Minimum wage revisited

A while back, I wrote a post wherein I said that, despite being against a federal minimum wage, I supported the federal government raising the minimum wage.  I still say that, at the time, it was what needed to be done.  However, as time passes, circumstances change, and, sometimes, people need to see what needs to be done now, rather than think that what may have been a good idea in the past will forever be a good idea.  This is, I think, one of those times.

First, let me go back a bit.  When I wrote earlier, I complained that places like Walmart and McDonald's were benefiting from government subsidization of the low wages they were paying.  Of course, in the end, that government money has to come from somewhere, so the result is higher taxes and nobody is better off.  But businesses (and rational people) tend to be risk-averse, and the idea of changing the low pay philosophy to one in which businesses compete for better workers, in part by paying more, may have seemed too risky.  The status quo appeared to be working.  I can't say for sure whether that was the thought process, but it seems logical.  In the meantime, these companies experience high turnover rates, which costs them more, even if the job isn't rocket science and therefore doesn't require a lot of training, as some people have said.  And paying higher wages is money out of pocket now, in the hope that things work out better in the future, a risky proposition.

Well, over the months since I wrote that, I started looking around at people, and it became clear that a lot of people who have jobs aren't actually doing work that is worth $7.50 an hour, and I began to question my original idea that raising the minimum wage was a good idea.  Still, from an economic perspective, I did feel like it might help boost the economy in the short term, but it would also depend on the government cutting welfare spending and subsequently cutting taxes, which, sadly, doesn't really happen much in real life.

But then, a surprising thing happened.  These companies gradually started upping their pay scales, despite not actually being required to by law.  To me, this is a sign that these companies are beginning to realize that they may need to compete in the labor market.  Of course, it may also be that there is some public pressure on these companies to raise wages for the workers, even if it means having to pay slightly higher prices.  Whatever the reason, I think it's a good sign, and perhaps the government doesn't need to raise the minimum wage now.  However, I do think the government still needs to look at welfare reform, as that is part of the total equation.

One area of our welfare system that deserves a closer look is Social Security Disability.  Since 1986, the population of the U.S. has increased by approximately 30 percent, while the number of people on current pay status for disability has more than tripled.  At the same time, the average benefit amount also tripled.  (For some context on that benefit increase, the CPI a little more than doubled over the same period.)  I think that's significant, and an unsustainable trend.  But what do I know, right?

I guess the final straw for me, though, was seeing the response of at least some of the workers affected by the wage increases offered by these companies.  Apparently, they don't feel like it's enough.  And all I can say to, not all, but many of them is, "Earn more."  Take your bigger paycheck and get the skills to get a better job.  But don't just think that anyone owes you more for flipping burgers. It isn't rocket science, and someone else that can do it just as well as you will walk in the door, and maybe they'll do it for less than you.

And another thing to those workers that think that they deserve more.  I know that I can live on $7.50 an hour.  In fact, I can live on less than that, but fortunately, I work hard and my employer thinks I'm worth more than that.  I developed skills over my life.  I've also been in the position where I didn't have a choice but to work for minimum wage.  But, I worked to get out of that situation, and thankfully, now I'm in a better place.  So, here's some advice.  If you are working for minimum wage, don't have that baby that you really, really want to have.  Don't spend your money on booze or drugs, or big screen televisions, or iPhones.  Spend your time improving yourself.  Get some skills.  You can pretty much get a college degree without paying a penny out of pocket, so do it.  It's really up to you, and it really isn't up to your employer to make life good for you.