MmeGigs
Posts: 706
Joined: 1/26/2008
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Sorry it's taken me a while to respond - it's been hectic around here and hard to find a block of quiet time.
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I reject the idea of assigning an arbitrary "living wage".
That they're arbitrary doesn't mean that they were pulled from thin air. $12-$15/hr are the numbers I see most often when folks who have studied the issue try to put a dollar figure on it. The Republican former Speaker of the House here in MN is now our Commissioner of Labor and Industry, and he has used the $15/hr figure for a living wage. He wasn't recommending that we pay that much, but he tossed the figure out there. I figure that my $12-$15/hr is definitely in the ballpark.
We know for sure that a living wage is more than the current minimum wage of $6.55 or the $7.15 that it will be on 7/24/09. If an arbitrary number is going to be a sticking point, I'd be okay with bumping up the minimum by a buck or two an hour each year until we figure out through actual experience what a "living wage" is.
My definition of a living wage is that it is enough to afford necessities - food, shelter, heat, lights, clothing, transportation and basic health care. The cost for these things varies greatly from one part of the country to another, but there are damned few places where one can pay for these things on less than $12/hr.
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You have said that it will cause prices of products to triple. Unlike the government, a business can not print money to pay it employees wages, living or otherwise. Any wage and all the business portion of taxation that goes with it, is passed on to the consumer. It's not dollar for dollar because add SS and the employer's portion of the tax and it's close to two times, especially if the company pays any types of benefits such as paid vacation, sick time, and insurance. The point is, if you make something that costs a dollar and wages are increased the price goes up proportionally. The result is you could make minimum wage $100/hour and as a result, a loaf of bread will cost $75. The net result is the employee loses. Add to the equation, that the employee pays more tax on every purchase in the form of more sales tax associated with the higher cost.
You're wrong in your figuring here in many respects. First, the bits of govt that are most responsible for the cost of wage subsidies are the state and local govts. The states cannot print money. Some funding for those programs comes from the federal govt, but most does not. Social programs can account for half or more of a state's budget. Many states and most local govts are required by law or by their state's constitution to balance their budgets. The elected officials who decide what will be spent live next door to the people who'll be paying it, so they hear about the taxpayers' concerns every day. Most take that pretty seriously - it's damned difficult to raise taxes, which is as it should be.
The employer's portion of SS and FICA and such is about 8% of wages. Unemployment insurance would increase with higher wages, but that's also a very small percentage of wages. Health insurance costs don't track with wages - they'll be the same whether the employee is making $8/hr or $15/hr. Life insurance costs go up as wages go up, but that's a very small percentage of wages, and danged few low income folks get life insurance benefits through their employer. Many low-wage workers don't get paid vacation, and most don't get paid sick time. If they do, a week off is a bit less than 2% of annual wages. Very few get retirement benefits. The employer will pay more than a dollar for each dollar in increased wages, but they won't be paying two to one. It won't even be one and a quarter to one.
Labor doesn't account for most of the price of the products we buy. In the food industry, which is very labor intensive, they figure labor is a bit less than 40% of the price. Someone mentioned recently that the automakers figure that labor accounts for 10% of the price of a car. I'd imagine that other manufacturing labor is similar or a bit higher in less mechanized industries. Since food service workers are paid really poorly we would see a big jump in the cost of fast food since their wages would need to go up quite a bit to bring them to a living wage. Manufacturing workers make more, so not only would there be less of an increase, there's less of a labor factor in the price, so the price of those goods won't go up all that much.
We'd end up with higher prices, certainly. We'd also end up with more folks who are also consumers and taxpayers and fewer who are getting in line for food stamps, housing assistance, daycare assistance. So we'd end up with lower taxes and less reliance on government. Every dollar we don't spend on wage subsidies saves us more than a dollar in taxes, because there's a fair amount of overhead in these programs. I think it would all balance out money-wise and we'd have a more stable working class.
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You have also said that you want to cut most govt social spending, which is what fills in the gap between low wages and what it costs these low-wage workers to live. How do you anticipate that this gap will be filled if we don't do it with wages or with govt social benefits? What creates the gap? What is essential and 'entitled? The internet? Cable? Personal Car? Cell Phone?
The gap is created by the large number of jobs - about a third in our economy - that don't pay enough to afford food, shelter, heat, lights, clothing, transportation and basic health care. The programs that are out there now don't bring folks up to a living wage or cover all essential expenses. Perhaps the income limits should take some of these things into account. A phone is pretty essential. It's about impossible to function without one. How do you call in to work when you're sick? Payphones are becoming virtually nonexistent and cell phones are cheaper than land lines in many places, so maybe cell phones should be part of the formula. A personal car may be an essential expense. Some kind of transportation certainly is - it's impossible to hold down a job if you can't get to work. In big cities with good public transportation folks wouldn't need personal cars, but in smaller cities and rural areas, public transportation can get pretty limited. In my town, the buses only run from 6AM to 6PM on weekdays, they only run about half of the routes on Saturdays and they don't run at all on Sundays. In small towns around here there is no public transportation. Businesses are open every day and evenings and weekends. A lot of the industries have second shifts, some run around the clock. "How will you get to work?" is a pretty common interview question. If you don't have a car or live within walking distance, you probably won't get the job.
I get a little nervous when folks bring up "entitled". It's usually tossed out there to derail discussions about what we should do about poor folks. The argument goes that because people aren't "entitled" to food, shelter, etc. - there is no Constitutional right to these things nor any Constitutional mandate that govt provide them - we/govt have no obligation to provide them. It's an ideological argument that completely avoids addressing the problem of a growing underclass. If we all agree that no one is entitled to anything, the working poor and their issues don't just go away.
We're not talking about a small number of people here - we're talking about a quarter to a third of our workingfolk. Employers are saying that they can't afford to pay more. Many states are planning to hold the line on social spending despite the increasing number folks needing the help - they don't have the money to increase spending and feel that this is a bad time to raise taxes, a viewpoint with which I'm sure you would agree. Low-wage folks have limited options for filling in that gap. It's not like they can all go out and get another job. A lot of them are already doing that, but there aren't enough jobs out there to support that many folks working 50-60 hours a week or more, and weren't even when the economy was doing well.
What do you imagine will happen if we cut off programs that help support low-wage workers and don't increase their wages?
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Where is the Government's Constitutional responsibility to provide school lunch? Why should corporate welfare exist in the form of purchasing this food from government contracted vendors?
Some kids go to school hungry because their families are poor and have to ration food. We found out that hungry or poorly nourished kids can't learn and that kids who don't learn are more likely to become burdens on society. Feeding them is relatively cheap - about $300/yr or less per kid today - and it's a good long-term investment. A lot of bang for the buck, which is what many of us like to see in govt programs.
Govt buys this food from government contracted vendors because the public expects an open bidding process when govt is spending chunks of their money. As they should. They should also expect accountability on the part of the govt entities spending the money, which is something the Obama administration has said they plan to focus on.
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What I said was to audit the details of every government program, end the duplicity, State versus Federal programs, as well as those working at cross purposes.
I definitely agree with you on this, although I'd use "duplication" rather than "duplicity". I've been happy to hear that the Obama administration is planning on conducting reviews of all federal agencies to trim fat. I'm hoping that they'll encourage state and local governments to do the same, although I'll bet that most are already doing that in light of their current budget situations. I hope that the administration will talk to local govts more when it comes to social spending. Those are the folks who have to work with the programs on a practical level, so they can provide input on where the waste and duplication are.
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