Friday, January 5, 2007

The Minimum Wage

George Will wrote a column yesterday that laid out, pretty clearly, some of the arguments against raising the minimum wage. Whenever I am asked about it, my usual response is to say, "Cool! Let's raise it to $20 an hour!" Of course, that's stupid. Unless you want your $2.99 value meal to cost 12 bucks, you can't pay the fry guy at Wendy's $40k a year. But if the math works that way for a large increase, it works the same way (just less dramatically) for a small one. That's how math works. Let's assume for a minute, though, that a small and gradual raise in the minimum wage would increase prices by a small enough amount to be worth the trouble (although that's just for the sake of argument; if wages and prices rise by comparable levels, nothing really changes). Why would that be so? Well, to help the "working poor," of course. Some poor shmo making the current $5.25 an hour, putting in full-time (40) hours, and never taking a week off would make just under $11,000 a year. That stinks, and even a single person couldn't live like that. A married couple or roommates pooling two such incomes could perhaps barely scrape by, and that's not counting kids (or who would take care of them if both spouses had to work full-time).

But here's the catch--hardly anybody actually DOES that. Will gives the statistics, but think: do you personally know, or have you ever known, an actual, fully-functional adult who works full-time for minimum wage for more than a very short introductory period? I worked for the minimum ($3.35) when I was 16, washing dishes and bagging groceries. But even as a kid, by 17, I had earned a couple of raises. And that was part-time, after-school, and summer work (and, as an aside, the work I did wasn't really worth much more than that). The vast majority of people earning the minimum wage fall into those same categories. So in trying to help this hypothetical hard-working-but-terribly-unskilled fellow, what we really do is make it easier for a bunch of high school kids to gas up their clunkers and go to the movies. Why raise everybody's prices (and the entry-level unemployment rate) for that?

Now, here's a thought. If we absolutely MUST do something legislative to ensure that the working poor are not getting abused by evil employers, let's at least target the program. If you are still claimed as a dependent on anybody else's tax return, you could qualify for a sub-minimum rate. Of course, that just means that those greedy bosses will likely try to hire kids instead of adults, unless, of course, the adults' production is actually worth what they are being paid. Darn those laws of basic economics!

Not that any of this matters. This is a done deal. The new congress will easily pass a $7.25 wage, President Bush will gladly sign it (he's "compassionate," remember?), they'll phase it in, and most of us will not notice the gradual uptick in the cost of everything. Likely, other wages will follow in lock-step (the guy currently making $8 and happy about it will be less so when it's only 75 cents above what the rookies make), so we'll achieve pretty much parity with where we are now. But there will still be pockets of poverty, aggravated by very poor lifestyle choices (dropping out of school, having kids before or instead of getting married), and in a few years we'll be having the same discussion. Here's hoping teacher pay keeps pace.


Tommy B. said...

Ok, I'm no where near as smart as you, so I'm skeptical of weighing in here for fear that I might expose my stupidity, but that's part of learning right? So here goes...

The Bible says we reap what we sow, so (no pun intended) the folks who don't sow enough of their own self-development in order to earn wages higher than the minimum are really just reaping their own reward. So part of me says, "Srew em', it's their own fault." That's the part of me that would let people who deserve it die in the streets while I sleep at home in my waterbed. There's another part of me however that takes pity on these folks and thinks that "we should help them". I totally agree that raising the minimum wage helps no one but high school kids to put gas in their cars and go to the movies. However, I would like to know "what can be done" to help those who really need help. I know I have been severly stupid before and needed other people to bail me out of my own crap, God does that for me a lot especially.
Some people just can't be helped because they won't help themselves. Most folks who really wanted to do something with themselves could if they would just make a plan and work on it. I believe opportunity is everywhere, it's just that too often it comes dressed in blue Dickies and looks like work. So I'm back again to people starving in the streets and me not caring. Jesus did say that the poor would always be with us...

Jeffrey Schimizze said...

Hey Coach Sal, Jeffrey said Thanks;) We're both really excited! I'm with Tommy on this one though...a lot of people won't help themselves and are then in the situation that they have created for themselves. You can always join the military;) Enlisted isn't near as nice as being an officer but it's a steady income and an honest living. A lot of times it comes down to what people are willing to do and what their not. But I'm only 22 so what do I know;)

Jeffrey Schimizze said...

yeah ok so it should be they're and not their. I blame it on being in Turkey and slowly becoming more "Turked Out" every day;)

Coach Sal said...

Aha! I see that great minds DO think alike (and don't put yourself down--you're plenty smart). This topic has me thinking about poverty, too. Watch this space--I'm going to begin a post or two on that issue.

However, let's stipulate that the minimum wage issue only applies to those who are, by definition, working. So when we talk about the "working poor" as defined in this post, it's a alightly different issue from that of welfare, social spending, charity, and the like.

Philip Murphy said...

I've met several individuals that have career minimum wage jobs. They're found everywhere, not just burger joints.

In 1979 (a few years before your 16th Bday) the minimum wage was 30% lower in regards to the inflation-adjusted value than today's current m-wage. That's fairly substantial.

I don't buy the "increase the m wage and you'll increase your hamburger costs" idea. Does a happy meal in Vermont (minimum wage $7.25) cost more than American Samoa ($2.63 m-wage) or SC??? Nope. Crazy how that works.

I guess I'm opposed to a federal increase, but not opposed to a state increase. I believe it's more of a States right issue. If SC wants to attract more burger joints, then they should feel free to keep their m-wage at its current standard.

I also believe the states which use a sliding scale have chosen the best option.

In American Samoa, most burger joints pay $4 an hour, $1.37 more than the minimum wage. It just goes to show that in order to compete McDonalds realizes it needed to offer better pay/benefits. And if AmSam wanted to increase it's m wage, more power to them. However, people are clammoring to the island for a $2.63 job as it is.

this post is all over the board... but oh well.