A Question — Not a Statement — About the Minimum Wage

I’m against poverty and I’m against greed.  As a Christian, I can –and I do say– that. But I have friends who are economists or have studied economics and I have friends who are union organizers and faith based organizers. I’d like to start a debate or hear both sides or hear all sides because I’m simple when it comes to this stuff.

My question is this: Math-wise — and that’s all this is — If we raise the minimum wage and people make more, and the government takes the same tax rate and companies raise their prices because it costs more to make the product and landlords charge more because their renters “make more”, how does this help? My daughters are taking algebra or pre-algebra, so this metaphor comes to mind — Aren’t we just changing the value of “X” in the equation while nothing changes? 

Is there a way that minimum wage can be raised and landlords not charge more for rent and grocers not charge more? The human condition hasn’t changed much in 3,000 years or so — we’re still greedy and if we see more, we’ll take more. In addition, the zeitgeist in America today (or recently, anyway) is that of increasing financial inequality and the rich having better lawyers/more control over the government so they get to determine the rules. So if the human part of the equation doesn’t change and we change the value of “X”, does anything really change? Or does it change briefly until the greedy people get back on their feet and start acting the same way? Even that would be a modest gain for the people I know — which is better than the trouncing they’ve been taking, I would settle for a brief respite from abuse for the poor folks I know, but I’d prefer an actual (i.e. long-lasting) change.

Now, before anybody goes there, I don’t want to hear how the best way to deal with the problem of poverty/income inequality  is “don’t make any changes and let the economy deal with it” because that plan is what we have and it’s not working. Clearly, we need to do something different, and the minimum wage is at least an idea to do something differently. If we think it’ll work, let’s do it or at least try it, but can somebody explain how it’ll work? It seems like “re-arranging deck chairs on the Titanic” to me, but I don’t know.

Pastors and other leaders — how can we be anti-greed from the pulpit if that’s where the problem lies? Furthermore, are we just throwing stones that ripple with our own people if the country isn’t Christian anymore? Do we have any effect on the non-churched?  Does it even matter? Do we do what we can and see what happens?

I am not, in case people are wondering, hopeless or depressed. I’m trying to be realistic so that real change can happen, not just talk.

Thanks in advance…

Peace,

 

John

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11 thoughts on “A Question — Not a Statement — About the Minimum Wage

  1. Sean says:

    You continuously express the opinion that grocers, landlords etc are greedy for charging more if they have to pay more for labor. I think the argument always goes back to McDonalds or Walmart and that’s how you can make the argument that they must be greedy to charge more for a hamburger when they raise the minimum wage. The problem with that argument is that it is not only McDonald’s/Walmart that is expected to pay the higher minimum wage. It’s also Joe’s pizza and Bob’s convenience store. Small to Medium sized businesses employ a huge portion of the population and in many cases they have worked there way up from nothing to open these businesses. Now you put that burden on them and ask them to eat into their own livelihood. MAny of them aren’t rich, they just make a decent living working long hours to do so. They are more likely to cut back their staff than cut into their families livelihood. That’s not greed.

    Minimum wage was never meant to be a living wage. So, when I started at Burger King when I was 15, I should have been making $14.00/hr? I had no experience, it was my very first job, I slacked off as much as I worked because while my paper route taught me something about a work ethic it certainly didn’t complete the job of teaching me to work hard and get ahead. Burger King was only a stepping stone to Jordan Marsh, Sears, The Colonial Hilton, Lechmere, Stream/Microsoft, Kenan, Greenpoints, and then Iron Mountain. I strived for more. Before you assume that I was privileged (which compared to some I certainly was), my parents made me work for what I earned. I paid for my first car, started work at 15 (younger if paper routes count), worked full time through College, and kept striving for something more. That’s not greed.

    It’s also not greed to look at the history of raising the minimum wage and look to see if (as you noted) it has the effect that you are looking for…so I do get that debate, but we should also be fair to the people that have worked their way up out of minimum wage and started small/medium sized businesses and not assume they are greedy when they might oppose the minimum wage hike.

    • revlmftblog1 says:

      Sean:

      I also had a paper route. I also worked my way through most of seminary with 3 jobs at times. But it couldn’t be done anymore, and that was 25 years ago.

      I’m impressed, and you should be proud, of your work. It might be interesting to tie minimum wage to age, so kids DO learn a work ethic. I respect anybody who’s ever worked hard in their lives.

      The problem is that people who can only get that kind of work — laid off folks, and just plain poor folks. More later…

  2. Bob Youknowho says:

    I was at the supermarket a few weeks ago, during some quiet hours. The cashiers and baggers were chatting about how exicted they were about the potential of getting a raise. I asked them if any of them would be losing their jobs because the store wouldn’t be able to afford having these size people standing around not working any more.

    Now obviously I have no idea about this particular store’s finances and business philosophy, but the money has to come from somewhere:
    1) Pay fewer workers
    2) Lower profits (obviously your favorite)
    3) Increased prices

    You started out by saying you don’t like “greed”. But, if Mr. Shaw hadn’t been “greedy” when he started his grocery store, would any of these kids have these jobs in the first place? So, if you take away profits, aren’t you de-incentivizing companies from starting and jobs from being created?

    What about increasing prices? Well let’s think that through also. If prices go up (assume on a level basis through the whole economy), then all of these raises that people were just given have been counter-acted by the fact that their dollars will buy less! (And everyone else’s dollars too). So after all of the inflation settles out through the economy, everything is exactly the same and people will start saying that minimum-wage workers aren’t paid enough and part of the population will start screaming for a higher minimum wage again…

    I’m not trying to criticize anyone – just presenting food for thought.

    • revlmftblog1 says:

      Bob:

      I think that’s the point about math I was trying to make. I just don’t understand how it works.

      You ask, though, “… if Mr. Shaw hadn’t been “greedy” when he started his grocery store, would any of these kids have these jobs in the first place?” and I don’t get it. He needs workers to make his dream of a bigger store. He doesn’t need more money, per se.

      The point about “greedy” is that we get to a point where we don’t need any more of whatever — in this case, money.

      Drive is ok — a good thing, even. But once you’ve accomplished a financial goal, at some point, you don’t need more. That’s how “trickle down” was supposed to work — after an owner got so much that they didn’t need anymore, their workers or community or world could get the excess. But that didn’t happen, and that’s where I call it greed.

  3. Bob Youknowho says:

    Well I am speaking about Mr. Shaw on an entirely hypothetical basis of course. However, I’m sure instead of taking such a monumental risk to start a business, he was probably very smart and could have taken a pretty decent humdrum corporate job. However because of hypothetical “greed”, he decided to take a HUGE risk and start a company. Does that make sense?

    And you misunderstand about trickle-down. If I understand what you say, you seem to think that any “excess” should be given to the community charitably. And while I believe that charity should play a HUGE part in our economy (and based on our discussions in the past, I suspect that I place even more importance on charity than you do), that’s not the idea of trickle-down at all. Let’s suppose that Mr. Shaw develops wealth of billions upon billions of dollars. He may decide to add more wings onto his mansion – hence some of his money “trickles down” to the construction workers, electricians, masons, plumbers, etc., who do the work. Or, he might invest it in stocks so that his money “trickles down” to other businesses (who can subsequently use that money to employ more people, etc.). Or he might buy exquisite cars (thereby employing people who build those cars in factories). Or, even if he just leaves the money in an abhorrently large savings account, the banks can “trickle down” that money in the form of loans, mortgages, etc., so that other areas of the economy can use that money to flourish. (There are formulas to determine how much impact a dollar of savings in a bank will have on the rest of the economy – and depending on the interest rates, putting a dollar in the bank will yield about 15 dollars to be “available” to the rest of the economy!)

    So yes, Mr. Shaw could potentially be building a vast fortune (based on greed). But all of that money will still somehow “trickle down” into the rest of the economy, and have a lot of benefits!

    The only way that huge vast fortune wouldn’t benefit the rest of the economy is if he literally stashes dollar bills in his mattress. Anything else he does with that money will have benefits (and sometimes manifold benefits) on the overall economy.

    So although there is definitely a component of jealousy for someone with a vast fortune, the economic fact is the money will have a huge benefit on the economy and we should support anyone who can take risks like this and help so many other people. So whether his motivation is greed or philanthropy, his personal wealth is a great thing for everyone! (And personally, I’ve found that trying to figure out other people’s motivations is quite unhealthy)

    (There were a lot of people who made the claim that “Reagan’s trickle down theory” didn’t work in practice, however when I listened to those people they didn’t really understand the theory either. It DOES work, there is no way it can’t – unless he stuffs his dollar bills into mattresses).

    • revlmftblog1 says:

      Ah, Bob… I get what you’re saying, but Mitt Romney and many others do just that — their “mattress” is in the Grand Caymans.

      Also, experientially, there seem to be more poor out there, and the gap between rich and poor is growing. I get what the theory says now that you’ve explained it, but how do you explain the reality ?

      I’m trying to be practical here and don’t want to fix a problem that doesn’t exist, just the ones that do.

      Peace,

      Jihn

  4. Bob Youknowho says:

    Very insightful, Jihn! 😉

    You’ve just stumbled onto a flaw in the system, and why I used the word “overall” (which the grammar nazi in me just realized that it should have been two words, “over all”- but I digress). Actually a more correct word would have been “global”.

    In an economy, it’s the exchange of money for goods/services that creates wealth (and standard of living) for all. For example If I spend a dollar on a chair, the carpenter benefits from that dollar. And the carpenter might spend that dollar on a piece of wood. And the lumberjack might use that dollar to buy a saw or clothing. And so on. As long as dollars are being exchanged for goods & services (and yes that includes counseling services), ALL of our standards of living will increase.

    The flaw that you’ve discovered is that some of the dollars have left the US economy. (They are still in the “overall economy”, and providing benefits to citizens of the Cayman Islands, however they have left the US economy).

    How could that money still benefit the US economy? Only if the citizens of the Cayman Islands, through their economic benefit, return those dollars to the USA (perhaps by buying USA-made goods). Otherwise, those dollars are, in fact, “lost” from the USA and no longer generating more wealth for us (but they are still generating wealth elsewhere).

    And just for fun, this brings us to the trade deficit and why buying goods from China is a HORRIBLE thing for the US economy. Instead of that dollar being used to benefit the carpenter, the lumberjack, the saw manufacturer, the clothing manufacturer, and so on – the dollar that you just spent on the Chinese chair is now having all of those benefits for Chinese carpenters, Chinese saw manufacturers, Chinese clothing manufactures, and so on. (And, BTW, none of those people will have that dollar to buy your counseling services!!! Oops!)

    Does that answer your question?

    • revlmftblog1 says:

      It is, as I thought, part of the problem. I suspect there are more ways that rich “tax dodges” mess with the system, but thanks for the acknowledgement.

      I agree about the Chinese, but I don’t need the business. There seem to be enough

      • Bob Youknowho says:

        Well some other time I’ll talk about how horrible taxation is for the economy, and why the rich look so hard for opportunities to dodge taxes….

        And if you don’t need the business, there are plenty of other counselors who *could* use the business! (And in case you missed my point, I was trying to say that there are Americans who don’t have money to buy counseling services because of the dollars that left the economy, I wasn’t saying that you would expect Chinese patients…)

        By the way, we’ve strayed far from your original post about minimum wage – sorry about that 😦

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