How You Subsidize the Minimum Wage

Nearly four million Americans earn the minimum wage of $7.25 per hour, according to the Bureau of Labor Statistics.

That's not a lot of money. Even clocking in 40 hours a week, a minimum wage job will bring in just barely $1,000 a month after taxes -- and about half of minimum-wage employees work less than 30 hours a week. Nationwide, the average rent on a one-bedroom apartment is $1,091 a month. A portion of minimum-wage workers are teenagers or college students living with their parents or roommates, but any way you spin it it's hard for one person to get by in America on less than $1,000 a month, let alone a family.

So how do millions of Americans do it? This statistic helps explain it:

More than half of fast food workers have to rely on public assistance programs since their wages aren't enough to support them, a new report found.

According to a University of California Berkeley Labor Center and University of Illinois study out Tuesday, 52% of families of fast food workers receive assistance from a public program like Medicaid, food stamps, the Earned Income Tax Credit and Temporary Assistance for Needy Families. That's compared to 25% of families in the workforce as a whole.

The report estimated that this public aid carries a $7 billion price tag for taxpayers each year

Assuming fast-food workers are good proxy for minimum-wage workers, this actually explains a lot. If it sounds impossible to get by on less than $1,000 a month, that's because it probably is, and most minimum-wage workers don't. They earn a wage that isn't sufficient to support them, and various government assistance programs make up the difference.

Public assistance isn't just for those out of work, down on their luck, or in a short-term bind. It's for those who are gainfully employed but earning such a low wage they can't sustain themselves. Which is to say: The reason fast-food and other low-wage employers can get away with paying so little is because taxpayers subsidize the slack. The report estimates McDonald's (NYSE: MCD  ) subsidy alone is worth $1.2 billion a year, which equates to more than a fifth of its 2012 profits. 

Here's one way to think about this. Since 1969, the real (inflation-adjusted) minimum wage has declined by about 30%, from more than $10 an hour to $7.25 an hour. During that period, the percentage of Americans receiving food stamps surged:

Source: Bureau of Labor Statistics, USDA, Federal Reserve.

This isn't all causation. Food-stamp eligibility has shifted throughout the years, and changes in unemployment shifts the number eligible for assistance.

But we know three things. One, there's a positive correlation between the real minimum wage falling and the number of Americans on food stamps rising. Two, wages as a percent of GDP are near an all-time low, and corporate profits as percent of GDP are near an all-time high. Three, the issues that anger Americans more than almost any other are the weak jobs market and high government spending. All three of these are related to each other.

I don't have an solution for it. Maybe assistance needs to be cut, forcing workers to raise pay. Maybe the minimum wage needs to be raised, relieving the number of Americans on assistance. Either way, remember the first lesson of economics: There is no such thing as a free lunch. 


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  • Report this Comment On October 26, 2013, at 11:37 AM, Gypsybella wrote:

    I have a Solution!!! Start enforcing a MAXIMUM WAGE for companies that have employees that must rely on PUBLIC ASSISTANCE to survive!!! QUIT BLAMING THE WORKERS and realize that CORPORATIONS are SUCKING THE MONEY OUT OF OUR SOCIETY!!!

    READ PAGE 2 of this report:

    "The reason fast food workers and other low wage employers can get away with paying so little is because TAXPAYERS subsidize the slack. The report estimates that Mc Donalds subsidy ALONE is worth 1.2 Billion per year, which equates to more than 1/5th of it's 2012 PROFITS."

    Key term here is PROFITS!!! NOT Operating Costs!!! If Mc Donalds could survive as a corporation with only making 80% of it's PROFITS, we could get every one of it's workers OFF WELFARE WITHOUT RAISING PRICES!!!!

    Think about it... How many other companys are STEALING our tax dollars this way?????

    I am SICK of hearing about everyone blaming the Worker for being on welfare - for not having enough ambition to get a better job, without ANYONE talking about these companies that are RAPING Money out of our society because NO ONE has told them NOT TO!!!!

    Forget about raising the Minimum Wage... START A MAXIMUM WAGE TALK!!!!!

    Please Share Share Share...

  • Report this Comment On October 26, 2013, at 11:38 AM, Gypsybella wrote:

    I have a Solution!!! Start enforcing a MAXIMUM WAGE for companies that have employees that must rely on PUBLIC ASSISTANCE to survive!!! QUIT BLAMING THE WORKERS and realize that CORPORATIONS are SUCKING THE MONEY OUT OF OUR SOCIETY!!!

    READ PAGE 2 of this report:

    "The reason fast food workers and other low wage employers can get away with paying so little is because TAXPAYERS subsidize the slack. The report estimates that Mc Donalds subsidy ALONE is worth 1.2 Billion per year, which equates to more than 1/5th of it's 2012 PROFITS."

    Key term here is PROFITS!!! NOT Operating Costs!!! If Mc Donalds could survive as a corporation with only making 80% of it's PROFITS, we could get every one of it's workers OFF WELFARE WITHOUT RAISING PRICES!!!!

    Think about it... How many other companys are STEALING our tax dollars this way?????

    I am SICK of hearing about everyone blaming the Worker for being on welfare - for not having enough ambition to get a better job, without ANYONE talking about these companies that are RAPING Money out of our society because NO ONE has told them NOT TO!!!!

    Forget about raising the Minimum Wage... START A MAXIMUM WAGE TALK!!!!!

    Please Share Share Share...

  • Report this Comment On October 26, 2013, at 11:45 AM, Dadw5boys wrote:

    congress, people like Karl Rove, Jeb Bush, and 1000's of those who get Tax Dollars from U.S. Grants Eat a Free Lunch everyday !!!!!

  • Report this Comment On October 26, 2013, at 1:20 PM, peteysa wrote:

    I rather support minimum wage workers than no wage workers. At least minimum wage workers are trying.

  • Report this Comment On October 26, 2013, at 1:24 PM, Phoenix1 wrote:

    I'm also tired of workers being blamed for having to use Food Stamps.

    Simply put - I have a disabilities, but do not qualify for SSI or SSD. I work what I can. I have spent years looking for work around my disabilities (I'm 70% deaf - try working a telephone job with that! I am good with people in person when I can face them when they speak).

    I'm a very good merchandiser....but you have to understand retail: Conflict of Interest. If you work in one store, you cannot work for any other store that may be considered a competitor.

    I applied at a store I merchandise as a Vendor....since I have not been put on the schedule, I am not quitting what work I do have!

    I've gone to Bartending School....I can't get a job due to lack of experience. Duh, how do you think I will get that experience?

    Last time I applied for college financial aid, they actually told me I would qualify IF I was 24 or younger and had a kid with no baby daddy. Well, since I kept my legs closed......(I am gonna try again).

    I've applied at every Fast Food joint. Come on, even Taco Bell won't take me because I have other work experience, so they don't see me sticking around. I would not mind working my way up to Team Leader or Management! I just want to work! Gonna do the open interview at Pizza Hut in a few days....I've only applied atleast 5 times....maybe an open interview will get me a job.....

    I search CraigsList, Monster, All Retail Jobs, etc. every darn day. So you can't say I am not trying!

    PS: Since everyone likes to nitpick: I'm sorry about my new skinny jeans for $16.98, purchased on sale and with a coupon, but one of my jobs has a new dress code. Would you rather I purchase these, or quit?

  • Report this Comment On October 26, 2013, at 2:00 PM, DQ10 wrote:

    2 months ago McDonald's said if it raised wages it would have to raise prices. This week, they raised prices. Record profits, a falling standard of living. Only in America.

  • Report this Comment On October 26, 2013, at 2:12 PM, djconklin wrote:

    The way this works is quite interesting! Even if you never even buy from the companies that only pay people minimum wage, you are subsidizing them with your taxes! And the rednecks think its alright to have higher taxes because of it!

  • Report this Comment On October 26, 2013, at 3:43 PM, VermontNative wrote:

    I know The Motley Fool is a column about investing so when they talk about companies that have found a way for the government to subsidize their labor cost in a neutral or even negative manor you know the issue of wages and personnel income is becoming a major economic issue. One thing that seems to escape our politicians and business leaders, and God help the investment analyst that even thinks this, corporate profits and return on investment are not the economy. The economy is personnel and corporate spending. It is the money that gets churned from a paycheck to a grocery store or car payment. Or the paid invoice that goes back to a supplier to pay their employees and other expenses. Until our economic statistics use these measures as publicly as they use the daily stock market activity we will continue to be blinded to reality by the short term movement of a few indexes that rely too much on the short term herd mentality of the market.

  • Report this Comment On October 26, 2013, at 4:32 PM, Donmax425 wrote:

    That problem can easily fixed by the Tax code. If an employer pays less than a livable wage tax the employer for the difference. If they make arguement that this is an entry leval job. Than tell them that they better hire kids who are living at home.And above all support E-Verify to make sure that they are not employing illegals. Remember the minumum wage is tied to QE. If the Gov't wasn't printing 85 Billion a month they woldn't be asked to pay 15 bucks an hour. The problem is Employers don't care.

  • Report this Comment On October 26, 2013, at 5:40 PM, lunatik96 wrote:

    The fool has it right on these economic issues. What they and almost everyone else misses is the social implications. You want to eliminate social aids and food stamps? Be ready for the riots.

    How long would you expect someone to work if they can't survive.

    Political truth #1 - Republicans really don't mind welfare, as long as it is for their donors; the businesses, corps and wealthy.

    Political truth #1 - Democrats aren't different, they just have a slightly different constituency; the businesses, corps and the poor.

  • Report this Comment On October 26, 2013, at 8:33 PM, VermontNative wrote:

    Lunatik96 is correct, all of the government programs to support low income workers are the "bread and circus" of our society. The programs were started in the 60s to help people while they worked their way to better jobs. After the inflation of the 70s companies figured out that if they made low wages the norm their workers would become permanently eligible for public support programs. Why pay them if the government will? Now if you wanted to end these programs you would have to force an increase in wages as you phase out the support network that both companies and employees have come to rely on. It is either that or add about a million pages of tax code to collect the cost from the companies that are the offenders in this permanent cycle of poverty. The only winners there are accountants and lawyers.

  • Report this Comment On October 26, 2013, at 9:02 PM, Corsair3117 wrote:

    Believe it or not-there's actually a European country without a minimum wage! I'll reveal the identity of that "backward hellhole" in a moment. Sure, they probably flaunt the basic fact that when the price on something is low, people buy more of something and when prices are high, they buy less, and claim that only the loony left thinks that by raising the price of labor that jobs won't be lost.

    They also probably think that people who stay very long at minimum wage in the U.S. are as rare as retired corporals. They think we should probably trust our lying eyes that reveal MacDonald, Wendy, and BK workers that greet them are by and large teens gaining valuable entry level jobs that the demogogues want to destroy.

    You may have heard of this "hellhole" It's called Switzerland, and while our printing press money and stimulus package and big gov't proposals reign, THEIR unemployment rate has fallen over the last decade from a 3.9% "high" to a current rate of 2.3% (Stat Source: The Economist)

  • Report this Comment On October 26, 2013, at 10:54 PM, mnn2300 wrote:

    Minimum wage jobs are supposed to be entry level jobs, designed to give teens and others a first job, its not meant to be a career.

  • Report this Comment On October 26, 2013, at 11:13 PM, redoctober90 wrote:

    I'm a college graduate working retail. I have some student loans, live with my parents, the essential "moocher". I'm against a minimum wage hike, though. Why? I think like a businessman.

    Say the minimum wage is up to $15. That's roughly about $30,000 a year. Cool beans, huh? I can live on my own!

    Here's what happens: First off, I'm now eligible for income taxes. In fact, about a 15% tax bracket. So chalk off $4500, send it to Obama, and hope and change your way to largesse.

    Now I have to go eat. To McDonald's, or Walmart, both minimum wage bastiens. Since they are paying double, why not charge double - and why not a little more? We need a percentage of profit. So that $1.99 bottle of vegetable oil and $12 pack of chicken wings, they cost now $4.79 and $28. Heck, I have to stay in business - and now with twice as much money in circulation, why not?

    Now we get to the housing. Now that everyone has money, they'll all be buying up the apartments and the land and housing, and you know what? If I'm a landlord, I have competition. Time to raise prices! And you know what, my land goes up in value. Time to go and have my property taxes raised, too!

    Finally, I need healthcare. I'm making money now, but you know what? I still don't get it from my employer - he is too busy trying to figure out from his $150 an hour accountant - heck, if everyone else gets a raise, the CPA should too, it's capitalism, an uneducated person should not make as much as the custodian, who should not make as much as a lab technician, and so on.

    So those of you who are making minimum wage (and for those of you without a job because it doesn't make sense to make work rather than make babies), you need to do yourselves a favor: Research your position. Think about how money works....it has no value except what we assign it. Fast moving money causes inflation. Every time. More of it marginalizes debt, an inherent liberal pipedream.

  • Report this Comment On October 26, 2013, at 11:49 PM, ChMacQueen wrote:

    Its really not that hard to figure this out. When you raise minimum wage you raise wages of standard goods more. So every min wage increase just makes things cost even more hence min wage earners have more money but less to spend. Next thing is regulations add major expense. Your average business is losing a huge amount of money through regulations. This increases costs so price goes up yet wages stay the same.Next off is public assistance. If no public assistance if people want more money they learn a trade or get a college education and try harder. Like in the old days you worked at a burger joint in HS summers and crap but you knew it sucked so you pushed that education for more. If you fail its YOUR fault and no one bailed you out. Maybe you have to live 3-4 workers in a house or work 2 jobs. Public Subsidies simply tell people its cool to fail, someone else will pay you for failing.

  • Report this Comment On October 28, 2013, at 1:48 PM, ejprzybylski wrote:

    Hi Morgan,

    To start, my name is Eric and I've read every single one of your articles over the past 12-18 months. I'm a financial analyst with a background in Economics and find nearly all of your work both effective and objective. I must say, your contributions to my knowledge are great. This is the, or one of the, first times I feel the need to take serious objection to your implication and how you framed this article.

    First, worldwide, higher minimum wages do not at all equate or correlate with higher employment or GDP growth. Many, many great economies have no minimum wage and are very successful right now (Singapore, Switzerland, South Africa, the Nordics). Additonally, many high min. wage nations are struggling right now (France, UK, Japan, U.S. Greece, Spain). --Cause and effect? Probably not, as you'd agree, too many variables among the inputs to draw a conclusion about a couple outputs. I would ask though, that you be reminded that increased minimum wages significantly decrease entry level employment and marginally decrease total employment (I'd be happy to share some of these sources and studies with you, I really would, many exist).

    Second, and this is where I'm a little disappointed in, when I say, how you "framed" this article. Your graph depicting real minimum wages against food stamp enrollment and citing a positive correlation smacks of data manipulation. I say that because your data starts in 1969, which is--by far--the highest level of real wages in history. If you go back even a few more years, real minimum wages fall precipitously (they rattle between $4-$5 in today's dollars between 1938-1950). If you include a little wider sample, your "correlation" is completely wrong.

    Lastly, I know you say you don't have a solution, but, reading between the lines, you seem to be placing a lion's share of the blame here on the employers (as you say they're being subsidized, and relating those subsidies with their profits). Okay, so, I don't agree with that at all. If McDonald's increased wages it would, without a doubt, decrease their employment (such as a move toward automation [which is already happening, with McD's purchasing 7,000 kiosks to replace cashiers in many of their European locations]). It could, potentially, increase their prices, as well. So you'd effectively have fewer, slightly higher paid employees, and higher prices for customers (which would almost certainly lead to lowered demand and, thus, even fewer employees).

    Thanks for writing, though. Keep it up!

  • Report this Comment On October 28, 2013, at 2:20 PM, TMFHousel wrote:

    <<First, worldwide, higher minimum wages do not at all equate or correlate with higher employment or GDP growth>>

    I don't believe I implied that it did.

    <<Your graph depicting real minimum wages against food stamp enrollment and citing a positive correlation smacks of data manipulation>>

    Clearly states: "This isn't all causation. Food-stamp eligibility has shifted throughout the years, and changes in unemployment shifts the number eligible for assistance."

  • Report this Comment On October 28, 2013, at 2:21 PM, TMFHousel wrote:

    <<I say that because your data starts in 1969>>

    I didn't cherry-pick that date. It's the earliest I could find food-stamp data on.

  • Report this Comment On October 28, 2013, at 2:23 PM, TMFHousel wrote:

    <<If you include a little wider sample, your "correlation" is completely wrong.>>

    Do you have data on that?

  • Report this Comment On October 28, 2013, at 2:42 PM, ejprzybylski wrote:

    I shouldn't have started with that. I didn't think you implied GDP/Unemployment was related to minimum wages, but it was something I just wanted to get out there as a basis of my feeling on the subject. Also referenced other commends up-thread.

    Regarding your graph, by superimposing two data points, the natural mind tries to draw a comparison. I acknowledge you said, "it's not all causation," which is accurate, but you frame the chart as if there is some relation--I'd argue there is not. I'd go so far as to venture that higher minimum wages increase food stamp enrollment, ceteris paribus--based only on prevailing economic principles that higher labor costs decrease labor demand.

    Regarding the date selection, a great pic on real minimum wages going back a few more decades is here, http://oregonstate.edu/instruct/anth484/minwage.html

    with data here: http://www.dol.gov/whd/minwage/chart.htm#.UNuMXXeDmSo

    About food stamp enrollment, there was no program between 1943 and 1961, but for 1939-41 and 1961-now, you can glean a lot of good data from the USDA's history of the program, here:

    http://www.fns.usda.gov/snap/rules/Legislation/about.htm

    By superimposing this additional data, even though it's not quite as accurate as the modern data you presented, it shows a different picture.

  • Report this Comment On October 28, 2013, at 4:25 PM, kyleleeh wrote:

    << If McDonald's increased wages it would, without a doubt, decrease their employment (such as a move toward automation [which is already happening, with McD's purchasing 7,000 kiosks to replace cashiers in many of their European locations])>>

    That's not automation, it's just shifting the labor from an employee to the customer. It takes just as much work for the customer to put their order in the Kiosk as it does a cashier... more probably as they are not as familiar with it as the cashier is. It only works if the customer is ok with it, if not they go to the cashier. I see people all the time ignoring the self check out line because they find it inconvenient, and more time consuming.

  • Report this Comment On October 28, 2013, at 4:30 PM, ejprzybylski wrote:

    Kiosks (or any automated system) have, and will continue to, cut down on labor costs for businesses that utilize them. ATMs, self-checkouts, pay-at-the-pump, and millions more point-of-sale transactions that no longer require people are all examples of automation. Yes, the customer now performs the "labor," but that's not what I'm referring to.

  • Report this Comment On October 28, 2013, at 5:36 PM, kyleleeh wrote:

    << Yes, the customer now performs the "labor," but that's not what I'm referring to.>>

    Then you're not referring to automation. Automation does not shift labor it eliminates it. What you're referring to is cutting labor costs by offering fewer services to the customer.

  • Report this Comment On October 29, 2013, at 6:07 PM, wtatm wrote:

    Hi Morgan,

    As usual, great insight into an ongoing American issue.

    However, I would challenge one statement of yours. Toward the end of your article you state, "...there's a positive correlation between the real minimum wage falling and the number of Americans on food stamps rising." I don't have the numbers, but in looking at the graph, if true, I can't imagine that positive correlation is very strong. It looks like the real minimum wage fell every year from 1981 to 1989... and the percent of Americans on food stamps appears to have fallen every year as well. Likewise, both figures look like they went up in 1990-1991 and then both fell together through the latter half of the 90's to about 2001.

    My guess is that the percent of Americans on food stamps correlates much more highly to another variable instead... likely the unemployment rate. The Carter years show increasing food stamp usage... and had high unemployment. The Reagan years started with terrible unemployment and improved pretty steadily through the 1980s. The early 90's increase correspond to the Bush recession of 1990-1992 ("It's the economy, stupid!"), while the decreases from '94 to '01 would correspond to the generally improving economy under Clinton (including a couple years of budget surpluses!).

    Just my two cents.

    Jim

  • Report this Comment On October 29, 2013, at 6:32 PM, dmiles2 wrote:

    The big players at big companies have been manipulating the economy and government for their own benefit for over 120 years. Workers and small companies suffer. You should all read The Case Against the Fed by Murray Rothbard. You can find a pdf version at mises.org

  • Report this Comment On October 29, 2013, at 6:45 PM, xetn wrote:

    I have a better idea: eliminate the minimum wage completely. It was first instituted in the 1930's to help prop up union wages and prevent low wage competition. It is a disaster in that it prevents people without work experience and lack of education from gaining employment. It should be renamed the guaranteed unemployment law.

    The talk of subsidies is really interesting because it brings to mind socialism. It is also interesting reading all the previous entries where most support subsidies. Subsidies are a form of theft where the government takes from certain groups and gives to other groups.

    And the "Fool" calls this a free market? What a joke. Wages, in a free market, would be based on the supply and demand for workers and freely negotiated. But we don't have a free market, we have fascism.

  • Report this Comment On October 29, 2013, at 6:46 PM, ScottPletcher wrote:

    If you're just going to make up a number for the minimum wage, without regard to the actual production of the workers, why not go to $30 or $40 or more? You CAN'T realistically separate the value a worker provides and the pay he/she receives. Btw, to everyone yelling about "evil corps", etc., do YOU pay EVERYONE that does ANY work for you at least $15/hr? Babysitters? Lawnmowers? Pizza delivery drivers?

  • Report this Comment On October 29, 2013, at 9:38 PM, xetn wrote:

    If the minimum is so great, why not make it $1000 per hour? Or perhaps $1 Million per hour?

    The minimum wage is completely stupid.

    ScottPletcher:

    Good call. And you are right on!

  • Report this Comment On October 30, 2013, at 9:02 AM, roadslide wrote:

    its time for corporate america to pony up or trouble will soon come,,, this subsidizing of workers pay by tax payers is a just the thing for occupy wall street supporters to go for... shame on mcdonalds , wallmart and the like... folks are sick of this, profits up and wages down, and will start joining organizations like occupy wallstreet... the battle has just begun...

  • Report this Comment On October 30, 2013, at 9:23 AM, Mathman6577 wrote:

    The minimum wage is not intended for people to earn a living off of. It is intended for young people new to the labor force. Any effort to change that dynamic will of course be resisted by the market. When will the misguided realize this?

    Also, any mathematical (not statistical) correlation between any two numbers does not imply that there is a cause and effect relationship. I don't think rise in food stamp participation is due to min wage. I think it is due to the current administration wanting to control more of the economy by giving away free stuff.

  • Report this Comment On October 30, 2013, at 10:23 AM, TMFHousel wrote:

    <<If the minimum is so great, why not make it $1000 per hour? Or perhaps $1 Million per hour?>>

    If drinking water were good for your health, why not drink a swimming pool? Or an ocean?

  • Report this Comment On October 30, 2013, at 11:23 AM, xetn wrote:

    TMFHousel

    Nothing like answering a question with a different question.

    Apparently, you cannot answer the question logically.

    The reason why the minimum wage cannot be $1000 or 1 million is because it would put everyone out of work. Now apply that same logic to raising the current minimum wage. I will put more people out of work.

  • Report this Comment On October 30, 2013, at 12:27 PM, MiltFreedman wrote:

    Morgan might need to go back and review Economics 101, or possibly Micro-econ.

    #1), the Government should get the he** out of setting labor wages. That should be determined by Private business, who are much closer to knowing what is going on and what they can afford to pay their workers.

    #2) Artificially setting a higher minimum wage will quite natually cause higher unemployment, therefore in America, requiring more tax subsidies for those on the dole. There is NOTHING wrong, no dishonor in working for low wages. There should be Disdain and Dishonor for those Mooching off the government teet.

  • Report this Comment On October 30, 2013, at 2:04 PM, kyleleeh wrote:

    <<There should be Disdain and Dishonor for those Mooching off the government teet.>>

    What if the ones doing the most mooching are the corporations paying the low wages?

  • Report this Comment On October 30, 2013, at 7:19 PM, LookAtFacts wrote:

    Always start with a false premise to justify the case you are building.

    1. There is no national average for a 1 bedroom apartment.

    2. If a person is working at minimum wage, the odds are they are students and/or living at home or sharing an apartment.

    3. When 2 is not the case the odds are they are not the sole wage earner.

    By all means research issue and then reach a conclusion based upon the facts. Don't start with a conclusion and then find facts to substantiate the conclusion

  • Report this Comment On November 01, 2013, at 12:14 PM, reinaam wrote:

    Fast food jobs weren't meant to be the main wage earner job. The industry relied on high school and college kids for employment for these part time workers. Later on, seniors started working there to supplement their SS. Anyone who thinks that these jobs are worth $15/hr needs their head examined.

    Also, as to the idea that we subsidize the industry work force, another way to look at it is that instead of US doling out 100% to an individual for doing nothing, the industry is partially paying the individual for providing a service.

  • Report this Comment On November 01, 2013, at 1:36 PM, HurricaneJohnson wrote:

    I've come to expect this sort of "if A, then B" logic from MF.

    A - raise minimum wages

    B - life is great

    The market dislocation is tremendous when the government diddles with wages. Do you really think that if there was no minimum wage, that people would go to work at McDonalds for 50 cents an hour? McDonalds is competing with the welfare state. We've made people comfortable in poverty.

    Like the $1.65 I used to earn at a minimum wage job, the experience is there for a young worker to learn. The stats of the number of people working minimum wage supporting 3 kids is almost non-existent.

  • Report this Comment On November 01, 2013, at 3:24 PM, TMFHousel wrote:

    <<I've come to expect this sort of "if A, then B" logic from MF. A - raise minimum wages, B - life is great>>

    The only thing the article said in respect to solutions was, "I don't have an solution for it."

  • Report this Comment On November 01, 2013, at 4:33 PM, rlv1 wrote:

    As the owner of a small, fast-food franchise, I do not agree or disagree with this article. One point I would like to make is that most of these people are not degreed and probably did not finish high school which limits their marketability. IF they would go on and learn a trade, get a degree, obtain a skill, they can use these lower paying jobs as a stepping stone. That is what I did so I know others can do it, too. As for fast food workers being on public assistance, I know my people are NOT on public assistance; they are in families with 2 wage earners who are barely scrapping by. Again, getting the right skill set is SO important to obtaining well-paying employment. If I raise my average wage to $20/hour, you better get ready for the $10 lunch.

  • Report this Comment On November 01, 2013, at 4:42 PM, geezer27606 wrote:

    No one is compelled to pay a minimum wage. Minimum wage law simply outlaws jobs with an hourly economic value less than the minimum number. It is the reason we pump our own gas and no longer have elevator operators or clean streets. It just kills some jobs.

    Minimum wage workers would be a lot better off if they didn't have to pay the 19.5% Federal flat income tax deceptively mislabeled as Social Security, Medicare, employer employment tax, and Federal corporate profit tax. Many might not even need welfare if they got to keep the $1.41 an hour the IRS takes from them.

  • Report this Comment On November 01, 2013, at 5:21 PM, mdotley wrote:

    As wtatm said, there are several stretches in the charted period where "real" minimum wage and food stamp enrollment march hand in hand -- exactly the opposite of the author's premise.

    Another observation I made is that virtually all of the growth in food stamp usage occurred in two periods: monotonic growth 1969-1976 and 2007-2012. Between those two, it went up and down, but the net change was very small.

    The first period corresponds to the time when the program was just rolling out from what was essentially an experimental program (less than 50 jurisdictions) to a nationwide program (in 1974). This enrollment expansion was mainly driven by geographic expansion, as a part of LBJ's War on Poverty. (Source: https://en.wikipedia.org/wiki/Supplemental_Nutrition_Assista...

    The second of those periods corresponds to the Bush-Obama recession and efforts by the both presidents to expand eligibility, so that is no reflection on the minimum wage. (Source: http://reason.com/blog/2012/01/23/bush-and-obama-the-food-st...

    In short, the data you present simply does not support your thesis.

  • Report this Comment On November 01, 2013, at 5:58 PM, pharos60 wrote:

    Riv1:

    One of my first summer jobs was waiting tables at restaurants in a resort town, back in the era of 1/2 minimum wage for wait staff. The custom there was that wait staff got one meal per shift--not the most expensive stuff--but it was a reasonable meal. I know it didn't cost the restaurant a great deal of money, but it was a big help to us. Do you do anything like that for your crew? If most of them are 2 wage earner families just scraping by, a rather modest increase in wage or some help with food would be a substantial benefit for them, and I suspect not at great cost to you. And since you are the franchise owner, anything above the corporate mandated pay rate is entirely up to you.

    I am not suggesting that you have an obligation to solve the serious underemployment problem we currently have, but I'm interested in your views, as a business owner, beyond simply advocating getting skills and education to advance oneself. In a past life when I owned a business, I spent a lot of time with employees one on one teaching them the skills they needed to continue in the field (electronics) beyond the stuff they never would have learned in school, or the stuff they missed on their own. Unfortunately there isn't a lot to learn in the fast food business that transfers to other food operations, other than just being a good employee (yes, a valuable skill), so how can you help these people move on, or do you view it as anything you should concern yourself with?

    Are you serious about $20/hr wages = $10 lunch, or was that just hyperbole? Who said anything about $20/hr wages? There are a lot of manufacturing jobs that don't pay that much. A wage cost vs retail meal price curve should be easy to construct and if you are paying ~$7.50/hr now with a typical ~$7 fast food meal price, $20 wages would imply a far higher meal price, I think.

  • Report this Comment On November 02, 2013, at 11:13 AM, tdotsports1 wrote:

    There are actually a ton of well paying jobs out there but unfortunately are looked upon with disdain. Skilled blue collar jobs are available everywhere (heavy machinery, plumbing, electricians etc) but kids/parents feel this is a last resort. Students don't want to "settle" for this type of "menial" work. Look at the most popular degrees being obtained, there is no work associated with the arts, psych, poli sci degrees that kids gravitate towards.

    The education system needs to push kids into vocational training where an honest wage (65k+) is waiting and demand is high. Not everyone is destined for a four year college degree and a ton of high paying blue collar jobs are never filled.

    Just my 2

  • Report this Comment On November 02, 2013, at 11:21 AM, Mathman6577 wrote:

    The problem with socialism (i.e. increasing the min wage against the wishes of the market) is that you eventually run out of other people's money).

  • Report this Comment On November 02, 2013, at 12:26 PM, misviki wrote:

    tdotsports1,

    I think you hit the nail on the head. I have read all of the comments here regarding minimum wage and would like to add my 2 cents.

    I failed the 9th grade and quit, wife quit in 11th grade. We married at 17, 6 kids (girls) by 26. How do you take care of a family that size with no formal education? 3 jobs got it done. I picked the one I liked the most...being an electrician. Added air conditioning later (it's hot in Florida) had some business cards printed and built a rep for dependability. Read everything I could find on the subjects and guess what? We retired at 49! (76 this month)

    Sure, there are folks that for particular reasons can not make it...but they are few and far between. By the way, my wife stayed home until the kids were in school and then helped me. Our girls went to private school (grammar and high school). Since I was self employed so soon, health insurance was tough as was life insurance.

    So, do the minimum wage job for awhile and learn how to be an employee. Then delay the cell phone, the cable, the time off with friends, the weekends off and give up the vacations. Shop resale and clip coupons. If you can do that (most will not)...you will not be a minimum wage earner very long...and later you will never say "I could have been somebody; I could have been a contender."

    Old folks

  • Report this Comment On November 02, 2013, at 10:19 PM, dtoad101 wrote:

    Workers don't raise their wages their wages! Their employers do. Workers can get their employers to raise their wages by asking for it or striking for it. Cutting support for EITC will hurt the workers until their employers raise their wage. See above. Things like food stamps / SNAP cards are corporate welfare that allow employers to pay less than a liveable wage and to garner greater profits for themselves. They also allow corporate America to compete internationally until the burden on the USA becomes too great.

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