Minimum wage has not tracked productivity. People who must rely on these paltry wages are living at near-poverty level and with high unemployment and weak worker rights, it is difficult to demand fair compensation from employers.
>In 1968, the real value of the minimum wage was $10.65, so that, in fact, an increase today to a $10.50 federal minimum would not even bring the minimum wage fully back to the 1968 standard. Moreover, since 1968, average U.S. labor productivity has risen by 135 percent. Thus, if, since 1968, the U.S. minimum wage had only just kept up with inflation and average labor productivity growth, the minimum wage today would be $25.00.
Workforce is not responsible for productivity increases... technology is.
Also, minimum wage is a terrible measure to use here. Look at median wages, or even look at the upper end of the bottom quintile. Less than 3% of the country's workforce earns at or below minimum wage. [http://www.bls.gov/cps/minwage2012.htm]
Yep, this is why I'm against min wage. When I used to pick Mexican guys up as a landscraper in college, they wouldn't even get in the truck for less than $14 per hour.
People think that employers would take advantage of workers without min wage, and it's just not true (most of the time). In fact, the min wage enables them to do just that now since real market wages are above min wage laws.
In the UK, we the tax payers subsidise the McD's minimum wage so that their employees can actually live. We pay housing cost subsidies and pay the utility taxes and ... . madness - we subsidise their terrible wages just so we can buy a terrible burger at a silly low price.
I'm not sure that we're subsidising McDonalds as much as we are supporting people in a bad position. There will always be jobs that can't pay good wages and it's fine that these jobs don't pay well because these are jobs that require no skills and should only be worked by people new to working who are not dependant on their wages to live, teenagers or those in education. The real problem is that it's becoming more and more normal for people that should be in a career to work in a minimum wage job... forever.
My sister worked in a minimum wage job for a few years and that was fine, she was using it to gain work experience and the money she earned was enough to buy things she needed and to pay for her further education, now she has used that experience (and education) to start a career and hopefully within a couple of years she'll be well on her way to a lifetime of good earnings, all off of the back of minimum wage. The minimum wage being higher for her would have made no real difference, it was enough for her to justify working and to be able to afford to invest in her future. The problem lies entirely with the long term reliance on minimum wage, which is not a problem that McDonalds is responsible for.
I have no criticism for people who take minimum wage jobs - they are stars because they have motivation and (often) a clear view of where they are going - so all power to your sister.
The bug bear is that a very high percentage of the people earning minimum wage need state intervention to actually live.
If minimum wage does not pay enough to pay rent and local taxes - plus a reasonable social security contribution (health insurance in the USA) then the job is being subsidised by the people earning just a little more (the tax payer?) - so this is a subsidy to the employer - often a very large one.
I resent being asked to subside jobs where employers should be required to pay a living wage. I have no issue with the employees - only respect because they are doing their best in a tough market place.
What "very high" percentage? A single person working a 40 hour week for minimum wage can afford to live without unusual subsidies, even in London, unless you're going to abolish the NHS or introduce a poll tax. The many students working at McDonalds are certainly being heavily subsidised... and would be even if they weren't working at McDonalds or anywhere else.
The minimum wage-earning family breadwinners whose incomes are heavily topped up with child benefits and housing benefits might be being heavily subsidised, but that's because their living costs far exceed those of more employable people, not because McDonalds (or the local shop that barely scrapes a profit most open hours) is underpaying them due to their subsidies. Cutting their benefits gives McDonalds incentive whatsoever to raise their pay, because there's no shortage of unemployed, unskilled people willing to cram into shoddy shared flats and work as many hours in the week as possible.
I'm not a fan of corporate welfare like the Job Skills Agency paying a quarter of McDonalds' annual training budget, but there's no way you can prevent the existence of unskilled, un(der)employed people with few expenses dragging down the earnings of unskilled employed people that can't balance their budgets without subsidising them or auctioning off their kids.
It's questionable whether you want the opposite to happen - high restaurant prices, fewer affordable options, and fewer restaurants in general.
People will start screaming at politicians to "create new jobs", and for the skill level there's not much you can do except having subsidized cheap joints.
Ouch - lots of folks (uni graduates a plenty) taking jobs well below their "qualification" level. So - please do not be dismissive of people's skill levels.
Although not doubting the author's claims, the budget itself seems a little skewed. Who spends $90/mo on electricity? My bills come to $30/mo from Nstar - although I don't heat or cool my apartment from this supply.
Also, $100/mo for Cable & Phone? $30/mo T-Mobile Plan + $40/mo Comcast Internet = $70/mo.
There's an extra $90/mo saving - for what it's worth.. :-(
My power bill is around $40/month for my house, I work at home most of the time and I live in San Francisco. Tack in about $60-70/mo in the winter when I run the heater (gas). I am also educated enough to put on a sweater instead of running the heater :)
That said, I think the budget is pretty skewed as well, and assumes a few things that I propose are incorrect. For starters, having a car payment (or really a car at all) is an incredibly bad idea. I'd also posit that living in a non-shared situation is also un-ideal. I'd also suggest that if you're not making enough money, you shouldn't have a cellphone nor cable TV, but I suppose you could qualify for the infamous "Obamaphone". IMHO you could cut $600/mo off that spend then tack on $40/mo for a bus pass, tack on $80/mo for a reasonable healthcare bill, $30/mo for some cheap DSL or even dialup so you're not totally off the grid.
That leaves you with $450 and only working the MCDs job.
This obviously isn't to say it'd be a marvellous life, but its not working two jobs/etc.
I think the other disconnect is that people expect a "job" to be a "career" as well, and IMHO thats just wrong in this situation. Someone who's working a min-wage job is either just getting into the workforce (as a teenager or something) or someone who can't get anything else. The someone who can't get anything else, I don't know what to do about that, but its not the problem of wage payers to help them out.
Canadian here: Electrical bill of $60-80 every two months in a 600sqft condo on the third floor of a west by south west facing unit. It's also possible to rent a room or small basement suite for $600/mo and have all utilities included.
If you're on minimum wage, internet is easily accessible from a library, McDonalds, or Starbucks. Or find a landlord offering it bundled.
Cheap cell plans from $20 upwards do exist.
I'm not saying this is ideal, but then again, we're talking about minimum wage. I used to work at McDonalds in Canada and one of my co-workers worked her way up to manager and managed to go to college part time. Granted, she was also living at home with her parents and our post-secondary education is heavily subsidized up here.
I spend probably 90 to 140 on electricity. I seldom use heat, but cooling is quite necessary here. My phone is $45 and I'm still on my parent's plan so that's quite a bit of savings. And I don't have cable, but my internet costs $65/month.
I don't doubt that is is hard to live a nice life on minimum wage. But I also believe that a lot of people just find it absolutely outrageous to go without a lot of things we don't actually need. I think it is funny that "cable" is listed in the budget like it is a basic necessity for life. Ditch cable = save money.
If ever you needed a reason to seriously evaluate what types of businesses to support, this is it. The race to the bottom is fully supported by the average person's spending habits.
While $20/month for health care is ludicrous, the writer's $215 claim is also at the high end for individual coverage. Most privately carried health care plans easily available to individuals cost between $70 and $140 dollars for one person. The bigger issue is that copays and deductibles will quickly escalate to the point of no being affordable should anything significant actually go wrong - private insurance at the moment (probably until Obamacare kicks in) is really only an effective coverage if you can afford to pay thousands of dollars a year worst case scenario.
Anyway, the main point of the bit still stands. Just the difference between premiums and what it would cost to actually get care was a little off.
Is this true in all cases? I believe my folks are paying over $1k per month for health insurance, implying more like double the writer's claim per person.
$70-$140/mo for private health insurance sounds like what you pay if you're young and completely healthy.
>> easily available to individuals cost between $70 and $140 dollars for one person
...as long as that person has never had a blip on a health check in the past, and is under 30.
$215 is nowhere near the high end for individual coverage, even for high-deductible plans. Think multiples of that number. I wouldn't be surprised if there were people paying over $1500 for a high-deductible plan for one person.
I assumed younger. Perhaps I shouldn't have assumed male, but most fast food workers seem to be younger. I figured the vast majority would be under 30.
Most of the plans I've looked into have fine print that makes it more likely that they'll deny coverage than try to charge someone more than $300 month in the sub-30 male cohort.
Obviously I'm ignoring family/dependents.
I'm wasn't trying to suggest that health care was affordable, or that the kind of coverage someone in the position mentioned could get would be sufficient - at best it would probably make them go bankrupt a few month later in most cases - Just that a large number of fast food workers could probably get insured for somewhat less than the assumed estimate. Presuming no diabetes, cancer, other major issues.
Obviously if you were born in 1960s or 1970s then your base rate goes up to 120 - 400 range instead, and people no longer young are obviously likely to be less healthy to begin with, which makes it improbable that you'd get near the low rate.
Anyway, I wanted the takeaway to be that regardless of even being able to get insurance for less, it's worthless because if anything goes wrong maximum out of pocket would still ruin anybody in that kind of work position, not to mention the spiral effect of missing work, not that I obviously don't really know how much it costs to insure older people or women.
Most privately carried health care plans easily available to individuals cost between $70 and $140 dollars for one person.
Another vote for "You are incorrect and are very likely basing this on your sole experience of shopping for a young, single, no kids, healthy male's insurance."
Because you have no choice? It would be very fortunate in mass transit hating America to be able to avoid needing a car.
It costs more to be poor than it does to be rich. Poor people can't afford to wait for sales and deals. They buy three crappy $30 pairs of shoes instead of one nice $60 pair of shoes because they live paycheck-to-paycheck. They will take the best car that they can find because maybe they can't save up $2000 all at once to buy a cheap used car.
You can survive without a car if you pick the right place to do that. I lived in AZ for three years before buying a car. I went to school and worked during that period. Sure it sucked needing to ask for rides from friends when I needed to get some place that was too far for my bike and didn't mesh with bus route/schedule. But it is totally possible to do it.
Because you have 2 jobs totaling ~70 hour work weeks to get to. This probably means that you don't have an hour or 2 to get from one to the other and in many many parts of this country public transit systems take that long.
"There are people who comfort themselves by telling themselves that poor people are only poor because poor people are lazy. Pretty sure someone who works 74 hours a week isn’t lazy."
Agreed. Now, let's stop talking about them for a minute and address the ones that are lazy. The ones that are only ever looking for a handout and specifically not looking for a leg up. I know some of these people. Allow me to paraphrase them: "Why should I do anything if I'm going to get a check from the government anyway? And why should I even think about doing anything else if all they'll do is take my guaranteed money away when I do something else?"
Now, how will we address this segment of society? Because clearly, these are the ones in danger of becoming criminals (of which we have plenty) if they're required to stop suckling.
Also, there are plenty in between. If the only job you're willing to do is assemble burritos for minimum wage for four hours a day, why are you entitled to a "living wage?"
Finally, let's look at the economics. The only way to not have anything resembling a classist system is if every [productive] member of society earned the same wage. But that's not feasible because it removes a tremendous amount of efficiency from the market. All kinds of market indicators are gone. I suspect (economist that I am not) it would lead to near-term economic chaos settling into a completely non-innovative society. Why strive for anything better when we're all "the same?"
Edit: Am I just too ranty? I don't understand the downvotes without replies.
A little ranty. And you are kind of all over the place. Yes, there are some people that actually are lazy and pride themselves on gaming the system and they should be cut loose. As I read, I was actually thinking of an up vote but then you veered off about criminals and such. I'll leave it alone then.
http://www.peri.umass.edu/fileadmin/pdf/resources/Minimum_Wa...
>In 1968, the real value of the minimum wage was $10.65, so that, in fact, an increase today to a $10.50 federal minimum would not even bring the minimum wage fully back to the 1968 standard. Moreover, since 1968, average U.S. labor productivity has risen by 135 percent. Thus, if, since 1968, the U.S. minimum wage had only just kept up with inflation and average labor productivity growth, the minimum wage today would be $25.00.