Saturday, May 23, 2015

The even BIGGER Minimum Wage Lie

The narrative that the left is attempting to promote, is that the minimum wage, should be a lower middle class living wage.

They have further determined this "living wage" to be about $15 an hour.

Thats about $30,000 a year based on the standard 2000 hour work year (thats 5 full time work days a week, minus 10 unpaid days for national holidays. Most minimum wage workers do not receive paid holidays or paid vacation).

It's also a $15,500 a year RAISE for those workers, more than doubling their pay (currently $14,500 by the 2,000 hour standard).

...If you think someone picking up  litter in parks, or working a cash register at McDonalds, on their very first day of their very first job, is worth paying $30,000 a year...

There is something wrong with you.

...Or your just don't understand how money, or wages work (which, frankly, is often the case).

Normal wages are not just arbitrarily "set" by some big daddy in the sky, or by evil greedy CEOs looking to "exploit the workers". They are based on the value a worker can provide to an organization, and the cost to the employer of replacing that worker.

Normal wages are not arbitrary, they are not fixed, and they are VOLUNTARY. If you dont want to take what an employer offers, then you can find a different job that you want more and are willing to take less money for, or you can find a job that pays more.

If you can't find a job that pays more, then your skills and experience are not worth more, or you are not selling yourself properly. Otherwise, you WOULD be able to find a job that pays more.

On the other hand, if an employer doesn't pay enough for a job, that people are willing to take what they are offering workers to do that job; that employer won't be able to fill that job. They will have to either make the job more attractive to workers, or increase the pay (or both).

It's basic market economics... Of course, the left don't believe in markets...

Here's the thing...

Really, I think this whole $15 an hour idea stems from the concept many seem to have internalized (whether or not they've put it into words, or consciously thought about it):

Having a "good" middle class life shouldn't be hard.

People shouldn't really have to do things like sell themselves well, or find a better job every year or two, or work harder, or deal with politics, or work overtime, or work more than one job; to make enough money for a "good life".

They see how competitive and harsh the world is, and the job market is, and they think it's bad and scary and stressful, and not everyone can compete. Even if they have the skills and experience some people are bad at interviewing or resume writing, and some people are too stressed by it, and some people are discriminated against, and theres just no demand for the skills and experience many people have, and its all changing all ttthe time...

...and dammit everyone deserves a "good life".

They think everyone who is not disabled, should be able to find a "good" job, that gives them a "good life", regardless of their skills and experience.

In fact, many of them even say you have a RIGHT to a good job, that pays enough to have a "good life".

They don't think you should HAVE to compete, or struggle, or be stressed, to have a "good life".

They just want people to be able to get a default job, for default pay, and have that be "enough", without worrying about negotiating, or getting raises, or competing for better jobs or more money, or losing their job and not being able to find one that pays as much.

Sure, if people want to compete for better jobs, or want to make more they can... but they feel that every job, no matter how unskilled, or how little value it provides to their employer, should pay enough to have a "good life", just for showing up and doing the work assigned, and that people shouldn't have to worry and compete, just to have a good life.

That everyone should be able to make enough money to live where they want, at least with a spouse or a roommate.

That everyone should be able to make enough money to raise kids, or to travel, or to live in new York York or LA, or to go to college...

So we can all be equal and free of "wage slavery", and pursue our real passion in the arts or something, I guess?

Same reason most of these same people think that college should be "free", and school loan debt should be forgiven... or just erased. Same reason most of these same people think health care should be "free" (or paid 100% by employers and the government, which to them, is the same thing).

They want people to be able to have a good life, and not worry about having their life screwed up, by losing their job, or getting sick, or not being able to find a new job.

They want people's lives to not be subject to the whims of the marketplace, or of economics.

How... Utopian.

This in fact, was the original promise of socialism, communism, marxism, maoism... and every other utopian ideology. That somehow, through proper application of government, we can be free of struggle and strife, and free of the need to toil, and free to pursue our dreams without worrying about those things.

Of course, this completely ignores basic economics... There is no such thing as "free", and unfortunately, no matter what laws the government passes, you just cannot ignore basic economics. Because on this planet, we live in a scarcity based economy (no matter what economic system "runs" it), and economics runs EVERYTHING.

In ignoring basic economics, It also completely ignores the fact that jobs don't exist to provide a living for workers.

Though actually, if you ask most leftists, that is actually what they believe jobs are for... or at least what they should be for.

Ask a union organizer why the factory exists, and he'll tell you it's to provide good high paying jobs for his union members first... and whether the employer makes any money or not isn't his problem. They're all greedy exploiters anyway.

But that's not how the world works.

Businesses dont exist to give people jobs. Jobs exist, for the purpose of doing the useful and productive work of an employer, in order to make money for that employer... Hopefully at a profit, or those jobs won't exist for very long.

No, the minimum wage is NOT a living wage, because it is not intended to be, nor should it.

It is meant to be the absolute minimum an unskilled and inexperienced worker will make, while they are learning skills and gaining experience, that will make them more valuable to employers.

... Which is exactly what almost all minimum wage workers do. Excluding tipped employees, over 80% of minimum wage workers earn at least 10% more than minimum wage within 2 years, and at least 30% more within 5 years.

Only 4.5% of the overall work force, and only 1.8% of the full time workforce between the age of 18 and 65, earn minimum wage. It is not, never was, and never should be a living wage.

Also, the common narrative that the minimum wage hasn't kept pace with inflation is a lie.

Not just a misinterpretation or shading the truth, it's a flat out propagandist lie.

They lie, by choosing the starting point of their timeline at the highest relative value the minimum wage has ever been, 1968... Which, incidentally, was immediately followed by the highest annual peacetime inflation the U.S. has ever seen, for over 15 years.

The minimum wage has kept exact pace with inflation for the last 30 years (since 1985, to the penny), and has more than kept pace, since it's inception in 1938. It was only from 1969 to 1984, when inflation in the U.S. went as high as double digit numbers annually, that it did not.

In fact, it's not only more than kept pace with inflation since it's inception, and has a much higher relative purchasing power... It has actually almost  DOUBLED relative to inflation, since its inception in1938.

The 1968 number was unusually and artificially high. How high? It was a near doubling from just a few years before, at $1.60 an hour (a 20% increase from 1966, which was itself a 40% increase from 1962, and overall it was a 100% increase over 1956... Even though the U.S. had less than 3% annual inflation in those years. The 1956 minimum wage in 1968 dollars was $1.02. In 2015 dollars, it's $6.96... a bit less than minimum wage today).

But even in 1968, the "$15 living wage" people's baseline year, the minimum wage was STILL not intended to be a living wage. $1.60 an hour in 1968, meant about $3,200 a 2000 hour work year, or about $10.88 and $22,000 a year in 2015 dollars.

That year, the median wage for ALL workers was $6,580 or $3.30 an hour, a bit over DOUBLE the minimum wage. The household income was appx. $7,800. However, the median wage for full time employed males, was actually $7,600 (because women were a small percentage of the full time work force, made far less then men, and rarely worked if their husbands worked a good full time job).

In 2015 dollars, that would be about $45,000 a year for all full time workers, $51,000 for full time employed men,  and the household income would be about $53,000.

Which by the way, is not very different from what they actually are now. $44,000 for all full time workers, $48,000 for full time men, and household income is about $54,000

Remember, these are medians, not averages. Also note, all were above 1968 levels before October of 2008, but the recession has taken about $2k-4k out of personal income and $4-6k out of household income ("official estimates" are as low as $1k personal and $2k household, but no-one actually believes that. Also, they don't account for inflation... official estimate, or actual... Adjusting for inflation using official numbers... which are well known to be very low... Some estimate as much as $6 personal and $9k household accounting for wage freezes, reduced profit sharing and bonuses, and lack of job growth and promotions; as middle income males were hit worst by unemployment and wage cuts, and have recovered least).

So, by that logic, with the artificially high minimum wage of 1968 being approximately half the prevailing median full time wage; to "keep up" with 1968, the 2015 minimum wage should be...

... Wait for it...

$11 an hour.

So, to match what the highest minimum wage in all of American history, the glory day, their chosen baseline, wouldn't be $15, it would be $11.

Of course, as As I have now explained several times, the 1968 wage was a sudden and artificially high raise, double the 1956 wage, and in constant dollar terms, four times the minimum wage at its inception in 1938.

To keep up with 1938, would be? About $4.20

To keep up with 1956, the year before the minimum wage started jumping every couple years much faster than inflation? About $6.95

At $7.25, we're at about the same in constant dollars, as 1962.

..... So the inflation argument is a flat lie, and the $15 argument is not based in economic reality.

But, just to put the nail in that coffin for good... Just in case somehow the $15 minimum wage sounds like anything close to a reasonable or good idea...

Let's do some comparative analysis:

U.S. military E1 (private/airman basic/seaman recruit) makes about $18,500 a year, or about $9.30 an hour base pay (based on the same 2000 work year... This of course is far less than a duty year even in peacetime, which is about 2700 hours, working out to $6.88 an hour).

Once that soldier, marine, airman, or seaman, are trained and ready to perform the basic duties of their basic occupational field ( E2, at 6 months or so), they get a raise to about $20,800, or about $10.40 on 2000 hours, or $7.70 on 2700 hours.

When they reach fully trained and qualified in the basics of their specialty ( E3, usually around 12 to 18 months or so), they get another raise, to about $24,400, or about $12.25 an hour (or $9 an hour).

Once they are fully trained in the details of their specialty, and have a couple years of experience in their field (E4, usually 24  months or so), and are directing the efforts of 2 to 5 other junior enlisted, they get a raise up to about $25,500, or about $12.75 an hour ( or about $9.45 an hour).

After 3 to 5 years, an E5 (sergeant/staff sergeant/petty officer 2nd class) whose job is to be a well trained and expert specialist in an particular area, and/or to supervise and direct the efforts of 5 to 10 other enlisted personnel...

...and here's the kicker...

... makes a base pay of $30,800, or a bit over $15 an hour on the 2000 hour scale, or about $11.47 an hour on a peacetime 2700 hour duty year.

Oh and by the way, its likely that sergeants immediate "supervisor", in HR terms, would be a 2nd lieutenant. A position that requires a bachelor's degree, and only pays $35,000 a year (with MUCH higher expenses than enlisted men, and they don't get a raise for 18-24 months)

So... According to this theory, minimum wage...

...for a 15 year old high school kid working at the mall food court lets say..

...Should be... about the same as base pay for a serious, skilled professional, with five years experience in their field, and at least two years experience supervising as many as 10 subordinates... With the added bonus of being taken away from their families for months at a time and BEING SHOT AT.

If you can't see just how ridiculous that notion is...

But hell... let's take the comparisons further...

The average starting base pay for cops in the U.S. (and most departments require degrees and certifications now) is?

$26,600 a year, or about $13.30 an hour (before overtime and detail of course)

How about teachers?

$36,000 national average (though they vary significantly by state, from $27k to $51k) or $18 an hour based on the 2000 hour year (which is how teachers are paid, even though they work very different hours... Usually about 1600 a year, including after school and work at home time).

Thats with a degree, and a teaching cert (which in some states can take two more years and thousands more dollars over and above the degree). Before they get certified, they average $24,000


$34,000 with a degree, but no experience, masters or CPA, $48,000 with a CPA but minimal experience.

Auto Mechanics?

$27,000 with no certifications, but at least 2 years experience and their own tools. $31,000 with a certification, tools, and experience.

Computer systems and networks operator or technician?

$29,000 with a degree and at least two years of work experience, preferably in tech support. $22-24k with no degree, a few of the right certs, a demonstrated skill and aptitude, and SOME experience.

How about carpenters?

Apprentices start at between $10 and $15 (with tools), journeymen start at $15 to $22 depending on specialty (framing, finish, roofer, cabinet maker etc..), region, seasonal demand, and unions.


Plumbers helpers and apprentices start at from $11 to $14 an hour. Journeymen $18 to $28.


Apprentices start between $9 and $15. Journeymen, from $16 to $24.

...Hmmm... Thats... Umm...

So... yeah... Apparently a grocery stocker, on his first day at work... should make more to start than a cop, a teacher, a mechanic, a computer and network tech, a carpenter, a plumber, and an electrician?

Yeah... NO.

But wait they say... "Now that the minimum wage is $15, then everyone else will have to get paid more proportionally, and everyone will be better off".

Umm... first, thats not how that works. Ever heard of an "inflationary spiral"? Probably not, since if they had, they wouldn't be suggesting the $15 minimum anyway... So look it up.

Second... hey... wait... that means this isn't actually about the minimum wage at all, and its not abput "helping the poor" now is it?

If it were actually about helping the poor, then they'd be pushing for $11 or $12. First, they would be MUCH more likely to get $11 or $12 than $15.

$11 would be roughly half the median full time wage, at $22,000. This is roughly equivalent to the 1968 level (whereas, today's minimum wage is roughly equivalent to 1962).

Critically, $12 an hour would give a single minimum wage income earning family, with two adults and two kids a $24,000 income, enough to lift them out of poverty, while allowing a parent to care for the children. It would bring a dual income family $48k, which is close to the national median household income (which would be $13.50 an hour with two full time wage earners by the way).

... and of course, we don't even need to get into the fact that outside of wealthy urban areas, minimum wage employment would fall to somewhere around zero, if even an $11 national minimum passed...

No... It's not really about helping the poor.

As it happens... A huge number of union contracts, are index linked to the minimum wage, or to the mean or median wages (which would also be increased).  When them minimum wage goes up, so so do their union contract wages.

So are large numbers of government programs, and statistics... Including many poverty and welfare statistics.

And of course, if non-union labor is forced by law to be as expensive as union labor (and by the by, unions are usually exempt from wage regulations), then there's going to be less competition, less price pressure, and more jobs for union members.

So, all if a sudden it's not a "reasonable living wage" for less than 2 million people... It's a big raise for 15 million union workers, and and big budget increase for a whole bunch of government programs (whose administrators and staff are likely union members themselves. 50% of union workers are government workers)... and... what? They think that's actually going to happen?

Really? They think that's actually going to happen?

Or maybe they're hoping that by asking for $15, they can split they're difference, and get $11?

And hey... it's still a huge increase on their contracts right?

And they think that's going to happen?

Where's the money going to come from?

Hell, the money doesn't exist even to give just the less than 2% who actually make minimum wage, a raise to $11 (about 8 billion a year, mostly born by small businesses who already have an 80% failure rate, without increasing their labor costs by 50%). Never mind giving that same raise to 15 million more... Or... any raise to any more.

What are they going to do, mandate it by law, and just print some more money?

I direct you to the "inflationary spiral" concept I noted above.

The entire concept of $15 is a patently ridiculous and disingenuous scam.