Minimum Wage

So yesterday while on the van pool home a republican got into an economic discussion with me....one should never do that. We discussed the shrinking middle class and how someone on minimum wage would probably live worse off if they were on government assistance. His solution? Reduce government benefits to "encourage" people to work...I pointed out that does nothing to solve the problem and what really should be done was raise the minimum wage to a point where one could live off of it, thereby encouraging people to work that way.

Of course he was adamant against it and boasted how it would hurt the business, etc. I pointed out that economic studies have shown that increasing minimum wage has not had the effect many claim and actually helps the economy....he wouldn't accept it. So I went for the kill.....

I told him at one time a person could get a diploma from high school and enter the work force and fully be able to make a living. Granted it was often lower to mid-level middle class, but none the less, you could do it. And they all started at *gasp*....minimum wage. This stumped him. I pointed out that minimum wage never kept up with the rate of inflation and thus no one could come out of high school and earn a decent living without some additional college or trade school. I pointed out that this was one reason why the middle class was shrinking and that the system was unbalanced.

Used a couple of other examples as well, such has a person buying a hamburger for a buck (loaded with massive cheap fat) because they have less income where as someone with more income would buy a higher quality hamburger....plus this would help with their health as well. Chains keep making cheap hamburgers loaded with fat because that's all the majority can afford. He agreed.

It'd probably be more effective to create a maximum wage, or at least a de facto maximum wage with taxation. Yes, I know...heresy.

Doubling the minimum wage (for a start) and re-building a progressive tax with no exemptions would do more for Americans and the real economy than all the corporate welfare, bailouts, and tax cuts can ever hope to.

on a "thrifty" lifestyle, above the poverty line.

That's right, a single income could support three other people on minimum wage and not be poor. They'd have to eat chuck on Sunday instead of top round, but they'd eat. Vacations might be spent in a tent in a campground instead of a hotel, but they'd get to take them instead of being so dependent on overtime pay that they went years between them.

That decent standard of living meant that people had money to spend, they spent it, and the whole economy boomed all the way up.

The way the minimum wage was allowed to be eaten up by inflation is a national disgrace. The way working people in general are treated by this country should be a source of deep shame.

Back in 1980, average CEO pay was 42 times the average worker. In 2008, it was 312 times average worker pay. This is the real class warfare, despite what the CNBC and Fox News idiots whine about.

In 1950 the minimum wage was $.75/hr.

http://www.dol.gov/whd/minwage/chart.htm

Adjusted for inflation to 2009 dollars, that is the equivalent of $6.61. At 40 hours a week, that's only $13,749, far less than the U.S. poverty level for a family of 4, $22,050.

http://aspe.hhs.gov/poverty/09poverty.shtml

So please provide the logic and statics you used to back your claim that "a single income could support three other people on minimum wage and not be poor." Such a claim seems ludicrous on its face - in inflation-adjusted dollars, the minimum wage is significantly *higher* now than it was in 1950.

and it was designed that way. The CPI back then was honest, with food, energy and housing costs all considered.

Apparently you don't understand exactly what has happened to those official inflation figures. They're about 40% below what they actually are.

Has the BLS removed food or energy prices in its official measure of inflation?

No. The BLS publishes thousands of CPI indexes each month, including the headline All Items CPI for All Urban Consumers (CPI-U) and the CPI-U for All Items Less Food and Energy. The latter series, widely referred to as the "core" CPI, is closely watched by many economic analysts and policymakers under the belief that food and energy prices are volatile and are subject to price shocks that cannot be damped through monetary policy. However, all consumer goods and services, including food and energy, are represented in the headline CPI.

Most importantly, none of the prominent legislated uses of the CPI excludes food and energy. Social security and federal retirement benefits are updated each year for inflation by the All Items CPI for Urban Wage Earners and Clerical Workers (CPI-W). Individual income tax parameters and Treasury Inflation-Protected Securities (TIPS) returns are based on the All Items CPI-U.

http://www.bls.gov/cpi/cpiqa.htm

http://www.weedenco.com/index.php">This company has made millions for decades simply forecasting economic trends. The old man developed his model in the 60's. By the 90's, his formula was not returning the consistently accurate results that clients paid for, so he tried to find out what had changed.

What he discovered, and has been verified by countless studies, published in hundreds of newspapers and magazines for decades, is the slow creep of inaccuracy caused by every administration since at least Kennedy "tweaking" the baseline and re-interpreting the data to make a given report look a little better. The cumulative effect of half a century of these tweaks has rendered government numbers nearly irrelevant.

In the report I got in 2003 (the last time I had the $ to maintain my subscription) had unemployment at just over twice the reported rate and pegged inflation at almost three times the government rate.

Social Security and unemployment insurance are two of the main reasons our government has fudged, lied, and now completely removed the baseline for calculating inflation.

When I was a young man gasoline and college were almost free in comparison to what I could earn.

There was a time when I was making ten dollars an hour, gasoline was sixty cents a gallon, my rent was $85 a month, and my college fees were less than $1000 a year. I'd gripe about paying $100 for textbooks. That would be ALL my textbooks, including some very thick science texts.

The inflation statistics are flaming bullshit.

Entry level workers with high school diplomas have been crushed, hope has been extinguished.

It still is. The reason you could easily afford things is that you had a good job.

And everyone acknowledges that the price of college has increased much faster than the rate of inflation.

EDIT: And for the record, about 20 minutes at minimum wage still earns a gallon gasoline, presently.

The statistical machinery has been explicitly designed to mask the corrosion at the bottom of the pyramid. The current minimum wage cannot support a robust and inclusive economy.

It's nostalgic revisionism to think otherwise.

The difference between now and then has nothing to do with minimum wage, it has to do with far-above-minimum-wage blue collar jobs, which used to be fairly accessible with just a high-school diploma.

Fewer people suffered the minimum wage for long. Now for many workers it's a permanent condition.

Raising the minimum wage would make up for that loss. So would some kick ass unions.

Raising the minimum wage will not magically make factories re-open their doors or cause robots to be replaced with line workers. In fact, it would probably have the opposite effect. The root problem is the disappearance of those jobs, and pretending that a hamburger flipper is as valuable a job as a factory worker won't change that underlying fact.

Wow, what year was this? 1926?

Your beer was never safe and the bathroom was never clean.

and was nearly bowled over when I moved to Minneapolis and a decent place cost 115 a month at minimum.

I remember being pleased that I was going to make 2.35 an hour at my new job. My old job only paid 2.25

Every one will tell you that the minimum wage would have to be WAY above what it currently is to have any negative effect on the economy. The truth is some will tell you it is a net BENEFIT to the economy. 1) It improves the economic condition of people who spend virtually all of their money immediately, which keeps money churning through the system. 2) It prevents the "wasting" of labor on marginally useful or profitable activities. Jobs that truly aren't "worth" the minimum wage are eliminated and generally replaced by more productive jobs which increases the general productivity of the economy.

For all that the south fought it, slaves were a horrible waste of manpower. It was a general drag on their economy and tended to cause the waste of all manner of resources, not just the human beings that were trapped in the system. A minimum wage tends to help prevent the waste of manpower, and the associated resources that go along with that.

It's really not all that different from cities that try to remove marginal industrial property and convert it to more useful purposes. Parks, schools, light industrial or commercial, or even residential. Replacing marginal or derelict property with better uses tends to reduce the demand for various forms of law enforcement, provide a boost to the tax base, and tends to create better paying jobs and living conditions for the citizens.

Minimum wage, at the levels that we have in the US merely says, "Stop wasting manpower on stupid jobs".

They also invariably play the angle that raising wages will cause a company to have to shed employees, or not hire. As if these cons gave a fiddler's f*** about the wage earners. If they could drop kick production/service to where ever and put them all out on the street they'd do so in a heartbeat.

The korporate ( sic ) propaganda machine must really have short attention spans. I've followed these issues for at least the last half-dozen minimum wage debates and the arguments are always the same. As another poster pointed out, a minimum wage rise did not stifle the economy, yet they trot out the same arguments against it as though the is the 1st go-'round.

Why not set the minimum wage to something like, say, $100/hour?

If you're going to guarantee a minimum wage for low-skilled labor, why go cheap? Why not go all the way?