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01 августа 2011, 14:57

The U.S. Enters Into Microrecession

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Last Friday, the U.S. Bureau of Economic Analysis revised its real GDP data going back to the start of the 2007 recession. Our animated chart below, created with the Make a GIF online app, shows what changed: We added the horizontal line indicating the peak of the previous period of economic expansion, which helps highlight the biggest change: instead of having reached and passed that previous peak in the fourth quarter of 2010, the new data indicates that inflation-adjusted GDP in the U.S. is stalling out well below that level. So, instead of the U.S. economy generating $13,444.3 billion (in 2005 U.S. dollars) of economic activity in the first quarter of 2011, it is actually 1.6% smaller than previously thought, having generated $13,227.9 billion (in 2005 U.S. dollars). This revision for the first quarter of 2011 marks the largest deviation from previously reported GDP data, coming in some $216.4 billion below the earlier recorded levels. We also see that the U.S. economy performed far worse than previously thought at the depth of the recession in the fourth quarter of 2009 and the first quarter of 2010. The deviation from previously reported data for both quarters is respectively $205.5 billion and $201.1 billion less than the values that were presented by the BEA before the 30 July 2011 GDP revision. But the first quarter's deviation of $216.4 billion from the previously reported level is extremely serious. Adding in the advance estimate for the level of GDP in the second quarter of 2011, here is what the one-quarter annualized GDP growth rate and the two-quarter annualized GDP growth rate looks like on our GDP Temperature Gauge charts, which projects the most recently recorded growth rates of GDP against a temperature spectrum indicating the typical levels of GDP recorded since 1980: Of these two charts, the less volatile Two-Quarter GDP Growth Rate Temperature Gauge, which considers the annualized growth rate of GDP over the preceding two quarters and which is useful in forecasting future GDP levels, has fallen into the purple "cold" range of our GDP temperature spectrum. What this reading confirms is that for all practical purposes, the U.S. economy has entered into what might be considered at the very least to be a "microrecession" in the first half of 2011, which confirms what the U.S. stock market first signaled would happen back in June 2010. It is still too early to tell if the current economic sluggishness will last long enough or become severe enough for the National Bureau of Economic Research to react and classify the period as a full-blown recession. You can say a lot of things about the GDP revision, but at least it wasn't unexpected (for anyone paying attention, that is!)

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30 июля 2011, 18:17

How to Raise the Debt Limit Without Increasing the Debt Burden

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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"....

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28 июля 2011, 19:05

Changing Perspective on New Unemployment Claims

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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.

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27 июля 2011, 17:57

Charity in America: The Recipients

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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.

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26 июля 2011, 15:22

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

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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!

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25 июля 2011, 17:59

Charity in America: The Donors

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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.

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22 июля 2011, 17:26

Keeping Your Beer Cold on a Hot Day

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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!

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21 июля 2011, 18:26

Tax Deductions for Charity by Income Level

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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.

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20 июля 2011, 18:30

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

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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.

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19 июля 2011, 17:27

Teens and the U.S. Federal Minimum Wage

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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.

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18 июля 2011, 18:40

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

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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: Age 25-29: +1.9% Age 50-54: +1.7% Age 45-49: +1.1% Age 20-24: +0.7% Age 55-59: +0.5% 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.

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15 июля 2011, 15:14

The ABC's of Google's Search Results

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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....