Why An Oregon With a $15 Minimum Wage Isn’t a Good Idea

It would seem that some people don’t really care about economics or anything when it matters most; of course, “it” meaning the minimum wage. In fact, people seem to really care about economics only when it agrees with them. Hence, we have liberal economists who twist the principles of economics without telling those who agree with them the flip side, the truth. This is why people who understand economics are frustrated with those who don’t and push for a minimum wage increase. Maybe it should be increased, but not up to $15.

People might say that Oregon isn’t thinking about a $15 minimum wage. I tell anybody who thinks this that they obviously don’t know about 15 Now PDX, or they don’t read this article by The Oregonian or that article by The Oregonian. Perhaps they’re very oblivious and don’t even know that Koin 6 News has an article about it. Obviously, there is an organization and three articles about it. Oregon has many people with plans to try to raise the minimum wage to $15. As a matter of fact, there’s a large possibility that a measure on the 2016 ballot for Oregonians to vote on it may show up.

What’s making many people frustrated in Oregon, that is, if they oppose such a minimum wage increase, is that supporters of this $15 minimum wage do not care whatsoever about people losing their jobs. It brings up a simple equation that anybody can understand: Employed People – Jobs = Unemployed People. There’s gotta be something more to this. Trust me, there definitely is.

Inflation Isn’t a Good Example

One argument that was made was that $7.25 back in 1980 was worth about $20 and oh yes, it most definitely was. But this isn’t much of an argument. Here’s a short list of inflation and what $7.25 was worth in the ’80s in 2013 dollars:

  • 1980: $20.46
  • 1981: $18.54
  • 1982: $17.47
  • 1983: $16.93
  • 1984: $16.23
  • 1985: $15.67
  • 1986: $15.38
  • 1987: $14.84
  • 1988: $14.26
  • 1989: $13.60

Over the decade of the ’80s, the dollar weakened. In this case, nearly $7 for $7.25. I brought this up because if you start from 1989 and say, “Look! Nine years ago the minimum wage was worth a lot more than it is today!” those who understand macroeconomics would be very annoyed with you because the farther back you go, the higher the value gets.

For example, $20.46 is nothing compared to 1913’s value of $7.25. Of course, you don’t see anybody saying “Oh my gosh! Look at 1913! $7.25 was worth $170.58!” Luckily, most people have a little more sense than that. However, this argument isn’t a very good one mainly because nobody made $20.46 in 1980. I believe that those who do argue that in 1980 our minimum wage was worth $20 mainly argue this point because they think most people are not smart, intellectuals who will look into things for themselves.

The minimum wage in 1980 was $3.10 per hour. Again, nobody was being paid $20.46 as a minimum wage back then. In 2013, $3.10 in 1980 dollars was actually the equivalent of $8.75 in 2009 dollars, only $1.50 more than the current federal minimum. I brought this up to a Democratic family member and she immediately said, “Bullcrap (censored)!” It is true that just because the wage increased that inflation won’t just unexpectedly spike. However, the unemployment rate will spike up again.

The Truth About the Tipped Minimum Wage

I’ve heard about how so many people think that the minimum wage is the absolute lowest amount someone could be paid. These people do understand that there’s a tipped minimum wage. But they fail to realize how this law actually works. Currently, the tipped federal minimum wage is $2.13 per hour. However, 19 out of the 50 states pay that. All of the other states actually pay either the full state minimum wage before tips or just pay above the federal tipped minimum wage.

Here’s the thing that most people aren’t being told when the tipped minimum wage is used as an point of argument: You can’t actually make $2.13 per hour. There’s a federal law that says that if a tipped minimum wage worker’s combined wage and tips “do not equal the federal minimum wage, the employer must make up the difference.” So anybody that thinks their waiter is only making $85.20 each week can now put their mind at ease and rest peacefully.

The reason why this wage is so low is because so many people in America tip their servers. According to Bloomberg Businessweek, Seattle has some opposition from waiters and bartenders about increase to $15 per hour. Pagliacci Pizza, a popular pizzeria in Seattle (one of my personal favorites), has talked about potentially removing the tip line on their receipts. Even though the minimum wage is $9.32 per hour in Seattle, waiters and bartenders “can add another $45 per hour on the weekends.” America is known for tipping their servers. One consequence of Seattle’s $15 minimum wage will be fewer tips to servers. Let’s not see Oregon move to what’s socially considered a very greedy mindset.

Oregon Can’t Afford to Lose More Jobs

Oregonians often complain about how there aren’t jobs around that they can do. There are many who say that businesses can afford to hire more workers and pay them all much more than $10 per hour. If a business makes billions of dollars in revenues, you should understand that they don’t get to keep all of those billions of dollars. There’s a lot of expenses. They have to pay for rent, utilities, materials, utilities, shipping, packaging, etc. Starbucks (SBUX) is a good example of what I’m trying to say.

The Seattle based coffee giant, Starbucks, had a net income of $8.3 million in 2013. This means that the company only got to keep $8.3 million of what it earned in revenues. The total revenue earned by this company was $14.9 billion in 2013. After expenses, this became a gross profit of $ Before you start going nuts over the $8.3 million that it has as a net income, it has debt. Starbucks, as of September, 2013, has $1.3 billion in debt. Starbucks has a total of $2.6 billion on hand. So why don’t we want to see it pay employees too much more?

The general public most likely just see Starbucks as some big, greedy corporation that doesn’t deserve to keep all of its money. This isn’t the case. Starbucks is still trying to grow as a company. With Starbucks needing to increase their minimum wage to $15 per hour in Seattle, jobs will need to be cut in order for it to keep growing. We should look to helping companies grow. This is because when a company decides to expand, the demand for labor increases, which means more jobs. Do we really want to see a decline in the number of jobs in Oregon?

Oregon Will Need More Taxpayers

Oregon is a beautiful place with no sales tax. A sales tax has been on the ballot about seven times in the past and it’s always been voted against. Because of this, our beautiful state relies heavily on income, business, and property taxes. Why am I bringing up taxes when I’m supposed to be talking about a $15 minimum wage? Well, because a taxpayer is someone who pays taxes, obviously. Small businesses generally make up the state of Oregon. Smaller businesses can’t afford to pay all employees $15 per hour. Even if the employees all made $10 per hour and had incentives for raises as the business grew, cuts would then have to be made.

When jobs are cut in Oregon, we see a decline in our state’s income. After a while, a deficit will occur, and legally, states cannot have deficits at the end of the year. I say that they cannot have deficits because even though the federal government isn’t required to have a balanced budget, the states are. What’s left over, and by left over I mean not allocated for future funds and whatnot, is sent back to the federal government. What happens when a state has a projected deficit? They raise their tax rates. Oregonians can’t afford to have higher taxes.

Just as John Kitzahaber said in the second Oregon Governors Debate that businesses tend leave Oregon once they get big enough. John Kitzhaber also said he’s not in favor of a $15 minimum wage, and he’s a Democrat! The truth is that Oregon doesn’t need higher taxes. Oregon needs more taxpayers, which can be attained from more jobs. We’re not going to get that from a $15 minimum wage.

Why You Should Look in to Things

The CEO of Starbucks, who approves of a minimum wage increase to $10.10 per hour, doesn’t want to cut jobs and is concerned with not being able to provide all the benefits to his workers. Here, we can see that CEOs aren’t necessarily greedy. However, despite this fact that the national news wrote an article about this CEO and his noble interview, 15 Now PDX would have you think that he’s a greedy man. Cherry picking from websites that state a $1.7 billion profit and over $9,000 per hour wage for the CEO is supposed to stir up anger within Oregonians.

According to Yahoo! Finance and Marketwatch, the gross profit of Starbucks was $8.5 billion and $4.2 billion respectively. Look at the links and you’ll see that it’s hard to figure out what “profit” 15 Now PDX’s source is quoting. They said it came from the company report, but that thing wasn’t written as simply. Either way, 15 Now PDX’s sources are stretching. Starbucks’ CEO makes less than Apple’s CEO, but still more than Microsoft’s CEO.

The math on the $9,637 hourly wage is off. If Starbucks’ CEO worked a 40 hour work week, he would make $385,480 each week. This means, that if the CEO worked only 10 weeks, he would make most of his $3.96 million salary. I’m sure you know just as well as I do that a CEO does not work only a quarter of the year. If we have our CEO working 40 hour workweeks and he worked at least 40 weeks of the year, he’d make $15,419,200 per year. I’m sure he’d like to have that salary. The moral of the story? Always check your math. If someone else gives numbers like this, check their math. You never know who might be lying to you. I welcome all checks on my math and will update my articles accordingly if I really screwed up.

Why It’s a Bad Idea (Conclusion)

We’ve seen many examples in this article. We’ve seen that some of the arguments used by supporters are manipulating the minds of those who don’t understand how to look things up for themselves. How awful would it be to know that someone is trying to take advantage of other peoples’ ignorance? How terrible is it to know that a topic that has created many debates and arguments was created on false pretenses of $7.25 being worth $20 over 30 years ago? How asinine is it to believe that people won’t find out what the law about the tipped minimum wage on their own?

These questions are things we ought to be asking ourselves. Why should we allow others to take advantage of something many of us don’t know much about so they can have their personal agenda pushed forward? If you found out that someone lied to you about something you were passionate about, you’d probably be upset with them. So why not be upset with those pushing for a $15 minimum wage? Why not be upset with those who use knowledge many of us aren’t willing to go out and get against us? I’m outraged that it’s even happening!

Please, click on all of the links. I have not only put them in the text, but I’ve put them at the bottom of this article for everybody that doesn’t want to go back and look for them. This is a very important issue. If you truly care, you should see for yourself and click on these links that will take you to The Federal Reserve’s inflation calculator or The Department of Labor’s explanation of the tipped minimum wage law in plain and simple form. Please, I beg you, prove these people wrong and fight back by self-educating and voting.

Please share this with everybody you know. This doesn’t affect only Oregon. It affects the entire nation since there are groups like 15 Now PDX who twist facts and use false information. I’ve emailed the group about their informational mistakes and they haven’t gotten back to me. It’s clear that they’re intentionally using this information because they think people don’t know any better. Let’s prove them wrong!


 

Calculation Sources

The Federal Reserve: Inflation Calculator

The Department of Labor: Minimum Wage

The Department of Labor: Tipped Minimum Wage Law Map

The Department of Labor: Tipped Minimum Wage Law Simple Explanation

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