Minimum Wage explanation for Dummies

      In what has to be one of the most self serving and disingenuous acts ever to be disguised as a good deed, McDonald’s has partnered with Visa to make a website dedicated to showing its employees how “to properly budget” their meager peasant salaries. However, what it actually does is illustrate the fact that it is nearly impossible to get by on minimum wage, as shown in this “example” budget chart actually taken from that website: On first glance, the $1105 top line seems like it might be a part time McDonald’s employee’s pay, but, that is actually what you would make if you were working full-time at McDonald’s - $1,105 dollars a month. Oh, but wait; that’s actually $1160 before taxes at $7.25 hourly (national minimum wage) but less when FICA and Taxes are deducted.

Now let’s say that the “second” job that they budget in here is also minimum wage. That would mean you were working about 74 hours a week, using the national minimum wage on average. That’s almost another whole full time job.

 

    And what do you get for working 74 hours a week? Well, you don’t get to heat the apartment, clearly. There’s a zero next to the line item for “heat” in that chart. In most apartments there are separate checks for gas and electric– that would mean that not only do you not get to heat and cool your home, but also that you do not get to heat your water, or cook on your stove, if you have a gas stove. Also noticeably absent in this budget - food and gas. There’s a line for a car payment, but not for gasoline, which is odd, because if you’re working two jobs it’s possible you will pay more for your gas than you’d be paying for your car.

Perhaps the biggest lie herein is health insurance for $20 a month? Maybe if your state gets off its ass and implements the Affordable Health care Act, otherwise there simply is no such thing as health insurance for $20 a month if you’re buying your health insurance on your own. A more reasonable figure is around about $200 a month– and that only covers hospital emergencies, and only for the insured him or herself.

     “But Mike,” you say, “this isn’t so bad for a kid working a first job. Surely this minimum wage budget is for the under 20 young employee. Right?” Dead wrong! You may think that most of these minimum wage earners are teenagers. The Michelle Bachmanns and others in Congress who would love to hold, lower or eliminate the minimum wage incorrectly repeat this falsehood all the time. It is an incontrovertible lie!

Anyone interested in the facts? Nationally 87.9% of minimum wage earners are over the age of 20. In fact, the state with the largest percentage of minimum wage earners below age 20 only has 27% at that level or below. 28% of those minimum wage earners people are parents trying to raise a kid on this budget. That is not a good thing for our future and it is not a good thing for our economy.. In order for the economy to thrive, people have to be able to buy things. All the money going to people at the top does not help us.

The minimum wage should have reached $21.72 an hour in 2012 if it kept up with increases in worker productivity, according to a March 2013 study by the Center for Economic and Policy Research. While advancements in technology have increased the amount of goods and services that can be produced in a set amount of time, wages have remained relatively flat, the study points out. Even if the minimum wage kept up with inflation since it peaked in real value in the late 1960s, low-wage workers should be earning a minimum of $10.52 an hour, according to the study. The graph below illustrates this reality. 

So perhaps a better question is “If productivity has far outstripped the minimum wage, someone’s making more money, right?” Look to the corporations for the answer.

Right now, The Bachmanns, Rand Pauls and others in our government are saying that we shouldn’t even have a minimum wage. That employers should be free to pay people whatever they can get someone to agree to work for. If they can get someone to work for $3 an hour, then it should be allowed. These are usually the selfsame people who comfort themselves by telling themselves that poor people are only poor because poor people are “lazy”. I’m fairly certain that someone who works 74 hours a week isn’t lazy. To repeat: If the minimum wage had kept up with inflation it would be over $10 an hour. If it had kept up with productivity It would be $21.72.

     I don’t want to live in some dog-eat-dog Ayn Rand erotic fantasy. Human beings are worth more than that. Anyone who works 40 hours a week (never mind 74 hours) ought be able to take care of all the basic necessities in life. This isn’t about redistribution of wealth for Socialism’s sake. In fact, on a national basis it’s the opposite and should be embraced by those who cry for a balanced budget. Corporations shouldn’t be able to pay their workers a pittance, keep all of the profits to themselves, and expect taxpayers to make up the difference with social programs. It’s not fair to the workers, and it’s not fair to any of us.