It seems to me that, from my limited perspective, every time that there is any public discussion about raising the minimum wage there are a number of editorials or letters to the editor which predict economic disaster if employers are forced to pay a certain proposed minimum wage. One of the reoccurring arguments is that once you raise the minimum wage to a certain amount, employees who are already at that level, will resent getting same amount as lowest level workers and will demand an increase. If they do not get an increase they will quit and go elsewhere. The further prediction is that the employer will have to raise prices for its services or products and will face the real possibility of going out of business.
The current proposal in many cities which is already the law in some major cities such as Seattle, is for a minimum wage of $15.00. So far, in Seattle, there has been no reports of the wholesale closing of companies because of this change which, I understand, is being phase in. Still, I do not want to just discount the fears of those who are predicting such disastrous results. If these fears come to fruition then, of course, no one wins. If companies do actually go out of business then the employees are not making any money once unemployment runs out.
First, let us take a brief look at how one would live on a wage of $15.00 an hour. One can check on the median or the average amount an individual or a small family of four pays for essentials. One can also get information on approximate taxes and the earned income credit.
The gross pay for someone making $15.00 an hour, assuming they work 40 hours a week and are paid for 52 weeks a year would be $31,200.00. Approximate expenses would be:
Housing: Average is 962.00 per month or $11,544.00 per year.
Food: Cheapest I found was 66.00 a week which I think is
unrealistic even for a person of one. Annual at that
rate is $3465.00
Taxes: FICA – assuming no state/city taxes $15.3% =$ 4773.6
Earned income credit- depending on size of family. With two
children a family could actually get credit slightly above the $4774.6 A single or married couple with no children would not get any Earned income credit.
Auto: Cheapest car payment I could find was $149.00 a month.
This is $1788.00 a year.
Car Insurance: Minimum of $1200.00 a year.
Might take public transportation in certain cities and save
a lot. In most cities that is not a viable option.
We are now have spent a total of $22770.00 if there is no
earned income tax credit. This leaves a balance of $8430.00
for car maintenance, house maintenance, clothes (assuming
one is not living in a nudist colony year around!), home owner
insurance, personal care and miscellaneous expenses. That
is $162.00 a week. If anything in house breaks and one needs
service or if something breaks on car or if there is any
medical expense which is not covered the small balance is going
to be quickly used up. I have not allowed anything in the budget
for cable or any other entertainment. There is also
nothing for such possible expenses as birth control. Of course
we expect the poor to refrain from sexual activities.
The response to all this might be that the person made choices which resulted in a low income job or perhaps the person is in school and can live at home therefore getting parent(s) to assume a lot of the
living expenses.
Obviously we cannot, from our privileged position. assume that a particular person had the means, encouragement, or health to train for a profession or skilled job. Besides, someone has to do the low paying jobs. Some of us were lucky enough to have to do them only while training or going through college. When I went to college I was also, once I used up the GI bill, able to make enough money to pay for tuition and other school expenses. Today, I could not do that even at my current income.
The person who is so frightened of raising the minimum wage might still retort with, “All this is fine and dandy but if the employer has to shut down the business because it cannot afford to pay the minimum wage none of it matters. How realistic of a fear is this? Are their businesses which might have to shut down?
First, let me confess that, until last August I had a small business which only employed 2 part time employees. For a time I had one full time and one part time employee as well as some contract employees. My business was a counseling business which had a policy of providing service to anyone who needed it regardless of ability to pay. We did accept insurance payments. Some insurance companies paid decently. Many did not. The office manager who was full time for several years and then part time for the past 10 or so did, when I closed the business, make $15.00 an hour and was given prorated vacation and sick time. She also got small bonuses when possible. The person who cleaned got a little less money and only came in for 4 hours every other week.
The goal was to insure that all of us had a family income that allowed us to live decently. The office manager and the part-time cleaning person were married and their spouse had an income. I was single. If the office person had become single for any reason without inheriting a significant amount of money then the commitment was to insure that we both got a livable wage. If that meant dividing the profit down the middle , then that is what we would have done. If we could not do that and pay other expenses we would have together explored other options.
All of us thought that we were very blessed with a decent living and did not want for anything essential. In other words we did not feel deprived. We did have vacations – not luxurious –but very pleasant. The office manager had health insurance through her husband’s employer and I had coverage through the VA. Previous employees were provided health insurance.
If indeed the office manager had found a better paying job or one that was closer to her home or provided some other benefit than I would have been pleased for her.
It may also be important to note that, whenever possible, we did business with those who were known to treat employees with equal respect. The bank we used and the office equipment company we used treated all their employees with great respect and paid them decently.
Of course, if I had many employees we would have had to look at other options. I also assume that gross income would have been more if I had other employees. The bank which we used was owned by those working at the bank.
For years I have made it a point to talk to small business owners who seemed to treat employees well. A local restaurant near my former office paid all it staff well and had always provided paid vacation and sick time to all of its regular employees. The atmosphere of the restaurant as well as the food drew many steady customers. If one has ever talked to or read about employees of Trader Joes, one knows that people work there because they like working there. As a customer I love going there not only to purchase products but because the atmosphere is so positive. I feel good when I leave there. I am not a person who loves to shop, but I love spending time at places where employees are happy and feel good about working.
Does this mean that if one raises minimum wage that all employees are going to be happy that everyone is getting paid decently and that on one will complain if an entry level worked is making the same as a seasoned worked? No, it does not. It is true that, in general if we humans are treated well we will, as a whole, respond with a positive attitude and be happy if others are also doing well. It is also true that if folks are treated with disrespect then they are not going to be happy at any wage. A good example were steel companies and other companies who were asking most employees to make “sacrifices” while a few top employees got enormous increased benefits. Even thought the wage of the average worker was still very decent, they did not feel respected or treated equally.
It is true that there are going to be some humans who suffer from depression and/other mental and emotional illnesses who are not happy no matter how they are treated. It is also true that there are folks who bring a history of unhappiness to work and cannot shake that off. Bless them. I would not wish such despair or unhappiness on anyone.
Many studies will, at the same time, support the conclusions that companies who treat everyone with respect, including paying a living wage esperience:
· Less turnover. Turnover is very expensive – cost of hiring, training and waiting for new employee to reach their potential is very expensive.
· Fewer sick days.
· Employees are more efficient.
· Employees are willing to work as a total team and not as likely to refuse to do a job because it is not their job.
· Less employee theft.
· Less “shirking” of duties which, of course, makes co-workers unhappy which affects overall production.
· Employees become the best marketing tools.
· Customers will like doing business with a happy, efficient organization.
I suspect that we could identify other benefits. One also should consider that the better employees are paid, the more they spend in the general economy which make it possible to pay employees of other organizations well.
In fact, if one looks at the larger picture it is difficult, if not impossible to find a downside to treating all people with respect. This includes a wage on which one can take care of their family. $15.00 is not the end goal, but it is a huge improvement from the current minimum wage - $5.15 (one state’s minimum) or even the Federal 7.25. Just try making a budget on 7.25. which comes out to $15,080.00 a year. Use the figures I quoted above for basic housing, food, and transportation. What would one cut out of the budget. After housing and food one has no money. At this level there are, for some family, some assistance available, but it seems as if every year the money allocated to help those who live at the bottom level of our income floor is less and less. In this country many seem to think in terms of the poor feeling entitled which translates all to often as lazy or bad or ….
Really!
RSS Feed