DawgTalkers.net Forums DawgTalk Everything Else... Poverty and The Brain

Absolutely. My Uncle would love a raise in wages for his customers: renters. He owns an apartment complex and figures that if people make more money, he can charge more rent

And I'm saying it actually has not when you factor in inflation. In 1997, the buying power of minimum wage was $7.59/hour. Today it is $7.25. The buying power has decreased. If I gave you $20, and then traveled back in time to 1963 and gave someone $19, on paper I gave you more money, but in terms of buying power, the $19 is 1963 is far greater.

I am curious ..... what is it for the average US wage?

If you reference the CNN Money site I linked above, the buying power of minimum wage spikes the day the wage is raised, then gradually declines for however many years it takes them to raise it again because inflation is always going up... The buying power has historically fluctuated between $7 and $9/hour based on today's dollars with some spikes above that and some drops below that but that seems to be the "comfort zone" that it bounces around.

Let me open up a topic for conversation based on something I read in the Charlotte Business Journal recently. It had the highest paid Executives of public companies in Charlotte. I was very surprised at the way their pay is structured.. Not a single one of them has a salary over $1.5 million, most of the top 20 is in the $880K to 1.2M range... but the total compensation of the top 20 ranges from over $5 million up to almost $25 million last year. Most of them have stock awards that are 5x to 10x their salary, some have option awards that are 5x to 10x their salary.

On one hand, I get that this reduces their tax liability, it also ties their compensation to the performance of their company, which in theory would be a good thing. However, the downside seems to be that it makes them far more beholden to the stock price than anything else since that is where the vast majority of their income comes from. So they are personally motivated to drive the stock price at any cost.

Charlotte is home to some pretty heavy hitters, Bank of America, Duke Energy, Lowes Home Improvement, Coca-Cola Bottling, SPX.. but at the top of the list, and this shocked me, is the woman who runs Premier Inc. She made $24.91 million last year. And what does Premier Inc do? They claim to streamline healthcare operations to save them money. Clearly, whatever they are saving, they are paying a considerable amount to her.

I'm not as concerned with actual dollars of what y'all think a CEO is worth or should make... but how should their pay be structured to motivate them to not just drive the stock price but "to do the right thing" by their employees and the community? Is there anything that can be done to change it?

If we use the same parameters, in 1997 the national wage average was $27,426, which adjusted for inflation would be $40,429 today. Our current wage average is $44,888.

let's try this again....




"maybe not at the rate some would like" = more or less quantifying what you are saying, and seemingly trying to counter me on.

"but it has increased" = simple mathematics 7.25 > 5.25

I never stated it was a rate equal with inflation, just countering when rockdogg stated minimum did not increase. Maybe he meant in relation to inflation, maybe he didn't. I was just adding facts in case he was unaware of the recent changes.

And that math is far too simple. It's just numbers that don't take into account the value of the currency. By that logic, if I gave you 1000 rubles, and gave someone else $25, then 1000 > 25. Except that wouldn't be the case at all. I gave the other person far more than you. When you take into account the value, minimum wage has decreased. Simply taking the numbers at numerical value instead of actual value borders on semantics.

^ reads between the lines...

Some context on minimum wage throughout the world - Link

Context on unemployment percentage throughout the world - Link

Countries with higher minimum wages than the United States (in US dollars) per annual income and their unemployment rates (%):

1. Australia - $32,045, 6.0%
2. Luxembourg - $30,827, 5.7%
3. Monaco - $27,285, 2.0%
4. San Marino - $25,321, 7.0%
5. New Zealand - $25,148, 5.6%
6. Netherlands - $24,029, 7.0%
7. Belgium - $24,028, 8.5%
8. Germany - $23,8684, 4.7%
9. Ireland - $23,390, 9.7%
10. France - $23,320, 10.5%
11. Canada - $20,194, 6.5%
12. United Kingdom - $20,174, 5.6%
13. Israel - $15,485, 4.9%
14. United States - $15,080, 5.4%

The countries rounding out the top 20 after the United States are Andorra ($14,800), Japan, Slovenia, Malta, Spain, Argentina ($11, 229)

The idea that you cannot pay minimum and low wage workers more money without massive job losses and huge inflation is asinine. The data directly contradicts any such notion. In fact, Australia has been able to rebuff recessions for over 20 years - Link

Many other countries such as Switzerland, Norway, Iceland, Sweden, and Finland allow for collective bargaining agreements that include minimum wage laws based on industry, sector, etc. These countries (as well as the other ones listed above) frequently score higher than the United States in terms of quality of life - Link

A big boost to our minimum wage would cause a temporary condition of job loss and inflation.. because we have achieved an equilibrium with where we are... we would probably get over it. I can't tell you how bad it would be or how long it would last but a 50% increase in our minimum wage to get us to just $22,500 a year would upset the proverbial apple cart temporarily. Not to mention, to a upper middle class person like myself, it would be like a pay cut because prices would go up immediately but my pay would only adjust over a period of time.. so to any middle class person, it would be a pay cut.

But there are other factors to consider.. which of those countries has millions of unskilled and undocumented immigrants flowing into them annually? And what about immigration? If all of the sudden a company was forced to pay $13/hour for a job they could barely afford to pay $8/hour for before.. does that not provide them even more incentive to hire the illegal who is still willing to work for $7/hour?

Did you know that consumer prices in Australia are almost 25% higher than they are in the United States? that wipes out a significant portion of that $32,000... In Luxembourg a meal at a mid-range restaurant is 82% more than in the United States and rent prices are 63% higher? In Monaco, rent is 670% higher (no, that's not a typo).. consumer prices in general are 245% higher...

So please don't tell me we can do this without inflation.... and do you see those unemployment rates in Belgium, Ireland, and France?

Do we need to do better? Yes, we absolutely do.. but raising minimum wage is just one small piece of the puzzle and would not be without its adverse effects.

I never said that there wouldn't be inflation nor job losses. In fact, the CBO estimates that if the minimum wage were increased to $10.10, there would be between 0 and 1 million job losses - Link

They also note the following:

*Once the increases and decreases in income for all workers are taken into account, overall real income would rise by $2 billion.
*Real income would increase, on net, by $5 billion for families whose income will be below the poverty threshold under current law, boosting their average family income by about 3 percent and moving about 900,000 people, on net, above the poverty threshold (out of the roughly 45 million people who are projected to be below that threshold under current law).
*Families whose income would have been between one and three times the poverty threshold would receive, on net, $12 billion in additional real income. About $2 billion, on net, would go to families whose income would have been between three and six times the poverty threshold.
*Real income would decrease, on net, by $17 billion for families whose income would otherwise have been six times the poverty threshold or more, lowering their average family income by 0.4 percent.

Of course, the Department of Labor indicates the opposite and notes that "A review of 64 studies on minimum wage increases found no discernable effect on employment. Additionally, more than 600 economists, seven of them Nobel Prize winners in economics, have signed onto a letter in support of raising the minimum wage to $10.10 by 2016." - Link

The Department of Labor also notes:
*Academic research has shown that higher wages sharply reduce employee turnover which can reduce employment and training costs.
*Minimum wage increases have little to no negative effect on employment as shown in independent studies from economists across the country. Academic research also has shown that higher wages sharply reduce employee turnover which can reduce employment and training costs.



I'm just going to leave this here - Link

Questions 7 and 8 under "Immigrants and the Economy" refute your statements.

*The evidence shows that in the long run, immigrants do not reduce native employment rates. But some evidence suggests that in the short run, immigration may slightly reduce native employment, because the economy takes time to adjust to new immigration... When the economy is weak, new immigration has a small negative impact in the short run on the employment of native-born workers.

*The salient point here is that earlier immigrants are the group that is most adversely affected by new immigration. This is because they are often the most substitutable for new immigrants, often living in the same places and possessing similar skills. But for native-born workers, the effects tend to be very small, and on average, modestly positive.14 This is useful for reminding policymakers that native-born workers have little to fear as far as immigration’s labor market impact is concerned.



Are Luxembourg and Australia really that much worse off than the US?

Costs of Living in Luxembourg - Link

Average price for two at a mid-range restaurant for a 3-course meal - $81.55
Meal at McDonalds - $10.12
Bottle of soda - $2.28
Domestic beer (0.5 L) - $4.78
Rent for 3 bedroom place outside of the city - 2,085
Monthly disposable income - $3,350
Mortgage interest rate - 2.0%
Rent is approximately 39% of monthly expenses

Cost of living in Australia - Link

Average price for two at a mid-range restaurant for a 3-course meal - $80.00
Meal at McDonalds - $9.00
Bottle of soda - $3.16
Domestic beer (0.5 L) - $6.00
Rent for 3 bedroom place outside of the city - $1971.61
Monthly disposable income - $4,205.39
Mortgage interest rate - 5.34%
Rent is approximately 31% of monthly expenses


Cost of living in the United States - Link

Average price for two at a mid-range restaurant for a 3-course meal - $45.00
Meal at McDonalds - $6.50
Bottle of soda - $1.64
Domestic beer (0.5 L) - $3.50
Rent for 3 bedroom place outside of the city - $1300.65
Monthly disposable income - $2,658
Mortgage interest rate - 4.2%
Rent is approximately 30% of monthly expenses



Again, I realize that there will be inflation and job losses. At the same time, it is a net positive for the economy as more people will have more disposable income to spend. This in itself helps spur the economy creating "trickle up" economics. The increase in income outpaces inflation throughout the world.



You're right. We could do better. A lot better. The pieces to the puzzle aren't as adverse as you make them seem.

You can rent 2 bedroom apartments around here for 500 bucks per month

jc

The simple truth is higher wages benefit business. Americans today spend $150 billion a year in tax subsidies that go to people who have jobs but still live in poverty. Why do we allow the fast food and convenience store owners large profits while also letting their workers earn a government paycheck? And this HURTS the economy on top of it! If I'm getting food stamps then hey, it's going to food. If I'm getting an extra $5/hr I may decide to put some of it to food, but some of it to go see a movie. Or buy a game. Ya know, stuff that helps the economy, especially small business.

Also the idea that high wages will increase unemployment is absurd. We need to fix overtime. It used to be years ago that we had strong overtime rules. So workers worked 40 hours a week and then went home to their families. Workers were happier and unemployment was low. Today the average full time worker is working 47 hours a week. And those extra 7 hours are mostly free. How may you ask? Because all I have to do is promote someone to assistant manager. Once they are a "manager" in name only, I don't need to give them overtime pay. So I can pay someone under 30k a year working 70 hours a week doing the job of one and a half people. That takes a job out of the economy. And when you have persistent unemployment like that, I have more leverage to reduce worker pay even more. After all, where are the jobs?

And in Austin a 1BR goes for 2k a month. Part of the reason why the minimum wage should be economy driven and not just flat across the board IMO.

There's a 2 bedroom house for rent on my street for $600.

And that's in a WAR ZONE!!

Yep, it looks like they just cratered the area in front of the house this morning.

jc

The reason I and my Uncle want wages to go up (across the board, not just min wage) is because we run businesses. Mine is still in the infancy while his is well established, but we both operate the same way: off dividends. So for us if we make $0 in a week then we get paid: $0. Minimum wage doesn't apply to us. Many Mom&Pop Businesses run this way. You form an LLP/LLC and take dividends as your paycheck. Even if you draw a salary the fact that you have an ownership stake in the company means you can't draw minimum wage. How could you unless the company was producing positive cash flow? Employment protections only apply if you're an employee.

And even if your business is B2B, you still need wages to go up because *somewhere* someone along the way is paying to a regular joe blow customer. If I'm making turbochargers to sell to a distribution company that then sells to GM, I want people to make more money so GM can sell more cars at a higher price, so I can make higher margins.

The only people I can think of who DON'T want higher wages are people who have so much money that they can make millions off of profit earnings in stocks dividends. In that case they want profits to be as large as possible so they can earn more each quarter. But to be in this position you already must be a multi-millionaire. And so losing a few points isn't going to turn a multi-millionaire into even a single-millionaire. But what they do have is lots of money. And that money buys alot of lobbying in congress. Lobbying that has no interest in the middle class or lower class.

Let me preface this by saying, I agree, we need to find a way to help solve the poverty issue.

But, the question remains, are all jobs worth 10,11,12,15 dollars an hour? Does the kid bagging your groceries deserve $15/hr? How about the Wal-mart greeter? If they do, then what about the the people currently making $15/hr that worked their way up to that and took classes or schooling to get there.

It is easy to say, "this is how much it takes to survive", but it's hard to quantify the pay for some jobs.

What about part time jobs?
What about under-18 year olds?
What about the person in the mid-west vs the person in LA?


It is way more complex than a simple static number across the board.

minimim wage should be set.

who cares if it's part time or under age?

sorry, but it sounds like your saying "you're under 18, so you're only worth 5 bucks an hour"

good luck with that.

Let a burger flipper in Ohio find out that a burger flipper in LA working for the same company is making more and that some of the profits the Ohio flipper is helping to generate go to supplement the LA flippers wages and then see what happens.

Actually, it looks like he just put he question out there.

My first programming job out of college paid $15/hr. This is after getting into thousands of dollars into debt for student loans. Yay!

I believe in economic freedom and believe it cuts both ways. If we reduce ourselves to just looking at the corporate side of economic freedom, then we restrict the freedoms of the worker. How so you ask? Not allowing workers to collectively bargain is a good starting point. Forcing workers to collect government handouts to live is another.

As to the minimum wage amount desired, I think it has to be fluid and collective with the local market forces. $15/hr makes sense in Seattle but would not in Akron. The good thing is we have systems to collect data to come up with an idea:

http://livingwage.mit.edu/

I can agree with that.

2 br apts. here are no where near what 2 b.r.'s in cities are.

Is that any better or worse than you saying, "You're worth $15/hour (or whatever) regardless of the value you bring to the company, how easy it is to replace you, etc."?

i rather get a minimum set wage than "eh, you're new, so 5 for you"

My son is 18, he lives at home, he pays for some of his expenses but I still pay for the majority of them... he doesn't really NEED $15/hour. He can do everything he needs to do on $8/hour... so if a company can pay him $8 and this allows them to pay a single mom $12/hour, what's the problem with that?

because eventually he's gonna move out.

i don't think you realize how many kids are 17 and live alone. it's a lot.

what you're talking about is a unfixed rate, and that's dangerous, as there's too many ways to manipulate that to screw over employees.

I moved out of my parents house and into an apartment when I was 17, at the beginning of my senior year of high school. I worked 3 unskilled labor positions and attended class. My teachers knew this and cut me some slack. I don't think I would have welcomed the notion that my labor was worth less than an older person. I agree with DC to an extent, but you run the risk of generalizing gray areas. Difficult to quantify hardship.

God I hope so.


I never said age should be the only factor.


So it would be like the tax structure?

I don't think he's talking about an "unfixed" rate.

I know I'm not.

The problem with a set federal minimum wage of $10 - for example - is, L.A. isn't rural Ohio.

Cleveland isn't rural n.w. Ohio (or rural "any where" ohio.

A person cannot live on the current min. wage in NYC, chicago, Columbus, etc.

Raising a "federally mandated" min. wage to $15 - for example, would allow someone living in the "unknown areas" of rural America (as city people generally don't realize there IS life outside in the country) to buy a house.

I think the fed minimum wage should be standard.

the states should have the power to raise that based off location, but can not go below federal standard.

if that's what you're talking about, then i'm all for it.

Isn't that what we have now?

do we? i don't know much about it.

maxpower and Jack mention purchasing power, and how just raising it isn't actually doing anything.

The most glaring problem is that a company would then seek to staff themselves solely through people such as your son, avoiding the single mother because there's less capital in doing so.

Yes - that's what I'm talking about.

And the Fed. mandated should not be to appease "city" people where the cost of living is sometimes 2 or 3 times what the c.o.l. is in other places.

As DC said "that's what we have now."

The city of NY, or la, or cleveland, or columbus - anywhere - they are free to raise the minimum wage in their jurisdiction, aren't they?

Yes, the system we have now is a mandated federal rate where states or cities are free to set higher rates if they want. By that logic, the rate has to be set at or near the lowest cost of living place in the country, so that others could adjust up if they want.

If I'm not mistaken, the lowest cost of living state in the country is usually Mississippi.. so if we want to set the minimum wage based on some average of what it costs to live in Mississippi and then let other states and cities adjust up from there, I could live with that program.

That's what I was getting at. A federal standard has to be set at a certain level, what determines that level? No matter what it is, it will be high for some, low for others, so setting a federal minimum doesn't really SOLVE the problem of poverty. And then in 5 years when inflation has raised the C.o.L. by 25%, we raise it again.

I guess that is one way to make us all millionaires, just keep raising everything until even the paperboy makes 1 million a year.

This is what we have now, and it's broken. I don't agree with flat $15/hr either because its almost always calculated based on major cities. We need a fluid rate, like the tax code, based on data aggregated from the US census. It wouldn't even be that expensive to calculate with census data.