Friday, September 22, 2006

Living Wage vs. Minimum Wage

I've noticed a lot of talk lately about wages in the US. Whether it's WalMart employees that can't afford their own healthcare, or the overty line not moving in the last 10 years, there is a problem in this country with the buying power of the lowest paid. And of course, it's an election year so politicians are more likely to raise the minimum wage to win votes, but I wonder if raising the minimum wage is the solution to this problem.

I admit that I tend to be more conservative when it come to financial matters, while liberal on social issues, but this issue overlaps those two catgories. If we raise the minimum wage, that will help a little bit in the short term, but eventually companies will raise everyone else's wages and costs comparably so that in essence, nothing changed. It will help with housing the most, I would imagine, but I also admit that I am not an economics expert - I only had one class in college and it's debatable how much was actually learned there. I think that people who are working should definitely be able to afford the necessities (meaning housing, food, healthcare, clothing) on that income, and right now that isn't happening. I also think that raising minimum wage isn't going to do that - just like it hasn't done that in the past. It's going to take a much more radical and sweeping change to accomplish that, and it's not one that I see most people being willing to do. It would mean that we'd all have to change the way we live and shop. Am I wrong? Would raising minimum wage do more than I think? I honestly don't know, so I look forward to your thoughts and explanations...

7 comments:

Saltworks said...

I agree with many of your points. I believe that raising the minimum wage is simplistic. It is useful mainly to politicians who are pandering for the vote. It especially hurts the fixed income retired. The effect of the minimum wage increase is to instantly increase the rate of inflation, wiping out the minimum wage increase benefit within a month or two. In the end it leaves the poor right where they started.

Rachael said...

I think a minimum wage increase is a good thing. Even though some product prices may rise in response to a minimum wage increase, a lot of essentials do not. If the minimum wage is raised, my rent doesn't go up, nor my car payment, nor my utilities, and that is where the bulk of my income goes. True, deaconess_grrl, radical sweeping change is needed to balance the economic gaps, but I don't see that happening in our life time. At least an increase in the minimum wage would help a little bit now.

Big Unit said...

Every once in a while you see a story about a "poor" teacher or something passing away and then they find out that she has left a million dollars to charity or her children.

It's really not about how much you make but how you choose to spend it. Not that I am a good example. People want to live above their means, spend their money on unnecessary items, and have instant gratification instead of saving up for something.

Here comes some stereotyping: some would rather spend their money on a cool car w/ 20 inch wheels, cable tv, $100 athletic shoes, fancy painted nails, blackberry bluetooth cell phones, etc than getting a nice apartment, using public transportation or getting a sensible used car, buying nice pre-worn clothes at a rummage sale or goodwill, ect.

The other intity to share some blame is credit card companies and lenders. Bad credit, no credit, do you make $100 a month? We'll sell you a car or just about anything else for the low monthly payment of $60 for the rest of your life because the interest rate is 30% so in the end your $1000 car costs $17,348.37.

Ouch, oh that hurts; I am trying to take the log out of my own eye. I don't really need internet at home, I could get up 5 minutes earlier to make my lunch instead of going out to eat, I didn't really need that new pair of shoes I bought this week, or did I need to spend $20 for $4 worth of food at the state fair.............

Andy B. said...

I spent an afternoon last week with a young, single mother of two trying to decide between two options: going to work and paying for childcare or staying home with her kids and seeking another way to feed them.

What about instigating a "maximum wage" in our country? X dollars per year would be the max, and then any money above that would have to be used to feed the poor and other good stuff like that?

Andy B. said...

I spent an afternoon last week with a young, single mother of two trying to decide between two options: going to work and paying for childcare or staying home with her kids and seeking another way to feed them.

What about instigating a "maximum wage" in our country? X dollars per year would be the max, and then any money above that would have to be used to feed the poor and other good stuff like that?

Anonymous said...

andy's ideA sounds pretty good but i can't help but wonder what that might look like. it seems crazy toimagine in our consumer culture. will jobs simply offer more perks and just change th way wealth is then "gifted"? it would certainly be interesting as to what the workplace might look like.

mandyc said...

I agree, Andy's idea is very interesting, yet not practical in the real world. I would love to see sports stars, CEO's and the like not rake in enormous salaries that get spent on extravagant homes, cars, jewelry, etc. but I think either companies would end up finding other ways to compensate (like some are already doing) or people just wouldn't ever strive to earn more than the maximum, still leaving the working poor not making enough to live. It's not like there's some contant amount of money in play, so if we limit the top earners, the lower earners have to get more - the amount of money seems very fluid based on "the economy" - when the economy is going well, there's more money floating around the system, and vice versa when things are bad. I think it's interesting that everything is guaged by these mathematical formulas that are always looking for growth - they want to see people earning more, spending more, consuming more -- how can we constantly grow the economy bigger?!?! This doesn't seem to be logical - sooner or later we have to run out of the natural resources or human power, or just max out. Am I wrong?