Saturday, April 9, 2016

" The Minimum Wage wars."

Arguments for and against raising" The Minimum Wage" .

California this week raised the minimum wage to (1)>>15 dollars an hour . Its a sure cry from the national average.Even when I first started working back in the early 80's at fast food restaurants making ends, going to school, the wage was $3.35 hr .  You were lucky if you clocked in for a full 7 hours , so I would have to work at Mc Donalds , and Carls Jr two shifts on Friday , weekends . The proposal, hammered out over the weekend by (1.2)>>Gov. Jerry Brown and labor organizations, would raise the rate from $10 an hour to $10.50 on Jan. 1, 2017, with a 50-cent increase in 2018, further $1-per-year increases through 2022, and inflation-indexed increases after that. Businesses with fewer than 26 employees would have until 2023 to hit $15.The deal still must be approved by the Legislature, and the battle there may be bruising, (1.3)>>with stiff opposition coming from business ownership groups; indeed, the unions' desire to avoid a costly battle over a proposed ballot measure raising the minimum wage motivated the negotiations. With raising the wage it could be a good thing , but its also bad news for mom&pop private business .  Last year these small businesses were hit with Obama-care regulations . A $15 hourly wage may not be a big stretch for employers in high-wage areas like San Francisco, where living costs have spiraled out of control. In rural parts of the state, however, critics fear job cuts and forced unemployment. Only 12-16% of Silicon Valley employees work in industries where at least half the workers earn less than the minimum, according to Bureau of Labor Statistics data analyzed by FiveThirtyEight. In some rural areas, almost 50% of workers are in these most-affected industries.The government considers any individual making less than $11,490 a year to be in poverty. A single mother supporting two children, however, would be considered poor if she made less than $19,350 a year, certainly below the minimum wage.
Argument For .
I agree we have to get people out of poverty.  Giving workers more money is small potatoes compared with what corporations and the rich are receiving all the time.Today's minimum wage is on par with what it has been, adjusted for inflation, over the last 20 years. But the flattening of the minimum wage is part of a generational decline.In short, as fast-food workers protest their wages today across the country and urge a minimum-wage increase, public policy has not kept up with how much things cost.The minimum wage peaked in 1968. Even though it was just $1.60, it had the buying power today of $10.74. But from then on, despite the raw minimum wage being increased 14 times, it has not kept pace with inflation.Someone working full time - 40 hours a week - at the minimum wage today of $7.25 an hour, would make just $15,080 for the year.The federal minimum wage has never been adjusted for inflation, but how much its real value has changed depends on observers and researchers.According to Think Progress, the minimum wage would be more than $10 an hour, about the rate that's being proposed, if it kept up with inflation since the 1960s.Lost amid the rhetoric about $15 an hour being a boon for the working poor is this: The entire effort to raise the minimum wage is being pushed by organized labor, mostly government-employee unions. Virtually every vote in favor of $15 an hour in California was accompanied by copious campaign contributions from unions, totaling about $10 million. The Service Employees International Union (SEIU) even delivered large campaign contributions to five key Democrats (who may have been having second thoughts) on the day of the vote.The odd part is that very few of their members make minimum wage. In 2015, only 510 California state employees did, mostly interns, students, and part-time conservation-corps workers. So why were these unions so eager to press for a huge hike in the minimum wage? Some numbers from California hint at why.
Argument Against.
Raising the minimum wage is not, by any stretch, a poverty panacea. Its knock-on economic effects are in fact complex, its redistributive aim less well targeted at the working poor than, say, the earned-income tax credit. But opponents who insist that a raised minimum wage only hurts low-wage earners by eliminating entry-level jobs—a popular conservative 

 Many other economists and public policy experts fear a number of unintended consequences if the minimum wage is raised from its current level to $10.10 per hour, as President Barack Obama has proposed. These include:
•A loss of jobs, as predicted by a recent Congressional Budget Office report, which forecast that total U.S. employment could be reduced by 500,000 jobs.
•An increase in consumer prices, driven by companies offsetting increased labor costs.
•The possibility that a higher minimum wage would attract more experienced workers and keep them in lower-wage jobs longer, blocking young people or people with limited work experience from entry-level jobs.
However, in perhaps the most poetic cause and effect scenario, once the people realize that items such as minimum wage actually do nothing but hurt their chances for gaining employment or starting a small business, they leave the state in droves.Based on a study of IRS tax returns, over 250,000 California residents moved out of the state between 2013-2014.It’s no better in the other "minimum wage hiking state", New York, where United Van Lines data shows that out of all of their relocation contracts, New York comes in second for "high outbound."Now that higher minimum wages are a reality, we’re certain these numbers won’t get any better in future years.


Increasing the minimum  wage
is overdue , but still , will
not help catch up with
inflation .
(1)>>15 dollars an hour wrote an article about how the minimum wage is stuck at $7.25 per hour in 2012. They claim it should be $21.16. How did they get there? Here’s what they said:“The minimum wage reached its (inflation-adjusted) historic high in 1968, when it was raised from $1.40 to $1.60 per hour.  Adjusted for inflation using the BLS online inflation calculator that would come to $10.55 per hour in 2012 dollars.That $10.55 figure is the focus of a nationwide campaign organized by the National Employment Law Project (NELP).  In today’s political climate it would certainly be a major accomplishment to achieve a $10.55 minimum wage.  But $10.55 is still far too low.Using 1968 as our benchmark for the minimum wage implies that low-wage Americans today should be making just as much as low-wage Americans were making 44 years ago.  That benchmark is — frankly — ridiculous.Can you imagine Americans of 1968 settling for a minimum wage standard of living that had been set based on 1924 standards?  What about 1880 standards?  At some point we should expect low-wage workers to start living better than they used to.  Don’t low-wage Americans deserve to live in the 21st century, not the mid-20th?(1.2)>>Gov. Jerry Brown.The irony of the situation, which will most certainly go under reported, is that even California’s Governor Brown knows that it’s not the right decision to make economically. Regarding the actual economic impact, California’s Governor Brown was quoted as saying that "economically, minimum wages may not make sense."For instance, the pay of new public-school teachers in California is tied to double the minimum wage. Increase the minimum wage by 50 percent, and entry-level teachers will see their pay boosted from $40,000 per year to $60,000. This will trigger demands from more senior teachers for a raise as well. By the time the increase works its way through contract negotiations, the wage bill for the state’s 295,000 teachers could hit $10 billion, a 12 percent increase in overall costs.Tallying up the potential for larger state- and local-government expenditures, a 50 percent increase in the minimum wage could hit California taxpayers for somewhere in the range of $25 billion in added payroll costs, assuming the state retains all of its 1.75 million full-time-equivalent workers. Considering government unions’ $10 million in political donations, this works out to a return on investment of up to 250,000 percent.(1.3)>>with stiff opposition.  A minimum wage of $12.25 in San Francisco and Oakland already has forced many restaurants to raise prices 15% to 20%.The median wage in cities such as Fresno, El Centro and Merced is around $15 an hour,  making it difficult for employers in those areas to set $15 as a base pay.Every time minimum wage goes up the business owners start crying that the sky is falling. And every time somehow the planet keeps spinning and life goes on. Then once the wages filter back into the economy profits rise and they'll think it was because of their brilliant business strategies. At CA's current tax rate, a single tax filer working full time at minimum wage and with standard deductions owes $277.42 in CA income tax. At the new wage, they will owe $635.54. That is a whopping 229% increase per minimum wage earners.All that will happen by increasing low wages is accelarating inflation. The problem is not the wages, the problem is the cost of living. Throwing money at problems doesn't fix the problem. It just fixes the symptoms. Reduce taxes and regulations which will make things cheaper.

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