Sunday, March 31, 2013

$17 Should be the Minimum Wage

Please bear with me for a couple of minutes as we hash over some basic income statistics...or not.

Back in 2007 the "median household income" was $55,438. According to a new report from Sentier Research, that's declined to $51,404 in February 2013.

If you consider that a majority of households in the U.S. (approximately 80%, the majority of which are married couples) who now have two or more incomes, for the sake of this post, we can divide the median household income by 2 to = $25,702 for a median average income per year.

But according to the Bureau of Labor Statistics, the median weekly earnings of the nation's 103.8 million full-time wage and salary workers was $775 by the end of last year (or $40,300 a year GROSS).

Persons employed full time in management, professional, and related occupations had the highest median weekly earnings of $1,146 ($59,592 a year GROSS)--- while those employed in service jobs earned the least with a median wage of $485 a week (or $25,220 a year GROSS). Now combine ÷ 2 = $55,906 a year GROSS.

And yet, according to the latest data from the Social Security Administration, 50% of all U.S. wage earners had a NET income of $520 a week or LESS, (or $27,000 a year or LESS ).

I've added those figures ($25,702, $40,300, $55,906, and $27,000) ÷ 4 = $37,227 a year ÷ 52 weeks = $715.90 a week ÷ 40 hours = $17.90 an hour.

$17.90 an hour is what I've given you as a statistical value for a "median hourly wage" (meaning half of all Americans earn this or less, and the other half earn this or more). Now allow me to explain why $17.90 an hour should instead be the new minimum wage (and also indexed for inflation).

First, let's examine the chart below. As you can see 40% of the entire U.S. workforce earns less than $20,000 a year --- That's 61 million working Americans.

Median wages in the U.S.

The poverty rate threshold for a family of four in 2012 was $23,681 a year before taxes (The official poverty measure in the United States is defined in terms of before-tax cash income.) A majority of poor households are single parents (51%), of which 97% are mothers, of which 69% rely on food stamps. and 50% of poor families have no air conditioning (but yes, as Fox News pointed out, most do have refrigerators), and 68% of poor single parents rely on Medicaid, of which 87% of those report not having enough to eat.

Mitt Romney's "47%" (those who need "entitlements") earns less than $25,000 a year. (Source: Social Security Administration)

Entitlements (e.g. food stamps, Medicaid, etc.) are really "wage subsidies" for large corporations like McDonald's and Wal-Mart. Many of the largest U.S. corporations, on average, have paid an "effective" U.S. corporate tax rate of only 8.1% over the last 5 years. So they haven't even been paying for their fair share of these "wage subsidies" either. But yet, they want everybody else to make these "shared sacrifices" while their profits and executive salaries have grown larger and larger, year after year.

40 years ago in 1973 (as a high school drop out) I was earning $7.50 a hour in a union sheet metal shop as a welder's helper. According to the Bureau of Labor Statistics' CPI inflation calculator, what I earned in 1973 would be $39.22 today (or $81,577 a year). But according to the Bureau of Labor Statistics, the median wage for a welder in 2010 was only $17.04 per hour (or $35,450 per year).

In other words, what a skilled welder is [under] paid today at $17.04 per hour, is about what I calculated the minimum wage of $17.90 an hour should be today --- Remember, I was earning $7.50 an hour 40 years ago, and the federal minimum wage today is only $7.25 an hour.

If a business owner (small or otherwise) says they can't afford to pay their workers at least $17 an hour in 2013, then maybe they shouldn't be in business at all. Plantation owners weren't "businessmen", they were "exploiters", just like war profiteers and price gougers. Henry Ford was a businessman. Capitalism shouldn't be about personal gain at any cost to the masses; it should be shared economic prosperity for all.

CEOs shouldn't be earning 380 times more than their lowest paid employee. A CEO on the S&P 500 earns an average salary of $13 million a year. If the lowest paid worker at Wal-Mart earned $17 an hour, that's $35,360 a year, and that still goes in to $1 million 283 times. The owners of Wal-Mart (the Walton family) have already amassed more than $100 billion. How much personal net wealth do just a few individuals need before they can finally say they are "free" --- and are enjoying "free markets" --- and are participating in "free enterprise" in a "free society"? The word "free" has been more symbolic of "greed" than anything else these past 40 in "free to exploit".

And yet, still they complain.

In 1988 (25 years ago), while managing a small business (a video rental store), we were paying our employees (college students) $9 an hour to work the counter --- Remember, that was 25 years ago. And that's still more than what many workers are paid by Wal-Mart and McDonald's today, who are America's two largest job creators (the federal government, which also includes the U.S. military, is America's largest job creator).

Of course, if you also included State and City employees, "government" (by a much wider margin) would employee many more people --- and would without question --- be our largest "job creator" (who, by the way, pays better wages, employs full-time, and offers much better benefits.)

But the GOP uses this fact as a "wedge issue" to divide the American workers, saying government employees are paid too much, when in fact, it's been the wages in the private sector that have paid much too little for far too long.

But it should also be noted that a single person who is earning $17.42 an hour (or more) today, will also be paying a higher tax rate that Mitt Romney will on $20 million of annual income earned from his capital gains. So I propose that the new minimum wage be $17.41 an hour (and only if you work over-time will you be in the higher income tax bracket.)

Marginal Income Tax Rates for 2013

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