Fair Wages, part I

The Colorado minimum wage increase ballot issue passed last week. I feel a little bad about voting against it, so I’ll make up for it by writing a blog entry on the subject. That’ll show ‘em!

The minimum wage in Colorado is the same as the federal rate, $5.15 an hour. That is shamefully low.

I’ve heard a number of arguments against raising the minimum wage. I won’t discuss them in detail, but will suggest that logically, they must boil down to one of two points:
· Having a minimum wage at all is a bad idea.
· A minimum wage is good, but the current rate is adequate, if not too high already.

I actually don’t hear too many people argue the first; perhaps because that is starting to lose its place as a socially acceptable position, and people don’t have the guts to honestly argue it. I’m sure there are some economists out there who will argue that the economy as a whole would be stronger without it. My guess is that such people are not likely to be earning anywhere near the minimum wage.

But once you accept that there should be a minimum wage, then the whole issue becomes exactly what the rate should be. And I’m not hearing that discussion from the defenders of the status quo, just that the current wage is high enough.

And logically, that’s a weak position to hold. If you think $5.15 an hour is just right, then you should want to raise it for next year to adjust for inflation. If you think it will be fine for next year, then shouldn’t you be arguing that the current rate is too high? Shouldn’t you have been saying that last year and the year before?

Here’s my take. This country is rich and fortunate enough that we should guarantee that everyone who puts in forty honest, hard-working hours a week is entitled to a minimally decent standard of living. This would include:
· renting a clean, safe, one-bedroom or studio apartment
· sufficient amount of groceries, clothes, and other necessities
· adequate health benefits, including long-term disability
· enough to furnish your apartment over the long-term; includes dishes, linens, as well as furniture.
· transportation to/from work
· enough for a small entertainment budget

Note that this doesn’t say anything about being able to support children or a family. I’m a bit undecided on that, actually. On the one hand, if you are in dire financial straits, you shouldn’t be starting a family. On the other hand, if you have a decent job, start a family, lose your job, and are reduced to working minimum wage, there should be some safety net to keep your family solvent. But for now I will say at the very least, you should be able to support just yourself on minimum wage.

Now $5.15 an hour, if you work 40 hours a week for 52 weeks, works out to $10,700 per year. That’s $890 per month, assuming no deductions. I don’t actually know how much you get deducted at that level; I believe there’s something for FICA and maybe Social Security. Still, call it $890 a month.

In grad school, back in the late ‘80’s and early 90’s, I was able to get by on about $900 a month (in 1990 dollars) by being extremely frugal – no eating out; new clothes were rare; furniture was either pulled from a dumpster or donated. My car and part of the insurance was a gift from my parents. When I got sick and insurance wouldn’t cover it, my parents picked up the bill. I did have a few luxuries: I generally didn’t have a roommate; I bought a CD or two a month, and after a while I was able to save up enough to buy a computer. Taking out the entertainment budget, I was technically able to live on less than $800 a month, but I had help. It wasn’t fun, although I had a safety net via my parents, so I never truly worried about going broke. And it was easier to tolerate knowing that it was only temporary (although it lasted five years).

Ahh, the good old days. So can you live on $5.15 an hour, and have the decent standard of living described above? Maybe. It would be very tight – especially if you needed a car. There would be no margin of error. I wouldn’t want to try it.

Anyways, the point is that if you’re against a minimum wage increase, what do you think the value should be? If it’s not enough to live on, why not? My personal take is that some subset of the people who decide the rate should actually try it out for a year and see how they like it.

A few other comments:
Minimum wage increases passed in six states last week – good for them. I saw some grumbling on a conservative website that people “went out and voted themselves a raise.” Ummm . . . no. Amendment 42 in Colorado received over 720,000 votes; way more than the number of people making minimum wage in the state. The whole idea that the minimum wage is some sort of entitlement and because of it, people are being unfairly rewarded is pretty rich … if you think a minimum wage job is some great scam, the McDonald’s down the street is hiring – try it out.



By the way - you can see a map of county results here: http://www.cnn.com/ELECTION/2006/pages/results/states/CO/I/02/map.html. The distribution is pretty interesting. It looks like the results track well with a combination of: Democrat/Republican breakdown in the county, and cost of living. The counties most heavily for the measure were Pitkin (Aspen), and San Miguel (Telluride), while the counties most against were the poorer counties out east. Which raises a good point – it would make sense for the minimum wage to be tied to the cost of living for a region. You need to earn more to live anywhere near Aspen than you to live in Yuma. But that gets back to my original point – let’s figure out what the standard of living should be, then calculate the right wage from that.