Posted on 02/11/2021 12:34:59 PM PST by Brian Griffin
The scheme would most importantly take local housing costs and employer & employee status into account.
The basic housing cost factor would be the square root of the pre-Covid 2019 HUD fair market rent of a one-bedroom apartment in the zip code area of the employee's most common work site divided by 10, rounded.
Typical HUD fair market rents might be around $1,200/month in much of America, $2,000/month in some big cities and $3,000/month in prime SF Bay areas.
The basic housing cost factors for those amounts would be $10.95, $14.14 and $17.32, respectively.
To compute the base minimum wage, the basic housing cost factors would be adjusted for CPI inflation since January 2019 and then rounded up to the next dollar.
People would have to work somewhat more hours to cover their big city rent. The big city rents are higher for many reasons, such as better lifestyle attractions, commute time value and long-term income growth opportunities.
Some smart aleck might say four weeks of 40-hour $18/hour work won't cover $3,000/month SF rent. I would first say share a place or take the BART to & from Richmond, CA. I would then say high SF & NYC rents have fallen.
With 160 work hours a month, people might gross $1,760 in a small town and $2,400 in a big city, or about $560 and $400 a month above typical rents, at a minimum. That may not seem much, but most people start their first job while living with family and then develop skills and experience that command a premium above the minimum wage.
In 2024, after say 10% inflation, the base minimum wages would be $13/hour, $16/hour and $20/hour, respectively.
The employer status factors might be:
A. $1/hour off for unincorporated/Chapter S unaffiliated[i.e. not a franchise] businesses and persons,
B. $1/hour off if such businesses/persons operate from just one location(excluding equipment/supply storage),
C. $1/hour off if such businesses/persons had no other direct employees except the substantive owner(s) during the same employer standardized hired employee pay period.
The employee status factors might be:
A. $1/hour off if the employee claimed to be unemployed on his/her written job application,
B. $1/hour off if the employee claimed to be under age 18 on his/her written job application,
C. $1/hour off if the employee claimed to have a criminal/drug court record on his/her written job application.
These factors allow for a quite appropriate amount of targeted wage flexibility in the labor market.
The maximum reduction for any employee would be $3/hour.
A small business in a modest housing cost locale might be able to get help for $10/hour($13/hour less three $1/hour discounts).
I'm sure many of you would say this is too complicated. However, one basic rule coupled with an inflation adjustment and six employer optional exceptions is actually quite a simple system. It has been my lifelong experience that employers will readily go through a great amount of effort to pay most employees as little as possible.
In practice the federal Department of Labor would compute the base minimum wages annually by zip code and small employers would check the DoL website annually for their most expensive zip code place of business (or listen to their fellow employers kvetch). Status factor application would be an employer option.
There are many of you that object to a federal minimum wage. However, federal minimum wages are necessary when the federal government subsidizes rents to below $300/month for many millions of people. Refugees are entitled to full welfare benefits by treaty.
If there was no federal minimum wage, many employers would simply collect job applications until they find a federally subsidized person (or some older mortgage-free homeowner) who could afford to work for say $6/hour. The federal welfare system, which is not going away in my lifetime, badly corrupts the job market.
Many of you might say having a federal minimum wage costs jobs. It does, but not as much as supposed since the services provided by low wage workers, such as fast food preparation and shelf stocking, are often highly desirable and avoid the need for impossibly high capital investment. Moreover, if a college student misses out on a $6/hour job, he can borrow tuition money and pay the borrowed money back when he gets a $50,000/year job after graduation. The student who misses out on a job will have more time to study and may even have his educational debt wiped clean by vote-buying politicians.
It should be understood that a federal minimum wage also increases the ready availability of quality labor by making jobs more financially attractive to workers and by greatly reducing the number of job applications a person has to fill out to get a job since employer fishing for $6/hour labor is outlawed.
I suspect that the federal government should set federal minimum wages with the goal of minimizing federal welfare costs.
Bear in mind, President Joe Biden would gladly sign a 'historic' nationwide federal $15/hour minimum wage bill into law. The average federal employee salary in Washington, DC was about $108,000/year a few years ago. To Nancy, Chuck and Joe, $15/hour is chump change.
I would suggest that a revised federal minimum wage law not go into effect until January 1, 2022 because the small businesses that remain need to recover from Covid restrictions and massive amounts of Covid financial "relief" are still being handed out to individuals.
They’ll be out of work too, if they are looking for jobs that are just below the new higher minimum wage. Your arguments make no sense.
Low wage employment is hopefully transitional.
If the total number of unskilled jobs goes down by say 4%, but the more important rate of personal upward transition goes up by 8%, then we have a winning policy.
By eliminating the ability of cheapskate employers to bottom fish, we make the ability to get on (and then climb) the employment ladder much easier.
If Mom and Pop don’t went to pay their grunts the federal min, then they can close up shop and get real jobs. Maybe learn to code.
” if you don’t understand how a minimum wage creates unemployment”
If Change B increases the income of 10 million households by 10% but costs 50,000 jobs, would you implement Change B?
The only purpose of legal immigration is to increase the labor force and lower prevailing wage. THERE IS NO OTHER REASON FOR LEGAL IMMIGRATION.
Da, Comrade. You should fit in very nicely with the Biden Administration—you should apply for a job with them as an economist.
“Cheapskate employers?” Sure, they’re cheapskates—that must be it. All employers are identical, nationwide, and their business all have identical cost structures. All employees nationwide are identical too, with identical skillsets and ambitions.
Some jobs are not worth $15/hour, and the employers who can’t afford to pay it will either pay them under the table for less, or let them go.
Fixed it.
You’re a regular Hillary Clinton—you just *loves* you some social engineering through taxation. Why do you feel it’s your right to demand that those 50k people lose their jobs?
Under the table is illegal and option B who will do the work? Their competitors that WILL pay the new minimum?
I should add that my scheme has strong wage cost predictability, which itself is important in job creation.
As I suspected, you’ve never run a business. Every cost is borne by the customer. If prices cannot be increased sufficiently to cover costs, while preserving profits, then the businesses will either find a way around (under the table and illegal), or possibly automate. I don’t know why you Leftists always think there’s a deep well of limitless money from customers to draw from. Have you never heard of price elasticity?
“Why do you feel it’s your right to demand that those 50k people lose their jobs?”
In posting my proposal I’m asking for your politically marketable input to avoid such job loss.
When I went off to college, I learned about the Department of Political Economy. Note the adjective.
If you really believe this to be true, then YOU are the cheapskate. Why are you stopping at $15/hour? If raising the minimum wage has never had an effect on employment, then make it $50/hour, or even $100/hour. Imagine how nice that will be!
If you don’t want to make it $50 or $100 per hour, explain why not?
There should be NO federal minimum wage law.
Let the market decide.
Let the employee add value to his place of employment, and let the employer pay based on value added.
PERIOD
Why does the federal government have to be involved in every freakin’ facet of American life???
Damn it.
My input is that you should throw your proposal in the trash bin. No amount of political spin will prevent job loss if it were to be implemented.
You want a government subsidized work force so who is the leftist again? Jeff Bezos is that really you?
Well I do know that a $15.00/hr min wage would push the cost of a McD’s 1/4 pounder to $50 maybe $60 per burger. Maybe a $100!!!
Why not let the heroic “Moms and Pops” that don’t like the min wage get real jobs, maybe learn to code?
Probably would, yes. So what conclusion do you draw about the minimum wage from that, Professor?
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