Thursday, Dec 18, 2014
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Current minimum wage is out-of-whack


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Corporate profits are the highest and overall wages are the lowest since 1929 – does that year ring a bell? — and yet Republicans continue to put forth arguments to repeal the minimum wage. This one takes the cake — a cake most likely frosted, packaged and sold by a minimum wage baker’s assistant.

Charles Koch, CEO of Koch Industries and fourth richest American at $31 billion, wants to eliminate the minimum wage to, get this, “Improve economic opportunities for the poor.”

Koch insists “a minimum wage means some workers and employers are worse off because they are unable to voluntarily engage in what would have been a mutually beneficial exchange.” As in “gosh, you’re in such dire straits what with your need to eat and all that I will allow you to engage in an exchange of your humanity for a pittance so I can exploit your distress.”

Only someone who is rich and arrogant would define such an exchange as “voluntary.”

The federal minimum wage was set at $7.25 an hour in 2009. Nineteen states, the District of Columbia and several municipalities have legislated higher minimum wages. Unlike most other government yardsticks the minimum wage is not benchmarked to inflation. If it had continued to be inflation adjusted after 1968, the last time it was at $1.60, it would now be $10.74 per hour. That’s not going to create any millionaires but every penny counts when you’re penniless.

But even that figure is not really accurate. If you consider worker productivity and per capita personal income growth since 1968 the real figure should be closer to $17.00 per hour.

There are all sorts of studies on the economic impact of a minimum wage without conclusive evidence of harm or benefit. Proponents argue it reduces the demand for social services, increases consumption and does not have nearly as much impact on unemployment as cyclical and market forces. Opponents argue it results in fewer available low paying jobs, higher prices and adverse effects particularly on small businesses. It should be noted, however, that companies having revenue of less than $500,000 per year and not engaging in any interstate commerce are exempted.

Since the macroeconomics is muddled the one inescapable truth about inadequate wages is that they make life more convenient for the rest of us while keeping millions destitute. Our food is cheaper; our lawn care is cheaper; our home healthcare is cheaper. My, aren’t we proud?

What’s more, major corporations like Walmart and McDonald’s that rely heavily on underpaid staff are essentially sticking it to taxpayers to underwrite their profits by obliging employees to use the public safety net to cover what should be the employers’ social responsibility.

About 3.6 million workers earn the federal minimum wage or less. The $7.25 wage translates to about $15,000 per year. The government’s official poverty guideline for a family of four is $23,550.

So argue “voluntary exchanges” all you want, just don’t turn around and impugn the working poor for relying on food stamps, public housing and Medicaid.

Marty Moore is a freelance writer living in Port Richey.

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