# The Minimum Wage “Adjusted for Inflation” is Biased Propaganda

We’ve all seen what the minimum wage would be if it were adjusted for inflation, but do we really understand what that means? Many people tend to think that it represents what the minimum wage would be if it kept up with inflation for all those years. I’m probably going to get a lot of backlash for this, but that’s not what it represents. It represents what the minimum wage would be in 2013 dollars and the purchasing power thereof.  However, there are organizations that preach “income inequality” and advocate for ludicrous minimum wage increases that would have you believe otherwise.

I decided to take a deeper look at what the minimum wage would be if it actually would be around \$21.16 or \$12 per hour. Hold on to your seats, because this small amount of research I did is going to make a lot of people confused, mad, and calling me names. Hint: It’s nowhere near what anybody thought it would be.

Inequality.org: The Overblown \$21.16 Minimum Wage

Inequality.org wrote an article about how the minimum wage is stuck at \$7.25 per hour in 2012. They claim it should be \$21.16. How did they get there? Here’s what they said:

“The minimum wage reached its (inflation-adjusted) historic high in 1968, when it was raised from \$1.40 to \$1.60 per hour.  Adjusted for inflation using the BLS online inflation calculator that would come to \$10.55 per hour in 2012 dollars.

That \$10.55 figure is the focus of a nationwide campaign organized by the National Employment Law Project (NELP).  In today’s political climate it would certainly be a major accomplishment to achieve a \$10.55 minimum wage.  But \$10.55 is still far too low.

Using 1968 as our benchmark for the minimum wage implies that low-wage Americans today should be making just as much as low-wage Americans were making 44 years ago.  That benchmark is — frankly — ridiculous.

Can you imagine Americans of 1968 settling for a minimum wage standard of living that had been set based on 1924 standards?  What about 1880 standards?  At some point we should expect low-wage workers to start living better than they used to.  Don’t low-wage Americans deserve to live in the 21st century, not the mid-20th?”

First of all, as I just mentioned, the “inflation-adjusted” minimum wage peak in 1968 is only good for measuring purchasing power. But we’re not really looking for that. It doesn’t matter because, as they pointed out, we can’t measure our standards at 1968 when it’s present day in the new millennium. It’s 2015 now, we can’t be measuring the purchasing power of the past. This is a great point that they make. But the bad part is that they hurt their argument with the next part.

“A better way to update the minimum wage is to benchmark it to personal income growth in the economy as a whole.

Per capita real personal income excluding current transfer receipts — that is, the personal income earned in the economy, excluding Social Security and other government programs, adjusted for inflation — has grown by 100.6% since 1968.

In other words, the NELP has it too low — by half.  If our standard for minimum wages had kept pace with overall income growth in the American economy, it would now be \$21.16 per hour.”

Since measuring inflation wasn’t good enough for Inequality.org, because they want to show how big the gap in “income inequality” is, they decided to throw in per capital real personal income. That’s a real economic indicator, but that’s not a good one to throw into the mix. Here’s why: When someone is trying to show how bad income inequality is, you don’t want to use an indicator that uses the incomes of the ultra rich. They’re saying that everybody’s incomes have increased by 100.6 percent.  By everybody, this doesn’t just include the rich like the other propaganda that’s written, it includes everybody.

Mother Jones wrote an article about income growth in the United States and how it’s stalled for most Americans. The chart you’re going to want to look closely at is labeled “Change in Share of Total Income.” As a matter of fact, here’s the chart:

So what’s so bad about the economic indicator, per capita real personal income with this argument? Mother Jones, another left-winged political commentary site, claimed that wages have been staggering. Add up the total share of income and you get nowhere near 100.6 percent, which was the claimed growth of the economy’s income. When Inequality.org wrote this, Mother Jones came out with this chart the following year. Clearly, these two left-winged political commentaries need to get their stuff together because now who the heck are we supposed to believe?

Those who read the article will notice that Inequality.org said that even \$21.16 wouldn’t represent progress in 2012. Thus, 15 Now should understand that, if this is actually true, \$15 per hour won’t do anything. Bottom line: These people need to get together and collaborate instead of create political propaganda that just contradicts each other.

Inequality.org: The Propaganda

You may be wondering how Inequality.org’s article is propaganda. This is an excellent question that should be explored a little. It’s important to know that propaganda likes to use half-truths to prove a point. Inequality.org used half-truths and spun them into its opinion, which didn’t make sense at all. How? Well, it first used a real economic indicator. Those that understand it will see that the whole “poor people are getting poorer” argument is defeated by using this indicator. This is bad for Inequality.org because minimum wage increase activism relies on that argument being valid.

What didn’t make sense to me was inflating the previous minimum wage from 1968 to show what the minimum wage should be today. On top of that, Inequality.org decided to double that amount from 1968, because it believes that \$10.55 per hour is too little for people to live on. Regardless of whether this is true or not, using a personal opinion isn’t credible. What credibility is there when no research on the cost of living is done? If no research is done, how are we supposed to believe that \$21.16 is where the minimum wage should be?

What If the Minimum Wage Actually Followed Inflation?

Now that we see that the minimum wage that has been adjusted for inflation doesn’t represent what we thought it did, the real question is: What would the minimum wage be if it were linked to inflation? Well, we need to understand what this means before we can get into the math behind it. In a nutshell, linking the minimum wage to inflation means that it would follow the Consumer Price Index (CPI). If we were to do such a thing, we would need to allow the minimum wage to fluctuate rather than keep it from decreasing.

How I Calculated Minimum Wage Increases

First of all, I’m not able to use all of the minimum wage data from the Department of Labor (DOL) because the minimum wage was implemented in 1938. The reason why we can’t use the previous data is because when we get annual data for the CPI (inflation), the earliest year we can really find is 1948. Thus, the earliest minimum wage data that is usable here is 1947’s minimum wage.

Secondly, it’s important to understand that this isn’t an analysis of comparing previous minimum wages and inflating them to the present day. It’s an increase or decrease, depending on the CPI, of the minimum wage since 1947. This means that if the CPI increased by 2 percent, the calculation that I will make will add 2 percent to the minimum wage. This is so we can see what the minimum wage would actually be if it were linked to inflation and fluctuated with it.

Thirdly, the CPI that I used is the percent change from one year ago. This was so I could just add 1 and then multiply it by the previous year’s minimum wage. This is important to note because the CPI is an index and just has an indexed number by default.

The equation that I used for calculating the adjusted minimum wage is as follows:

$AMW=P_w(1+CPI)$

$AMW$ – Adjusted Minimum Wage

$P_w$ – Previous Wage

$CPI$ – Consumer Price Index

NOTE: Adjusted Minimum Wage is not adjusted for inflation. It is simply increasing the wage at the same rate of annual inflation.

The Results

Below is a simple table of the results of linking the minimum wage to inflation. Starting with 1947’s minimum wage of 40¢ per hour, I used the previously stated equation.

 Date CPI (%) Adjusted Minimum Wage 01/01/1948 7.7 \$0.43 01/01/1949 -1.0 \$0.43 01/01/1950 1.1 \$0.43 01/01/1951 7.9 \$0.47 01/01/1952 2.3 \$0.48 01/01/1953 0.8 \$0.48 01/01/1954 0.4 \$0.48 01/01/1955 -0.3 \$0.48 01/01/1956 1.5 \$0.49 01/01/1957 3.4 \$0.50 01/01/1958 2.7 \$0.52 01/01/1959 0.9 \$0.52 01/01/1960 1.5 \$0.53 01/01/1961 1.1 \$0.54 01/01/1962 1.2 \$0.54 01/01/1963 1.3 \$0.55 01/01/1964 1.3 \$0.56 01/01/1965 1.6 \$0.56 01/01/1966 3.0 \$0.58 01/01/1967 2.8 \$0.60 01/01/1968 4.2 \$0.62 01/01/1969 5.4 \$0.66 01/01/1970 5.9 \$0.70 01/01/1971 4.2 \$0.73 01/01/1972 3.3 \$0.75 01/01/1973 6.3 \$0.80 01/01/1974 11.0 \$0.88 01/01/1975 9.1 \$0.96 01/01/1976 5.8 \$1.02 01/01/1977 6.5 \$1.09 01/01/1978 7.6 \$1.17 01/01/1979 11.3 \$1.30 01/01/1980 13.5 \$1.48 01/01/1981 10.4 \$1.63 01/01/1982 6.2 \$1.73 01/01/1983 3.2 \$1.78 01/01/1984 4.4 \$1.86 01/01/1985 3.5 \$1.93 01/01/1986 1.9 \$1.96 01/01/1987 3.6 \$2.04 01/01/1988 4.1 \$2.12 01/01/1989 4.8 \$2.22 01/01/1990 5.4 \$2.34 01/01/1991 4.2 \$2.44 01/01/1992 3.0 \$2.51 01/01/1993 3.0 \$2.59 01/01/1994 2.6 \$2.65 01/01/1995 2.8 \$2.73 01/01/1996 2.9 \$2.81 01/01/1997 2.3 \$2.88 01/01/1998 1.5 \$2.92 01/01/1999 2.2 \$2.98 01/01/2000 3.4 \$3.08 01/01/2001 2.8 \$3.17 01/01/2002 1.6 \$3.22 01/01/2003 2.3 \$3.30 01/01/2004 2.7 \$3.38 01/01/2005 3.4 \$3.50 01/01/2006 3.2 \$3.61 01/01/2007 2.9 \$3.71 01/01/2008 3.8 \$3.86 01/01/2009 -0.3 \$3.84 01/01/2010 1.6 \$3.91 01/01/2011 3.1 \$4.03 01/01/2012 2.1 \$4.11 01/01/2013 1.5 \$4.17 01/01/2014 1.6 \$4.24 01/01/2015 #N/A #N/A

A visual representation of what the inflation-linked minimum wage would look like. (Blue: CPI; Orange: Adjusted Minimum Wage)

Where the Minimum Wage Should Be

Interestingly enough, we hear about where the minimum wage should be due to the purchasing power in today’s dollars. If we were to account for inflation correctly, then in theory, the minimum wage would fluctuate. In this case, the minimum wage should be at \$4.24. This means that, currently, our minimum wage is \$3.01 over the amount we should technically be at right now.

The question will surely arise, “How would we pay for anything with that kind of low wage?” The answer is very simple: The market, following the laws of supply and demand, would regulate prices for us. Since a 40-hour work week would produce a pretax income of \$678.40 per month, many people wouldn’t be able to afford a high price on everything. However, I do not recommend setting our federal minimum wage that low from where it is right now. But for the sake of answering the question of how people could afford anything, it’s important to understand that not very many people would actually accept such a low wage.

The Minimum Wage Would Drive Up Due to Higher Employment

The market would drive the wages up little-by-little until people would start to accept jobs. That would become a socially-driven minimum wage. However, the reason for an increase in starting wages at companies would be due to the increase in employment. Some may ask, “How would higher rates of employment increase the minimum wage?” Just like earlier, the answer is simple: Supply and demand affects the price of labor (wages) the same way it affects the price of goods and services.

If McDonald’s was opening a new restaurant where the unemployment rate was relatively low, it would have a hard time finding employees to work for them. It might hire 10 employees to start. But once the employees can’t keep up with the demand, there will need to be more employees on shift each day. Eventually, if the demand for labor were high enough, and that’s not too hard to get to when you’re more desperate, McDonald’s would end up raising its starting wages to \$10 per hour. Sure, it might really get around \$9 per hour in federal minimum wage states. But that’s still better than \$7.25 or \$4.24 per hour regardless.

Actually Linking Minimum Wage to Inflation

So what would happen if we actually linked our current minimum wage to inflation instead of going back and calculating it throughout time? I’m not exactly sure, but if lawmakers seriously considered it, I would be intrigued. If you think about it, it would force a lot of prices to stay lower for a longer amount of time. This is mainly because the increases are small. Companies can’t decide to increase their prices by a few dollars when people only receive pennies in increases each year and still be profitable.

I decided to do the math on the current minimum wage and link it to inflation. If we had linked the minimum wage to inflation in 2009, when it was raised to \$7.25 per hour, then this year, 2015, would have a minimum wage of \$8 per hour. Interesting to think that after five years, we would see an increase of only 75¢ per hour. This would satisfy the desires of both sides of the political spectrum: We would see increases in the minimum wage, but it wouldn’t kill small businesses. Why wouldn’t this kill small businesses? Because the minimum wage won’t always increase, which will decrease the cost of labor.

How long would it take for our minimum wage to get to \$15 per hour? Quite a while. If we saw the exact same pattern for annual changes in the CPI between 2009 and 2014, meaning it would just repeat, then the federal minimum wage would be \$15.12 in 2046. No ridiculous spikes in the minimum wage of 200 percent to \$15 per hour like we saw in Seattle and San Francisco. No jobs will be killed immediately, giving ample time for people to make plans of what they’re going to do with their business and employees can plan on what they can do to make themselves more valuable to their employers.

How to Not Be Fooled by Propaganda

There’s a really easy way to tell if what you’re reading about economics is propaganda or not. First of all, you need to see if what is being written about economics is actually following the laws of economics. If the laws of supply and demand are correctly being followed, then you know that it’s probably economically sound. If it defies the laws of economics, it will take a lot to be economically sound and not propaganda.

Second, you should be able to replicate what’s being written. If someone gives you an equation and tells you what the variables in it represents, then it should be replicable. If it’s not, then it would easily be rejected in a peer reviewed journal. In my article, I gave a simple equation and clearly labeled the variables in it. Go ahead! Check my work. I welcome it. People who write propaganda will not simplify their equations as much as they can and they probably won’t seriously welcome you checking their work unless they make their math hard. Please understand that a lot of economics uses calculus, differential equations, and plenty of other higher levels of math.

Lastly, see if the author of what you’re reading has a history of violating the laws of economics for a potential political gain. I’m sure there’s a lot of people that will say that this entire article was 2,000+ words of propaganda and false allegations. I try my best to not be biased because I use the scientific method. If linking the minimum wage to inflation proved that it wouldn’t work out, I would’ve written that it would kill small businesses. If I would’ve found that Mother Jones and other writers of political propaganda were economically sound, and credible, I would’ve said so.

I hope that all of my readers take everything in this article to heart. The minimum wage is something that shouldn’t be increased to whatever amount we think is good because it’s a quick, temporary solution. We need to think about unintended consequences, long-term benefits, and inflation control. These things take time to figure out and are very serious. It shouldn’t be taken lightly. Sadly, these days, it’s taken very lightly because we see people who just want to slap a band-aid onto our economy. I say that enough is enough. We’ve seen little help from these economic band-aids.

1. Thanks! We should talk sometime. I don’t always get a whole lot of people to discuss things with or bounce ideas off of.

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2. Anonymous says:

Your full of shit! The min wage should be fluctuating with the profits the companies they work for make and the cost of living increases and interest rates. You can’t pin it on inflation and CPU alone that is what created the inequality in the first place. Everyone knows that if the min wage rose at the rate profits did the min wage would be 22.00 an hour. So your calculations are simplified to the point of oppression friendly.And the majority tax rate compared to upper income. You are conveniently leaving out a plethora of factors for your own interests. When a hardworking blue collar worker cannot even afford a home modest for his family compared to a CEO of a min wage giant who sits and collects millions and then gets a tax break amounting to more than that worker earns in a year plus a bonus that does the same you have a problem. And not just one problem. A plutocracy controlling a Democracy is the problem. You are the problem. The majority needs to wise up to that fact and know it should be the Democracy controlling the plutocracy. It’s the only way for monetary equality or people like you will run a muck and take a mile when you only deserve an inch. Thus the American state of things. Get real bunghole. 4.25 an hour pppphhhhhh.

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1. Expletives, condescension, and enough confidence in yourself that you decided to be anonymous.

It sounds like you’ve read a couple of articles on economics and now call yourself an expert. Even I don’t consider myself a total expert and I’ve taken numerous courses in economics. Lucky for me, I don’t let my emotions take control of how I decide to argue with someone I don’t agree with.

It’s okay that you disagree, but all you have are complaints with no evidence to back up your claims. How can you expect me, or anyone that isn’t a political Ophelia, to take you seriously if you have nothing to prove your ideas?

You say I’m full of it. Prove it. You say my CPI calculations are crap. Prove it. You act as if you read my article. Prove it; had you actually read it, you would’ve seen exactly how it was proven. Instead, you’ve exposed yourself as a political Ophelia, allowing party politics to trump logic and reason. You’ve allowed your emotions to get involved, and in doing so, have greatly proven my point. Thanks!

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2. Very well said. Rather someone is anonymous or not does not change the fact that he/she is right. This article was very lazy and the argument is weak, inconclusive, presumptuous, calls everyone who does not agree with them as propaganda and ignores a lot of other factors. I like to read what the ignorant are posting and they are still up to their old tricks using loosely based data and calling everything they don’t agree with a lie.

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3. Lee says:

To anonymous, I just am astounded at your complete ignorance. So lets clear up a few things about CEOs. Many have a play to pay, ie it means they HAVE certain goals they have to meet in company performance to MAKE those large salaries. I have a friend who works for a large engine manufacturer and his contract states he only makes a small percentage of published pay if his leadership fails. BUT if he works hard, hires people who produce and makes a profit for the company and its shareholders he makes several million dollars. YES thats a lot but when you control a company supplying billions if not trillions in functional goods, parts and services for the WORLD.
Now lets put something in perspective, my current employer is having to produce about \$3000-\$4000 every two weeks for payroll PLUS pay for parts, services, rent, etc to stay in business. So at \$4000 thats around \$104k a year in JUST PAYCHECKS. Now I found out last year his shop turned about \$500k, ex fiance may have stole some of that but also I know she failed to pay certain bills too. Now with matching funds lets call it \$150k, he probably has at leat \$150k-\$200 in expenses, At least \$150K in parts, HMMM the \$500k is looking really small considering state the shop is in (roof leaks) some tools are old/need servicing.
For some reason many people who think \$15 minimum wage is fair have no clue of the COST of doing business, or the fact that if a guy making \$7.50×40=\$15,600 with no overtime or extra work, goes to \$31,200. And this is for the trash and mop guy. What about the worker who has worked for 4 or 5 yrs made it to a management position making lets say \$12.50hr. So to be fair that person wage must go up as well and lets just take fact most of the management that make in \$12-\$15 hr make more on over timeso lets use a round number of 20hrs. 40 hrs week is \$26,000+\$19500=\$45500 so just for two people to double the wages the cost of TWO people went from \$61100 to \$122000.
FOR TWO PEOPLE.
What about a a business with 10 people and a profit margin of LESS than \$500k. Your stupid idea just put those 10 people out of a job, a business not using other businesses and many many people hurting.
ALSO fools like you fail to understand that since 1968(for ridiculous reason) look at how many new rules and regulations people have to follow now vs then. Costs have gone up, profits have gone down and now wages would destroy many small and mid size businesses.
GROW UP AND GO LEARN SOME FACT BEFORE SPOUTING YOUR SJW/OCCUPY BS.
Good article!

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4. Anonymous says:

I know right COMPLETELY FULL OF BULLSHIT with his corner cutting equation! That shit is propaganda idiot! An easier way to do this would be to factor in the cost of living then make the minimum wage 3 times that cost to equal a wage that’s above just livable making poverty another obsolete thing of the past! But will Companies ever actually do this or will greedy CEO’s do what they seem to always do…? Which is take the money & run! Or in this guy’s case claim propaganda as truth & truth as propaganda! A workable marketing strategy I suppose but by far from & by no means factual!

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5. If you think I’m cutting corners, please, suggest a better equation to show what I’m presenting.

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6. Carl P. Davis says:

All I know is that the wealth disparity has increased exponentially to the point that the “wealth gap” today is greater than it was in 1929 and we know what happened next. One other thing I know is that history always repeats in principle. Soooo. Buckle up kiddies and enjoy the ride down to Hell where the Roman and British Empires fell.

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3. Robert says:

What happened in 1980? Things started to level out shortly there after…Maybe that’s because they decided to take those volatlie things like food and petroleum out of the market basket…I gotta better idea for calculating the minimum wage: Tie it to the price of a barrel of oil.

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1. strider says:

Inequality.org was not stating that \$21.16 is would be the inflation adjusted minimum wage today, it stated that it would be \$10.55. It is saying that if the minimum wage had kept up growth with the ‘real personal income’ (which was at 100.6% from 1968 according to them). So 10.55*(1+1.006)=21.66.

You assumed that the base minimum wage should be calculated from 1948 when it was 4.18 in 2013 dollars or 2.5 times lower in real terms than in 1968. The difference comes from the fact that you assumed no real income gains for the minimum wage while Inequality.org assumed the average gains.

I can’t justify if 1948 or 1968 base minimum wage should be used the comparison because the wage setting is political, however I disagree that no income gains should be attributed to the minimum wage. If minimum wage earners can not enjoy the benefits of the general economic growth soon they will be social outcasts and will not be able to contribute to the society. Minimum wage should provide a basic standard of living for the present time. The poverty threshold for a single person was \$11,670 annual while the minimum provided with \$15,080 of pretax income annually. So earning a minimum wage is just barely keeping you out of poverty – and that’s when having no children.

Indexing the minimum wage by the mean real income growth (as per Inequality.org) is too extreme, in my opinion, however some indexing is definitely needed.

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1. Thanks for the insight! I agree that something needs to happen with the minimum wage in terms of indexing. However, the indexing that I did allowed for income gains. In 1948, the minimum wage was 40¢ per hour. By 2015, the minimum wage would’ve been \$4.24 per hour.

The 1948 “base” minimum wage that I used wasn’t converting it into 2013 dollars. I used annual CPI (% Chg from Last Year) to dictate the increases and decreases in it. Thus, as the table I put in my article showed, there were small increases 13.5 percent being the largest increase percentage-wise from \$1.30 to \$1.48 in 1980.

The idea behind this was not for minimum wage earners to enjoy the benefits of economic growth as much as it was to control inflation. In a way, it makes all businesses oligopolies. If everybody charged \$5 for goods and services, and the minimum wage only increased by pennies due to the 1 percent inflation, then those goods and services may end up being only increased to \$5.05.

I apologize for my math being off from Inequality.org. You’re absolutely right that they had linked the minimum wage to real personal income. I’m a little embarrassed that I didn’t realize that sooner.

As I mentioned in my article, I didn’t agree with how they indexed it partially because they’re using the highest inflated point and then tacking on the 100.6 percent. Everything becomes overblown and it would actually kill the economy.

In order for the minimum wage to actually keep up with inflation, we need to index it to annual CPI so that not only inflation can be controlled, but so that the minimum wage grows with the economy. Currently, \$7.25 is overblown and prices of goods and services outpaced inflation itself as well.

We cannot have perfect equality, or near perfect equality, without sacrificing many, if not all, of the liberties and rights that make America so great.

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I think the indexing you are referring is CPI indexing (not income indexing) meaning that 40 cents in 1947 can buy as much (or is worth as much) as \$4.24 in 2014. So the income of the minimum wage earner did not change – only the prices did. Actually what you did was convert the 1947 minimum wage from 1947 dollars to 1948 dollars, 1949 dollars and etc., finally arriving 1947 minimum wage in 2014 dollars.

I’m sorry, but I didn’t really understand what you meant with the third paragraph of your reply.

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2. Roxie says:

I’d like to see you work for \$4.24 an hour. Greed will be the downfall of humanity. Sad to see such ignorance.

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3. I invite you to read my article again. Mainly because I believe you missed my point. I’m not saying that the minimum wage should be \$4.24 per hour. Rather, I’m saying that the minimum wage WOULD be \$4.24 per hour had we followed inflation from the time we started measuring it. I even include the math and figures for anybody to use and double check themselves.

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2. They already ARE effectively outcasts (or haven’t we heard all the slander directed against them as loafers?) and unable to contribute (much.) Most end up having to lean on welfare in one form or another to make ends meet, while their employers make a killing.

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2. Has anyone thought about using a non inflationary currency to pay for basic goods precisely to set a basic income that is not exposes to systemic risk and inflation?

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1. None that I know of. That would be really hard to do, seeing how inflation seems to be something that will always occur no matter what.

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1. What do you think of ‘time’ as a non inflationary currency for the production and payment of certain basic goods, like food. I have been wrestling with this thought for a while. I see several set backs related to professions that require higher education. I think those should remain on a regular currency regime. However, it makes some sense at the level of basic necessities. i.e prices of food are fixed by capacity of production, and paid by in minutes. Non production would imply a shortage for the community as a whole, (regardless of income levels) while over production would imply less time to produce the same output or selling over production for profits benefiting communities. The central idea is to displace the use of regular currency to pay for essential needs, thus fueling discretionary consumption that creates jobs, while diminishing the exposure to systemic risk.
I would love to hear your thoughts 🙂

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2. Wix says:

Inflation is not natural, it is man made. Or, are you meaning something else?

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3. David says:

By your calculations the average price for a house would be \$60,000 and average price for a car would be \$15,000.

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1. Which calculations are you talking about? The inflation rate over time?

The inflation rate I used was the inflation rate of all goods and services. Housing or durable goods inflation rates would be a better choice for getting a rough estimate for what the price of a house or car should be.

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4. The laws of supply and demand should determine what the minimum wage should be, not some agenda driven power hungry govt bureaucrat who is pandering for votes. I’m not an economist but I am a 20 year career salesman. I’ve spent about half my career selling to small businesses in the Washington DC area suburbs so I am well acquainted with the challenges small business owners have. For many of them, raising the minimum wage will mean letting someone go to compensate for the increase in payroll. The answer to the minimum wage is simple – MORE PROSPERITY. When small businesses flourish it creates more economic opportunity on numerous levels. Unskilled workers stand a much better chance of getting hired, advancing their job skills and pay when small businesses are desperate for workers. What we need is a REAL economic recovery, not the last 6 years of this smoke and mirrors facade that the Obama administration touts as a recovery.

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1. You’re absolutely right. The nice thing about a lot of principles in economics is that you don’t have to be an economist to understand them.

You hit the nail on the head when you mentioned the layoffs to compensate for minimum wage increases! All businesses have a limited amount of income. What I don’t understand is why people think there will magically be more money in everybody’s pockets immediately after a \$15 minimum wage is implemented. In order for things to straighten themselves out, the economy needs to tumble, and possibly have a recession, first.

I, too, agree that we need real economic recovery. I’ve previously written about how the president can manipulate his image using economic indicators that most people don’t seem to fully understand.

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1. Anonymous says:

Companies have a finite amount of money, but you’re gullible if you believe they would mostly lay people off because they can’t afford to keep them on. I mean, that situation surely happens. But with any large corporation what’s more likely is that they decide they can keep their profit margins up if they take the work some other people are doing and pile it on other workers. Pay those guys more, give them more work and remove the others. Make them work unpaid overtime because chances are you’ll never get in trouble for it. The Industry is full unethical practices and no one’s doing anything about it fast.

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2. Of course, generating more prosperity would require more people to have more money in their wallets to spend; a requirement for generating enough demand to require a business to hire rather than fire (or abuse their workers.) You want to have prosperity FIRST before paying people more, but you can’t have it until you HAVE paid more. And on and on we spin. Someone needs to have a little courage and take a risk, and since cash-free low wage earners don’t have the means, that’s gonna have to be either the businesses or the state.

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3. Concerned Citized says:

“Supply and Demand” in reality only works in a heavily regulated environment where there are many small companies competing for lots of consumer’s business in a fair and regulated playing field. The reality of “Supply and Demand” without regulations only leads to Monopolies, price-fixing, inequality and greed. We need the minimum wage to be linked to median standard cost of living for each generation, not just the CPI or inflation. For example Housing, Insurance, Medical, and Education costs have skyrocketed well above the CPI and the minimum wage needs to account for this. Creating a strong middle class is what helps our economy grow. The discrepancy of wealth in America now is killing our democracy. Allowing a small elite population to hoard all the money is not healthy for a stable economy, nor a stable government.

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5. Sassy says:

So what, in your esteemed estimation, is a livable minimum wage? One in which the head of a household could support their family? Keep in mind than in the 70’s, even a minimum wage worker at McDonalds could support a family. You cannot say that today’s full-time McDonalds employee could support a family. So what say you? And make your answer realistic and non-corporate if you are able.

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1. Thanks for the thoughtful comment! I’ve tried to figure out what a universal “living wage” would be for the past couple years. I don’t think that there should be a federal wage anymore because one size rarely fits all.

Realistically, the country is too big for a federal minimum wage to really be all that effective. Many states are saying the same thing by creating a state minimum. And even then, it’s really hard to pin down a statewide minimum.

There’s more to what one makes at minimum wage jobs, like McDonalds, than what the current minimum wage is versus inflation. For example, “Full-time employment” is being redefined as 30 hours per week because of Obamacare requiring insurance to be offered at that number of hours. I can tell you that the way businesses get around that is by hiring people to work less than 30 hours consistently.

So I don’t think there’s really a one-size-fits-all solution that would work federally. Each and every state understands its situation better than the federal government does. The leading index (an economic indicator created for each state by the Fed) is a great way to see the health of each state’s economy. This indicator goes to show that there are different situations in each state.

For example, Oregon has been consistently doing better than Washington and Idaho over the past couple years (Link below). It would be unrealistic to say that Idaho should be up to Oregon’s standards and implement a \$9.25 minimum wage. In the beginning, it would be work out nicely and people could start saving a little here and there. But in the end, landlords will raise rent prices, local farmers will raise the price of produce, and then we will all be wondering what the next “livable wage” should be.

When it comes to supporting a family, the times have changed. You’re absolutely right. McDonalds doesn’t cut it anymore. We need more than a high school education to be competitive anymore. Experience alone won’t cut it. I’d say that supporting a family is now a matter of either college or trade school unless one works their way up into management somewhere. Realistically, we need more electricians, plumbers, and carpenters as well as other trade skills that aren’t taught in college. Hence, the Roto-Rooter guy can make a killing if he’s one of two or three plumbers in a city of 25,000 people.

That’s what I say about it. Sorry this was kind of long. Please, feel free to ask more if something isn’t clear.

https://research.stlouisfed.org/fred2/graph/?g=2wFW

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1. Zack says:

Also the minimum wage job was NEVER MEANT TO BE A CAREER JOB!

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2. Zack: As for the minimum wage, you’re right that it wasn’t meant to be a career job. That being said, when it was implemented, it was considered to be the wage on which you could support a small family (Three people). But it isn’t clear if the one income was supposed to do this. It would make sense that two minimum wage earners in a family of three could do it, and maybe this was the intent. But unless we have real evidence that only one could support a family of three or even more, we must assume that if it doesn’t appear to support a family with only one income at minimum wage, then it must be a minimum of two.

Hence, \$7.25 at 40 hours per week for 4 weeks is \$1,160 per month. \$1,160 earned by both parents gives a pretax income of \$2,320 per month, or \$27,840 per year. Definitely enough to get by and have smartphones.

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3. Concerned Citized says:

I agree with Jack who said “minimum wage job was NEVER MEANT TO BE A CAREER JOB!”, but that is what has happened for millions of Americans who are still struggling to get by. It’d be fine if a small company wanted to pay less than minimum wage to an employee who was truly treated as an intern (or apprentice) and was learning vital tools to advance their knowledge and career (and this does occur). BUT the minimum wage has been used by big profiteering companies to pay their employees as little as possible so as to maximize investor profits. (and I’m not saying profits are bad, but I’m saying everyone in a company should benefit from a profitable company, not just the top CEO’s)

Plus, whoever said it is possible for a family of 3 to live on a two income minimum wage salary \$27,840 per year (combined) never had kids. The cost of childcare while the parents are away at work alone is more than the minimum wage which means one parent must either stay home and take care of the child, or the family needs to have someone else providing free childcare (grandma maybe) or subsidizing the childcare until the child is old enough to go to public school (4-5 years old). Then add the cost of a small 2 bedroom apt for 3, and food, baby supplies (expensive), insurance (most forgo it), transportation, already well over budget. It is IMPOSSIBLE to raise a family on minimum wage unless you are subsidized! Which is why many employees of big companies (like Walmart) rely on food stamps to get by, which, in my opinion, is equivalent to our tax dollars going to subsidize these big companies profit margins. These big profitable companies need to be forced to pay a “living wage” not just the minimum wage.

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4. Jason says:

To make the claim that a minimum wage was not meant to be a “career job” is both correct and incorrect. It’s really only correct in its semantics, though, to be sure.

Webster defines a career as “1. an occupation or profession, especially one requiring special training, followed as one’s lifework:” So… since minimum wage is an entry level or starting wage, naturally it would not fall under “career” which represents growth in an occupation requiring special training.

Alone, that statement is worthless… because it’s just semantics.

Now if you want to contribute to the argument, you could say that “minimum wage was never meant to be a living wage!”

But I think you didn’t say that because you know that, in that case, you’d be dead wrong from a historical standpoint. Considering that’s EXACTLY why the minimum wage was implemented. To protect a basic standard a living. The administration responsible for implementing the minimum wage believed this so strongly that FDR went so far as to say that NO business which thrives by paying its workers a wage that does not meet the standard of living does not deserve to continue in this country.

Now that we’ve cleared up that the idea that a minimum wage is supposed to be some kind of pocket change until you “GET GOOD NOOB!”… I’ll also point out that the reason for its implementation is irrelevant to our current economy. We are where we’re at, and we need a solution. Unless you think our economy is currently “good” and needs no change, in which case we’ll just have to part ways and agree to disagree because, frankly, I’d say you’re turning a blind eye to a fire in the barn.

Ted, I completely agree with your assessment… to a point. I agree that a jerk-reaction of raising the minimum wage as is being fought for by the \$15ers is more devastating to an economy over the long run. It provides temporary relief, followed by people feeling like they’re in the same situation not even a generation later, only now they’re screaming for a \$25 minimum wage… and etc, etc.

However, I think it’s important to note that your knowledge in economics is rare. Heck, I have no knowledge in economics. You won’t see me provide you with formulas or charts or evidence, Ted. But I do have a fair amount of common sense. Using that common sense, I say that the cry for \$15 is really just a cry for “I’m tired of working so hard and still being poor.”

You could blame it on their skill set, but I don’t believe that as a society, someone should have to be incredibly skilled or knowledgeable to live a comfortable life. To live a luxurious life? Sure. But there is a real problem when people are crying out about not being able to live no matter how hard or how many hours they’re working.

Raising the minimum wage arbitrarily will do nothing… I know that. I think if people could separate themselves from their emotions and think a minute, they’d know that too. But people are desperate, angry, and scared. They cry for \$15 because they don’t know what else to do. They’re saying “Look, I’m not super smart… but I’m a hard worker. Please, help me.”

So I say unto you… and people like you who ARE knowledgeable and studied in economics. Help. Don’t just debunk what band-aids “wouldn’t” work… find solutions, try to call your senators when you come up with said solutions… There must be SOMETHING that can be done.

Because I FULLY agree with FDR’s statement. Yes, corporations don’t owe individuals anything, but I do think they owe society something. I don’t think a business deserves to exist if it cannot pay its workers a living wage. Period.

In an ideal world, we’d be able to tell them that with how we spend our dollar. Unfortunately, large corporations like Wal Mart are able to provide people with goods for relatively low prices, and since all the middle class is making is low wages, buying things at low prices becomes a necessity. Thus the cycle continues.

Whatever solutions we find need to be implemented VERY SOON. Because I also agree that whatever we do needs to be done slowly over a long period of time. Because of that, we need to get started ASAP on whatever that solution is.

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5. Jason says:

“To protect a basic standard a living. The administration responsible for implementing the minimum wage believed this so strongly that FDR went so far as to say that NO business which thrives by paying its workers a wage that does not meet the standard of living does not deserve to continue in this country.”

To protect a basic standard a living. The administration responsible for implementing the minimum wage believed this so strongly that FDR went so far as to say that any business which thrives by paying its workers a wage that does not meet the standard of living does not deserve to continue in this country. (Paraphrased not an exact quote.)

My bad. Mind moved faster than my hands.

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1. Thanks for the comment!

The hard part when dealing with CPI is that it’s an extremely broad measure of inflation. There’s actually a way to measure inflation of a plethora of things. It’s just that the CPI is, in essence, an average of all inflation. That’s why it’s so low. I used it because it’s the only thing that makes sense to me when applying it to an increase in hourly minimum wages.

Because it’s an overall inflation rate, it would make sense to adjust the minimum wage according to it. For example, if inflation rose by 2%, wages should increase by 2%. This is, however, if it’s indexed to inflation. Believe it or not, some states, like Washington and Oregon, index their state minimum wages like this. But because they did it at a later time, the increases seem larger than they would have been had they started it out this way.

You’re partially right about the CPI being a measure of consumer spending. The only thing is that it focuses on the prices rather than spending. There’s an economic indicator for that called “Real Personal Consumption Expenditures.” That’s what measures consumer spending, but again, this is a total. It is possible to narrow it down to different categories, but that’s really hard to do without the Bloomberg professional service, which usually costs \$2,000 per month.

That being said, I stand by my calculations because of the fact that the CPI is a generalized measure of inflation, not just cost of living. Feel free to ask for more clarification if needed. 🙂

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1. Alexis says:

Thank you for your interesting article. I just have a couple of comments. You stated:

‘This means that, currently, our minimum wage is \$3.01 over the amount we should technically be at right now.

The question will surely arise, “How would we pay for anything with that kind of low wage?” The answer is very simple: The market, following the laws of supply and demand, would regulate prices for us.’

“When it comes to supporting a family, the times have changed. You’re absolutely right. McDonalds doesn’t cut it anymore. We need more than a high school education to be competitive anymore.”

If I understand this correctly, even though the minimum wage is \$3.01 over what you believe it should be according to your inflation analysis, in terms of purchasing power the market does not take care of protecting worker wages. We need people to work at McDonald’s now just as we did previously and yet wages for these workers no longer permit them to raise a family on those wages. Saying simply that people need more education to get higher paying jobs is true but does not really address the issue of the relationship between wages and the cost of living. I’m not an economist so perhaps I have this completely wrong.

I do have one additional comment unrelated to the economic analysis. There are numerous comments in which you claim that the analyses with which you disagree are nothing more than propaganda. In one place you wrote:

“These people need to get together and collaborate instead of create political propaganda that just contradicts each other.”

First, accusing people of engagement propaganda adds nothing to the adequacy of the argument you are trying to make. This is simply an attack on the motives of those with whom you disagree. We see enough of this in Washington thus I’m disappointed to see it here.

Second, the idea that “these people need to get together and collaborate” is, again, irrelevant to the adequacy of the argument but also supposes that all people at the other end of the political spectrum agree on what data should be used, how it should be used and exactly what conclusions are justified on the basis of the data. Neither liberals nor conservatives are clones of each other, and are not always going to produce identical analyses.

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2. Alexis: Sorry for the delayed response.

It does seem fishy when I say things that appear to be contradicting. However, it’s important for me to explain the context. I’ll address the propaganda thing in a moment.

According to how inflation has fluctuated, we are \$3.01 above the inflation-target wage. However, that’s not what happened with the minimum wage. So yes, I give out a technicality, but the issue is that \$7.25 isn’t enough. Why is that? It’s because if prices actually followed inflation, we would see today’s prices be a little different than they are now. Businesses don’t have to use inflation as a guide or anything. They can make them up as they please. Hence, Apple charges \$850 for my iPhone, but the real cost of making it is much closer to \$400 thanks to outsourcing.

I believe that the minimum wage, today, is probably meant for working families. As I pointed out to another commenter, both parents earning minimum wage, or two roommates earning minimum wage, have a combined household income of \$27,840, which is much easier to afford things on. I believe that’s what today’s minimum wage is supposed to represent.

Now I’ll address what you said about propaganda. Propaganda is everywhere. Its definition, however, is much more broad than most of us realize. It is the televised media, the newspapers, the magazines and tabloids, and it’s even a PSA at times. Even my blog could be called propaganda. Propaganda that has a positive, empowering goal is called “white” propaganda (kind of like a white lie).

However, when I say that it’s purely propagandistic to say that the minimum wage today was worth \$20 back in the ’80s, what I’m saying is that it’s a falsity that uses the lack of knowledge about economics that occurs in most people in order to gain support. While I am a conservative, my goal is to unite the people by informing them about economics. If economics was still in every high school, we would have a nation of moderates.

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3. Zack says:

Ted: Good article and well thought out BUT is not the ‘official’ CPI calculated EXCLUDING gas (fuel) and food? Thus a ‘bastardized’ calculation not necessarily representing the ‘true’ value/level of inflation?

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4. Zack: Thanks! I’m glad you liked it. I’m unsure as to what is excluded from the official CPI. I do know, however, that it’s considered to be “all” goods. I’m sure that it really means “most goods,” seeing how the unemployment rate (U3) isn’t the true unemployment rate.

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5. Roxie says:

It would also be amusing to see YOU support a family with even one child with a \$7.25 per hour job. You’ve obviously never had to struggle financially or you wouldn’t be saying of this BS.

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6. I’m REALLY glad you brought this up. I’m in the final year of my bachelor’s degree program at my second 4-year university (I transferred). While I’m doing this, I’m married and I have a two-year old daughter. However, before coming back to my home state, I was in Idaho, attending school and raising a family. I eventually transferred to another school and had some time to work before we moved.

What’s the point of me telling you all of this? The minimum wage in Idaho is \$7.25 per hour. I was a pizza delivery driver, which meant that I made \$5.25 per hour plus tips while delivering pizza and \$7.25 per hour when I was in the store. We made it work while I was working a full-time job at \$7.25 per hour.

You should NEVER assume that someone hasn’t struggled with anything, especially finances. I’ve had to decide between food and rent before. I’ve come close to losing my car several times. I’ve come close to being evicted a time or two as well. All of this while being a college student. So believe what you want, but I have struggled more than you think.

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6. Eward Lombardi says:

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1. Thanks for the awesome comment! Something I’d like to add to that is that the minimum wage by itself can’t support one, two incomes can support a small family. Two people, say, roommates, making \$7.25 per hour at 40 hours per week, will earn a pretax income of \$2,320 per month. That ends up being \$27,840 per year. Add a third friend to that, and you’ve now got a household income of \$41,760 per year. They could create a system of pooled money, or they could create a system of paying a certain amount every month that is their share.

Either way, the minimum wage alone can never be a “living wage.” However, it most definitely is a living wage that can support a small family if two or more full time incomes are supporting it. I believe that,in this sense, the minimum wage was intended to be a living wage.

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2. A.N. says:

1) Myth: The minimum wage was never supposed to be a living wage

This is probably one of the most dangerous—and easy to debunk—myths about the minimum wage, which was championed by Franklin D. Roosevelt beginning in 1933. During an address FDR gave about one of his many economic salvation packages, he explained that “no business which depends for existence on paying less than living wages to its workers has any right to continue in this country.”

At the time, Roosevelt’s Fair Labor Standards Act of 1938—passed as part of New Deal legislation—set minimum wage at 25 cents. Roosevelt intended this rate to be “more than a bare subsistence level.” The minimum wage was created expressly to ensure that people of all skill-levels, if they worked, could “earn a decent living” off those wages—thus, a living wage.

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7. Alexis says:

Thank you for your reply. I have just a couple of thoughts to share with you. You wrote:

I believe that the minimum wage, today, is probably meant for working families. As I pointed out to another commenter, both parents earning minimum wage, or two roommates earning minimum wage, have a combined household income of \$27,840, which is much easier to afford things on. I believe that’s what today’s minimum wage is supposed to represent.

And in your response to Zach you indicated that it wasn’t clear whether the minimum wage was intended to make it possible for one worker earning the minimum wage to support a small family. I think there’s reason to believe that that was indeed the intent. The original legislation passed in 1938 specifies that the objective of the minimum wage was to address the problem of “labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers.” At this point in our history the typical working class American family did not include both spouses working full-time out of the home. In addition, when people were asked in 1936 what the ideal family size was they answered 5.6 (2 adults and 3.6 children.

http://www.gallup.com/poll/164618/desire-children-norm.aspx

And in fact, in 1940 about 70% of families had three or more members.

As you know, the expectation in that time period was that the woman would be primarily responsible for maintaining the home and raising children. But within a couple of years after the legislation was enacted the United States found itself embroiled in World War II. Women left the home to work outside the home to support the war effort. At the conclusion of the war, women by and large returned to the home and the ideal for the American family was again of a male breadwinner and a woman remaining at home to handle affairs of the home and the raising of children. (In fact, there were many barriers to women even entering the workplace environment.) And as one of your earlier commenters noted, at one time it was possible for a family to me these minimal obligations with one full-time worker earning the minimum wage. In addition, at that period in our history it was considered a sign of failure of the male (the breadwinner and provider, as he was called) if the woman had to work outside of the home. And despite the fact that the minimum wage was sufficient to accomplish this with only one full-time worker, the post-war period was a period of significant prosperity. In other words, it seems that paying workers a sufficient wage to enable a family with one full-time worker to at least meet the “minimum standard of living necessary for health, efficiency, and general well-being” was possible with the minimum wage at that time. And this was accomplished despite the objections from the business community during the prolonged dustup in the process leading to the passage of the original 1938 legislation that the minimum wage would wreck the economy. Thus although it might indeed be possible for a family with two spouses working full-time today to earn enough money to meet that minimum standard, The historical record suggests, at least to me, that this was not the expectation when the legislation was originally passed. As a country that prides itself on doing better in moving forward do we really want a situation in which we have, in effect, cut the benefit of the minimum wage in half by doubling the number of workers required to produce that minimum benefit?

Here is something else that occurs to me. We have an array of social services funded by the taxpayers that did not exist in 1938. These services, such as SNAP and TANF, fill in the gap left by the minimum wage. In fact, it could be argued that this is a form of corporate subsidy. That is, because companies do not pay a living wage, the taxpayers have the choice of either letting people starve or providing them with food and other services that they need in order to survive. In accord with this line of argument, it would be better for companies to shoulder this responsibility, rather than having this taxayers have to do this.

The question then is whether paying a living wage would cripple the companies having to pay this wage. That is, of course, an empirical question. I certainly don’t have the answer. But I do know that the business community has historically complained that it would be crippled every time a proposal to raise the minimum wage, or an actual raise of the minimum wage, took place. Those predictions of doom have never come to fruition. As I understand it, economists do differ as to the effect of the minimum wage, but nobody believes that the dire predictions of doom have ever been produced by passing the original minimum wage legislation or by increases in the minimum wage. One can also look at the experience of other countries that pay a higher wage for guidance. I know that in countries such as Demark, the minimum wage for fast food workers is a living wage (\$20 p/hr).

This is, of course, anecdotal evidence and I have no idea as to how much the experience of other countries applies here, if at all. My guess is that it might depend on the industry. Some kinds of jobs are such that they might be outsourced to other countries if the labor costs are too expensive here. Other kinds of jobs, such as fast food jobs, cannot be outsourced to other countries. Someone has to hand the burger across the counter. (Although robotics might eventually put an end to that!)

Just a quick comment regarding the issue of propaganda. According to Mr. Webster this propaganda is:

“ideas, facts, or allegations spread deliberately to further one’s cause or to damage an opposing cause”

And this is the common understanding. When people say something like,” that’s just a bunch of propaganda” they mean that it is information that is not only false but provided knowingly and intentionally. My thinking is that accusing people of spreading propaganda requires information affirming the intent was to deceive rather than merely that the information is inconsistent with one’s own point of view. In addition, such accusations don’t really get to what matters, which are the facts. The best argument against someone spreading propaganda is information showing that the propaganda is factually false.

Thanks again for hosting this discussion. I’ve enjoyed reading your comments and the comments of the other participants. I teach sociology, which students tend to like, but I wish they (and me as well) were more literate in economics.

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1. Thanks again!

The thing about Denmark’s high minimum wage is that they don’t necessarily keep much of it. I’ve written a couple other articles about Denmark, one focused on the prices they have.

The reason why the wage is higher there is mainly because of taxes. If there were similar taxes here in America, we would find the minimum wage crazily increasing due to the fact that everything just cost so much. In the price comparison article, you’ll find that the VAT tax they have makes a 2016 Honda Accord Sedan, which would only be \$22,105 at its base price, \$52,407.77 at its base price. It sounds like the dealer would get a pretty decent income from that, but they actually pushed the price of the taxes onto the consumer. Hence, an additional \$30,000 is required largely due to taxes.

A big part of why I’m against raising the minimum wage is because there are already programs such as SNAP and TANF in place that make up for part of the difference. The minimum wage in Oregon is \$9.25 per hour. The maximum amount you can receive in SNAP benefits in Oregon is \$511 per month. Without SNAP benefits, 40 hours per week gets you a pretax income of \$1,480 per month. Add the \$511 to get your monthly pretax income of \$1,991, which is still below the threshold of \$2,100 per month. Thus, a full-time worker in Oregon now makes an hourly rate of \$12.44 because of the added SNAP benefits.

Thanks for your kind words! I, too, wish that economics was something taught more in high schools again. Do you teach sociology in middle school, high school, or college?

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1. Roxie says:

Are you saying ONE person can receive \$511 in SNAP benefits??

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2. Hi again, Roxie. I never claimed that “ONE” person can receive \$511 in SNAP benefits. \$511 is the maximum that a household of three can receive. I have received SNAP benefits in the past and, if you’re actually reading my comments, you’ve previously read that I have a wife and a two-year old daughter. So me (1) plus a wife and child (2) equals three (3). Hence, my household size is three. Here’s a link for how much people can get in SNAP benefits.

Income thresholds have changed since I wrote the article, too. So here’s a link for that.

https://www.fns.usda.gov/snap/income-rules-income-limits

Just so you know, I was able to spend less than five minutes to find this on Google.

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“So what’s so bad about the economic indicator, per capita real personal income with this argument? Mother Jones, another left-winged political commentary site, claimed that wages have been staggering. Add up the total share of income and you get nowhere near 100.6 percent, which was the claimed growth of the economy’s income.”

No, that is not what the chart is intending to show, which is why it would not add up to 100%. The chart shows the CHANGE in share of total income, not total income. Thus, the top 5% have increased its share of total income by 30%; NOT its share of total income IS 30%. [In fact, it’s share of total income is much greater].

[I believe the charts you want to be looking at are here: http://www.advisorperspectives.com/dshort/updates/Household-Income-Distribution.php ]

You also say: “When someone is trying to show how bad income inequality is, you don’t want to use an indicator that uses the incomes of the ultra rich. They’re saying that everybody’s incomes have increased by 100.6 percent. By everybody, this doesn’t just include the rich like the other propaganda that’s written, it includes everybody.”

I believe they are saying the average of incomes _overall_ has changed 100% – however, based on the data I referenced, it is 62%. [CBO http://www.cbo.gov/sites/default/files/112th-congress-2011-2012/reports/10-25-HouseholdIncome_0.pdf inflation adjusted growth in after tax income was 62% from 1979-2007.]

If I understand you correctly you think that growth for those at the top of the income scale should not be counted? That makes no sense to me. In fact, quite the opposite. If we are talking about inequality then looking at the average of _all_ income gains, and then measuring that for, say, each quintile of income group, is reasonable. It is precisely because growth has been so much larger for those at the top of the income scale that the inequality exists. And, it is growing.

I would like to know your thoughts on these things.

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1. Thanks for the comment!

First, I’d like to take the opportunity to explain that I was not claiming that Mother Jones had said that the total growth share in total income would be 100.6%. Inequality.org’s article mentioned the figure when it was talking about per capita real personal income.

The reason why I believe that the per capita income economic indicator shouldn’t include the ultra rich is because the indicator is just an average of all incomes in the US, which doesn’t necessarily reflect any change in the majority of the people. Thus, I could easily argue that income inequality isn’t real and that the poor have rising incomes, too, because the per capita income is rising. But the reality is that the poor have stagnant wages that aren’t reflected in the per capita income. That’s why I don’t think we should include the ultra rich in it.

I do think that income inequality in a potential issue in the US, but I would definitely say that wealth inequality is NOT a real issue. Why not? Because that’s like pointing the finger at someone who created a situation where they could save money and saying, “Hey! You’re not broke like I am because you saved your money. That’s not fair!” The wage gap is a much better cause than the gap between what people have in their bank accounts. In terms of wealth inequality, Bernie Sanders is pretty rich even with just a few hundred thousand dollars.

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9. In the these debates I’m always surprised no one mentions the next level of automation coming, white collar jobs are just as much at risk “47% of job categories being open to automation within two decades” .It is always said with new technologies new jobs are created. What happens when the new technology can,for now I use the term lightly but it it is getting smarter, “think”. There could be devastating impacts in the job market across the classes or we might figure it out ..we’ll see..
http://www.economist.com/news/briefing/21594264-previous-technological-innovation-has-always-delivered-more-long-run-employment-not-less

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1. Thanks for the comment!

I see two sides to the argument for automation. I think that automation is only a threat to so many jobs. My temp job at Symantec (data entry and account correction) became automated to the point of correcting thousands, if not millions, of records at once. Luckily, being an economics major, I can find a lot of other jobs in the service industry.

On the flip side, I think automation can wipe out a lot of mundane jobs that require little to no mistakes, such as cashiering. Car washes went from being done by hand to automation. So did printing.

In the long run, I’m confident that we would find something else for those who are losing their jobs to robots.

Thanks again for bringing up this interesting point!

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10. Eggplantparmislife says:

Completely ignoring the fact that single mothers existed, a lot of them. A living wage was suppose to be one person being able to support. I know there is child support but that is a fickle and unreliable system that often times people get out of never paying. One person in my opinion should have a wage that allows them to take care of two people. Also you need not speculate what the minimum wage meant, FDR said it very clearly when he enacted it:

“No business which depends for existence on paying less than living wages to its workers has any right to continue in this country. By living wages, I mean more than a bare subsistence level — I mean the wages of a decent living.”

Politics aside, there is no ‘oh yeah so if two people put together there paychecks, they can make it”. It’s a completely biased idea relying on a person to have a roommate or a partner or spouse. Who says you have to live with someone else? Living on your own is a thing and is suppose to be a thing. This co-dependency you’ve created in order to make it just proves the minimum wage isn’t working. I realize raising it will raise prices later on but this idea that a mom could take care of a child on 7.25 or a college grad who can’t find a job in their sector, taking a 8.00/hr job still can’t have their own apartment is ridiculous. This is why college grads move back home.

And saying a minimum wage job is never suppose to be a career is idealistic. There are people with learning disabilities (who don’t have family and live on their own) who need to survive and won’t move up. The truth is (that no one will admit it) you’re going to have adults who will never move up or change paths. There will always be people who made it a career, through no fault of their own. They still deserve to live, they provide a service the country wants, they deserve to live decently for that service.

I personally don’t think the \$15 is a good idea, at all actually. But like I said, this co-depenancy idea you’ve come up with is gross. Sorry but no one is required to date, or have a roommate, or be married in order to make it in life. Also at the rate of divorces and young people holding off on marriage, single people are more prominent than ever.

Liked by 1 person

11. Me says:

So people should be living on less than five dollars an hour? I suppose next you are going to try and comvince us that trickle down economics did not fail, and was a good thing. Typical GOP propaganda.

Liked by 1 person

1. I get the feeling you skimmed rather than read everything. The article was about where the minimum wage should be based on inflation. Everybody thinks inflation has outpaced the minimum wage, but officially, the minimum wage has outpaced inflation.

As for trickle down economics, I have said in multiple articles that it doesn’t work today because it’s dependent on the honesty and morals of others. There’s been a moral decline, so while it actually worked for a short time, it doesn’t work anymore. Personally, I think it didn’t work because of NAFTA. That’s the fault of George HW Bush and Bill Clinton. Busch started NAFTA and Bill Clinton signed it.

I understand that you’re probably not going to believe that what I wrote was not GOP propaganda. That’s your opinion and you are entitled to it. However, all I did was research and present my findings. Sadly, what is considered the science of economics to those who actually study it is considered propaganda by those who may not understand it very well.

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1. So everything that does not agree with you is automatically a lie and propaganda and all the research that most studies show to be opposite of your findings is all propaganda. You use the term propaganda so much you fail to realize you have done a Freudian slip because you are the one with propaganda trying to convince people to go against their own interests. I had a comment listed from earlier that disappeared but perhaps something else happened, I don’t know but how convenient. People are working 80 + hours just to get by. How come back in the 50’s a person could have one working family member, children, enough for education, vehicle and home. All these things were affordable as a result of socialism injected into the country with FDR the most successful president in U.S. history. How come in the modern day with all our technological advances most of us have to be poor and barely getting by unlike almost 70 years ago when technology is much better life for the majority should be much better. The free market is collapsing on itself just like it did in the 30’s. You start with the roaring 20’s and then end up with a depression so no even back then trickle down economics NEVER worked and they never will. It has already been disproved. That is a fact. Stop calling everything that does not agree with you as propaganda. That is what a fascist does.

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12. Jake says:

I have a few questions. If the U.S. did not have a minimum wage everything would depend on supply and demand. If there was a lot of demand for a product the business would need more good employees to accomplish the goals. To get the good employees they would have to pay these employees more. Is it possible though that businesses that are not “skilled” would be able to keep their employee costs down because they have plenty of people to take the spot if the current employee decides to leave or protest the wage? I know some business owners who try everything to keep employee costs low and product price high. Given this business doesn’t pay its employees min wage but the employees could make more money if there was another company around that competed with same skill level. Also do you believe that minimum wage actually makes businesses set their price automatically to this instead of figuring out what would be a good wage to pay their employees? If the min wage was raised would the wage increase help other businesses gain money because now these people have more money to spend and put back into the economy? Thanks I do the research but it seems that most information is somewhat skewed either way and there’s many situations and variables that could change these situations. I believe no minimum wage would be best and would set itself but it does make me wonder if “unskilled” workers would be out of luck because of this.

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13. ruthweinekoetter says:

It’s nice to have two people working for minimum wage & end up with\$27k, but it won’t be enough for a family. The average childcare cost is \$11,666. Because your kids need to be cared for, when both parents work. If you have two kids, that’s \$23,332. So you have a whopping 4k to live on for he year. So, can it support a family? No. An unskilled single mother? No. Roommates, who all pitch in, sure.

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14. Anonymous says:

Smell test you cant live on current minimum wage. Baseline tie employees wages to CEO pay increases. Problem with supply and demand here is there is always surplus labor so wages are downward driven. Thats why trade and labor laws exist or else jobs move to places with slave labor as its more cost effective. China anyone? I agree a national minimum wage should be the absolute minimum as cost of living differs. But far to long corporate returns have outpaced many fold wage increases while the same conglomerates ask for socialist government had outs to hire or build. So what will it be a law to increase to a living wage or a national labor union to demand one or some other measure look at history to see what happens when to many people can’t make a living.

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15. Rich says:

“…not very many people would actually accept such a low wage.”

You have to have a job if you want eat. If the only jobs you could get paid that low a wage, then anyone would take them, if they’d been used to a higher income, pride might keep them from doing so for while, but zero income is less than that, so they would cave eventually.

” “How would we pay for anything with that kind of low wage?” The answer is very simple: The market, following the laws of supply and demand, would regulate prices for us.”

What?!

“The Market” is all of the businesses that exist and all of them work on a profit motive, they set their prices based on maximizing profit, not the incomes of low wage earners. I suppose if everyone suddenly started making just over \$4 an hour and they could no longer sell anything to anyone because no one could afford it, they’d drop their prices, but since all the products would have been made before the wages dropped, they’d be selling everything at a loss and promptly be in the red and eventually go out of business.

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16. Gabriel says:

I believe the political leftist rhetoric that wages are the problem and need to be corrected is equivalent to putting a band-aid on a severely infected wound. If we go deeper and attempt to heal the disease we see the core issue is an endlessly inflated debt based monetary policy enshrouded in secrecy by our communist central banking system. If money is managed correctly and kept honest our dollar should maintain it’s strength. Inflationary monetary policies are cunning thievery, and while some would say stealing in any fashion is immoral, this form of stealing is legal in the United States. Most of the population is in the dark about how this works. They don’t understand why the are constantly running in the Hamster wheel. This policy works very much like a pyramid in that those who get the money first realize the most value and as this money trickles down the system the flood of money adversely and disproportionately affects those at the bottom.

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17. Its always the conservative way to say something is so complex that you peons cannot understand it…therefore…we should do…Nothing!!

For all the arguments, you cannot deny that when working people were paid middle class wages, we had a thriving economy. Take those jobs away, put them overseas (and claim for those countries they are great paying jobs) – and have no safety standards – aaaaaannnnddd the world economy still sucks. Why? because those folks still don’t have any real purchasing power like we did from 1946-1960s.

The “cheap labor” mantra of all large corporations is what kills the economy. When you don’t pay workers well, they can’t spend, and there is no need to hire. Face it Big Bizness, you need to pay us well.

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1. The answer isn’t to do nothing. The answer also doesn’t lie within raising the minimum wage past the point a small business can afford. Less than one percent of all businesses in America are small businesses. Trying to punish the bigger businesses hurts the smaller businesses more, which only helps the bigger businesses gain more business if the smaller ones close.

I never showed any support for outsourcing. I openly oppose NAFTA, which was signed by a liberal president. NAFTA is the reason why the crazy outsourcing to Canada and Mexico occurred. It needs to be renegotiated. If it’s safety standards you want, then why not do more to help those other nations? Do you know what the minimum wage is in Mexico? It’s a daily wage rather than an hourly one. And it’s less than five American dollars per day. Raising the American minimum wage doesn’t help those in Mexico.

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18. Carl says:

Except that the minimum wage is meant to be the minimum living wage, capable of paying for rent, utilities, and food. Your argument is invalid.

Liked by 1 person

1. You say my argument is invalid, but wouldn’t yours be even more invalid since the federal government believes that \$7.25 per hour is enough to live on?

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1. Ted, what would the minimum wage look like if we only included the inflation rate of the “basic necessities” (food, clothing, shelter, energy, transportation)? If the minimum wage is indeed what a family of three requires to sustain itself, then using a general gauge like CPI (which includes steep price declines from consumer electronics) doesn’t seem appropriate.

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19. Drew says:

How would people survive working full time for \$678.40 a month in the year 2016?

“The market, following the laws of supply and demand, would regulate prices for us.”

So you would bet on “the market” adjusting to cater to people in abject poverty? What do you propose the price of a gallon of milk would be if the market is accommodating those who make \$8,136 annually? You also realize when the market doesn’t adjust, minimum wage workers would all be homeless, unclothed & starving… while working 40 hours a week.

“I do not recommend setting our federal minimum wage that low”
Then your system is fundamentally flawed, no? You seem to understand that you’ve created an equation that is completely divorced from economic reality.

“not very many people would actually accept such a low wage” Who that could find a better job has ever opted for a minimum wage position? It’s called necessity. What do you mean they “wouldn’t accept it”? Would they opt to travel the world? Live off their savings?

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1. I’m not saying that we should be paying people \$4.24 per year. I’m saying that if we had indexed to inflation from the very beginning (like a lot of people say we should have done all along) then the minimum wage would have been that low. With the way prices are today, there’s no way in hell anyone could live on that unless they were high schoolers that weren’t emancipated.

When I say that people wouldn’t accept such a low wage, I’m saying that people would usually look for a higher paying job in the free market. Currently, we don’t really have a free market because we have a price floor (a minimum imposed by government). The price floor is intended to help prices be more fair to both suppliers and consumers, but the problem with a minimum wage (price floor) is that businesses will look at that as the lowest wage they can legally pay someone (which is true) and, depending on the job, they will pay no more than that no matter the experience.

“My system” isn’t flawed because I never said we should actually set our federal minimum wage that low. Personally, I think we should let the states create their own minimum wages if we’re going to have one at all. Most do it anyway, so why are we allowing states to do to their residents what firms do to pay their employees less?

To answer your question from earlier, yes, I do believe that a true free market would actually take care of a lot of wage problems. You see, if a company decided to actually only pay people \$4 per hour, then only those who were desperate enough for a job would take it. However, they would also be looking for a better paying job and, when offered one, they will use that as a bargaining chip. A true free market would actually empower the worker, not the firm. Currently, the way we have everything set up, it’s backwards. Even though it’s intended to empower workers, there’s much more that unintentionally empowers firms instead.

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1. “However, they would also be looking for a better paying job”

Except that 3/4 of the jobs out there are poor paying jobs. I know this all too well living in rural Appalachia. It is small comfort to go from a job paying \$7.25/hr to one paying \$10. You still can’t afford to buy the middle class standard of living, you are still going to live paycheck to paycheck.

Whenever we have that totally free market thing going on, without protections for working people, most corporations choose not pay well. You would think they would learn from Henry Ford and from our experiences after WWII, that a well paid work force creates a booming economy. A well paid work-force needs to be done world wide…or companies will just keep going to the next place that doesn’t have protections for workers.

The cry that corporations can’t pay well is complete nonsense. All the money is just staying at the top. If wages were raised watch the people start spending again, and watch things boom. They don’t explain that in economics books because those are written for the business owners, not the working folk.

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20. Notice nobody has responded to Jan. 9 rant.

From something else I wrote:

This is where most of America is right now…because most of us are not middle class.
Frank & I were 7 months from paying off our car…a Nissan Versa that already has 110,000 miles on it because we have a 2 hr round trip where ever we work. Not having a car payment would mean we might make progress on our credit card bills, which are high because in the 5 1/2 years we’ve been together we’ve experienced a great deal of unemployment either because of my depression or the shitty job market here.
Frank hit a deer last week, and chances are the car is totaled. We will probably only get around \$5000 for the Versa…which means we are now in for more years of car payments.
In case you weren’t around for the story of how we wound up in the Versa. We had a PO crap Cavalier 03 we had to by from a used car dealer because both of us had no credit and I had no job. Engine went out after 4 months. Replaced that and more. About \$7000 invested in it, but that is what you have to do when you have no credit and piss poor paying jobs. Had new snow tires on it when a tree fell on it WHILE FRANK WAS DRIVING. A foot closer I’m sure he would have been killed. You can’t buy full coverage insurance for a car that old. The ensuing trips to the hospital made me lose my job. His mother had died a few months earlier and left him some money so the money we were going to use to get married and have a honeymoon went to buy the Versa.
This is the kind of thing that over half of America is enduring right now. Being broke broke broke broke broke. I am paying \$600/yr on interest alone on the credit cards I can’t get paid down. To say I am discouraged does not even being to describe it. And yet conservatives will keep arguing against paying working people any better with every breath.

You can use any justification for why wealthy corporations/people shouldn’t have to pay a livable wage…but the fact remains that without doing America will never to to its form glory. And there really is NO excuse except GREED.

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1. I’m sorry to hear that you’ve had a hard time financially. It’s not about wanting to pay people less than they’re worth. I agree that people should be paid more, but raising the minimum wage isn’t the best way to do it. All this does is make businesses threaten to fire a bunch of people.

So how do we get people to have higher wages without forcing it with legislation? Simple. The free market. It takes a little time, but there’s power behind people saying that they won’t just take any job presented to them. That’s part of the issue today: People are so desperate that they jump on anything that pays a little money. But there’s a serious issue with that.

The issue is that a lot of these low paying jobs without are starting to demand commitment from people. Some of them get angry with you if you tell them that you’re looking for another job. Even if it’s in their best interest to know, they look for reasons to fire you. So nowadays, you almost have to lie to get time off for an interview. To me, that’s not greed. That’s a simple issue of a lack of morals.

I’ve made the case to professors before that in order for our economy to stay healthy, we need morality. The case I usually make is religion and marriage, but it goes beyond that when we’re dealing with other people. Today, fewer people in charge of businesses practice a religion that would keep them from being unfriendly and firing someone from trying to better their situation. More people don’t really view marriage as a goal anymore, which is a personal choice, but it helps people gain a work ethic towards achieving a goal.

The point is that it’s not an issue with greed in every situation. Too many people think managers need to get the job done at any cost and that people should be grateful to even have a job today. We’re going on eight years out of the worst recession we’ve experience in this century. We’re past that attitude. People need to start advocating for themselves again.

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1. Lordy, you are not paying attention or I need to go into more detail.

If you don’t think you need to take any job to prove a point, well congratulations, you are in a different half of America than I am. I don’t think you realize just how destitute this nation has become. You ought to have a clue from the moralless worm they elected to our highest office. The people in my area HAVE to take jobs for low pay from jerks…because that is the only kind of jobs we have in working class America. I have now been looking for 8 months for something that pays better than \$10/hr and have found maybe 3 positions to even apply for, much less get an interview. A nearby winery was glad to give me a part-time job – for a college graduate at the wonderful wage of \$8.50/hr, no benefits, work all weekend every weekend. Please don’t try to tell me they can’t “afford” to pay better – they are a huge winery that caters to the upper class. At 53yo, not where I expected to find myself.

I tell my story not for personal pity, but to try to get conservatives to understand what your “free market” BS has done to this nation. I came from working class grandparents, college educated parents and both generations had a solid middle class wage that they earned. I too am degreed along with my sister and cousins, but most of us aren’t going to get near the financial security that the last 2 generations had. And don’t give me junk about being lazy or entitled. I write because so many people are in far worse shape. I don’t have to worry about being homeless or hungry, my mother can afford to help. But to know I will never be able to retire sucks, and I expect to be charity/government dependent if I live too long. Mom’s money won’t last forever.

Actually the “free market” might do well if the folks at the top had the morals you complain about. I’m not sure wth marriage has to do with anything. I never got married or had biological children. Instead I taught high school and kept foster teenagers. IMHO, to many of my rural “Christian” neighbors probably think I am a freak for not getting married on having children. Since 75% of them voted Trump into office, it will be long time before I set foot in a church again.

Again, you just try to make up excuses of why working people can’t be paid better. The money is all being hoarded at the top. A perfect place to start is by raising the minimum wage. Then raise taxes on the well-to-do. And getting working class people middle class wages should be done on a world-wide basis; otherwise corporations will keep moving factories to new places where they can cheat workers. If I haven’t said it before, most people MUST make a middle class wage in order to have a thriving economy. Those at the top just cannot keep it all. Until we are willing to legislate what they won’t do naturally, the economy will continue to suck.

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2. I’m not in a “different half” of America. I, too, have issues like much of the rest of the country does. I never said that the business “couldn’t afford” to pay your angry self more. I also don’t have the necessary information to make that judgment. Assumptions are usually wrong, but the hard data that companies keep never lies. Believe it or not, I do know how destitute the nation has become. I study this for a living, remember? I know that roughly half of the United States labor force makes \$30,000 or less (usually less).

What you call “Conservative free market BS” is what I call basic economics. There’s a reason why economics is considered a science with scientific laws that have been proven over time. Just to be clear, the United States labor market hasn’t had a free market since the middle of 1938, when the minimum wage was first enacted. A true free market wouldn’t have any price floors like a minimum wage or a price ceiling like a maximum income. The market would work itself out and unemployment would be low due to employment rather than due to people who gave up looking for work.

The problem I’m more concerned about, however, is that you’re not really being open minded about what I’m saying. Much of what I’m saying isn’t necessarily “conservative.” It’s what a lot of liberal professors at the University of Oregon have repeated themselves. You cannot assume that everyone that disagrees with you economically must be conservative.

As for “money hoarding,” it’s not really happening the way you think it is. People who own major corporations do make a lot of money. But if they just own the business and don’t receive a salary, then they don’t really have a whole lot of liquid assets (such as cash). They have to sell their shares to get money and if they sell too many, they’re no longer the owner. Many CEOs do have large salaries, but they’re hardly taking as big of a percentage of revenue as you make it seem. Many CEOs are also paid in shares of stock, which isn’t a liquid asset like money.

A lot of the money a company makes in profit tends to stay in the company. This is so the company can expand and provide raises to those who have it in their contracts.

You say that I’m just making excuses as to why businesses can’t pay people better. But if you had read what I previously wrote, you wouldn’t really think that. Then again, if you think raising the minimum wage and increasing taxes on just the wealthy will solve all of our problems, maybe I should be more mindful of the fact that you probably 1) haven’t taken an economics class or 2) took an economics class but didn’t take it seriously or 3) took an economics class but didn’t pay attention.

And just for your information: I’m worried that I won’t be able to find a job after school. Why? Because I’m not sure Trump can fix a lot of the issues that have occurred under Obama. Say what you will about Bush, but he’s been gone for eight years. It’s time for people to realize that Obama had made the economy his own by 2011 and made things the way the are now in six years. Again, I’m just asking that people try to understand economics and open their eyes.

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3. I guess you believe that you are doing your own thinking, but you sound like a conservative mouthpiece.

No “free market” since 1938? well up until that time history tells us we had a weak middle class, mostly just poor and ultra rich. Under those terrible liberals, otherwise known as the Greatest Generation things got evened out and we had the strongest middle class in history – because they paid working people well. Those are the times people want to return to. The way you economists talk, business owners can’t “afford” to pay workers well, but they sure did after WWII. And they can now – they choose not too. Laws can be changed back to what worked. Not just minimum wages, and taxes, but a variety of other measures.

I’m sorry but since 1980 this economy has been run by conservative principles, to the devastation of the middle class. Including during the Bush and Obama admins. Actually we have been seeing some improvement out here – I’m seen jobs for \$10/hr starting. Of course prices went up so much that that will only bring us to what we could buy before the recession.

Having big money seems to be a disease. I’ve seen friends and family afflicted, and they are not even the super wealthy.

No, I haven’t studied much economics except browsing thru books from the library. I notice any mention of the working class or minimum wages is glaringly absent. I know a mistake when I see one, and writing off the purchasing power of the working class that makes middle class wages has been a doozy.

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21. william says:

I think, what ever the reason for goods and services prices increasing- so should the salaries of the people that buy those goods and services. Capitalism has acted in bad faith, it knows what it takes to survive and all of these fake number are just to camerflouge the truth.

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1. Salary increases are usually between the employee and employer. The minimum wage in Oregon was indexed to inflation until recently.

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1. Something to bear in mind is that both sides of the aisle tend to want the same thing, but they have different philosophies of getting there. For example, everyone wants economic growth. But Democrats tend to be much more impatient about it and believe that quick, explosive growth is much better when, in reality, quick growth is only a good idea in the short run.

However, in the medium and long runs, Republicans take the cake with wanting economic growth to be much more effective by expanding over time. The medium and long runs are extremely important because you have to deal with issues like prolonged unemployment and recessions. But in the short run, you can handle small booms and busts without really hurting your economy too much.

As for the article you linked, it’s interesting. But you should keep in mind that what works in one area or state doesn’t necessarily work everywhere else. This is why Obamacare didn’t work out so well on a national scale, but worked beautifully in Massachusetts. This is the very reason, in my opinion anyway, why Mitt Romney didn’t want it to be expanded to a national scale. There are enough rich people in Massachusetts to make such an idea work, but not on a national scale.

You also might want to take a look at why Minnesota is doing well. Target, Best Buy, US Bank, Buffalo Wild Wings, and many other huge corporations are based out of Minnesota. Interesting, isn’t it, how Minnesota, a fairly liberal state that hates big corporations, has so many based within its borders and is the reason why their economy is doing so well?

https://en.wikipedia.org/wiki/List_of_Minnesota_companies

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2. I think you and others have studied so much and want to believe its so “complicated” that you can’t open up to any other ways of thinking.

You defend the conservative ways of thinking – “Free Markets” “Cheap Labor” although that is what we have been doing since 1980…and there is no middle class left in this nation. Your “slow, long term” approach is nothing but BS.

Without some protections for working people, the money gets hoarded at the top and most of us stay poor. Rich people for the most part are not generous people, and will keep every dime, no matter how unreasonable.

“Cheap Labor” is what has f***ed things up. There is no such thing as “cheap labor”. Its really slave wages. Again, without most of the population making good wages, you cannot have a vibrant economy.

Shall I make you a list of all the things I have not bought in the last 15 years since I quit teaching? And teachers don’t make that great money to begin with, so I was never able to put much away. But I never dreamed I would be unable to make a living wage for 15 years with a college degree. But that is the situation for well over half of America.

Actually, …NO I don’t think both parties want the same thing. Conservatives/Republicans want to keep the money among the entitled, wealthy, deserving – as they see it. I’m sorry but as I said, the more rich people have the more they want. I’ve seen it in my own life. And they have a terrible time admitting they got any help. For God’s sake,Trump thinks he’s a self-made man after inheriting millions.

Again, the problem with Ocare is Republicans. In my Republican run state, Republicans refused to have subsidies for us poor people so we could get health insurance. So it was not properly funded and then you are going to say it “failed”. What a crock.

And what evidence do you have that “liberal” Minnesota hates big corporations? If they are locating there they must think its good. It is time for these corporations to see that “cheap labor” sucks, and that paying good wages to working people makes them stay longer and work harder, and keeps customers more satisfied when they get good service.

A question I post over and over and over again to you conservatives…
“What kind of sense does it make to not pay the majority of people a living wage, then bitch because so many people want public assistance???” With this outlook, no wonder so many people voted for that pile of trash we have to call President – a billionaire who will not do one thing to help the idiots who put him in there. In fact, every single thing he has done so far is spitting in the face of working people.

I feel like you are not getting your money’s worth for that degree. Try some critical thinking instead of the same EXTREMELY TIRING conservative BS.

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Liked by 1 person

23. Lafars says:

Richard D. Wolff disagrees with this article (he’s an educated economist so you can’t call him out for not understanding the system)

Liked by 1 person

1. First and foremost, any Marxist would disagree with anything I wrote, regardless of education. You act like he’s read my article. I certainly haven’t heard of that, but I also won’t say that I know everything, nor will I say I’m the most educated. However, the statement that someone disagrees with me means nothing, especially if he’s never read it.

My article was to point out the flaw in logic most people have from wanting the minimum wage to be linked to inflation, since people tend to think of it wrong, anyway.

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1. Roxie says:

Sure, CEOs and such should be earning more than their employees, but not DISPROPORTIONATELY more. Everyone is entitled to a living wage. Most people are NOT receiving basic living wages while the wealthy few ARE receiving WAY MORE than they could ever use to live with. There is absolutely no good reason for that. It’s pure greed…plain and simple. Anyone who supports it is either a. biased due to being on the rich side of things or b. brainwashed

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2. As I’ve mentioned before, again, if you’re actually reading what I’m saying back to you, I am NOT on the rich side of things. I know of no married college students with a kid who is rich AND not getting constant help from family. Now that we’ve established this again, let’s address the other stuff you’ve mentioned.

In many cases, a CEO is in charge of the entire company while a store manager is in charge of around 30 people, maybe less. In many cases, an entire company is thousands of people (sometimes tens of thousands). If you really want to see how “disproportionate” this is, we can use averages.

On average, a general manager earns \$50,151 per year. The average Papa John’s store employs around 30 people. This averages to \$1,671.10 per employee the general manager is in charge of. According to its corporate profile, Papa John’s employs 23,100 people and CEO John Schnatter, Papa John himself, has a reported salary of \$1.77 million. \$1.77 million divided by 23,100 gets you an average of \$76.62 per employee that he is in charge of. He is reported to exercise \$7.84 million (likely through his shares of stock in the company on top of his salary). Even if we were to use this figure, his average pay per employee is \$339.40. Hence, the CEO of Papa John’s makes 20.31 percent per employee of what his store managers make per employee.

General Manager Salary
http://www.payscale.com/research/US/Job=General_Manager/Salary

Papa John’s International, Inc. Corporate Profile
https://finance.yahoo.com/quote/PZZA/profile?p=PZZA

You mention that there is no good reason for someone to make “WAY MORE” than others and you claim that it is pure greed, “plain and simple.” The reality is that greed usually has very little to do with it. In fact, let’s use Papa John’s financials to prove this. In 2016, Papa John’s reported \$1.72 billion in revenue (total sales). The cost of this revenue (AKA cost of goods sold, which are material costs for its revenue and does not include wages) was \$1.35 billion. This leaves the company with \$359 million before any other bills or employees are paid (gross profit). Taking out operating costs (wages, rent, utilities, etc.), the company is left with \$164.5 million. After paying taxes and all other expenses (interest on loans, etc.), Papa John’s reported a total of \$102.82 million. In case you’re wondering what the percentage Papa John’s paid in taxes (not the “tax rate,” but the actual amount of taxes compared to its income), it paid 31.31 percent. This is found under the section entitled Income from Continuing Operations and dividing Income Tax Expense by Income Before Tax.

You can say that it’s “wrong” for Papa John to take \$1.77 million for a salary all you want, but the man earned it. John Schnatter built Papa John’s from the ground up and is still the majority shareholder today. You cannot seriously tell me that you wouldn’t take such a salary from a company you built from a one-man shop into a full blown corporation that employs 23,100 people. Many would take a lot more than that if they had the opportunity to. Think about how you would feel if someone told you what you were doing was absolutely wrong just because they didn’t agree with your salary that YOU worked hard over decades to be able to earn. You would likely defend your salary, saying that you had worked harder than anyone else at your company to make it what it was today.

Papa John’s Financial Data
https://finance.yahoo.com/quote/PZZA/financials?p=PZZA

Now to address living wages. Just as was said on Netflix’s ‘House of Cards,’ “You are entitled to nothing.” In reality, it’s true that people are entitled to nothing more than what they produce. Therefore, we are not actually entitled to Medicaid and SNAP benefits, we’re lucky enough to have a country that has programs like that for those that need them. They are also usually self-help programs to help people get back on their feet, not a “give-me-something program” where you just show up and receive something, which is often how people look at them. Nobody is entitled to sit around and just receive money. This isn’t even how it works in most socialist societies.

Since I’ve mentioned that I’m not rich, you may think that I’m brainwashed. Here’s a little bit of political background for you: I’m from Oregon, which is often viewed as a ground-zero for liberalism. My entire family on my mother’s side, father’s side, and even on my stepmother’s side, are all Democrats except for my father, who isn’t really even conservative. Then there’s me, a conservative Libertarian that was made out of all of this. If there was any brainwashing done, it was by leftist Democrats and other liberals. If they were to brainwash me, I would never have thought that people weren’t entitled to anything but what they produce. Hence, I cannot have been brainwashed since everywhere I’ve lived was liberal except for Idaho, which would NEVER have tried to make a Libertarian out of anyone (they’re just about all Republican out there).

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24. Ryan says:

I agree with the math, but like most bad business people if you only do the math to try to turn a profit you are likely an a hole no one wants to work for. You add in the social factor and this changes the equation.

Would anyone today put up with living like the poorest people in 1948, absolutely not. That should not be factored in as an after thought or on an ad hoc basis. Nobody but waiters would accept \$4 and change, but that’s a different argument that means more restaurants and higher turnover.

I’m sure the CPI covers food, housing, and utilities. But what about post 47 development. I personally would base off 67 since it was high and people would be more willing to accept that standard of living.

No microwave, that’s cheap and quick food which is vital on minimum wage. No internet or computer, good luck getting a better job. No car, good luck getting to your job or filling up your car if you do have one. No TV, probably not a necessity but socially isolating to an extent. Probably a few other things I’m forgetting like A/C, it’s hotter now than 1947.

Overall I can see \$10 being the federal minimum wage and states like California, Oregon, New Jersey, Washington, New York, New Jersey, and Massachusetts going to 12-15. Chicago and some other large expensive cities too.

26 is utterly ridiculous, but so is 7.25 and 8. It should be able to put someone through school or help them survive immediately after, not for someone in their 30s with kids which is where the pressure comes from.

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25. David Cygielnik says:

Ok, I agree with your math, and the increases you listed. I didn’t read Every comment (I made it about 10-15 in, a few past the ridiculous Anonymous comment…) Yes, Minimum wage tied to just the CFI would be Tiny. The problem is in the Cost of Living increases that you don’t take into account. Yes, Inflation is good to track, and I’m not sure I’d have done the math on the wage rate itself, but on the wage total that working 40 hours a week times 50 weeks a year (2 weeks unpaid leave is believable) and do the percentage change on that. I’m not going to do the math out, I don’t have the time unfortunately, maybe later. I think the problem is that market forces since the 1970s have really pushed prices up, while not giving people the buying power to keep up with said increases.

Wages should not have necessarily kept up 100%, nor should they have been left behind by such a large margin. I think that the biggest problem is not the amount of money that is around for goods and services, but the prices of those goods and services. Those prices have skyrocketed since the 1970s. I think that the biggest problem is that when the economy was strong, prices went up to reflect this. Nothing wrong there, but when the economy started to fall flat (late 90s) the prices kept going up like nothing was wrong. then in the 00s, It became belief that people had Lots of buying power, when that power was in fact, waning. Prices went up, wages became Very stagnant except for the rich, and then, suddenly 07-08 happens and a depressions hits Hard.

It was built up to from about late 2005, but people didn’t notices due to some smoke and mirrors being put forth by the economy and corporations that kept promoting “Buy! Buy! Buy!” instead of “Buy! Save! Buy!”. I think that if prices had slowed in their growth when wages did, we wouldn’t even really be having this discussion right now. 🙂 My Father bought a 2 story, 4 bedroom house that 2 floors total are 22×50, then there is an attic, full basement, and 2 car garage. In 1981 that was 104k. I now have a 1950sq ft 1 story, 2 car detached garage, and my yard is about 1/3 the size of his, And I’m living in a much lower cost of living state than he does, and mine was 145k in 2016…. scary increases in cost over 30 years, considering wages have barely moved in the same time period.

I honestly think the problem we have had with the economy of this country is the abstract notion that prices can Always be increasing, no matter how the economy is doing. If costs slowed when growth slowed, then I think we’d all be fine. 🙂

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