Much like malaria, we are never totally cured of the the “living wage” myth which erupts every few years on the political scene. This time around the Service Employees International Union is leading the charge along with Progressive Democrats of America. The goal is to create a nationwide $15 an hour minimum wage. The focus is on food service workers. The slogan is, “Fight for 15!”
Apparently wages, prices, and other economic stuff do not find their levels through the laws of economics (such as the Law of Demand) and free market forces, but are really arbitrary! So, a better approach would be to use Massachusetts Institute of Technology’s Living Wage Calculator for Tucson (I’m not making this up). A prospective employee who applies at McDonalds can check the box that describes his household and his wage will be set—everyone who works hard will be able to support his family!
Speaking of the Law of Demand, what will happen if entry level fast food wages are artificially bumped up to fifteen dollars? Well, according to the law, as prices go up, demand goes down. Fewer people will be employed. More importantly, those who will be retained or newly hired will be generally higher skilled or experienced to meet the productivity demands of the higher wage. As a result, the low skilled inexperienced workers—those whom we presumably want to help – will be shut out of the labor market. They will be denied the opportunity to learn work habits and skills on the job.
It is actually more sinister than that. As economist Thomas Sowell notes, “The last year when the black unemployment rate was lower than the white unemployment rate was 1930, the last year before there was a federal minimum wage law.” Sowell adds, “The following year, the Davis-Bacon Act of 1931 was passed, requiring minimum wages in the construction industry. This was in response to complaints that construction companies with non-union black construction workers were able to underbid construction companies with unionized white workers (whose unions would not admit blacks).” If you ever wondered why the AFL-CIO supports increasing the minimum wage when its members already earn well in excess of that wage, now you know.
What of the businesses themselves? Nobody is terribly concerned about the survival of McDonalds or Burger King, but how about the local restaurants we treasure? Recently Oakland, California instituted a high minimum wage. The San Francisco Chronicle reported on the effects, “Oakland’s new minimum wage law has confused immigrant businesses in Chinatown, several of which have shut down because they can’t pay the new rate of $12.25 per hour.” Putting our local family businesses out of business will not only exacerbate the poverty problem, it will change the character of Tucson, and not for the better.
It might be useful to look at who we are talking about—who works for minimum wage and below (you can be employed below minimum legally in certain situations). The Employment Policy Institute has a breakdown, “According to U.S. government data, in 2006 only 14 percent of minimum wage recipients were raising a family on the minimum wage. The remaining 86 percent were teenagers living with their working parents, adults living alone, or dual-earner married couples.” The average household annual income for a minimum wage earner is $46,000.
So how about that 14 percent, the people who are actually struggling? First, the good news is that two thirds of minimum wage workers get a raise beyond minimum in the first year, so they are not trapped where they are. For the rest, an affirmative step, according to EPI, would be for Arizona to pass a state level Earned Income Tax Credit law. With tight parameters, the people working minimum wage with dependents could get the financial assistance they need without destroying the incentive to work. They will get the help they need until they move on to a higher wage.
Most importantly, these workers will have the satisfaction and the dignity of becoming self sufficient.
I have no idea what motivates the SEIU or the PDA, but it sure isn’t helping the working poor.
This article appears in Apr 16-22, 2015.
Why not give them $35.00 an hour? That would really help.
Adults living alone really do need that increase, and then some, especially if their minimum wage job is not full time. I’d be interested in some recent data on that. What proportion of minimum wage jobs are part time, with erratic schedules an employee can’t plan a second job around. Those people are really in trouble.
*gasp* An opinion piece in TW actually making sense? What is this world coming to?
My thoughts exactly Edeiwmurk, this article is based on logic. Forcing a higher minimum wage will not have the intended results (except for the unions who have their wages scaled up from the minimum).
I’m really surprised at both the article and the comments. Without a minimum wage that makes sense, consumption goes down. Without consumption (preferably endlessly increasing) the whole system collapses. To put it into simplistic language that the reader and commenters can understand, if no one can afford to buy anything, no one can afford to make anything. Get it? Sound like a good future to you all? Not me. Of course, if you allow for endless corporate greed and the Godhead of Profit to continually rise why…you end up with what we have–the most income-unequal first world nation on earth. Really something to be proud of (NOT). The Law of Demand leaves profits inviolable and we are already living what that looks like.
If they don’t like their salary, work to get better and more valuable. Quit the whining. It’s that simple.
As long as immigration rates are at record levels, wages will continue to be low. That’s the law of supply and demand.
Australia already did this years ago, look it up on line, still have Mickey D’s, sky still firmly in place.
Give people a raise. Working people will just return their pay increase back into the economy. Poor and starving people make for a weak and failing America and a hard times Tucson. Like an Uncle used to say to me, “Some Businesses have NO business in business.”
I was waiting to see the effects of TW becoming an arm of Tucson’s biz rags. Interesting. Balanced reporting of the D.C. flavor comes to Tucson? Perhaps we can have a few pieces on climate this year to really flesh things out. I’m sure they’ll be watching the numbers very closely with each issue.
And too they are pushing pot like it was lollypops (not that I’m complaining, but a rotating puff-piece for every dispensary in town is pretty transparent)…
Do I hear $40.00 ?
If only life were as simple as Betts made it out to be. In most third world country they still follow the rule that gains are made through effort.
You could give 10,000 people a goat, and I bet by Sunday three guys own all the goats. It is the law of economic consequences that you seek to undo.
Efforts would be better spent spinning the earth the other direction.
Betts not all businesses are owned by corporations. Not all McDonalds are owned by corporations same goes for any of the fast food restaurants. They do have to pay for the name along with rent/mortgage, property taxes, utilities, product, employee wages and insurance. They also have the cost of upkeep on the building and appliances they use. Paying a higher wage would raise the price of the product that they sell. Not many people can afford it now and fewer will be able to afford it if the price goes up. That leaves the owner the options of letting people go to cover the higher wages or closing the doors because not enough people is buying the product to cover costs. That also goes to mom and pop restaurants. Until more and more people get back to work and as long as we have illegals that are doing the jobs at lesser wages (yes it is suppose to be against the law to hire illegals but our fabulous government in DC won’t let our laws be enforced) decent jobs will not happen.
The quote from Employment Policy Institute, “According to U.S. government data, in 2006…” doesn’t actually seem to appear anywhere on the page: https://www.epionline.org/studies/r16/
That link actually takes you to a study published in 2000.
That aside, this argument seems to miss the point. There is demand (in the purely economic sense of the word) for all sorts of things that we don’t allow. Where is the benefit in letting capital buy people’s time for starvation wages?
Colin, why bother? It doesn’t matter if the subject is biz, health, or any other facet of the modern world: “Institute” is a handy little code-phrase for “Bought and paid for by _____. Our job is to think for you so you don’t have to.”
If you happen to disagree, then just change “Employment Policy Institute” to “Environment Policy Institute”, and see how much you find yourself wanting trust that theoretical entity instead…
http://www.dol.gov/minwage/mythbuster.htm
All of your data is complete bullshit. 88% of people making the minimum wage are above the age of 20. This is from the department of labor. In addition all of the empirical evidence shows that raising the minimum wage has no discernible effect on unemployment. http://www.cepr.net/documents/publications/min-wage-2013-02.pdf?hc_location=ufi
If minimum wage kept pace with inflation and worker productivity, it would be over $20 an hour. If a business can’t afford to pay a living wage to its employees than it doesn’t deserve to stay in business.
Long ago a guy making automobiles paid his workers more than he had to because he wanted to be sure they could all be able to afford to buy one his automobiles. You think the company went out of business? Not only did Ford not go out out business, they did not need the recent bail out like GM and Chrysler.
But then, in recent times Ford, in my humble experience, makes a better product than the other two.
The taxpayer essentially subsidizes businesses that don’t pay a living wage. Workers who can’t afford health insurance or food use social services and that is paid for by the taxpayers. Raise the minimum wage and you will see a significant decrease in the need for food stamps, medicaid, etc. It’s not a real free market when corporations like McDonald’s and Walmart are subsidized by the government.
I like what you wrote, Isadoro, until you note Ford escaped a bailout. How they escaped the bailout was not by patting workers more, but through economic risk: Ford bailed itself out by essentially mortgaging the whole company, right down to its proprietary logo. It then worked its way off of the loans it took out.
I agree Ford makes a better product than GM.
Sidenote: Ford took a small bailout in the early 1980s. Chrysler took a much bigger bailout at the same time period and became a poster child.
(Not trying to start a car talk here.)
To everyone: I’m curious if this is an opinion piece running as a published guest commentary in the coming edition, or if this is a mere guest blog post. Jonathan Hoffman is TW’s noted Libertarian contributor to provide an alternative voice to the alt-weekly.
If you will, allow me for a moment to suggest that the poor of this town,
and our country have never been helped by following rich men’s advice.
And by rich men, I count among them both historic European intelectuals and their benefactors…
and the perversions to which their words have been distorted in support of modern wealth.
Heresy, you say? Go to your local, still public and un-monetized non-profit library, and read *all* of what he wrote.
And by poor, I include among them pretty much all of the middle class these last 30 years.
The doctors, city lawyers, engineers, restarauneurs, plumbers & tradesmen, and all the other small business owners-
who pay the largest percentage of their income in taxes of any in this country.
I can do the math. I was educated in this state when the public education (and prison!) system wasn’t
being turned into an elaborate scheme to funnel tax dollars back into the financial system.
If the goal is to put people back to work, then it is clearly established that this is most directly acomplished
by putting money in the pockets of those who will spend it in the real economy…
not in a stock market soaring on fed-printed funny money.
Henry Ford knew that his factory workers had to make enough to afford his cars in order to prosper.
When did we lose sight of that in this land?
It is no different when you run a (local) restaraunt in Tucson.
People who don’t have enough to live on don’t eat out much.
A large increase in the number of Tucsonans with some spare change ought to increase your fortunes, no?
You ask me if I am in support of increasing the minimum wage? I say yea.
The last 30 years has seen the middle class all but disappear. For the great majority, their mobility was not upward. Now the rich are whining because poor people are picking on them. It’s their own fault for destroying the only buffer between the two.
An economy only works when money moves. Once it stops moving, it isn’t really even money anymore. Now it only serves to ensure that there is absolutely no possibility that an incredibly small number of people will ever want for anything ever again. Or for political leverage to outright buy elections. This was done on purpose. After all, the 1% does pretty well in third world countries.
Why do the prices of goods/services have to automatically increase if minimum wage increases?
Why can’t the billionaire CEOs absorb the difference?
Why is it automatically the general public that have to account for everything? I’m sure the higher ups at fast food burger joints would survive on 1 billion a year instead of 5 billion. Period.
15$ to Flip a burger? Really? Most people in the medical field don’t make 15$. Stop complaining, buck up and make yourself more valuable and get educated. If the minimum wage was increased to 15$ the entire system would be effected and all across the board the wages would go up. Then the economy would adjust and things would cost even more and then collapse. Thats when the cycle starts all over.
There is a lot of arguing here about a “living wage” which is an arbitrary number, since what is a “living wage” depends on where you are. Fifteen dollars an hour seems to be the number being discussed the most. Here is the simple fact – if the minimum wage is raised to $15 an hour, it will no longer be a living wage. Prices will increase. Those people whom have spent years in school and gaining skills that are currently making a decent salary at $20-25 an hour will effectively get a massive pay cut, since their wages aren’t going to go up. I really am not sure why unskilled labor feels that $15 an hour is somehow “fair”.
Just read the MIT chart. In the real world, people wear clothing and get an education/training. Yet the category, “Other,” only lists $71. for a single adult. One is spartan, not ignorant and naked. Please, if we must use data, let’s be intellectually honest about how we use it, what we include and what we omit.
Be well.
Jonathan, you are biased against the minimum wage and you are just cherry-picking your facts. First of all, you neglect to mention that these low wages very often are supplemented by public assistance [1]. That means large employers are heavily subsidized, even while they hand out large dividends to shareholders and huge bonuses to their executives. Second, you say that consumption *will go down* (because prices will go up) but somehow you forget the very first premise: We are increasing wages, so people will have more to spend. (Just on this latter point, we can say your article is irresponsibly naive; I really don’t know how it got past the editor.) If prices go up, that just means the people actually using those products/services (instead of the public) are paying closer to the true cost. But I’m skeptical that they will go up very much since they can readily absorb the cost (corporations have been doing quite well, even through the recession).
Furthermore, it may very well be true that the transition to livable wages for everybody won’t be accomplished by this single action that is the minimum wage increase. But guess what? There’s a ton of other things we can do to react to adverse consequences–you know, like write more legislation. Or we can raise taxes on the wealthy and close loopholes that let corporations hide income from the IRS. Wouldn’t it be great if we could have education, roads, *and* a working class all at the same time? It’s pitiful how much you cry when the poor ask for the dignity of a livable income from a job *they are already doing*.
1. http://www.nytimes.com/2015/04/13/business/economy/working-but-needing-public-assistance-anyway.html
Mark, allow me to clarify something. The Law of Demand as it applies here refers to the workers, not the goods they buy. As prices go up – as in the cost of employing low-skilled workers – the demand for those workers goes down resulting in fewer opportunities for those workers to get a start and move beyond the entry level wage, as two thirds do within the first year. Thank you for reading and taking the time to comment
Brace yourselves because once they satisfy their desire to change terminology from minimum wage to living wage, the assault begins on those more able.
Aka… Maximum wage limits will be put in place.
Why can’t you folks see what’s coming?
Brace yourselves because once they satisfy their desire to change terminology from minimum wage to living wage, the assault begins on those more able.
Aka… Maximum wage limits will be put in place.
Why can’t you folks see what’s coming?
Wealth is consolidated by the wealthy. The only reason prices will go up if wages increase is because the wealthy would like to maintain their lifestyles (while keeping the underlings in their place). Greed is the issue here. It is the idealogy being peddled here. Why should some get more than others? Did they work for it or do they feel entitled as these workers that are protesting do? Whose entitlement is more important or correct? Depends on which side of the workforce you are on. Single adults cannot afford to live the same lifestyles as their “masters,” even when working for a “reputable” employer, such as the UA. Just as libertarian ideals point to the free-market as the solution (find a new job, get educated) the same group would like to end government assistance, a “solution” peddled in this op-ed. What if there was a minimum wage for corporations and they had to struggle for all of their over-the-top bonuses and extravegance? Such a world will never occur. Tucson Weekly going right wing?
I guess the Weekly has a bunch of billionaires writing on this page since so many people are against fellow workers having a higher income. You do realize that a raise in the minimum wage raise raises all wages, right? Or do you not want to be paid more? $15 was studied and found to be a minimum wage. It wasn’t randomly selected.
Educated yourselves before spouted the ignorance of the corporate media.
PTxS