Minimum Wages

This graphic, from the Wall Street Journal, appears today in anticipation of President Obama's likely State of the Union mention tonight.  Here is the same data presented in a handy map:

Oregon and Washington, as you probably know, lead the pack in terms of the minimum wage (something I always remind myself when shelling out $12 for a burger and fries at a brewpub).

The question is: is the minimum wage a good way to address income inequality or poverty?  Most economists would probably agree with the premise that it isn't.  Policies that do a better job of targeting income transfers to low wage workers, like the Earned Income Tax Credit, are much, much more effective at reaching the target population.  But is it a good second-best policy (i.e. one that might not be as efficient but is politically possible and does a reasonable job of doing what we want)?  This is a big and open question and where you'll find the most active debate among economists.

Soccernomics: Income Inequality in US Pro Sports

The Harvard Sports Analysis Collective (yes, there is such a thing) has done an interesting little analysis of sports salaries and finds that the MLS is actually mid pack in terms of one measure of income inequality: the Gini coefficient.

This is interesting in itself - the league with a tight salary cap and legions of low paid employees is actually more unequal than the NBA?  Can it be?  Well, the Gini in this case is a little deceiving.  Fortunately the HSAC has also plotted out the Lorenz curves for each league.

What you see here is that the MLS curve is relatively flat and then has a huge upswing at the end.  Without getting into the details, this tells us that there are lots of relatively equally low-paid players in the MLS and a very few extremely well compensated ones (the Thierry Henris and Clint Dempseys of the league).

The astute econ majors will note that when Lorenz curves cross (as they do for the MLS with the MLB and NFL, for example) that the Gini is not a good relative measure of inequality.  It becomes more subjective.  So we can see from the bottom graph that the top graph is not really informative. But the MLS dynamic is really about how many players earn low five-figure salaries, so when the big stars come in to the league under the designated player rule which allows their outsized salaries not to count against the salary cap.  Whereas in leagues like the NBA the minimum player salary is high enough to maintain an income distribution that is more equal.  Perhaps this is a comment on the relative strength of the players unions?  The MLS players union has the challenge of representing players whose sport does not yet generate the television ratings to generate large revenues and thus significant movement on minimum player salaries seems unlikely for the foreseeable future.  

Oregon December Unemployment falls to 7%

A little voice in my head says 'go for the low hanging fruit' in an attempt to breathe life in to my moribund blog.  So here it is, my pithy take on yesterday's jobs report from the State of Oregon.

Like the national picture, the unemployment rate fell, in Oregon's case to 7%.   Unlike the national picture, it did so on very strong job creation: Oregon added a seasonally adjusted 4,400 jobs in December and a revised 4,300 in November.

My take is that the state is doing a very good job pulling itself out of the recession even while construction still lags.  What then could put a damper on? Well a severe drought would not help, nor does continuing trouble at the Port of Portland.  Still, the long slog out of the pit continues.

Okay, so maybe it is not very pithy after all...

Economics Instructor Needed

You know things are bad with your blog when you mother asks you if everything is okay because you haven't posted in over a month.  Yes mom, I am fine but crazy busy.  The title of the post is but one reason why.  My apologies to my legion many handful couple of devoted fans mother for my lack of attention to the blog.  I have not entirely given up but adding the department chair duties and authoring a textbook to my normal workload has taken a toll.

Anyway, to the news at hand:

The Economics department at Oregon State is in need of a replacement instructor for the current term as well as for Spring and Summer terms as well.  Minimum qualification is a Master's degree in economics.

You can view the job posting and apply here, and you are welcome to contact me or the department office for further information.