Thursday, August 14, 2014

Two Minimum Wages?

One of the difficulties with discussing changes to the minimum wage is that there are different kind of people that have those kinds of jobs.  While it seems reasonable to argue a working adult deserves one rate of pay it may be difficult to make that same argument for a high school student working a part time gig for gas money (leaving aside the thought that a part time minimum wage job might not buy all that much gas right now).

Arguably, although most likely not universally agreed upon, an adult working a full time gig - ie 40 hours/week for 50 weeks/year ought to earn the poverty rate, yes?  This year, for a single person that rate is $11,670 (  There's another dimension to the thing right there: should the size of an earner's family effect their potential minimum wage?

One disaster at a time.

Round up (arbitrarily raise the poverty rate): $12,000/50 weeks/40 hours is... $6/hr.


I hadn't done that math until I wrote that sentence.  That complicates things.

Here I was, hoping I would be able to make a reasonable argument for having different rates for different types of earners - I still think that's possible.  But... my index for what an minimum earning adult was going to be based on the poverty rate.  Based on that math, rounding up comes to $6/hr.  The current federal minimum wage is $7.25/hr ( or $14,500/yr.

So maybe before we start to monkey with the compensation we need to better frame the problem, starting with coming up with a more realistic poverty rate.  Or maybe the first thing ought to be to try to discover if a single adult can reasonably live on $12,000/yr.

I have to say offhandedly that doesn't sound as dire as I thought.  Certainly it's more complicated than $12k/50/40.  Minimum wage earners would be hard pressed to find truly full time work.  Should the minimum wage reflect full time employment or the more likely experience of someone that finds them-self underemployed?  That's actually a more interesting question than some of the others.

Some of the other factors:

  • poverty rate vs. cost of living vs. quality of life
  • worker's age
  • worker's dependents
  • geographical location
All things being equal (although clearly they aren't) I have always been a proponent of raising the minimum wage.  I am starting to wonder if the underlying assumptions aren't a bigger problem than the politics.

FWIW what I was going to say was that I thought there was reasonable motivation to make a distinction between an earner who is being claimed as a dependent on someone else's tax return and someone who is (for lack of a better word) a primary earner.  But let's put a pin in that for a moment.

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