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Wednesday, June 20, 2012

A $10 an Hour Minimum Wage?

Representative Jesse Jackson Jr. (D-IL) is busy trying to gather sponsors to send a "$10 an hour Minimum Wage" bill. It's practically dead in the water, but  it's a first step in asking for another minimum wage hike increase. The last minimum wage legislation was in 2006 taking three years to bring the increase to the current $7.25 minimum. Some state's minimum wage is higher than that. I remember in 2007, Chicago barred Wal- Mart from inside the city because they do not want to pay the $10.00 an hour minimum wage. Representative Jackson said that the last time we set the correct amount on a minimum wage was in 1968, so in order to meet the 1968 minimum wage increase after indexing for inflation, that amount would be $10.00 an hour. It's not that out of the ordinary because candidate Obama said he wanted to see the minimum wage at $9.50 by 2011. The president never got around to talking about it.

Come on Democrats,you have to get on base,steal second,get bunted over to third and then come home anyway you can;can't just go for the home run ball.

I can see a $10.00 an hour minimum wage phased in over a 5-year period (depending on what party is in power), especially during these hard economic periods. Economists have always been against a minimum wage because of their free-market principles, but they are normally supply- siders. The $2.25 increase will help the demand side of the “supply and demand equation." Henry Ford was not a liberal by any standard, but he recognized that he would prosper with a strong middle class. In 1914. Mr. Ford, established an unheard of $5.00 a day minimum wage in his factories. That $5 a day made the Ford Company much more attractive and made Henry Ford a billionaire. Morale shot up, employee turnover sharply dropped, and, most important, productivity surged. The argument is that Mr. Ford made a free market decision and not one mandated by the government. My answer to that is, competition did not follow suit allowing Henry Ford to become a billionaire and his decision brought up the upper- class to boot. We need to start doing something about the income inequality, but I don't think the answer will be come from the supply side because they will continue out sourcing, employing fewer workers and using more technology to make profits for their shareholders. That's good for my portfolio but it doesn't do a thing for my middle-class working friends,relatives and neighbors.

It's not a one- sided issue because the small-business owner is already burdened with a lot of overhead and with 15 million people unemployed, his goods aren't exactly flying off the shelves. I saw a roundtable discussion where a small-business person said that an increase in the minimum wage would make him shutdown one of his three stores because the little own aspect of raising the minimum wage would mean that he would have to raise the wages of those making $10.00 an hour in order to keep the peace. Congressman Jesse Jackson Jr. then said that small businesses had received 18 tax cuts, so it only seems fair that workers get an increase. Remember that story in our paper a few days ago about the employee who worked  all those years at Chesnik's  furniture? I would be willing to bet that his salary is not among the highest; mid-level at best. We know that you can't really make it with $8.75 an hour and considerably less so at $7.25, so even if you account for the fact that those are supposed to be entry level wages, workers have not gone greatly above that for years. It would be wonderful if market competition controlled the wages, and I've seen a good example of that because I remember our company regularly increasing our benefit package, wages, and bonuses and but then that stopped as insurance costs started skyrocketing and they changed their focus to downsizing and increasing the bottom line.

 The $10.00 minimum wage will also get many workers off the government dole and make them taxpayers, they might finish that degree program  that they couldn't afford or start paying their student loans.  It's not all bad but like the one of my favorite political saying goes " Don't let the perfect be the enemy of the good."

I don't expect this to be an issue in this year's presidential campaign even thou increasing the minimum wage is a well-liked issue. It's as popular as tax cuts but wait, isn't that one of the reasons we're in this mess in the first place! We always want the goodies, but we don't want to pay them.


dale said...

I read through local v national. I really want to comment, and your new blog appears.

Go check out Bsspotters latest blog. It is very long, skip to the bottom quarter and read "The Future" first. Then go back and read from the top. This speech incorporates some of your LvsN blog.

Mike said...

When I saw the word "Fascist",I didn't need to read anymore...:-)

I keep telling you I'm not influenced by LW blogs,I only read them to get my ears tickled now and then.

Sorry about that Dale,I assumed the no comments meant no interest..It's all about the readers.

dale said...

If the title had been... Progress and Society, would you have read the article? Words and perceived meaning.

Mike said...

Words,AUTHORS and perceived meanings.

Thomas Sowell is also a turn off.

Nothing wrong with Progress and Society and the opinions thereof.

born2Bme said...

I have no idea how people make it on $10/hr., much less what it is now.
My husband is about to retire from Alcoa and even though the retirement and insurance he will draw is probably a lot more than many people make, he is going to have to go get a "easier" job to make ends meet, until he is 62 and can sign up for SS.

Mike said...

That's true born,for instance the price of rent in Victoria has gone up because of Ford Shale and an uptick in the economy but wages haven't...Some friends are making more money but it's because of overtime and some are catching up when overtime dried up....Companies are doing more with less.

Mike said...

Lol...Come on Dale, I can't wait until you come and try that old whine and dance with me". Every nickel sent to government is one less nickel available for the private sector and our families. "..... Who's gonna pay for the roads, the public library, firemen, teachers, water? That’s a talking point for “don’t tax me bro.”

BTW My account at the VA is still active.

You know that's a straw man argument for no government or taxes. It's just another sound bite that's been used for over 30 years for those who don't like to pay any taxes. They forgot about the Federal Interstate System, the Hoover Dam, NASA, and natural disasters that were paid for out of tax revenues... We should be in this together not private sector vs. public sector... Taxes have been low for a long time (since Truman). I'm not advocating for higher taxes..just saying.

Government is not entity all by itself because it's " of the people. For the people" and I can say that every eight nickel we give to the multinationals goes the fund their world wide enterprises and lobbyists that keeps unemployment high... That statement sets up another barrier.

Sorry but old habits are hard to break...Have a good one Dale, looking forward to your rebuttal ..:-)

Mike said...

A couple of notes:

Why isn't the Fed doing more in their area of responsibility..full employment and stable prices?
All they are doing is selling short-term debt and buying long-term debt to keep interest rates low.

The libertarian-leaning Republican and former presidential candidate admitted Wednesday that he accepts Social Security checks just minutes after he called for younger generations to wean themselves off the program, in an interview on MSNBC's "Morning Joe."

Isn't that a definition of a hypocrite?

Edith Ann said...

I still want to know how he delivered babies is a poor-ish area without having Medicaid patients. It's possible, but very hard for me to believe that all those babies were insurance and cash.

Of course, I guess he could have made it so very affordable for his services, and if they used Medicaid at the hospital, that's no connection to him.

I dont know. I just always wondered about that.

Mike said...

That's one of those " every nickle that you don't give to to the government doesn't go to pay for Ron Paul's Social Security check."..:-)

BIGJ said...

Well let me speak my mind. Jesse Jackson should do his job on decreasing the National debt, the less debt the stronger the dollar bill.

Mike said...


Rep. Jessie Jackson,Jr. Is but one of 535 members of Congress.

The debt will be addressed at a later dare but jobs and solving the income inequality  will reduce our debit with added tax revenues....A strong dollar is not necessarily desirable because our goods will be too expensive for others whose economies are also declining...A strong dollar is  always the goal but right now we are in a world economic crisis...Or our country would have to depend on our consumers purchasing most of the goods.

Mike said...


This is what I'm talking about

"The dollar’s “strength” or “weakness” is relative. “A strong dollar means that when you exchange it for another currency, you get a lot of that other currency for a single dollar,” says Josh Bivens, an economist at the Economic Policy Institute. A weak dollar, of course, implies the reverse.
That’s ... it. In practice, a strong dollar makes foreign goods cheaper and domestically produced goods more expensive. That’s a boon for American consumers, American travelers and countries that export to America. In fact, when you hear that China is manipulating its currency, that’s a reference to its efforts to keep the dollar strong and the yuan weak. As far as China is concerned, a strong dollar means a strong China.
A weak dollar, meanwhile, makes American-made goods cheaper on the world market and foreign-produced goods — including commodities, like oil — more expensive. That’s a boon for American manufacturers and people in other countries who want to buy American goods or come visit the country. The very crude way to put it is that, in the short term, a stronger dollar is good for buying stuff and a weaker dollar is good for making stuff.
What a temporarily weak dollar is particularly good for, however, is recovering from a deep recession. “If domestic demand is weak,” says Barry Eichengreen, an economist at the University of California at Berkeley, “the normal way an economy reacts to that is by substituting export demand, and a more competitive dollar is the way that happens.”

This is from the Washington Post  May 17 2011

Tophat said...

I certain agree that min. wage needs to be adjusted every 5-7 years-

In today's economy $10 is one hellava number. I say no, too high for what these jobs contribute to industry.

No one would ever expect anyone to run a household on $400 a week. If one is not willing (or for whatever reason unable) to improve their education or skill levels-- near poverty income is the expectation.

When I first got out of high school, I worked 40+ hours at Pizza Hut, 16 hours at Sears, 10 to 30 hours at Athey's Trophy in the wood shop- while attending VC.
All three jobs were at min wage or slightly above.

Then I got a "real" job-- $315 month at Victoria Bank and Trust- and continued school at night. (VBT had benefits and a future.)

Education continued on for another 12 years.
I retired at a midrange 6digit salary with a great package.

In my humble opinion, this is the American way, had minimum wage been higher, two things would have happened- I would have been overpaid for minimum contribution- and I would not have continued education.

Mike said...

Let me see if I interpreted your reasoning, which are valid points. You agree that the minimum wage should be adjusted every few years but $10 an hour is too high.
I understand your point a $10 an hour entry level wage might create complacently preventing an individual from obtaining an education which we know leads to more permanent employment and a lot more compensation.

I have to admit $ 7.25 -$10 an hour will be a jolt but we have a demand problem and a income inequality one also;a low minimum wage will not help those problems. I left the Henry Ford example.
I think it still holds true that the increase in minimum wage will impact teen age employment;I believe it was common belief that a 10% increase in min. wage teen age unemployment would drop by 3%. I'm not sure of what it would be today.

I'm not really sure if $7.25 has to be the bottom line number in evaluating pay. We all know if the supply of labor demand is low,so are the wages. When the demand (consuming with a higher min. wage)picks up labor becomes more of a premium.

Mike said...

I'll have plenty to blog about next week because rumor is SCOTUS might rule on the Affordable Health Act and the Arizona Immigration law today or Monday.

Tophat said...

Effectively minimum wage should be exactly what it implies. Legislating increase in minimum wage is not an effective method of merit increase. Individual can continue to produce minimum effort, yet receives an increase due to no effort on his own.

There should be increases in minimum; based exactly on cost of living changes.

Minimum wage is a good learning curve for our young people. It hammers in the fact that if you don't do something- what you are earning today is the exact same as what you will be making in twenty years.

Minimum wage should never be viewed as a basis to run a household. It is not (unless you live in tent in the woods and walk everywhere).

I am not well read on the impact of teenage employment, off handedly the concept seems valid. However, unless dear ole Dad is going to give you money for doing nothing-- minimum wage job is the alternative. My Pop would have given me the grand sum of nothing. He provided shelter, food, and the other basics- nothing more, nothing less.

Another scenario to consider: Joe Doe goes to work for minimum. Does a very good job- Boss gives him a raise, coaches him how to earn more. Then bingo, minimum wage goes up- and the employer is hiring new people at his wage. So while Doe may not have yet earned his next increase, Doe will get it anyway in order for employer to be fair. Hardly fair to employer. Minimum wage increases always impact employer payroll expense from existing employees as well as new hires. Once you take the Walmarts of the world out of the picture, most small operations just plain cannot afford it.

Mike said...


"Legislating increase in minimum wage is not an effective method of merit increase." ..I wholeheartedly agree because government should not be in the business of merit pay or any other employer/employee decision unless determined by law.

I agree with your points of views from a incentive structure but I am looking at this through a macroeconomic analysis.We don't know what the equilibrium wage is but we know that wages will be low right now because we have an abundance of labor and that's to the employer's favor but low wages also means less purchasing power, which is to their disadvantage. Back in the 70s strong labor unions kept the equilibrium in check. We have 15 million unemployed people who are not consuming enough to buy the goods required to make the companies hire. When the widgets start leaving the shelves and inventory becomes low, demand for labor will increase and so will wages. Are you discounting the consumer purchasing power the increase in wages will bring thus enabling the boss to do more hiring or are we stuck at the company needs?

The intention is not to bankrupt a small company; remember they were given 18 small business tax breaks while the workers were given cookie crumbs.

I will always believe that money is always a pacifier and not a motivator. A least 80% of motivation is from within.More money means less leisure time and only 20% want less leisure time.

Mike said...

The minimum wage sets a price floor which makes it illegal to go below. Some companies will go around that with adult workers by paying them cash or making them contract labor. The companies that comply will then get selective and will hire fewer teenagers to do the menial jobs, thereby inhibiting that teen from paying for today’s high costs of education. Things have changed dramatically since we faced those challenges.

I don’t expect to hear a debate about the minimum wage anytime soon but it’s one I would find interesting, if the lawmakers bring up- to- date information in making their case.

Mike said...

I went over to the VA and it's unbelievable how many new (*wink wink*)posters there are,now..I know two are banned posters making use of their time before Facebook...I couldn't resist correcting a myth on BigJ's blog..Dang I may have to stay on as the myth sheriff..:-)

born2Bme said...

I guess let them have fun arguing with themselves until the ax falls.