Minimum Wage: From the Horse’s Mouth

[ieldanth 0]

It isn't minimum wages but wages as an average that determine cost of living. The two are tied together through market dynamics. Demand goes up, supply lags, and you have the third dynamic that Mr Siegel forgot: price. Prices increase to re-establish balance in the short term while production tries to catch up with demand. Problem is, prices act as a ratchet in that once supply and demand are equal again, the prices do not usually fall back to original levels.

Either way, we currently stand at about 3% of jobs in the minimum wage category, usually entry level or unskilled positions that are not generally held by people trying to support a family(primary income). Either that or areas where the majority of jobs are minimum wage or thereabout. Usually, these areas are high-unemployment with companies that are only there as a stopover on their way toward overseas manufacturing. When the minimum wage increases, these companies move out. Either that, or they cut benefits. Now, you have people who were making $5.15/hr making $0/hr, or people who now make $8/hr but don't have health insurance. Want to see actual evidence of this? Go shopping. Note the number of "Made in the USA" tags you see today vs "Made in (insert country here)".

What is needed in these areas isn't a mandatory wage hike, but economic development and incentives for growth. A reason for companies to move in and provide good jobs.

[one...two...tree 2,762]

Minimum Wage: By The Numbers

Morgan Spurlock is at it again. The man who exposed the unsavory side of fast food in the popular documentary Supersize Me takes on minimum wage in his new series “30 Days.” In the show, which launches tomorrow night on FX, Spurlock will submerge an average American in a completely different lifestyle for one month. (The Center For American Progress is holding an advance screening of the show in Washington, DC tonight.) For his first episode, Spurlock decided to explore exactly how hard it is to live on a minimum wage income for thirty days. He and his fiancee, Alex, moved to Columbus, OH and lived on $5.15 an hour for a month. They found out it’s pretty impossible. Here are the facts behind minimum wage in America:

4.3 million: Number of Americans who have fallen into poverty since President Bush took office

$5.15: Federal minimum wage

26%: How much the inflation-adjusted value of the minimum wage has eroded since 1979

0: Number of times minimum wage has increased since 1997

7: Number of times Congress has increased its own pay since 1997

$0: How much more a year people earning minimum wage earn today compared to 1997

$28,500: How much more a year members of Congress make today compared to 1997

$10,700: Amount a person making minimum wage will earn in a year

$5,000: Amount below the poverty level working 40 hours a week, 52 weeks a year at minimum wage will leave a family of three

7,300,000: Number of workers who would benefit from an increase in the minimum wage

72%: Percentage of adult workers who would benefit from an increase in the minimum wage

1,800,000: Number of parents with kids under the age of 18 who would benefit from an increase in the minimum wage

11 million: Number of jobs added to the economy in the four years after the last minimum wage hike

$8.70: Amount minimum wage would have to be today to have the same purchasing power it had in 1968

2.5 years: Amount of health care for two children which could be bought by raising the minimum wage from $5.15 to $7.25

86%: Percentage of Americans who support raising the federal minimum wage

[Trumplestiltskin 5,791]

This is pretty pedestrian (and I'm no economist) but its clear that there is no clear, single solution to economic inequality. Laying the blame solely at the feet of the minimum wage, the unions or the welfare state (two other oft-cited scapegoats) is optimistically simplistic, IMO.

Edited October 10, 2006 by erekose

[ieldanth 0]

"7,300,000: Number of workers who would benefit from an increase in the minimum wage

72%: Percentage of adult workers who would benefit from an increase in the minimum wage

"

There are only 10 million workers?

Sorry, but those seem like some fairly brown-fingered numbers there.

Also, since we are apparently trying to raise a family of three on minimum wage, why stop at $8 an hour? Why not raise it to $20 or even $30 an hour! Think of the spending power then! The American economy would be an unstoppable powerhouse!

[one...two...tree 2,762]

This is pretty pedestrian (and I'm no economist) but its clear that there is no clear, single solution to economic inequality. Laying the blame solely at the feet of the minimum wage, the unions or the welfare state (two other oft-cited scapegoats) is optimistically simplistic, IMO.

I agree that there is no single, definitive solution, however, just as we have minimum safety standards for workers, setting a minimum wage seems logical. It does raise question that if we are becoming a society of service oriented jobs, does that type of work deserve a wage that is livable? If not, who is or who will work those jobs? If yes, then it does mean no more cheap fast food but this country survived before fast food became a main staple in our diet.

One ideal would be to encourage and support employee owned companies which would make unions and minimum wage standards obsolete.

We need fair trade to keep manufacturing jobs here.

"7,300,000: Number of workers who would benefit from an increase in the minimum wage

72%: Percentage of adult workers who would benefit from an increase in the minimum wage

"

There are only 10 million workers?

Sorry, but those seem like some fairly brown-fingered numbers there.

Also, since we are apparently trying to raise a family of three on minimum wage, why stop at $8 an hour? Why not raise it to $20 or even $30 an hour! Think of the spending power then! The American economy would be an unstoppable powerhouse!

When I found that site, I couldn't find any source for the figures...(my bad).

Here's something with a source:

Heather Boushey at the Center for Economic and Policy Research. She analyzed the Survey of Income and Program Participation and found:

• The overwhelming number of minimum wage workers are adults. Fewer than one in five are under 20, and more than half are between 20 and 54. Let's repeat: over 50 percent are between 20 years old and 54 years old. 87 percent are over 20.

• The average minimum wage worker brings home 68 percent of their household's income. Many of them are supporting a family on nothing but the minimum wage, which is to say $10,500 a year -- well below the federal poverty line.

• The minimum wage can be sticky. For more than a third workers, three years after they start, they've received neither a raise nor a promotion. This is far more prevalent among middle-aged workers, who need the increased income the most.

• The percentage of the American economy relying on the minimum wage has dropped in the last decade. In 1992, 8.6 percent of men and 16.4 percent of women were stuck at the bottom, now it’s 5.6 percent and 8.6 percent respectively. Notice the drop in female reliance on the wage to 3 percent higher than men, down from 7.8 percent.

• Interestingly, workers in states with a minimum wage above the federal level are less likely to remain in a low wage job and more likely to advance upwards.

So most minimum wage workers are adults, and the positions can be sticky, which is to say that raising the wage will create a serious income subsidy for needy folks. Also important (but rarely mentioned) is that raising the wage will also increase the value of the Earned Income Tax Credit, as the EITC is tied to earnings and the deterioration of the minimum wage in comparison to inflation has harmed the EITC's worth.

Edited October 10, 2006 by Steven_and_Jinky

[ieldanth 0]

I would be interested to know how many primary breadwinners stay in those positions and why. Transient workers who may be coming back from, say, a layoff would certainly account for some of those positions filled. However, these people, unless they are either in a location with few opportunities or out of sheer lack of ambition would not stay in dead-end positions like this and would seek more gainful employment at the nearest opportunity. Minimum wage jobs are of course sticky since the companies that utilize that type of labor tend to be two or three-tiered franchises with perhaps a superintendent, a small group of managers(generally one per shift) and a pool of workers and that is about it. The managerial position represents the only shot at a raise and those positions do not open often. The super, if there is one, is usually the franchise owner and so that position rarely changes hands.

The employee-owned business is a good idea as long as you have employees who know how to run a business profitably. This means a greater emphasis on economic education than we currently see. Most Americans do not have a good understanding of that one critical topic.

[one...two...tree 2,762]

I would be interested to know how many primary breadwinners stay in those positions and why. Transient workers who may be coming back from, say, a layoff would certainly account for some of those positions filled. However, these people, unless they are either in a location with few opportunities or out of sheer lack of ambition would not stay in dead-end positions like this and would seek more gainful employment at the nearest opportunity. Minimum wage jobs are of course sticky since the companies that utilize that type of labor tend to be two or three-tiered franchises with perhaps a superintendent, a small group of managers(generally one per shift) and a pool of workers and that is about it. The managerial position represents the only shot at a raise and those positions do not open often. The super, if there is one, is usually the franchise owner and so that position rarely changes hands.

The employee-owned business is a good idea as long as you have employees who know how to run a business profitably. This means a greater emphasis on economic education than we currently see. Most Americans do not have a good understanding of that one critical topic.

Employee-owned - I was thinking more in line with credit unions. I'm a member of a credit union, but I'm not involved in the financial decisions beyond voting on board members.

How can we retain a vital economy without higher paying jobs or at least a majority percentage of jobs above the poverty level? I think it's odd that many of those who oppose minimum wage believe in trickle down economics - the idea that if you give those on the upper tier more income mobility, they in turn will share the wealth so to speak. Without some way of balancing the scales, our society is quickly becoming economically divided between the rich and the poor

[ieldanth 0]

Employee-owned - I was thinking more in line with credit unions. I'm a member of a credit union, but I'm not involved in the financial decisions beyond voting on board members.

To that end, it is possible to own a piece of your employer if they are publicly traded.

You even get to vote on board members if you own as much as one share.

How can we retain a vital economy without higher paying jobs or at least a majority percentage of jobs above the poverty level? I think it's odd that many of those who oppose minimum wage believe in trickle down economics - the idea that if you give those on the upper tier more income mobility, they in turn will share the wealth so to speak. Without some way of balancing the scales, our society is quickly becoming economically divided between the rich and the poor

The problem is, the poverty line moves depending on how many people you are trying to support, but the job only pays a particular amount regardless. What would be a living wage for a single person may not be feasible for a family of four. So, most jobs being above the poverty level for what size family? Is that economically feasible? Should we, with a changing economic landscape, not educate people on the growing importance of relying on multiple streams of income rather than just one? As America shifts from manufacturing to service, it becomes more important to be one of the people who own part of the company rather than just another employee. The rich are getting richer by doing things that make them richer. This includes investing in other companies and knowing how the marketplace works. I'm not talking about your Fortune 500 fatcats, even though they certainly know how it works, but your neighborhood millionaires that you don't even know about since they don't go around conspicuously consuming. They know how the market works and how to make money off it and how to budget so that they end up with more this month than last on average. Bad things still happen to them, so they are not immune to setbacks, but they are far more prepared than someone with a collection of debts that eats up 90% of their income.

[one...two...tree 2,762]

Employee-owned - I was thinking more in line with credit unions. I'm a member of a credit union, but I'm not involved in the financial decisions beyond voting on board members.

To that end, it is possible to own a piece of your employer if they are publicly traded.

You even get to vote on board members if you own as much as one share.

Yes, but with publicly traded companies, they are vulnerable to being taken over by a competitor or merged into a huge conglomerate. Publicly traded stock should never exceed 49 percent of the total stock - the majority of stock should always be owned by the employees. If you quit, then you must sell your stock. When you are hired you are already vested into the company.

The problem is, the poverty line moves depending on how many people you are trying to support, but the job only pays a particular amount regardless. What would be a living wage for a single person may not be feasible for a family of four. So, most jobs being above the poverty level for what size family? Is that economically feasible? Should we, with a changing economic landscape, not educate people on the growing importance of relying on multiple streams of income rather than just one? As America shifts from manufacturing to service, it becomes more important to be one of the people who own part of the company rather than just another employee. The rich are getting richer by doing things that make them richer. This includes investing in other companies and knowing how the marketplace works. I'm not talking about your Fortune 500 fatcats, even though they certainly know how it works, but your neighborhood millionaires that you don't even know about since they don't go around conspicuously consuming. They know how the market works and how to make money off it and how to budget so that they end up with more this month than last on average. Bad things still happen to them, so they are not immune to setbacks, but they are far more prepared than someone with a collection of debts that eats up 90% of their income.

I understand what you are saying and I realize that setting minimum wage standards is not a fix-all.

The way I look it is - do we want a society where most of the jobs available do not pay livable wages? Economic mobility is key to the American Dream. If there are viable options for Americans to move up the economic ladder then I see that as the best solution. However, the trend is that the choices are quickly eroding. Our economy essentially has thrived on the backs of Third World labor. We enjoy a stronger dollar because many of the products we buy are so cheap...but at what cost? Who then gets to move up the ladder? We need to have choices and we need a society that promotes, encourages and protects those choices.

[I'm Gone 60]

Well now that you are going to living in the Philippines I think you will discover the true meaning of minimum wage.

[ieldanth 0]

Yes, but with publicly traded companies, they are vulnerable to being taken over by a competitor or merged into a huge conglomerate. Publicly traded stock should never exceed 49 percent of the total stock - the majority of stock should always be owned by the employees. If you quit, then you must sell your stock. When you are hired you are already vested into the company.

So, when you are hired, would you buy in? When you leave, you naturally sell the stock back to the company, since selling on the open market would eventually lead to a greater than 49% share being openly traded and thus causing the company to be vulnerable to hostile takeovers. Would this stock go into a pool of available stock or would each employee be responsible for a share of the sale? Would you institute a vesting system to keep transient employees from taking advantage of the stock sellback? It would help bookkeeping if you either were a private corporation or a public corporation but not both. Shares of the company would have to be bought and sold internally only for the workers to maintain control, but you are going to have to come up with the investment capital to get it off the ground as well. A system of all charter employees chipping in a particular amount as a down payment on an SBA loan may work, depending on what your business will be doing, and you derive shares from there. You just have to have some people willing to take on some risk. A location, an idea, and enough charisma to get people excited enough to chip in and help out and you have got your dream in hand. I would suggest going small starting out and working on something that is fairly simple, but has an amount of unmet demand in a particular area. Keeps your overhead from killing you.

[one...two...tree 2,762]

Yes, but with publicly traded companies, they are vulnerable to being taken over by a competitor or merged into a huge conglomerate. Publicly traded stock should never exceed 49 percent of the total stock - the majority of stock should always be owned by the employees. If you quit, then you must sell your stock. When you are hired you are already vested into the company.

So, when you are hired, would you buy in? When you leave, you naturally sell the stock back to the company, since selling on the open market would eventually lead to a greater than 49% share being openly traded and thus causing the company to be vulnerable to hostile takeovers. Would this stock go into a pool of available stock or would each employee be responsible for a share of the sale? Would you institute a vesting system to keep transient employees from taking advantage of the stock sellback? It would help bookkeeping if you either were a private corporation or a public corporation but not both. Shares of the company would have to be bought and sold internally only for the workers to maintain control, but you are going to have to come up with the investment capital to get it off the ground as well. A system of all charter employees chipping in a particular amount as a down payment on an SBA loan may work, depending on what your business will be doing, and you derive shares from there. You just have to have some people willing to take on some risk. A location, an idea, and enough charisma to get people excited enough to chip in and help out and you have got your dream in hand. I would suggest going small starting out and working on something that is fairly simple, but has an amount of unmet demand in a particular area. Keeps your overhead from killing you.

Most companies do in fact invest in their employees in the sense that it costs them to train and get that employee up and running before they actually see a return on their investment. The company that I work for paid a percentage of my salary to a recruiter for bringing me to the company and they do this all the time. I understand the need for investment capital and of course the employees would be having to invest into the company themselves, but if they were publicly traded with a restriction to keep the majority of the stock employee owned, that company could find the investment capital it needed to get started. I never understood the point though for companies to continue to grow into huge corporations or conglomerates. It doesn't make sense to the employees nor does it seem to have any long term benefit to the companies themselves. What it does is inflate stock and the shareholders gain in the short term, but then the trend is these huge corporations have to do large scale layoffs to keep the stock value up. A company whose primary existence is for the welfare of it's employees will reach it's full maturity and level off in my opinion. There have been a few examples of American companies that have done just that, but they aren't sexy enough for the stock market. Sustainability in my opinion is a much better goal than expansive growth with short term gains. Having employee owned companies means that everybody's getting a piece of the pie, not just those in upper management and the shareholders.

[mawilson 2,133]

That would work for the major companies but most people are employed by small and medium size business's Speaking from experience the owners of these small and medium size business's are not raking it in like the CEO's of the fortune 500 companies. The pro-minimum wage people often hold those few up as a reason for raising the minimum but the truth is the harm would come to companies that can least afford it and who employ the most. It's class warfare at it's worst.

You keep saying that most Americans are employed by small businesses. That seems strange to me, as there don't seem to be many small businesses left thanks to conglomerates and giant corporations..

Not many small businesses left????? Where do you get that?

Small businesses account for nearly half of America's overall employment.

[one...two...tree 2,762]

That would work for the major companies but most people are employed by small and medium size business's Speaking from experience the owners of these small and medium size business's are not raking it in like the CEO's of the fortune 500 companies. The pro-minimum wage people often hold those few up as a reason for raising the minimum but the truth is the harm would come to companies that can least afford it and who employ the most. It's class warfare at it's worst.

You keep saying that most Americans are employed by small businesses. That seems strange to me, as there don't seem to be many small businesses left thanks to conglomerates and giant corporations..

Not many small businesses left????? Where do you get that?

Small businesses account for nearly half of America's overall employment.

Can you cite a source, because that's peculiar that companies like Walmart, which just happen to be the largest retailer in the world and also one the largest employers, are everywhere. How many small mom and pop stores do you know of that compete with Walmart? Just what kind of small businesses are you refering to?

Edited October 14, 2006 by Steven_and_Jinky

[ace13 0]

You are wrong that small business don't compete--DEAD WRONG

http://www.sba.gov/aboutsba/sbastats.html