MONETARY HISTORY CALENDAR -- August 1-7

AUGUST 2

1100 – BEGINNING OF THE REIGN OF KING HENRY I OF ENGLAND
About 1100 AD, the King ordered the creation of a unique form of money. Made of wood, the currency was called “Tally Sticks.” They were polished sticks of wood declared by the Sovereign King to be good for the payment of taxes. The sticks were used as money by England for 726 years – included the period of the British Empire. It may be no coincidence that shortly after the Bank of England (a private entity) was established in 1694, it attacked the Tally Stick system. Nevertheless, the Sticks were accepted as money for another 150 years, until 1854.

AUGUST 3

1871 – BIRTH OF VERNON PARRINGTON, AMERICAN HISTORIAN
"The only safe and rational currency is a national currency based on the national credit sponsored by the state, flexible and controlled in the interests of the people as a whole."


AUGUST 6

1893 – BIRTH OF OF WRIGHT PATMAN, DEMOCRATIC CONGRESSMAN FROM TEXAS, CHAIRMAN OF US HOUSE COMMITTEE ON BANKING & CURRENCY (1965-75)
"I have never yet had anyone who could, through the use of logic and reason, justify the Federal Government borrowing the use of its own money I believe the time will come when people will demand that this be changed. I believe the time will come in this country when they will actually blame you and me and everyone else connected with Congress for sitting idly by and permitting such an idiot system to continue. "

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Why this calendar? Many people have questions about the root causes of our economic problems. Some questions involve money, banks and debt. How is money created? Why do banks control its quantity? How has the money system been used to liberate (not often) and oppress (most often) us? And how can the money system be “democratized” to rebuild our economy and society, create jobs and reduce debt?
Our goal is to inform, intrigue and inspire through bite size weekly postings listing important events and quotes from prominent individuals (both past and present) on money, banking and how the money system can help people and the planet. We hope the sharing of bits of buried history will illuminate monetary and banking issues and empower you with others to create real economic and political justice.
This calendar is a project of the Northeast Ohio American Friends Service Committee. Adele Looney, Phyllis Titus, Donna Schall, Leah Davis, Alice Francini and Greg Coleridge helped in its development.
Please forward this to others and encourage them to subscribe. To subscribe/unsubscribe or to comment on any entry, contact monetarycalendar@yahoo.com For more information, visit http://www.afsc.net/economiccrisis.html

How to Raise the Debt Limit Without Increasing the Debt Burden

Has it occurred to anyone in Washington D.C. that there is a way to increase the statutory limit on the nation's debt without increasing the national debt burden on individual Americans?

Here's how. Instead of fixing the total amount of the national debt (aka "the nation's credit limit"), fix the amount of the national debt per capita.

Here's how that would work. As of 28 July 2011, the amount of the total public debt outstanding for the United States stands at $14,342,865,885,306.46.

Meanwhile, the U.S. Census currently estimates the resident population of the United States to be 311,878,336, as of 30 July 2011.

That sets the current national debt per capita to be roughly $45,988.66.

Since that's so close to $46,000 of national debt for every man, woman and child living in the United States, we'll use that round figure for our remaining calculations.

According to the U.S. Census, there's a net gain of one person every 12 seconds in the United States. In 30 days, after 2,592,000 seconds have ticked off the clock, the U.S. population will have grown by 216,000 to an estimated 312,094,336 people.

The total public debt outstanding of the United States could then rise to $14,356,339,456,000, an increase of $13,473,570,693.54 (almost $13.5 billion) from where it is today, without increasing the national debt burden per individual American, which would hold level at $46,000.

And that could be done, automatically, for every month going forward.

The only question remaining is why should individual Americans be burdened more than than amount to accommodate the spending desires of Washington D.C.'s politicians and bureaucrats? So far, these people have not shown that they can provide a good return on the "investment"....

Changing Perspective on New Unemployment Claims

Good news! The trend in new, seasonally-adjusted unemployment benefit claim filings is shifting in a more positive direction:

The major trends we observe in the number of seasonally-adjusted initial unemployment insurance claim filings, indicated by the letters in the chart above, are described here.

The shift from an upward (bad) trajectory to a slightly negative (better, not good) trajectory over the past several weeks coincides with the reduction in oil and gasoline prices. The current trend began when employers reacted to a spike in these prices in the spring of 2011, which impacts the both cost of transportation for businesses and the discretionary income of consumers.

We see that in what is now clearly a sudden upward shift in the number of weekly new jobless benefit claims that occurred in early April 2011. Since oil and gas prices peaked in early May, the trend in new jobless claims has been largely flat and through 23 June 2011, may be considered to be falling at an anemic rate of 361 per week.

That's better than seeing the number of new jobless claims rise each week. At roughly the 400,000 per week level however, that's nearly 75,000 per week higher than the 325,000 level that would be consistent with real economic growth.

There is a dark cloud on the economic horizon where these figures are concerned. After having bottomed just above $3.55 per gallon several weeks ago, the national average price for gasoline in the United States has been rising. Now at $3.70 per gallon, this price level suggests that job losses may reverse their current positive falling trend and will begin rising again in the weeks ahead.

Charity in America: The Recipients

In 2010, Americans donated an estimated $290.89 billion to charitable organizations, an amount approximately equal to 8.2% of the amount of U.S. federal government spending in 2009. The chart below shows the amounts received by various types of charitable organizations:

Giving USA reports that 2010 saw some $1.43 billion that was directed toward post-earthquake relief efforts in Haiti. Approximately 75% of these charitable contributions went to Human Service organizations, while much of the remainder went to International Affairs-oriented charitable organizations.

According to data collected by The Guardian, the United States government under President Barack Obama committed some $41,268,315 million to earthquake relief efforts in Haiti, while private organizations and individuals in the United States provided $1,117,401,659.

Or in other words, when it comes to the desperate plight of the poorest people in the Western hemisphere after an especially devastating natural disaster, individual Americans and private charities have proven to be over 27 times more generous than the U.S. government.

Previously on Political Calculations

• Tax Deductions for Charity by Income Level - here, we determined the amount of charitable contributions by income level for the 87% of individual and households who itemized their charitable donations on their tax returns!



• Charity in America: The Donors - we break down the major sources of charitable contributions in the U.S. for 2010!

Data Sources

Giving USA Foundation. U.S. Charitable Giving Shows Modest Uptick in 2010 Following Two Years of Declines. 20 June 2011.

Spending vs Revenue: The U.S. Debt Crisis in One Chart

Assuming that the current U.S. debt crisis began in 2008, which is more responsible for the current U.S. government debt crisis: excessive government spending or too big a fall in government tax receipts?

We present the answer using data from 1967 through 2010, graphically, below:

At its peak in 2009, we find that the gap between the federal government's spending and its tax collections is much more heavily weighted toward the side of excessive spending. With spending accounting for approximately 62% of the pre-crisis gap, we find that excessive spending by the U.S. federal government in the years since 2007 is primarily responsible for the current debt crisis.

But that may be a moot issue. The key point to understand in the current debate is that while the federal government is not capable of precisely controlling the amount of its tax receipts from year to year, it is more than fully capable of controlling the amount of its spending. But only if there are enough people elected to the government who make that objective a priority!

Charity in America: The Donors

Who donated money to U.S. charities in 2010? And how much money did they give?

Via the National Park Service (really!), who tapped the 2010 report on charitable giving produced by the American Association of Fundraising Council, through Giving USA, we have the answers to these two questions! The chart below summarize what we found:

Overall, 72.8% of the estimated total of $290.89 billion for all estimated charitable contributions in 2010 were donated by American individuals and households, or $211.77 billion.

Going by tax data reported by the CBO for 2008, approximately 87% of these charitable donations by individuals and households were claimed on U.S. income tax returns. The remaining 13% were made by Americans who did not itemize their charitable giving on their tax returns.

Previously on Political Calculations

• Tax Deductions for Charity by Income Level - here, we determined the amount of charitable contributions by income level for the 87% of individual and households who itemized their charitable donations on their tax returns!

Data Sources

Giving USA Foundation. U.S. Charitable Giving Shows Modest Uptick in 2010 Following Two Years of Declines. 20 June 2011.

Congressional Budget Office. Options for Changing the Tax Treatment of Charitable Giving. Table 1 - Charitable Contributions by Tax Filers' Itemizing Status and Income Group, 2008. May 2011.

MONETARY HISTORY CALENDAR -- July 25-31

JULY 25

1876 – BIRTH OF CONGRESSMAN LOUIS T. MCFADDEN (R-PA), CHAIRMAN OF THE HOUSE BANKING AND CURRENCY COMMITTEE
“We have in this country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve Banks. Some people think the Federal Reserve Banks are U.S. government institutions. They are private credit monopolies; domestic swindlers, rich and predatory money lenders which prey upon the people the United States for the benefit of themselves and their foreign customers….The truth is the Federal Reserve Board has usurped the Government of the United States by the arrogant credit monopoly which operates the Federal Reserve Board."

JULY 26

1925 – DEATH OF WILLIAM JENNINGS BRYAN, DEMOCRATIC PRESIDENTIAL CANDIDATE, SECRETARY OF STATE
"We say in our platform that we believe that the right to coin money and issue money is a function of government…Those who are opposed to the proposition tell us that the issue of paper money is a function of the bank and that the government ought to go out of the banking business. I stand with Jefferson...and tell them, as he did, that the issue of money is a function of the government and that the banks should go out of the governing business...When we have restored the money of the Constitution, all other necessary reforms will be possible, and ... until that is done there is no reform that can be accomplished."

JULY 27

1694 – BANK OF ENGLAND CREATED
A private central bank, England began to borrow all of its money from corporate banks rather than simply creating it debt-free as it had for hundreds of years.

JULY 28

1919 – BANK OF NORTH DAKOTA FOUNDED
The Bank of North Dakota is the only state-owned bank in the US. Its primary deposit base is the State of North Dakota. All state funds and funds of state institutions are deposited with the Bank, as required by law. Other deposits are accepted from any source, private citizens to the U.S. government. No tax dollars are used to pay interest to bond holders since the state has no debt. Coincidentally or not, North Dakota is one of the few states in the nation not facing a fiscal crisis.

JULY 30

1863 – BIRTH OF HENRY FORD, INVENTOR AND INDUSTRIALIST
"It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."

JULY 31

1881 – BIRTH OF SMEDLEY BUTLER, US MARINE MAJOR GENERAL (TWICE DECORATED)
I wouldn't go to war again as I have done to protect some lousy investment of the bankers. There are only two things that we should fight for. One is the defense of out homes and the other is the Bill of Rights. War for any other reason is simply a racket.

1912 – BIRTH OF MILTON FRIEDMAN, ECONOMIST
If you kill the Fed [Federal Reserve] and don't kill fractional reserve lending, you've done nothing.

JULY 1939

A PROGRAM FOR MONETARY REFORM RELEASED

A group of prominent economists issue a plan for US monetary reform. The lead author of the plan, “A Program for Monetary Reform,” [PMR] was University of Chicago professor and Quaker Paul H. Douglas. More than 230 economists from 150 universities approved it without reservations while an additional 40 supported it with some reservations.

In assessing the problem of the day, the PMR states, “If the purpose of money and credit were to discourage the exchange of goods and services, to destroy periodically the wealth produced, to frustrate and trip those who work and save, our present monetary system would seem a most effective instrument to that end.” It also stated monetary systems based on a gold standard “has had…disastrous results all over the world.”

The PMR called for government creation and maintenance in the quantity of money. “Our own monetary policy should…be directed toward avoiding inflation as well as deflation, and in attaining and maintaining as nearly as possible full production and employment.” The plan also called for eliminating fractional reserve lending – the process of banks loaning our many more times the amount of money in their possession. Back in the 1930’s the reserved requirement was 5:1. Today it’s 10:1. Some of the major banks involved in the economic collapse of 2007 had ignored this law and were loaning out 50 times their reserves. The PMR called for a 100% reserve requirement – banks could only lend the amount of money they possessed.

The document goes on, “In early times the creation of money was the sole privilege of the kings or other sovereigns – namely the sovereign people, acting through their Government. This principle is firmly anchored in our Constitution and it is a perversion to transfer the privilege to private parties to use in their own real, or presumed, interest. The founders of the Republic did not expect the banks to create the money they lend."

Their plan to reduce the national debt was simply to have the government purchase government bonds with new US debt-free money.


NOTE 1: An excellent article explaining our monetary policy and describing in detail how to reform it is at the Center for Progressive Economics
http://cpe.us.com/article/monetary-policy/

NOTE 2: I’ve written an article on Eliminating Rather than Exploiting the Debt Crisis
http://www.opednews.com/articl​es/Elimating-Rather-than-Expl-​by-Greg-Coleridge-110724-782.h​tml

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Why this calendar? Many people have questions about the root causes of our economic problems. Some questions involve money, banks and debt. How is money created? Why do banks control its quantity? How has the money system been used to liberate (not often) and oppress (most often) us? And how can the money system be “democratized” to rebuild our economy and society, create jobs and reduce debt?
Our goal is to inform, intrigue and inspire through bite size weekly postings listing important events and quotes from prominent individuals (both past and present) on money, banking and how the money system can help people and the planet. We hope the sharing of bits of buried history will illuminate monetary and banking issues and empower you with others to create real economic and political justice.
This calendar is a project of the Northeast Ohio American Friends Service Committee. Adele Looney, Phyllis Titus, Donna Schall, Leah Davis, Alice Francini and Greg Coleridge helped in its development.
Please forward this to others and encourage them to subscribe. To subscribe/unsubscribe or to comment on any entry, contact monetarycalendar@yahoo.com For more information, visit http://www.afsc.net/economiccrisis.html

Eliminating Rather than Exploiting the Debt Crisis

July 24, 2011 / OpEd News
http://www.opednews.com/articles/Elimating-Rather-than-Expl-by-Greg-Coleridge-110724-782.html

Keeping Your Beer Cold on a Hot Day

With the U.S. gripped by a heat wave, it's time once again to turn to science to solve one of the bigger problems that Americans will be dealing with this weekend: how to keep their cans of beer cold longer in triple digit temperatures (that's over 38 degrees Celsius for our metric system-burdened readers!)

And for that science, we turn to the the gang at My Science Project, who conducted one of the most unique studies we've seen into the matter. Here's how they described their first experiment, which sought to definitively answer the question "How Effective Are Beer Cozies?":

Beer drinking is one of the world’s favorite pastimes. So as the weather started heating up, we felt a scientific duty to investigate this burning beer-related question: what is the most effective beer can cozy?

We took temperature measurements using a digital thermometer with a metal probe. In most of the experiments, the probe was submerged 5.5 cm into the beer, at the approximate midpoint of the can. All experiments were performed outdoors, with ambient temperatures varying from 90F (32.2C) to 103F (39.4C). Except as noted, all beverages used were 12 oz. (355ml) domestic beers. The starting temperatures for the beers ranged between 35.7F (2.1C) and 43.7F (6.5C)

See? It really is science! Here are the beer cozies they tested:

• A can holder made by Coleman, made of a red vinyl-like material


• A neoprene cozy imprinted with a camouflage design


• A premium model made of a pewter casing with a black foam liner, embossed with the number and colors of NASCAR racer Jeff Gordon


• A foam rubber cozy imprinted with a humorous slogan


• A soft vinyl/plastic-like cozy with the colors and number of NASCAR racer Tony Stewart

Here are their conclusions for this first experiment:

Depending on their material, beer can cozies can be effective in keeping beer cool even in extremely hot weather. The two cozies that performed the best employed a layer of dense foam about half an inch thick, which prevents heat transferring into the cans and the beer by limiting convection and conduction. A cheap beer cozy can be just as effective as a more expensive cozy, provided you get the right type. On the other hand, an ineffective can cozy, while it may improve your grip on the can or keep your hand dry, will not do much to keep your beer cold.

See? It's science that you can even use! Next, they tested bottle cozies, finding that they're effective, especially if they're lighter colored.

But getting back to the can cozies, they also tested the "Cadillac" of cozies, Thermos' Thermax Can Insulator (similar to this model), to see how it might stack up against the foam competition. We'll let the results speak for themselves:

Results: We waited…for a full three hours, to verify the manufacturer’s claims. We found that the Thermos can cozy did indeed outperform the two most effective cozies from our previous trials, a traditional foam can cozy, and the pewter and foam Jeff Gordon commemorative NASCAR cozy. After one hour, the beer in the Thermos can holder was 53.4F (11.9C), compared to 58.6F (14.8C) in the foam cozy and 58.2F (14.6C) in the pewter and foam cozy. The uninsulated can was 69.2F (20.1C). So, it lived up to one of its claims by outperforming any cozy we could find.

Now for the really fun part! For our money, things really got interesting when they tested beer cozies made from "alternative" materials against the foam cozies they tested earlier. What kind of "alternative" materials, you ask?

In this experiment, we faced three types of carbohydrates off against a typical beer can cozy. The bagels and donuts we prepared in a similar manner – cutting a can-sized section out of the middle and stacking them three high. The Rice Krispies Treat beer cozy was a more elaborate production, which we have fully detailed here.

And now, the findings:

All of our food-based can cozies worked to some degree, but the Rice Krispies Treat cozy stole the show. We theorize that its superior insulating ability probably comes from the thickness of the material combined with the Styrofoam-like quality of the Rice Krispies Treats. And as gratifying as it would have been to see a successful synergy between beer and donuts, the bagels were slightly better insulators, perhaps because they are denser than the raised glazed pastries.

We'll close our Friday post with an image of the winning beer cozy:

Here's hoping you'll find a way to keep cool this weekend!

Tax Deductions for Charity by Income Level

In 2009, Americans reported nearly $34.9 billion worth of donations to private charities serving the public interest on their federal tax forms, as they claimed the federal government's tax deduction for charitable contributions on their taxes.

Of all these donations, $19.14 billion, or 54.9%, were made by taxpayer households that reported $200,000 or more in annual income.

Needless to say, that's a lot of money that President Barack Obama believes would be better spent by the U.S. government in the form of spending controlled by elected U.S. politicians who would receive political benefits from it, which is why the President has repeatedly proposed cutting or eliminating the charitable contribution tax deduction for Americans who earn high incomes.

The President most recently went after the charitable contribution tax deduction in his original budget proposal for the U.S. government's 2012 fiscal year, which could limit the amount of a tax deduction for high income earners by up to 30%. Using the most recently available tax return data for 2009, the chart below shows the approximate distribution of charitable contributions by annual income along with the estimated impact of the President's ambition

Using 2009 data and assuming that if not for the tax deduction for charitable contributions that Americans earning high incomes would not donate as much money to private charities, we estimate that the potential effect of the President's FY2012 budget proposal would affect up to $1.9 billion of charitable contributions, or 5.4% of the total, for which high income earning Americans would no longer have any income tax-reducing incentive to donate.

We also estimate that if the President's proposed reduction of the tax deduction for charitable giving were extended to include the donations of taxpaying households with incomes above $200,000, the amount of charitable contributions that would be affected would grow to $5.4 billion, or 16.5% of all charitable contributions reported on 2009's tax returns.

Data Source

Joint Committee on Taxation. JCS-3-10: Estimates of Federal Tax Expenditures for Fiscal Years 2010-2014. Table 3 - Distribution by Income Class of Selected Individual Tax Expenditure Items, at 2009 Rates and 2009 Income Levels. http://www.jct.gov/publications.html?func=download&id=3718&chk=3718&no_html=1. 21 December 2010.

The Distribution of the U.S. Mortgage Interest Tax Deduction by Income

If the federal government tries to increase the amount of its tax collections by eliminating or limiting the mortgage interest tax deduction, who's most at risk of seeing their taxes go up?

To find out, we tapped the U.S. Congress' Joint Committee on Taxation's report on tax expenditures for 2010-2014, which provides the breakdown of how much of the mortage interest tax deduction is claimed by taxpayer income level for the 2009 tax year.

We then used that data to construct the distribution of the mortgage interest tax deduction by taxpayer household income below:

As you can see in the chart above, the greatest amount of "losses" to the federal government, at least, from the perspective of a hypothetical government overlord, is represented by taxpayer households who have incomes in the range between $50,000 and $150,000.

Meanwhile, President Obama has proposed limiting or eliminating the tax deduction for mortgage interest for individuals with incomes over $200,000 or households with incomes over $250,000.

But given the amount of spending the President would like to do, we find it's unlikely that only these high income earners will be affected. If such a change to the U.S. tax code is implemented, we would expect that the income threshold that would see the tax reduction benefit of the mortgage interest deduction will be lowered over time.

Data Source

Joint Committee on Taxation. JCS-3-10: Estimates of Federal Tax Expenditures for Fiscal Years 2010-2014. Table 3 - Distribution by Income Class of Selected Individual Tax Expenditure Items, at 2009 Rates and 2009 Income Levels. http://www.jct.gov/publications.html?func=download&id=3718&chk=3718&no_html=1. 21 December 2010.

Teens and the U.S. Federal Minimum Wage

What percentage of employed teens make the minimum wage? And what percent of all minimum wage workers are teens?

Both questions are answered in the chart below, at least for the years from 2002 through 2010!...

From 2002 through 2006, the U.S. federal minimum wage was set at $5.15 per hour. Then, beginning in 2007, it began being raised once a year - first to $5.85 per hour on 24 July 2007, then to $6.55 per hour on 24 July 2008 and finally to $7.25 per hour on 24 July 2009, where it still stands today.

As of 2010, approximately the same percentage of teens earn the federal minimum wage or less as there are teens among the nation's minimum wage earners.

How Much Are Geezers Displacing Teens from the U.S. Workforce?

The Big Picture's Invictus points us to an interesting study, via e-mail:

You may want to have a look at this BLS research:

http://www.bls.gov/opub/mlr/2009/11/art3full.pdf

which I had referenced here one year ago at The Big Picture:

http://www.ritholtz.com/blog/2010/07/demographics-to-the-fore/

Here's what Invictus wrote in that latter blog post:

Shortly after the minimum wage was raised last year, the right-wing chorus rose up and began to assert that the rise in teen unemployment was directly attributable to the more generous pay scale. To my eye, and based on numbers I’d crunched, I thought demographics were much more at play (note: that’s “much more,” not “exclusively”), and said so here last September:

There is evidence – real, actual evidence! – that it’s the 55+ age cohort staying in – or re-entering – the job market that is much more at play than the minimum wage…Where there had been less than 2.5 workers 55+ per teen worker in the year 2000, that number has now jumped to a record 5.5…As a percent of the workforce, the 55+ age cohort has now reached a new record of 19.4%, clear evidence that older workers are squeezing younger workers from the workforce.

and here last November:

…simple demographics coupled with the damage wrought by this recession on the Baby Boom generation — in terms of both real estate and investment portfolios (particularly retirement portfolios) — is so great that many Boomers have realized they’re going to have to postpone retirement (see one story on that here, there are thousands on “postponing retirement” out there on The Google).

I reiterated that position here at TBP last month when illegal immigrants became the target of choice for stealing teen employment:

What about demographics — an aging boomer population — and a crappy economy that has the 55+ cohort postponing retirement and consequently crowding out the younger generation (parents keeping their own kids/grandkids out of the job market, as I put it a while back). The data is there for all who choose to explore it.

Well, now comes Bloomberg news with this:

Workers Over 65 Vie With Teens in Labor Market for First Time Since Truman

U.S. employees old enough to retire are outnumbering their teenage counterparts for the first time since at least 1948 when Harry Truman was president, a sign of how generations are now having to compete for jobs.

That makes for a great question - how much might these geezers (our endearing term for the older workers of the U.S. workforce) be displacing teens from the U.S. workforce?

To answer that question, we turned to the Bureau of Labor Statistics' annual reports on the Characteristics of Minimum Wage Workers. Since so many teens in the United States earn the federal minimum wage or less (in 2010, 22.7% of all working teens earned the federal minimum wage or less, representing 22.8% of the entire minimum wage earning workforce for that year), if older Americans are indeed displacing teens from the U.S. workforce, we should definitely be able to see the effects of such a phenomenon in the age-based distribution of the minimum wage earning portion of the U.S. workforce.

The bad news is that these reports only go back to 2002, however that should provide enough data to see any large scale shifts in the age distribution of minimum wage earners.

Our first chart shows the stacked percentage share of each indicated age group within the minimum wage earning portion of the U.S. workforce from 2002 through 2010:

We see that the overall percentage share of teens within the U.S. minimum wage earning workforce has fallen from 2002 through 2010, however it's difficult to tell from this chart which other age groups might have made substantial gains. We'll next take a closer look by unstacking the data in this chart:

Looking closer, we see that a number of different age groups have seen an increase in their percentage share of the U.S. federal minimum wage earning workforce in the years from 2002 through 2010, however most of these changes appear to be relatively small as compared to the apparent decline in the teen percentage share of this portion of American workers.

We'll need to dig deeper, so we'll next look at the change in the percent share of each indicated age group with respect to their level in 2002:

That's more like it! Here, we see that the percentage representation of teens in the U.S. workforce in 2010 is 5.1% less than the level recorded in 2002. That figure confirms that teens are indeed being displaced from the U.S. workforce at the minimum wage level.

Next, we can see which age groups have done the displacing. Here they are, ranked from highest to lowest:

1. Age 25-29: +1.9%


2. Age 50-54: +1.7%


3. Age 45-49: +1.1%


4. Age 20-24: +0.7%


5. Age 55-59: +0.5%


6. Age 30-34: +0.1%

The remaining age groups, covering the Age 60+ portion of the U.S. federal minimum wage earning workforce, have also seen some displacement by the age groups listed above, as their combined percentage share in this portion of the U.S. workforce has declined by 0.9%.

In practical terms, for the 5.1% percentage decline from 2002 through 2010 in the teen share of American federal minimum wage earners, approximate half were displaced by young adults Age 20-34 (2.7%), while the remainder were displaced by geezers Age 45-59 (2.4%).

These figures assume that the geezers Age 45-59 also displaced the retirement age portion of the minimum wage earning workforce, those Age 60 or older.

So in terms of geezers competing directly with teens for minimum wage earning jobs, we find that there is some of that going on, however young adults are more likely to have displaced teens from the U.S. federal minimum wage earning workforce that are older workers, but it's nearly 50-50.

Finally, we should note that for these years, what we've outlined above is really a competition by attrition as the number of employed teens in the U.S. economy has fallen sharply over this time, with the competitive edge going to pretty much anyone who has more education, skills and work experience than teens.

Data Sources

Bureau of Labor Statististics. Characteristics of Minimum Wage Workers, 2002. Table 7. Employed wage and salary workers paid hourly rates with earnings at or below the prevailing Federal minimum wage by age and sex, 2002 annual averages. Accessed 18 July 2011.

Bureau of Labor Statististics. Characteristics of Minimum Wage Workers, 2003. Table 7. Employed wage and salary workers paid hourly rates with earnings at or below the prevailing Federal minimum wage by age and sex, 2003 annual averages. Accessed 18 July 2011.

Bureau of Labor Statististics. Characteristics of Minimum Wage Workers, 2004. Table 7. Employed wage and salary workers paid hourly rates with earnings at or below the prevailing Federal minimum wage by age and sex, 2004 annual averages. Accessed 18 July 2011.

Bureau of Labor Statististics. Characteristics of Minimum Wage Workers, 2005. Table 7. Employed wage and salary workers paid hourly rates with earnings at or below the prevailing Federal minimum wage by age and sex, 2005 annual averages. Accessed 18 July 2011.

Bureau of Labor Statististics. Characteristics of Minimum Wage Workers, 2006. Table 7. Employed wage and salary workers paid hourly rates with earnings at or below the prevailing Federal minimum wage by age and sex, 2006 annual averages. Accessed 18 July 2011.

Bureau of Labor Statististics. Characteristics of Minimum Wage Workers, 2007. Table 7. Employed wage and salary workers paid hourly rates with earnings at or below the prevailing Federal minimum wage by age and sex, 2007 annual averages. Accessed 18 July 2011.

Bureau of Labor Statististics. Characteristics of Minimum Wage Workers, 2008. Table 7. Employed wage and salary workers paid hourly rates with earnings at or below the prevailing Federal minimum wage by age and sex, 2008 annual averages. Accessed 18 July 2011.

Bureau of Labor Statististics. Characteristics of Minimum Wage Workers, 2009. Table 7. Employed wage and salary workers paid hourly rates with earnings at or below the prevailing Federal minimum wage by age and sex, 2009 annual averages. Accessed 18 July 2011.

Bureau of Labor Statististics. Characteristics of Minimum Wage Workers, 2010. Table 7. Employed wage and salary workers paid hourly rates with earnings at or below the prevailing Federal minimum wage by age and sex, 2010 annual averages. Accessed 18 July 2011.

MONETARY HISTORY CALENDAR July 18-24

JULY 18
BIRTH OF STEPHEN ZARLENGA, DIRECTOR, AMERICAN MONETARY INSTITUTE
"I am suggesting that the nature of human affairs requires the government to have four branches, not three, the fourth branch to embody and administer the monetary power…When society loses control over its money system, it loses any control it might have had over its destiny."

JULY 22
1950 – DEATH OF WILLIAM LYON MACKENZIE KING, 10TH PRIME MINISTER OF CANADA, 1935-48
“Once a nation parts with the control of its currency and credit, it matters not who makes that nation's laws. Usury, once in control, will wreck any nation. Until the control of the issue of currency and credit is restored to government and recognized as its most conspicuous and sacred responsibility, all talk of the sovereignty of Parliament and of democracy is idle and futile.”

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Why this calendar? Many people have questions about the root causes of our economic problems. Some questions involve money, banks and debt. How is money created? Why do banks control its quantity? How has the money system been used to liberate (not often) and oppress (most often) us? And how can the money system be “democratized” to rebuild our economy and society, create jobs and reduce debt?
Our goal is to inform, intrigue and inspire through bite size weekly postings listing important events and quotes from prominent individuals (both past and present) on money, banking and how the money system can help people and the planet. We hope the sharing of bits of buried history will illuminate monetary and banking issues and empower you with others to create real economic and political justice.
This calendar is a project of the Northeast Ohio American Friends Service Committee. Adele Looney, Phyllis Titus, Donna Schall, Leah Davis, Alice Francini and Greg Coleridge helped in its development.
Please forward this to others and encourage them to subscribe. To subscribe/unsubscribe or to comment on any entry, contact monetarycalendar@yahoo.com For more information, visit http://www.afsc.net/economiccrisis.html

The ABC's of Google's Search Results

What's the top non-advertisement link you see when you type just one letter into Google? Here are the top results we got when we did just that!

• A is for Amazon.com.


• B is for Bank of America


• C is for craigslist


• D is for Dictionary


• E is for eBay


• F is for Facebook


• G is for Google


• H is for Hotmail


• I is for Internal Revenue Service


• J is for Jimmy John's Gourmet Sandwiches


• K is for Kohl's


• L is for Lowe's Home Improvement


• M is for Mapquest


• N is for Netflix


• O is for Orbitz


• P is for Pandora


• Q is for Qwest


• R is for Redbox


• S is for Southwest Airlines


• T is for Target


• U is for United States Postal Service


• V is for Verizon


• W is for Walmart


• X is for Xbox 360


• Y is for Youtube


• Z is for Zillow

We wonder how much this list changes from year to year....

Disappearing Teen Jobs and the Minimum Wage, Part 3

Today we're going to show you that increases in the minimum wage are indeed very well correlated with the reduction in the employment to population ratio for teens.

But wait, you say! Didn't Invictus show a chart indicating otherwise over at The Big Picture?

And didn't you yourself yesterday show a chart that seemed to agree with Invictus' conclusions?

Why yes! Yes we did! And here's what we said about that apparent agreement:

So at first glance, it would appear that Invictus is correct and the editorial writers of the Wall Street Journal are wrong on the effect of the minimum wage on teen employment levels.

However, that's only at first glance. We can't help but notice that Invictus' analysis is superficial at best and is really fundamentally flawed, because he appears to have a California-size hole in his analysis.

We say Invictus' analysis is fundamentally flawed, because what Invictus completely forgot to consider in his analysis discounting the role of the minimum wage in affecting the employment to population ratio of American teens is that there is more than one minimum wage in the United States!

As it happens, a large number of states, and even cities, have their own minimum wage. If those minimum wages are set lower than the federal minimum wage, then federal minimum wage is the minimum wage that employers must pay. But if those state and local minimum wages are set higher than the federal minimum wage, then those higher than the U.S. federal minimum wage is the minimum wage that employers are required to pay.

Since we keep mentioning this as being a California-size hole in Invictus' analysis, let's compare California's minimum wage with the U.S. federal minimum wage over the years from 1980 through 2012:

Here, in the period before 1998, we see that there was little difference between California's minimum wage and the U.S. federal minimum wage. But after 2008, we see a major divergence, as California's minimum wage rose to become 31% higher than the federal minimum wage of $5.15 per hour in the years from 2002 through 2006. After 2006, both California's minimum wage and the U.S. minimum wage have increased, but the percentage difference between the two today is somewhat less at roughly 10%.

That's a big difference for the years from 2002 through 2006. And it's meaningful for a serious analysis of the relationship between increases in the minimum wage and rising teen joblessness because California is home to an awful lot of teenagers:

In fact, from 1980 through 2009, California's working age teens, those between the ages of 16 and 19, grew from accounting for 10.5% of all American working age teens to 12.8%. Since about 2000, California has been home to approximately one out of every eight American working age teens.

So what happens when a state that's home to one-eighth of the working age teen population of the United States sets its minimum wage at a level equal to 131% of the U.S. federal minimum wage? See for yourself:

We suddenly see that changes in the minimum wage, whether California's or the United States' federal minimum wage, correlates closely with major increases in the percentage of the jobless teen population of the United States.

There's only one exception. The period from 1998 to 2000, where an increase in California's minimum wage is not matched by an increase in the jobless teen population. As it happens, this period of time corresponds to the inflation phase of the Dot Com Bubble, which was characterized by a booming job market that was, perhaps coincidentally, centered in California's Silicon Valley.

The booming job market of the Dot Com Bubble's inflation phase counteracted the typical effect of a minimum wage increase on the teen employment to population ratio, which explains why this period displays results that are not observed in other periods. It is the only period of time covered by our analysis in which employers had enough of a boom in revenue to more than cover the increased costs of employing low-skilled entry level workers after a minimum wage hike was enacted.

In fact, if not for California's minimum wage increases in 1997 and 1998, it's very likely than the drop in the number of non-employed teens in the years from 1998 through 2000 would have been much greater, as more teens would likely have joined the U.S. workforce to take advantage of the opportunities available to them.

Finally, for our money, the most interesting correlation we observe in the chart may be seen by what happens to the non-employed teen to teen population ratio when either California's or the U.S. federal minimum wage increases and also by what happens when those increases stop and the minimum wages hold steady. It appears as if both the California state legislature and the U.S. Congress have a switch for controlling the level of the teen employment to population ratio that they can turn on and off.

As such, we find the changes observed in the teen employment to population ratio in the years from 1980 through 2011, and especially in the period of interest of 1997 through the present, to be largely a government-manufactured phenomenon.

And also as such, we find that the anonymous editorial writers of the Wall Street Journal are on much more solid ground than is the anonymous blogger Invictus in considering what correlation the minimum wage might have with respect to the decline in the percentage of the working teen population over time.

Previously on Political Calculations

• Disappearing Teen Jobs and the Minimum Wage, Part 1



• Disappearing Teen Jobs and the Minimum Wage, Part 2

Disappearing Teen Jobs and the Minimum Wage, Part 2

Is there really a connection between the rise of the minimum wage and the disappearance of teen jobs from the U.S. workforce over time?

Having now set the stage for our analysis, our first step will be to essentially duplicate The Big Picture's Invictus' analysis, so that we can determine how much of a correlation might exist between the two things. Our first chart presents the BLS' data for the Employment-to-Population Ratio for individuals between the ages of 16 and 19. Although Invictus is mainly concerned with the period from 1997 onward, we'll go back to 1980 so we can pick up any previous trends:

Note: In the chart above, we've indicated the NBER's official periods of recession in the chart with the red-shaded vertical bands.

What we see in reviewing the chart is that there seems to be a fairly clear break in the overall trend in the teen employment-to-population ratio. Before 2002, we find this ratio was consistently above 40%, but that after 2002, it has fallen below this level.

Beyond that, we find that the teen employment to population ratio tends to fall during periods of recession, which is something we should expect.

In our next chart, we'll look at the mirror image of this chart - the teen non-employed to population ratio, which shows the percentage of the U.S. teen population who are not employed:

The reason why we're considering this chart is because it will make a visual comparison between the rising minimum wage over time and the change in the ratio of non-employed teens to the overall teen population of the U.S. easier to see.

Speaking of the rising minimum wage over time, here is the level of the federal minimum wage from 1980 through 2011:

Now, let's overlay these last two charts together and see what we can see!

In the chart above, we adjusted with the scale of the vertical axis for the U.S. Age 16-19 Non-Employed to Population Ratio so that it would fairly closely match up with the period from 1997 through 2000 (the beginning of Invictus' main period of interest) while aligning the major horizontal gridlines of both vertical axes.

Examining the chart from 1997 onward, we see that there appears to be very little correlation between the increase in the non-employed portion of the U.S. teen population and the federal minimum wage, although the period from 2007 through 2009 does appear to have some correlation, although this might be due to the recession that corresponds to these years as well.

So at first glance, it would appear that Invictus is correct and the editorial writers of the Wall Street Journal are wrong on the effect of the minimum wage on teen employment levels.

However, that's only at first glance. We can't help but notice that Invictus' analysis is superficial at best and is really fundamentally flawed, because he appears to have a California-size hole in his analysis. We'll address that problem and what the real connection between disappearing teen jobs and rising minimum wages looks like in the next post of this series.

Previously on Political Calculations

• Disappearing Teen Jobs and the Minimum Wage, Part 1

Data Sources

U.S. Department of Labor. Wage and Hour Division. History of Federal Minimum Wage Rates Under the Fair Labor Standards Act, 1938-2009.

U.S. Bureau of Labor Statistics. (Seas) Employment-Population Ratio - 16-19 yrs. Employment-population ratio. Age: 16 to 19 years. BLS Data Series LNS12300012.

Disappearing Teen Jobs and the Minimum Wage, Part 1

What does the data really tell us about the rising minimum wage over time and the disappearance of teens from the U.S. workforce in recent years?

The question rises, again, thanks to a Wall Street Journal editorial and criticism of it, both featuring some pretty blatant politically-motivated biases on both sides of the issue.

The WSJ takes the conservative side of the issue:

Perhaps you've already noticed around the neighborhood, but this is a rotten summer for young Americans to find a job. The Department of Labor reported last week that a smaller share of 16-19 year-olds are working than at anytime since records began to be kept in 1948.

Only 24% of teens, one in four, have jobs, compared to 42% as recently as the summer of 2001. The nearby chart chronicles the teen employment percentage over time, including the notable plunge in the last decade. So instead of learning valuable job skills—getting out of bed before noon, showing up on time, being courteous to customers, operating a cash register or fork lift—millions of kids will spend the summer playing computer games or hanging out.

The lousy economic recovery explains much of this decline in teens working, and some is due to increases in teen summer school enrollment. Some is also cultural: Many parents don't put the same demands on teens as they once did to get out and work.

But Congress has also contributed by passing one of the most ill-timed minimum wage increases in history. One of the first acts of the gone-but-not-forgotten Nancy Pelosi ascendancy was to raise the minimum wage in stages to $7.25 an hour in 2009 from $5.15 in 2007. Even liberals ought to understand that raising the cost of hiring the young and unskilled while employers are slashing payrolls is loopy economics.

The opposing position, arguing that the minimum wage has had little or no effect on the decline of working teens was taken up by Invictus at The Big Picture. Here's the core of Invictus' argument:

How a minimum wage increase that was enacted first in 2007 is responsible for a teen employment/population ratio that has been declining since 2001 — throughout the other guy’s entire presidency, in fact — is not addressed. Where was the Journal as the rate declined from 44.6 when Bush took office to 30.6 when he left? Where were they when it made a historic low under Bush’s watch (August 2008)?

Journal:

Back on planet Earth, the minimum wage increase has coincided with the plunge in the percentage of working teens. Before the most recent wage hikes, roughly seven million teens were working. Now there are closer to five million with a job and paycheck.

That statement is, sadly, simply false. At the time “before the recent wage hikes” (July 2007), there were 5.888 million teens employed (BLS Series LNS12000012). There are now 4.240 million employed. There have not been “seven million teens” working since the early months of the Bush administration. As for when “the plunge” actually began, see for yourselves:

Source: BLS.gov

The plunge — which began on Bush’s watch and continued through his “boom” — took place during a period when the minimum wage was $5.15/hour and was not raised until 2007. No explanation for that inconvenient fact. Or the inconvenient fact that the teen employment/population ratio rose after the Sept. 1997 increase in the minimum wage to $5.15 (where it stayed until a decade later, when it went to $5.85).

Invictus goes on to argue that "teens, generally, are not eligible to make the minimum wage", which is really going off the rails in our real-world based opinion, but could there be something to the portion of his argument that's actually based on data rather than poorly understood legal trivia? Who's more right in the serious part of this fight - the WSJ's editorial writers or some anonymous blogger(s) named "Invictus"?

As some anonymous blogger(s) named "Ironman", we're going to dig into the bigger picture to work out what really was going on through Invictus' specified period of interest.

And why not us? We've long established our street cred in the econoblogosphere with respect to our coverage of the teen employment scene, but we've really only focused on the period since we began blogging (since December 2004). We've never really looked at the data for teens before that time, which is really what's at the heart of Invictus' data-based arguments.

And we'll play it all out this week. Stay tuned!

June 2011 Jobs: Worse Than You've Heard

By now, you've likely heard much of the commentary of how bad the June 2011 Employment Situation report was. Words like horrible, stunningly bad and awful have been used to describe it.

And yet, it was actually worse than that, with one surprising exception.

The surprising exception is the teen employment level, as June 2011 saw 59,000 more individuals between the ages of 16 and 19 enter the U.S. work force. That positive net change quickly evaporated however, as 59,000 fewer young adults between the ages of 20 and 24 were counted as being employed during the month. And then, things took a dramatic turn for the worse for individuals Age 25 and older, as the number of employed Americans in this age category saw their numbers in the workforce plunge by 445,000.

For those Age 25 and older, we have to go back to December 2009's month-to-month job loss of 595,000 to find a worse figure for this age category. The same holds true for all individuals Age 16 or older.

Of the 455,000 jobs lost by those Age 25 or older, approximately 45% were lost by individuals between the ages of 25 and 34, 23% were lost by individuals between the ages of 35 and 44 and 21% were lost by individuals between the ages of 45 and 54. Just 11% of the 455,000 job loss figure was represented by individuals Age 55 and older.

Compared to when the total employment level in the United States peaked in November 2007 just ahead of the recession, some 7,250,000 fewer Americans are being counted as being part of the U.S. workforce today.

MONETARY HISTORY CALENDAR July 11-17

JULY 11

1862 – LEGISLATIVE ACT AUTHORITIZING US GOVERNMENT TO ISSUE MONEY
Congress passes legislation to issue and circulate $150 million in non-interest bearing, debt-free notes – Greenbacks.

JULY 13

1832 – CONGRESS FAILS TO OVERRIDE PRESIDENT JACKSON VETO TO RENEW THE CHARTER OF THE SECOND NATIONAL BANK OF THE UNITED STATES
In his veto message to renew the misnamed “national bank” (it was actually a private bank controlled/owned by stockholders, a majority of whom were foreigners), Jackson stated: “Controlling our currency, receiving our public monies, and holding thousands of our citizens in dependence…would be more formidable and dangerous than a naval and military power of the enemy.”

1956 – QUOTE OF OF J.R.R TOLKIEN, AUTHOR (THE HOBBIT AND LORD OF THE RINGS) AND UNIVERSITY OF OXFORD PROFESSOR IN CONTOUR MAGAZINE
The true equation is “democracy” = government by world financiers.
The main mark of modern governments is that we do not know who governs, de facto any more than de jure. We see the politician and not his backer; still less the backer of the backer; or, what is most important of all, the banker of the backer.
Throned above all, in a manner without parallel in all past, is the veiled prophet of finance, swaying all men living by a sort of magic, and delivering oracles in a language not understood of the people…
There should only be one source of money: one fountainhead from which flows the nation’s blood to vitalize commerce and industry, ensure economic equity and justice and safeguard the welfare of the people…In other words, it has always been and still is our contention that the prerogative of creating and issuing the money of the nation should be restored to the State.

JULY 14

1833 – DEATH OF WILLIAM GOUGE, ADVISOR TO PRESIDENT ANDREW JACKSON; AUTHOR, A SHORT HISTORY OF MONEY AND BANKING
"The large extent of bank influence is not easily seen. We seldom see an identified bank or a money corporation candidate running for office; but when questions arise which affect them, the banks have agents at work, whose operations are the more effective because they are unseen."

JULY 17

1780 – BANK OF PENNSYLVANIA ESTABLISHED
Quakers first introduced public banking in America with the creation of this state-owned bank which issued its own paper scrip which it lent to farmers. Resident paid no income taxes. There was no government debt and no inflation. The state prospered.

1862 – PASSAGE OF POSTAGE CURRENCY ACT
The act authorized the issuance of 5, 10, 25, and 50 cent notes – which were needed to substitute for gold, silver and copper coins which were hoarded. These fractional currency US debt-free notes, sold in perforated sheets like stamps, were redeemable by the US Post Offices at face value in postage stamps until 1876.


Note: Readers may be interested in this short piece connecting the current national debt ceiling Congressional deliberations and monetary policy
How Do We Eliminate the National Debt? Democracy.
http://createrealdemocracy.blogspot.com/2011/07/how-do-we-eliminate-national-debt.html

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Why this calendar? Many people have questions about the root causes of our economic problems. Some questions involve money, banks and debt. How is money created? Why do banks control its quantity? How has the money system been used to liberate (not often) and oppress (most often) us? And how can the money system be “democratized” to rebuild our economy and society, create jobs and reduce debt?
Our goal is to inform, intrigue and inspire through bite size weekly postings listing important events and quotes from prominent individuals (both past and present) on money, banking and how the money system can help people and the planet. We hope the sharing of bits of buried history will illuminate monetary and banking issues and empower you with others to create real economic and political justice.
This calendar is a project of the Northeast Ohio American Friends Service Committee. Adele Looney, Phyllis Titus, Donna Schall, Leah Davis, Alice Francini and Greg Coleridge helped in its development.
Please forward this to others and encourage them to subscribe. To subscribe/unsubscribe or to comment on any entry, contact monetarycalendar@yahoo.com For more information, visit http://www.afsc.net/economiccrisis.html Previous calendar entries are posted at http://afsc.net/monetaryhistorycalendar.html