On the occasion of the scheduled fast food-workers strike today (Thursday, December 5), I thought I’d dip into the vault and repost something from earlier this year on a proposal to hike the federal minimum wage. Workers in around 100 U.S. cities are striking on demands that their wages be moved from the current federal minimum of $7.25 per hour to $15 per hour – that’s well ahead of what President Obama suggested in a State of the Union address back in February. What we look at in this post is why basic economics breaks down when talking about increasing the cost of labor. While you’re looking, you might want to check out a couple other posts I did on minimum wages: one on Washington state (who’s minimum wage is above the federal one) and one on the relationship between minimum wage and federal assistance.
Minimum Wage Hikes – or – What Econ 101 Didn’t Teach You
Your entry-level economics class taught you (or should have) that when the price of something goes up, less of it is consumed. This holds for cars, interest rates, widgets, and wages. So, during this week’s State of the Union address, when President Obama called for raising the federal minimum wage from its current level of $7.25 per hour to $9.00 per hour, and tagging the minimum wage to the cost of living, it drew a decent amount of criticism. Read more
We all make mistakes in life. I can think of a few (hundred) I’ve made over the years.
Stop waiting on interest rates to manage DB risk and volatility!
What if a plan sponsor could take steps to help minimize costs and control volatility in their defined benefit (DB) plan regardless of the interest rate?
A recent paper published by Principal Financial Group® says it can be possible. (PDF: 694 KB)
It’s a common belief that interest rates have nowhere to go but up. And because bond investments typically go down in value when interest rates go up, plan sponsors may be avoiding investments in bonds in favor of other options. As the duration – that is, the length of the maturity of the bond – extends longer, the larger the decline in the bond investment will likely be if interest rates increase. So plan sponsors that invest in bonds have generally been sticking to shorter duration bond investments.
If a plan sponsor feels interest rates will go up, should they avoid bonds – and in particular longer duration investments? According to this article, that is not necessarily the case. Read more
Change is difficult. And I’m not talking about the shirt I changed this morning because my wife said the buttons were holding on for dear life. No, I mean the kind of change that reinvents the very foundation we have grown accustomed to for so many years. The foundation that maybe we helped create and have used to thrive under for the better part of our careers.
We know it’s necessary. It’s the right thing to do.
Many believe we’re nearing a crossroads in the retirement services industry. Participants simply aren’t saving enough. And despite the bells and whistles each service provider is coming up with to support employee education, the reality is that if left to their own device, individuals are not making the necessary decisions to control their own retirement destiny. Read more
The first Thanksgiving was held in 1621 in Plymouth, MA. More than two-hundred years later (1863), President Abraham Lincoln created the national holiday that we now celebrate. For most of us, this is a joyous time to get together with family and friends to reflect on our blessings.
But, no one ever asked the turkey how he felt about the festivities. According to the U.S. Department of Agriculture, more than 45 million turkeys are eaten in the U.S. at Thanksgiving. The lesson for us: even in a celebration, there may be some that don’t share our enthusiasm.
Much has been made throughout 2013 about the three “arrows” of Japanese Prime Minister Shinzo Abe. While this deflation-fighting plan of monetary loosening, fiscal stimulus, and structural reforms has been broadly successful, I believe it will be the strength or weakness of the yen that will determine whether Japan’s economy emerges convincingly from its deflationary period in 2014.