dotCommonweal

A blog by the magazine's editors and contributors

.

McDonald's, Nixon and the minimum wage

Back in the days when I worked part-time or summer jobs such as hot dog vendor, library clerk and shoe salesman, I remember being outraged upon learning that McDonald's Corp. had showered President Richard Nixon with campaign donations to persuade him not to raise the minimum wage. As Bloomberg News reports in this excellent piece on two McDonald's employees - Tyree Johnson, who works in two Chicago location, and Jim Skinner, who served as chief executive officer - not much has changed. Leslie Patton reported:

Fast-food restaurants have added positions more than twice as fast as the U.S. average during the recovery that began in June 2009. The jobs created by companies including Burger King Worldwide Inc. and Yum (YUM)! Brands Inc., which owns the Pizza Hut, Taco Bell and KFC brands, are among the lowest-paid in the U.S. -- except in the C suite.The pay gap separating fast-food workers from their chief executive officers is growing at each of those companies. The disparity has doubled at McDonalds Corp. in the last 10 years, according to data compiled by Bloomberg. At the same time, the company helped pay for lobbying against minimum-wage increases and sought to quash the kind of unionization efforts that erupted recently on the streets of Chicago and New York.

The story provides a portrait of Tyree Johnson, who earns $8.25 an hour, the minimum wage in Illinois. He has worked for McDonald's for 20 years. "Johnson would need about a million hours of work -- or more than a century on the clock -- to earn the $8.75 million that McDonalds, based in the Chicago suburb of Oak Brook, paid then-CEO Jim Skinner last year," Bloomberg News reported.The story, which ran Dec. 12 (and which I later learned about when the writer received an award from the Sidney Hillman Foundation), demonstrates that the minimum wage deserves to be a much larger issue than it has been on the political landscape. Basic fairness calls for it.The minimum wage I received as a 17-year-old serving hot dogs at a beach in the Rockaways during the Nixon administration was worth 15 percent more, adjusted for inflation, than the $8.25 an hour Illinois minimum wage that Chicagoan Tyree Johnson receives for flipping burgers - and 30 percent more than the current federal minimum wage of $7.25 an hour.

About the Author

Paul Moses, a professor of journalism at Brooklyn College/CUNY, is the author of The Saint and the Sultan: The Crusades, Islam and Francis of Assisi's Mission of Peace (Doubleday, 2009).

79 comments
Close

79 comments

Commenting Guidelines

  • All

I wonder if this should revive the debate between having a minium wage and a living wage? I guess that's kind of a dead issue.

NYT had a story about low wage employees in high end hotels who were no longer getting tips by business travelers and foreign visitors. The worker retaliation will be/was just the same as a short Hemingway advice line in For Whom the Bell Tolls. "never be captured because they do things to you'. Beware Fast food frachises.

On the whole, a very good article.I couldn't agree more that these are workers who should unionize. What can the church do to assist?The game of resetting employees' wages to minimum wage when a franchise changes hands is not one I had heard of before. It's pretty outrageous. This is a clear-cut example of where a union could add value by putting a stop to this practice.The so-called wage gap is potent rhetoric, but it's somewhat problematic to the story. The author does a fair job in trying to untangle some of the complexity. But ultimately, the CEO's and Johnson's places in the labor market are very difficult to compare directly to one another. I believe they are fundamentally in different labor markets, i.e. they are living on different supply and demand curves, and are working for different employers besides. (The author abets this confusion by implying that Johnson is a McDonald's employee, although he does clarify later in the story that Johnson works for a franchisee). Cutting the CEO's pay in half most likely would have no effect whatever on what Johnson earns.The vignette in the story of the woman who has downgraded her career to work at the Protein Bar tells an important part of the story. People are coming into the labor market for McDonald's jobs who, ten or fifteen years ago, would have been in jobs with significantly better wages. Naturally, this works to the benefit of franchisees, as higher demand for jobs keeps wages low.

Huge numbers -- depends on who is counting -- of Wal Mart and fast-food employees are eligible for food stamps. This applies even to those who are in what their employer considers full-time work, which usually isn't enough hours to force the employer into overtime or fringe-benefit situations. This condition of work-plus- food stamps is widely attributed to the feckless lack of education of the fast-food workforce. However there is another way to see this picture.One could see it as a corporate compensation system that consists of the food-stamp-eligible wage plus the government subsidy provided by food stamps. If one sees it that way, of course, McDonald's and Wal Mart and their like turn out to be the most happily dependent among the "takers" Mitt Romney said would never vote for him. And their employees turn out to be share croppers.Their CEOs are certainly worth every cent of their bloated salaries for their ability to keep their government subsidies while laying the blame on their employees for excessive government welfare spending. Not just anyone can do that and keep a straight face.

Tom, that's some good analysis re: food stamp subsidies. It certainly hearkens back to the question that Paul raised in the original post re: what is the purpose of a minimum wage, and where should it be pegged? What if it were pegged at a level such that a person who works 30 hours/week at that wage level receives sufficient wages that food stamps aren't necessary?

In "Undercover Boss" the CEO of Modells was shocked to see how some of his sales employees were homeless and how low paid his warehouse personnell were. These people have no rights. Compare them to the comfortable chanceries who have the gaul to complain about their freedom.

One would hope that employers do not factor in food stamp eligibility as an employee "benefit" for which they have no financial responsibility, but Tom Blackburn is correct that there are many minimum wage earners who are eligible for the USDA's food stamp program. The current eligibility requirements and benefits are set forth on the agency's website:http://www.fns.usda.gov/snap/applicant_recipients/eligibility.htm#income... food stamp benefits are a lifeline that many families cannot do without, there is, unfortunately, significant fraud in the benefits distribution system. For some time there have been no paper coupons or stamps for a beneficiary to redeem; instead, an eligible food stamp recipient is issued a debit card that is electronically primed each month with the recipients benefits amount. The card can be used to purchase eligible food items. Some unscrupulous recipients and storeowners engage in a practice known as trafficking, however, whereby the storeowner pays the recipient cash (e.g., $75) for the amount on the card (e.g., $100) that is swiped for a phony purchase. The storeowner ends up with $100 electronically deposited to a bank account, and the recipient gets a discounted amount that can be spent for whatever purpose, including the purchase of USDA-ineligible items such as alcohol and tobacco products. The USDA has implemented fraud-fighting techniques that have had substantial success, but fraudsters continue to develop strategies for beating the system. Obviously, their efforts are detrimental to honest benefits recipients on many levels.

Minimum wage laws treat all employees the same. By that I mean, a 30 year old with work experience and a family to support is treated the same as a 16 year old who is working for spending money. Those employees don't have the same 'living wage' needs nor the same 'minimum wage' productivity. A single minimum wage standard does not recognize those differences.

It's a minimum, Bruce. Nothing prevents an employer from paying more for experience or greater productivity.

It is startling that McDonalds got away with this for so many years. Usually people will avoid companies or actors who appear unjust. Then again Walmart seems to do alright with such a reprehensible practice as did Modells before the owner intervened.

It's also instructive to look at minimum wage as a function of per-capita GDP. From 1938-1978, 2000 hours (50 wks x 40 hours) at minimum wage earned an average of 62% of per-capita GDP. That number now stands at 31%. This didn't happen by accident--we went through two ten-year stretches (1981-1989, 1997-2006) when the minimum wage was unchanged.Simple arithmetic suggests that the minimum wage should be doubled.This would have several salutary effects. Poverty would decrease. Expenditures on food stamps, medicaid, etc., would be reduced, and income tax revenue would increase--thus, we reduce the federal budget deficit. The working poor would feel less pressure to work ridiculous hours just to put food on the table.Yes, it might cut the profits of employers that depend on cheap labor. But why should the taxpayer subsidize Wal-Mart and McDonalds through food stamps and the Earned Income Credit? Why shouldn't they pay a decent wage in the first place?

"Its also instructive to look at minimum wage as a function of per-capita GDP."Why is that instructive?

"Yes, it might cut the profits of employers that depend on cheap labor. But why should the taxpayer subsidize Wal-Mart and McDonalds through food stamps and the Earned Income Credit? Why shouldnt they pay a decent wage in the first place?"Spot on analysis, Greg. But then who would go to the annual Alfred E Smith Dinner?

I very briefly worked at McDonalds as a teenager and seem to recall I made less-than-minimum wage as a restaurant worker (like waitresses). Maybe I misremember that. I also worked one Summer for a Poconos resort as an "emergency chamber maid" I filled in when a maid was out (but didn't get any tips; the tips went to the "regular" maids). I received much, much less than minimum wage on the grounds I was being given room and board. The food was okay, but the room was Grapes of Wrath. We were all in shared cubicle bedrooms in plywood barracks. We were allowed to swim in the resort lake during certain hours, but weren't allowed to sit on the deck chairs.I kind of lost interest in hospitality after those experiences.

Here's this from the plus ca change file: "Let the working man and the employer make free agreements, and in particular let them agree freely as to the wages; nevertheless, there underlies a dictate of natural justice more imperious and ancient than any bargain between man and man, namely, that wages ought not to be insufficient to support a frugal and well-behaved wage-earner. If through necessity or fear of a worse evil the workman accept harder conditions because an employer or contractor will afford him no better, he is made the victim of force and injustice.... If a workman's wages be sufficient to enable him comfortably to support himself, his wife, and his children, he will find it easy, if he be a sensible man, to practice thrift, and he will not fail, by cutting down expenses, to put by some little savings and thus secure a modest source of income. Nature itself would urge him to this. We have seen that this great labor question cannot be solved save by assuming as a principle that private ownership must be held sacred and inviolable. The law, therefore, should favor ownership, and its policy should be to induce as many as possible of the people to become owners. Many excellent results will follow from this; and, first of all, property will certainly become more equitably divided. For, the result of civil change and revolution has been to divide cities into two classes separated by a wide chasm." Rerum Novarum, Leo XIII, 1891, starting at No. 45.NB: the right to private property, while "inviolable," is connected not to the right of employers to pay less than a living wage, but to the ability of workers to advance to the propertied class. Or if this isn't strong enough language, here's the same document, in No. 20:"wealthy owners and all masters of labor should be mindful of this - that to exercise pressure upon the indigent and the destitute for the sake of gain, and to gather one's profit out of the need of another, is condemned by all laws, human and divine. To defraud any one of wages that are his due is a great crime which cries to the avenging anger of Heaven. 'Behold, the hire of the laborers... which by fraud has been kept back by you, crieth; and the cry of them hath entered into the ears of the Lord of Sabaoth.'"

I've been told that to defraud a worker of his wages is a reserved sin, that is, one so terrible that only the bishop can grant absolution for it. I usually think of the Church as progressing from imperfect to better moral principles. However, in the matter of the rights of workers we seem to be going backwards -- the Holy Spirit is not being listened to.

Ann - you may be right, although in this case I don't think it is the church that is regressing, so much as society.

"The minimum wage I received as a 17-year-old serving hot dogs at a beach in the Rockaways during the Nixon administration was worth 15 percent more, adjusted for inflation, than the $8.25 an hour Illinois minimum wage that Chicagoan Tyree Johnson receives for flipping burgers and 30 percent more than the current federal minimum wage of $7.25 an hour."Let me pose this question to the group, as I'm not completely sure how to think about this.Paul's point from the original post, which I've pasted here, as it pertains to the minimum wage's not keeping up with a reasonable pricing index, is valid and extremely important.What I want to think about is the fact that he made minimum wage as a 17 year old.What constitutes a "living wage" for a 17 year old may not be the same as a living wage for the subject of the Bloomberg piece. I assume that guy is in his 30s or 40s. A 17 year old needs some money for whatever expenses come up for kids of that age who live with parents:keep a car running, and some savings for college, and reasonable leisure/entertainment. (I am purposely ignoring, perhaps unfairly, family situations in which a 17 year old's wages are needed to keep his parents' household afloat). 17 year olds should not need medical plans, as the parents' plans and/or Obamacare and/or Medicaid should be providing these.I trust it's obvious that a 40 year old's living wage requirement are very different: he needs to be able to pay for a place to live, and medical care, and food, and clothing, and education-related expenses for his family, and so on and so on.Here is the point: while I have no evidence for this, I have to assume that McDonald's made the strategic decision, decades ago, that its workforce would consist of 17 year olds like Paul was back then. Actual careers at McDonalds restaurants would be management-track careers (a lot of which also are low-paid, btw; I know that homeless shelters in our area have had McDonald's assistant managers among its occasional clientele). McDonald's wouldn't be, and never would be, a place that pays a living wage to adults who work on the line. It positioned itself in the labor market (I'm guessing) as addressing the labor niche for the high school kid saving for college, or the juco student, or the guy who dropped out of school or didn't go to college and is trying to figure out his life. And I'm guessing that, from McDonald's point of view, there are trade-offs to this strategy: in return for low pay (but pay which is at or even a bit above the legally required minimum wage), it gets a workforce that is what a teenager workforce always is: immature, unreliable, high-maintenance with regard to shift scheduling, and so on. The kids get enough money to keep gas in the tank, and a couple of years of work experience that can be parlayed into a better-paying job, even if that is simply a better-paying job in the food service industry.Is this morally wrong of McDonald's?

Jim P. ==I don't think it's wrong. Anyone who has ever had to supervise a young person without work experience knows that it takes a good bit of time to supervise their work -- teach them how to do the simplest things well, then the not so simple stuff, and teach them such things as the importance of arriving on time and cooperating with others. In other words, such jobs are also learning experiences, and the employer does give the worker something more than wages. The problem is that the jobs are dead end ones. That is where the rest of us are responsible for seeing that there are training opportunities for more challenging work. I have read that there are now some joint programs of businesses and local schools to teach and train kids in more advanced work, some of which leads to actual jobs, and they can work quite well. They're real world education, so to speak. They should be paid apprentice wages -- more than the MacDonald's kids, but less than workers who do advanced work without the need for constant supervision. There are of course many levels of work and many levels of ability. I suspect that this calls for a big variety of educational/training choices, choices that might have to change somewhat from decade to decade as the local industries/opportunities change. How to integrate general education -- education in the Humanities for all the workers regardless of career prospects -- is the big challenge. They need to know a lot more than just how to do a particular job, e.g., how to be a good citizen. Not to mention religious education.

Jim said:

Is this morally wrong of McDonalds?

In a word, yes.They may have had worthy intentions of hiring only 17 year olds, but unless that is all they have on the line, then their intention is irrelevant.What happens instead is that they end up hiring adults. These adults don't get health care, so the ones with children often have to go on Medicaid. The ones that get sick have to go to the emergency room. The ones with larger families may have to go on food stamps. Maybe they need rent support. In other words, they become part of a state subsidized working poor.Under capitalist logic, the "subsidy" for the worker's health and welfare would come from the cost of a hamburger. But instead, in the US, it's "socialized" and spread to all of us. We can pretend that McDonalds simply has a business model that requires them to pay slave wages. But their business model factors in what they don't have to pay because it is covered by other sources. McDonald's, in other words, is a parasite who wants adult workers (because they hire them) paid at teenager wages and subsidized by other people.I don't know whether you eat at McDonalds. But I do know that you have paid for a lot of hamburgers.

unagidon ---Let's say you're a MacDonald's personnel manager. Two people come in to apply for work, one a single mother of three and one 17 year old. The single mother tells you she has tried for 6 months to get a job, but no luck.Whom would you hire? Why?

I'd almost always hire the adult whether she had been looking for work for six months or not. But I hope you are not saying that this makes McDonald's a charitable outfit. They are exploiting their workers, including the teenagers.They are exploiting the adults by paying them a sub-minimal wage. We know that it is a sub-minimal wage at least to the extent that any necessity of life has to be subsidized by the greater public. We know that these things that are subsidized are necessary, because we as a society will not tolerate people starving, dying in the streets, etc.If McDonalds is exploiting its adults, it should be paying them more. If they should be paying them more, then they should be paying the teens more under the principle that they are doing identical work. If they want to pay teens less, they should give them less to do. I don't see it as just that two people working side by side because (all things being equal) one is younger and more than because one is black or one is a female.

U ==I'm not saying MacDonald's is a charitable organization. I'm saying that the obligation to provide for those who cannot provide fully for themselves is not the obligation of employers. So when the single mother gets the job, then we, the community, rightly pays for the welfare that subsidizes her employment. It is not corporate welfare. I am presupposing that people ought to be paid for the value of their work, not for their familial woes. It's easy to blame MacDonald's when it is we who are the stingy ones.I think that Walmart is a somewhat different case. ISTM that the work that Walmart clerks do is more demanding than simply making change and handing out burgers. (I don't doubt, however, that within MacDonald's there is also work above the lowest degree of difficulty, and the people who do it should be paid more.)There are two separate moral issues here, I think: 1) whether employers ought to set wages on the basis of the difficulty of/skills required by the work, and 2) whether the community is responsible for providing welfare for those who cannot/do not fully provide for themselves.

I agree with Bruce & Jim that a Living Wage is different for a teenager then a person with a family. I agree with U. too that McDonald's and places like it are exploiting teenagers. When I was teenager, I had an endless series of sh*t jobs, many under the table, some violating certain restrictions on hours young people can work. As a kid, I was just happy to have the money, but looking back as an adult, I have to say, I think it is even lower to take advantage of children than it is to exploit adults. This is not to say inexperienced teenagers should have the same pay as adults, but companies that purposefully recruit a workforce like that in order to underpay them are not doing the right thing. And re: people having different wage requirements, in the small agencies I've run, everyone was underpaid but, when I could,I would sometimes try to find some more money for someone who was struggling to raise a family. I have colleagues who strongly disagree with that approach, though, saying personal circumstances shouldn't come into play. And there are obvious parity issues, right? I certainly couldn't do that when there were other people in the agency doing the same job with the same experience. But I don't see anything wrong with accommodating individuals worker's circumstances when you can. We make reasonable accommodations for people with disabilities, why not for other circumstances?

Ann said:

Im saying that the obligation to provide for those who cannot provide fully for themselves is not the obligation of employers.

I will contest this statement.There is a myth that the job of the business owner is to provide for the owner/stockholders. In the case of stockholders, we know that this is a fiction, because the senior management of companies takes as much for themselves as the market will bear. But this myth also says that it is the obligation of management to pay as little to its workforce as they can get away with. Within this myth, the worker then becomes responsible if they are underpaid. The myth requires us to deny that there is such a thing as a just living wage (argue about it as much as we want to). But the fact that the country and the general public subsidizes the working poor in many areas tells me that there is in fact such a thing as a just living wage. We just don't think that the employer needs to pay it in our society. We think instead that it is right and proper for society to subsidize the wages of workers at McDonalds and Walmart. I think that these subsidies (as opposed to paying a just living wage) go against the spirit of capitalism. I think that the true costs of things (which includes a non-subsidized just living wage) should be contained in the commodity, not socialized among the general public. This way, I can choose to support McDonalds by buying their stuff or not. Right now, I don't have a choice; I subsidize McDonalds and other workers and McDonalds management gets to keep wages down (because of this subsidy) and reap the profits; and to a great degree this profits them personally. In short, McDonalds management is transferring liabilities (a just living wage) and risk (that their workers will unionize in the absence of the subsidy) to the rest of the public. I don't think they should be allowed to do this.I also find this business of blaming the workers for their low wages (since management can't be blamed) to be infuriating.

Irene said:

When I was teenager, I had an endless series of sh*t jobs, many under the table, some violating certain restrictions on hours young people can work. As a kid, I was just happy to have the money, but looking back as an adult, I have to say, I think it is even lower to take advantage of children than it is to exploit adults. This is not to say inexperienced teenagers should have the same pay as adults, but companies that purposefully recruit a workforce like that in order to underpay them are not doing the right thing.

In terms of full disclosure, I worked for a Chicago food store chain in the 1970's that was unionized and that did not distinguish between teenagers and adults when paying wages. Wages were paid on a strict system of seniority. I was also the union steward for the store I worked at for a time.While I worked there, the union sold out the workers by agreeing with the company to reduce the wages for teenagers. They claimed that they could make this equitable by "grandfathering" the existing teenagers under the old wage agreement. I know that they were thinking that most of these teenagers would rotate out of the stores in time. What they claimed would not happen (but did) was that the store management would start finding reasons to rotate out the higher paid teenagers ahead of time. It struck me as inequitable that I would work side by side with someone my age who was making less and would always make less than I was while doing precisely the same work.

Unagidon, you're doing a good job with this, and I don't want to knock this discussion off your course. But If McDonalds business model (as Jim Pauwels suspects, and I do too) is to employ 17-year-olds, this question arises: McDonald is open during school hours. So, does the business model also depend on encouraging school drop-outs? Or does it depend on overlooking the model and employing that mother of three children at 17-year-olds's wages when its workforce isn't available?Look, the community provides roads to bring customers to the drive-through windows, police to drive by periodically and detectives to investigate late-night shootings, defensible property rights, zoning protection, curb cuts, clean water -- and customers pay for their burgers. At least, the employer shouldn't require subsidies for its workers and (depending on how you answer the question above) compete with education, and then send its lobbyists to the state capital to get out of paying its share of the taxes for the community goods.I mean, before we get into morality, Ann, wouldn't it be nice to get to simple decency?

Tom said:I mean, before we get into morality, Ann, wouldnt it be nice to get to simple decency?I hesitate to use the word "decency" in these discussions, because it relates to intention and in my experience the intentions of management are always good. It's just that their hands are tied by the market. It is the market that requires them to look at labor as a simple cost of production like any other cost; it is the market that demands that labor be paid as little as possible; and it is even the market that demands that management be paid as much as the market will bear. Management wants to do the right thing, but the market (which is the democratic expression of price) ties their hands. So they do what they can, which turns out to be rather little unless they are forced to.

"The problem is that the jobs [on the McDonald's line] are dead end ones."Yes; but I've known a number of people (including, FWIW, my pastor) who started their work careers by salting french fries at McDonald's and then moved out, on and upward to better things - at other employers. And a couple of people in particular I'm thinking of do not speak ill of McDonald's; they believe they learned a lot of important work lessons and life lessons - insistence on quality, attention to detail, a fanatical focus on serving the customer, keeping a constant eagle eye on cost control, and so on.So part of my question would also be, "Is it morally wrong of McDonald's to (again, I'm guessing here) make the strategic decision that its line jobs also would be dead-end jobs - that the expectation is that McDonald's workforce would be a high-turnover workforce, and it almost explicitly disclaims any long-term career responsibility for its employees? The response to a McDonald's employee who wants more money would be, "Go find a better job somewhere else. Thanks for your service. Do me a favor and hand me that stack of job applications on your way out the door."

' Its also instructive to look at minimum wage as a function of per-capita GDP. ''Why is that instructive?'---Allow me connect the dots. We can look at the value of the minimum wage in terms of a) unadjusted dollars, which doesn't tell us much, or b) inflation-adjusted dollars, which tells us if it has maintained its absolute value, or c) percentage of per-capita GDP, which gives us the relation between the minimum wage and the overall prosperity of the nation. We often hear about a) or b), but not so much about c).The minimum wage is not a law of physics, or even economics. It is a political choice. For forty years, the choice that was made was that even unskilled labor deserved a slice of the economic pie that grew with that pie, with increasing prosperity shared, to some degree, by all. For the last thirty years or so, the political decision was that the minimum wage should only keep up with inflation, maybe. (For grounds of comparison: if the 1938 minimum wage of $0.25 were only adjusted for inflation, it would have been $3.94 in 2011) Thus, the working poor have not shared in economic growth. This has knock-on effects; in part because the minimum wage serves as a floor for the entire wage structure, the median income, adjusted for inflation, has hardly budged in thirty years. What's more, this problem is creeping up the economic ladder and starting to hit the professional class--according to the American Chemical Society, the median income of PhD-holding chemists, adjusted for inflation, has declined over the last decade.As I said, it is a political choice. Some will argue that we should have no minimum wage; others that it is too high now. I contend that for forty years, we chose to have a wage structure that kept pace with our nation's growing prosperity, and we can make that choice today.

"[McDonald's] may have had worthy intentions of hiring only 17 year olds, but unless that is all they have on the line, then their intention is irrelevant. What happens instead is that they end up hiring adults. These adults dont get health care, so the ones with children often have to go on Medicaid. The ones that get sick have to go to the emergency room. The ones with larger families may have to go on food stamps. Maybe they need rent support. In other words, they become part of a state subsidized working poor."I agree that this is problematic.In the spirit of playing devil's advocate, let me respond with the free market advocate's response: that the single mom with three kids who is earning minimum wage at McDonald's freely accepted that job. There were no constraints on either side; this is not the NFL draft. She was offered the wage, and she accepted. If she didn't think she could support her family on it, she didn't have to say yes. But she did. And once she is employed at that wage, there is nothing whatever to prevent her from finding a better paying job somewhere else. And (I'm again presuming to read McDonald's secret, innermost thoughts here) she is getting more than her perfectly legal minimum wage: she is getting valuable work experience and learning the ins and outs of running a restaurant. These are things that she will be able to leverage for that future, better job - somewhere else.McDonald's would claim (I'm still speaking in the vein of devil's advocate here) that it is not responsible for the woman's life situation; McDonald's did not impregnate her nor cause her to stop going to school nor any of the other woes that beset her. McDonald's is not a social service agency, it as an employer. Its expectation of a single mom with three kids is the same as that of a 17 year old who is socking away money to attend Land Grant University: to work competently, to maintain a presentable appearance, to show up when she's supposed to. If either party has a problem with that arrangement, they're free to dissolve it and go find another one.

Jim said:

Is it morally wrong of McDonalds to (again, Im guessing here) make the strategic decision that its line jobs also would be dead-end jobs that the expectation is that McDonalds workforce would be a high-turnover workforce, and it almost explicitly disclaims any long-term career responsibility for its employees? The response to a McDonalds employee who wants more money would be, Go find a better job somewhere else. Thanks for your service. Do me a favor and hand me that stack of job applications on your way out the door.

How easy it seems to be for us to classify some jobs as not fit for adults. And the adults who take these jobs must therefore be punished for being too stupid or lazy or both to find a higher paying job. There is a "take it or leave it" element to any job. But do jobs we consider rightly low paying really have or deserve no dignity? Does a corporate CEO really work harder than a 60 hour a week Mexican busboy?

In the spirit of playing devils advocate, let me respond with the free market advocates response: that the single mom with three kids who is earning minimum wage at McDonalds freely accepted that job. There were no constraints on either side; this is not the NFL draft. She was offered the wage, and she accepted. If she didnt think she could support her family on it, she didnt have to say yes. But she did. And once she is employed at that wage, there is nothing whatever to prevent her from finding a better paying job somewhere else.

You play the devil well. Let me play a different devil and say that the question really is "why would a single mother take a job at McDonalds if there are better jobs for her to take out there". The answer is that it is likely that there are not better jobs out there for her. So then the question is, why not? It could be because she is too stupid or lazy to get an adult job. But if you have ever worked at a fast food restaurant, you find that the lazy don't last (and neither do the stupid). So it may be that there is just a massive class of work out there that we socially accept as being substandard in pay as though this were a natural condition. And instead of mandating a minimum wage that would allow the pay to not be substandard (and incidentally rightfully pass the cost onto the product that the company is producing) we pretend that people in these jobs are hopeless cases who need public charity like Medicare and food stamps. This also has the happy side effect of us being able to congratulate ourselves that WE have jobs that pay well, which must mean that we are smarter and more industrious than those poor bastards who work in the fast food industry.

"I think that the true costs of things (which includes a non-subsidized just living wage) should be contained in the commodity, not socialized among the general public."u --I don't understand this. What is the difference between "the community" and "the general public"?It seems to me there are two sets of rules at play in this problem: 1) the "rules" of capitalism and 2) morality. (Yes, morality, Tom B. Common decency *is* a matter of morality.) Sometimes the two conflict as in the case of the whom to hire -- the 17-year-old or the older single mother. Yes, there is conflict,but there is a resolution that respects both -- the state (the community/general public) provides for difference the mother needs. Or the company can hire the mother and more pe ople will have at least a bit of food.I'm certainly not defending the corporations that do not meet their obligations to the workers and to the buyers of their products. But there are indeed limits to the good that employers can do an still maintain their own rights.By the way, I dislike the term "their workers" in some contexts. Makes the workers sound like peon/slaves/peasants who have natural obligations to certain people, and this implies the old noblesse oblige, which was an improvement over grab-what-you-can-get morality, but it is no longer appropriate in a country in which everyone has a vote (theoretically anyway, but that's another big problem). Yes, the employer has more power in a work situation than workers do. But that needs to change. Unions have to get their legal protection back, especially with regard to the right to unionize in the first place. Breaking into a company is the biggest hurdle of all. Once a company is unionized the problems are usually not as great.Not that unions themselves always conduct themselves morally at all times. They dont' . But that is a diferent problem.

Unagidon: Beautiful!

Ann said:

I dont understand this. What is the difference between the community and the general public?

I didn't say "community". I said "commodity". And simply put, what I mean is that there should be no hidden costs that are subsidized by people not purchasing the commodity. Cheap gasoline is a case in point. Carbon emissions create public health costs that are not contained in the price of gas. Cheap pork is another case. The environmental damage caused by factory pork raising are not contained in the price of the meat.I think we can start with the question of true costs and risks before we get to the question of charity or fairness.

" And simply put, what I mean is that there should be no hidden costs that are subsidized by people not purchasing the commodity."This is quite a conservative position: why should our tax dollars pay for working people's food and shelter? We could get a lot of people off our public-assistance rolls by requiring the employer to pay a living wage.On the other hand, it may be, as Ann has suggested, that Americans are fine with subsidizing workers this way. It keeps the price of hamburgers lower.

Jim said:

This is quite a conservative position: why should our tax dollars pay for working peoples food and shelter? We could get a lot of people off our public-assistance rolls by requiring the employer to pay a living wage.

Surprised? I think that the system continues the way that it does because people don't think in terms of real costs. It doesn't occur to them that they are paying for things that could be paid for by actual consumers.(This doesn't mean, by the way, that I would suppot stopping tax supports BEFORE raising the minimum wage.)

A modest proposal: Deregulate to the bare minimum all transactions in order to expand the economic pie, then redistribute to whatever degree of equality is desired. Practically everyone will be better off compared to the outcomes when a heavy-handed regulatory regime intervenes so that no one is ever oppressed/exploited in any given transaction and when employers are demonized if they hire low-skilled workers.

How would one redistribute like that without heavy regulation?I'm not trying to demonize employers for hiring low skill workers. I'm trying to demonize them for passing on costs and liabilities to the general public.If the working poor must be subsidized by public money, then the minimum wage is too low. It's that simple.

Does this apply to Burger King and other fast food outlets?

Applies to any workers subsidized by the state or the public (because I include the commercial subsidization of medical costs).

"The answer is that it is likely that there are not better jobs out there for her. So then the question is, why not? It could be because she is too stupid or lazy to get an adult job."If we stop to think about it, it's just statistical reality that not all of us are equally intelligent and equally industrious. Take any group of 100 perspective employees, and ten of them will be less smart than the other 90, and ten of them will be lazier than the other 90.And without going to rectifiable character flaws like laziness or rudeness, there are all sorts of factors that make people less attractive as employees: health issues (certainly including mental illness), criminal records, lack of fluency in the native language, citizenship status, and so on. (I'm assuming that McDonald's line jobs are considered low-skill jobs and that McDonald's trains its employees, so new-hire qualifications are relatively minimal).So, to the extent that the labor market is a meritocracy, it seems to me that, over time, some people will end up in better-paying jobs than others. But - the question of the employer's responsibility to pay a living wage doesn't, or shouldn't, depend on these personal characteristics. Even the dumbest, laziest and rudest people ever created, if they can get themselves employed, are entitled to a living wage (however we define it). It's part of the social contract. You hire her, you pay her a living wage. Or so it seems to me.The tension / conflict in all this may be the meritocracy bit. The labor market functions on supply and demand. You want to earn more money, then find another job. Or get promoted. Or get a degree, or another degree, or a certification, or experience, and then find another job or get promoted. Find a way to increase your value. (Or know someone. Or start your own business.) That's the way the system works now.

U,To learn about redistribution without heavy-handed regulation I rcommend some early essays by Milton Friedman, the father of the EITC.If the minimum wage is currently too low and must be doubled, say, so that costs aren't shifted to the public at large, then do you anticipate any increase in the unemployment rate? Who would be responsible for that increase? I assume it would not be Mr. McDonald. Would all those who would exploitatively hire someone to sweep the floor at $10 an hour but not at $20 be socially irresponsible?

"Does this apply to Burger King and other fast food outlets?"Not to mention small businesses, which in my observation are more exploitative of teens and low-skill workers than McDonald's, which I believe boasts about its perks and benefits. At that tier of employment, there are worse jobs out there than flipping burgers for Mickey D's.

"If the working poor must be subsidized by public money, then the minimum wage is too low. Its that simple."... or the cost of living is too high.

The tension / conflict in all this may be the meritocracy bit. The labor market functions on supply and demand. You want to earn more money, then find another job. Or get promoted. Or get a degree, or another degree, or a certification, or experience, and then find another job or get promoted. Find a way to increase your value. (Or know someone. Or start your own business.) Thats the way the system works now.

I don't think it works this way exactly. It's all about what the market will bear. Skillfulness can remain constant while demand can swing wildly as all those poor working class people who expensively retrained themselves as highly skilled computer programmers found when we started outsourcing those jobs to India. The meritocracy myth also supports the idea that all these corporate executives are worth these ever increasing salaries they have been getting as they use their authority to take all the benefits of higher productivity garnered by everyone else these thirty years. Not hard to argue that the Mexican busboy should make less than the college educated chap, but harder to argue that the CEO should make $20M for... what? Working harder? More skill? Really?

Jim said:

or the cost of living is too high.

That's the classic argument of the German school. Wages should never rise. For anyone. Productivity should bring prices down and THAT is what increases the standard of living.

Patrick said:

If the minimum wage is currently too low and must be doubled, say, so that costs arent shifted to the public at large, then do you anticipate any increase in the unemployment rate? Who would be responsible for that increase? I assume it would not be Mr. McDonald. Would all those who would exploitatively hire someone to sweep the floor at $10 an hour but not at $20 be socially irresponsible?

Why should unemployment increase? Profits will decrease, yes, since they are being subsidized by public money now. But if a corporation can afford to eliminate a worker you can be sure that they have done so whatever the minimum wage is. Would employment go up if the minimum wage was lowered? Why should it? But that's the flip side of the same argument.

I appreciate almost all of the comments on this thread. I've learned a lot. A special thanks to Unagidon. The arguments he has advanced here are compelling.

The Wikipedia article on the Minimum Wage is not too bad as such things go. A person with any view on the Minimum Wage can read it and feel vindicated. But it's not a bad little review of some arguments pro and con.My own view is that it is possible to set the minimum wage high enough such that there would be a substantial (un)employment effect. We can all think of instances where we see the labor market responding to lower and higher wages. One clearly is "offshoring" of jobs that formerly were American jobs; if changing the wage rates had no impact on employment, we'd expect that employers would not ship American jobs overseas.I do assume, though, that there is some "play" in the available wage rates, and giving everyone at a McDonald's franchise a dollar-an-hour raise (which would be in excess of a 10% raise) is not going to bankrupt the company - they'll find some way to make up the lost money, or they'll deal with lower profits. The art is in determining how much is high enough without causing real damage to the enterprise.

Jim said:

My own view is that it is possible to set the minimum wage high enough such that there would be a substantial (un)employment effect. We can all think of instances where we see the labor market responding to lower and higher wages. One clearly is offshoring of jobs that formerly were American jobs; if changing the wage rates had no impact on employment, wed expect that employers would not ship American jobs overseas.

Holding prices constant, a sudden large increase of wages would be a burden on a company and yes that company would be tempted to start laying off people. Still, the work would need to be done. So the next step would be to raise prices. Would demand levels stay the same if prices were raised? If demand did, then the increased wages would not matter. Would demand remain the same with higher prices? I am not sure that it would not, IF wages were raised the same degree for everyone at the same time (which is what a rise in the minimum wage does) and prices were raised at the same time to the same degree. And keep in mind that in the context of this discussion, the rise in the minimum wage would be to offset the public and private subsidization of their salaries, which means that the money going to these higher wages would appear as if by magic in lower taxes and therefore could support demand.

I do assume, though, that there is some play in the available wage rates, and giving everyone at a McDonalds franchise a dollar-an-hour raise (which would be in excess of a 10% raise) is not going to bankrupt the company theyll find some way to make up the lost money, or theyll deal with lower profits. The art is in determining how much is high enough without causing real damage to the enterprise.

Yes, among the bellowing of gored executives dis-engorging a few million, McDonalds could afford to hand out raises. But again, there are two principles here. The first is that if the worker needs a government or private subsidy in order to survive, then the minimum wage is too low. An adequate wage (whcih I think can be measured) should be the hallmark of the minimum wage, not whether the executives would be discomfited. The second principle is supposedly capitalism's own. The capitalist is responsible for his own risks and liabilities. This is why they supposedly deserve to profit. In practice they will try to scrape these things off onto others as much as possible. But not allowing them to do this isn't socialism. It's capitalism. I could even imagine a Bill introduced in the House called the Defense of Capitalism bill that would raise the minimum wage, eliminate business subsidies, and cap the salaries of corporate executives.

FWIW, a libertarianish website recently challenged commenters to come up with an appeal to someone with a soft heart like Oprah Winfrey which would convince her about the harm done by the minimum wage. The winner:"Find a person who got laid off from a charity after minimum wage increase. She tearfully says 'I just want to help people.'"http://econlog.econlib.org/archives/2013/01/make_the_feelin.html

"So the next step would be to raise prices. Would demand levels stay the same if prices were raised? If demand did, then the increased wages would not matter. Would demand remain the same with higher prices? I am not sure that it would not, IF wages were raised the same degree for everyone at the same time (which is what a rise in the minimum wage does) and prices were raised at the same time to the same degree."unagidon - you may know that there is a useful measure called price elasticity of demand that predicts what will happen when an enterprise raises prices. The general rule of thumb is that, the more that what one offers is a commodity (i.e. it's pretty much indistinguishable from what the guy across the street offers), its goods will be price-sensitive, i.e. an increase in prices will result in lower sales, and a decrease in price will result in higher sales. (The full explanation of elasticity takes it a step farther and explains that the revenues lost by the higher unit price may or may not be made up for by the resulting increase in revenues).As you know, price in the real world generally isn't completely a function of the enterprise's internal costs, it is also influenced - in a lot of cases, dictated - by competition and the marketplace. If my costs go up by 10% but I lack the market power to raise prices by 10% or more - then I've just taken a financial hit.My hunch is that McDonald's customers are somewhat price-sensitive - that a hefty (word chosen intentionally) chunk of consumers don't have a decisive preference between a Big Mac or a Whopper, and so if McD raises prices too noticeably, the consumer will switch to a different drive-thru lane. My hunch also is that it's a fairly price-elastic industry; hence 99 cent menus and the like. But as has been pointed out above, an increase in the minimum wage presumably would have an identical impact on the wages paid by Burger King, Wendy's and Taco Bell, whom I'm assuming are more or less equally exploitative. (As a matter of fact, I'd be curious to know if any of these gigantic franchisers are known to treat their employees particularly better and pay better than the others). So in the event of an increase in the minimum wage, McDonald's employee cost increase presumably wouldn't put it at a competitive cost disadvantage. I don't know who the price leader is in that particular industry, or if there is one in particular. But I can see the execs scratching their heads, peering out the window at the competitor across the street, and asking themselves, "If we raise our prices by 10% to compensate for the increase in the minimum wage, will they do the same?" Knowing one other's elasticity helps to answer that question.In short, an increase in the minimum wage introduces some risk and unpredictability. I suspect that the risk, by itself, is enough to activate the lobbyists. Not that greed has nothing to do with it, of course. But most companies I've known over the years like things kind of stable and predictable, particularly if the stable and predictable status quo has them sitting in the catbird seat in their particular market.

As interesting as the conversation is, I think we need to think more broadly than simply trying to figure out if the minimum wage should be $7.50 or $8.50 or $9.50. A big part of the issue, and one that was touched on in the original Bloomberg piece, is that these food service industry jobs, memorably referred to in Wayne's World as joe-jobs, are one of the few sectors in the economy that are experiencing vibrant labor market growth. I'd bet that all of us know people who have downscaled from middle-class wages to wages at or near the poverty level because those are the jobs that are available. This is McDonald's dream: stable, reliable workers at rock-bottom prices who are too frightened and cowed to look elsewhere. I'd much rather see McDonald's have to raise their wage rates because the competition for workers is so fierce that it has no choice. This isn't unheard-of. It happened in our area during the high-tech boom days.

Let me ask a stupid question, maybe 2:If youve never owned a business and actually employed someone, havent you been paying a minimum wage of $0 per hour your whole life? Do you have the right to criticize those who pay their employees more than you ever have?

Let me ask a stupid question, maybe 2

You're right. It is a stupid question. What are you getting at?

UnagidonThats not very nice and out of character for you. What am I getting at? John 8:7 of course.

Sorry. It looked like you were trying to say something very silly, like one could not criticize slave holders unless one had owned slaves oneself.

Unagidon-No sweat. I agree, it would be a silly statement if thats what I meant by it. Im not sure where the slaveholder reference came from, though. To clarify, my point is this:I should be very reluctant to criticize my fellow man for not paying others enough if I have never paid anyone one thin dime.

Ah but I do pay them; every time I pay my taxes or pay an insurance claim.

First, I was not referring to you specifically, but I do think there are millions that I referred to generally. Second, that reply is a dodge. ;-) You know I was referring to wages.

This site from the federal Bureau of Labor Statistics, entitled "Characteristics of Minimum Wage Workers", provides some facts and statistics that are pertinent to this discussion. http://www.bls.gov/cps/minwage2011.htm

63% of earnings in this country are from hourly wage earners. That's a huge number of workers. And yet the unions are weak. What might the country's GDP be if they had more power -- and income.Thanks for the site, Jim P.

"And yet the unions are weak."My view is that unionization is absolutely part of the solution for retail and food-service industry workers who earn at or near the minimum wage.I suggest this sometimes to people in low-wage jobs who complain to me about their jobs - I'll say something along the lines of: "You should organize the workers. Figure out which union would represent you, and contact them. They can help you - they have professional organizers." The impression I get from the folks I mention this to is (1) they don't view it as a serious possibility and (2) they have little or no interest in pursuing it. For whatever reasons, unions don't seem to have any momentum or mind share, except in the public sector.

I suspect that the average fast food employee knows little or nothing about what unions are, what they do, and how difficult it has been to establish them. Unions grew out of the original lack of power of industrial workers, such that even children were sometimes worked to death. It was only when the workers became desperate unto death that they risked their lives collectively to get the organizations establishers.Employers these days simply don't pose threats to human life and health as they did in the old days, so workers are not easily motivated to risk their jobs to preserve them. Yes, there are still some health and safety risks at times, but the people now seem to want those problems to be regulated. The old guys risked their lives to organize, the young ones just risk their jobs. I suppose the only way to motivate them would be for there to be very strong laws protecting their right to organize such that hey felt safe enough doing it. There are legal rights to organize at least in some places (Isn't there also a federal law), but it seems that the laws do not have enough teeth. (I'll have to check this out with my old NLRB lawyer friend.)

Hi, Ann, I'm sure you're right that the conditions don't seem as exigent as it was for coal miners a hundred years ago. Still, a single mom who earns minimum wage at McDonald's and faces the prospect of bringing her children into a homeless shelter so they can be warm for the night might truly be said to be in a desperate situation. The subject of the article in question, who lives in a fleabag dive in a slummy neighborhood, isn't much better off. If he has the luxury of thinking objectively about his situation, he might ask himself, "What's the downside of trying to organize the workers? If they (illegally) fire me, how much worse off will I really be on public aid? And the upside could be pretty substantial."What is interesting is that, in the area where I live, certain retail workers, like grocery store employees, are unionized. And their pay and their rights do seem significantly better than what is sketched for the subject of the article. The benefits of unionization seem pretty visible around here.

"I should be very reluctant to criticize my fellow man for not paying others enough if I have never paid anyone one thin dime."I don't think you should be uncomfortable if you have ever worked for a living yourself. I'm comfortable criticizing someone for not paying "enough" when I know that the payment would not be enough for me to live on myself.

JIm P. ==I'd say that if that mother faces those circumstances, then the problem is not her employer but the local welfare program. I'd like also to raise this question: how should the work of part-time workers be calculated? I mean both 1) those who work only a few hours a week or month and 2) those who work only part-time for many individual employers? How do you calculate their hourly wages if not on the basis of the work done? I'll grant you that I think that most people who do such part=time work are generally paid abominably, but the question remains: how to calculate their earnings fairly??)

I wrote, "a single mom who earns minimum wage at McDonalds and faces the prospect of bringing her children into a homeless shelter so they can be warm for the night might truly be said to be in a desperate situation."Ann replied, "Id say that if that mother faces those circumstances, then the problem is not her employer but the local welfare program."Here is a mathematical way to think about this.In Illinois, where I live and where the subject of the original article in this post lives, the minimum wage is $8.25/hour. If an adult works full time at that rate ($8.25/hour X 8 hours/day X 22 work days/month), she grosses $1,452/month. I'm not sure what taxes and benefit charges would be deducted from the check of a minimum wage worker, but McDonald's does offer a benefits package to its employees, and presumably she would enroll in health care and prescription drug coverage for herself and her children. So let's assume that her net take-home pay is quite a bit less - let's suppose that it's $1,200/month. (My hunch is that it would be somewhat less).I just went to our local newspaper's website and did some quick searches for apartment rental rates in the town where I live. I presume that a mom with children would want a minimum of a two bedroom apartment. According to rental ads, the range of monthly rents for a two bedroom apartment is from $800/month to $1,750/month, with $1,450/month seeming to be where the market is. Speaking as a guy who visits clients in apartments as part of our outreach ministry, I can vouch that the apartments that rent for less than $1K/month are really crummy, and some of the neighbors are folks that a parent wouldn't want to expose her children to (e.g. gang members). Let's say that, despite all the undesirable elements, she is able to get into an apartment for $800/month. That leaves her $400/month for everything else: food and clothing and household items for her and her children, plus utilities, plus a car payment, plus gasoline and any maintenance her car needs, plus everything else.It's very difficult to make that math work. With a few moments' thought, it becomes clear that the financial solvency for this family is fragile, to say the least. Any unbudgeted expenses that might come up, they're in huge trouble.Her annual gross income would be about $17.5K/year, and that would qualify her for public assistance. Hopefully, she could also get some child support from the father. And she may be able to work more than 40 hours per week. And there is sort of a safety net in the community, like the food pantry our parish maintains, to help people who are running short on money for the month. But I trust it's clear that we're now running up against unagidon's objections: the employer's responsibility is to pay a living wage. Public assistance and community safety net seem to be subsidizing wages that are far less than a living wage.My contention, as someone who works with people in this situation in our community, is thatfull-time work at minimum wage + public assistance + child support + community safety net ...... still doesn't add up to a living wage.

Jim --Yes, her situation is still not good. But the *question* is: who is obligated to help her? I grant you thata *both* her hourly wage and her welfare are too low. So what should the minimum wage be? And *on which basis* should it be determined?Yes, unagidon says that welfare unfairly "subsidizes" wages, but what makes his position true?The question at issue is: how should we determine a fair minimum hourly wage, whether full-time or part-time workers, and for single people and for those with personal obligations? You and unagidon seem to be saying that the minimum wage (or salary?) should be established on the basis of what the neediest person in the community would need to live decently. But if that is truly the fair minimum wage, wouldn't the bachelor boy just out of high school be entitled to the same wage as a guy with 4 kids and a dead wife?

Ann writes:The question at issue is: how should we determine a fair minimum hourly wage, whether full-time or part-time workers, and for single people and for those with personal obligations?--This is a can of worms best left unopened. A person should be paid what the labor is worth. If the labor of people with dependents is made radically more expensive than that of single people, it invites discrimination. At present, it is _against the law_ to ask a job applicant about their family status, but a two-track wage scale would present the employer with such substantial risk that they'd find out somehow.We still see too much of the opposite, where a pastor will tell the church secretary "Your husband has a good job, so you should accept a meager salary." Rather than trying to figure out what a "living wage" is, and getting sidetracked by discussions about what a proper food budget should be, or whether a color TV is a luxury, it is more straightforward to peg the minimum value of labor to a given percentage of per-capita GDP (and doubling the minimum wage would be a good start). It is a blunt instrument, to be sure, but one that doesn't distort the economic relationship between employer and employee in ways that would invite discrimination. Better to deal with the finer issues of support for dependents through, for example, the tax code, as we do now.

Ann - yes, I agree that these are important and very difficult questions.Catholic social teaching insists on a living wage. The question is, how do we get there?Surely the spirit of a government-imposed minimum wage is to approximate a living wage - however that is defined. For a family of four, food stamp eligibility would be annual gross wages of about $30k/year or lower. For a household of four with a single earner (like the single mom we were presupposing in my previous comment), $30K/year would work out to an hourly wage of about $15/hour - that's fully double the existing federally-mandated minimum wage. (But note that, if there are two wage earners in the household, then between the two of them, they could get to $30k/year if both work full time at the minimum wage. This illustrates one of the issues with trying to use the minimum wage to get to a living wage; living wage requirements vary widely from one household to another, and a minimum wage mandate can't distinguish between these differences).But $30k/year may be setting the bar low, too. An article in our newspaper suggests that, in the suburban area where I live, a family of four needs to earn $46K/year to achieve a minimal level of financial security. I have to say that this seems more realistic to me, too. So our hypothetical single mom with three dependent children would need to earn $23/hour - that's fully three times the federally mandated minimum wage, and close to three times the minimum wage that is required by my state (Illinois).Based on numbers like these, I believe that the minimum wage needs to go up pretty dramatically - at least double what it currently is.This wouldn't solve every problem. People would still be poor. Unemployment would almost certainly go higher for people in the minimum-wage labor market. Apartment rental costs almost certainly would go higher at the low end of the rental market, as the purchasing power of the poor increased. The low end of used-car prices might go up, too. It would be a very imperfect solution. But it seems to me to be more just than the status quo.I've already suggested unionization for people in the minimum-wage labor market. People who follow my comments on dotCom know that I am very far from a cheerleader for unions, but surely, workers in the minimum-wage labor market who can act collectively are going to be doing better than minimum-wage workers who are on their own.I have some remedies in mind that probably wouldn't play very well at dotCom. I view illegal immigrants as labor competition for American minimum-age earners, so I'm not in favor of open borders. And I'm in favor of substantially better education outcomes for the poor, and so I'm in favor (somewhat ironically) of defanging teachers unions that serve poor communities.

The National Low Income Housing Coalition publishes an annual report that estimates how many times the minumum wage a worker would need to rent a two bedroom unsubsidized apartment. Numbers often vary wildly within a state, of course, but in no state is the minimum wage adequate to cover housing costs. The general rule of thumb for housing to be considered affordable is rent<30% of gross.Here's the map: http://nlihc.org/sites/default/files/oor/2012-OOR-Min-Wage-Map.pdf

"But $30k/year may be setting the bar low, too. An article in our newspaper suggests that, in the suburban area where I live, a family of four needs to earn $46K/year to achieve a minimal level of financial security. I have to say that this seems more realistic to me, too. So our hypothetical single mom with three dependent children would need to earn $23/hour thats fully three times the federally mandated minimum wage, and close to three times the minimum wage that is required by my state (Illinois)."Jim P. --OK -- so in your area the employer should up the minimum wage because the landlords ask exorbitant rents. The, I would say, requires the employers to "subsidize" the landlords. Again, the employer has to take the responsibility for the family's rent problem. And doesn't this skew the microeconomy -- employers having to charge more for their products in order to pay for the families' rent?

JIm P, --You have a point about open borders. I'm not sure that they're so unfair. The economic system of, say, Mexico is really rotten -- relatively large very rich upper class, tremendous poor class. Why should the American system in effect subsidize the very wealthy Mexicans? Yes, not to admit the Mexicans would be terrible for them, but isn't it terrible for them to have to leave their families? Maybe Mexico needs another revolution. How does one decide on helping or not helping someone when a third party is responsible for the bad situation that calls for help? If, analogously, your neighbor is not educating his children, do you have an obligation to do so? Or does the whole community have the obligation?

"OK so in your area the employer should up the minimum wage because the landlords ask exorbitant rents. The, I would say, requires the employers to subsidize the landlords. Again, the employer has to take the responsibility for the familys rent problem."Ann - yes, that is one way to look at it. If there were more substantially more rental units in the area, then presumably the price of two bedroom apartments would fall, and that would alleviate some pressure on low-income families. But rental units aren't popular with the powers that be in our area; our suburb aspires to be the kind of place where everyone owns their own home, and zoning rules are constructed accordingly. Proposals to build multifamily dwellings are scrutinized very carefully. If it's a high-rent development, that's ok, but if the label "affordable housing" attaches to it - then resistance mounts. Current residents fear that affordable housing will mean that the riff-raff will move in. (Our area has employers, really good public schools, and low crime rates - just the kind of place that riff-raff with dreams and aspirations for its children would want to settle in.)

Another question; does a living wage include enough to save up a down payment?

Ann - I think we've watered it down here to being enough to pay the rent.

Add new comment

You may login with your assigned e-mail address.
The password field is case sensitive.

Or log in with...

Add new comment