Last week I was amused by the fact that it took pointing out that Congressmen got $31,000 in raises since the last hike in the minimum wage before the House of Representatives was willing to put together a bill. Of course this wage hike for millions of workers was attached to a huge cut in estate taxes for people with multi-million dollar net worth that is widely regarded as a “poison pill” Just for reference, the $31,000 in Congressional raises works out to 6,019 hours of work at minimum wage, or at 40 hours per week, just under 3 years of work at minimum wage. Yeah, that’s right. Just the annual raise would take 3 years for a minimum wager to earn. If the rise in minimum wage actually goes through, the raise will only be 4,276 hours of minimum wage work, about 2 years of work assuming a little overtime.
By way of reference, this raise would directly benefit over 7 million workers, 70% of whom are adults — not teenagers. The majority of the workers in question are women, and a third of them are the sole wage-earners for their families. Furthermore, 22 states have enacted higher minimum wages than the federal standard. According to the Bureau of Labor Statistics there are 144 million people employed right now in the United States. So by my math, just under one out of every 20 employed Americans would get a raise under this bill.
I confess, I used to be one of those people who was against raising the minimum wage. I was a young worker, and thought that raising the minimum wage would make older (more desperate) workers more attractive to the sorts of employers who pay minimum wage. I now see that wages today are artificially depressed by several factors. Sure, in an ideal world wages would be raised not by government fiat, but by workers saying “no, I can’t afford to pay my bills for that, so you will have to pay me more,” and employers responding “well, that’s what everybody else says too, so I guess I will have to pay you what you are worth.” For those that say a raise in the minimum wage would result in inflation, I reply that low-income people spend most if not all of what they earn; if they have more money to spend, they will spend it, and that is good for the economy.
On one hand, 13% of men aged 30-55 have dropped out of the workforce, due to a combination of not being able to find jobs as good as the ones they lost, wives who do work, home equity loans, and sometimes-trumped-up disabilities. The money quote:
Many of the nonworking American men could find work if they had to, but at lower pay and fewer benefits than they once earned, and they have decided that they prefer the alternative. It is a significant cultural shift in the country from three decades ago, when men almost invariably went back into the work force after losing a job and were more often able to find a new one that met their needs.
Translation: if the economy were really as good as it was in the 70s, these men would have moved on to other jobs that, if not better, at least “met their needs.” Unspoken: or gone into business for themselves. Let’s say for the sake of argument that most of these men should be in the workplace, and that this is an artificial contraint of labor supply. As a footnote, could the low minimum wage and the ability of these men to “just say no to low wages” be part of the reason the majority of minimum wagers are adult women?
Now, it would be easy, nay a cheap shot, to say that welfare reform artifically grew the labor supply by “forcing lazy welfare recipients to get jobs.” Well, that represents maybe 4 million workers, sure. And they are barely getting by, “working long hours despite low wages, shrinking health-insurance coverage and serious trade-offs between work and decent care for their children.” These people would certainly benefit from higher wages, but more so from universal health care and fundamental changes to their childcare arrangements. Oh, and that says nothing of dealing with the fundamental additional expenses of being poor in the first place. Unfortunately, none of those things are on the Congressional agenda, but a minimum wage hike is.
You cannot reasonably talk about why low-wage earners earn so little without talking about the elephant in the kitchen: illegal immigration. Do not get me wrong, I am not against immigration; like almost all Americans, most of my forbears came to this country sometime after 1607. But there are 2 major problems with hiring illegal immigrants. First — as I have said many times before — there is no way to know which of them are just people trying to get by and which of them are involved in drug-running, human smuggling, human slavery, forced prostitution, organized crime, and/or terrorism.
The second problem is that the sort of employer who doesn’t mind if his employees aren’t legal doesn’t mind ignoring other laws while he’s at it. Laws like workplace safety regulations, overtime laws, and even that minimum wage law we were discussing. So not only are we talking about millions of people artificially increasing the labor supply, they might not even be getting minimum wage. Furthermore, they may be working way more than 40 hours a week, and they may be working in an unsafe environment that a legal worker simply wouldn’t tolerate. When one out of every 7 Mexican workers is working in the United States — and most send money home — we cannot be too surprised that Americans are having a hard time finding jobs (I will leave the possible impact on the trade deficit to the reader’s imagination). Although the official numbers estimate 11 or 12 million illegal immigrant workers, some experts think the number is closer to 20 million. Or back to the BLS statistics, or almost 14% of the American workforce. Elephant in the kitchen? It’s a whole herd of elephants.
The Feds are finally starting to come down on employers who break the law by employing illegal workers. But frankly, if they were serious, they would not be going after small time operators with a few dozen employees. Nope, if they want to get the job done, go after some big companies.
Hey, if they need to protect their big-business benefactors, just send a little note to the CEOs of the S&P 500 companies letting them know they have 30 days to get their acts together before the raid.
In closing: 100 years of progress; about freaking time they did something to prevent unwanted pregnancy, the leading cause of abortion; it turns out that people will eat as much as they can fit in the container, regardless of container size; and it’s vaccination time! Quick question, which is cheaper: $360 for a vaccine that prevents cervical cancer — you know, should your daughter be sexually assaulted or have an unfaithful husband or just use the wrong hot tub — or thousands of dollars to treat that cancer?