Posted on 04/26/2006 7:19:08 AM PDT by Marxbites
About a fortnight ago, Mrs. Williams alerted me to an episode of Oprah Winfrey's show titled "Inside the Lives of People Living on Minimum Wage." After a few minutes of watching, I turned it off, not because of the heartrending tales but because most of what was being said was dead wrong. Let's look at it.
The show claims that 30 million Americans earn the minimum wage of $5 an hour. Actually, the federal minimum wage is $5.15 an hour, and 17 states mandate a higher minimum wage that approaches $7 an hour. At one point, Oprah did manage to clear up this aspect of the show's errors.
The U.S. Department of Labor reports: "According to Current Population Survey estimates for 2004, some 73.9 million American workers were paid at hourly rates, representing 59.8 percent of all wage and salary workers. Of those paid by the hour, 520,000 were reported as earning exactly $5.15."
Workers earning the minimum wage or less tend to be young, single workers between the ages of 16 and 25. Only about two percent of workers over 25 years of age earn minimum wages.
According to the U.S. Bureau of Labor Statistics: Sixty-three percent of minimum wage workers receive raises within one year of employment, and only 15 percent still earn the minimum wage after three years. Furthermore, only 5.3 percent of minimum wage earners are from households below the official poverty line; forty percent of minimum wage earners live in households with incomes $60,000 and higher; and, over 82 percent of minimum wage earners do not have dependents.
The U.S. Department of Labor also reports that the "proportion of hourly-paid workers earning the prevailing Federal minimum wage or less has trended downward since 1979."
Another issue that's not often taken into consideration is there's a difference between what a worker takes home in pay and his total compensation. Employers must pay for legally required worker benefits that include Social Security, Medicare, unemployment insurance, workers' compensation, health and disability insurance benefits, and whatever paid leave benefits they offer, such as vacations, holidays and sick leave. It's tempting to think of higher minimum wages as an anti-poverty weapon, but such an idea doesn't even pass the smell test. After all, if higher minimum wages could cure poverty, we could easily end worldwide poverty simply by telling poor nations to legislate higher minimum wages.
Poor people are not poor because of low wages. For the most part, they're poor because of low productivity, and wages are connected to productivity. The effect of minimum wages is that of causing unemployment among low-skilled workers. If an employer must pay $5.15 an hour, plus mandated fringes that might bring the employment cost of a worker to $7 an hour, does it pay him to hire a person who is so unfortunate as to have skills that permit him to produce only $4 worth of value per hour? Most employers would view hiring such a person as a losing economic proposition.
Two important surveys of academic economists were reported in two issues of the American Economic Review, May 1979 and May 1992. In one survey, 90 percent, and in the other 80 percent, of economists agreed that increasing the minimum wage causes unemployment among youth and low-skilled workers.
Minimum wages can have a more insidious effect. In research for my book "South Africa's War Against Capitalism" (1989), I found that during South Africa's apartheid era, racist unions, who'd never admit blacks, were the major supporters of higher minimum wages for blacks.
Gert Beetge, secretary of South Africa's avowedly racist Building Worker's Union, in response to contractors hiring black workers, said, "There is no job reservation left in the building industry, and in the circumstances I support the rate-for-the-job [minimum wages] as the second best way of protecting our white artisans." Racists recognized the discriminatory effects of mandated minimum wages.
I'm trying to figure whether ineptitude explains the errors in Oprah's show or a deliberate attempt to mislead.
Since 1980, Dr. Williams has served on the faculty of George Mason University in Fairfax, VA as John M. Olin Distinguished Professor of Economics.
acticle also neglects to mention percentage of people who are service/ sales staff. they oftem make minimum wage on paper, but in reality, make significantly more that doesn't get reported.
Other socialist buzzwords for wages are, "Living Wage", "Prevailing Wage", and for those who don't own a business, "Stakeholders".
520,000 out of 73.9 million is about two-thirds of ONE percent.
Economists tend to agree minimum wage causes unemployment.
What always strikes me is that the left is so enamored with power that they'd raise min wages for votes from the stupid which hurts and prices out of employment those with the least skills and experience first.
The hypocritical lying Rats have no shame. Damn the progressives and their fawning and scurrying to copy the policies of the Euro-diktators we ended up fighting for tyrants they became from the very policies we copied from them.
Very interesting article. It's a keeper.
And taking that further, 520,000 out of 300,000,000 (US population) is not quite one-fifth of one percent (exactly 0.173%). So, a random sample of people living in the US should produce 1 minimum wage employee per every 575 people.
Yeah, the ones that aren't called Marx, Reich, Krugman, Galbraith, Keynes, Rubin, Spermling, Podesta, etc!
But these aholes (the ones alive) find it oh so easy to look the camera in the eye and lie to the whole of America.
Like what a great job Clinton did with the economy - which he stole credit for even tho GDP was rising when he stepped in, flattened after his largest tax hike in history, only to resume the systemic RWR boom which then rocketed ahead on the back of Newt's cuts and reforms, to be torpedoed yet again by an unconstitutional inflationary Fed chasing it's tail. Are we up for a repeat since the spigots were opened so long at such low rates?
BTW - in the 30's gold was worth $20/oz. Now it exceeds $600/oz. That's a 30 fold depreciation of the dollar - IOW the dollar has lost 96.66% of it's pre-FDR confiscation of gold value. Which he immediately depreciated 41% when he arbitrarily revalued gold at $35/oz. Exactly the opposite of what he campaigned he'd do.
Now ponder the opportunity cost of all the lost compounding of every cent that went to Govt to be redistributed in the name of the "common good" which was really no more than greedy vote buying at taxpayer expense? And start it from the time the railroads were subsidized with OPM which eventually led to any industrialist buying influence and Govt protection for themselves also in the name of the common good.
Just how much richer would ALL Americans be today had FDR's court NOT given congress the ability to spend on special interests by it's fiat decision sans amendment, to reinterperate the Gen'l Welfare clause to mean the opposite of it's previously understood meaning of the prior 125yrs?
Another issue that the dems never want to solve.... This should a local issue as costs of living vary in different parts of the country.
7 bucks an hour in Mississipi goes much farther than in southern California. One federally set wage cannot adequately compensate for that reality.
Low productivity stems from, as you say, being lazy.
And being lazy keeps ones skills from increasing at all.
Don't pick my man William's nits - cuz he's aces in my book.
I always wondered why there seemed to be such a hue and cry for minimum wage raises if there were so few people earning that amount, until I read that many union contracts and other compensation schemes are directly tied to the minimum wage. For example, a union contract might stipulate that its beginning wage is 4x minimum wage so any rise in the minimum wage automatically gives the union people a raise. Don't have a source for that information, though. I am just throwing it in for conversation. But now, I have to get ready for my more-than-minimum-wage job.
Bookmarked
Re your post number 10 on FDR. Had the opportunity to be part of a press panel questioning Democratic candidates for congress this past week at a public debate. In addition to bashing the Republican incumbent and the Bush Administration at every opportunity, two of the three Demos sang the praises of Roosevelt and his "wonderful economy" and how we should return to the 1936 solutions. Good thing I hadn't just eaten. Since they were mostly preaching to their party faithful, that went over well with the audience. (Forgot, one also said he wanted to work to get Kyoto imposed on the US.) Scary stuff.
Get to take on the Republican incumbent and his primary challenger in a couple of weeks in the same public format. Should be fun--and more crowded. The demos didn't attract that much attention.
Great information, thanks for posting.
Thanks for posting.
Ask them when they are gonna get off their asses and do something to reverse the judicial fiat of FDR's stacked court that gave congress UNLIMITED spending abilities that today keep factions at each others throats in competition for Govt largesse.
Promoting the Genl Welfare meant for Govt to stay the "F" out of the private sector - not subsidies for special interests payed for with OPM.
Well, I can't really use your language but the idea is good and I'll see if I can't frame a good question on spending power of government and whether the Republicans have a plan to rein it in. Thanks for the idea.
Excuse my french!
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