Thursday, March 27, 2014

My Views on Minimum Wage

My daughter is a big advocate of raising the minimum wage to $11 from its current rate of $7.40 here in Michigan. I believe she is such a big advocate because she and her boyfriend make minimum wage. She only has one job. He has 3. They do okay. They could do better.

Because she feels so passionately about the subject, I am forced to think about it often and the subject is starting to grow on me. I may have felt more passionate about it when she was little when I did work minimum wage and never had less than 2 jobs as the primary caretaker for two children who might have wanted to hang out with me once in awhile. But then I didn't have time to think about things like that. And now it is to me more a matter of logic than one of emotion. Allow me to demonstrate.

If you make minimum wage, and you work 40 hours a week (in my experience this does not happen often because employers who can't be bothered to pay their employees a living wage also don't want to call them "full time" with any sort of benefits to go along with that status), you will earn about $250 a week, after taxes. Possibly less if you have no dependents, but we're going to work with that number because it's nice and round. If you're working in a month with 4 weeks, that's $1000 per month ($1,184 gross). Another nice round number. Let's take that number and play with it a bit.
(I admit I suck at math, but I'm going to do this anyway)

On a side note, I would like to point out that the poverty threshold in Michigan government for a single person household with no dependents is $11,344 and benefits are available to those earning up to 150% of poverty or $17,016 which pretty much qualifies all minimum wage workers to government benefits. Someone would have to earn $8.87 per hour and work full time to exceed this limit. So logic dictates that the minimum wage should be at least $8.87 per hour.

I truly believe that employers who rely on the government to feed their full-time employees is the greatest drain we have on our society today and it's really a pity that legislation has to be considered to put an end to it. But I digress. As usual.

Let's begin.

Here in Michigan you can get a decent 1 bedroom apartment for about $450, a two bedroom for $700 and lot rent in a trailer park is about $400. The income to housing payment guidelines used by most landlords in reviewing rental applications is 30%. That's $355 for someone making minimum wage. That means that a full-time minimum wage earner cannot even qualify for a one bedroom apartment. And let's say that the landlord lets it slide and rents them a $450 one-bedroom apartment anyway.

After rent, said minimum-wage earner will have $550 left. I'm going to be generous and assume that the landlord pays for heat, water and garbage pickup. Chances are electricity will not be included. Now I pay about $200 per month for electricity, despite my many energy saving schemes, but I have a big house with lots of people in it and lots of electronics that I don't think my single minimum wage earner can afford, so let's figure he pays about $75 per month in electricity. He'll need a phone, whether it's a cellphone or a house phone, for safety reasons at the very least, so let's say he's frugal and that'll be about $50 per month. We're at $425. And I believe I'm being very conservative with my estimates.

Let's say our guy is a pretty good cook and buys real food, spending about $50 per week. I can't believe he has a garden because of the nature of his apartment so he'll have to buy all of his food. I hope he doesn't live in Detroit, because I hear food is really expensive there. So now we're at $225 per month. Of course I am assuming he isn't getting his food from the government or a food pantry.

Not bad. But I'm going to assume he has a car so he can get to his job. That's what? $50 per month in gas, assuming he was lucky enough to get an apartment close to work and about $100 per month for insurance. We'll assume the car was a gift and he doesn't have to pay a monthly payment on it. We're at $75 now.

So, what can you buy for $75?

  • An internet connection OR cable (not both). - But not a TV or computer.
  • An outfit OR a pair of shoes (not both) I hope he doesn't have to pay for his own uniforms. I hope he's really a he and doesn't have to buy bras too.
  • Oh wait, I didn't count things like toilet paper, razers, soap, dish soap, laundry soap, toothpaste...
  • Maybe a chair or a mattress from the Salvation Army
  • Some car maintenance, as long as nothing actually needs fixing.
  • Oh man, I didn't count his health insurance either. Well, maybe he won't get sick. He probably doesn't get paid time off anyway. Oh wait, he probably qualifies for state assistance. No worries then.
  • I hope he's got good teeth and doesn't need glasses
  • About 12 hours of daycare. It's a good thing this guy doesn't have any kids. But no worries, if he did, the government would pay for his daycare at a substandard rate.

Now let's assume the same guy makes the new proposed minimum wage of $11 per hour and has the exact same expenses. (I actually find $11 per hour a little high, but I'm going with it anyway.) I'll even put him in a higher tax bracket and leave him with $1500 per month.
That leaves him with $725. Oh wait, he doesn't qualify for state health insurance anymore so let's get him a nice health plan and knock it down to $525

So, what can you buy for $525?

  • Both internet and cable
  • An outfit, complete with bra and shoes and a haircut and a mani-pedi
  • A trip to the Dentist
  • A new pair of glasses
  • A date
  • A night out with the boys
  • A complete bedroom set from the Salvation Army or a few nice pieces from your neighborhood furniture store
  • A car payment on a new, safe car
  • Or some repairs on your old car
  • A class or two at a local college
  • About two weeks of pre-school, if he had a kid, which he doesn't, of course.

More importantly, what does this give the community?

  • He's no longer getting government funds and he's paying more taxes, potentially lower taxes for the rest of us or maybe those taxes would be spent on other things, like education, potholes, parks and mental health services.
  • More income from more customer activity for his local internet and cable company, clothing store, doctor, dentist, eye doctor, restaurant, bar, theater, furniture store, auto mechanic and college and potentially many more.
  • A more well-educated neighbor and potential employee.
  • A neighbor who is less likely to resort to illegal activity to get by- people who are well educated are less likely to commit violent crimes as are people who are well-fed. 
  • A neighbor who is driving a car that is safer and less likely to malfunction and cause an accident you might be the victim of.
  • A healthier neighbor, less likely to spread disease when you visit his workplace or he visits yours.

But wait! I know there are so many arguments against raising the minimum wage. Arguments that look like these:

1. Minimum wage jobs are mainly for teenagers anyway.
If this were true, MacDonald's wouldn't be open during school hours.

Besides, any employer would rather hire an adult over a teenager. Teenagers are notoriously unreliable and have a reputation for not taking their jobs seriously.

Also, many places have policies against hiring anyone under 18 for liability reasons. If you work with animals, chemicals, alcohol, certain machinery (slicers), you don't get the job if you're under 18 because employers don't want your mommy suing them when you lose a finger. (And of course the law requires that you be over 18 to sell alcohol).

2. Well college kids then.
Really? In the above example, our minimum-wage-earner has no dream of going to college on that income unless he takes out a butt load of loans and spends the rest of his life in debt. No, grant is ever going to cover everything unless you're some sort of sports star.

When I was in college full time and getting financial aid in the form of grants, loans and the workstudy program I still had to work an additional minimum wage job AND I got foodstamps and medicaid. And guess who is paying $200 a month for the rest of her life for the privilege of doing so. (I will NEVER recommend anyone take out student loans. Ever.)

Any employer who expects his employees to rely on the government for their livelihood is screwing the entire country. Not just his employees.

3. These are all "stepping stone" jobs. Nobody expects them to be a career.
Why does this have to be true? It doesn't. These jobs require specialized skills and special personalities to do them well. Some people are really good at retail and food service jobs and find that they really enjoy doing them. These are the people you want to keep. You keep them by paying them a living wage.

Unfortunately, if you're really good at a job and you can't make ends meet doing it, you are forced to seek employment elsewhere. There are TONS of mediocre cubical dwellers who would make excellent grill masters, cashiers, kennel workers, and retail associates if only they could make enough money to eat doing what they love. Instead they're stuck doing something they can only put half effort into while the jobs they'd love to do are filled with people who would do anything to get out.

Wouldn't it be better for everyone if people worked at the drive through because they love working at the drive through and worked in the office because they love working in the office?

Imagine a world where the guy you buy your pizza from LOVES making pizza and spends his free time perfecting his kneading technique. And the lady who sells you shoes LOVES shoes and spends her free time researching the latest fashions and fitting methods. And the person who takes care of your dog at the kennel loves working at the kennel, has been there for years and knows you and your dog by name. And you can always depend on them to be there because they're earning a living wage.

Instead we have a world where these people must sadly turn away from jobs they love to work at jobs they hate just so they can make ends meet and they are replaced by people who only took their beloved job because they "couldn't find anything better".

I hated working in an office at $18 per hour and loved picking up poop for minimum wage. If I could pick up poop for say $12 per hour, I'd do it forever. I really would. But I can't afford to pay daycare so that I can pick up poop for minimum wage, so I don't do it. Wouldn't  you rather I took care of your dog, (which I'm good at) rather than handling your sensitive documents (which I suck at and hate)? Instead you've got someone who doesn't know the first thing about dogs working at the kennel "until something better comes along".

4. If we raise minimum wage, employers will have to fire people
This may be true in the short term, but I am sure it'll all balance out. Remember that guy in our example who couldn't even afford an outfit and a pair of shoes at the current minimum wage who also hit the salon at the proposed new minimum wage?

It's true that some employers won't be able to pay all of their employees if the minimum wage goes up. But very soon some employers will find that demand for their products have increased dramatically due to a larger percentage of people who can afford them in the community and they will have to hire more employees to meet the demand.

5. These minimum wage jobs are unimportant and do not require any special skills
Seriously? Minimum wage workers prepare your food, care for your children and pets and make and sell the products you use every day. Do you really want unskilled workers caring for your infant child while you're at work? I think not. How safe do you feel about the prospect of eating hamburgers prepared by people who haven't learned about food safety?

When you go to work at MacDonald's, you have to learn food safety. You have to learn how to work the cash register and their myriad food-like substance creating machines. These are all skills you are learning. And while you're learning these skills, you are slowing down the productivity of the entire operation. And in a few months when someone offers you $8.50 to go work at Wendy's, you're going to take your skills and go. And when someone offers you $9.00 to work at 5 Guys, you're going to take your skills and go again until finally someone says "Hey, you can work in my office for $15 an hour and actually eat real food occasionally" all those skills just went to hell. All the effort someone put into teaching you those skills were wasted. Even if you HATE working in an office and LOVE working fast food, you will leave and your former employer is going to have to teach someone else that skill set and it's going to have a negative impact on his productivity.

What if instead you learned all those skills and stayed. What if your employer valued your skills and paid you a living wage and when you were offered a job from another store he was willing to pay you more to keep you? Then when your friend came along and said "Hey you can make $15 per hour working in my office" you might say "You know what, I think I can continue making $12 an hour doing something I love and I am good at." And your friend would have a better office worker in the end, because he'd hire someone who didn't hate the job and already had the skillset.

I know, I sound a little Communist here, but I really believe everyone should do what they are good at and what they love. I believe that if everyone could survive doing what they are good at, that everyone would receive better service, better care and better products. This can not happen when the wage disparity is so great.

What confuses me is that people make lots of money sitting in offices typing numbers into spreadsheets while other people are sweating over hot grills, dealing with angry customers and cleaning up other peoples' crap and making barely enough to survive. That's unnatural. Or at least it should be. My husband says the people who work the hardest make the least, and in many cases I think this is true, but it's stupid. The people we as a society depend on deserve more. We need to remember that we depend on them and treat them accordingly.