Facts and fantasy and the minimum wage

Are you for or against raising the minimum wage❓It really doesn’t matter. If America wants to raise the minimum wage, so be it. However, what does matter is how the idea is being sold and the claims being attached to the propaganda.

If you are a full-time worker and earn the proposed $10.10 per hour, you have an income of $21,000 or $1750 a month. Is that middle-class? Probably not, but nobody seems to know how to define middle-class.

There is no universally recognized definition of middle class. There are federal poverty level guidelines, so if you happen to wonder if you’re poor, you can consult the Department of Health & Human Services (not that you likely need guidelines to tell you if you’re poor). But after that, you’re on your own to decide if you’re lower middle class, middle class, upper middle class or in the fabulously wealthy territory. But to get us started thinking about financial status, a U.S. household with four people living off $23,850 or less is considered poor. (Hawaii and Alaska, with highest costs of living, have different guidelines.)

One helpful yardstick to judge whether you’re middle class: Median household income was $51,017 in 2012, according to the most recent U.S. census data. Robert Reich, a professor of Public Policy at the University of California-Berkeley and former Secretary of Labor, has suggested the middle class be defined as households making 50 percent higher and lower than the median, which would mean the average middle class annual income is $25,500 to $76,500.

If you’re in the middle of the middle, however – not lower or upper-middle class – that would be an income range between $39,764 and $64,582, says Aaron Pacitti, an assistant professor of economics at Siena College in Loudonville, N.Y. SOURCE: US News Money

If you look at some of the President’s policies, middle-class goes all the way to $200,000 a year income and then you become wealthy. Depending on where you live, your standard of living varies greatly within the middle-class. So, raising the minimum wage is not helping raise the status of the middle-class especially considering that most minimum wage earners are part-time workers.

IMG_1927-0.JPGSource:BLS
What I really object to is the insulting propaganda from this government. Look at the sections below that I placed in bold. Does any of that make sense? First, given all the stated benefits of paying workers more, why would smart business people not be paying $10.10 already … or more for that matter? Then we have the business owner saying taxpayers deserve to have him pay his workers more. Has anyone thought about the fact that all this also means higher costs for government contracts?

Let’s have a serious debate about minimum wage without the political fog and ignoring of potential consequences. If America wants to pay its lowest skilled workers $10.10 and hour; fine but let’s do so with our eyes open and without false expectations of changing the middle class.

From the Department of Labor Blog

A Promise Made and a Promise Kept
by SECRETARY TOM PEREZ on OCTOBER 1, 2014

President Obama promised that 2014 would be a year of action to expand opportunity and grow the middle class. Today, the president upheld his promise to lift the minimum wage to $10.10 per hour for workers who are employed under federal contracts. A final rule announced by the Labor Department today implements Executive Order 13658, signed by the president on February 12, and will directly benefit nearly 200,000 American workers.

The underlying principle couldn’t be simpler: no one who works full-time in America should have to raise their family in poverty. And if you serve meals to our troops for a living, for example, then you shouldn’t have to go on food stamps in order to serve a meal to your family at home. By raising the minimum wage for these workers, we’re not just upholding the president’s promise, but the fundamental American promise that hard work should be rewarded with a fair wage.

Our action today will make a big difference for workers like Jackeline Osorio. She’s a 21-year-old mother from Annandale, Virginia, who serves food to military personnel and Defense Department officials in the Pentagon food court. “I don’t make enough money, and I have to pay some of my bills late,” she says. “$10.10 an hour would help me pay my bills on time.”

The But this doesn’t just help workers. It will also strengthen companies doing business with the federal government, thus giving taxpayers a better return as well. Carmen Ortiz Larsen is president of AQUAS, Inc., a federal government contractor that provides information technology management support. She says that a higher minimum wage is better for the bottom line: “From a business perspective, a higher minimum wage will reduce turnover and training costs, and lead to more productive workers who are focused on the work at hand, not on looking for another job that pays more.”

Another business executive agrees. Jon Cooper is president of Spectronics Corporation, a leading manufacturer of ultraviolet equipment and fluorescent materials, which has been awarded numerous federal contracts over the years. “If a company is getting a contract paid for by taxpayer dollars, it’s only right that they pay a $10.10 minimum wage,” Cooper says. “Fair wages are part of the formula for success at my company.”

13 comments

  1. I would like to advance a thought, and just “spitballing” here,…you hike the minimum wage so a place like McDonald’s has to hike their prices so the minimum wage earner has to pay more for their burger and fries. Other places affected by the minimum wage increase will hike their prices and inflation will kick in as the minimum wage earners buy more hence (supply goes down as demand goes up increasing prices), basically, then minimum wage level increase is zeroed out and all you will do in the long run is increase the poverty level i.e. instead of the poverty level being below $13,000 it will be below $18,000 let’s say because you are NOT increasing the purchase power of the dollar over the long run (2-3 years probably). It’s a nice political ploy full of sound bytes and righteous fury but it won’t work in “real life”.

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    1. The Administration continues to push the idea that raising the minimum wage is good for companies and that it is supported by employers. If that is true, why wouldn’t employers act on their own to help their own business.

      The answer is because they would price themselves out of the market just as you point out. It goes beyond that as well because workers earning above but closer to the new minimum wage will seek to remain equivalent thereby driving up all prices. The answer in my view is not fixing wages, but driving people into better skilled, better paying jobs with each group entering the labor market gradually advancing … largely on their own initiative. But I fear those days have been buried under an entitlement mentality.

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  2. Let’s see, the minimum wage is 77 years old as of next January(2015). It started out at $0.25 ph. It was 10 years later when it was increased by 10 cents to $0.35 ph.

    After WWII, we had a ‘baby boom’ when all those men returned from the military and began having families (babies born between 1945 & 1955) also known as ‘baby-boomers’. And, when the MWL went over $1 ph., we had a social revolution in this country. Children who could not find work, headed for the beach in California. We then had a ‘drug culture’ problem. ‘Drop out, tune in, get high’! That was the motto for the early sixties.

    The national debt is a part of this equation. I suggest you track it after WWII and see if you think it could have been dealt with in a more responsible way. Borrow our way to success!

    Where do we go from here?

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    1. That’s not exactly right. It was raised to $.30 in 1939 and to $.40 in 1945. It was last raised in 2009. We can raise it all we want, but it won’t help unskilled workers climb the economic ladder.

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      1. How do you tell someone that they are offering facts not in evidence? You just have your facts wrong. The MWL went into effect in 1938 at $0.25 ph. It was raised by $0.10 in 1948 to $0.35 ph.

        My first job was @ $0.35 ph. I have railed against the MWL most of my adult life since it serves only politicians who want to buy votes with your money. There are a lot of votes from people who think they are getting something for nothing.

        When I was young, a person was doing pretty good if he/she could bring in $20 per day. Now, that is the starting pay per hour. I think you should take the training wheels off your bike and get the facts straight. Only children get their facts wrong!

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      1. Publish your source. Something you read, no doubt! BLS did not exist in the thirties. You offered erroneous facts without any collaboration. The training wheels are taking you down the wrong path.

        RHS

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      2. I SENT THIS TO ‘DOL’. Their website info is wrong! Lets see if they respond……
        And, people make up and quote ‘facts’ that are wrong all the time. RHS
        ********************************************************************

        DEPT OF LABOR
        OCTOBER 07, 2014

        http://webapps.dol.gov/contactus/contactus.asp?agency=WHD

        I believe your information on your website is in error. The minimum wage went into effect Jan 01,1938 @ $0.25 ph.

        It was 10 years later, 1948 when it was raised by $0.10 to $0.35 ph.

        I think you are publishing misleading and incorrect information.
        ********************************************************************************************************

        Effective Date 1938 Act 1 1961 Amendments 2 1966 and Subsequent
        Amendments3

        Nonfarm
        Farm

        Oct 24, 1938 (this date is in error)(It should read Jan.1,1938)

        Oct 24, 1939 This date/amount is erroneous

        Oct 24, 1945 This date/amount is erroneous

        Jan 25, 1950 I cannot comment on this since it is beyond my memory.

        I would appreciate a response.

        Sincerely,
        R.H.SMITH

        RHSMITH001@YAHOO.COM

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      3. I am glad to hear you checked additional sources to confirm your info. And, I say again ‘ Publish your source’! I still contend it is erroneous.

        RHS

        Check this out. How Black Tuesday Signaled the Start of the Great Depression

        How Black Tuesday Signaled the Start of the Great Depres… Black Tuesday (October 29, 1929) was the fourth and last day of the stock market crash of 1929. Panicked investors stampeded out of stocks, kicking off the Great De… View on useconomy.about.com Preview by Yahoo

        Could we be in a ‘bubble’ that could lead to another major down turn in the stock market?

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