Reflections on the Minimum Wage

NJ has put on the Nov 2 election ballot a NJ State Constitutional Amendment to raise the minimum wage.
My feelings on this are that it is a false flag operation that either ignores the real issues that cause poverty or it's more nefarious; in that is is a stepping stone to the progressive / State-ist ultimate goal- a "living wage".


Some excerpts from the Bureau of Labor Statistics:

Characteristics of Minimum Wage Workers: 2012
In 2012, 75.3 million workers in the United States age 16 and over were paid at hourly rates, representing 59.0 percent of all wage and salary workers. ¹ Among those paid by the hour, 1.6 million earned exactly the prevailing federal minimum wage of $7.25 per hour. About 2.0 million had wages below the federal minimum.² Together, these 3.6 million workers with wages at or below the federal minimum made up 4.7 percent of all hourly paid workers.

• Minimum wage workers tend to be young. Although workers under age 25 represented only about one-fifth of hourly paid workers, they made up about half of those paid the Federal minimum wage or less. Among employed teenagers paid by the hour, about 21 percent earned the minimum wage or less, compared with about 3 percent of workers age 25 and over. (See table 1 and table 7.)
• In 2012, 6 percent of women paid hourly rates had wages at or below the prevailing federal minimum, compared with about 3 percent of men. (See table 1.)
• About 5 percent of White, Black, and Hispanic or Latino hourly paid workers earned the federal minimum wage or less. Among Asian workers paid at hourly rates, about 3 percent earned the minimum wage or less. (See table 1.)
• Among hourly paid workers age 16 and over, about 10 percent of those who had less than a high school diploma earned the federal minimum wage or less, compared with about 4 percent of those who had a high school diploma (with no college) and about 2 percent of college graduates. (See table 6.)
• About 11 percent of part-time workers (persons who usually work less than 35 hours per week) were paid the federal minimum wage or less, compared with about 2 percent of full-time workers. (See table 1 and table 9.)
• By major occupational group, the highest proportion of hourly paid workers earning at or below the federal minimum wage was in service occupations, at about 12 percent. About three-fifths of workers earning the minimum wage or less in 2012 were employed in service occupations, mostly in food preparation and serving related jobs. (See table 4.)
• The industry with the highest proportion of workers with hourly wages at or below the federal minimum wage was leisure and hospitality (about 19 percent). About half of all workers paid at or below the federal minimum wage were employed in this industry, the vast majority in restaurants and other food services. For many of these workers, tips and commissions supplement the hourly wages received. (See table 5.)
  
• The proportion of hourly paid workers earning the prevailing federal minimum wage or less declined from 5.2 percent in 2011 to 4.7 percent in 2012. This remains well below the figure of 13.4 percent in 1979, when data were first collected on a regular basis. (See table 10.)

 http://www.bls.gov/cps/minwage2012.htm

On May 24, 1937, President Roosevelt sent the bill (Fair Labor Standards Act of 1938) to Congress. The bill provided for a 40-cent-an-hour minimum wage, a 40-hour maximum workweek, and a minimum working age of 16 except in certain industries outside of mining and manufacturing. The bill also proposed a five-member labor standards board which could authorize still higher wages and shorter hours after review of certain cases. Proponents of the bill stressed the need to fulfill the President's promise to correct conditions under which "one-third of the population" were "ill-nourished, ill-clad, and ill- housed." Interestingly, and this is my mojor point, it is clear the minimum wage has done nothing to reduce poverty!!! Nothing.
 
  The case of the much publicized fast food worker:
Value Meal # 2 please, diet coke. An automated cash register rings up sale, automated fry machines time and beep when fries cooked, same for burger, register even tells how much change to give. Boring work, make no mistake. But, it teaches responsibility. Show up on time for your shift. Be neat, polite, work well with others, be client-centric. LEARN. Now go get a new job, showcasing this experience and I guarentee you will be making more than the minimum. Yet Union agitators, like the SEIU like to push these poor folk who do not understand the bigger issues to demand more money. You see, all-too-often, one of the unintended consequences of efforts to create artificial monopolies in labor markets (minimum wage also means it is illegal for you the individual to sell your services for less) is that the entrepreneurial spirit normally finds a way around barriers that goverments or unions place in its way.

Meet Alpha. Alpha is a fully-functioning hamburger slicer, dicer and flipper. In fact, Alpha pumps out 360 burgers per hour.  http://momentummachines.com/#product  According to Momentum Machines website:

• it slices toppings like tomatoes and pickles immediately before it places the slice onto your burger, giving you the freshest burger possible.
• our next revision will offer custom meat grinds for every single customer. Want a patty with 1/3 pork and 2/3 bison ground to order? No problem.
• Also, our next revision will use gourmet cooking techniques never before used in a fast food restaurant, giving the patty the perfect char but keeping in all the juices.
• it’s more consistent, more sanitary, and can produce ~360 hamburgers per hour.

The labor savings allow a restaurant to spend approximately twice as much on high quality ingredients and the gourmet cooking techniques make the ingredients taste that much better. 
Pictures: http://momentummachines.com/gallery/

So here we see one example of what can happen when the cost of technology is less than or equal to the cost of labor. Keep insisting on government or union mandated increases and viola- a solution that favors business but surely not the low or unskilled worker. No more minimum wage entry level fast food jobs. Now, you still need an entry level job to start, where?

The New Jersey Minimum Wage Increase Amendment, Public Question 2, also known as SCR 1, is on the November 5, 2013 ballot in the state of New Jersey as a legislatively-referred constitutional amendment.The measure would set minimum wage at $8.25 per hour with annual adjustments for inflation beginning January 1, 2014, if approved. The current minimum wage in the state is $7.25; the same as the current federal wage. The measure will also add automatic yearly increases based on the Consumer Price Index.

• "Reasons to Vote Yes" as stated in the League of Women Voters description of the Public Question 2

The current minimum wage has not kept up with inflation and is not sufficient to sustain a family. Adjusted for inflation, New Jersey’s current minimum wage is lower than it was in 1967. Increasing the purchasing power of low wage workers could benefit the economy as well as the workers directly affected. Better paid workers may be more productive, and more loyal, sparing companies the expense of training new workers when old ones leave. If workers are being paid too little to support themselves, this raises issues of basic fairness. Tying the minimum wage to the consumer price index and building it into the constitution ensures that workers will have a minimum wage level that keeps up with inflation and avoids having to fight a battle over the minimum every few years.

 Reasons to Vote No" as stated in the League of Women Voters description of the Public Question 2:

Tying the minimum wage (and annual increases) to the NJ State Constitution will make it less flexible and more difficult to change, should the need arise. Increasing the minimum wage might reduce the number of available jobs and/or increase the cost of products and services. Small employers may have an especially difficult time paying a higher rate. If increasing the minimum wage is beneficial to companies through reduced turnover and more productive workers (as some argue), then wages should rise by way of market forces without a government mandate. Some workers have been pressing for a minimum wage of $10 or higher -- if that was an appropriate level, then constitutionally fixing the rate at an inflation-adjusted $8.25 ties New Jersey to an inadequate minimum for a long time.

Source: http://ballotpedia.org/wiki/index.php/New_Jersey_Minimum_Wage_Increase_Amendment,_Public_Question_2_%282013%29
 

Read more: http://blog.heritage.org/2013/03/05/busting-5-myths-about-the-minimum-wage/

Read more: http://www.businessinsider.com/charts-obama-9-dollar-minimum-wage-historical-2013-2#ixzz2iHVgqBLd

According to a 1978 article in the American Economic Review, 90 percent of the economists surveyed agreed that the minimum wage increases unemployment among low-skilled workers.


A 1992 survey by published in the same journal revealed 79% of economists in agreement that a minimum wage increases unemployment among young and unskilled workers.



 In 2013, a diverse group of economics experts was surveyed on their view of the minimum wage's impact on employment. 34% of respondents agreed with the statement, "Raising the federal minimum wage to $9 per hour would make it noticeably harder for low-skilled workers to find employment." 32% disagreed and the remaining voters were uncertain or had no opinion on the question. So 1/3-1/3-1/3, no clue. Because it does not bring the intended results...well intentioned, yes, Results, not so much. 


 Let us start with some facts as a base line.Who after all is the minimum wage worker? With the exception of industries that are "tips" oriented, quite lucrative in many cases (cash is unreported, untaxed income afterall...oh come on man, you know that is true), the real minimum wage worker is the no skill entrant into the workforce, the teenager, or the super low skill manual labor worker. That's it. Everyone one else, that has some skills, drive a forklift, can do basic math to work in warehouse, do measurements, construction industries, etc...well, they do not get paid minimum. Minimum wage means just that. You have nothing to offer the employer but the bare minimum. Cold, hard fact.

 I do not support the Amendment as I do not think minimum wage should be part of the NJ State Constitution. I would agree that minimum wage when adjusted for inflation has not kept up, but I firmly believe there are other ways to address the issue. Want to raise the minimum absent of a link to the state constitution, ok, fine. 
I will address poverty and how to finally make a positive impact in a future post. 
 
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