The Reality of Minimum Wage

Rally_demanding_$15-hr_minimum_wage_(31326059165)There simply are not enough hours in the day to address every foolish thing you see posted on social media, but there are some things that I just cannot let go. In the words of Christian comedian Ken Davis, “You can’t let people fall in the stupid pit” without out at least trying to help them. The push for an increased minimum wage is one of those things that I have to address. Lately, it has gotten even worse. Ever since it passed in Seattle, the magic number for many proponents of a minimum wage increase seems to be $15 an hour. According to the Washington Post’s questionnaires sent to Democratic candidates for president, all eight candidates still in the race favor an increase in the federal minimum wage to $15 an hour. (That includes Tulsi Gabbard, despite her exclusion from the debates and the DNC doing its best to shut her out. Of course, Gabbard is also the only one still in the race to favor a universal basic income, an idea most prominently supported by former candidate Andrew Yang). Tom Steyer actually favors a minimum wage of $22/hour.

Sure, a $15/hour minimum wage sounds like a great idea. But in reality it is no better than just printing more money. Does an increased minimum wage put more money in the hands of the people? Yes. Will they spend it? Yes, they will have to, because prices will go up.

Let’s use fast food restaurant employees as an example. The web site fightfor15.org features this statement on its homepage: “McDonald’s: Fast-food workers deserve $15 an hour and a union so we can pay our rent and support our families. Agree? Add your name now.”

If McDonald’s workers get a pay increase to $15 an hour, what will that do? Well, my understanding is that McDonald’s franchises employ about 750,000 people in the U.S. and that there about 14,150 McDonald’s restaurants in the U.S. That works out to an average of 53 workers per McDonald’s. Let’s narrow it down even more and look specifically at McDonald’s workers in Illinois, since Illinois has passed a law increasing their minimum wage. There are about 650 McDonald’s in Illinois. That would equate to 34,450 McDonald’s workers if we use the average. Let’s suppose only 60% of them are earning minimum wage, though I imagine that is exceedingly low. That would be more than 20,000 people just at McDonald’s restaurants earning minimum wage, and in Illinois this year the minimum wage went up by $1.00 per hour in January and will go up by another 75 cents per hour in July.

So, imagine 20,000 workers working, for the purposes of this illustration, 20 hours per week, and, come July, making $1.75 per hour more than they were in July 2019. That equates to $700,000 per week in wages that have to be paid by Illinois McDonald’s, or more than $36 million over the course of a year. Are the various owners of McDonald’s restaurants on Illinois going to collectively eat that increase (pun intended)? Of course not. They will raise prices. And every industry that has minimum wage workers will raise prices. So, costs will go up and that nice minimum wage increase will be negated. Various studies project that the cost of a Big Mac would increase by 4.3% if McDonald’s workers were paid $15 an hour. The rate of inflation in the U.S. hasn’t been that high since 1990. And that’s just a Big Mac!

In Seattle, where the $15/hour minimum wage push all began, housing values have increased by an average of 5.49% annually since 2000. The median rent for a two-bedroom apartment in Seattle is more than $1,600 a month–about $500 per month higher than the national median. The median for a one-bedroom in Seattle is $1,332 a month. The recommended food spending per month for a Seattle resident is 23% above the national average. The cost of a dozen eggs in Seattle is 68 cents above the national average. On average, the price of gas in Seattle is the highest for all major cities in Washington. Oh, and Seattle also has a sales tax of 10.1%! True, Washington has no state income tax, but I doubt you’ll notice any benefit by the time you absorb all those other high rates.

The minimum wage is not necessarily beneficial. When the first minimum wage in America was implemented in 1938 it was twenty-five cents an hour. Had it been increased at the rate of inflation, it would be somewhere between $4.50 and $4.80 an hour today. Instead, it is $7.25 an hour, more than 50% higher than it should be if it was only intended to keep pace with inflation.

When the minimum wage was implemented it was one part of a sweeping piece of legislation, the Fair Labor Standards Act, designed to address a number of Depression-era workforce issues. Other elements of the law addressed overtime pay and child labor. According to the Legal Information Institute of Cornell Law School, “The minimum wage was designed to create a minimum standard of living to protect the health and well-being of employees.” Franklin Roosevelt, in his statement after signing the National Industrial Recovery Act in 1933, said of wages, “It seems to me to be equally plain that no business which depends for existence on paying less than living wages to its workers has any right to continue in this country” and that “by living wages I mean more than a bare subsistence level—I mean the wages of decent living.” That statement has been used by many to argue that the minimum wage was always intended to be at least a living wage.

There is room to debate that assertion too, but let’s suppose for a moment that that has been the intent all along. The current federal minimum wage of $7.25 an hour would pay a worker who works 40 hours a week for fifty weeks a year and annual pre-tax income of $14,500. According to the Department of Health and Human Services, the 2019 Poverty Guideline for the 48 Contiguous States and the District of Columbia was $12,490 for an individual. The 2020 guideline was just released in January 17, and it is $12,760. (And, in case you are wondering, the Census Bureau and programs based on poverty level, such as SNAP, are based on gross income).

Maybe you don’t like the notion of basing the minimum wage’s relation to a “living wage” on a single individual. Fair enough. Let us suppose, then, that there is a family with two wage earners, both working 40 hours a week, fifty weeks a year, for minimum wage. The income for that family would be $29,000. That exceeds the poverty level for a two-person, three-person and four-person family. (The 2020 Poverty Guideline for a four-person family is $26,200). And, in case you are still uncomfortable, there is government assistance available for those families, since eligibility for programs based on poverty level requires that a family’s income be at or below 130% of the poverty line.

According to the Census Bureau’s 2018 report, the official poverty rate was 11.8%, which was the fourth consecutive annual decline and the first since 2007 that the poverty rate was significantly lower than it was that year, which was the year before the last major recession. Another interesting fact: the drop in poverty rate from 2017 to 2018 was highest among African Americans and second-highest among Hispanics. The was a bigger drop for females than males. And when considering educational attainment, the biggest drop was among those with “some college” while the only area where the poverty rate went up was among those age 25 and older who had no high school diploma. The interesting facts are abundant, in fact. The lowest poverty rate when considering family characteristics was among married couples, who had a poverty rate of only 4.7% in 2018. The highest percentage of poverty was among female householders with no spouse present, but that demographic also had the largest drop in poverty percentage.

If you consider the three-year average (2016-2018) of percentage of people in poverty by state, the state with the lowest percentage was New Hampshire, at 6.4%–and New Hampshire uses the federal minimum wage of $7.25. The five states with the next lowest percentages of poverty were Maryland (7.1%), Utah (7.9%), Minnesota (8.7%), Colorado (8.9%) and New Jersey (9.1%). Among those five states only Utah has the $7.25 minimum wage, but the minimum wages of the other states are still modest, and the average minimum wage of those five states is $9.31/hour. The states with the highest minimum wages were New York ($13), California ($12), Washington ($11.50), Oregon ($11.25) and Colorado ($11.10). We already saw that Colorado was among the states with the lowest poverty rates, but the other four states on this list did not fare so well. New York (11.8%), California (12.5%), Washington (10.3%) and Oregon (10.6%) were not the worst by any means, but even with Colorado included the average percentage of poverty was 10.82%. That put those states at 1.5% below the U.S. average that year of 12.3%, but still well above the average percentage of 8.34% for states 2-6 on the list. In other words, the five states with an average minimum wage of $9.31 had a poverty percentage two and a half percentage points below the five states with an average minimum wage of $11.77. I don’t know about you, but I do find it at least noteworthy that the states with an average minimum wage that was $2.46 higher led to a poverty percentage that was 2.48 percentage points higher. Maybe it’s a coincidence, but you just can’t get much closer than that.

 

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https://www.census.gov

https://www.raisetheminimumwage.com

https://smartasset.com/mortgage/what-is-the-cost-of-living-in-seattle

 

Photo credit: By Fibonacci Blue from Minnesota, USA – Rally demanding $15/hr minimum wage, CC BY 2.0, https://commons.wikimedia.org/w/index.php?curid=53672511

Strange Bedfellows

You’ve no doubt heard the old proverb that politics makes strange bedfellows. Never have I experienced the reality of that on a personal level more than I have over the past couple of months, thanks specifically to the impeachment of Donald Trump.

Back in December, Mark Galli, who was the editor in chief of Christianity Today, wrote an editorial advocating for the impeachment of President Trump. I do not disagree with what Mark Galli said about Trump as a person, but being immature and nasty on Twitter is not an impeachable offense. Galli’s assertion that the “facts are unambiguous” about Trump’s phone call with Ukraine shows his lack of political understanding and his fervent desire for Trump to go. Sadly, he failed to realize that using impeachment to remove Trump because you don’t like him is just as wrong for evangelicals as it is for Democrats.

Shortly thereafter, Timothy Dalrymple, CT’s president, wrote to effectively defend Galli’s editorial. Dalrymple made some valid points, but he politicizes the term “evangelical.” What Dalrymple fails to acknowledge, and what was a huge problem with Galli’s editorial, is that if those who dislike Trump’s character and personal baggage–and I count myself in that group–allow that to become justification for impeachment, an incredibly dangerous precedent will be set. Impeachment has to be reserved for that for which it was intended or we risk seriously weakening our form of government. Does Trump have flaws? Absolutely. Should we jump on board the silly allegations from House Democrats to remove him? Absolutely not. The ends do not justify the means.

That whole situation left me, in the eyes of many anyway, defending President Trump, which is not something I have been inclined to do. He has done some wonderful things as president, including recognizing Jerusalem as the capital of Israel, appointing pro-life justices to the Supreme Court, defending prayer in schools, attending the March for Life Rally, etc. But he has also demonstrated immaturity, lack of tact and badgering/belittling behavior toward his opponents. In short, he has usually been anything but presidential. For those reasons, I cannot say that I like President Trump. It is almost a reversal of what the situation was like when Ronald Reagan was president. Many people who did not agree with Reagan politically liked him personally. Now, I agree with Trump politically quite often, but I cannot stand him personally.

Last week my proverbial bedfellow changed when I asserted my respect for Mitt Romney’s decision to vote to convict President Trump on one charge of the impeachment. I said then, and I say now, I do not agree with his conclusion, but after listening to Mitt Romney’s interview with Chris Wallace I do respect his decision to vote his conscience. Is that not, after all, exactly what we expect our elected officials to do?

Well, that position met with some opposition among my own friends but it met with far more opposition among Republicans and conservatives around the nation. One friend insisted to me that conscience was not what senators were to use to inform their vote; instead, they were to rely on the Constitution and on the facts that were presented. But I disagree; the two are not separate. Obviously, Mr. Romney felt like the actions of Mr. Trump were consistent with the constitutional threshold for impeachment. He said as much in the interview. Accordingly, he was voting his conscience and the Constitution by voting guilty on one charge. Article II of the Constitution specifically says “high crimes and misdemeanors.” Romney thought Trump’s actions rose to that level. He interpreted the “facts” as rising to the level of impeachment and thus, based on those facts, he believed guilty was the right vote. His conscience dictated that he vote accordingly–according, in other words, to his understanding and interpretation of the facts. He interpreted the Constitution strictly and that is precisely why he voted the way that he did–he believed that an impeachable offense had occurred, based on the facts and evidence he had received.

So, whether we agree with him or not–and as I said, I don’t–Romney’s conscience dictated that he do what he thought was consistent with his oath. Romney heard the facts that were presented, and in his interpretation, they met the threshold for impeachment. He then voted what he thought the facts warranted–guilty on one charge, not guilty on the other. He did what he thought was right, not what he knew his party wanted him to do. And that, by the way, is constitutional. He was faithfully executing his responsibility, just as he swore he would do. The fact that I, or seemingly most any other Republican, did not agree with his interpretation of the facts does not mean that he was wrong. (To throw another strange proverbial bedfellow into the mix, for these same reasons, I also respect Tulsi Gabbard’s earlier decision to vote “present”).

No “high crimes” are found in the Constitution. Article II, Section 4 says, “Treason, Bribery, or other high Crimes and Misdemeanors” (emphasis added). Obviously, then, impeachment can occur for offenses other than treason and bribery, but what those other offenses are is no spelled out. Abuse of power would certainly be one of them. If I thought Trump had abused his power then I might even agree with Romney. Based on the testimony I heard, I do not think he did, so I disagree with Romney. But I still respect his willingness to vote what he thought was right, knowing full well—as he was reminded by Chris Wallace—that he would face the full wrath of Donald Trump and an ongoing cold shoulder from his party. In short, there was no good reason, politically, for Mitt Romney to vote the way that he did. He knew that President Trump was not going to be convicted because there was no way there were going to be enough votes to meet the required two-thirds supermajority. So while others have chosen to attribute his vote to his personal animosity for Donald Trump, I am choosing to take Mitt Romney at his word. I cannot fathom any other reason why he would take the political risk he took to vote that way. And those consequences came swift and heavy. One person who had the audacity to say “Good for Romney” in response to a post on the Huck’s Army Facebook page stating that Romney was going to vote to convict, and asking for comments, received an immediate response from another individual saying “You are a jerk.” Really? Having a difference of opinion on Romney’s actions from the expected condemnation makes him a jerk? Why? Plenty of others called Romney pathetic, a disgrace, a traitor, a turncoat, a snake, a moron, a RINO and a Democrat masquerading as a Republican. Let’s not forget that just eight years ago Mitt Romney was the Republican nominee for President of the United States!

Furthermore, I was deeply troubled by how many people—professional pundits and social media commentators alike—who ridiculed Romney for invoking his faith as one of the reasons for doing what he thought was right regardless of the political consequences. We cannot want a politician to be both influenced by his faith and to ignore his faith. Many Republicans, and particularly many conservative Republicans, advocate for political positions, and even political action, that is based on and derived from a sense of morals that is often rooted in Judeo-Christian faith. Romney is a Mormon, of course, but most Mormons are quite conservative morally and socially. Would we really want a candidate or an elected official who was not influenced by his faith? How deep, sincere or meaningful would such faith be, anyway, if an individual were able to set it aside when considering some of the most important decisions he would ever make?

Finally, Romney’s vote also brought to light another matter that is worthy of serious consideration. Much has made of the fact that with his vote to convict, Romney became the first U.S. senator ever to vote to convict a president of his own party. That’s troubling to me, but not for the reason you probably think. Many seem to be taking the position that Judge Jeanine Pirro so obnoxiously took yesterday on her FOX show “Justice with Judge Jeanine.” “Permit me to introduce you to a non-leader,” Pirro began, before reminding viewers that Romney was the first senator to ever commit such a perfidious act. “How dare he!” she went on. “How could he? And why would he?”

Pirro went on to call Romney an “embarrassment” and to say, “Your jealousy of this man [Trump] is a constant rage burning within you because you can never rise to the heights that he has. Because guys like you fold like wusses and you don’t have any selflessness or the ability to think about others, as Donald Trump has thought about making America first.” Pirro later concluded her childish rant saying, “How about you get the hell out of the United States Senate?”

(By the way, add Pirro to those who lambasted Romney’s reference to his faith. She said, “Do you ever wonder why people never mention God or religion — only bring it up when they get caught doing something or when they need an excuse for something they did? What a bunch of phonies.” I don’t know how often Pirro expects Romney to mention his faith in order for it to satisfy her standards, but this is certainly not the first time he has mentioned it).

By now you have likely gathered that I was not only unimpressed with Pirro’s monologue but also with her position. I said that I am troubled by the fact that Romney is the first senator to vote to convict a president of his own party—but the reason that troubles me is because it hasn’t happened before. Donald Trump is the third president to be impeached, joining Andrew Johnson and Bill Clinton on that short list. There were eleven articles if impeachment filed against Andrew Johnson, though senators decided that eight of them were objectionable and only considered three. Like Trump, Clinton faced two charges. Why would it take until the sixth impeachment charge for a senator to vote for conviction of a president of his own party? That fact reveals two possibilities, neither of which are appealing.

On the one hand, it could indicate that impeachment charges thus far have always been politically motivated. That would be tragic. As I have already argued in this space, impeachment is to be used for “Treason, Bribery, or other high Crimes and Misdemeanors.” Those are not political matters. If we allow our elected officials to pursue impeachment out of political motivation then we will have a serious problem.

On the other hand, if impeachment articles have been legitimate and not motivated by politics, Romney’s first-ever vote could indicate that senators are more loyal to their party than they are to what is right. How did I reach that conclusion? Well, it seems improbable that there could be six articles of impeachment that were not politically motivated and yet all proved to be erroneous charges. But if the impeached presidents were actually guilty of even one of those charges, and the evidence supported that conclusion, but no senator of the president’s own party would vote accordingly, what other conclusion could there be? The votes on Trump’s impeachment actually confirm this likelihood, as it also was the first time ever that no member of the opposing party joined in support of the president.

George Washington warned sternly against “the baneful effects of the spirit of party” in his Farewell Address. Blind allegiance to party, said Washington, “serves always to distract the public councils and enfeeble the public administration. It agitates the community with ill-founded jealousies and false alarms, kindles the animosity of one part against another, foments occasionally riot and insurrection. It opens the door to foreign influence and corruption, which finds a facilitated access to the government itself through the channels of party passions.” In other words, no good can come of it! Washington’s advice then? “[T]he common and continual mischiefs of the spirit of party are sufficient to make it the interest and duty of a wise people to discourage and restrain it.”

As he so often has, Washington proves once again to be prophetic. We are seeing unmistakable examples of the “spirit of party” in the United States just about every day. This does not bode well for our nation or for our future.

Oh, one more thing regarding strange bedfellows… I don’t even like Mitt Romney.