A Living Wage

That has a nice ring to it. No wonder so many people have rallied around the term. It practically shouts “fairness”, doesn’t it?

So how will we make this noble goal a reality?

Well, first we should define it. Theories can afford to be vague, but when it comes to actually implementing something in the real world, some attention to detail is required.

A Living Wage is…well…the amount of money necessary to live comfortably. There. That sums it up nicely. It says everyone should have enough to live, but it also says “comfortably” so we’re not demanding an extravagant lifestyle. That sounds fair.

The next detail we have to work out is, how much money does it take to live comfortably, but not extravagantly? Is there an amount that would suffice for everyone? Well, no. We all have different needs.

We’re going to have to devise a measurement we can all agree is fair. How about a certain amount for each person? After all, we all have the same basic needs like food and shelter. Once we determine how much it takes for one person, we can easily see how much a household of two, three, four, or any number of people needs.

But the cost of food and shelter varies in different parts of the country. One number won’t satisfy the needs of everyone, so we’ll have to establish different Living Wages for different regions. In fact, we’ll need different numbers for different cities.

That shouldn’t be hard. There are lots of studies that tell us what the cost of living is just about everywhere in the US. We just need to use the data to establish how much the minimum wage should be in every city and town.

What about a national minimum wage? Well, that just won’t work. The amount needed in a big city like New York or San Francisco would pay for an extravagant lifestyle in a lot of other places. No, we need different minimum wages if we are truly going to ensure enough to live comfortably, but not extravagantly.

Well, that’s settled. Now the last step is to see how it will apply in a real-world setting. Let’s conduct a test in a hypothetical fast-food emporium. That’s the sort of place where minimum wage jobs are often found.

Our fictional burger joint has three line workers, an assistant manager and a manager. Management usually makes more than the workers, so we’ll just focus on those three who are making the burgers and fries. They’re all doing the same work, so they should get the same pay, right?

But wait. We already agreed that the amount one person needs has to be multiplied by the number of people in his or her household. The wage has to be enough to support the whole household, doesn’t it? We can’t expect kids to go out and get jobs.

One of the workers is a teenager working after school and living with his parents who have their own income. So he is only supporting himself, sort of (he doesn’t pay rent or utilities). Still, we have to pay him the minimum.

One of his coworkers is a single mom supporting herself and her two kids. Does she need three times as much? Maybe not, but she definitely needs more than a single person.

The third worker is a married man who supports his wife, three children and his aging parents. There are seven people in his household.

I see a problem, do you? We can’t insist that the employer pay each of these employees what they need. They are all doing the same work. If it is unfair to pay a woman less than a man for the same work, it must also be unfair to pay these people different wages.

Maybe I’m just not smart enough to solve this problem, but the only solution I see is to pay everyone enough to meet the needs of the neediest among them. I’m sure none of the employees will complain. The single mom will be very comfortable and the teenager will be able to afford every electronic gadget invented, and maybe a new car, too.

But, the man with the big family is getting a Living Wage while the other two are getting something that just might be considered an extravagant lifestyle. In our efforts to make this fair, it’s turned out to be not as fair as we’d hoped.

There’s another problem, too, although it might not be as obvious. The managers make more than the line workers because they have seniority and additional skills (at least I hope they do, or how did they get into management?) If the workers get a raise, doesn’t management need a raise, too? But what if the manager is single? His wage will be way more than the amount needed to meet his needs. We can’t cut his pay because he is entitled to make more than the people he manages.

And this dilemma won’t be limited to the few people working in this one store. It will affect the people who raise the beef, make the cheese, grow the wheat, bake the buns and the people who transport it all to the store. So the store owner will not just have to pay more in wages, he’ll also pay more for the food. His profits are going to be reduced a lot. So much so that he might be better off trading places with one of the line workers. Before that happens, he’ll probably raise the prices. If he doesn’t, he’ll go out of business and everyone will be unemployed.

If this happens everywhere, the cost of living will go up everywhere. That means we’ll have to adjust our Living Wage figures to match the increase. If we don’t, the Living Wage will no longer be a Living Wage.

Some have suggested linking it to the rate of inflation. That would put the necessary adjustments on autopilot. We’ll never have to deal with this again.

Problem solved? Almost. People on fixed incomes will just have to suck it up. And then there’s this:

The minimum wage worker is still making less than other people. In fact, they are still on the bottom rung of the ladder. Changing the minimum wage doesn’t change their relative status. The only way to actually improve their lot is for them to gain skills and knowledge, making them more valuable to employers. We don’t see too many doctors, lawyers, mechanics or plumbers working for minimum wage. We are willing to pay more for people with skills. Employers are, too.

If we really want to help people, shouldn’t we do everything we can to encourage them to better themselves instead of giving them a raise they didn’t earn? Wages are payment for services provided. They are earned by working. Wages are not something earned simply by living.

A Living Wage is a catchy slogan, but sometimes slogans only work in theory. Theories need to be proven. This one can’t be.

Minimum Wage

There is talk – again – of raising the Minimum Wage. Some bad ideas never die.

We are usually told about some poor soul trying to raise four kids on this meager income, and we are encouraged to believe that employers should be responsible for the needs of their employers. That could be a difficult task. A single student has very different needs than a mother of four. If the employer paid on the basis of need, the mother would earn much more than the student. But that wouldn’t be fair, would it? So how is this dilemma the responsibility of the employer?

Still, we are told we should pity the poor minimum wage workers, because they don’t make enough to live on. How can we help them? Should the minimum be raised?

First, let’s find out why they don’t earn more. After all, a lot of people do, so what makes the minimum wage earner so unfortunate?

There are no minimum wage doctors or lawyers. You can’t hire a plumber, an electrician or an auto mechanic for $7.25 an hour. We are willing to pay those people a lot more for their expertise. Employers pay more for skilled workers, too.

So, the best way to help those who are only making the minimum is to provide them with knowledge, skills and experience so they can command a higher wage.

It’s the difference between giving a man a fish, and teaching him how to fish.

Of course, that would take time and effort. In these days of instant gratification, we don’t like having to actually DO anything, or being told that we might have to wait for results.

Let’s do something NOW! Let’s just raise the minimum wage. So, instantly, everyone who only gets $7.25 today will get $9.00 tomorrow. Problem solved, right?

Every action has consequences.

The Minimum Wage earners probably have co-workers with a little more time and experience on the job, and who are paid a little more. Let’s say they make $7.50. Then, there must be a supervisor for these workers. That person earns even more. Let’s say $8.00.

If we give the first person a raise, to $9.00, what about the person who worked there awhile? Does he/she still make $7.50? Of course not, but don’t they still deserve more than the minimum? That person is going to have to get a raise, too. How about $9.50? That’s only fair. Then there is the supervisor. Let’s give him $10.00 per hour. Of course, if there is anyone above the supervisor who is making less than $10.00 per hour now, they will need raises, too.

If the minimum wage goes up, EVERYBODY gets a raise! Wonderful!

Or is it? Let’s take a look at your favorite fast-food emporium. That’s probably a good place to find people making the kind of wages we’re talking about.

When you buy your cheeseburger, you are paying for the wages of everybody who works there … and the people who baked the buns, the people who slaughtered the cattle, the people who made the patties and the paper products, the people who milked the cows and made the cheese, the people who harvested the lettuce, and the people who delivered all those things to the restaurant.

And ALL of those people got a raise!

The price of your cheeseburger just went up so much that you might want to reconsider getting fries with that! But you can afford it, because you got a raise, too, didn’t you?

Well, you pay taxes, don’t you? When you get a raise, part of it goes to the government. The more you make, the more you pay in taxes. In fact, for every dollar you earn, you’ll take home about 75 cents to 80 cents, if you’re lucky. But the price of EVERYTHING is going up to cover the FULL cost of everybody’s raises. (Not just your raise, but the actual cost of that raise. For every dollar your employer gives you he must contribute to your Social Security, Medicare and Unemployment Insurance. $1.00 of wages costs the employer about $1.12). Now a dollar won’t buy as much as it used to – and 80 cents will buy even less!

After the government takes its raise out of our paychecks, we might find that we can’t afford as much as we used to. And when there is less demand for products and services, businesses need fewer employees. So some people will lose their jobs, while others will get a raise that won’t be enough to cover the higher cost of everything!

And here’s the worst part. Guess who will lose their jobs first? The people with the least skills – the minimum wage earners – the people you were trying to help!

Even if they keep their jobs, the unskilled workers are still on the bottom of the heap, making MINIMUM WAGE, and that will never be enough because everything costs more!

Did you help them? Did you help anyone? In fact, you hurt most everybody – especially retired people who are on fixed incomes. Because they are out of the workforce, minimum wage laws won’t affect them, so they won’t get a raise. Yet, everything they need to buy went up in price.

The Minimum Wage earner thinks he got a raise, so he doesn’t see the need to improve his skill level, which is the only way he will ever improve his earning potential.

Did anyone benefit from this? To find out, follow the money.

The more you earn, the more you pay in taxes.

Remember this the next time your nice elected officials tell you they want to help you by raising the Minimum Wage. Before we had this little chat, you probably would have voted for the candidate who seemed to “care about the working poor”. Politicians rely on a voting populace that doesn’t think too much.