Sunday, January 22, 2017

About Mismanagement of State Budgets

If you listen only to those who agree with you, any illusion of populism is just a narcissistic fantasy.  That's not how Ithaka works and Lotho presents cogent bases for support of state versus federal spending whereas Silas is on the other team for the Fed, as typically you would expect for liberal / conservative positions while those positions still meant anything.  Others of the regulars take varying positions in-between.

So ... we have the financial disaster of California's state budget and beware of heavy anti-Left bias but that doesn't mean all that much when none of them seem all that sure what the Left means either.  (CNSNews:  California Budget Deficit Rising: Wasteful Spending, Minimum Wage Hike to Blame)

There's the click bait so what's the pitch.

“California spends 4.7 times as much per mile of state-controlled highway as the national average.  More specifically, for every $1 Texas spends on its highways, California spends $5.80. For every $1 Michigan spends on its highways, California spends $3. … California ranks 47th for highway conditions, while Michigan ranks 30th and Texas 11th. So while spending a lot less per mile, those states are able to have much better road conditions.  In fact, over the last 20 years, California's highway system and road conditions made the least amount of progress among all 50 states.”

“… There is arguably more fat and wasteful spending at Caltrans than there is in any other state agency, which is saying a lot.  Spending 4.7 times the national average per mile (in exchange for one of the poorest-ranked transportation systems in the county, no less) means a lot of bad decisions about spending are being made.”

- Reason Foundation (?)

That looks reasonable, assuming the numbers are true, for pitching the idea California isn't worth a damn about managing transportation dollars.

Note:  it doesn't stop there but I'll accept the point for the moment.


California’s legislative analyst projected last year that the recent increase in the state’s minimum wage to $15 an hour will cost taxpayers $3.6 billion more a year in increased government worker pay.  This is partly because already well-paid government workers sometimes have their pay pegged to a multiple of the minimum wage.

The increase will also drive up state welfare costs by wiping out many jobs.  The American Action Forum predicts the increase will ultimately cost California nearly 700,000 jobs.  An economist at Moody’s calculated that 31,000 to 160,000 California manufacturing jobs will be lost. 

- CNS

Here at the Rockhouse, I see not much more than fortune telling in this one.  I take issue as to whether government workers really are well-paid since there's not an iota of documentation for it.  However, if it's true wages are tied to the minimum wage then someone has no idea of the purpose of the minimum wage in the first place.  That I see as mismanagement.

The second part is nothing but fortune telling with the typical sky-will-fall rhetoric.  That serves no useful purpose for me.


Compound that with more fortune telling.

Job losses from the minimum wage increase will also reduce state tax revenue.  Meanwhile, low income workers who manage to keep their jobs despite the increased minimum wage will face increased taxes and reduced federal earned-income tax credits and food stamps.  As Henry Schmid notes, “the tax implications of going from a $10- to a $15-an-hour minimum wage” wipe out much of the benefit of any increase to the affected workers. “For a family of four with both spouses making the minimum wage, their federal tax will increase from $4,106 to $7,219, payroll tax will increase from $2,579 to $3,869, their earned-income tax credit (EITC) will be reduced from $596 to zero … and the $2,400 food-stamp credit will be lost.”

- CNS

Whether any jobs will really be lost is unknown but there will definitely be revenue coming back from the people raised to the minimum wage because there will be more tax on it, assuming they make enough to get past the bottom end of the taxation scale.


The author is a lawyer so trust him or not as you will.

Have a ball.


Note:  thanks to Pink for the reference.

15 comments:

Anonymous said...

Please remember when ACA was rolled out, everyone was warned that it would lower the average hours worked per employee. Since the threshold for coverage was set at 26 hours per week, most entry level and lower management hours were capped at 25 hours per week. So many if those employees reacted in one of two ways. Apply for federal benefits based on thier new income or to acquire a second position to ensure they were working a 40 hour week.
A few of these employees were allowed to work overtime in the transition as it was cheaper to pay the overtime and avoid the insurance. This quickly went away as more part time employees were hired.
The number of full time manager were reduced and those retained worked more hours for the same wage.
Raising the minimum wage, will result in one of two responses first reduce the number of hours paid or secondly raise prices. The latter will begin an inflationary cycle.
Which will negate the gains of the increase wages. It will increase tax revenues but those directly affecting this class can easily be adjusted to lessen the impact.
It is a minimum wage it is meant for entry level positions. I can get a position tomorrow for over $15/hour in a warehouse or manufacturing position. Why should an employer pay a 16 year old kid who has no skills and probably a very poor idea of a true work ethic a livimg wage. The living wage is acquired by advancing through the system by increasing your value.
As to the overpaid state employees, an average state emoloyee makes $56K with benefits $86k compared to $45K for a private sector. It is hard to compare private sector benefits since they have such diverse value depending on t h e company issuing them
The tax implications he states could overcome with a few votes in either state or federal government.
So that is a wash for either side

Unknown said...

I understand the logic but what happens when your options are relatively limited due possibly to poor education and raises one or more children alone so the individual can't do much about it while trying to work at the same time. There are so many who have relatively poor jobs and some percentage with little likelihood they will ever get beyond them.

All things being equal, you go to night school and you lift yourself up but what if they're not due to circumstances such as I've listed above. Down here it looks like we're the Untouchables since there wasn't a word about us yesterday and Trump says various things but there's still no evidence except as noted in his policy statement regarding military spending. I did hear the minimum wage in it yesterday whereas it was absent with Clinton except a minor sop for appeasement and it wasn't to the level they were demanding yesterday.

It's tough to tell tone online so know there's no rancor in that and only observations.

Anonymous said...

It takes no education or intelligence to be a picker in a warehouse. There are multiple programs out there for childcare either with stand alone daycare or in conjunction with their local school in an aftercare program.
Please dont continue to allow people to make excuses for not progressing when there are programs out there to help them. I have spent my life helping employees and others get into these programs and re-invent themselves. Most of these programs are not underfunded but underutilized. They do suffer from waste and mismanagement. Dont tell me that if we didnt spend so much on the military machine we coukd do it all.
I dont see the spending ratchetimg back anytime soon but using these rograms and eliminating waste is real and can be done now

You refuse to use any government program out there. That is your choice but they are out there. I have multiple people in your situation adding federal benefits was a 45 minute appointment. It generated a 25% increase in yearly funds. It is done through a EBT card and they only need to physically appear once per year

Unknown said...

I do see the position and I know the part you play in helping those who are willing to help themselves. I'm seriously not trying to make excuses for anyone and my purpose is only reporting what I know. Some people do not do it for whatever reason and I can't address what it might be since I do not know. The ones who seem stranded typically are mothers with a couple or more of children and they don't seem to be able to pull out of despite working and I have no clear answer as to why not.

My own situation is different and I leave it out. However, I do want the military spending reduced for many valid reasons since wasting half the tax gold makes no sense for business or much of anything else.

I do want both sides represented and there's another article about California's state budget which appears to be screwed and there's an article addressing it which I have used for reference. It has a heavy bias against the Left but I presented it anyway since some of it is valid and the culmination in it is your call what to make of it.

Anonymous said...

A simple solution for those mothers is a graduated system of benefits so they can continue thiers benefits as they become more successful. They would be reduced over time rather than a hard threshold to losing the benefits

Anonymous said...

Workfare isnt a bad plan to create a work ethic.

Unknown said...

I wouldn't deny it, assuming all standards, yours and mine, for managing the workfare are applied. My standards generally apply and that will make just about anything work.

No problem with graduated benefits. I just can't have anyone hanging and not able to cope. Benefits should reduce as salary increases but with at least some buffer to give some sugar from the increased pay or there's not a big incentive to do advance yourself.

Unknown said...

I didn't write that second sentence correctly

My standards generally require fairness and that will make just about anything work.

Unknown said...

It's important to Yevette to emphasize because, wtf, she was career union ... the non-union members were to be represented the same as the union brothers and sisters and this was required by law.

Thus far, I'm hearing a regulatory fiasco since it's not really a union if you don't have to be a member to be in it. Nevertheless, they see nothing better and will fight for their union notwithstanding various flaws.

Anonymous said...

That is true. You can not be forced to pay union dues if it is an open shop. Wether or not a workplace is an open or closed shop depends on wether it is a right to work state or not. And the CBA that is negotiated between the employer and union determines what is covered and all employees are covered wether the pay dues or not. They are also supposed to be represented by the union stewards in all disagreements with management.
In a closed shop, Union dues are compulsory and all employees are members.
Tennesee is a right to work state. Because WTF I spent my life preventing unions from unionizing delivery drivers and other employees. Hendersonville is home to the first Drivers Union most of my locations were in and surrounded Hendersonville. While that union has hundreds of members they never successfully negotiated a CBA even though the new laws listed it as legal to hold a vote to unionize by location as opposed to an entire company. That was only done in a Florida Domino's with a location of 11 employees.
This may have changed since I retired.

Unknown said...

This Democrat sees all that state interference and would cheerfully stab it with a knife. Sorry I have no fiery opposition but it just ain't there.

I'm glad you retired ... but you cain't fool me. There's no retirement from workaholism (larfs).

Anonymous said...

I watched football yesterday. I thought
about doing something today but realized I needed to conserve energy to play with The Fairy Princess tonight

Unknown said...

It's what I mean ... effective time management. Ha!

I did see the Patriots will be in the Super Bowl and you'll never hear the end of it if they take another one (larfs).

Anonymous said...

No worries I use football get in another nap.
If by time management you mean I allow time to pass with nothing accomplished.
You are right I manage time fine

Unknown said...

Definitely. There's got to be some screwing off time or you blow up. That's fine time management in minimizing explosions of that nature.