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Can YOU live on a $15 Minimum Wage! It's a start, but a truly fair MW beats welfare

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The Biden administration has made major news by pledging to address the absolutely awful state of the national minimum wage standard, calling for a universal increase to $15 an hour.  In comparison to today’s reality, it looks like,  and in many cases IS, a big deal for workers because in a state like Pennsylvania where I live, it would literally MORE than double the current state minimum wage of $7.25.  Wow...REALLY?  Yup….and it has been there for 11 straight years.

So yes, $15 is a big deal, but let us be blunt.  It should be just a start, especially if America wakes up to the fact that a truly fair Minimum Wage, one that takes into account the true costs of living by region for a set of agreed upon basic living costs is a far more efficient way to more fairly allocate resources.  And as the Biden relief package begins to unfold, there are already signs that that $15 idea could be a bargaining chip that gets sidelined.  If that happens, it would be tragic and a major missed opportunity to change the way we distribute income in America.

I’ll give you a challenge, especially those of you making a decent wage, a solid annual salary, living in a nice home with a car.  Let’s do some quick and easy computations and then see if you can create a viable budget with the results:

Gross earnings IF you are fully employed at a $15 minimum wage?   $30,000 (and in today’s gig economy full employment is often a myth.)

Then deduct off the top:  Taxes:

If you are single and a wage earner with an annual salary of $30,000, your federal income tax liability will be approximately $2,500. Social security and medicare tax will be approximately $2,300.

Ouch….Collectively that roughly 5 grand right off the top.  Starting from there and rounding off, you now have to figure out how to live on a tad over $2,000 per month.  So get to work.  You may want to do some online searching to find average cost-of-living figures for various items, but use them as rough figures as you add up housing, food, transportation, child care, health care and other necessities:

Basic cost-of-living expenses include housing, food, transportation, child care, health care and other necessities, according to the Economic Policy Institute.

Cost-of-living expenses can vary from person to person because of factors like lifestyle and family size. For example, commuting costs could vary based on your job and how you get to work. The bigger your home, the more you may pay for things like heating and air conditioning. And having to provide for kids could increase costs in a number of different ways.

Cost-of-living estimates can also vary depending on which data is referenced, which standard-of-living measure is considered and how everything is calculated.

Take the most basic….

Rent, or if you are “lucky” a mortgage payment and property taxes

Food

Transportation— If its your own vehicle, add gas, license, fees, taxes and insurance.

Child care — Really rough for single women with kids. Good luck if you have children and no relatives to help you or need to pay for day care.

Health care— hopefully you can get affordable care.  But better make sure affordable doesn’t mean a meaningless policy that leaves you holding the bag when something bad happens.

Phone— gotta have one these days plus fees for apps and services

TV and with it basic cable

Utilities unless you get those with your rent.

Try it yourself…..see how far you get down that list of basics before the difference between income and outgo crosses paths.  And good luck with even thinking about job training, savings for emergencies or retirement.

We all know it basically…..a minimum wage today, even at $15 just is not sustainable without tons of compromises...leaning on relatives and friends, extremely cheap and often crumbling housing that can require sharing spaces...not an ideal situation, public transportation, living in “food deserts” with poor choices and limited supplies of often high-priced basics. And as the pandemic reveals, working long hours under often unsafe conditions that risk your health and safety.

We respond by not really thinking about it if it doesn’t affect us directly.  We hear the howls from those who disparage low wage individuals as “ too dumb to get a good job,” or “are just lazy and looking for a handout.”  And we don’t push back on the reality that most on minimum wages and often less-than-full-time jobs in today’s gig work universe, ARE working REALLY hard just to survive.

Go visit a nursing home or dementia facility and, if they will tell you, ask how many are working more than one job….sometimes two full time.  Go ask the guy working as a night guard who never sees his family in daytime because it’s all he can get and he has no bargaining power.

The stories are endless and the result is a huge segment of Americans today living at or below poverty, often working like hell, but having to turn to welfare, and food and heat and rent assistance — welfare programs that for decades have been the focal point of battles over welfare queens, people buying caviar with food stamps, lazy bums churning out kids and taking OUR tax dollars to churn out another generation of welfare cheats.

In many cases, the reality is that the millions of workers, laboring at wages that barely sustain them get paid those wages by giant corporations (Amazon, Uber, Lyft, Walmart, McDonalds) that howl at minimum wage increases even as those same workers turn to welfare assistance because their wages aren’t enough.

In 2014, Americans for Tax Fairness published a report documenting that Walmart alone was costing American taxpayers $6.2 BILLION a year by paying wages so low the workers had to use welfare programs to supplement their income.  (Methodology for the study and how the figures were arrived at can be found in the linked article. And remember this was over a half decade ago.)

"It found that a single Walmart Supercenter cost taxpayers between $904,542 and $1.75 million per year, or between $3,015 and $5,815 on average for each of 300 workers."

Americans for Tax Fairness then took the mid-point of that range ($4,415) and multiplied it by Walmart’s approximately 1.4 million workers to come up with an estimate of the overall taxpayers' bill for the Bentonville, Ark.-based big box giant's staffers.

The report provides a state-by-state breakdown of these figures, as well as some context on the other side of the coin: Walmart's huge share of the nationwide SNAP, or food stamp, market.

"Walmart told analysts last year that the company has captured 18 percent of the SNAP market," it reads. "Using that figure, we estimate that the company accounted for $13.5 billion out of $76 billion in food stamp sales in 2013."

Pay attention to that last paragraph. Walmart paid such low wages its workers HAD to pursue welfare programs to get by, and Walmart reaped the benefit by raking in 18% of all the federal food benefits given to low-wage families.  Pretty good deal — pay poverty wages and then have them spend those welfare food benefits at Walmart.

THIS is the point where all of us need to step back and shift our views about how income is distributed in America and the huge and growing disparity between the low-wage, often minimum wage workers and even decently well off middle class workers and families. 

As noted, the lowest paid get minimum wage AND have to turn to welfare programs — programs that are reviled, demonized, scapegoated, inefficient, time consuming, demeaning and bureaucratic.  Not only do they COST billions in benefits themselves, they also cost billions in the resources to administer them, and they are commonly rife with corruption.

Here’s a crazy idea!!!!

What if we sat down and decided on a basic, reasonably fair minimum wage (adjusted for local and regional realities) high enough to cover at least the true basics of living?

Oh, but business owners and Heritage Foundation economists and Ayn Rand acolytes will holler:  “We can’t afford it.  They’ll go out of business.  It will cost jobs.  They can’t compete. It’s pure socialism.”

NONSENSE and HOGWASH!!!

If all businesses are subject to a common minimum wage obligation, it blocks those who benefit by screwing their workers to cut costs and gain an advantage, while others who want to be fair have difficulty competing.  Much more level playing field.

How about us, as consumers of goods and services provided by businesses that rely on intensely low cost labor:  restaurants, janitors, crossing guards, produce workers, meat plant workers, etc.? 

Yes, all of us will wind up paying a few cents more for hamburgers, a head of lettuce, a sit-down or take out meal, a taxi ride.  And it will add up overall to higher costs and we will pay them.  But spread across the entire population, it should not be onerous.

BUT RIGHT NOW WE IGNORE THE FACT THAT WE ARE ALREADY PAYING HIGHER TAXES TO SUPPORT INEFFICIENT PROGRAMS

We need to  recognize that the costs we ALREADY pay to help the very poor — those inefficient welfare programs with their billions a year paid out because corporations resist fair wages…..those programs can be substantially reduced because workers will be paid directly a fair wage for their services and can afford more and better food, a better place to live, and a better life for them and their families.

And there is ample evidence that additional income for lower wage workers goes back into the economy MUCH more rapidly than when goes to the very wealthy. It’s a direct and speedy economic stimulus.

Let’s change the narrative everyone.  The benefits for us all could be truly amazing if we accept today’s reality and the real need for substantive change.  $15 is a lot better, but it is only a start!


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