A minimum wage political stunt to make you 'feel' but not 'think'

Last week for Ohio Watchdog, I wrote about the latest political stunt to push a higher federal minimum wage.

It's all about a "Live the Wage" campaign and you can read the details here.

But here's the gist: There are a bunch of people out there - primarily on the left side of the political aisle, along with unions - who want to raise the minimum wage to $10.10 an hour.

They so want that targeted number that their latest telephone conference to announce a new initiative was held at - wait for it - 10:10 a.m.

The new ploy is called "Live the Wage" and it's similar to the bogus food stamp challenge that was so popular - and so criticized - just a short time ago.

You see, the thinking is that if only members of congress (who earn about $83 per hour) would try to live on a minimum wage, they'd see how hard it is to do. Then, after experiencing that hardship, they'll rush to vote to increase the current rate of $7.25 per hour to $10.10.

Yes - it's all about an appeal to emotion.

Of course it's hard to not have money, especially in a society that is constantly pushing you to buy things.

And no one aspires to be poor. It's not like you wake up one morning and decide your goal is to earn only the minimum wage.

Even people who are currently working at a minimum wage job don't think that's all they'll ever be paid. That's just not in the human psyche.

So with the new campaign, supporters of the increase challenge you to live on $77 per week - after taxes and housing expenses, that is. You see, housing varies so much from city to city that it's just not a doable challenge if you don't take out the average cost.

And $77 is what they say is all that's left to live on if you're a full-time worker earning the federal minimum wage. (Never mind that 21 states, including Ohio, already have a minimum wage greater than that.)

The supporters of the wage hike use a lot of emotionally-charged words in their push. Phrases like 'work hard' and 'play by the rules' and 'support a family.'

Except, as my Ohio Watchdog story shows, most people who get paid the minimum wage are NOT supporting families. In Ohio, less than 2 percent are single parents with children in the home. And the average household income for a person who earns minimum wage is nearly $66,000.

What this means is that the vast majority of people we're supposed to feel sorry for are teens or college students who are working while going to school and living with their parents (at least when they're not living at school, which their parents are most likely paying for as well).

Or they are seniors who are willing to take a minimum wage job to supplement their retirement income, especially because if they earn too much, they could see reductions in that retirement income.

Or they are spouses who are earning extra income to supplement the family budget. This could be because they desperately need that second income - even at minimum wage - or because they want it to pay for items they'd like to have but don't necessarily *need.*

So the emotional appeal - that you need to feel sorry for these poor people who are trying to support a family of four on only $77 a week - falls extremely flat in light of the facts.

But you're not supposed to pay attention to the facts. You're supposed to *feel* - but not *think.*

The other fact you're not supposed to consider is that minimum wage is a starter position, usually reserved for the least-skilled individuals with no experience. Nearly all people who start out making a minimum wage are going to be earning more than that within a year, many in less time than that. Many companies use it as a probationary wage, increasing it slightly after 90-120 day when the new employee has proven their ability to come to work on time and do the job.

And most companies will be a pay increase after one year. Even the woman on the conference call with the politicians when they announced this stunt - the one who was supposed to represent the average worker who just couldn't get by on $77 a week - admitted that she got a raise and was no longer earning just the federal minimum.

But interestingly, no reporters who were on the call with the Live the Wage supporters asked about that.

Former Ohio Gov. Ted Strickland, who was on the call, started his week of minimum wage living early. He said it was really tough.

Well no kidding. I don't know how much he's making as head of the Center for American Progress Action Fund, but the last CAP Action Fund president earned $164,000 in 2012 (according to the 990 form the non-profit is required to file). So it's no surprise if he finds it "tough" to go from that to $77 a week - who wouldn't?

You get used to living at a certain income and when your income suddenly drops, you have to make adjustments. You can't eat out as much. You buy cheaper cuts of meat - probably more chicken than beef tenderloin. You forgo $20 salads at swanky restaurants in exchange for tuna fish sandwiches you make at home. You cut down on alcohol since you just don't have the funds to pay for it.

Or you do what U.S. Rep. Jan Schakowsky did - eat like this:

My #LiveTheWage menu for the week. pic.twitter.com/fi2BbY4ooE
— Jan Schakowsky (@janschakowsky) July 24, 2014

That probably looks like most family's menu for the week. Oh the horror!

The point is - most individuals can live on a minimum wage salary if they have to. They'll make sacrifices and change their habits based upon a limited income, but they'll do it.

If they have a house with a mortgage they can't afford on that salary, they'll sell it and move into an apartment they can afford. They might get a roommate - or two - in order to make it more affordable. They make adjustments to their travel methods, maybe opting for public transportation or ride-sharing. They shop at Goodwill or re-sale shops rather than at the mall. They might even sell things, like clothes, video games and equipment or other items. They might choose to take on two jobs.

Even if they do those things, they probably won't be in such a situation for long. They'll get a raise, network, get more experience and most will get a better-paying job. Eventually they'll be back to where they were before, living comfortably.

And the less than 5 percent of minimum wage earners who are heads of a household have a host of resources available to them: food stamps,TANF, Aid to Dependent Children,housing vouchers, transportation vouchers, utility assistance, job training and host of other government benefits and private charities. They won't really be living on just $77 a week, when all that is included.

The problem is, most people know this. Most people with a job have worked at a minimum wage position (me included) and we know what it was like. We also know we didn't stay there long, and that doing a good job and showing your employer your value as a worker was a key aspect of moving out of the minimum-wage position. We remember what it was like to live on Ramen noodles and we know we could do it again - if we had to. We just make sure we don't have to.

We also know that rising the minimum wage means too many people who need entry-level, no-skill jobs will be priced out of the market. The work that they are qualified for and can do won't be worth that much money. Unemployment will rise even more. It won't give us the kind of economic growth we need.

And supporters of the hike have no arguments left that can't be debunked by a little bit of common sense.

So now you're supposed to *feel* ... because if you'd only *feel* what it's like to live a minimum wage, all your logic and reason will fly out the door and you'll jump on the bandwagon to raise it.

Instead of thinking about why businesses aren't hiring, what kinds of costs job providers are having to pay that prevents them from using money for hiring, why the economy isn't growing like it should or why millions of people are out of work, politicians are ridiculously trying to 'feel the pain' of living on $77 a week - as if that will give them great insight into why the number of unemployed is at a record.

Don't you think it's funny that no one ever tries to live like a small business owner for week? To feel what it's like to try to make a payroll, deal with government forms and mandates, handle local government rules and regulations, deal with happy and angry customers, supervise a work staff, promote your business, do the accounting and somehow find time for family and friends and an actual life outside of work?

One day in the life of small business owner is much more difficult and stressful than trying to live on $77 a week.

That's the reality of this ridiculousness - and that's why the whole "live the wage" publicity sham is such a travesty.

Minimum wage jobs do not accomplish goal

As so many of us have said all along.... From the National Center for Policy Analysis:

The authors of a new study titled "Unequal Harm: Racial Disparities in the Employment Consequences of Minimum Wage Increases" state that it would be easy to say the high employment levels for young adults is an unfortunate byproduct of the recession, but you'd be wrong. The study demonstrates that increases in the minimum wage at both the state and federal level are partially to blame for the crisis in employment for minority young adults, says the Washington Examiner.

* Their study focuses on 16-to-24-year-old male high school dropouts, understandably a relatively inexperienced group of labor market participants.
* Among the white males, the authors find that "each 10 percent increase in a state or federal minimum wage has decreased employment by 2.5 percent; for Hispanic males, the figure is 1.2 percent."
* But for black males, "each 10 percent increase in the minimum wage decreased employment by 6.5 percent."

The authors compare the job loss caused by higher minimum wages with that caused by the recession and find between 2007 and 2010, employment for 16-to-24-year-old black males fell by approximately 34,300 as a result of the recession; over the same time period, approximately 26,400 lost their jobs as a result of increases in the minimum wage across the 50 states and at the federal level.

Why do young black males suffer unequal harm from minimum wage increases? The authors say that they're more likely to be employed in low-skilled jobs in eating and drinking establishments. These are businesses with narrow profit margins and are more adversely affected by increases in minimum wage.

Source: Walter Williams, "Minimum Wage Harms Those It Is Designed to Help," Washington Examiner, May 9, 2011. William Even and David Macpherson, "Unequal Harm: Racial Disparities in the Employment Consequences of Minimum Wage Increases," Employment Policies Institute, May 2011.

For text:

http://washingtonexaminer.com/opinion/columnists/2011/05/minimum-wage-harms-those-it-designed-help

For study:

http://epionline.org/studies/even_5-2011.pdf

Suprise! Youth unemployment skyrockets

This really shouldn't be a surprise, but the Labor Department is reporting that unemployment rates among youth have reached a post-WWII high of 52.2%. This story in the New York Post, however, never mentions one of the key contributors to this high rate: increased minimum wages.

It only makes sense that, when unemployment is high in general, as it is now during these recessionary times, employers are going to want the most for their money. Youth workers are the most unskilled, with the least experience. It's just common sense that a government mandate to pay a set amount will cause employers to want to get the most value for that wage, seeking out potential employees with attributes that provide that value - meaning older workers who have some level of skill and experience.

James Sherk, from The Heritage Foundation, arguing for a delay in the planned increase back in July, wrote:

On July 24, the minimum wage increase Congress passed two years ago will enter its final phase, increasing the cost of hiring unskilled workers by 10 percent. Economic research demonstrates that higher minimum wages come at the cost of higher unemployment for low-skilled workers, but when Congress passed the minimum wage increase unemployment was low. Now, in the middle of a deep recession, unemployment has risen sharply for the least skilled workers. Wage growth has flattened since the start of the year. This minimum wage increase will artificially increase costs for struggling businesses at exactly the wrong time. And as a result, it will cost 300,000 teenagers and young adults their jobs.
...
Most minimum wage research confirms this effect: Two-thirds of recent minimum wage studies find that it reduces employment, with the overwhelming majority of the most rigorous studies reaching this conclusion.

While it's hard to separate the various causes of high unemployment during a recession, one cannot ignore the fact that the increased minimum wage had some impact, contributing negatively to the other recessionary impacts.

Those who support increased minimum wages say this is a 'moral' thing to do ... that 'ensuring decent wages' for all is the proper role of government. However, such beliefs defy reason when you see that the result is higher unemployment for the unskilled and the youth - the very groups such higher minimum rates are supposed to help.

And that's in a normal economy. In a recession/down economy, the negative impact is even greater. But watch politicians campaign on the 'gift' of a higher wages that they've so generously 'given' to us, while ignoring the actual results of their actions.

The new minimum wage will hurt more than it will help

Last Friday, the federal minimum wage increased 11% to $7.25/hour.

In Ohio, the minimum is $7.30, which was effective as of January 1. The old Ohio minimum of $6.55 (for 14- and 15-year-olds and employers who gross $267,000 or less) is replaced by the new rate, making it the same as the federal minimum - also an 11% increase.

So what does this mean in a state that has record unemployment numbers, especially among teens and those with only a high school education?

Well, common sense will tell you that if employers have to pay more for an item (in this case - labor), they will try to get their money's worth - the same as you and I. So with higher numbers of people looking for work, you have more supply and more options when it comes to who you will hire. If you can hire a high school kid or someone who's actually got some work experience but has now been laid off, which are you more likely to choose?

Most employers will pick the more experienced individual, leaving more of the teens and lesser-skilled individuals without work.

The wage that is touted as 'helping' those who only have the skills to earn the minimum, ends up hurting them because it makes them less desirable than others when compared to the value of the work.

Steve Chapman has a great column on this very concept, calling the minimum wage a 'dangerous mirage':

At a time when employers are laying off workers, Washington is going to make it more expensive to keep them.

If you're a minimum wage employee, your job will pay more, but only if it still exists. These days, most companies are scrutinizing every position on the payroll to make sure it's worth the cost. Raise the toll, and some employees will find they are no longer valuable enough to make the cut.

He also explains how the increased minimum wage pushes more people into jobs that are not subject to minimum, actually increasing the number of people who earn below that amount.

The facts and data clearly show that increasing the minimum wage does not really help people who earn that amount. So why do politicians keep doing it? And will the American public ever truly understand the negative economic impact of this action?

Minimum Wage for some - but not poll workers

Just passing along two posts about the issue of whether or not poll workers qualify for minimum wage.

Right Angle Blog wonders why Attorney General Marc Dann doesn't want poll workers to be treated like everyone else.

Crabby Fat Guy (love the name, btw!) has a link to the opinion and this comment:

"In further poll work news the Board of Elections is short poll workers for the upcoming elections. I wonder why? Duh!"