California has enacted a bill raising the minimum wage
from $ 10.50 to $ 15 per hour. The $ 15 minimum, however, will not be reached
until 2022: in 2017 it would go up by 50 cents, and then one dollar each year
until the $ 15 target is reached. NY State
has announced plans of raising the minimum wage to $ 15 by 2018 in the metropolitan area and at a slower timing in upstate.
Politicians, some workers, and labor unions celebrate
this bill and publicize it as a big win. Surely it should attract votes from marginal
wage earners.
In annual terms, this means: $ 21,840 in 2017, $ 22,
880 in 2018, $ 24,960 in 2019, $ 27,040 in 2020, $ 29,120 in 2021, and $ 31,200
in 2022. So over a 6-year period, the annual wage would increase by 43%.
Opponents of the increase in the minimum wage claim
that many jobs will be lost. This might be true in the short term, but in the
long term, experience has shown that the economy will absorb the increase and
move on. However, with a high youth unemployment rate, in the short term, there
might be a hiccup.
As an 18 year-old earning $ 1 per hour minimum when I
entered the workforce, I was satisfied. I lived with my parents and the cost of
living was much lower. Gas was 25 cents a gallon, a cup of coffee was 5 cents,
a hot dog 10 cents, and so on. With one
hour’s work I could have lunch and drive 14 miles.
Anticipated Benefits
I was blown away to read that some 57% of the workforce earns less than $ 30,000 per year.
I would have guessed half of that.
Raising the minimum wage will be a boost for some, but
it will not have a big impact on the poor – which constitute 7% of the
population.
Experience has taught us that some individuals
might re-enter the workforce once the annual minimum wage exceeds welfare
payments.
Living Wage
Some developed countries have moved from the minimum
wage concept to the living wage concept. Australia has probably the most forward-looking
philosophy, followed by some European countries.
After you deduct payroll taxes, net pay shrinks. No way can one say that it is a living wage. No way can these folks
afford to live in the communities in which they work with minimum wage pay. Commuting will eat up another slice.
For a minor living at home, the minimum wage might be
OK.
The original idea of a minimum wage was intended to establish a starting point for those entering the workforce, not an landing point. I do not think that it was meant to provide a living wage.
The original idea of a minimum wage was intended to establish a starting point for those entering the workforce, not an landing point. I do not think that it was meant to provide a living wage.
Things have changed … time to adjust to the 21st
century.
One of today’s newspaper headlines in the San
Francisco Bay Area laments the skyrocketing cost of rental housing. A
one-bedroom apartment rents from $ 2500 to $ 5500 depending on location.
Questions
· Why is it that we hesitate to do what is kind and just?
Surely the increase does not portent a
calamitous impact on our economy!
· Should it not a raising tide lifting all boats? Or just yachts? The increase by all economic
measures is not excessive.
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