The catastrophe of a livable wage
It seems that daily I read articles in the newspapers or on the internet citing many examples of why many United States businesses cannot afford to pay a minimum wage on which individuals and families can live. In fact, on Tuesday, November 10, 2015 in the St. Petersburg edition of the Tampa Tribune, Michael Saltsman the research director at the Employment Policies Institute, stated: “The survey of 166 mostly labor economists, conducted for my organization by the University of New Hampshire survey Center, finds that 72 of U.S. –based economists oppose a $15.00 federal minimum wage. That includes a majority of economists who identify as Democrats.” If one goggles faceof15.com, one will find numerous testimonials of why businesses, especially small businesses, cannot afford to pay a minimum wage of $15.00 an hour. In fact, some document that some, such as high- end restaurants quit allowing folks to tip wait persons, but essentially added a twenty percent fee to cover the cost of paying other workers the minimum wage of $15.00 an hour. Many wait persons in high end restaurants make much more than $15.00 an hour.
Many people who claim that a minimum wage of $15.00 an hour cannot work are in favor of the earned income tax credit. Currently this credit is based on adjusted gross income and number of dependents. In 2014 a single person making an adjusted gross income of less than $14,880 could quality for an earned income credit of $502.00. For a single head of household with three dependent children the adjusted gross income qualifying amount goes up to $47,955. That person might quality for $6269.00 earned credit bringing the total to 54,221.00 which is considerable more than the $31,200.00 gross annual pay if making $1500.00
(In the United States income tax system, adjusted gross income (AGI) is an individual's total gross income minus specific deductions. Taxable income is adjusted gross income minus allowances for personal exemptions and itemized deductions.) Wikipedia
To put all this in perspective, let’s take a brief look at McDonalds which is one of the companies which is currently being pressured to pay a minimum wage of $15.00 an hour.
Google the base salary of new McDonald’s CEO Steve Easterbrook and one will find that his base salary was to be $1,100.000.00 and his annual incentive opportunity rose to 160% of his base salaried. 160% of 1.1 million is $1,760,000.00 bringing a possible total to $2,860,000.00 per annum. Comparing that to an employee making $15.00 an hour working 40 hours a week for 52 weeks for a total of $31,200.00 gross pay per annum, Mr. Easterbrook would still be making 91.66 times the amount of the $15.00 an hour full time employee.
Is we goggle the top executives of McDonalds. we find that the top four executives are paid a total of $11,200,000.00 gross pay per annum. This would pay 358.974 employees a base pay of $15.00 an hour. (Goggleamericamarkets.usatoday.com) Interestingly, top paid McDonald’s workers make on the average of $1,397.00 an hour.
Macroaxix.com reports that McDonalds has a total number of part-time and full time employees in the United States of 420,000.00 which means that it would cost them somewhere around 8 billion dollars to pay all employees a year. (As near as I could determine that is $8,000,000,000 extra which is certainly more than the total that they are paying the top four executives.
If we look at some small businesses there is no question that raising the minimum wage to $15.00 an hour would strain a budget.
Some objections to the $15.00 an hour minimum wage include:
· School kids still living at home and not having any expenses for rent, utilities, and other often food would have to be paid the same amount as those adults supporting a family.
· Organizations such as Salvation Army who does not pay their top executive as much as other charities (top in salaries and other benefits may be as much as $98,000.00 which is still considerably less than other charitable organizations pay their top executives) could not afford to function.
· Small business, including start up business, would have to shut down.
· Entrepreneurs go into business to make money. If they are not making money they will not start new businesses.
· Some businesses would be forced to replace some positions with machines such as kiosks thus leaving more people unemployed.
What are we going to do? If there are no businesses, there will be no employees and everyone who does not have inherited money or money from non-legal businesses enterprises will be homeless. If there are no employees or owners paying taxes even the earned income tax will be worthless because they United States will be bankrupt. (Of course, we are already deficit spending, which is another story)
Are we just to throw up our hands and ignore the fact that if we continue to pay employees less than a livable wage we are not only being immoral we are deluding ourselves into thinking that we are saving money? In truth, we are not saving money. The cost of poverty eventually demands that we pay extra for emergency room visits, more for education costs when children are not cared for, and more for social services.
It is, of course, very difficult to come up with exact long term costs of poverty, but no one seems to disagree that we do pay in the long run for every dollar we may think we are saving in the short run.
What are the real issues? They include:
· All of us want to be able to have enough money for food, clothing, and other necessities, which in the United States often includes a car, and all the expenses associated with owning a car.
· All of us, if we have children, want to be able to take care of them decently.
· Most people are as concerned about a sense of fairness as they are about base pay. If all the employees share in the hardships and the profit of a company then folks are willing to sacrifice - at least temporarily.
· We can certainly create laws, which allow for some exceptions, without requiring a forest of trees and a PhD in mathematics for the justifying paperwork.
· We could explore options such as family income.
· We may, as a society look at more creative ways to share resources. Again, if our neighbor is not sharing resources and we are in the habit of evaluating our worth by comparing ourselves to our neighbor then many people will not agree to shared resources
· A single payer health care plan, paid medical school, and paying doctors the same amount as other professionals would directly and indirectly save money long term.
· We need to help each other (including CEOs) to redefine success. This is a social and spiritual issue.
· Providing treatment and education instead of the enormous cost of incarceration would save a lot of money.
In short, I am suggesting that just looking at minimum wage without looking at other issues begs the question of why so many of us in such a “wealthy developed” nation are suffering and feeling like second class citizens. The days when many seem to accept the concept of the robber baron that later becomes a philanthropist may be long gone.
Written November 10, 2015
It seems that daily I read articles in the newspapers or on the internet citing many examples of why many United States businesses cannot afford to pay a minimum wage on which individuals and families can live. In fact, on Tuesday, November 10, 2015 in the St. Petersburg edition of the Tampa Tribune, Michael Saltsman the research director at the Employment Policies Institute, stated: “The survey of 166 mostly labor economists, conducted for my organization by the University of New Hampshire survey Center, finds that 72 of U.S. –based economists oppose a $15.00 federal minimum wage. That includes a majority of economists who identify as Democrats.” If one goggles faceof15.com, one will find numerous testimonials of why businesses, especially small businesses, cannot afford to pay a minimum wage of $15.00 an hour. In fact, some document that some, such as high- end restaurants quit allowing folks to tip wait persons, but essentially added a twenty percent fee to cover the cost of paying other workers the minimum wage of $15.00 an hour. Many wait persons in high end restaurants make much more than $15.00 an hour.
Many people who claim that a minimum wage of $15.00 an hour cannot work are in favor of the earned income tax credit. Currently this credit is based on adjusted gross income and number of dependents. In 2014 a single person making an adjusted gross income of less than $14,880 could quality for an earned income credit of $502.00. For a single head of household with three dependent children the adjusted gross income qualifying amount goes up to $47,955. That person might quality for $6269.00 earned credit bringing the total to 54,221.00 which is considerable more than the $31,200.00 gross annual pay if making $1500.00
(In the United States income tax system, adjusted gross income (AGI) is an individual's total gross income minus specific deductions. Taxable income is adjusted gross income minus allowances for personal exemptions and itemized deductions.) Wikipedia
To put all this in perspective, let’s take a brief look at McDonalds which is one of the companies which is currently being pressured to pay a minimum wage of $15.00 an hour.
Google the base salary of new McDonald’s CEO Steve Easterbrook and one will find that his base salary was to be $1,100.000.00 and his annual incentive opportunity rose to 160% of his base salaried. 160% of 1.1 million is $1,760,000.00 bringing a possible total to $2,860,000.00 per annum. Comparing that to an employee making $15.00 an hour working 40 hours a week for 52 weeks for a total of $31,200.00 gross pay per annum, Mr. Easterbrook would still be making 91.66 times the amount of the $15.00 an hour full time employee.
Is we goggle the top executives of McDonalds. we find that the top four executives are paid a total of $11,200,000.00 gross pay per annum. This would pay 358.974 employees a base pay of $15.00 an hour. (Goggleamericamarkets.usatoday.com) Interestingly, top paid McDonald’s workers make on the average of $1,397.00 an hour.
Macroaxix.com reports that McDonalds has a total number of part-time and full time employees in the United States of 420,000.00 which means that it would cost them somewhere around 8 billion dollars to pay all employees a year. (As near as I could determine that is $8,000,000,000 extra which is certainly more than the total that they are paying the top four executives.
If we look at some small businesses there is no question that raising the minimum wage to $15.00 an hour would strain a budget.
Some objections to the $15.00 an hour minimum wage include:
· School kids still living at home and not having any expenses for rent, utilities, and other often food would have to be paid the same amount as those adults supporting a family.
· Organizations such as Salvation Army who does not pay their top executive as much as other charities (top in salaries and other benefits may be as much as $98,000.00 which is still considerably less than other charitable organizations pay their top executives) could not afford to function.
· Small business, including start up business, would have to shut down.
· Entrepreneurs go into business to make money. If they are not making money they will not start new businesses.
· Some businesses would be forced to replace some positions with machines such as kiosks thus leaving more people unemployed.
What are we going to do? If there are no businesses, there will be no employees and everyone who does not have inherited money or money from non-legal businesses enterprises will be homeless. If there are no employees or owners paying taxes even the earned income tax will be worthless because they United States will be bankrupt. (Of course, we are already deficit spending, which is another story)
Are we just to throw up our hands and ignore the fact that if we continue to pay employees less than a livable wage we are not only being immoral we are deluding ourselves into thinking that we are saving money? In truth, we are not saving money. The cost of poverty eventually demands that we pay extra for emergency room visits, more for education costs when children are not cared for, and more for social services.
It is, of course, very difficult to come up with exact long term costs of poverty, but no one seems to disagree that we do pay in the long run for every dollar we may think we are saving in the short run.
What are the real issues? They include:
· All of us want to be able to have enough money for food, clothing, and other necessities, which in the United States often includes a car, and all the expenses associated with owning a car.
· All of us, if we have children, want to be able to take care of them decently.
· Most people are as concerned about a sense of fairness as they are about base pay. If all the employees share in the hardships and the profit of a company then folks are willing to sacrifice - at least temporarily.
· We can certainly create laws, which allow for some exceptions, without requiring a forest of trees and a PhD in mathematics for the justifying paperwork.
· We could explore options such as family income.
· We may, as a society look at more creative ways to share resources. Again, if our neighbor is not sharing resources and we are in the habit of evaluating our worth by comparing ourselves to our neighbor then many people will not agree to shared resources
· A single payer health care plan, paid medical school, and paying doctors the same amount as other professionals would directly and indirectly save money long term.
· We need to help each other (including CEOs) to redefine success. This is a social and spiritual issue.
· Providing treatment and education instead of the enormous cost of incarceration would save a lot of money.
In short, I am suggesting that just looking at minimum wage without looking at other issues begs the question of why so many of us in such a “wealthy developed” nation are suffering and feeling like second class citizens. The days when many seem to accept the concept of the robber baron that later becomes a philanthropist may be long gone.
Written November 10, 2015
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