At Work

$15.00 an hour minimum wage

$7.25 an hour is low and should be raised, to what and how is the question.

The political discourse says go to $15.00 and soon, but is also based on misleading rhetoric regarding who earns the minimum wage and how raising it would impact American families.

Opponents claim raising the minimum would cost jobs. I question that; workers are needed when they are needed and the march toward further automation will continue regardless.

On the other hand, raising the minimum will have consequences because of the ripple effect on other jobs especially in the absence increased productivity.

For example, the $7.25 wage is 1.24 of the poverty level. $15.00 is 2.56 so it’s reasonable to assume the official poverty level and all programs linked to means tested benefits will increase. Where does that leave unskilled workers?

Other examples, a starting teachers average hourly rate is 2.11 times the current minimum wage (using a full 2080 hourly work year), but only 1.02 times $15.00 an hour. For the average teacher in the US, the ratios are 2.56 and 1.24. With a $15.00 minimum wage average starting salary should go from $31,842 to $67,186. What does that do to property taxes and affordability of housing?

Look at the average salary in the US and you get 3.19 times today’s minimum, but only 1.54 the higher $15.00. Even more startling is that the ratio of median family income goes from 4.12 to 1.99. In other words, the household income would have to go from $62,171.2 to $128,544 to maintain the same relationship to the minimum wage.

All of this has major implications for the economy. It is unlikely that wages as illustrated will jump to the equivalent ratio for a $15.00 minimum wage, but there will certainly be pressure to raise wages in recognition of the new minimum.

Raising wages means higher prices for goods and services which means higher inflation. What does this mean for the worker still in a minimum wage job? It seems to me they have gained little or nothing and may lose ground if they lose eligibility for means tested benefits.

These are the possible consequences that are not considered or poorly thought out in the political rhetoric.

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25 replies »

  1. To f4j7: It is true that some employers don’t invest in their employees or are not large enough to have the option to offer additional skills. Going from the fryer to the register or the lawn mower to the weed wacker does not deserve a pay raise. I started out my career as a printer. I saw there was a market cap on what I could earn as a non-union printer. At night and weekends I got training as firefighter as a volunteer and then I joined the NJ Air National Guard for additional training which lead me to a full-time fire fighting job. Then I switch from an airport firefighter to an industrial firefighter with a large company. This company did invest in its people. When I felt that I was getting too old for fire fighting, I had to compete to get an offer within the company for another position. This company did provide training so I could go to another department. This provided benefits for both me and the company as they were using my knowledge and skills to strengthen another department.

    My point is that I still had to take a chance and I still had to attend classes to learn my new trade. I didn’t like where I was at in my career so I did something about it. If you don’t like stocking shelves at store, go to night school and get a degree. Become the store manager or district manager, but don’t just demand more money for doing the same thing. Yes I know that some people can’t do this but most can’t because of their poor life choices or not putting a priority on their education and building skills. People can afford to get a tattoo but they can’t afford to use that same money for a class.

    Safety nets are for when you fall and should be used sparingly. The “safety net” should not be a box to hold you up. Too many people today want that box instead of doing things for themselves. Did our founding fathers and pioneers have safety nets? If they failed, they died. Somehow that has translated into those who are successful must house and feed those to don’t want to help themselves.

    I am not opposed to raising the minimum wage, just the amount and how fast.

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    • MOST employers don’t invest in their employees. Going from the fryer to the register or the lawn mower to the weed wacker does DOES deserve a pay raise because it’s acquiring a new skill and or product knowledge which INCREASES the effectiveness of their customer service and sales skills. And since you brought up Unions, that’s the NUMBER # 1 problem is our country, we went from 40% Unionization to FOUR percent! In a Union you get raises and promotions based on SENIORITY, that NEVER happens in the private sector, and that is WRONG! What does fire fighting or National Guard have to do with anything? Most Americans are either too old or not physically fit enough to do those things, does that mean they shouldn’t make more than 5$ an hour? My point is that most people making 5 to 15 dollars an hour are barely getting by and can’t afford food let alone college tuition or costs certificate classes that “build skills”. It’s not about not liking stocking shelves at store, it’s about employers not giving their employees promotions and reasonable cost of living increases each year. And you’re idea of becoming the store manager or district manager is the most unrealistic pipe dream imagineable. I work in Employee Relations, I talk to people all over the world, many of which have been with the company for their whole careers and are only making 12 to 17$/hour. In government and Union jobs you get paid more for doing the same thing, it’s called dedication to your employer. If I give them 5 years of my life,then I want 5 years of decent raises, decent benefits, and chances for advancement. Saying most can’t because of their poor life choices is hate speech. You don’t know what might be going on in any particular person’s life, but everyone deserves a reasonable standard of living. Should everyone be a millionaire? of course not, but no one should be held down at 5 or 10 or even 15 dollars an hour for DECADES. And the analogy that a tattoo is the same cost as a college degree is silly. Safety nets are NOT for when you “fall”, they are for when you employer FAILS you and pays you 5 to 15 dollars an hour! Safety net program should and ARE based on your income. I’m so tired of people saying if you can’t make it you should die. That’s the most insensitive, heartless comment there is. Don’t bother to respond, you’re obviously neither a christian, or a caring individual, so there’s no point in continuing the dialogue.

      Liked by 1 person

      • My whole point about firefighting in the national guard is that there are non-traditional ways to learn skills. You must take some personal responsibility and take chances to learn new things. If you expect the world to just give you everything, then you’ll be waiting a long time for advancement and pay raises.

        Going from lawn mower to weed wacker does not deserve a raise. But going from lawn mowing to the lawn mower repair guy does. The difference that it takes almost no knowledge or skill to cut grass with either a mower or a trimer, but repairing small engines requires some knowledge and use of some speciality tools beyond a screwdriver and wrench.

        For the record, I came from a poor background and work my way to an early retirement. I am a capitalist-libertarian. I worked hard for everything and when I didn’t like what I was doing, I did something about it and changed my career path on my own. I do not believe socialist ideas of just giving people everything for nothing.

        I am interested in your ideal of 5 year’s worth of work and 5 year’s worth of pay raises and 5 promotions. At what point will a company have all chiefs and no indians? Who will do the work?

        And who do I hate again? Teaching a man to fish is one of the most Christians things I know to do, but they have to want to learn.

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      • And my whole point is that if you’re over 29 you’re too old to join the military and if you’re over 39 most are probably too old or too out of shape to become firemen.

        Liked by 1 person

  2. An alternative to an artificially high minimum wage is the wage subsidy. Oren Cass , author of a recent book, Once and Future Worker, proposes that a government wage subsidy would raise the income of the lowest paid workers but would not have the job killer effect of a high minimum wage. He argues that we already have a wage subsidy program, albeit not an effective one , in the Earned Income Tax Credit.

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    • I don’t see the main issue as a job killer. If a fast food place needs people to conduct business at $7.25 why will it need less at $15? Automation is already underway and nothing is going to stop it. I see wage compression as the issue affecting the entire economy. I don’t see how a wage subsidy is any different. We tend to approach this as if we are dealing with heads of households and families yet that is a small % of MW earners.

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      • I get the concept of the subsidy however it still would result in wage compression. The only real difference I see is that it will shift the labor costs from the businesses to the government and offers no incentives for businesses to pay the going rate for the available labor. It would keep the business labor costs artificially low which is I guess the idea instead of giving other business tax breaks. Walmart and several other large employers used part-time workers so they did not have to pay for benefits and told them to apply for welfare and medicaid. I believe they would keep wages just below whatever the requirements are so that their employees would earn this subsidy. The workers may not to be able to leave for better working conditions or better hours without ensuring that make enough of a pay jump to make up for a lost subsidy or their new job has a subsidy.

        As unemployment numbers dropped Walmart and Amazon had to increase wages and offer more benefits to compete for the available labor without the labor learning anymore skills.

        Instead of the government giving billions in subsidies that would result in tax on somebody else, how about giving everybody a taxcut? Then you can wipe out that taxcut by raising the income taxes to pay down the increasing deficit.

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      • Dwayne, yes, the government wage subsidy is not without problems. And given the current relatively low rate of unemployment it may seem like a solution to a problem we don’t have. But things can change both in the economy and politically. If we go into a recession and the Senate and the presidency go Democrat in 2020, some very unwise political solutions like a very artificially high minimum wage may be coming. The wage subsidy is an alternative that should be considered I believe.

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    • Vince, the most important issue that isn’t being addressed here is that the ENTIRE bottom 50% of Americans make less than 15$ an hour per person, per job. So raising the minimum wage to 15$ would be a RAISE to over 100 MILLION Americans, which is a GREAT thing

      Liked by 1 person

  3. Higher costs will mean fewer jobs. If the minimum wage is raised it also means the employer will pay more Social Security taxes for the employee as well.

    Who wants to pay a teenager $15 an hour? What is the cost to society of not having an abundance of jobs for teens to enter the workforce and learn about keeping a schedule, customer service, etc. Also seeing that paycheck with taxes taken out – that’s a priceless lesson, for sure!

    I do not agree with the idea of having to pay a “living wage.” If you need to make more $$ – you need to find a better paying job.

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      • Rdquinn, I work in Human Resources. Employees don’t have the power to acquire better skills without the employers help. If employers only allow them to answer the phone or to ring on the register and that is ALL the “skills” they are allowed to use on the job, then how is the employee supposed to acquire new skills?

        Liked by 1 person

      • On their own initiative like taken training classes or going to might school for nine years like I did. Plus staying with one employer or in one industry is not the road to success.

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      • it has NOTHING to do with “initiative, you’re still not thinking clearly. If you make 5 to 15 dollars an hour you do NOT make enough to pay for rent, food, and clothing let alone go to COLLEGE or pay for “training classes” and since you’re poor you probably have NO crediting rating…

        Liked by 1 person

    • Tom Murin, 1st of all, the minimum wage is for ADULTS, there is a LOWER minimum wage requirement for TEENS. 2nd, why ON EARTH should someone making minimum wage have ANY taxes taken out? Minimum wage doesn’t pay enough to cover RENT, let alone gas and water and insurance and electric and transportation and food and clothing!

      Liked by 1 person

      • That teen MW only applies for first 90 days of employment and of course they won’t actually pay any taxes, more likely get additional money back

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      • That’s not accurate in my state. And again, we’re talking about the new wage won’t be fully implemented for up to TEN years in some cities and states, that should be MORE than enough time

        Liked by 1 person

  4. Another way to look at the unintended consequences of doubling the minimum wage would be from the retiree’s point of view. There is no way that their retirement income will double or increase by the same relative percentage that they now enjoy being above the minimum wage. This will mean as prices rise to pay for the higher wages and the resulting inflation, their buying power will decrease. You cannot increase the COLA or double the social security or pensions to make up the difference.

    Retirees should expect that their buying power to decrease over time due to inflation, but doubling the minimum wage in a relatively short period of time will do nothing to improve the lives of the working poor since everything shifts by relatively the same percentage. If anything, it will make more poor people who were on fixed incomes since their income will not shift.

    You might as well devalue the dollar, it has the same affect on buying power.

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    • Dwayne, we can discuss up to what level the minimum wage should go up, but keep in mind 2 years ago during the Republicans nominee debates, all 20 Republicans running for office said they would not be willing to raise the minimum wage by ONE PENNY, yet they are also the party wanting to END all safety net programs, let alone the INCREASE those programs need if they aren’t going to raise the minimum wage!

      Liked by 1 person

      • Fine atleast you gave a number, but guess what? All 20 Republican candidates for president said they would NOT be willing to raise the minimum wage ONE PENNY. So when you vote R, even though you CLAIM you’re for 11.25, if you put the R person in office, you do NOT, therefore, support 11.25 an hour

        Liked by 1 person

      • Guess what problem we have though, for the past FORTY years, people have been UNDERPAID and should have been receiving the EQUIVALENT of 11.25 value, instead were getting 5 or 3 and now have no 401k or saving because they were massively underpaid

        Liked by 1 person

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