Our "Livable" Wage

 

 

"Can all this money make this better? I sure hope so!"

My first job in the sixties was like many other in that day. I was paid a dollar an hour to bus dishes at a restaurant. When I worked a few hours at the YMCA, my pay was 85 cents an hour. When the new Montgomery Wards store opened up in town, I felt rich as I was able to negotiate $1.25 an hour. This was all fine and good as I was still in high school, living with Mom and Dad, and any money I made was all disposable.

As of late, our imperial President (who just happens to live more lavishly than Henry the Eighth), has been chiding the country for wage inequality. It is simply not fair! Thus, his minions in the Senate, as well as many state houses in various parts of the country, have set a course to right this egregious wrong. Old terms such as "minimum wage" are quickly being supplanted with new ones like "livable wage".

How bad has it gotten? One fine Progressive law maker in California recently said the "livable wage" needs to be $26/hour just in California. Why just in California? Well, you know - due to excessive regulations, the state is very expensive to live in. $26/hour, or $54,000/year will allow you to just squeak by in the Golden State.

In 2012, the median annual income for a family of four was $65,000. If California did pass a law which would establish a "floor" for wages at $54,000, what do you think would happen to jobs that required skills and training? Bingo! All wages would start to spike up. The pool of money to be paid in wages however, would remain static. Some economists have estimated that even a "floor" wage of $10.10/hour (as our President wants) would shrink the labor force by another 500,000 people.

The question which begs to be asked of the "wizards of smart" in Washington is simply this - with our labor participation percentage at historic lows, with almost 92,000,000 people out of the work force, why in the world would we want to tinker with a system that has worked well for decades? The minimum wage was NEVER intended to be a livable wage - it was only a starting point for kids or unskilled workers. Today however, many seem to think a 'livable wage" (like health care) is a right which should be woven into our Bill of Rights.

In the next few weeks or months when the sophism and hyperbole really starts to flow, remember one basic rule of physics as well as economics - "you can't make something out of nothing". In other words, the variable in the equation will be the number of people working. Once we artificially mess with wages, the number of people working will have to go down. It really is as simple as that.