. In the late 1800s, it was not uncommon for an owner to push for a trade union, like the Knights of Labor, or the AFL, but usually just for skilled trades for the reasons above.

An unskilled labor union, like the CIO is a different animal. The unskilled laborer would like the salary and respect of the skilled laborer without having to develop the hard-to-replace skills. Management objects to this, as do the skilled workers. A major problem with unions, as best I can tell, is a socialist bent that combines the skilled and unskilled worker to the disadvantage of the skilled trades.

Not all unionists harbor fondness for welfare or socialism.

Also popular. Few workers harbor a fondness for welfare or socialism. Mostly they want to keep their earnings.

Labor union management generally prefer a high minimum wage — and often favor high taxes too as a way of curing societal ills. This causes friction, both in wage-negotiation and in political party support. Skilled workers tend to want to be paid more than unskilled, and generally want to keep the majority of their earnings. As a result, skilled laborers tend to vote Republican. Unskilled workers tend to vote for Democrats. Generally, there are more unskilled workers than skilled, and the union management tends to favor Democrats. Many union leaders have gone further — to international socialism. They push for high welfare payments with no work requirement, and for aid the foreign socialist poor. The hard-hats themselves tend to be less than pleased with these socialist pushes.

During the hippie-60’s and 70’s the union split turned violent. It was not uncommon for unionized police and construction workers to hurl insults and bricks on the anti-war leftists and non-working students and welfare farmers. Teamster boss Jimmy Hoffa, supported Nixon, Vietnam, and the idea that his truckers should keep their high wages at the expense of unskilled. Rival teamster boss, Frank Fitzsimmons pushed for socialist unity with the non-working of the world, a split that broke the union and cost Hoffa his life in 1975. Eventually the split became moot. The war ended, US factories closed and jobs moved overseas, and even the unskilled labor and poor lost.

Skilled workers are, essentially managers, and like to be treated that way.

Skilled workers are, essentially managers, and like to be treated that way.

The Americans with Disability Act is another part of the union split. The act was designed to protect the sick, pregnant and older worker, but has come to protect the lazy, nasty, and slipshod, as well as the drug addict and thief. Any worker who’s censored for these unfortunate behaviors can claim a disability. If the claim is upheld the law requires that the company provide for them. The legal status of the union demands that the union support the worker in his or her claim of disability. In this, the union becomes obligated to the worker, and not to the employer, customer, or craft — something else that skilled workers tend to object to. Skilled workers do not like having their neighbors show them high-priced, badly made products from their assembly line. Citing the ADA doesn’t help, nor does it help to know that their union dues support Democrats, welfare, and legislation that takes money from the pocket of any one who takes pride in good work. We’ll have to hope this split in the union pans out better than in 1860.

Robert Buxbaum, June 5, 2016. I’m running for water commissioner. I’d like to see my skilled sewer workers rewarded for their work and skill. Currently experienced workers get only $18/hour and that’s too little for their expertise. If they took off, they’d be irreplaceable, and the city would likely fall to typhus or the plague.