P.S. I invite all manner of
criticism for this...I love a good fight.
I was reading along after I
logged onto the internet when I bumped into an article that realy made my day.Im sure one or two of you have heard
my rants and raves in the past regarding the sinking wages in the U.S. And I am reasonable sure that many of you
have either glossed over my rantings or rejected them out of hand.But Im used to that.When I rant to people about it
on the street or at coffee the whole toppic seems to fly right over thier heads.This link leads right into it.
http://moneycentral.msn.com/content/
SavingandDebt/P134742.asp?GT1=7392
In 1938,Congress passed the Federal Minimum Wage Act.They established
that .25 cents per hour was the MINIMUM REASONABLE LIVING WAGE.That would provide an individual with
food,shelter,clothing and baisic expenses.Adjusted for cost of living and inflation over the last 67 years,would put
the Federal Minimum Wage at nearly $16.00 an hour.Its interesting that "prevailing wage" is calculated in exactly
that fasion.Companies that perform contract work for the government are required by law to pay "prevailing
wages."The hard numbers fluctuate up and down slightly,but in point of fact,federal jobs and contract jobs typicly
start in that neck of the woods.
The usual method of calculating wages has been a very simple formula for
years.Unskilled labor starts at...minimum wage.Semi-skilled labor typicaly gets minimum wage plus 50% and works its
way up to skilled labor,which begins around minimum wage x 2 and goes up from there...to max out around 4x minimum
wage.The government contractors get around paying more that double by putting people on salery and calling it
good.But with a minimum wage that isnt even half of what it should be,whats a family to do?
The big seperation
began in the mid 1960's.All at once it was being discovered that there were alot of very expensive Government
programs that were going to need funding.There was a nice little war going on in South East Asia and a whole pile of
expensive toys being purchased to ward off the Soviet menace.The war on poverty began in earnest.And that is a war
that we are now,ultimatly loosing because jobs dont pay living wages anymore.All of these neat things cost alot of
money.And there are only two people in the United States who pay taxes.Consumers pay it in higher prices and
emloyees pay it in lower wages.After that its just a question of who writes the actual check.
The article above
indicates that families at or below $57,343 anual income are in trouble.Whats that work out to based on what the
minimum wage should be and its effect on the wages above it over the course of a forty hour work week?
P.S. I invite all manner of
criticism for this...I love a good fight.
I have a few critiques:
1.
That number for what the minimum wage should be is way off. If you took that 25 cents and adjusted for an average
inflation rate of 5% over 67 years, the minimum wage would be $6.57. Discounting the huge inflation in parts of the
80's, I don't think inflation has been that high for 67 years, meaning that I think the number should be a little
lower.
2. You can make the minimum wage argument all you want, but the fact is that the minimum wage exists
because the supply for people is higher than the demand for people, meaning that companies would have to pay
less than the minimum wage in order to have a 0% unemployment rate and still have all businesses remain
profitable. The question is, do you want a high unemployment rate or a low minimum wage? The higher the minimum wage
is, the less jobs will be available, thus increasing the unemployment rate. It's a tradeoffs between the number of
jobs and the pay of jobs.
3. That $57K number is one of those amounts that is probably for a high number of
family members. My mom was a single parent raising two children, and she made a lot less than that. We were
poor, but we were able to survive. In college, I calculated that I could live on $7K per year by myself on the dirt
cheap rent I was paying and living on the cheapest food available (after all, we are talking about being able to
live, not being able to live comfortably) with no car (you could walk or take the metro to work) and almost no
additional expenses (Good Will, anyone?). Adding additional family members does not increase rent (unless you want
to add more bedrooms, but I am still going on the basis of being able to live, not live well - please don't say you
can't because I still practically live like this with the occasional perk here and there...probably an extra $2K
(housing not included because I live in an expensive city rather than my cheap college room - I could live in a
worse neighborhood) than my estimate last year...one day I'll learn not to be cheap). That is still below the
minimum yearly wage of $5.45 per hour (Is that what it is now? It was $5.15 when I worked at that rate.), which is
over $11,000 per year. This is not including the fact that you could live with someone else who also works and save
money on rent by living together.
It would be nice to have a higher minimum wage (anyone who has worked for
minimum wage would know that), but I believe in taking personal responsibility and doing whatever it takes so that
you can earn a job that makes more than that if you are so worried (or work in one place long enough to earn
seniority and make more than that amount). You can also get a second job (again, I practice what I preach - I have
worked two jobs before, and I may begin again soon for extra $$$ if I can suck up the courage to go back to a
low-paying job to supplement my nice-paying job).
It's not a life of luxury, but I think a person can make it
in this country if he or she puts their mind to it. It is a lot better than raising unemployment. Feel free to
refute my facts/opinions, but I was just doing as you asked and fighting the good fight.
Okay...that assumes that the cost
of living goes up a meer 5% over the corse of ten years...cost of living doubles every eleven years....do the math
again...
Out here in Oregon the living
wage has been calculated by the experts to be about 11.00 per hour. According to my own calculations, I think a
person needs about 25K to meet basic expenses, unless "going without", in this economy. That is comparable to your
figures.
The cost of living here is not terrible, relatively speaking. But it is stunning how many get by on
less than that. People go without insurance, cars, new clothes, healthy food, health care; and do what they have to.
They also soak off their parents, grantparents, and other elder family members. When the baby boomers die, a lot
more people are going to be hurting. They also put a greater burden on emergency rooms, debt collection, prisons,
lawyers, and other expensive systems that poor people become involved in. (Banks do make a huge amount of money off
penalties from bounced $5 checks/debits, so that's good for them ).
Ultimately it's more efficient for
someone to get their money by earning it than from, say, "government handouts", to use a simplistic term. It's a
hell of a lot cheaper for us to give it to them that way than via a bloated system. And there is a big cost to
society to being filled with "poor people", or people who don't earn a living wage, by whatever reasonable
standards you want to use. Poor people are expensive; they have to use their own energy and resources for things
other than contributing to society; and they more often get stuck, with fewer opportunities in general to rise to a
greater level of contribution.
Politicians of both parties have been lying to us since the sixties; telling us
about how "the economy" keeps getting better. The shrinking middle class rarely gets to define what that
term, "the economy" means. The amount of poor people has particularly increased during the past four years or so,
while the wealth of wealthy individuals, as well as numbers of the very wealthiest, has increased
dramatically.
There are many complexities and sides to the picture, but the bottom line is that, since the
sixties, the ability of a family to get by on the earnings of one breadwinner has disappeared, for all except
the wealthiest. Real wages, and by "real" I mean accounting for everything, not just inflation, have done
nothing but go down steadily since that time.
In general, we have to unravel the big picture, and not just look
at minimum wage increases (see Pancho's #2 -- BTW, the figures in #3 might be controversial). I think they need to
play a part, ultimately; but not in isolation.
When you have people working their asses off full time doing
important work, they "deserve" to be paid a wage that enables them to live without creating more problems, for
themselves and society. By deserve I mean that it is not only their right, it is better for all of us.
For a
society to be doing any good at all, I believe you have to get everyone you possibly can to a certain quality of
living.
Last edited by DrSmellThis; 11-09-2005 at 12:44 AM.
DrSmellThis (creator of P H E R O S)
That assumes that the cost of
living goes up 5% every year...you are assuming the value is 6.5%. In fact, the average inflation rate from
1938-2002 was 4.01% (source: Economic History Services,
http://eh.net/hmit/inflation/inflationq.php). Using that
figure, the minimum wage today should be, according to your argument, less than $4 per hour (I have $3.48,
but it could be 4% more or less than that depending on what year you are calculating it for). The minimum wage is
much higher than that today.
Is inflation the only real
component in cost of living changes?
DrSmellThis (creator of P H E R O S)
I like your addition of the
"living wage", DST.
By the way: #3 figures are personal (I don't think the word "controversial" should describe
personal experience, but you might have been taking it as my expression of a fact rather than an anecdote...I don't
think there is such thing as a "fact" that a person can live on $x amount or not because everyone's definition of
"living" is going to be different...it's not completely black and white).
If you would like my math on it, I
was paying less than $300 per month while sharing the most disgusting house you have ever seen in college and paying
less than $200 per month in groceries. We will round up and say I spent $350 per month on rent and $250 on
food/toiletries/other necessities. That is $7,200 per year. Since I rounded up, you can buy clothing, furniture,
etc. at the Good Will for $.25 per shirt and practically nothing for furniture, etc. Also, I had the benefit of
being young and healthy, so although I did not visit the doctor or dentist for the year or so that I was calculating
my expenses (but I went before college, so you can call me out on it), it does not include healthcare. However, I
am still calculating the basics to live, not to live comfortably. Also, if your employer had benefits, you could
probably be covered that way (albeit not very well for a minimum wage job). I'm not saying it's pretty. I'm
saying it's possible. I did it for a whole year...I could have kept going had the need been there.
The
timeless insight that wisdom results from considering the bigger picture can be applied to any field of endeavor,
including economics. Whenever a problem is unsolvable within a context, you have to enlarge the context. In a bigger
picture paradox ceases to be paradoxical.
To expand, the classic tradeoff in Pancho's #2 points to the need to
look at a bigger picture than just the wage/employment tradeoff, which seems like an unsolvable paradox.
So
let's try to enlarge the picture Pancho painted in #2.
In order for there to be a demand for people, there have
to be people with disposable income they can choose to put toward different goods and services provided by people.
The more free the spending choices people have, the greater the variety of goods and services that will be
needed.
In order for that to happen to the max, the most people possible have to be making free choices about
spending, and then spending; rather than being trapped in poverty; having their expenditures predetermined; or over-
saving/investing, which is less efficient for creating a demand for people.
In general, this all points toward
creating a bigger middle class, which is the opposite of what's been happening. I am defining "middle class" here
by what I said in the last paragraph.
In nurturing and building a larger middle class, you increase wages
without decreasing employment, and transcend the paradox.
A large middle class is key to a lot of factors in a
successful society.
Another factor in the bigger picture is that in order for there to be employment, people have
to need help. In order for people to need help they have to be involved in projects that become more successful over
time. In order to do this, they have to be using their talents in a maximal way to meet maximal needs. This also
increase both wages and employment.
This points toward helping people achieve their potential in the context of
human needs.
To do this we first have to have the biggest possible picture of what humans need; e.g., as Maslow
did; versus wants, which are less efficient to fill, since filling them does not contribute to potential as
powerfully or necessarily. Needs are also more stable and reliable than wants.
Humans need more than
food/clothing/shelter. "Fulfillment" is a state of thoroughly met needs.
So second, we need to support people to
meet the full spectrum of human needs, through education, etc.
By logical necessity, this all implies an
economics of fulfillment as opposed to wealth. "Wealth economics" create rich and poor people without a
middle class, where no one is fulfilled except by accident.
Virtually no economists talk about it this way. Our
economy is built on a wrongheaded notion of economics, an economics isolated off from the interconnected, big
picture of life.
Last edited by DrSmellThis; 11-09-2005 at 01:02 AM.
DrSmellThis (creator of P H E R O S)
DST: Inflation reflects the
relative increase of the index of prices in the US, which includes necessities and the average of most, if not all,
goods. I don't know if/how real estate/rent prices are factored into that figure, though. If not, I will concede
that it would be much higher. It's just that inflation is the base number we use to determine the average increase
in the price of all goods in the economy, so I wanted to use an official number rather than one of those statistics
that people like to throw around until no one remembers how they arrived at it (cost of living doubles every 11
years...How long of a period did they measure that for? What did they measure as the cost of living? What
geographic location did they use? etc.). If Big Tim could give us the data on how they arrived at that number (I
reversed the math to get the average cost of living increase of 6.5% per year from the data provided of a $16
minimum wage in 2005 from a $.25 minimum wage in 1938; seeing as most stock portfolios have been lucky to see a gain
of 6.5% in the past few years (I concede that the stock market has increased 10-12% over the long term), I question
the size of that number because then nobody would invest if they were losing money relative to the cost of living
increase).
Speaking of
wages:
Workers face paycheck pinch
After inflation, American workers earned 2.3 percent less
than they did a year ago.
Oh! and welcome back Panch! Where ya
been?
Seems like old home week, Jambat just showed up again!!
Freedom begins when you tell Mrs. Grundy to go fly a kite.
--Lazarus Long
in our neck of the woods,
$10 seems to be about the de facto minimum wage. I asked a woman at McDonald's at the drive thru window and they
start at $9, not sure what Walmart pays around here. About the cheapest apartments available are $1000 per month,
most go for $1200 or more. So, let's say you are making $10, that equals $1600 a month - $1100 for rent - Fed
taxes, Soc Sec taxes, leaves one about $250 a month for gas - what does one eat???
I've read that if the
minimum wage were fair, it would need to be about $16 an hour for unskilled labor. Sounds about right to me.
There is a cure for electile dysfuntion!!!!
Understand that "cost of living"
and "inflation" represent two completely different aspects of our economy.In 1938,most working class adults walked
to work.There was no need for a car or gas money.Electricity was less commonly used for esentials like cooling
food.(Ever seen a 1920's-30's vintage appartment? They still have ice boxes.)The number of things in our scociety
that require money to aquire or maintain has grown quite alot.And Im not talking about cable TV either.Just the
baisics assigned to having a "standard of living" have grown.
Telephones were an uncommon item in many housholds
as late as the 1960's.Try to get along without one now.Or even more fun,get a party line for you AND your
neighbors.It would be perfectly reasonable to expect people to live without health insurance...but for the fact that
in 1965 you could hand the doctor a five dollar bill and get a prescription and the prescription you picked up at
the pharmacy might cost you an hour or two worth of wages.My last prescription cost me three days wages and it was
considered CHEAP.Never mind what the doctor wanted for his services.
Inflation typicaly refers to the increase
in the cost of staple items.Housing,milk,fuel and so forth.Cost of living is a relative term applied to a region or
area where the "cost" is higher or lower than average,or an increase in the esentials required to have a standard of
living.The cost of living here on beautiful Bainbridge Island for example,puts an inexpensive,single family home in
the $380,000 to $400,000 price range.And those prices are considered good.I have seen similar homes in other areas
priced below $100,000. The difference? In an area with $100,000 homes you can expect to max your wages out in the
high $25,000 range.
The unfortunate problem with a metropolitan area with high wages is that the number of high
wage jobs is limited.Housing costs go up regardless of peoples ability to pay them.With the influx of highly paid
software types,our areas housing market exploded.But it left huge numbers of people lining up at food banks.Sure,you
could cast your thoughts of maybe landing a good job asside and move to a more reasonably priced area...Wal Mart
here I come!Or you could move just far enough outside the area that you could still commute...at three dollars a
gallon for fuel.Been there,done that.And done it with thousands and thousands of others every morning.
The sad
part of that is that it has been going on in or around almost every major city in the united states for years.So you
have a choice of paying for higher housing costs,or paying all the associated expenses involved with longer and
longer commutes.The whole point behind the creation of the minimum wage in the first place was to insure that if you
were working at a job,helping your employer to become disgustingly wealthy,your labors should at the very least
gaurantee you a standard of living fit for a human being whos efforts are productive.
Understand something...I
do not berate or belittle employers for not paying enough.Most of the employers I have worked for would have loved
to be able to afford higher wages.Higher wages mean lower turnover,happier and more productive employees and a
better work environment.What has changed over time is the relationship between tax burdens and wages.Ask any
employer with a couple dozen people working for them and find out how drastic those taxes can be.That translates
into less money for employees,employee bennefits and so forth.It also translates into increased prices for
consumers.And that hurts everybody.
Now go back and look at tax rates in 1960,65,70,75,80,85...and so forth.The
sharp climb in those taxes being paid by buisinesses and corperations correspond to the decline of wages.A former
coworker of mine who is now retired,started a family on his minimum wage job and his wifes part time minimum wage
job in 1967.They even managed to scrape together a down payment on a house.I would like to see someone do that
now.
Okay...Im gonna stop now...my meds are starting to kick in
Pancho,my finantial advisor (a
panhandler named Bob who lives under an overpass) tells me that if your investments are earning less than 8%,you not
breaking even.Factored into that are not only inflation,but the taxes that you wil invariably pay on your capital
gains.Some of those taxes can be deffered,but you pay them in the end anyway.Most investors,fund managers and so
forth shoot for ten percent.But 8% to 8.2% is about break even.
You are preaching something
I've been on about for a long time. Taxes hurt the middle class and poor people no matter who the tax is levied on.
Over the years there have been innumerable measures to shift the tax burden to the wealthy with no mention or maybe
no realization that the burden is just going to take money away from the working people. I wonder if it isn't done
that way on purpose, most people don't see beyond the end of their noses. I wonder how many realize what you and I
both are harping about, that the tax dollars always come from the consumer and we are the consumer? The solution,
the only real solution is to cut taxes, period! The only way to do that is to cut government. The alternative is an
ever increasing tax burden on each and every person in the US. Sooner or later something has to give as tax dollars
are not a bottomless well to draw from.
On another related subject, today I gave two presentations to high
school freshman classes on the subject of educational goals. One of the topics covered was earning a living and how
much it takes to live in today's world. The figures for expenses were deflated about 30% yet it clearly
demonstrated that you cannot live in any reasonable fashion on minimum wage, not and pay taxes, have health
insurance and a decent car. Why do we have a minimum wage if you cannot afford to eat and keep a roof over your head
while working?
To compel a man to subsidize with his taxes the propagation of ideas which he disbelieves and abhors is sinful and tyrannical.
Thomas Jefferson
Let me begin by saying that I
agree with everyone is saying (I want world peace and an end to world hunger like everyone else), but I do want to
bring another side to the discussion because people start to take everything for granted or as necessary when it is
not.
There are a few things we are assuming every American is entitled to that is not necessarily so...which I
find to be ironic since I'm considered the "naive youngin'" compared to the other posters on here. Some food for
thought:
1. Using a basic economic model, raising the minimum wage would simply cause employers to raise their
prices accordingly, leading to inflation. What does that mean? Higher wages would lead to higher prices, which would
negate the point of giving higher wages in the first place.
2. A lot of our estimates are assuming that several
things are basic necessities that simply cannot be.
a. A car - I have worked my whole career (outside of a
2-month period when my mom moved, I came back from college, and I worked at my old job) without the use of an
automobile. I use the Metro in DC, and I walked to work/school every day since I was 15. You could also buy a nice
bike and ride to work.
b. Health insurance - Although most countries have a socialized healthcare system, the US
does not. What does this say about our government? They must believe that health insurance is a privilege, not a
right. After all, they won't fit the bill (I am exaggerating here for effect; I know many Republicans' stands
usually reflect the fact that the health system would weaken or crumble if supported by the government - a valid
worry). I have a neighbor that pays for her health insurance, and I have a colleague whose parents are not covered
at all and are hoping they get by until their Medicare kicks in. Another point: health insurance is just that -
insurance. The big insurance companies are betting that you won't get sick, while you are protecting yourself in
case you do. Instead of giving these companies hundreds of dollars per month, put that money into a Health Savings
Account or some other account and save it for when you actually do get sick and have to pay a $1XX or $1XXX bill.
Remember: insurance companies wouldn't be in business if they weren't making money. They are just taking my money
because I never get sick, and therefore they are laughing at me because I give them money for no reason (for now, of
course; I do agree that health insurance is a good thing - I am just giving a different perspective).
c.
Independent residence - People seem to assume that everyone has the right to live by themselves, one roomate, or a
nuclear family. This is not the case. Once again, it is a privilege and not a right. Most cultures have huge
families living under one roof, and many countries are so overpopulated that dozens of people live together and
never get any time alone. In fact, in many Arab countries, it is perfectly natural for someone to just space out and
not talk to anyone for hours even though they have 10 people around them (introverted time, anyone?) simply because
they have no alone time - ever. If people would just group together, that rent would go from $1,200 per month
to $600 to $400 to $300, etc. This was true in the United States as well in the early 20th century. My history books
in high school contained several pictures of a 3-person family living in a house no bigger than my living room while
the man worked 14-hour days 7 days a week in a polluted factory that was slowly killing him to keep their home and
put food on the table. These apartment units had no sewage, and the smell from excrement flooded the building.
Apparently, we as a society feel we deserve much more than that even for the poorest workers (and I am sure that we
do, but we must remember what things were like before so we don't take everything for granted).
3. Using the
4.01% inflation rate and a 25% tax rate (it is 30% for capital gains, but I'm using 25% because it fits easier in
my example as you'll see in a moment), an 8% return after taxes would be 6%, minus inflation would be about a 2%
real return. If inflation is higher (slightly lower than 6% at a 30% tax rate), your panhandler is right.
Ironically, the return on most investments (Savings accounts: almost 0% until the ING account, which is sitting high
at 3.X%; CDs, bonds, etc.: can vary from 2-5% give or take) is a lot lower than that. In other words: Are you saving
money or losing money? You're better off buying a house and letting the price increase offset inflation. Maybe
people shouldn't laugh at people with coin collecting hobbies... :-P
There's probably more, but I'll wait
until someone counters this because I'm getting tired.
Mtnjim: Thank you! It's been a while, and I
thought I'd come back and do some writing. I need a little escape from the stress of recent life events.
True but do you haveOriginally Posted by Pancho1188
an alternate suggestion? Food stamps and subsidised housing? We have that already and it is a crime ridden
disaster.
ThereOriginally Posted by Pancho1188
is no bus or transit system in the city I live in. Owning or at least having access to a car is a necessity here. In
large metro areas you are probably better off without a car. I've been in Washington DC and New York City many
times and I wouldn't even consider driving there. However, those transit systems are funded in all or a major part
by tax dollars. The more riders the more tax dollars needed.
who considers qhat the government decides as aOriginally Posted by Pancho1188
valid point? You do have a good point about the health savings acocunt but that is gambling too. I had cancer when I
was 21, the cost was astronomical. Without insurance I'd still be paying for it. I guess with insurance I am
too.
That's a good point but I can't really imagine anybody willing going back to thoseOriginally Posted by Pancho1188
conditions. Even if the government tried to force it, I don't think it would happen quickly. However, economic
factors may be forcing those type living conditions on us over a period of time.
Originally Posted by Pancho1188
To compel a man to subsidize with his taxes the propagation of ideas which he disbelieves and abhors is sinful and tyrannical.
Thomas Jefferson
One of the resons we live here as
opposed to any of the various overpopulated arab,african or asian countries is that A) The fruits of your labors
result in freedom B)You are not expected to live in squalor and die of dysentary at the age of thirty and C) There
is a sense of fairness built into our way of thinking and living,hence its illeagal to kick puppies,enslave children
and sell women into sexual bondage.(not sure about that last one but Im checking.)
the conditions you describe
above are in fact reasonable for any fresh faced twenty two year old college graduate to endure for a while,until
they get thier professional feet underneath themselves and start getting traction economicaly.But in many
states,occupancy laws prohibit living more than one and a half families per single family dwelling.Exceeding those
restraints can result in all manner of unpleasantness,including seeing your children shuffled off to live in a state
sponsored concentration camp(foster home.)
In response to your baisic economic model...you are absolutly
right.Simply raising wages wont realy fix anything.We have forty years of backsliding to try and repair,so alot of
very difficult changes need to be made gradualy.But dont make the mistake of thinking that those changes dont need
to be made.The middle class is struggling more and more each year in what used to be a fairly comfortable
existance.And once the middle class begins feeling ANYTHING,the solution will be just as painful as the problem
itself.Rome went thru similar things many times.Once poverty begins to effect the middle classes,things are getting
bad.
A wonderful book entitled The Nazi Seizure of Power details how it was the middle class in Germany that
ultimately enabled the Nazis to gain control because thier standard of living was being threatend.The middle classes
in Germany didnt realy feel the pinch of the German recession as baddly as the poor and working classes,but the fear
that it was comming was enough to motivate them to seek answers to a potential problem.The answers they came up
with,at the time...seemed to make sense.They unfortunatly found out otherwise.
We no longer have the luxury of
time to figure out what needs to change.Our economic structure in this country is built largely on debt,foreign
trade,risky investments,overheated realestate and so forth.Its the working class that forms the backbone of the way
our economy works.Thier paychecks are what feed the middle class.Once those paychecks start suffering,the eventual
fall out can be extremely painful for everyone.
Something to note is the snails pace with which things like the
Dow Jones Industrial Average and the NASDAQ have been "recovering."The loss of money at the low end has effected the
spending habbits of everyone.Throw in high energy costs and you get a stalled economy(dont get me started on the war
on terror and its "actual" cost.)Wage earners create jobs by spending,analists on Wall Street get paid to paint a
pretty picture to encourage the herd to spend more.But if the wage earners dont have the money to spend,they simply
dont.
And whatever you do,dont think that the low minimum wage only effects the lowest paid workers.Remember
that someone who earns $25.00 an hour has his pay scale calculated based on the minimum wage.It isnt just some
arbatrary number that someone pulled out of his ass one day while doing a crossword puzle.All of these things are
intimately interconnected.When one suffers,we all suffer eventualy.France is beggining to understand that leaving
the muzlim population with a forty percent unemployment rate doesnt realy work out too well.Generous government
handouts arennt enough.These people want the freedom that comes from being able to earn a living.
Tim, you make a fair
argument.
I forgot one more point:
We are also assuming that, at minimum wage, we are only working 40 hours
per week. I forgot how bad of an assumption that was...and actually can't believe I did because I work a hell of a
lot more time than that. If I got paid minimum wage for the hours I work, I'd be making not just the $11,000 I
estimated before but more like $17,000 or so. That is another assumption we are making.
Again, I am not
saying that this is great that everyone could afford to live if only they sacrificed their life. I just think there
is a skill and a will problem: the skill being the knowledge and ability of our government to do the best they can
to ensure that all have the opportunity to live a happy life, and the will being the determination to do what you
have to do to live the best life you can by putting in the time and effort to do so.
I think we need to see
both sides because one side pushes for social change, while the other pushes for people to help themselves. Blaming
the government when you control your own destiny (this is, after all, the land of opportunity) is bad, but so is
ignoring the problem when the laws are stacked against the poor (try getting a place to live if you do not already
have one; try finding a job if you do not have a place to live - such a catch-22).
Overall, with these
conflicting influences, I think that the government is doing the best that they can right now. However, it would be
nice to get some economists working with the government and other organizations to hypothesize some appropriate
solutions that wouldn't shake the economic foundations of United States capitalism.
"The government is doing the
best they can."
The question is "at what?"
The problem with economists is that they don't look at the big
picture, tend to stay within a party line, and spout cliches, like about unsolvable tradeoffs.
You'd have to
look at the real causes of prosperity, start to address injustices, and be willing to bring radical change to the
way you do things politically; and with lifestyles. Because the system won't allow this right now; no one even has
the courage and wisdom to call it like it is, get the public in a similar mindframe, and set long term goals. There
would be a violent reaction by the powers that be, including politicians, corporate interests, and the priviledged;
against even talking about what things would need to look like. Even pop culture would rebel. It has to start with
an aggressive push to enlighten people over time. The people doing this teaching would have to have courage,
brilliance, wisdom, and charisma. Unfortunately, to have this kind of effect on thinking in our current culture, you
have to be talking religion. Political and social philosophers -- people carrying on the fundamental level of
discussion that is needed -- are treated like freaks. The deep discussions simply cannot happen. Only preachers and
spiritual leaders are permitted to talk on that level with the masses, and taken seriously, in our culture. The
public would have to get used to thinking in some new ways. Our children are our hope.
But most politicians are
absolute idiots, compared to what they'd have to be. It's all useless cliches marketed to focus groups and the
lowest common denominator. No one has said anything new or had any better insights to offer in the past forty years.
Anyone that has some of these insights to offer gets marginalized. Eventually we will be forced to open ourselves to
new insights, and new ways of thinking about our lives, politics and public systems from the ground up. Right now
few are open to changing they way they think. These people have to die off.
This is of course very little help to
anyone right now. But that's the way it is. No such help is available right now.
DrSmellThis (creator of P H E R O S)
One of the unfortunate problems
that we face with the deflation of wages is that it didnt happen over night.It has taken forty years to deteriorate
to this level.Remember that the rising cost of government realy began in earnest in the mid 1960's and has become
progressivly worse since then.There is no easy "overnight" cure to this issue.But at the same time,there is no way
to reasonable argue that people are better off today than they were forty years ago either.
Corperate interests
had a very significant roll to play in keeping wages from staying up with the cost of living and inflation.The
single biggest expense in any business is labor.Many corperations,knowing how wages are calculated(based on minimum
wage,)sought Government intervention to help stop the bleeding that was caused by ever stronger labor unions and
thier demands for ever better wages and bennefits.Many companies were bled to death by the unions and I know several
people who worked for such companies.
By keeping the minimum wage down,it became possible to negotiate with the
unions from a position that "Hey,Joe bread winner doesnt do that well In a non-union job.Why should you do so much
better?"
Another aspect was the non-union companies and businesses that were going to be facing higher and
higher tax burdens over the comming decade.With a strong minimum wage,the ability of these companies to control
labor costs and still meet thier tax burdens would have shot prices thru the roof,creating a cycle of inflaton that
would have been extremely hard to control.That was a contributing factor in the inflationary period that we saw in
the 1970's.Prices durring both the Ford and Carter administrations shot up dramaticly and nobody could seem to get
a grip on it.Things finaly mellowed durring the early 1980's but even then we were experiencing the shockwaves of
declining wages and higher prices.
The end result has been a country in which we pay more and more taxes for
ever fewer services and cannot get living wage jobs that dont require bachelors degrees or more.And even with a
bachelors degree,I know a number of people who ended up working for...you guessed it,the government.Government jobs
at the state or federal level are the only non-private sector jobs that pay living wages anymore.Imagine if everyone
was required to pay the same wages that goverment employees get.
That is hilarious! I'm a fan ofThese people have to
die off.
This is of course very little help to anyone right now."
dark humor.
Tim: You're right. I would love to work for the government. Bachelor's Degree? Pay Class X.
Master's? Pay Class X+2. That plus 2 years' working experience? Pay class X+4. What a great system.
There are a lot of mainstream
people that identify problems like labor unions, lawsuits (healthcare, paying benefits, etc.), and taxes. People and
politicians have been talking about these all along. Yet no one has been able to solve anything thinking about it
this way.
Why?
Could it be something bigger and deeper?
DrSmellThis (creator of P H E R O S)
I know a guy who works at
Washington State department of Labor and Industries.He has been with them about twelve years and he and his wife
just bought a new boat.They have a very nice four bedroom home,two newish cars(they were bought new) and they have a
nice vacation a couple times a year.These are things I have NEVER had.
orriginaly posted by
DST
Well,all of those things play aThere ae a lot of mainstream people that identify problems like labor unions, lawsuits, and taxes. Yet
no one has been able to solve anything thinking about it this way.
certain roll in the larger picture.I am not simplistic enough to assume that the only problem is the minimum
wage.There are alot of various reasons behind the backsliding of the American standard of living.But the biggest are
greed...and people who want to protect thier cushy government jobs.
Same goes for people working
for huge, "evil" corporations. I just think there are patterns to all of this besides the common ones people point
out.
DrSmellThis (creator of P H E R O S)
People are greedy when not at
their best. Can't change that. But if people were greedy to be fulfilled, it wouldn't be all that bad. We
can support that kind of "greed". What we can control is whether we systematically support greed for
meaningless, useless wants. We are capable collectively of more than we are individually, and when at our worst
individually.
That seems to be a problem with no ghost being in the machine, so to speak.
For example -- and
there is more to it than capitalism, but -- capitalism is like a machine with no soul. It has ends by virtue of the
way the mechanism works, like cancer has ends independently of the host organism. It is cut off from human interest.
It is disconnected with the big picture and ends of humanity, just like the economics that reflects it. Wealth
maximization is the only end of the machine. The machine is not answerable to human interest. But it is not
independent of human interest. It teaches interest in whipping up and trying to "satisfy" greed.
DrSmellThis (creator of P H E R O S)
Well...in terms of meaningless
and useless wants,one need only watch television with a jaded eye for a couple hours to discover that people are
largely controlled by meaningless and useless wants.Between hollywood and marketing firms bombarding our children
with all the things that will make them happy,we train peoples perceptions to the point that if we arent spending
money,then life just doesnt have purpose.
BTW,the machine of capitalism does in fact have a soul.It soul is
warped and twisted and dark and it feeds on the misery of others for profit.
Earn under $57,343? Watch
out
Rising inflation and interest rates put the bottom 75% of
Americans behind the financial eight ball.
By
Scott Burns
A
visit to the glitzy section of any city in America will give you the idea that we don't know what to do with all
the money we have. You get the same impression at any high-end mall in suburbia.
In fact, income
thins out pretty quickly. According to the most recent (2003) IRS statistics on tax returns,
households needed at least $295,495 to be in the top 1%, $130,080 to be in the top 5%, $94,891 to be in the top 10%
and $57,343 to enter the top 25%.
Yes, you read that right. If your household income is over $57,343, you're
well toward the front of the line when the checks are handed out. If your income is below $29,019, you sink into the
bottom 50%.
Train wreck
Increasingly, those in the bottom 75% -- households with incomes below $57,343 -- are
starting to look like a long, slow train wreck. Without recognition of the problem, the entire country could find
itself in dire straits pretty quickly.
Let me show you why.
In the 10 years from 1993 to 2003, income has
continued to concentrate. While the bottom 50% of earners had 14.92% of income in '93, they had 13.99% in '03.
Similarly, the top 25% have enjoyed an increased share of total income, rising from 62.45% in '93 to 64.86% in
'03. This is pretty much what you'd expect over a period of rapid change. Those with leverage increase their
incomes. Those without leverage don't.
Over this period the dividing line income for the bottom 50% has risen
from $21,179 to $29,019, rising 4.3% a year. Had the income line risen only with inflation it would have risen to
$26,504. And that's an important fact: Even the bottom of the income scale has gained some purchasing power over
the period -- about $2,515 (see table below).
Combine that additional income with recent low interest rates on
home mortgages, a period of weak-to-declining rents for apartments, a multitude of low-interest and no-interest
offers from stores and car manufacturers, and the people who do a lot of the heavy lifting in our society have been
getting along.
Better to be on top
Those with earning power have done a lot better than just get along. Earners
at the top 1% line have gained $63,040 in purchasing power. Earners at the top 10% line have gained $12,198 in
purchasing power, while seeing the portion of income they spend on income taxes decline from 20.2% to 18.5%. Earners
at the top 25% line have gained $5,570 in purchasing power.
The vulnerable bottom of the income pyramid
_____________Top 1 % Top 10 % Top 25 % Bottom 50 %
1993 Income (1) $185,715 $66,077
$41,210 $21,179
2003 Income (2) $295,495 $94,891 $57,343 $29,019
1993 Income Adjusted for Inflation (3)
$232,415 $82,693 $51,573 $26,504
Gain (1)-(3) $63,040 $12,198 $5,570 $2,515
% of Income Taxes Paid
34.27% 65.84% 83.88% 3.46%
Average Tax Rate as % of Income 24.31% 18.49% 15.38% 2.95%
Source:
The Tax Foundation
That isn't the case for
those in the bottom 50%. Their entire $2,515 purchasing power gain since 1993 may already be history. Skeptics
should consider this brief list:
Another way to
- With the typical household consuming about 1,000 gallons of gas a
year, an increase from $1.50 a gallon to $3 a gallon means a purchasing power loss of $1,500.- Rate increases for
electricity and natural gas.- Rising medical co-pays and other out-of-pocket expenses for health care, plus
rising employee health-care insurance premium costs. Premium costs were up 10% in 2004 alone.
see the same thing is to examine wage gains. In 2004 the average weekly earnings of private, nonagricultural workers
rose by only 2.2%. The Consumer Price Index rose by 3.3% over the same period. This year has been a replay --
year-over-year wage gains are running less than 3% while inflation has ramped up toward 4%. And all this assumes we
believe the CPI is an accurate reflection of the inflation we experience.
Can the politicians work magic with
tax reform?
No way. If the federal income tax was simply eliminated for every household in the bottom half, it
would only liberate about 3.46% of their income -- less than inflation for one year.
Bottom line: Unless there
are some real wage gains for working stiffs -- soon -- we're heading for a recession.
Thanx Pancho I apprciate
you posting that for me.
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