At Work

What should the minimum wage be?

imageTalk about depending on who you ask. The easy answer may be that it should reflect inflation, but that depends on when you start measuring and whether or not your initial minimum wage amount was accurate.

I looked at the history of the minimum wage from the start and when it was increased in the past.

Based on the following it appears that a minimum wage of about $11.00 an hour could be justified, but where does $15.00 an hour come from? 

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Categories: At Work, Government, Politics

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4 replies »

  1. Well first off, it should be changed to starting wage. Once you are hired, it is your work ethic’s that determine any increases. Also every State is different, has different tax codes, so a blanket $15 will not work in every locale. I am for letting the wage increase until it starts to hurt jobs, and people’s lives.

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  2. Readers, don’t underestimate the point Dick makes when he asks – did the minimum wage have the correct relationship to other economic factors when originally introduced in the 1930’s – at $.25 per hour. And, don’t underestimate the impact of the point Dick makes when he asks from where should we be indexing the wage – it’s high point in the past (1968 – which suggests that the Congress in 1968 decided that either the starting point in the 1930’s or the level of indexation since the 1930’s was wrong).

    So, for comparison, if you look back from 2014 and “inflation” adjust all the way back to the 1930’s, the highest effective minimum wage over the past ~80 years was $8.54. See: https://www.google.com/search?q=minimum+wage+inflation+pew&rlz=1C1EJFA_enUS661US663&espv=2&biw=1366&bih=623&tbm=isch&imgil=UcnQyO2sMW5cwM%253A%253BbVa0CRkAMg7zUM%253Bhttp%25253A%25252F%25252Fwww.pewresearch.org%25252Ffact-tank%25252F2015%25252F07%25252F23%25252F5-facts-about-the-minimum-wage%25252F&source=iu&pf=m&fir=UcnQyO2sMW5cwM%253A%252CbVa0CRkAMg7zUM%252C_&usg=__i5B3eeLV0PgrPNcyEzHtoTHDoBA%3D&dpr=1&ved=0ahUKEwis7eWuy-rLAhXsuIMKHejYAcAQyjcIRg&ei=zur8VqzODuzxjgTosYeADA#imgrc=UcnQyO2sMW5cwM%3A

    Don’t forget, much depends on what index you use to adjust the minimum wage for “inflation”. First, are we talking wage inflation or perhaps we are talking about “inflation” as measured by the CPI. The CPI is a reasonable measure of the change in prices for a “market basket of goods”, but is not an effective measure of inflation because:
    – There is no effective adjustment in CPI-U for the changes in the market basket (we don’t have the same purchasing wants and needs as we did only a few years ago), and
    – There is no effective adjustment for the impact of quality of the goods and services we buy.

    But, if you want to use CPI-U and you want to start with the initial minimum wage, implemented by the demi-god of Democrats, FDR, it would be $4.19 today. If you want to see it in CPI-U inflation adjusted dollars with any year’s starting point, see: http://money.cnn.com/interactive/economy/minimum-wage-since-1938/

    And finally, the minimum wage does vary by state, so, the federal minimum wage is not the effective minimum wage in many states: http://www.pewresearch.org/fact-tank/2015/08/03/the-real-value-of-a-15-minimum-wage-depends-on-where-you-live/

    Here’s what I say. Let California go its own way, and the rest of the states can go their own way, and, we will have a great set of data points in 15 years – giving effect to the concept of laboratories of democracy – what the Supreme Court once asserted, way back in 1932, before there was a federal minimum wage:

    Laboratories of democracy comes from a 1932 Supreme Court opinion by Brandeis: “state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.” This relates back to the 10th Amendment of the Constitution where: “all powers not delegated to the United States by the Constitution, nor prohibited by it to [from] the States, are reserved to the States respectively, or to the people.” I do believe in the 10th amendment – as given to us by the founders. I do not believe every issue should be federalized. What is best for me in Ohio is not necessarily best for me if I were to move to California. And, what is best for my son, who currently lives and works in California, would not necessarily be best for him if he were to move back to Ohio.

    Bottom line, CA has decided to create and test a higher minimum wage – so, let’s let this (almost) scientific method of experimentation go forward for a test – keeping in mind that a “fair test” using the scientific method can ONLY occur if you keep all other conditions the same while you change only one factor (the variable – here, California’s minimum wage) and you don’t change any other minimum wage, federal or state, nor introduce any new federal or state welfare/wage legislation/regulation that would affect the experiment. Let’s see if people migrate to CA for the higher minimum wage. Let’s see what the impact is on individuals whose productivity cannot justify a $15 minimum wage – whether there is a gain in employment, a loss of employment, a gain in poverty or a reduction in poverty, a gain in population in CA or a reduction in population in CA – relative to the other states.

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  3. High cost of living areas like Seattle,WA, CA, NY, NJ, PA, MD DC, and VA, you may know of a few others, could justify $15.
    What many politicians will not tell you is one reason they want it to go up is then more is paid into Social Security and taxes.
    Also unless you have a lot of kids most welfare benefits go away after $25,000. Or are reduced so much many do not even apply. I know a single parent with one child and she told me the Food stamps benefit is $50 per month so she does not even apply. Free School lunch is all she applies for. I think they may of figured 2 part time workers working 29 hours per week make $45,240 per year before taxes. Good household income for many places.

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