As is usually the case Sen Sanders presents a misleading case for his ideas and fails to consider the implications.
A small percentage of US workers earn the federal minimum wage. A tiny percentage of hourly workers earning the minimum are raising a family. Most minimum wage workers are young and single and work in service industries. Many are part-time workers.
As I have before, it’s not a simple matter of raising the minimum wage for a certain group earning below the target wage. Going to $17.00 means wage pressure on up the pay scale, it means higher taxes paid by employers, more pressure on prices and business earnings – which affect stock prices – and perhaps greater incentive to do without the same number of workers.
Let’s think this through before waiving a magic wand at wages. The only way that minimum wage workers will truly benefit is by moving out of a minimum wage job.
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Two points…
First, for each dollar raise, it costs the employer $1.25-$2.00 depending on the state and benefits.
Secondly, if you listen to the Fed, they feel that controlling wage inflation is critical to getting inflation under control. This is exactly opposite of what progressives want. You can’t have both.
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Should the federal minimum wage be raised like what the many states have done over the last few years, maybe. But one size does not fit all and local labor and cost of living should determine what the wage should be. Any questions on that look at the federal per diem rates for different areas. As long as there is an open border, somebody will always work for less.
But Bernie’s proposal is nuts. Overnight he wants to raise the federal minimum wage 234% and cut a person’s productive time by 20% to 32 hours a week. If I did the math correctly that would equate to about a 293% raise for basically unskilled labor which is a minimum wage job.
I retired from a highly technical job and was one of about 65 people who had current federal licenses to operate a nuclear power plant at the time. It takes about 18 months to get licensed and that license is only good for that plant. I’ll tell you one thing, I would demand that I too get a 300% raise or they could find someone else to put up with the BS of maintaining the license. If I got a 300% raise, you better believe that your electric rates would be going up too. There are skilled operators at non-nuclear plants and wind turbine farms too. I’ll bet that same sediment would bleed over into every job field. In order to avoid a doctor shortage, doctors are going to want 300% more just like plumbers, electricians, auto mechanics, everybody.
Now go to McDonalds and pay 300% more for your not-so-happy meal. Unless you too got a 300% raise you will not be able to afford it and McDonalds will close the store resulting in layoffs of all those lucky minimum wage people. Or they will be replaced by robots which is starting to happen now. Or you will have to make your own. Self checkout anybody?
You might as well devalue the dollar by 300% to get the same result.
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We’re talking poverty here. A raise of $7/hr., $1,000+ a month, $15,000+ a year. For him or her, that’s survival. That’s food, rent, medical care. For someone in “middle class” or above, it’s a boat payment. Big difference.
Minimum wage is not necessarily the only answer. Another alternative is social services. It appears there are a lot of people who don’t like that either. Minimum wage workers will benefit most by moving out of minimum wage jobs? There are not enough good paying jobs. We need these people. For our own good, for social and economic stability and quality of life, we need to make sure these people can survive, even prosper.
I guarantee your burger costs will not go up by 300 percent. Labor is only about 20-25 percent of their cost.
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“America is lending money it doesn’t have to kids who can’t pay it back to train them for jobs that no longer exist. That’s nuts.” – Mike Rowe of Mike Rowe Works Foundation.
According to US BLS, there are 9,590,000 job openings (adjusted) for March 2023. Of which 3,730,000 where in food service, retail, hospitality, and the arts, which I would guess has the greatest number of minimum wage jobs. This tells that almost 2/3 of the job openings requires a higher skill which will pay higher. Also of these 3.7 million “minimum wage type” job openings, they are not being paid the federal minimum wage. Even Disney is paying all their workers at their theme parks at least $18 / hr. In NJ, the minimum wage is $14.13. I see most jobs advertising $15-18 hr locally.
Now these number do not say how many people are actually making minimum wage and I am sure that is more than 9+ million people. If those people don’t like working for minimum wage then there are probably 5,860,000 job opening (in March 2023 alone) requiring higher skill so maybe they should take some personal responsibility and learn a valuable skill to qualify for one of those higher paying jobs.
I didn’t wait for a handout. I came from a broken home. But I took a chance and I was able to get training in four different career fields. Each time I moved up the economic ladder until the point that I was able to retire early.
You may be right that fast food costs may not go up 300% but I guarantee you it will be more than 25% as all of the supply chain and manufacturing chain’s labor will go up 300%. Will it be 30%, 40%, 50%, I don’t know but burgers are more than I am willing to pay now since they already have gone up 44% at McDonalds
(3/11/22 cost $21.08 then one year later 3/8/23 cost $30.44 for the EXACT SAME ORDER, thus ending any future annual visits to McDonalds).
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I don’t usually follow BLS stats, but I don’t think you can infer much from 9 + million job openings. A 4 percent unemployment rate is usually considered “full employment” because it reflects normal job movement. I don’t think it particularly represents an opportunity for lower wage workers to move up.
They can, of course, like yourself, many lower level workers prepare themselves for higher paying jobs, but overall, the ratio of lower paid to middle and higher earnings remains the same, or changes very slowly over time. Unfortunately, as shown in the two graphs in this blog, in the U.S. the changes are going in the wrong direction. Towards more inequality, not less.
What happened in 1980? I don’t buy that it’s a sudden shortage of personal responsibility. You can’t keep blaming the lowest man on the totem pole.
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I’m not interested in talking about minimum wage laws since that doesn’t address the income problems that a lot of workers have. I do think that the whole concept of moving manufacturing overseas and leaving a huge segment of the population to do service type work was a mistake, intentionally or on purpose.
Years ago the talk was always of the United States having a great middle class. That talk is no more. More and more people are heading this way to join the club. I doubt that very many of the hordes coming in will be doctors, dentists, IT professionals or anything but labor seeking to compete for jobs.
I wish Bernie and crew would do some real work on the real issues. Fat chance of that.
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“A small percentage of US workers earn the federal minimum wage. A tiny percentage of hourly workers earning the minimum are raising a family. Most minimum wage workers are young and single and work in service industries. Many are part-time workers.”
The federal minimum wage is $7.25/hr?
And a very small percentage earn that?
Tiny?
Agreed, however 52 million Americans earn less than the proposed minimum wage of $15/hr.
That’s 32 percent of U.S. workers, and that is sure worth looking at.
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$17 minimum wage is $35,000/yr.
In 2021, 25 percent of U.S. households earned less than that. Not individual workers, but households. That seems incredible, even outrageous.
Incredible as in not credible. Unbelievable. Believe it. There are scores of studies and statistics showing that the U.S. is, for all practical purposes, the most inequal of all “advanced” countries in earnings and in accumulated wealth.
Yes, minimum wage workers will benefit by moving out of a minimum wage job, but he will immediately be replaced by another minimum wage worker, and the U.S. will still have the highest poverty rate of OECD countries. The math is inexorable.
WTH happened in 1980?
Click to access wir2018-summary-english.pdf
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Whatever can go wrong will go wrong. What happened in 1980?
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Many factors. $35k sounds poor, but not everywhere. I know many retirees who live on that income and quite content, plus you have to consider various benefits. Not 500 feet from where I live they built affordable housing where rent is heavily subsidized just for such families. You need a complete picture tax credits, etc. Lets say the relative few families earning minimum wage now go to $17 so the household is now $70,000 and everything in the economy adjusts. What was accomplished?
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Perhaps if we stopped importing uneducated minimum wage workers the minimum wage would increase due to demand. Labor is just another commodity subject to the supply/demand curve.
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As long as we are willing to pay much more for our food and many other services.
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Look up the BLS data
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Just Bernie being Bernie! Where’s Elizabeth?
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As I mentioned in a previous post, I am relatively new to this whole “inequality” debate. And I thank Bernie, among others, for calling it out.
I doubt the BLS can help us here. Too many “yeah but”s in there. As I pointed out before, for instance, in comparing public worker compensation to private; 50+ percent of Americans (including public workers) work for large organizations (500 or more workers), and those workers earn significantly more than those in smaller businesses. And apparently, according to the BLS, the smaller the employer size, the lower the wages, on average.
Also, the connection between individual incomes and household incomes is nebulous*
Will raising the minimum wage cause more problems than it cures? Perhaps. But it is worth studying carefully because it exemplifies the dual problems of poverty and income/wealth disparity. There is just no question that there is much more disparity …and… poverty in the U.S. than other developed countries …and… much more in the U.S. than there was fifty years ago. Why ?
This is fascinating, but I have chores for now. Don’t go away.
*I don’t have a prayer of finding the quote, but I recall one argument that comparing household incomes and poverty in the U.S. to those in Western Europe is misleading, because the U.S. has smaller households. May be, but I’ll take that with a grain of salt. It’s complicated?
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Yes, it would probably cost more for some items (especially food items), but coming from a state that is paying for illegals to the tune of about 1/3 of K-12 students, 1/3 of people in jail, a significant number of emergency room visits, legal help for illegals facing deportation, school breakfasts and lunches, other than English instruction, etc., etc., etc., it’s hard to believe the higher prices for food wouldn’t pay for themselves.
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