< PREVIOUS ] [ 2005 Index ] [ Ed Quillen HOME ] [ SEARCH ] [ NEXT >
The U.S. Senate has many important matters before it, ranging from a new Supreme Court nominee to a revision of the Endangered Species Act, and there's a proposal to increase the minimum wage, which has been $5.15 an hour since 1997.
This has received support from, of all places, Wal-Mart.
Lee Scott, the company's CEO, said last week that it is
time for Congress to take a responsible look at the minimum
wage
because We can see first-hand at Wal-Mart how
many of our customers are struggling to get by. Our
customers simply don't have the money to buy basic
necessities between paychecks.
In other words, if people don't have money to spend, they won't be enriching Wal-Mart.
Cynics have pointed out that Wal-Mart's competitive position could be improved with a higher minimum wage. The company starts new employees at a rate higher than minimum wage, and the average Wal-Mart hourly pay is about $9.50 an hour.
But the ma-and-pa shops often pay minimum wage. Raising that raises their costs, and makes them less able to compete with Wal-Mart.
This is not just speculation. I saw it happen here when the new Wal-Mart opened in 1997. Several ma-and-pa shops complained that Wal-Mart was poaching away their employees because it paid more. That says something about the economic state of Salida.
What should the minimum wage be? I've read that you're
supposed to spend no more than 30 percent of your income on
housing. If 900-square-foot starter houses
are going
for $150,000, the monthly payment on a 25-year mortgage
will be about $1,100. That means a minimum wage of $19.75
an hour for a minimal house.
But there are other factors. When I got out of high school in 1968 and started paying attention to the prices of things other than record albums, the minimum wage was $1.40 an hour, and self-serve gasoline sold for 25.9 cents a gallon.
So an hour's labor in a laundry washroom bought 5.4 gallons of gas. An hour's labor at the current minimum wage buys about 1.9 gallons. To bring us to 1968 gasoline standards, the minimum wage should be about $14.50 an hour.
You could buy a car that ran, more or less, for $100 then. Judicious shopping for a clunker now might get one for $1,000. That's a tenfold increase, which suggests a minimum wage of $14 an hour.
In 1969, Martha and I rented a furnished studio apartment on Capital Hill in Denver for $60 a month, utilities included. That cost 43 hours of minimum-wage work each month. The same 43 hours of minimum-wage work now would produce $220 for rent. The cheapest close equivalent I could find in yesterday's Post classified ads was $450 a month, and most were around $550. By the small-apartment standard, the minimum wage should be at least $12 an hour.
Beyond shelter and transportation, there's food and clothing. New clothing seems cheaper now than it did then, but since I got much of my wardrobe at the Salvation Army then, I don't remember any prices. As for food, a McDonald's hamburger then was 15 cents, or 6.4 minutes of minimum-wage work. Now a burger is 79 cents, or 9.2 minutes, indicating that $7.50 an hour would restore patty parity.
A gallon of milk was a dollar. Now it's $3.50 or so, so lactic fairness would mean a minimum wage of $18 an hour.
It cost six cents to mail a letter then. Now it's 37. So a postal-based minimum wage would be $8.65 an hour. On the other hand, long-distance calls cost a lot more then than they do now, and there was no email.
So it's hard to compare everything, but in general, it appears that a minimum wage of $12 to $15 an hour would restore American workers to 1968 standards.
There will be opposition to that, of course. Many economists argue that a higher minimum wage leads to the loss of low-end jobs and thus works against the poor.
However, that argument always comes from economists who make much more than the minimum wage, and I've never heard it from anyone in a minimum-wage job.
We may be hearing much more someday soon, though, if the current push to make the Supreme Court look to the past continues. In 1923, the U.S. Supreme Court found that a federal minimum-wage law was unconstitutional because it interfered with the employer's right to due process and the employees' right of contract. That was overturned in 1938, but these days, who knows how far back the Court will go?
< PREVIOUS ] [ 2005 Index ] [ Ed Quillen HOME ] [ SEARCH ] [ NEXT >