Wednesday, March 25, 2015

Philosophical Debate on Minimum Wage


Until recently I was a die-hard advocate for raising the minimum wage – until I saw a post on Facebook that altered my beliefs. That’s the nice thing about having an open mind – you allow others to explain their beliefs and you can either adopt them or refute them. 

In this case, I had to agree with the sender of a message who asked why a high school student should make as much as a military man or woman who gave 8 years of his or her life serving our country and now had to raise a family making the same income as a person serving up hamburgers.

My son is a United States Marine who will soon be looking for a job when he leaves the service. While I don’t expect him to be working at a fast food restaurant, I also know that the job market is unreliable at best. Should he expect to be making the salary he was making in the Marines? On the other hand, does he have to start from scratch? Can he support his family with the current minimum wage in Illinois? 

$8.25 x 40 hours per week = $330/week. Multiplied by 52 weeks, a minimum wage salary would equal $17,160 per year or $1,430 per month. 

But don’t forgot to take out taxes. Let’s subtract 25%. That leaves $1,072.50. Minus child leaves him $1,029.60 per month. The National Association of Realtors states that the average monthly payment for a 30-year mortgage at 4% is $1,061. A minimum wage job has just put my son in the red. Now he can’t afford a car to get back and forth to work when he finds a job – if he finds a job – nor will he be able to pay for gas, make his car payments, pay his phone bill, medical expenses, auto and housing insurance, mortgage, rent, or utilities, such as gas, electricity, or water. 

So how does a minimum wage employee handle life without food, clothing, heat, electricity, or water? What kind of home, with all its related expenses, can anyone on minimum wage hope to find with an income of only $1,029.60 a month?

And does a high school student deserve to make the same amount of money as a man who sacrificed his life in service to our country? 

Maybe we need to rethink minimum wage and not so narrowly define it. What if the wage we received depended on age and experience? But if minimum wage was age- and experience-dependent, what would prevent an employer, who was trying to save money, from hiring only high school students?

In 1950, the minimum wage was raised to $.75 per hour. An average house cost $8,450, about 11,200 times the hourly minimum wage. Compare minimum wage today – $8.75 per hour (Illinois) and the median sale price of a home in December 2013, $270,200, and you find an amazing disparity – the price of a home in 2013 is 30,000 times the hourly minimum wage.  

Who determines the cost of a house, the price of gas, or the value of a product? On the gas issue, according to Business Insider, “The general rule, according to the Environmental Impact Assessment (EIA), is that about two-thirds of your cost of gas at the pump is determined by crude oil cost. The rest is a combination of taxes, refining, distribution and marketing. These are ultimately just some of the 11 factors we determined influence gas prices.” Also included in the list are these factors: geopolitics, The Organization of the Petroleum Exporting Countries (OPEC) production, non-OPEC production, emerging market demand, our individual states, exchange rates, the weather, speculation, and hedging.  (May 8, 2012.)

As many of us have already suspected, gas prices fluctuate arbitrarily. According to that same article, Commodity Futures Trading Commission (CFTC) Commissioner Bart Chilton, in discussing the staggering 2008 barrel price change from $147 in June that year to about $30 in December, states that the disparity was, “almost certainly caused by spectators.” He goes on to say, "There was no justification for such a price swing based upon the fundamentals of supply and demand. The only good explanation is what many researchers and prominent economists and others have said about the link to excessive speculation." Read more HERE.

In the mid-to-late part of last century a rule of thumb for what to charge for a product was to take the cost of producing the product, combine the cost with the value of time spent building or creating the product (per hour cost), and then sell the item at a 200% profit. Eventually people started increasing the sales of their items to realize a 400% profit. Today, people charge thousands of percentages above what it costs to produce their products. But how are consumers supposed to purchase those products with wages that stagnate? How can inflation keep up? 

It can’t. The cost of living rises every day, but income remains sadly stable and increases only slightly – if at all.

As the rich get richer and the poor get poorer, the only thing that could save us from the clutches of poverty is a world-wide ban on greed, one of the seven deadly sins. Unfortunately, we seem to be committing all seven of those sins these days, including lust, gluttony, sloth, wrath, envy, and pride. 


So what’s the answer? We certainly can’t eradicate greed. Greed is too attractive a desire for any of us to expect that we will all suddenly become more spiritually aware of the roles we play on this Earth. But here’s a place we can start – what we need is more compassion, integrity, honesty, empathy, and fairness. Until we learn to respect and honor each other, the gap will widen between those who have and those who have not, many rich people will continue to berate the poor, and minimum wage will pay for nothing more than a spot in Tent City. 

2 comments:

  1. Interesting contrast to my take on the issue: http://personapaper.com/article/26448-answer-your-cats-questions-day .

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    1. Yes, it was. Doesn't it fascinate you how people can come up with two entirely different discussions on the same topic? I enjoyed reading yours.

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