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Friday, June 30, 2006

Minimum Wage again

--posted by Tony Garcia on 6/30/2006

I am tired of an issue that will continue to rear its head so long as people in this country believe things are owed to people just for existing. I am tired of an issue that will continue to rear its head so long as people in this country fail in their understanding of a real supply/demand with regards to labor.

Minimum wage.

The Senate killed a bill to raise the minimum wage by 40% (from 5.15 up by 2.10 to 7.25). Now what irks me about the people who advocate for this is the justification for it. At the current minimum wage, $5.15 an hour, a full-time worker would earn $10,712 a year, which is below the federal poverty line for a family of three. Uh, so what?

I'm not going to go through the macro economics part of why minimum wage hikes are not worth pursuing. Many others will do that. I'm not going to get into the micro economics either...many others will do that as well. I'm exploring on the individual basis the actual need (or lack thereof) for raising the minimum wage.

According to the 2004 Characteristics of Minimum Wage Workers there were 2 million people who earn minimum wage or less. Slightly disturbing until you realize that 1.183 (59%) work in the food service industry. Remember that servers get paid at this rate because they also earn tips. Once you factor in the people in sales who work for commission (hence they work at or below minimum wage) you realize that only 1/3 of those at minimum wage are in other industries. So, why is this an issue? Of those 1/3 how many are part-time and/or youth?

Beyond that, there are a number things that should be answered prior to engaging in a push for raising minimum wage.

1) How many people in their field for over a year are earning miniumum wage?
2) How many people in their present job for over a year are earning minimum wage?
3) Of those how many have had fewer than 2 jobs in the past 24 months.
4) How many Head of Households earn minimum wage?

So many other questions that are actually relevant to this issue, but I will stop there.

What jobs are earning minimum wage as a starting point? Clerk at Blockbuster? Fry guy at McDonald's? Electrical engineer at, well, whereever? What jobs earn that little? Of those jobs how many are filled by people without a high school diploma? Quite frankly I have very little sympathy for people whose earning power is close to nil if they did not get a diploma. The standards for getting one are so low that there is no excuse for not getting one. I have even less drive to help someone who dropped out of high school and their earning power hovers around minimum wage. Seriously there is not a reason in the world to have dropped out and not gained some marketable skills in the meantime. Those who fall into this category, frankly, are sleeping in the bed they made. It is THEIR responsibility, not businesses through mandated wage increases, to get on track. But I still am wondering how large of a group this is.

How many people are in their jobs over a year and still are earning minimum wage? I have two words for these people: Change Jobs. If a person is really so dense that they are staying in a job where minimum wage is being paid AFTER their probationary period expires they deserve the wage they receive. Typically the scales of wage hikes at that lower level of pay is quite fast FOR THE VERY REASON I JUST STATED. 99% of the people in a job where the minimum wage is paid after probation would leave that job. Businesses know that and if they figure they cannot afford the constant retraining they will not let that happen. The flip side, of course, is that if a business figures the constant retraining is cheaper than paying above minimum wage then the position is not one where anyone should seek a career. Those skills are obviously not marketable. Therefore staying in such a job is, well, a conscious choice and I see no compelling reasons for raising minimum wage for the benefit of these people.

One thing the drives down a person's "marketability" is their penchant for job-hopping. If someone is bouncing from KFC to Burger King to Wendy's to Pizza Hut all within a couple of years that says something for the inability to...well, a whole lot of inability to be honest. So if someone is job hopping and they are only able to pull down minimum wage that is their own fault. Stay in a job for a while and I have a hunch the wage will increase. The view of the employer upon hiring the hopper is, "Well, why waste time traning him with much when he is just going to leave soon anyway." In fact, after a while the hopper will find it more difficult to even find a job, much less one the pays only minimum wage. At that point he should count his blessings for being able to earn minimum wage.

The real key is of all the people who earn minimum wage I think you should eliminate from consideration those who are able to be claimed as a dependent by someone else. Typically this is a high school or college kid earning extra money. There is no reason in the world the minimum wage should be raised for these people. Of the remaining people earning minimum wage most fit in the categories described by my previous questions. I cannot find the numbers but all indications from other characteristics lead to the conclusion that very, very, very, very few people are the head of household AND earning minimum wage. Why does that matter. Because this tells us that the minimum wage earner is NOT the main income of the household. That means this issue is even LESS important.

Yes, the labor unions will/are pushing this. The race baiters will too as will every other "oppressed" group out there. While they cannot provide actual hard reasons why this is a worthy topic it does play into their "man is holding us down" drivel. But the truth of the matter is there is very little reason to take this issue up...ever.

If you are earning minimum wage and do not like it then change your job. Not that easy? That is just laziness talking. Work hard even within most companies where they pay ENTRY level minimum wage and eventually (with several months) you will be earning well beyond that. The only time that is not going to be true is if your own self-maintained circumstances are holding you down. There is nothing systemic holding people down. I know that from personal experience being homeless and working minimum wage jobs.

So can we please stop having this topic come up (in election years only, it seems). It is a pointless discussion for no real purpose and no real gains.


Blogger Internet Esquire said...

Truly a fascinating treatment of the topic of the minimum wage, and for the most part, I agree. The current minimum wage debate is steeped in ignorance about who the working poor are and how best to help them. Specifically, if you want to help the working poor, the best way of doing so is through an expansion of the Earned Income Tax Credit.

June 30, 2006  
Blogger McGruv said...

Every election year the Dems that bring up Minimum Wage and the Cons that bring up Flag Burning automatically lose my vote.

These tired old tactics are dispicable but they do reveal the "true colors" of people running for office. If they can't run on their own accord and resort to nonsense like this then they deserve to lose.

July 03, 2006  

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