Minimum Wage

A proposal to raise the minimum wage (S. 1062) was shot down this week, but that's not an entirely bad thing.  Those against the proposal cite damage to the profitability of employers as the reason why we can't raise minimum wage.  That reason is not the reason I'm supporting.  We do need to do something about the minimum wage, and that is to convert it into a living wage.  Enacting this bill would be a great short-term solution, but it falls short, we need to do something bigger.

Before I go further, let's look at the minimum wage.  Currently the minimum wage is $5.15 per hour, and that translates into a annual gross income of $10,712.  This assumes 40 hours worked per week, and 52 weeks worked per year, any other annual income I cite assumes the same.  During his term Bill Clinton allowed the states to set their own minimum wages, and several states have taken advantage of that.  Currently 18 states (AK, CA, CT, DE, FL, HI, IL, ME, MD, MA, MN,  NJ, NY, OR, RI, VT, WA, WI) and DC have a state minimum wage higher than the federal wage. 6 states have no state minimum wage (AL, AZ, LA, MS, SC, TN), so the federal wage is the wage, 1 state, Kansas has a lower state minimum wage, and the rest of the states have a minimum wage that's the same as the federal wage.  Since I like pictures, here's a map of the wages from the Department of Labor (I added the specific wages)

Uh oh, is this another incarnation of the Red vs Blue Map?  Almost is.  Anyways, I know there are more than 3 cities that have set higher minimum wages, but I don't have that info at the moment (this stuff was compiled from Wikipedia and The US Dept of Labor)

Now, the biggest problem with the minimum wage now is, it doesn't keep up with inflation.  Only in Alaska, Washington, and Oregon will the state minimum wage keep pace with inflation.  Even the proposal that was shot down wouldn't keep up with inflation.  If they wanted to bring it back in line with inflation they would raise it to $7.95, here's why.  The current minimum wage went into effect in 1998, so adjusting today's annual income to 1998 dollars, we find that the annual income goes down to $9,244.28 (actually it's 2005's figures, the calculator I used didn't have 2006 figures), and of course this means that each year inbetween would be lower.  Adding the differences together we find a disprepancy of $5831.15, that added to the initial value of $10,712 gives use the hourly wage of $7.95.  That's what the minimum wage should be at today, but this is only the 1998-2005 time period, if we look back farther, the minimum wage should be even higher.  I don't have the exact vaule, but it's somewhere in the $9.00 neighborhood.  So where is this $5,831.15?  It's in the hands of employers, they don't want to keep up with inflation because they make money off inflation.

But of course, this assumes that people can actually live off $10,712.  Can we really say that this is a fair wage?  This is the reason why unskilled workers work multiple jobs, and the classic retort, "Well, they can go to school to become skilled," doesn't apply to everyone.  For some people it is impossible.  Our social system traps many good people into situations where they have to work 3 minimum wage jobs just to get the basics.  Yes, there are programs to help people, but not all people are welcome to those programs.  If we created a living wage, then there would be need for less programs, lessening the burden on the government, and people could work less.  When people work less, they are with their family more; this alone can help "break the cycle" for the children of the working class and below.  Also, with a living wage, people can actually have the basics, and maybe a little entertainment from time to time.

So, how do we do this?  This may sound crazy, but bear with me.  First, abolish the federal minimum wage, or just make it apply to government jobs (but those jobs are salaried anyway, doesn't really matter).  Second transfer this power to the states, mandating that they establish a living wage.  The reason for this is because the living wage will vary from state to state, and perhaps even from borough to borough.  The living wage is tied directly to the cost of living, and is better suited for the state governments to oversee this program.  It would also be encouraged that they determine the living wage by the "basket of goods" method, that way, inflation isn't an overt issue, since it's then tied to the goods & services in the "basket."  For example, a gallon of milk could be $1.00 one year, but $2.00 the next year, when calculating the cost of the living wage, the inflated cost is already accounted for.

So there it is, get rid of the federal minimum wage, and have each of the several states enact a living wage.  And just so everyone knows, Congress gave themselves a "cost of living" raise this session.  If a bunch of already rich people are entitled to a cost of living raise, shouldn't everyone be allowed the same privilege?