This just in from the SC House Democratic Caucus:
SC House Democrats Release 2014 Legislative PrioritiesColumbia, SC – South Carolina House Democrats released their list of 2014 legislative priorities on Tuesday. House Democrats will focus on six main issues this session including more funding for education and teacher pay, establishing a state-mandated minimum wage, Medicaid Expansion, road funding, and early voting. The caucus will also propose legislation addressing immigration, workplace discrimination, and higher education this session.2014 House Democratic Caucus Legislative Priorities:1. Raise teacher pay to the national average2. Restore cuts to base-student-cost.3. Establish a state-mandated minimum wage.4. Bring home our tax dollars by expanding Medicaid5. Provide a funding solution to fix our crumbling roads and bridges6. No-excuse early votingHouse Minority Leader Todd Rutherford said 2014 was the year to get serious about funding our priorities.“House Democrats are serious about tackling the issues that face our citizens each and every day,” said Rep. Rutherford. “Our hard-working teachers deserve a raise and their students deserve a fair shot at success. We will never be able to be competitive with rest of the country if we continue to underfund our schools and underpay our teachers. Democrats understand that a thriving K-12 school system is directly tied to a thriving economy – we can’t have one without the other.”“When it comes to finding a stable and responsible funding solution for our crumbling roads, all options must be on the table,” said Rutherford. “And Governor Haley’s ‘money tree’ is neither stable nor responsible.”“South Carolina is one of only four states in the nation without a state minimum wage,” said Rutherford.” In order to compete in the 21st century economy we have to do away with 19th century ideas that are holding us back. We need to modernize all areas of South Carolina’s economy. We cannot compete in a global world or even with our neighbors without an adequate minimum wage structure.”“We refuse to be silenced when it comes to bringing our federal tax dollars home to reform and expand Medicaid, said Rep. Rutherford. “Many Republican Governors across the country have put aside partisan politics and embraced Medicaid Expansion. We will continue to ask Governor Haley and House Republicans to stop playing national politics with the health of South Carolinians and to stop wasting our tax dollars on silly political games. Refusing this money is fiscally irresponsible and morally indefensible.”####
Let’s zero in on those six priorities:
- Raise teacher pay to the national average
- Restore cuts to base-student-cost.
- Establish a state-mandated minimum wage.
- Bring home our tax dollars by expanding Medicaid
- Provide a funding solution to fix our crumbling roads and bridges
- No-excuse early voting
There’s nothing wrong most of those goals, taken individually. Except maybe the minimum wage. I’ve always thought the conservatives had a pretty good argument when they say raise the minimum wage, reduce the number of jobs at that end of the spectrum.
Oh, and the early-voting thing. I don’t hold with that at all. People should take voting seriously enough to go to a little trouble to do it. And that includes standing in a queue (unless, of course, you do have a good excuse).
A case can be made for each of the other four items — taken by itself. The fact that this state refuses to accept the extremely generous Medicaid deal the feds are offering is nothing short of insanity. Concentrate on that — something you could get a lot of business leaders to support you on, and you might get somewhere. But include it on this list, and you just sound like you’re offering Obama Light.
When you say “This is it; these are our priorities,” you give political independents, much less wavering Republicans, no reason even to cooperate with you on things you agree on, much less come over to your side.
By saying these are THE things that matter most to you, you’re establishing yourself firmly as the Political Other to the majority of SC voters. You’re saying, We don’t even stop to think about issues; we just buy into whatever the national Democratic Party puts out as this year’s talking points.
Which is not going to get you far in South Carolina.
Out of those six priorities, there is one item that you might be able to get the broad center behind: “Provide a funding solution to fix our crumbling roads and bridges.” And the Dems fail to be bold enough on that to say what that funding solution would be.
You could get, once again, considerable business support for an increase in the gas tax for infrastructure, if you had the guts to stand up for that. With support like that, you could actually expand your support base a bit, and have a real chance of accomplishing one of your priorities. Nikki Haley’s “money tree” is a ridiculously unstable basis for something as important to economic development as our road system. But you give it the same weight as raising the minimum wage, and it’s like you’re just taking marching orders from the national party.
As this list of priorities stands, it is a formula for going nowhere, a sermon to read to the choir, a map to staying in a political rut.
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It occurred to me that as I was typing the above, Democrats over in the House were probably patting each other on the back for their bold, gutsy platform — when it could easily have been drafted by the Republicans, trying to define Democrats into a political corner: “OK, let’s say they’re for any way of throwing money at our failing public schools, and they want to tell employers how much to pay their employees, and they want to complain about Republican ideas (the ‘money tree’) without offering specific alternatives, etc., etc….”
If minimum wage is such a bad idea, why do so many states have it? Do you really think a businessman is going to keep paying people he doesn’t need to get the job done?
No, he isn’t. Which is the problem with the minimum wage, if you want people to be employed.
Say you’re an employer. You figure you can afford $1,000 to hire some low-skill people to perform a particular function in your business. You’d like to hire 10, and you think you could probably find that many willing to do it for $100 each. But the state tells you you have to pay at least $200. So you only hire five.
Yes, this is an oversimplification, but so is everything offered on either side of this debate.
If you were running a fast food restaurant, what’s the most you would pay someone to take an order at the drive thru? What’s a living wage for that skillset? Assuming you have a 24 hour restaurant like McDonalds, would you pay $240 per day for that function?
Also, every increase in the minimum wage adds additional cost to the employer for FICA and Medicare contributions. Prices will rise as a result of any change – or else employees will be cut.
Regarding Doug’s question, “If you were running a fast food restaurant, what’s the most you would pay someone to take an order at the drive thru?”
… I have no idea. I would have to know a lot of things I don’t know now, but which an experienced fast-food restaurant manager would know, regarding what I would have to pay in my market for someone who could do that competently, and what that was worth to me. I would know a lot more about my price point, and what the market would bear in terms of the portion of the price that went to window labor. Lots of other stuff I’m not thinking of, as well.
Which is why I’m inclined to leave that up to the people running fast-food restaurants, rather than the gummint.
If I were Gus Fring on “Breaking Bad,” I’d pay whatever it cost to have discrete people on the drive-through window, because I would be making my real money from meth production.
Actually, I take that back.
If I were Gus Fring, I’d make sure Los Pollow Hermanos was making good money, and would therefore be, if anything, more careful to make a legitimate profit than the manager of a McDonald’s would.
I would need my front operation to be healthy, so that no one could audit it and wonder, “Where’s this guy’s money coming from?”
Or profits. Or CEO salaries. Or store landscaping. This is a pretty complicated issue and studies on both sides make good arguments. On balance a small hike in the minimum wage would PROBABLY do more good than harm to the economy.
To be honest the minimum wage is not my biggest issue. If the economy was running at full employment levels then we wouldn’t have the need for a minimum wage. The best way to get employment to a full level is for the government, especially the federal government, to hire more people and require contractors to pay a reasonable wage. With government now aggressively competing for labor the cost of labor (wages) would be bid up and businesses would have to follow suit in order to maintain good workers. Profits would inevitably decline which given the exhorbitant level of profits we have today that would be a good thing. With higher wages pumping money back into the economy those wages would likely come back eventually anyway.
Last sentence should be ….. those profits would likely come back …..
The way things are now, over 50% of all fast food workers also get help from some sort of government aid program (Medicaid or food stamps, for example). In effect, the taxpayers are subsidizing McDonald’s wages. (Wal-Mart also takes advantage of this scenario.) Raising the minimum wage would cause the real cost of the labor to be reflected in the price of the food, as it should be.
Low-wage workers spend every penny they make. Increasing the minimum wage would increase the amount of money moving around in the economy and act as a stimulus, and it would reduce the cost to taxpayers through aid programs.
“Increasing the minimum wage would increase the amount of money moving around in the economy and act as a stimulus…”
But Norm, would it do that if the same amount of money is being paid to fewer workers because that’s all the employer could afford under the new minimum? That’s the question I always have…
Your assertion supposes that employers can just magically come up with additional money for wages that would then flow through the economy…
Some employers may cut their labor, but you can only cut so far. You still have to staff your restaurant or store with enough employees to provide good customer service. What might be hurt in the case of McDonald’s and Wal-Mart is corporate profits, though I suspect they would cover it by increasing prices.
We’ve already determined as a nation that we think the idea of a minimum wage is a good thing. The current debate is about what it should be. It’s been unchanged since 2009, meaning that its buying power has been reduced steadily since then–the poor are getting poorer.
Maybe it would be better to remove the minimum wage from the political debate by tying it to some other economic indicator.
Its not clear that we would have fewer workers. Where the conservative argument falls apart is that these fast food businesses hire exactly the number of workers they need to get the job done and pay as little as they can get away with. Very few businesses would actually eliminate employees with a small increase in wages. They have to have x number to get the job done. With x – 1 the business cannot function.
“Low-wage workers spend every penny they make. Increasing the minimum wage would increase the amount of money moving around in the economy and act as a stimulus.”
Let’s assume for a second you’re correct, and that low-wage workers spend every penny they make. And let’s assume that an entrepreneur doesn’t. So what? What do you think she does with her money that isn’t immediately consumed?
I’m not sure I’m following you, Bryan, but an entrepreneur who doesn’t spend some of her money is not stimulating the economy with the unspent money. Money being spent by a low-wage worker does have a stimulating effect on the economy, doesn’t it? An active economy benefits everyone, I would think.
The rich save a huge percentage of their income which is largely lost to the economy while interest rates are at near zero levels. They may as well take the money and throw it in the ocean given the limited bona-fide job creating options available to already rich entrepreneurs. Once interest rates go up then we can revisit this topic. Right now higher wages trumps the need for capital 10-1.
“I’m not sure I’m following you, Bryan, but an entrepreneur who doesn’t spend some of her money is not stimulating the economy with the unspent money.”
I’m just asking you what a person does with money they don’t immediately spend.
Ah, yes, rich people put all their money in savings accounts paying 0.0005% interest. That’s how they got rich!
Sheesh…
Rich people get rich by being smarter than people who work at the McDonalds drive-thru.
“The rich save a huge percentage of their income which is largely lost to the economy while interest rates are at near zero levels.”
So, bud: You’re going to honestly tell me that a wealthy person is going to make the decision to take their capital and put it in a savings account that bears (as you correctly point out) almost no rate of return? Is that logical? Do you really think that’s what people generally do with money that isn’t immediately spent on day to day expenses?
Is that what you do with your money?
@Bryan
I think see your point now. If the entrepreneur were me, and I didn’t have a need for liquidity, I’d sink it into some sort of mutual fund. (I’ve learned from experience that I’m not very good at picking out individual stocks on my own.)
I don’t know how the stimulative effect of a dollar spent on stocks compares to the stimulative effect of a dollar spent on labor. I would think that the dollar spent on labor moves through the economy with more rapidity, and that it would likely end up back in the hands of an investor, satisfied in the knowledge that it had done a little good along the way.
“If the entrepreneur were me, and I didn’t have a need for liquidity, I’d sink it into some sort of mutual fund.”
Exactly.
Now, a mutual fund is simply a prearranged basket of stocks. Since you said that you don’t like picking stocks on your own, a mutual fund is basically your way of delegating the stock-picking responsibility to someone else who does that for a living.
Now, what happens when you buy a basket of stocks? That money goes to companies. Does some of that money then help those companies buy factories and machines to employ workers? Does some of that money then end up in the pocket of workers in the form of wages?
Where do you suppose the improvements in productivity come from, except by the investment by people of their savings?
I know bud thinks this is all a big scheme to make Norm rich at the expense of the workers, but it actually works for everyone. In a comment below, bud says that money managers “don’t do one damn thing for the economy as a whole” but as you pointed out, you would use a money manager to pick your stocks for you in the form of a mutual fund. Otherwise, you might not invest your money, and companies wouldn’t have capital. So I would say that the money manager provides you with a valuable service (for which he is compensated, of course) and the economy as a whole benefits from your investment.
It’s not diabolical. It’s Adam Smith’s invisible hand at work.
I’ve never considered the market diabolical. It does seem to be amoral.
I’m not convinced that investing the money in stocks has a greater beneficial effect that using the same dollars to pay for labor. Increasing the minimum wage has the benefit of lifting 900,000 people out of poverty and increasing the income (nearly all of it likely to be pumped back into the economy immediately) of 16.5 million people according to the CBO’s report. Because so many minimum wage workers also receive food stamps or other aid, it would also have the effect of moving people off of the benefits rolls.
The proposed increase is relatively modest. From 1955 until 1984–30 years–it was effectively higher than it is now. It shouldn’t be allowed to stagnate, which lowers the buying power of those workers.
I just don’t see much of a downside to increasing the minimum wage.
@Norm – you left out the part from the CBO report where 500,000 people will lose their jobs. Are you willing to trade that for moving one million to a higher level just above poverty?
Each of those 500,000 lost jobs will cost more in government assistance than the meager gains by raising some fast food worker’s pay by $50 a week.
@Doug
Yes, the report does say that 500,000 will lose jobs. It also says that the increased earnings by low-income workers will amount to about $31 billion, which should have a stimulative effect on the economy. It would move 900,000 out of poverty, but increase the income of 16.5 million.
As for the impact on the federal budget, the report has this to say (they specifically mention those being moved onto the unemployment rolls):
CBO concludes that the net effect on the federal budget of raising the minimum wage would probably be a small decrease in budget deficits for several years but a small increase in budget deficits thereafter.
I’m still unconvinced that raising the minimum wage is a bad thing to do.
“I just don’t see much of a downside to increasing the minimum wage.”
The minimum wage has its greatest impact on the market for teenage labor. The equilibrium wages of teenagers are low because teenagers have low or no skills and are the least experienced members of the labor force. Additionally, teenagers are often willing to accept a lower wage in exchange for on-the-job training. As a result, the minimum wage has it’s largest negative impact for teenagers than for other members of the labor force.
To give you an example from history, with the original 1938 imposition of the minimum wage, the lower-income U.S. territory of Puerto Rico was severely affected. An estimated 120k workers in Puerto Rico lost their jobs within the first year of implementation of the new 25-cent minimum wage, and the island’s unemployment rate went to nearly 50%.
How about something more recent?
Similar negative effects were observed on American Samoa from minimum wage increases imposed between 2007 and 2009. How bad was the effect there? Glad you asked.
Things were so bad that President Obama signed a law postponing the minimum wage increases scheduled for 2010 and 2011.
Concern over the scheduled 2012 increase of $0.50, actually compelled the head of American Samoa to testify before Congress: “We are watching our economy burn down. We know what to do to stop it. We need to bring the aggressive wage costs decreed by the Federal Government under control… Our job market is being torched. Our businesses are being depressed. Our hope for growth has been driven away.”
True story.
@Norm
Then why not raise it to $12 or $15? Who says $10 is the magic bullet? Why not pay everyone the same hourly rate as you or I make? Would you be okay with that?
And when we have this conversation in ten years because there are still relatively the same number of people in poverty, will that be because the minimum wage increase didn’t work?
Seriously, we have a set of data points over the decades since the minimum wage was implemented. At what point did increasing that wage work to reduce poverty?
Poverty is a result of conditions unrelated to the minimum wage. There is no magic bullet better than educating one’s self and developing a skill or work ethic that the market values at more than $8 per hour.
@ Bryan & Doug
The same CBO report that I mentioned above identifies low wage workers as 88% over the age of 20, and 80% with a high school diploma or higher education–AFTER the wage increase. We’re not talking only about high school kids here. American Samoa and Puerto Rico appear to be special situations which are already being handled with exceptions and modifications to the minimum wage in those locations. There’s no reason not to continue to treat those locations differently.
I’m not sure where the $10.10 figure originated except that it puts the current minimum wage back in line with what it was back in the 1960s. The problem with the way we handle the minimum wage is that we allow it to stagnate, which in effect adds more workers to the poverty count each year. The Miller-Harkin bill ties future increases to inflation, which means that those lifted out of poverty with this increase should manage to stay out of poverty even if they don’t move on to more lucrative positions.
If you can get along with 5 you will.
An analysis by the non-partisan Congressional Budget Office estimated that raising the minimum wage to about $10 would move about a million people out of the lowest poverty level but also result in 500,000 people losing their jobs. Is that better?
http://abcnews.go.com/blogs/politics/2014/02/minimum-wage-hike-could-cost-of-500k-jobs-cbo-reports/
The best way out of poverty is education and hard work… and not having children out of wedlock.
The “war” on poverty has been ongoing for decades with little success. Give people opportunity, not handouts.
“People should take voting seriously enough to go to a little trouble to do it. And that includes standing in a queue (unless, of course, you do have a good excuse).”
How do you feel when the neighborhood moves Halloween to Saturday?
I don’t have any strong feelings, or strongly held ideas, about Halloween. Unlike voting, trick-or-treating isn’t exactly the bedrock of our representative democracy…
Speak for yourself, man.
Voting should be allowed at any time within a 2 week window before election day. I see no practical downside to that very sensible change.
Why pay teachers the national average when the rest of South Carolina’s earnings are also far below the national average.
Wouldn’t it be bolder, and more sensible, to shoot for raising everyone’s income (as a sate) to the national average? Are teacher’s a voting block here as they are in other states; or did the SC Democrats forget to stop and think through this “priority”?
Agreed. I discount any analysis that attempts to categorize South Carolina as compared to any national average – there are too many variables that are ignored.
How about we pay the best teachers more and get rid of the worst ones? Yes, there are bad teachers.
Get rid of pay scales based on years of service once you get past five to ten years. By then, it’s pretty well established whether a teacher is excellent, good, or average.
As a teacher for 24 years, I’ve never felt underpaid. Nobody went into this profession thinking they were going to get rich. The national average for a beginning teacher is about 36K. In South Carolina the average is about 32K, although in some districts it’s as low as 29K (Richland 2 is 35K). When you factor in the lower cost of living in South Carolina, we’re probably not far off from the national average in terms of spending power. (A caveat: in many districts in the state, pay tops out at 22 or 25 years experience. That should be corrected.)
Almost half (some sources say over half) of all teachers leave the profession within their first 5 years. In most cases, it’s not because of the pay. It’s more often because of the high stress levels and work loads they never imagined they would encounter. One key to any educational improvement plan has to be to increase the number of veteran teachers in the schools who can serve as mentors for new teachers. Teacher retention is a more important goal than teacher pay.
More important is #2 on their list–restoring cuts to the base student cost, and increasing that amount. Those funds could be used to ensure that every student in the state has equivalent resources (for example, high-speed Internet and the hardware to access it), and to reduce the teacher-pupil ratio in the schools. Both of which, I think, would improve teacher retention (and high school graduation) rates.
They should throw out 1, 2, and 6. I’m not sure if they should throw out 3. It should be more prominent or not at all prominent. We should be leading or ambivalent; we should not be following. 5 is needed and could go along with 3; currently 5 is too vague and wimpy — find a funding solution?? How about fully fund our infrastructure to grow our economy. But anyway 5 is a reaction Gov. Haley’s goal instead of leading.
Re: #4: The News Hour reported last night about Arkansas’s approach to the Medicaid expansion issue. They obtained a waiver that allows them to use the expanded Medicaid funds to purchase insurance policies through the federal exchange to cover those who would otherwise be covered by the expansion. It sounds like a neat little trick: Take the money, use it to buy into a private pool where risk is distributed more widely, and take the administration out of the hands of the state government. On the surface it sounds like responsible government recognizing that some things are best handled by the private sector. Of course, they may be about to shoot themselves in the foot:
http://www.pbs.org/newshour/bb/private-alternative-medicaid-expansion-faces-crucial-vote-arkansas/
#5: Raise the gasoline tax, or establish some other funding source like a per vehicle/mileage/weight tax proposed by Doug and Kathryn on a recent post.
#6: We have moved persistently toward a more-inclusive voting process throughout our history, but we still have difficulty getting everyone to participate. Would we get a higher turnout if the process at the polls was more streamlined? One way to achieve this is by allowing no-excuse absentee voting. If we’re NOT going to allow such voting, then we should take steps to make sure that standing in line at the polls is an activity that takes several minutes out of our day, not several hours.
I think the Dems can make some progress with the Medicaid money issue. There are just too many very good arguments to do it and very little that actually makes sense on the other side. We’re simply throwing money away by not taking it.
Do you really think that’s what people generally do with money that isn’t immediately spent on day to day expenses?
-Bryan
Rich people shelter their money in many ways. At a time of an expanding economy they have opportunities to actually invest in projects that can create jobs. When the economy is slack there just aren’t a whole lot of things the super rich can do to create jobs so they basically sit on it. Or in the case of hedgefund managers or other money manager types push buttons to make money for themselves without doing one damn thing for the economy as a whole. It’s a zero sum game. The super rich basically skim ever more money off the poor, middle class and increasingly the moderately rich. It really amounts to nothing more than transfer payments from lower to higher incomes.
This diabolical and utterly wasteful rich mans game becomes much harder if wages are increasing at rates comparable to productivity gains. If corporate boards see the need to raise wages in order to keep valued employees they will do so but only if competitive pressures require it. Otherwise they can play this pay the CEO more and more game as a sort of quid pro quo game. But if the corporate existence is in jeopardy because value REAL workers, not the grotesquely overpaid upper management, are likely to bolt then the dynamics change abruptly in favor of labor wages.
The real tragedy of the current income inequality disaster is that it can easily be solved if government will simply act as a competitive employer rather than an enabler to the scheming thieves at the top of the income scale. I’m becoming cynical that the GOP really doesn’t want an improving employment picture because that would destroy the cash cow that the super rich have created for themselves. Lower unemployment will lead inevitable to higher wages. That would be the worst nightmare for the 1/10 of 1%.
The income inequality gap is a result of the education gap and global economics allowing cheaper labor overseas to replace unskilled labor in the U.S.
Ask yourself a simple question – how hard would it be for you to find another job if you lost your current job? If the answer is “difficult” then the reason isn’t because rich people are trying to screw you over.
“The real tragedy of the current income inequality disaster is that it can easily be solved if government will simply act as a competitive employer…”
First, income inequality is a/k/a “people being paid different amounts for different work”. I know, when you say it like that, it doesn’t sound like a diabolical scheme does it? Anyway, just a few questions for you:
1. How will the government be paying these people? Will it be through increased taxation or through increasing the money supply (printing money)?
2. What will these people be doing? Remember, we’re talking about people with low or no skills, so we’re not going to be able to very easily just have them to go install fiber-optic networks, restructure the power grid, engineer bridges, or even operate the heavy machinery.
3. How much will we be paying these people? Will it be all the same, or will it be by different jobs? Who in the government decides who gets a particular job?
4. What if the people don’t show up for work, don’t work well, or otherwise shirk? Do you still pay them or what?
It doesn’t sound easy to me, but I’m just a kulak.
Details, details… just take from people who earned it and give it to those who can’t. Let’s not deal with silly things like work ethic or education.
“Earned ” is a relative concept. How did CEOs of failing companies “earn” the huge bonuses they get?
income inequality is a/k/a “people being paid different amounts for different work”.
-Bryan
This is the obtuse nonsensical argument than conservatives make to defend the staggering, and growing, income gap that we are currently experiencing WHILE productivity is increasing. Nobody suggests a completely equal income level for everyone. So why do conservatives continue to suggest this? I guess it’s just an easy way to score points.
Ok so as a liberal I’ll play the reverse side of this argument. Lets suppose that one person controls as much of the wealth as the other 300 million or so Americans combined. Would that reflect the wishes of conservatives? Would that mean that one person is as productive as 300 million other people. Of course it wouldn’t. So why continue to make a point that is outside the bounds of what is actually being discussed?
Here’s what is actually happening in our economy. People without marketable skills are losing ground. People with marketable skills are losing ground. High school dropouts are losing ground. College graduates are losing ground. Practically everyone who has contributed to the expanding economy since the end of the Bush recession are losing ground. Why? Because a tiny, tiny cadre of super wealthy people are skimming. THAT is the problem. So let’s focus on that and not make up stuff that is irrelevant.
93% of people who want to work have jobs. The 7% who don’t are comprised mostly of people without high school diplomas or with limited skills.
“Because a tiny, tiny cadre of super wealthy people are skimming. THAT is the problem. So let’s focus on that and not make up stuff that is irrelevant.”
I agree. This cadre of the super wealthy are now the declared “enemies of the people.” We should take their property from them, as that would be in the best interests of the nation, and this fate is deserving by such an enemy. It should also be forbidden by law for anyone to aid this formerly super wealthy cadre after they have been dealt with. We’ll send them to “special settlements” in the wilderness of North Dakota and Alaska where they can toil amid the frigid living conditions and be purged of their treasonous ways.
Once we are rid of this class of people, the US will be a worker’s paradise!
Opinion piece packed w/ links on what happened in 1996 when we heard unemployment would go up for unskilled &/or fast food workers :
” it did contribute to healthy income gains for low-wage workers.”
“An increase in the minimum wage would increase the costs of businesses, especially those like fast-food restaurants that employ a large number of minimum wage workers. Higher labor productivity resulting from a reduction in labor turnover brought on by a higher minimum wage would offset a portion of these costs. ”
“According to a recent estimate, McDonald’s could cover about half of its higher labor costs by raising the price of a Big Mac by about 1.25 percent, or 5 cents. ”
http://economix.blogs.nytimes.com/2013/12/13/raising-the-minimum-wage-old-shibboleths-new-evidence/
Let’s look at this “analysis”:
““According to a recent estimate, McDonald’s could cover about half of its higher labor costs by raising the price of a Big Mac by about 1.25 percent, or 5 cents. ”
Most of the McDonalds I’ve been in about 8-10 employees working at any one time. Raising their wages by $2 per hour would cost $16-$20 per hour… or $256-$320 for a 16 hour workday. That’s 5,120 – 6,400 nickels. Per day. Every day.
Do you think there is a McDonalds in America that serves over 5,000 Big Macs per day?
My guess is that prices would rise by 5% across the board roughly.
Doug you make the same tired old argument that the only option for McDonalds is to raise the price of the Big Mac by 5%. There are plenty of other costs that could be cut. Even so, on a $3 Big Mac 5% is only about $.15. Hardly a staggering increase. The increase in wages would pay the government by reducing the food stamp budget these horribly paid hard working Americans must rely on.
Except they won’t reduce food stamp spending,,, can you guarantee raising the minimum wage will result in a decrease in food stamps?
Statements opposing the minimum wage usually assume that the current wage reflects market forces. The role of government subsidies to make up the difference between those wages and the cost of living for low wage employees is mentioned above, but is glossed over in most of the responses, as if it as a minor factor. It isn’t. All of us are paying through our taxes to keep wages artificially low at MacDonalds and WalMart. This is an enormous distortion of the cost of labor, and the beneficiary isn’t really the low wage employee (who still ends up with barely enough to get by) but the corporate owners, who are taking home enormous profits. Why are taxpayers subsidizing the wealth of the Walton family? How can people who call themselves conservative suppose that this is the operation of a free market? A minimum wage would do more to support a truly free market. A minimum wage is a much smaller government intrusion into the market than the current massive subsidies of low wage employees so that they can stay alive to work at WalMart. If corporate owners paid enough for their employees to live on, we could reduce the amount of government support for the working poor and therefore the cost and size of government. Why do people who call themselves conservative not support this?
Would you anticipate that spending on food stamps and other government assistance will decrease when the minimum wage is increased? Has that happened in the past? Want to bet that wouldn’t happen?
Based on past experience, what will happen is the cost of labor would increase, prices would rise accordingly, some people (500,000 by the CBO estimate) will lose their jobs and require additional assistance, no cuts will be made in programs. Essentially, the public in general will pay more for goods and services AND not see a decrease in taxes.
A true free market would eliminate the minimum wage and eliminate assistance programs. Anything else that monkeys with that market isn’t free market.
Very few people make minimum wage. Most talking heads (MSNBC and CNN come to mind on this issue – assume incorrectly that there are tens of millions of hard working men and women out there raising families on minimum wage.
That’s simply a made up lie.
“Perhaps surprisingly, not very many people earn minimum wage, and they make up a smaller share of the workforce than they used to.” = Pew Research Center.
50.6% are ages 16 to 24; 24% are teenagers (ages 16 to 19). – BLS
◾Largely part-time workers (64% of the total).
The spin on this issue is that hard working men and women are swinging hammers in construction making minimum wage. That’s also not true. As BLS stats show, very few folks in the construction industry are paid minimum wage.
The guy swinging the hammer or repairing your HVAC unit has more in common (salary wise) with the associate professor at the local state or private university than the fast food worker.
As a fast food worker as a teen, I made minimum wage for about 6 months while in training – then moved up to making several dollars more than minimum after showing I was willing to learn and show up on time.
Good points, Barry.
I made $3.18 an hour when I was 18. I moved onward and upward from there. Some people can, some can’t.
Being older than y’all, I had a couple of jobs where I made $1.68 an hour, that being the minimum at the time.
I had one job, delivering pizzas, at which I was paid $1.25 an hour. I kept that job for exactly one night. Hated every minute of those 8 hours.
The theory was that I’d make up the low pay in tips. Which was laughable. This was in Millington, TN. ALL of my deliveries that night were to the barracks at the Navy training facility located there. I had to carry a sort of mini-oven — somewhat bigger than a microwave, and about as heavy; very awkward (this was before they came up with those insulated wrap things) — that kept the pizza warm from the nearest parking space to the barracks entrance, which generally wasn’t a short distance. A crowd of young sailors or marines would greet me, and great confusion would ensue as to who was supposed to pay me, and they would eventually come up with the money, to the penny.
I made $0.00 in tips that night. If I’d been a girl, a cute girl, those guys might have coughed up some tips. But not for me, just another young guy like them.
I don’t remember whether I ever formally resigned the position. I just didn’t go back after that night.
Postscript — what with college and all, that was the only paying job I had that entire year. To this day, if you look at my Social Security income for 1972, it totals $10. A reminder, each time I look at it, of that one unpleasant night’s work…
I delivered phone books one Saturday – after I had a full time job (and my college degree).
I didn’t have anything else to do and I saw a flyer so I called and spent the day doing that- making about $50. It wasn’t fun. I didn’t do it again. I didn’t demand to be paid more. But it was experience.
I did the phone book thing once also. It was a miserable way to spend a day. I didn’t do a second day.
I worked at several McDonald’s locations (AZ, TX, SC) when I was young. I worked at the one on Hearon Circle in Spartanburg for 3 hours. Let them know on the way out I wouldn’t be back.
Reading about the different low paying jobs some held brought back a memory of my first job other than cutting lawns in the summer. My first encounter with working a job was delivering and collecting on a newspaper route. Out of the 25 cent per week, I earned a dime per customer. I had 75 customers. Unfortunately, my route consisted of most of the lowest income area of my hometown and it was populated with about every economic depressed situation possible, therefore the apt name, “The Bottoms”.
To make matters worse, about 1/3 of my customers were bootleggers. After about 6 months delivering the paper 5 days a week and trying to collect enough to pay for the paper for each week, I ended up owing the newspaper money. Going to the route manager was a waste of time. He told me to keep delivering for up to 6 weeks and if they hadn’t paid by then, he would collect. The problem was that since about 1/3 of my customers were bootleggers and the route manager was an alcoholic, when we went around to collect, by the time we returned to the newspaper building, the manager was drunk as hell and still hadn’t collected any money. He would instruct me to stay in the car, he would go inside, take a stiff drink of booze instead of money and tell me to keep delivering the paper. Looking back, it was a valuable lesson about human behavior but at the time, being hounded by the newspaper to pay for delivered papers was no fun at all. But, my parents held me to my commitment to work the route for 6 months and I did.
I delivered pizzas for 5 years as a middle aged man and found the work pretty rewarding at first. But as the economy tanked the owner of the franchise quickly figured out that he could get away with paying his workers less. By the time I left the job I was the only part time worker. Everyone else was full time and mostly in their 30s and 40s. I suppose we made a bit over minimum wage but not much. So this argument that only teenagers, working part time to buy Ipod downloads and go to the movies is pure, utter nonsense. Many, many people rely on these jobs. And let me tell you more things, these people worked hard, long hours. They were skilled in a sense that they knew how to find addresses. We all worked inside the store by making pizzas, answering the phone and a host of other jobs. No it wasn’t rocket science. But then again the heirs of Sam Walton aren’t exactly rocket scientists either.
“They were skilled in a sense that they knew how to find addresses.”
There’s an app for that.
First job story: While in middle school, I pulled the full trashcans from houses to the street on trash day morning and then back again in the afternoon. Mostly, the people I did this for were elderly people who could fill their trashcans, but weren’t able to easily get back and forth from their house to the street while pulling a heavy bin.
Wage: $10/week, per person.
$10/week/person to take their trash to the curb and back? Wow, seems pretty steep. You must have lived in a pretty nice neighborhood (with not a lot of other competing middle-schoolers)!
It’s what the market would bear.
Good back and forth here. (Just thought I would mention that.)