The Minimum Wage Is A Redistribution Of Wealth
No one can survive on 40 hours a week at minimum wage anywhere in the country. Workers around the country are toiling in poverty despite working full time. Many cannot even afford housing.
The federal minimum wage in the United States of America is just $7.25 an hour. By July of 2024, that figure of $7.25 will have been frozen in place for fifteen years. While $7.25 was a paltry sum of money when that figure went into effect in July of 2009, 15 years later it is worth even less. Even if folks making minimum wage were not allowed the privilege of a raise in the interim, that 2009 amount of $7.25 would need to be raised to $10.38 just to keep pace with inflation.
Observers might rightly point out that lots of states have enacted minimum wage requirements that are higher than that of the federal level, and this is true. In thirty states, the minimum wage threshold has been raised above the federal level of just $7.25. However, this means that there are still twenty states in which $7.25 is still the law of the land.
Financial advisors and budget experts all suggest that housing should not take up more than 30% of a household budget. Everyone from Forbes to the National Low Income Housing Coalition have acknowledged that there is nowhere in the country that a minimum wage job is enough to secure housing for a full time worker based on this best practice. If we cannot pay a full time worker enough to afford a place to live, why have a minimum wage at all?
Many employers, especially larger employers will encourage their employees to access government programs such as affordable housing, food stamp programs, welfare stipends and other benefits. Wal*Mart is famous for including access to these programs as a part of the way they train their staff. They are well aware that the wage they are paying their employees is insufficient to provide even the most basic necessities. So, they take advantage of public dollars to pad their profits and exploit their staff.
Wal*Mart is just one of thousands of offenders gaming the system. This practice, while unethical, is completely legal. Furthermore, one would hate to cut off the limited resources that are the lifeline for so many of these low wage workers. The programs designed to help people in need are not the problem, the folks gaming the system sure as hell are though.
In the last 15 years we have seen no movement in the federal minimum wage, but there have been big changes in the workplace. As companies strive to make greater profits they are running threadbare staffs in retail locations; see the great John Oliver piece on the way Dollar Stores are run and how they are staffed. Stores that might have once had six or eight employees on staff are now operating with just two, or in some drastic cases even down to just one. These efforts are being made to squeeze maximum profits from each location with no regard for the safety, dignity, or well being of employees.
Not only are low wage workers earning less due to fifteen years of inflation, but they are often working in conditions that are unpleasant at best, and unsafe at worst. Employees are now expected to work for lower wages than we have seen in this country in nearly a century, and they are expected to work in less stable and less secure environments as well. The workdays have largely gotten harder, more dangerous, and more unpleasant for the menial workers of this country. And they’re doing it for less money than in generations.
Critics might offer that no employers actually pay the minimum wage. Fair enough, all the more reason to raise it then. If your economic theory on the going rate for hourly work is on the money, let’s go ahead and codify it into law. Except, lots of groups and associations have fought higher minimum wages tooth and nail. Seems like if everyone was paying more than the lowest legal amount, raising the minimum wage might not raise such a stink.
Perhaps instead of thinking about this from the standpoint of the employer and the value for his money, let us think of it from the standpoint of the worker and the value of her time, talent, and efforts. Let’s work backward from our 30% of the budget for housing just to get an idea of where the wage should be. In my home state of Michigan, rent is in the middle of the pack as rates by state around the country are concerned. The average two bedroom rental would need a wage of $21.65/hour, more than twice the current minimum wage of $10.10.
What is the point in even having a minimum wage if it isn’t even half of what you would need to rent an apartment? And yes, many households do have two incomes, but it should not be a requirement for one to be married, partnered up, or to have a roommate to find affordable housing for your rate of pay. If we cannot ensure that a full time worker is able to afford a place to live and the ability to put food on the table without a handout from public assistance, why are we pretending to be upholding a certain standard of living at all?
If we are going to legislate with this level of ineffectiveness and apathy, let us simply return to the days of child labor and twelve hour shifts six days a week. Maybe we can return other gilded age traditions like tenement housing with several families sharing a single apartment. Perhaps these destitute workers could all share a barn or a stable. We’ve already removed most of the humanity from our low level employees, why treat them like humans at all?
In keeping these wages so low and forcing hourly wage employees into federal and state assistance programs we are redistributing the wealth of these workers back into the hands of families like the Waltons. Instead of subsidizing the avarice of the Walton family, we could force them to pay their workers a living wage, instead of the bare minimum.
In the state of Arkansas where Wal*Mart was founded, housing is almost as cheap as anywhere in the nation. For just $16.27/hour you too can make enough afford a two bedroom apartment in Arkansas. The trouble is that even in Arkansas, minimum wage is just $11.00, leaving you with a housing budget that sits way above 30%. Even in one of the most affordable states in the union, and one with a wage above the federal minimum, the minimum wage would still need to be raised nearly 50% to afford rent.
To give you a reference point, a worker in Arkansas making $11.00/ hour and working 40 hours a week should be spending no more than $528/month on rent.
While the housing situation in Arkansas is challenging, in expensive places like California it is absolutely dire. An hourly worker needs to earn $42.25 an hour to afford to live in California. The California minimum wage is one of the highest in the nation at $15.50, but it would need to nearly triple to make rent affordable. Surely, the housing crisis is not the fault of the minimum wage but the two are inextricably linked.
In forcing workers to spend greater percentages of their earnings on rent and in keeping their wages artificially low, there is a larger and more impoverished group of working Americans than at any time since the Great Depression. As food prices, housing costs, education, and health care have risen faster than the rate of inflation, wages have stagnated for the lowest rung of workers.
All of the above examples are based upon full time work at minimum wage or just above and yet for many workers in the country it can be difficult to find full time employment. To avoid paying benefits like health insurance many employers keep their employees scheduled for less than 27 hours a week. Full time workers are defined as anyone working 27.5 hours a week or more.
For many low wage workers this means coordinating multiple jobs usually in multiple locations. Securing regular hours and making sure shifts can be met at various employers is an additional series of challenges for an employee in this position. Having a second location for work also greatly increases the necessity for the employee to have access to a vehicle or reliable and affordable public transit. This of course is likely to add significant additional expenses into a monthly budget that is already overstretched.
Where we once had built a thriving and vibrant middle class, we’ve now built a system where one can work 40 hours a week and still be left without a place to live.
Is that really the minimum we want for ourselves?
Cheers,
Matty C
It's an incredibly bleak scenario, and even worse when one remembers that in some (many?) states, tipped employees aren't even making minimum wage. For example, in WI, a server makes $2.13/hr., with the assumption that they will make up more in tips.
My point as well, Kevin. As a former tipped employee, the server wage was (and remains) laughable. The only upside was that 90% of my income was cash. I'll let that marinate for a moment.
My guess is now, servers and bartenders are having to report close to 100% because who has cash on them anymore? Income inequality is a hot-button issue for me. I get rather soap-boxy... and don't get me started on Reganomics. Great read here! Thanks!!