I’ve always been against the hand of the state in private decisions and forcing a minimum wage is one of those interferences which has always grated. However, in a world where technology is raising productivity and reducing the demand for labour there ought to be a popular desire for everyone to have the ability to work for a living. And that means that if you work “full time” you can enjoy life. Well that is not the case if you are on minimum wage. In teh US, if you are on minimum wage you earn 36.0 percent below the poverty level and 62.7 percent less than median income. That is destabilising as well as seeming immoral.
There is also a case to be made for a minimum wage for stimulating the economy because when people have spending money, they spend it and that boosts the economy. And it is well known that distributions to people with less are spent, not saved, whereas rich people tend to hoard their capital.
It is a sad conundrum: We don’t really want to legislate a minimum wage, but if people aren’t getting a living wage even when they work full time and are employed by huge corporations, something has to be done to change it.
I can not afford to pay minimum wage for much of the work I do. It would be nice to employ a professional on the farm but the yield from the land does not compensate for the wage cost because people want machine produced food shipped from far away instead of locally grown, clean, zero-carbon food. So we scrape along, trying to protect nature and know that we can not afford to pay minimum wage. But if a big agro-industrial conglomerate is employing people, it ought to be humane and that means above the poverty level.
We know the whole system is going to have to change because business sense says: “put in more machines, which are cheap and efficient and you own them”, while humane morality says “give people work on a living wage”, the supply of which is dwindling fast. The gap between “have a lots” and everyone else is growing, but it should be shrinking.
Some truths from Barry Ritholtz in his article Taking a Closer Look at Fast Food Minimum Wages:
A full-time worker (40 hours a week) in the U.S. making minimum wage earns only $15,080 a year. For some context, median individual earnings are $40,404 a year (BLS), while the U.S. poverty level is $23,550 (HHS). Full-time minimum wage earners make 62.7 percent less than median income and are 36.0 percent below the poverty level. (The number you probably hear quoted most often is median household income at $51,017, according to the census. The minimum is 70.4 percent below that).
If the minimum wage had merely kept up with price inflation since 1968, it would currently be at $10.77. That is $22,401.60 per year, bringing wages closer to the poverty line. Beyond inflation, if it kept pace with productivity increases, it would be closer to $20 per hour; annual salary would be $41,600, higher than the U.S. median. And just for laughs, if the minimum wage kept up with the earnings of the top 1 percent, it would be higher than $22, or about $45,760.
What does all of this have to do with McDonald’s and Wal-Mart? Plenty. As Bloomberg Businessweek reported earlier this year, net total public assistance to the fast-food industry is about $7 billion dollars. (This does not include future medical costs associated with diabetes or heart disease). If the minimum wage were suddenly raised to $15, it would drive fast-food prices 25 percent higher, adding a $1 to the cost of a Big Mac.
As the accompanying chart shows, employees of the industry receive more taxpayer aid than any other sector.
Bloomberg BusinessWeek: Making the Economic Case for More Than the Minimum Wage