Would A $15 Minimum Wage Work?

Jobs Cityscape   -   http://mariopiperni.com/

Diana McGinness believes so.

“Cut, cut, cut entitlements!”

“Reduce the debt!”  We need to broaden the base (i.e more taxes on the 47%)!

“Reduce the size of government!”

Turn on any cable news network and that’s all you’ll hear.

And the only answers the politicians have are:  raise more taxes and/or cut entitlements (not defense, of course) or both.

We hear the GOP wants to cut food stamps and other programs that help the poor.  That something must be done with SS and Medicare because they’re going broke and Medicaid needs to be cut back, too, because we just don’t have the money.  And the Democrats refuse to let these programs take a hit.

People are tired of paying taxes to help the “lazy 47% who don’t pay taxes, is the complaint.

The economy is too sluggish, it’s not growing!

So we’re in gridlock as usual with no answers that either side is willing to accept.

Is there an alternative?  Maybe.

What if we could add  $169,260,000,000 to the economy?

Add $25,389,000,000 to the treasury each year in the form of taxes (without increasing anyone’s taxes.  Over 10 years, that’s $2.5 trillion add to the Treasury that could be earmarked to reduce the debt/deficit.

Reduce the costs of programs providing food stamps, housing vouchers, and the big one – Medicaid?

Collect $10,494.120,000 more annually in FICA premiums to shore up Social Security and Medicare.  That’s over $1 trillion in 10 years, that would surely strengthen each of these programs for the coming years without making major changes in the program.

How, you ask?

Increase the minimum wage to $15.00.

Using 2010 numbers, the poverty level for 1 person under 65 was $11,344.  That’s someone making $218.15 per week, or $5.45 an hour.  The working poor receive assistance in the form of housing vouchers, food stamps, and Medicaid and pay little, if anything in the form of federal taxes.

Using the federal minimum wage in 2010 of $7.25 and the then number of working people making poverty level or less in wages of 10,500,000 you can extrapolate those numbers as follows:

10,500,000 x $7.25 per hour for 40 hours @ 52 weeks = $158,340,000,000 in wages annually. FICA at 6.2% for these workers would contribute $9,817.080.000 to SS/Medicare. Of course, some of these are part-time jobs, so this is merely an example.  But for every person who can be removed from government assistance, that’s less tax dollars needed to support them.

And if you think a person flipping burgers doesn’t deserve $15 per hour, consider how much of your tax dollars are going to subsidize their wages so they can be paid $7.25 to flip those burgers.  One way or the other, the consumer/tax payer is paying a considerable amount to get that burger flipped.

Now change the minimum wage to $15.00 per hour and extrapolate the numbers:

10,500,000 x 15.00 per hour 40 hours @ 52 weeks = $327,600,000,000 in wages annually.  FICA would be a contribution of an additional $10,494,120,000.  Over 10 years that would be over $1.4 Trillion dollars.

With a 15% tax rate, those wages would contribute $25,389,000,000 annually in revenue to the Treasury and could be targeted to directly reduce the debt.  Over 10 years that would be a $2.5 Trillion deduction, in addition to the reduced expenditures for food stamps, housing vouchers, and Medicaid.

Add an additional $169,260,000,000 increased purchasing power to the economy.

Increasing the minimum wage would also add to the treasuries of states in the form of sales tax, income tax, among other taxes these dollars would generate.

A two-person working household could generate $30 per hour providing them income to save and possibly purchase a home.

The counter-argument will be that increasing the minimum wage will reduce jobs.  There are many studies that disprove that argument. There are several papers (links here) that refute that argument.

The other counter- argument will be that the cost of everything will go up and the jobs will move overseas.

First, these are service industry jobs…now 7 out of 10 in the U.S.  – it’s going to be hard to ship them overseas.  Are you going to order your burger from the McDonald’s in China and have it flown over to the pick up window?  I think not.  Nor is the Wal-Mart worker going to be shipped over there either so you can restock the shelves yourself.

As for the cost…two things to consider.  Are you going to pay $15-30 for a McDonald’s Big-Mac?  I think not.

Prices are determined based on the floor (the lowest price a seller can sell a product for) and the ceiling (the highest amount a consumer is willing to pay), and on competitor pricing.

And while the prices may go up — if the consumer is willing to pay and competitors are not competing — the consumer/taxpayer is already paying.  If the end game allows your taxes to be reduced and you, the consumer, have the freedom to choose where you will make your purchases — based on competitive prices and your willingness to pay and the fact that you have more money to spend then haven’t we all won?

When you look at the trillions of dollars that are currently not being invested in our economy via our workers, but are sitting on the shelf waiting to invest…the only question I have is is – who better to invest in than the workers and our economy?

An interesting idea but my concerns would be the impact a $15 minimum wage would have on American competitiveness in global markets. Diana addresses this point.

Yes, that is an argument for manufacturing jobs – but most of those are gone already – some are coming back because, in part, the Chinese are demanding higher wages.

But the service industry jobs are what I’m referring to – they can’t take those overseas.  And with so many of our jobs now in that category (7 out of 10) and these being the lowest paying jobs out there, it’s a place to begin.

Your thoughts?

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Comments

  1. Anonymous says:

    Wal-Mart is the Welfare Queen, with wages so low their workers must be subsidized by taxpayers. It makes sense, but will never happen. Probably because it makes sense and does good.

  2. morton weiss says:

    Of cause it won’t work because Billionaires like Walmart family need to make a Billion dollars of profit each year because they would find it a difficulty to subsist on only $500,000,000.

  3. Frank Castle says:

    I would support a minimum wage of $15.00 an hour! Absolutely. The time for this change is way passed due! The fact that minimum wage has been stuck in the economic doldrums for decades as well as generations is a national disgrace! When we as a nation take a serious review of poverty, entitlements, subsidies, the most glaring fact that slaps you in the face, is the blatant disregard for those that “have not” vs those that “have” in our society. As I mentioned earlier, the single digit minimum wage that has plagued this country from its inception, isn’t just about being cruel & insensitive to those who are forced to work for this ridiculous amount of money, it is also a form of forced classism by those who control & dictate policy. I propose a “flip-flop” scencio with all our elected officials, whereby, if they are forced to earn the current minimum wage as of January 6, 2K13, I can assure the American public that swift changes would come about once the men & women of Capital Hill receive their first paycheck! Furthermore, with a spike to $15.00 an hour, economics aside, the psychological benefit would be incalcuable. People would be enjoying what they do, instead of going through the motions until the whistle blows. Or it is time to exit the building. But when you factor in the increased revenue, the amounts received due to taxes being deducted would go a long way to reducing the national deficit & increased deposits into the Social Security System. Finally, let me say, I am 59 years young, my brother is also in his fifties, I have a sister 17 years my junior, then of course our parents, & then their parents. The point is, we have all been affected by this crippling minimum wage! I also have daughters & they have their own families, it is disconcerning, self defeating, insulting, embarassing, & yes, at times, humilitating as an American citizen, in this great country of ours, that a “social ill” a/k/a minimum wage has existed in single digits since its inception! Like I said, CLASSISM” lives in our society, it is how the working class & raised poor are kept in check! One needs to reach into their pockets & pull out the nickel plated coins to be reminded of their place in our communities. That, ladies & gentlemen, is a dam shame !

  4. alwaysoccupy says:

    Current behavior shows that the market wants to go the other way. From Republicans behavior about cutting costs to the extent of not helping Sandy victims,you would think that Republicans would want you so poor that they could go back to slavery for the sake of profit. Also the right to work laws in Republican states backed by Koch brothers et al which would like to diminish union control over workers and if they are successful,the rich can approach these non-union members and reduce their salaries so their company can survive China competition. The new defined contributions pension plans by corporations today on average will pay out sone 30-40% of your best 5 yrs on retirement. Monies that were put in company pension plans before now go as bonuses or stock options to top management Lastly,people replacing middle-class jobs have to accept 30-40% less salary for the same responsibilities..

    I would like to increase the minimum wage to $15.00 an hour but from the way business looks at it,they would hire temporary help doing twice the work for their money with no concern for health and prosperity for their employees. Greed has taken a serious grab in the USA. It is not a sin to make money but it is a sin to love money such that you do not share the benefits given from the many that made one’s idea a millionaire. It is the many that make the few rich. Unfortunately, the selfishness of the rich goes beyond entitlements and borders on hate for the people that can’t make it to the millionaire or billionaire club.

  5. GoldenSun says:

    Like a bear I have awoken from “Holiday Hibernation” to wish a “Good Day” and a “Very Happy New Year” – to Mario and his family and to ALL the “Mario Piperni Dot Com” friends – whom I’m know will provide the best of commentary in another exciting year !
    – GOLDENSUN

  6. brian says:

    I would raise it to $10 an hour first, then index it to inflation every year.

  7. Carol says:

    Hell YES! I’m tired of paying for WalMart employees (and all the rest!) to have “welfare”.
    We deserve a living wage, no matter where we work…now, let’s FIGHT the GOOD FIGHT and see if we can get ANY increase…then fight for some more.

    Who wants to start the petition? Who’ll call their Congressmen? Who’ll stay in the fight for the duration?
    I’ll start one at the White House site…you all go there and sign it!

  8. Well, I feel we have to start somewhere. Thank you all for your comments! Before pursuing this i wanted some input from others. If we each take this to our Reps & Senators and (Carol, please feel free to!) sign the petition and then spread the word via Facebook, Twitter, other blogs, etc once we get the petition link up…maybe even letters to the editor we might be able to start a movement.

    I made a couple of slight changes when i posted this on my site – you can read it here: http://politicsunspun.com/?p=596

    30 years of stagnant wages while CEOs have increased their income by, what is it 400%?, really should amount to theft.

    Carol, when you have the link to the petition, I’ll add it to the post. If you’d prefer I do it, let me know. The next 25 days are going to be a bit nuts for me, so your help would be much appreciated.

  9. Janet says:

    Boehner and company gave themselves a damn raise! He alone gets $800.00 more a year. He doesn’t even need the money. Yeah, that’s how broke we are in America. Hog wash!
    I just can’t literally figure on this kind of issue the way some of you have, but what I do know, is the minimum wage has to be a livable wage. One problem with that, are the small businesses that find this a difficulty. I can understand this, but who on earth can survive on today’s minimum? If a small business were thriving, they might still have a hard time meeting a livable wage for a part time helper.
    I wish I could work. I’m tired of always being sick because I can’t get more then the very basic of healthcare through medicaid. Yet, I can’t work, even if I were well. I’ll always have medical issues, and stuck with having to use a wheelchair. Medicaid helps me survive, but I feel like I’m on a slow death walk with the problems I’m dealing with because of how steep the cuts have already been. I’m one of the lucky few that has access to the internet, but there are an awful lot of people suffering even with the help. If any of the ideas you have all come up with had just one chance to work, life would be sooo much more improved for millions of people. The rich would still be very rich. I think, though, that it’s more about control, being able to manipulate the country’s middle class and poor. A power struggle the rich politicians and the groups like ALEC love to use for competition. Most of us are just the game pieces they use to win, or lose. While we are still believing in a dream that has long been toyed with.

  10. fidlerten says:

    What we need to do for one thing is to create a special rate for teenage workers, that allows big businesses like McDonald’s to have their cheap workforce to do a cheap job. Pay those kids a good 8 bucks an hour and they’ll be happy. Most generally they’re just trying to pay off their car or some other materialistic item.

    Then lift the wages of those over 18 who most likely will be trying to pay bills and take care of a family. I’m not trying to discriminate against teen workers but surely we should be able to prioritize where higher wages should go as far as need and experience.

    I am also not a welfare supporter. I am in favor of a work program that allows those able-bodied people without work, to work and make at least a minimum wage salary. Temporary assistance for maybe a month or two, really should be the limit of our welfare system, and anyone needing beyond that, can join a work program, which pays for actual work. That would be a much more productive system instead of just handouts.

  11. GoldenSun says:

    “The technological advancements of the internet, by use of it’s many web pages , have opened a vast opportunity for all to find a wealth of talent, knowledge and creativity on any given subject. Unfortunately the Art of Etiquette and Common Courtesy are not one of them.”

    Please allow me to add my two cents to Ms. McGuiness’ article.

    I love the idea of raising minimum wage. Too often we think such jobs of being just for teenagers. My understanding however, is that many single mothers, seniors citizens (and soon to be seniors) and some two parent families also do not make enough working at these low paying jobs to survive, so they must ask for government assistance.

    I’ve read statistics where we find that 41% of those receiving food stamps are what are called the “working poor”.

    According to the data given to us by Ms Guinness, $15 an hour minimum wage seems like it will help the economy and the American people, I’m not yet convinced we’ve looked at it from all angles.

    I agree with many of Ms Janet’s concerns, specifically in regards to the strain such legislation may put on small businesses.

    We can almost guarantee such legislation would meet with an immediate and severe backlash with some business owners, especially most Republicans, and has potential to “die on the vine” of well intentions. (Much like gun legislation)

    I’ve often wonder why Democrats did not devote more time to adjusting the “right to work” laws now found in 24 states and rising. My humble impression of such legislation is that it substantially reduces wages and benefits
    and allows business owners to run their businesses like “the company store”.

    I’m of the opinion that, In our battles with mistaken Republican ideology, we must study our opposition and “counter-move” their legislation in this chess game of politics.

    Republicans did not come up with their Nation destroying agenda all of a sudden. It took years of planning by think tanks and special interests groups to develop and put their strategy into effect. I think many times Democrats have been caught sleeping politically and thereby simply allowing them to get their way.

    What we must do is achieve a “long-term progressive infrastructure”, by this I mean getting as many Democrats elected statewide and nationwide as possible, from city council all the way up to the white House. This is what Republicans were able to do in 2010 where Democrats failed miserably to overcome the right wing propaganda machine and lost a vast number of seats, which contributed to making economic recovery stagnant and the shrinking of Democratic values and the push and power to achieve them.

    This also allowed Republicans the power to significantly change, bypass and many times eliminate, decades of long settled legislation such as abortion laws. They did this, not by directly banning abortion but by using their seats of power to alter the conditions of such laws.

    This is what I believe we should do to “right to work” laws now applied in 24 states. Alter it, Make it more favorable to the American worker. It is amazing to me how Republicans took Unions, which I believe makes up only 8% of the American working population and use that as a hammer to pass legislation that affect HALF the country and possibly more.

    Going along with the above, we must counter any elimination of minimum wage laws (another Republican agenda) and somehow counter the move that businesses are using to reduce the hours of the American worker simply to avoid paying higher wages and giving of worker benefits.

    Achieving the above and more will put us in a position to contemplate $15 an hour minimum wages further.

  12. GoldenSun says:

    “McGinness” – sorry I spelled your name wrong – GS

  13. morton weiss says:

    My dear Fidlerten,it would be constructive if you would come out from under your rock and see that when ever there is an add for 300 workers 3000 thousand show up.So where are you going to get the jobs for ALL the lazy welfare cheats?This is what is so annoying about those that are lucky enough to have a good paying job with benefits and not the common sense to see past their noses!

  14. GoldenSun says:

    Recent article, Bloomberg news – 12/2012

    “Delta Air Lines Inc. received 22,000 applications for about 300 flight attendant jobs in the first week after posting the positions outside the company.”

    No note as to whether the 22,000 were all “lazy welfare cheats”.

  15. fidlerten says:

    My Dear Morton,

    There is so much that could be done. We could have cleaner cities and towns and our schools could all use a paint job.

    There was a time when there wasn’t so many people around, that a person could walk down a country road for a few miles and eventually, they’ll find a farmhouse or something that had a few extra chores that could be done. I realize things are different now so we need to think in a bigger sense when it comes to a work program for the unemployed.

    We can find work for everyone if we try. Our government may still be paying for it but isn’t that better than spending it just handing it out?

  16. Carol says:

    Diana…I have to reset my password at the petition site, then I’ll post the link here…hopefully tomorrow.
    I’ll be happy to do what I can to advance the cause!

    BTW: I talked with the cashier at our local WalMart and told her there would be many to stand with them if they were to picket locally…she said the problem was to get “those lazy people” off welfare…too bad there was a line behind me!

  17. fidlerten – you’ve been listening to the smackdowns from the right and assuming they’re right.

    First there is no longer a “welfare” program in this country that exists as you once knew it. Clinton changed all that with TANF – Temporary Assistance for Needy Families. It is a block grant to the states to administer and make the rules to determine who gets help and it varies as to who qualifies from state to state.

    Here are the requirements for IL residents: http://www.dhs.state.il.us/page.aspx?item=30358

    You must have children or be pregnant, it is temporary (two years max) and you must either be going to school or receiving vocation training in order to receive the benefits.

    No one is sitting at home on the couch ‘”getting a check” while on TANF.

    In Mississippi, you can’t have more than $2K in assets, if you’re getting child support, you must turn it over to the state and the maximum benefits are as follows:

    How much will the TANF payment be?
    The amount of the TANF payment is based on the family’s income. When the income does not meet the TANF Program Need Standard, the family may be approved for a money payment up to the State maximum for that household size. Monthly payments in Mississippi are limited to no more than (per month):

    $110 for the first person
    $36 for the second person
    $24 for each additional person

    If you think people are clamoring to get on welfare so they can feast on $110 a month….well, really?

    In the entire state of GA I heard the other day there are only 4 thousand people who receive assistance.

    Since the federal government “block grants” the money to the states, many have redirected that money to serve purposes other than helping the poor. http://www.cbpp.org/cms/index.cfm?fa=view&id=3808

    Now let’s break down all the programs and see who gets all those welfare “entitlement” programs – http://www.cbpp.org/cms/?fa=view&id=3677

    53% of those receiving assistance are over 65 — poor people most of whom undoubtedly worked most or all of the lives in low wage jobs with no pensions or 401k plans and social security that is no longer enough to subsist on — and i would be many of them, as my mother did, are receiving assistance in order to be cared for in nursing homes, since their working children can’t take care of them at home. Those of us who would have liked to had daytime assistance while we worked so mom or dad could stay in our homes were denied that ability because the program didn’t allow it. AHA would have changed that, but the GOP saw to it w/Dem help that that portion of the bill has been repealed.

    20% more are people who are disabled and unable to work.

    18% more are people who DO WORK – but aren’t making enough to care for the families.

    For the remaining 9%: “Moreover, the vast bulk of that 9 percent goes for medical care, unemployment insurance benefits (which individuals must have a significant work history to receive), Social Security survivor benefits for the children and spouses of deceased workers, and Social Security benefits for retirees between ages 62 and 64. Seven out of the 9 percentage points go for one of these four purposes.” Paul Ryan was one of these 9%ers.

    BTW – I can’t speak for other states, but here in WA, people who get caught doing some minor infraction are sent out along the highways to pick up the trash as part of their sentencing. Do you want to start paying them to pick up the trash, fidlerten?

    And, sure, there is plenty to do out there – but the states don’t have the money to pay people to do it and, if they did, what prevented them from doing it when we were riding high — look around you and see how much infrastructure has been neglected over the last 30 years.

    As for a special rate for teen workers – there is one. In most states anyone under 18 is limited by the number of hours they can work (so they’ll have time to attend school). Most of those fast food jobs are now being done by those well over the age of 18, single moms, 50 + year olds that companies who have pension plans won’t hire or re-hire because they don’t want to pay the additional expense of benefits for them. McD’s doesn’t worry about benefits – and most people working there are not full time…so they have more than one part time job.
    ,
    In case you haven’t noticed, fidlerten, we have more employees out there than we have jobs for them.

  18. Goldensun says:

    Ms McGinness, Diana if I may – you continue to be the Queen of Valuable Information on this site !

    One of the links show that “Under TANF (Temporary Assistance For Needy Families), the federal government gives states a fixed block grant totaling $16.5 billion each year” which are meant to be spent on “assisting needy low-income families or children” in various forms, but ….

    “over time, states redirected a substantial portion of their TANF and MOE finds to other purposes, with some funds being used to substitute for (or “supplant”) existing state spending and thereby help plug holes in state budgets or free up funds for purposes unrelated to low-income families or children.

    The result –
    “In 1995, for every 100 families with children living in poverty, 68 received cash assistance through AFDC to help meet basic needs; by 2010, for every 100 families that were poor, only 27 families received such assistance.”

    In order to further supplement their state budgets – “many states cut already-low TANF benefit amounts further, shortened TANF time limits, or took other actions to shrink caseloads or keep them from rising much in the face of mounting need.”

    States now spend only about a quarter of their TANF and MOE dollars on child care and work activities.

    If I understand this correctly – This kinda flies in the face of the right wings claim that MORE tax dollars are being used for the poor when it is actually LESS.

    Thank You, Your Highness ;-)

  19. Ding, ding, ding! And the winner is….Golden Sun!!!

    You got it. And every time our Congressperson comes out and states they want to “block grant” a program — that’s exactly what happens to the money. Many states use it to plug their deficit gaps and the people who need it get screwed.

  20. Eddie Cantu says:

    Yes! The more money people make, the more money people spend. I bet the crash would never had happened if our minimum wage was higher. If it still did occur, the damage would have been a lot less catastrophic. Our wage inequality is by far the largest than any other devolved country in the world. The pay of a CEO averages about 400+ times more than the average worker. That’s disgusting. Maybe small businesses couldn’t survive paying such wages, but oddly, they seem to be the ones that pay the best. When most people can count on ten fingers of where they put their dollars, mostly big corporations, this should be a no-brainier. If you work, you should at least be able to afford to eat and function in society rather than spin your wheels and lose your goddamn dignity and sanity.