Raising the minimum wage

This issue has been brewing in our country for awhile. Like most political and economic issues, the minimum wage is a pretty polarizing one. Last night I read an article on Yahoo news where the owner of the oldest operating McDonald’s was interviewed and asked about what he thought about movements to raise the minimum wage to $15/hour. You can read the article in its entirety here, but I’ll be pulling sections out for the purpose of this post.

To be perfectly clear, I think there are a lot of valid reasons why the minimum wage should be raised. I don’t know where the $15/hour number came from, and I don’t know if that’s an appropriate figure in terms of an increase. But I would argue that the data indicate that it does indeed need to be raised. But first, let’s take a look at some arguments against raising the minimum wage, as outlined by Ron Piazza, the owner of the oldest operating McDonald’s.

I started at a dollar an hour. Poverty is as severe as it was when I was making a dollar an hour. The minimum wage increase, frankly, hasn’t reduced our poverty problem. Do I think it’s fair that people live in poverty? Of course not. But I don’t know how you can say that business is responsible for that.” 

Where to begin here. This is probably the worst possible logic to use against raising the minimum wage. First of all, I don’t really understand how the people who pay their workers’ wages aren’t responsible for those wages, which is what Mr. Piazza seems to be saying. It’s as if he’s blaming the employees for the amount of money that the company pays them, which is ass backward.

But more importantly, let’s examine the first statement by Mr. Piazza. And let’s look at the data. Let’s travel back in time 40 years, to 1974. According to the US Department of Labor, the minimum wage that year was $2/hour. Someone who worked 40 hours per week would be making $320/month. Well, when Mr. Piazza frames it that way, workers today seem downright ungrateful. But how far did a dollar get you in 1974? And would a 2014 dollar get you to the same places?

The average rent in 1974 was $185/month. Gas was 55¢ a gallon. So to fill a ten gallon car tank would cost $5.50, which means that if one filled up once per week it would cost a grand total of $22/month. Now let’s fast forward to 2014. The minimum wage is now $7.25. A full time worker would be making $290/week or $1,160/month. The average apartment in an urban center is now $1,022.13. Which would leave our minimum wage worker with about $140 a month for food, transportation, and utility bills. Someone in 1974 would still have about $120/month left over–back when a dozen eggs was only 78¢.

So what does all of this mean? Well, quite frankly, it means that someone who works for minimum wage in this country can barely afford a roof over their head. Which has big implications for the rest of us, since we end up subsidizing everything else as taxpayers. According to Business Week, we subsidize $7,000,000,000 a year to fast food workers alone. And according to Forbes, people actually make more money not working and collecting benefits than they do by holding a minimum wage job in 35 states. This graphic does a good job of summing this all up nicely.

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Doesn’t that seem a little, I don’t know, ridiculous to you? So let’s take this back to Mr. Piazza. How is this the fault of business? Well, gee, I don’t know Mr. Piazza, maybe because THEY’RE THE ONES PAYING THE WAGES? Employees don’t control how much they get paid (unless they’re in a union, but that’s apparently un-American), so Piazza’s argument is ludicrous. Let’s examine more gems from Mr. Piazza.

When the minimum wage is $10 an hour, you lose all that because I’m going to bring someone in at $10 an hour. What incentive did you have to learn your job?

Here we go again with this bullshit. Yes, your labor force is no better than a pack of dogs performing tricks to win cookies. Give me a fucking break. Money is NOT the only thing that motivates people to perform their jobs. What about, I don’t know, pride? What about wanting to make sure your coworkers succeed? What about wanting to see your company succeed and grow? Using Mr. Piazza’s logic, every worker in the country should show up to work every day and do the absolute bare minimum of work needed to get by. They’d never work overtime, they’d never stay late, they’d never take their work home with them. And to be sure people like that do exist. But how many people do you know who go above and beyond at their job? Many of you reading this right now probably do so because you, heaven forbid, like your work and take pride in it. And finally there is this:

Piazza says his managers make roughly $55,000 per year, which he notes is more than a teacher (“a noble profession”), and that his employees can flourish no matter “what schooling you have.”

“People think we’re a dead-end job. Well, I’m not a dead-ender. I’ve got 585 employees and 55 managers, they’re not dead-enders.” 

Gee, that’s funny, because all I ever here from conservatives who think the minimum wage shouldn’t be raised (or should even be lowered) is that fast food jobs like the ones Piazza provides are not meant to be permanent. That’s all any conservative pundit or talking head can jabber on about–these are jobs for teenagers, they aren’t meant to support people and families! Well, Mr. Piazza seems to be quite pleased with the permanency of the jobs he offers. His statement would seem to indicate that he sees no problem with people staying in fast food jobs long term.

On a side note, how stupid is it that a fast food manager makes more than a teacher? That’s pretty fucked up. And I’ll tell you why. In a market society like ours, wages are determined by the value that society as a whole places in the job being done. So guess what that means? Americans value fast food more than they value education! Although anyone who’s taken a look at the waist lines and test scores of American children probably could have told you that.

Another argument I hear about raising the minimum wage is that the price of goods and services would also increase. Well, yes, that is one possibility. Although in many cases it’s probably not a necessity. But let’s say that the price of goods and services generally did increase. So? It wouldn’t matter, because the wages of a the lowest sector of the economy would be increasing, meaning they would be able to afford more goods. Or more expensive ones. Any increase in price wouldn’t be more than the increase in wages (because employee/customer ratios are never 1:1). Essentially, a whole group of people would suddenly find themselves with disposable income that they would then pump into an economy. Not to mention all the money that taxpayers would save once these people no longer needed food stamps and other forms of public assistance.

But I know that this argument is bullshit for another reason. All one needs to do is look at the minimum wages that other countries set. In Australia the minimum wage is $16.87/hour (where, coincidentally a Big Mac costs $4.62–only 6¢ more than in the US). In Belgium it’s $11.69/hour. In Canada it’s $10-$11 per hour by province. In Denmark it averages out to a whopping $20/hour. New Zealand is $14.25 an hour.  And a lot of other first world, industrialized nations like Iceland, Germany, Norway, Sweden, and Finland don’t even have a minimum wage because all workers are allowed the right to collective bargaining (damn commies!). None of these economies are collapsing or teetering on the brink of destruction. In fact, a lot of those economies are booming. Hmm, could it be because companies there actually pay workers enough to buy the goods and services produced by their economy?

It essentially comes down to this: who should provide for workers–employers or your tax dollars?

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7 thoughts on “Raising the minimum wage

  1. I have no idea how even two people with minimum wage jobs get by. Especially when they have kids.

    What I do know, at least in my experience, it matters not how much you make. The world just finds new ways to get it from you.

    I remember when I quit smoking after 2.5 decades, I thought “hey I will have a lot of extra cash”, from not supporting the habit. That money exists only in your pipe dreams. I never really saw the improvement.

    We have been fairly successful around here at keeping our light bill at a decent level. Putting in CFL’s, turning off stuff we aren’t using, and looking for ways to just be efficient. Every time we see an improvement, they raise the fucking rate! The system is rigged.

    Raising wages will have the same effect on most people. It won’t make tires for the car any cheaper. It won’t make the cost of a baysitter any less. But what it does do, as you said, it pumps more $ into the system.

    The economy is the winner. I would whole heartedly agree with a raise in minimum wage.

  2. If there were tons of other jobs out there, and heavily subsidized post-secondary education I would say…sure keep the minimum wage where it is and let those jobs simply be a stepping stone for young people to get better jobs, but this just isn’t in the case. Many college grads are living like they are on minimum wage because student loan payments cut into the increased salary they are making for the most part. The…if you work hard you will move up in life mentality has to end, because for many there is literally nowhere to go. There is no plethora of good paying jobs that require only a high school education, because many of those jobs moved overseas.

    Some idiot was making the similar ridiculous arguments about this on an article I was reading the other day, saying that small business would be forced to close as a result because they couldn’t afford to pay their workers, but that’s a red herring because small business usually can never compete pricewise with big chains, but offer usually better service, and good quality to compensate, this means you need more people with buying power around so that shoppers have choice. Those with little means right now have no choice but to go to the bigger chains because they need to save the money, and those with means keep shrinking. So if you raised the minimum wage, small businesses might actually get more business thus increasing profit margins and leave the boss just as rich if not richer than before after paying his workers higher wages.

    The long and the short of it, as you pointed out, is that the rate in which the minimum wage has increased, has not kept pace with inflation. It needs to be raised.

    1. Excellent point about student debt. And to me the crux of that problem is two fold. For one thing it can never be discharged. You’re on the hook for life. It seems pretty stupid to me that someone can be totally reckless and irresponsible and run up a huge personal debt, file bankruptcy, and get most of it dismissed. But someone who makes a good choice–to go to school–gets penalized. For life. That’s just dumb.

      And two, education needs to stop being a for profit business. I’m all for capitalism, but some things just shouldn’t be run for profit. Education is one of them. Education is an economic investment for any society–better trained and educated workers compete better in the global market. Eventually, for every dollar we spend on education we get many more returned to us. In my perfect world, all education would be free.

      But since that won’t happen here–at least until my parents generation dies off–I’d be for some kind of reform. All high school students should have to take some kind of loan and debt counseling before entering blindly into the student debt system. More repayment programs–you provide two years of community service, 50% of your loans are forgiven. That sort of thing.

      1. I agree, I know Obama ran on a platform of giving free tuition to those who joined the peace corps, making it on par with the military and I don’t think it ended up working out that way, but I do believe that there is a deal you can make when you are in the peace corps to significantly reduce your student loan debt. I think this should be extended to community service as well. Furthermore they should also be incentivizing students to enter into career fields in which we are in short supply, like health care, or teachers in some areas, so that students get a break on their tuition provided they work at a certain hospital or school that is short staffed for a given number of years.

      2. Given our national political climate, I doubt there will be reasonable reforms anytime soon. Hopefully it happens at the state level, though. I know that in my state, Oregon, there’s an initiative called “pay it forward” that would amount to free college tuition for community and public colleges, so long as participants agreed to pay 3-5% of their post-college income for 20 years.

        http://www.oregonlive.com/education/index.ssf/2014/06/oregons_tuition-free_pay_it_fo.html

      3. Yeah I know of a couple of states who offer free masters degrees in teaching to stay and teach in their state for 5 years. That Oregon thing is a pretty good deal really. 20 years is a long time, but it doesn’t become as taxing if your first job isn’t a very good one so you don’t struggle so much at the beginning to try to rise out of a low income situation or spend a lot of time job searching.

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