Social Issue: On Economies - The Minimum Wage

Proposition: Raise Minimum Wage To Discourage Illegal Immigrants

It is my thesis that the current, low Federal minimum wage is an incentive for employers to hire undocumented workers. It is my proposition that if the wage was increased to what advocates call a Living Minimum Wage, that enough of the non-working Americans would go to work, thereby drying up the market for continued illegal entry into the US.

Different people have different opinions on the rationale of a minimum wage and on how much it should be if you have one. Republicans opposed the first minimum wage. It is a truism Republicans do not like the minimum wage. President Nixon did not raise the minimum wage during his 6 yeas in office. President Reagan did not raise the minimum wage during his 8 yeas in office. President Bush43 has not raised the minimum wage in his nearly 6 years in office. That is 20 years and counting! Two decades with no increase. Hmm? I wonder if Congress would do that to itself? I wonder how much that would be, if we reduced their newly adjusted pay of about $166,000 a year by the sum of the amounts of increase during the 20 years just enumerated? Talk about screaming!

The Federal minimum wage law was established concurrent with the Social Security Act , in 1935. The rate was set at 25 cents per hour. That was a living wage In 1935. For one person. I worked for 75 cents an hour minimum wage in 1950. And believe it or not, I paid Federal income taxes on that wage. My take-home pay was a few cents over $25. That was a living wage in 1950.

Any raise would be appreciated by those who are in jobs that pay the minimum wage. We’d hear the same argument we hear every time - it will cost jobs! That has never been true. Why? Because when it is a Federal law, it applies to everyone alike, and when you raise the water level, all ships float the same amount. No employer would be put at a disadvantage.

I suggest $10.00 an hour. So we don’t have to revisit this issue every decade, let’s put in on the COLA list. Like Congressional pay, for example. I’d add a requirement the employer furnish $2.00 an hour in fringe benefits or pay that extra amount directly to the employee, the employer’s choice. Who says this is not a free country? I’d exclude the $2 fringe payment from taxation and FICA. You can’t say I’m anti-business!

Assuming the 40 hour workweek continues, this would mean workers would be paid $400 a week. Plus another $80 to buy health insurance or contribute to a 401(k) etc. that is just $20,800 a year. Well, adding the fringe makes a total to be paid to the employee a grand total of 24,960 a year.

Employers are responsible to match 7.65% FICA, pay about 3.2% of wages for unemployment insurance and buy workers’ compensation insurance, often estimated at 5% of wages. Thus, a minimum wage employee costs the employer about $29,000 a year. $560 a week. Watch out Wal-Mart! Millions of new buyers are on their way! This could be the salvation of Sears-K-Mart. And etc.

I have long advocated a bifurcated minimum wage. I’d reduce the hourly wage rate to $8 for persons under age 20. This would give employers incentive to hire young persons. Hopefully, by the time the young person reaches age 20, he or she would be too valuable to the employer to be let go. Regardless, this seems to be a good idea to me.

This same kind of reduced minimum wage could also be applied to over age 65 types. Again, the $8 minimum and cut the fringe requirement in half. $1 an hour. This would encourage employers to hire older, semi-retired people. A thing of high social value.

Finally, proof of payment by employers ought to be added to any employment law. With modern computer calculated pay amounts and computer generated paychecks, tax records and so on, it would be a near-zero cost requirement to add to employers. Knowing the record is there for Wage and Hour inspection and enforcement, it would nearly eliminate the temptation to underpay workers afflicting some employers. Again, a more level playing field. Good for all concerned.

With a few simple, rational and humane rules in place, it is my thesis the problem of border control would be greatly reduced. With all employers on the same, level and transparent playing field, no injustice or preference would be shown to any. A chance for all private employers to really show “enterprise!”

If it’s so smart, you say, and so easy, then why has this not already been done? Well, I remind, it must be that not to do it is to the financial advantage of some people who have sufficient influence in Washington to prevent the obvious from becoming law. Whether or not all that influence is exercised legally is open to doubt but it is another issue. You will have to ask your own Congressperson about that.

See www.aflcio.org...



[edit on 7/21/2006 by donwhite]

Originally posted by donwhite
We’d hear the same argument we hear every time - it will cost jobs!

If you don't like that argument, how about the one that says the cost of living will rise because business will just build the higher cost of labour into pricing?

Where I am, we do have a 'training' wage, $2 less than the minimum. It applies to people with less than 500 hours of experience. Most business are finding that people won't work for $6 an hour and have to offer the full $8 anyways.

posted by Duzey
Where I am, we do have a 'training' wage, $2 less than the minimum. It applies to people with less than 500 hours of experience. Most business are finding that people won't work for $6 an hour and have to offer the full $8 anyways.

It has not been my experience as a long-time observer, that the increased minimum wage causes any noticeable ripples or measurable dislocations in the economy. That is more theory than reality. IMO.

I think that is true for 2 reasons. 1) the playing field is level. Every employer has the same problem. The more innovative, more efficient employers can actually take advantage of the rise in costs, the others may not. This does not apply to all.
2) wages are a small fraction of the retail cost of goods. If for example, labor is 20% of MacDonald’s cost, then to raise the 20% by 25% - admitting the real minimum wage is $8 - would be a 4% cost overall. So, a $3,95 meal goes to $4.20. Will MacDonald close? I think not.

Im with you, but where does it come from? I understand the McDonalds analogy, but assume its a business that spends a lot bigger % on labor? What happens then? We can't get them to stop hiring illegals, how in the world can we ask them to add a nearly 30% increase to their budget. Wheres it come from? From the prices of the goods and services we consume. I'm less versed in econ than many so I am eager to hear the real world response to this.

I have always been a huge advocate of the minimum wage, but that is only assuming our glorious economic balance won't tip back to Big Bro's favor automatically.

[edit on 21-7-2006 by DaFunk13]

Actually, I'm not so much worried about the effect the higher costs would have on the business, but that lower income people will get a raise and then see it clawed back through higher pricing.

Would there be enough left over to make a difference in their lives?

And like mentioned above, if people now earning minimum wage suddenly had more disposable income, more people would eat at McD's.
Which would in effect, make the extra cost for the meal MOOT, but then again, because McD's is now having more customers, they could easily absorb the extra labour costs, relying on volume sales instead of increased product prices.

As of now, people earning the minimum can pay their bills (barely) and don't spend a lot of time at McDonalds.

The economy needs people that have money, not people who need more money.

Originally posted by Duzey

Originally posted by donwhite
We’d hear the same argument we hear every time - it will cost jobs!

If you don't like that argument, how about the one that says the cost of living will rise because business will just build the higher cost of labour into pricing?

Where I am, we do have a 'training' wage, $2 less than the minimum. It applies to people with less than 500 hours of experience. Most business are finding that people won't work for $6 an hour and have to offer the full $8 anyways.

I will not work for less then $8 an hour, being in college and living on my own in a nice apartment, if I made any less I would never be able to affoard anyting. $8/8.50 is the "Living" wage right now, people who make the minimum 5.35 live in poverty level dwelings, if they can even live on their own, and live off of fast food dollar menue styl restraunts. The fact that congress denied raising the minimum wage disgust me, no wonder the average citizen feels like the government constantly s&#$% on them.

Originally posted by donwhite
2) wages are a small fraction of the retail cost of goods. If for example, labor is 20% of MacDonald’s cost, then to raise the 20% by 25% - admitting the real minimum wage is $8 - would be a 4% cost overall. So, a $3,95 meal goes to $4.20. Will MacDonald close? I think not.

Your simplistic view is so remarkably lacking it makes my head hurt.


McDonalds has to purchase things. For instance, Coke. Coke has low and minimum wage employees manufacturing soda for them. So do the all of the suppliers of the ingredients for Coke. And the people who store those ingredients for Coke's suppliers. And the people who work in Coke's warehouse. And the gas that goes into the truck that drives the Coke around is pumped/sold by minimum wage earners.

McDonalds will pay more for coke. Do I need to elaborate on everything else it will pay more for or do you get the point?


If the minimum wage works just make it $50.00 per hour. or $100! or $200! How about $1000, then we can all be rich!

and all those people doing all that minimum wage work, they live at home with their parents, or are part time employees and students, right.....

or are they taking whatever work they can find, and then going to the government to make up the difference in order to survive???

posted by cavscout

posted by donwhite

2) wages are a small fraction of the retail cost of goods . . a $3,95 meal goes to $4.20. Will MacDonald close? I think not.

Your -simplistic- view is so remarkably lacking it makes my head hurt . . . McDonald has to purchase things. For instance, Coke. Coke has low and minimum wage employees manufacturing soda for them . . McDonald will pay more for coke. Do I need to elaborate on everything else it will pay more for or do you get the point? [Edited by Don W]

I’m happy anyone is thinking about the minimum wage even if they don’t agree with me. Q. Do the anti-minimum wage people say when the CEO of ExxonMobil gets a $400,000,000.00 bonus to quit that is inflationary?

The old and shopworn inflation story is not true for 2 reasons. 1) the sum of the money supply is not altered. It is just shifted a small fraction. Which brings me to 2) the shifted amount is insignificant, in the totality of the nation’s GDP. Assume 10 million people are directly effected. Assume they are making $6 to $8 an hour now. Call it an average increase of $3 per hour to go to $10. If a worker puts in 2,000 hours a year, then we’re talking $6,000 X 10 X 10 to the 6th. Which is $60 billion. Chump change in our $12 T. economy. Live a litttle! Share a little bit of the wealth!



[edit on 7/21/2006 by donwhite]

Try this: stop thinking about dollars and start thinking about buying power.

Corporations have a legal responsibility to their shareholders to try and make as much money as possible. If the costs of doing business go up, then prices go up. the sub-economy that would be affected both employs and services minimum wage range earners.

The rich dont buy $5 shirts from Wal-Mart, the poor do. When Wal-Mart starts charging $6 for the same shirt (cause you know it isn’t going to loose money) only the poor will be hurt.

same with gas. do you think billy-bob-millionare really cares if gas is $3 or $4? He doesn’t, but I do and with gas stations only making a small profit on the pumps as it is, guess what will happen to gas prices when the joe-shmo-gas pumper now makes $8 per hour instead of $6. billy bob millionaire wont feel it, but Joe Shmo gas pumper will.

one other thing to look at is minimum wage for smaller areas, not provincial (canada) or state.depending on where you live or work minimum wage can be a fair ammount where 200 km away you need a minimum 2 jobs to live.

things such as houseing prices, food, transportation ect. when you work full time at higher than minimum wage that would barely cover rent on a small crappy appartment there is something very wrong. that is the situation many people i know are in.

around here minimum should be at about $20/hour, minimum is not even half of that ,around $7-$8. rent on a decent place tends to be about $1200/month. transport can cost $200/month (public transit). plus food, utilities (always going up) ect.

i agree that companies would tend to just raise prices to even above the higher costs thus changeing nothing. the key would be "fair" "LIVING" wage. if it were reviewed periodicaly it could cut this down a bit. any company found proffiteering should also be nailed more in fines then they gained, that would also cut down some problems.

companies tend to be publicly traded, this in it's self causes part of the problem. not only does a company need to pay for stack employees bills ect, they also need to give proffit over to millions of shareholders. personaly i would love to put a "salery cap" on shareholder proffits. not good for investers but invariably good for the ecconomy as a whole, as there would be more money in the hands of the average joe to spend instead of the same money going to a realitive few thus increasing more disposible income to spread arround.

When I worked for minimum wage, I hated it when it was raised because I knew that within a few months of its enactment, everything would cost more and I would have less discretionary income than before and I was never wrong.

I live in Ontario, Canada so it's no surprise that I start every day with a trip through the drive-thru at a Tim Hortons' for my morning "extra large coffee with three creams".

About a year ago, Ontario raised the minimum wage. Before this happened, when I ordered my "extra large, triple cream", a pleasant ethereal voice eminated from the drive thru loudspeaker to announce that it would cost me a buck fifty. The very day that Ontario's new minimum wage went into effect, the cost of a cup of coffee went up a nickel. A coincidence? I don't think so.

When the minimum wage went up, prices for a variety of things also went up -- coffee was just the most obvious example. Within a very short time, whatever increase a worker would receive was quickly negated.

If anything, a minimum wage job should be viewed as an incentive to continue one's education. Face it, having a skill, a degree or specialized training in a trade means one thing -- more earnings. If a person drops out of high school or simply chooses to accept "one's fate" as a minimum wage earner, what can he or she really expect -- a twenty dollar an hour job in exchange for not having any education or trade? A person in that postion has one of two options -- accept it or do something about it. In Canada, at least, there are programs that will help individuals to get their high school diploma and/or receive employment enrichment programs.

D** those poor people! They're mucking up the economy again!

posted by drogo

“ . . One thing needed is a minimum wage for smaller areas, depending on where you are the minimum wage can be a fair amount where 200 km away you need 2 jobs to live . . that is the situation many people I know are in . . here minimum should be at about $20 hour, but is not even half of that . . the key would be a "LIVING" wage . . reviewed periodically. . publicly traded companies cause part of the problem . . not only does a company need to pay its employees bills . . they need to give profit to shareholders . . I would love to put a "salary cap" on shareholder profit . . not good for investors but good for the economy as there would be more money in the hands of the average Joe to spend instead of the money going to a few thus increasing more disposable income to spread around. [Edited by Don W[

Christian socialism, Mr. Drogo. Your operative word is ‘Living’ wage. Who can argue against that? In good conscience? Q. Does raising the minimum wage incite inflation? Hmm? A. I don’t know, but we have not raised the minimum wage in the US of A since 1997. Yet, if I’m not mistaken, we have had inflation every year!

Do you think it is some other unseen element that is causing inflation? And not low wages? Which at first blush low wages would seem intuitively to be a counter inflation force? Hmm?


[edit on 7/21/2006 by donwhite]

The minimum wage is not the only factor regarding inflation, but it is one and from my experience, the corelation between raising the minimum wage and increased prices is about 1.

Originally posted by benevolent tyrant
If anything, a minimum wage job should be viewed as an incentive to continue one's education. Face it, having a skill, a degree or specialized training in a trade means one thing -- more earnings. If a person drops out of high school or simply chooses to accept "one's fate" as a minimum wage earner, what can he or she really expect -- a twenty dollar an hour job in exchange for not having any education or trade? A person in that postion has one of two options -- accept it or do something about it.

incentive yes, too bad it becomes a trap. i to live in ontario but couldn't afford collage. my parrents made too much for any grants, but with them haveing bad creadit i couldn't get loans with no creadit myself. so now i work just above minnimum wage. in order to go to collage now not only would i need to pay for the education, but get my income replaced somehow as well. i know from experiance that if i want to do well i cant work at the same time. not to mention that i would end up only makeing mabe half my currant income, plus loss of benifits, i couldn't hope to survive and do that. for me collage was just a dream that i just can't reach.

[edit on 21-7-2006 by drogo]

posted by benevolent tyrant

I live in Ontario . . I start every day with a trip through the drive-thru for my morning "extra large coffee with three creams." About a year ago, Ontario raised the minimum wage. Before this when I ordered my "extra large, triple cream" a pleasant voice from the loudspeaker announce that it would cost me a buck fifty. The very day that Ontario's new minimum wage went into effect, the cost of a cup of coffee went up a nickel. A coincidence? I don't think so. When the minimum wage went up, prices for a variety of things also went up - coffee was just the most obvious example. Within a very short time, whatever increase a worker would receive was quickly negated . . “ [Edited by Don W]

I hope, B/T, you are not about to argue for a reduction in the minimum wage, in anticipation of a decline in the general prices? If one thing causes the other, maybe the reverse would have a similar result? Maybe we could lower the minimum wage every year, and end up with coffee costing you a half a buck? I mean, economics is mostly number crunching, is it not?

A minimum wage job should be viewed as an incentive to continue one's education . . a skill, a degree or specialized training in a trade means one thing - more earnings. In Canada there are programs that will help individuals to get their high school diploma and receive employment enrichment programs.

I believe we have that, too, Mr B/T. We call it the GED - General Educational Development program. Almost all public schools sponsor those programs. It is not easy for a working person to have energy and time to take on post K12 school. We used to have Federal grants for post secondary school education but I think we traded those off for more armaments and so on. We must spend our regular $455 billion a year on security. What are you, after all, if you have no security?



[edit on 7/21/2006 by donwhite]

Originally posted by donwhite

It is not easy for a working person to have energy and time to take on post K12 school.

You're absolutely right, but I did it an so have millions of others.

We used to have Federal grants for post secondary school education but I think we traded those off for more armaments and so on.

Student aid programs are alive and well.

studentaid.ed.gov...

[edit on 2006/7/24 by GradyPhilpott]

posted by drogo

Incentive yes, too bad it becomes a trap. I to live in Ontario but couldn't afford collage. I couldn't get loans myself. Now I work just above minimum wage . . I know from experience that if I want to do well I can’t work at the same time . . [Edited by Don W]

I started college with the PL 550 GI Bill. When it ran out, I too had to go to work. It took me 4 years to finish the last two of college. Working and school do not mix well.

My first job was teaching in a private technical school. I learned that public tech schools are better quality-wise than private tech schools, which in America are entirely unregulated. Bad for students. Good for investors.

“ . . for me collage was just a dream that I just can't reach.”
[Edited by Don W]

I was 31 when I finished college. Credits are usually good for 10 years. You generally (here) have to be a full time student either one semester (your last) or one year. Otherwise, you can make a plan to get the first 3 years in 9 years. You have to save enough money to get you through the 10th year.

If you make such a plan, keep good records of your income and outgo over that entire period of time, I believe there are many banks that would loan you - on your own record - the money you needed - or a major part of it anyway - in your 10th year. Or, join the RCAF. I joined the USAF and it helped me all my life.

Remember Drogo, tomorrow is the first day of the rest of your life.


[edit on 7/21/2006 by donwhite]