Different shades of gray
Each month the Sun Advocate presents two views of the same subject as columnists Terry Willis and Tom McCourt see it.
Higher minimum wage pays
The US House of Representatives just voted passage of a long overdue bill. They voted to raise the minimum wage for American workers to the whooping sum of $7.25 an hour. If this passes it will still take two more years for this to fully become integrated into the workplace.
The minimum wage law was first passed in 1938 to set a standard for wages. It left exceptions for farm workers and jobs that provide income from tips and other sources. It mostly kept pace with the economy and inflation until 1997. That is the last time it was raised and it stood at $5.15 an hour every since. This 10 year span is the longest period that the country has gone without an increase in the minimum wage since the law was enacted.
The current proposal sets the increase of $2.10 an hour to take place in three increments over a two year period of time. The argument against this is that the increase will hurt low income workers and small businesses. It is said that small businesses will not be able to afford to hire workers or they will have to increase their prices to cover the costs. That may put some out of business. The workers they hire will be out of a job. Some businesses will just plain cut back on the number of employees. Again resulting in a loss of jobs for those who need them most.
I have empathy for the businesses that will have to start making some hard choices. When I ran the Family Support Center, wages were always an issue. I ran the center on a fixed amount of state funds each year. New money was seldom allocated from the legislator to pay any increases. I was offering more than minimum wage, but I found a way to give raises each year to the lowest paid staff. For three years I passed along any increase in budget or savings along to help my staff survive, while forgoing any increase in my own wage.
However, the fact is that the cost of living continues to rise. One bedroom apartments are listing for $400 and up. In the cities, it is closer to $600 for a one bedroom apartment. Housing subsidies have disappeared that assist those on the lowest end of the scale. Gasoline, heating, and electrical costs have skyrocketed over the past several year. Assistance to help defray those expenses has plummeted.
With a "pull yourself up by your own bootstraps" mentality existing, we need to at least give people the opportunity to get a pair of boots. Despite the fact that Representative Chris Cannon stated that "nobody makes minimum wage"; there are over 169,000 Utahns that currently make minimum wage or less. This is in a time when our jobless rate in Utah is at a historic low. Businesses are being forced to raise their wages to get and keep employees.
The fact is that many American workers are struggling to keep their heads above water despite the fact that the worker productivity rate is rising. The top tier of business executives continue to rake in record salaries while cutting and freezing the rates of the employees who do the nuts and bolts jobs. In 2005 the average difference between CEO salaries and their workers were 369 times more. In 1976 it was only 36 times higher.
A raise in the minimum wage can have a positive ripple affect to the wages of many. Those opposed to the increase try and pit the middle and lower class against each other when we should be banding together to say "enough."
I am not proposing a socialist society in which we all share equally. Hard work and ingenuity deserve to be paid for. That being said, we need to pay for it on the low end of the work scale as well as the top end. If I can no longer get a Big Mac for a buck, so be it. It is time to pay a little closer to a decent wage for the work we are asking to get done. There are several states that have already mandated this and it has not devastated their economy.
A living wage is a sign of a society that allows dignity of life. As we point our finger of morality around the world, we best make sure we take care of our own here in the United States first.
Musings on minumum wage
First let's get the facts straight.
Governor Huntsman recently commissioned a study to see what would happen if Utah raised the state minimum wage beyond the federally mandated $5.15 per hour. The study found that 6,000 Utahans make the federal minimum wage and another 13,000 are paid less than minimum wage. Most of those who make less than minimum are in food-service jobs where wages are supplemented by tips.
Of those making minimum wage in Utah, only 14.3 percent are full-time employees, 82.3 percent are part-time workers, and 3.3 percent are temporary workers. Of the 19,000 Utahns who make minimum wage or less, most are students or single young adults just entering the work force. Only a few thousand are trying to support families with minimum wage jobs, and most (or all) of those are receiving some kind of public assistance.
The study found that raising the minimum wage to $7.00 per hour would directly affect about 71,000 Utahans who make $7.00 an hour or less. Another 99,000 workers would benefit from a "spill over" wage affect. That means that 17 percent of Utah's work force would receive a pay increase if the minimum wage was raised to $7.00 an hour.
The minimum wage law has always been controversial. The whole idea behind a free market economy is to let supply and demand, as well as prices and wages, find their own levels. When the government interferes with any part of that, an artificial element is introduced that knocks the free market off the tracks. A mandated minimum wage always raises the prices of goods and services and often leads to some business closings and layoffs. Another thing we never hear about is that raising the minimum wage is a subtle way for the government to give itself a pay raise through expanded payroll and sales taxes.
But, our politicians claim to set a minimum wage for social and not economic or political reasons. The idea, we are told, is to give the poorest among us a living wage. It sounds good, but it's not true. For example, a new minimum wage of $7.25 (as proposed by the feds) is not a living wage. At $7.25, a worker makes just over $1200 a month without overtime. After deductions and taxes, a family of four with one wage earner is still on the street. If we are truly increasing the minimum wage to help people out, why not set the minimum at $20.00 an hour? If we did that, almost everyone in America would receive a pay raise.
But we know that if we did that, the cost of everything would double or triple. And when the dust settled, $20.00 an hour would have the same buying power that $7.00 has today. This is the sad truth about raising the minimum wage. Wages go up, prices go up, and taxes go up. Workers are not helped all that much and some businesses are actually hurt. It's politicians who make out like bandits.
If we are really interfering with the free market for social reasons, why not go all out and make some big changes in the workplace? Why not set a maximum wage as well as a minimum wage? Let's have a law that no CEO can pay himself more than 50 times what the average worker at his business makes. Let's pass a law that anything over 25 percent profit must be given back to workers in bonuses and benefits. Let's pass a law that no CEO can pay himself or his board of directors multi-million dollar bonuses without giving double or triple that amount to the rank and file workers. Let's pass a law that American companies who make products overseas pay huge tariffs to bring their goods back into the country. Let's take the profit out of going to Bangladesh to pay slave-labor wages.
And while we're at it, let's stop the practice of allowing companies to hire two part-time workers instead of one full-time worker so they can pay lower wages and avoid paying benefits. And let's stop companies from working two 12-hour shifts instead of three 8-hour shifts. They do that to eliminate one-third of the workforce, and it's cheaper to pay overtime and work their people to death than pay benefits for another whole crew.
Congress needs to address that problem and fix it. We need cheaper healthcare and stronger labor unions. There are many things we can do to help poor people more than raising the minimum wage.