There’s a lot of talk about the $15 per hour national minimum wage – some say it’s too much for unskilled labor, or the increase will crush small business owners – others say it’s a much-needed living wage, or its long overdue – and some even say its cloaked welfare – etc., etc….
In this case, there are many sides to this controversial topic to consider – responsible folks “should” do some research, some math, and maybe some analysis before supporting, or tearing down either side of the topic – the worst thing we can do, is hold fast to a “party” position without considering the issue for ourselves.
Let us consider three points:
- Is there a disparity between increased cost of necessities, verses increased hourly wages?
- If there is a disparity, how should we address this it?
- What is the bigger picture to consider in relation to 42 million Americans living in poverty in the richest nation on the world?
(You knew this was coming) I’ve pulled together some research for us to consider – for example:
- It is very easy to calculate the increased cost of basic necessities over the last twenty years – items like milk, bread, meats, vegetables, school supplies, clothing, hygiene items, housing, gas, transportation, phones, wifi, etc., etc…
- Its even easier to calculate the increase of the national minimum wage over the last twenty years – there has only been one increase to evaluate – a comparison analysis of these two increases (wage vs costs) can tell us a little about whether the national minimum wage should be considered for an increase.
SIDEBAR: If we were really savvy, we’d factor for itemized inflation, world markets, trade agreements, etc., etc… – nawwwwww – for this exercise, lets keep it focused on increases in costs of necessities, measured against increases in nation minimum wage during the same time period.
Spoiler alert! So far, the trends are pretty obvious – even though I’m researching by individual items (milk, bread, meats, etc.), it’s not hard to draw a conclusion that basic costs of necessities have increased anywhere from 55% to 85% over the last twenty years.
Remember, over the last twenty years there has only been one increase to the nation minimum wage – so that increase was easy to factor – I also consider the increases that 29 states have applied to their minimum wages that exceed the national minimum wage – I calculated those increases into a national average according to each relevant state’s estimated number of hourly wage works, measured against the estimated national number of hourly wage workers (not 1 to 1, but ratio to 1) – to insure larger (or smaller) states with a higher minimum wage, can be calculated proportionally to reflect in the national minimum wage.
So, my first point, initial findings illustrate the basic costs of necessities have increased anywhere from 55.3% to 85.2% over the last twenty years (call it 70.5% for illustration purposes).
In comparison, the national minimum wage, adjusted for states with higher minimum wages, has increased 38.8% over the last twenty years.
70.5% Cost Increases
38.8% Wage Increases
= 31.7% Disparity of Wage verses Cost
YES! There is a disparity – tell the truth, most of you already anticipated this outcome, right?
So, on to my second point – what should we consider, or evaluate to address the pretty obvious disparity?
“IF’ the increase to the national minimum wage is falling significantly behind increase costs of necessities, logic would suggest the national minimum wage should be considered for an increase – unless…
Unless, the national minimum wage was proportionally too high twenty years ago – which I strongly doubt (and the math does not support), but it is a possibility I needed to eliminate.
Or, unless the increase will cause harm to some layer of the economic process – for example, an increase of national minimum wage could break the financial backs of small businesses, farmers, and the service industry – I personally believe this to be a ‘fact’ (and not an assumption) – today’s economy will simply pass this increase to the “closest” agent, in the “goods to market pipeline” and financially crush small businesses, farmers and the service industry.
Perhaps, there are other considerations – let’s not ask about the impact to small businesses, farmers, and the service industry just yet – let’s first ask…
Costs to consumers are going up (fact) – those increases are manifested by more money ‘somewhere’ in the economic pipe that provides goods to market – if the cost of minimum wage workers did not go up proportionally, where did those increased monies end up?
Now, I know it is not that simple (don’t start throwing hatchets just yet), but it might be time to consider a recalculation of the money in the economic pipe (No. No. No, not wealth redistribution, for you extremists out there) – truth is, there are many agents getting paid along the economic pipe that bring goods to market – some of those agent’s average wages actually went up proportionally with increased costs of necessities (imagine that).
Again, the cost of basic necessities is on a steady rise (for a number of economic related reasons) – we know there are many other costs increases inherently baked-in the goods to market process – cost of raw ingredients/goods, production/manufacturing, distribution, retail, risk, etc., etc. – Economics 101 will outline how a single dollar can be divided up across this goods to market process.
And there is my second point – there are motives and methods for each cent of that illustrated dollar as it is divided up respectively.
There are decision makers all along the goods to market process – these super smart people ensure every penny of every dollar is evaluated against several costs:
- Is the process working effectively/efficiently,
- Are there are allowances for growth/modernization,
- Are costs of doing business accounted for,
- Is quality, quantity, and productivity considered,
- Are benefits and wages (for some) factored in,
- etc., etc… (it’s a very long list).
These super smart people COULD realign additional pennies for small businesses, farmers, service industry, and in turn hourly wage workers – but these are individual choices – and these choices are not necessarily in line with normal business practices, or basic human nature – and seriously, why would they take monies out of their assets, and give them to another agent without being legally obligated to do so?
Remember, a great deal of work has gone into ensuring that each “goods to market pipeline” works at maximum efficiency, productivity, and profitability – why would they risk toppling that lucrative process?
Finally, we have reached my third point – history is one of our greatest teachers – we could learn a lot from history, if we capture it accurately and reflect on it – the economic history of our nation tells many stories and provides many lessons to consider – in fact, there have been hundreds (if not thousands) of historic changes in our economic history, in spite of there being no legal motive to change – the absence of legal precedence gave way for other agents to step up to address moral wrongs discovered in the process – for example:
- Individuals, markets, or businesses influenced agents in the “goods to market pipeline” to alter how their pennies were rationed for the greater good of the larger process.
- Institutions, the medical community, science, and discoveries influenced the development and manufacturing of goods, materials, foods, and products to be better, safer, and smarter.
- Workplace disasters, faulty products, worker abuse, and evolving safety considerations influenced major changes in all through our economic engines.
- Organizations, corporations, churches, banking activities, advocacy groups, and advancing legal influences began to take on moral shortfalls to stand up for workers, consumers, and those who found themselves (like wage workers) in the many overlooked cracks of the goods to market process.
- And finally, the government developed, advanced, and maintains systems to ensure all of the decisions influencing the division of pennies of each dollar, is done so with some degree of legal obligation because of moral wrongs that naturally surface as a result of human nature.
All that said, to say…
Perhaps it is that time again – perhaps some of these influencers may step up and address this potential moral wrong that has surfaced in the greater economic process – regardless of the absence of legal obligation, a moral outcry from our nation’s impoverished begs for our attention.
In the simplest of terms…
The cost of basic necessities has gone up significantly, and the national hourly wages has failed to keep up.
For many of us, our incomes have embedded processes that cause our incomes to increase along with growing cost of necessities each year (without us even asking).
I wonder what our outcry would be without these privileges safeguarding our incomes.
I wonder how quickly we would demand, and receive correction for such a disparity in our version of the economic process.
$15 National Hourly Wage – Is it Enough?
Kevin's Thoughts 