Jan 08

There’s been much discussion in the news recently regarding the minimum wage, currently $7.25, and the efforts to raise it to a level which would at least keep pace with inflation. You’ll hear nonsense that if the minimum wage is raised, jobs will be lost. After all, if you raise the cost of something, the demand goes down, right? Even if this were true, it’s rhetoric with no data behind it. There’s more to supply and demand than the simple result of ‘less.’ That something is called elasticity of demand. Simply put, if you raise the price of an item by 1%, you look to see how much the demand goes down. If it goes down a very tiny amount the relationship is considered inelastic.


What’s interesting to note is that this experiment has already been performed for us, by states that raised their minimum wage above the federal minimum. Data accumulated, graphs made, truth exposed. Stores have already cut back on employees. Ever go into a Home Depot where there’s one clerk monitoring 4 self check registers? Or the local supermarket that has multiple self-check lanes, and a few full-service? Will an increase of 39% from $7.25 to $10.10, the current democrat goal, have zero impact on jobs? No, probably not. But the loss in jobs is likely to be quite small compared to the positive effect on the millions working at minimum wage.

The next issue is that trickle down economics doesn’t work. Corporations are sitting on over $2Trillion and for various reasons, still aren’t hiring or repatriating this money to the US. On the other hand, the extra $5700 this wage bump would give to the minimum-wager will be spent almost immediately. An immediate boost to the economy. There are nonsensical arguments out there such as, “if $10 is good, why not raise the wage to $25, or a $50K salary?” These arguments are red herrings, and should be called out  as such. At the start of this past holiday season, I heard the National Retail Federation CEO Matthew Shay say,”Since most of 2M min wage workers are young, it’s ‘more like a starting wage.'” Sir, you are out of touch with reality. Granted, slightly more than half are 16-24 years old, but this leaves the other half, adults that are trying to making a living on this wage. What I don’t see in the mix is a discussion of a lower wage for those under 25. It would make sense for the teen and students to stay at the current wage and would dismiss the notion that minimum wage earners aren’t those who are supporting themselves and their families. I offer such a proposal as compromise, not a position I’d otherwise push.

Now, let’s get to the punchline, the true transfer of wealth. It’s simply a matter of following the money. Wal-Mart has long history of establishing stores in neighborhoods and driving out the local stores. No wonder when Walmart submits a permit for a new location, there’s nearly always pushback and protests if the permit is approved. Given the low wages, their employees are typically reliant on some type of public assistance programs to help make ends meet. This assistance doesn’t come from thin air, it’s from the taxes that you and I are paying. You see where this is going? Our tax dollars are directly subsidizing Wal-Mart shareholders, more than half of which are members of the Walton family. The data shows that Wal-Mart’s net earning were $17.2B this past year. I wonder how much of this can directly trace itself to the subsidies its employees received. Yes, it’s time to raise the minimum wage, not as a means of redistributing wealth, just the opposite, as a way of stopping our collective wealth from going to this one family.

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Dec 14


This week, much of the focus of the political cartoons surrounded Santa and consumerism around the holidays. I’ll pass on that for now. For me, low wages are still an obsession. I’m not a fan of the Occupy movement, only because their message was too disjointed. But I do think the minimum wage needs to rise. At least to get back to the level of the late 70’s adjusted for inflation.

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Aug 31


It seemed interesting timing that I caught this political cartoon soon after my article on the McDonald’s budget was written. For what it’s worth, I was in NY a couple weeks back and those asking for money are still happy to get a dollar bill.

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Aug 29

In February I asked is it Time to Raise The Minimum Wage? Recently, McDonald’s (yes, the purveyors of fine hamburgers) offered up a budgeting guide for its employees.

McD Budget

It starts by assuming a second income. Which, in a sense, proves that minimum wage isn’t quite a living wage. I’m struggling with this budget, and trying to understand McD’s motive for it. If it’s an attempt to make the case that this income is enough to survive, it clearly misses the goal. Last I checked, if you don’t eat, you die, eventually. Where do you see food on this budget? Clothing? Haircuts? (I did go nearly a year without a professional haircut, but my wife and daughter put a stop to the home cuts.)
I’d also like to know where one can get a health insurance policy for $20 per month.

As I mentioned in my minimum wage article, I remember $3.10 an hour. For me, it wasn’t a living wage, it was beer money. My attitude back then was “I spent most of my money on women and beer, the rest, I wasted.” But even then, I had coworkers who weren’t high school or college students, they were adults for whom this money was their family income. I don’t know what their spouses did, hopefully this was a second income. As I see the unemployment rate refuse to drop as it should in any real economic expansion and I hear that people aren’t returning to full employment, but a hodgepodge of part time work, I’m concerned about where the middle class is heading.

Can you live on the budget above? What else do you see missing?

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Feb 28

President Obama recently called for an increase in the minimum wage, from the current $7.25 to $9.00 per hour. I found two charts to be of interest in furthering this discussion. First, the minimum wage as a percent of poverty level income.


This graph helps illustrate how those earning only minimum wage have failed to keep up with inflation and from a high of 90% of poverty level income are now closer to 60%. I’m not suggesting the minimum wage should be a particular fraction of poverty level income, just observing this graph goes in the wrong direction.

I know that there’s a strong case to be made for higher minimum wages resulting in the loss of jobs, although the data supporting this is a bit sketchy. I’d like to offer one more graph to show why I feel this way.


We are talking about just 2% of workers. Had the minimum wage tracked inflation, adjusted annually, businesses would have planned for it and dealt with the cost each year the same as they deal with rising fuel bills or any other component of their costs. With half of these workers being under 24, and not necessarily family breadwinners, we shouldn’t forget the half who are.

I remember a $3.10 minimum wage. It was enough to have pocket money as a teen. And it was awkward working side by side with those who were lifers, people who did this not for beer money, but to pay their bills. Keep in mind, if you look at $3.10 in 1980, it inflation-adjusts to $8.50 in 2012.

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