Monday, November 15, 2004

Minimum Wage = False Economy

I ran across an editorial in The Tennessean (colorfully known

to us non-liberal Tennessee residents as "Pravda on the
Cumberland") by Molly Secours. The Tennessean wants me to
buy an archive of the article now that it has been a few weeks,
but being an enterprising Googler, I have found it on another
site. This story struck me on several levels. Being a dad,
I know kids sometimes don't understand the prices of things
and can ask for a lot more than is financially possible to
give them. I have also been at the extreme low end of the
earning spectrum. I worked my way through college after
having my first child. I was making $5.00/hour when minimum
wage was $4.25/hour, so I have been in this father's shoes.
Except for one thing, this father is in his late thirties,
not early 20's. I recognized my situation as being untenable
and did something about it. Anyway, I'm sharing both the link
and a copy of the email I sent to Ms. Secours (below the link).
I have not received a response from her.

[My email to her]
Ms. Secours,

I read you editorial about the overworked father in "The
Tennessean". It is strange to me that you felt sorry
for the father in this situation. I cannot imagine speaking to
my children in that way. Two years ago, I was out of work
for 3 months. To make matter worse, I worked the entire
month of November 2002 before the lay off and didn't get paid
for it because the company I worked for ran out of money.
My two boys still came over every weekend and most of the time,
I didn't have the money to rent a movie, much less take them
to the theater. But I never spoke to them the way this father
did. We played a lot of board games, went to the library and,
weather permitting, the park. I just can't imagine telling one
of my children I don't have time for them.

I imagine this father (I just can't call him a "dad") is very
frustrated. I can imagine being in my late 30's and only
making $6.85 an hour would make me angry at the world. But
it is not the world's fault that he is in that situation. He
has had 20 years to obtain and develop a more valuable skill
than changing the oil in a car, something which a lot of us
do ourselves at home. I know several auto mechanics who earn
a very nice living. Perhaps if he expanded his automotive
skills his paycheck would increase.

The point of the article was to support an increase in the
minimum wage. Your argument was this father makes $6.85 per
hour and can't afford to take his son to the movies. Minimum
wage is now $5.15 per hour, so he makes $1.70 over minimum
wage. Let us assume that if the minimu wage is increased,
his pay will remain the same amount over the minimum, which
would be $8.70 per hour. He would only have to work 47 hours
to make the same amount. So he has an extra day to take his
son to the movies. That sounds wonderful. And it would be for
about 6 months, then the cost of the movies would rise because
the theater workers make minimum wage. Also, the family's
grocery costs are going to rise because all those grocery store
employees just got more expensive. In fact, all prices will go
up, completely negating his increase. The goods and services
purchased by the lower income families are provided by minimum
or close to minimum wage employees. He will be back working 7
days a week within a year. Minimum wage isn't the answer to
this man's problems, a skilled job is. Historically, prices
increase after minimum wage increases. Minimum wage only
creates a false economy.

Another thing that would help lower income workers would be
to reduce or completely repeal the FICA taxes. This takes
7.5% of their pay, plus the employer has to pay 7.5% also.
An extra 15% of his paycheck would go a long way, and it
wouldn't increase prices, because it doesn't cost the employer

It is easy to appeal to people's emotions and try to sell a
minimum wage increase, but it is not an emotional issue, it
is an economic one. A minimum wage does not improve a
worker's financial position, except in the short term. But
our society only looks at the short term.

Thank you,


1 comment:

Anonymous said...

You, sir, are correct!