Hi there, here I am, Mrs. Politically Incorrect again, with food for thought.
There is talk about raising the minimum wage again. People complain that Wal-Mart doesn’t pay a living wage. Well… Minimum is just that – the base pay for non-skilled labor. It’s not meant to be a living wage… It’s meant to be a starting point.
Fifty years ago, in 1964, the minimum wage was $1.25 an hour. Doing some digging through the prices found online, this is what I saw:
Note: I couldn’t find many of the convenience foods we take for granted – because they did not exist. Cooking was generally done from scratch, and as such, was likely quite a bit healthier! But I digress.
Minimum wage has increased by more than 6 times in the last 50 years. But food and other staples have, as well:
There’s a correlation, here, and something that bears further inspection: Local produce is rarely sold in large chain groceries anymore. The cost of fuel to transport items to the stores drives up the price. The cost of paying workers is also included. Ergo, the more we raise minimum wage, the higher our prices will get.
So, what happens when we increase minimum wage? Well, the short answer is prices go up. But… Higher wages don’t.
For example, using today’s numbers, if the following are tied to minimum wage at $8/hour, using one pound of butter as our basis:
Workers are involved in every step, here, from the harvest and production to packaging and transportation, to the day you actually buy the pound of butter.
Assuming that 5% of each step is worker wages, with an additional 5% tacked on for transportation (for need mechanics and fuel), and an additional 5% for the workers creating the power and building the stores, then $0.35 of each $3.00 is worker wages, or 11.67%.
If you raise the minimum wage 1%, or 8 cents in our model, the price will go up accordingly, or 0.12%. This will raise the price of the butter 3 cents.
Therefore, a minimum wage worker would spend 37.5% of an hour’s wage on a pound of butter in either case. However, a higher wage worker – let’s say someone earning $10 an hour – would start with 30% of their hour’s wage and go up a full third of a percent. Increase the minimum wage more, and the gap begins to narrow. The slightly-higher-paid worker, who is already paying more in taxes, is paying more and more of a percent of their income for butter, while the minimum wage worker, whose wages control the butter price, is still paying the same percentage they have been.
Ergo, the higher you raise the minimum wage, the more things will cost. Also, the more taxes must be paid, so there will be less take-home pay to buy those higher-priced items.
Giving people the opportunity to earn more is worthwhile. But we keep raising wages, and raising prices… And this gives those minimum wage workers no incentive to better themselves, learn a skill set and move up so younger people (teens with their first jobs) can start at the bottom. Of course, there will always need to be a place for those who are disabled or otherwise incapable of moving up.
Give a man a fish, and he will eat for a day. Teach a man to fish, and he will eat for a lifetime. -Unknown