A Living Wage

There is a great deal of controversy over raising the so-called minimum wage to a range of $12-15/hour these days.  Conservatives are, predictably, crying there will be many jobs lost as a result of such an increase, but that's a fool's argument. In nearly every case, the costs would be passed on to the consumer, eliminating the need for job cuts. Many small business owners won't realize this truth immediately and will claim such a wage increase would put them out of business. What they aren't grasping is that all their competitors will have to raise prices to keep pace with the wage increases as well, so they won't be hurt in terms of competition.

However, many will point to increased prices and ask where the benefit is in having the wage increase if everyone will pay more at the check-out stand. To explain the benefit, let's imagine a fictitious burger joint.

This fast-food establishment has 100 customers per hour with each customer purchasing an average of $5.50 of food and drink. On the shift, there are 10 employees, management not included. Each of the regular employees is a part-time worker, meaning they do not get full-time wages. Their average hourly wage is $7.50, costing the owner $75/hr. for that shift. He has made revenue of $550 per hour for a total of $4400. The cost of operations, including raw materials, electricity, water, rent or mortgage, and salary (including management) is $1600 for the single shift of 8 hours. That gives the owner a tidy profit of $2800. Obviously, he could afford to increase what he pays, but let's say he wants to maintain his profit margin and he passes on the increase to his customers. [Note: these assumptions are not taking into account the costs of government regulation compliance nor the costs of employer contributions for unemployment, social security and any benefit programs the employer may offer. However, they do give a good enough overall picture to give a fair assessment of affordability.]

He is selling 800 meals per shift. The increase in wages to $15 would double his non-exempt pay expense, totaling $150. An extra $75 spread across 800 meals would be an increase of $0.09375 per meal -- LESS THAN TEN CENTS. (I am immediately reminded of that phrase from the '60's -- "Say buddy, can you spare a dime?")

Okay, so we will pay an additional dime per meal. What do WE get for that dime?

Today's families are finding the wage-earners unable to make ends meet with just one job. Having to take more than one job leaves fewer jobs for younger workers coming out of high school or college (and YES, college graduates, some even with masters degrees, are having to take minimum wage jobs while seeking better positions.) If those same workers needed only one job, that would create openings for new workers, lowering unemployment. Additionally, if those workers, both new and established, did not have to depend on food stamps, section 8 housing, WIC and other social programs, we would need less tax money to cover government expenditures that ensure the greater social good. If we needed less tax money to do all the things we want, businesses and individuals could have their tax rates decreased. All of this from the single ten cents extra you'd have to pay for that burger meal.

This increase works for all of us, including employers. However, it can only work if Congress has the guts to eliminate the pay differential for part-time versus full-time workers. If business owners, especially corporations, think they can get away with paying less by simply hiring a fully part-time workforce, they will do it in the blink of an eye. When it comes to Corporate America, no change for social good can be counted on without the force of law.

If you think this model doesn't work for the "big-box" stores, think again. The increased cost to consumers would be far less than the dime we're talking about on a per-item basis. In fact, the entire purchase would likely only have to increase about the same dime.

Now that you have taken a closer look at the truth, ask your Republican (especially TEA party) representative why he is opposed to lowering your taxes.