Declining value of the minimum wage

[Michael]

State of Working America preview

The adjusted minimum wage in the USA is now LOWER than what it was at in 1968. Which probably isn't a surprise for most people attempting to live on it.

The minimum wage is not worth nearly as much as it was decades ago. The Figure, from EPI’s forthcoming State of Working America Web site, shows the inflation-adjusted value of the minimum wage since 1960, in 2009 dollars. When adjusted for inflation, the minimum wage was worth $8.54 per hour in 1968, compared to the current minimum wage of $7.25 per hour. Based on a typical, 2,000-hour work year, the 1968 inflation-adjusted minimum wage would equate to an annual salary of $17,080 per year, versus $14,500 for today’s minimum wage. (The Figure shows a 2009 minimum wage of $6.84 because the minimum wage was increased in the middle of that year.)

Ever had that feeling like things were getting shittier not better for you? Or when you read on the news about how you're in a rich 1st world nation.... but your life sucks and is actually worse than your parents. Ever wonder why the real wage of Chinese is doubling every 10 years or so while yours is stagnant or decreasing. Why you were raised by your mother but your kids are raised in a pen at a "day care center". Don't you kind of wish you could move over to a third world nation and have your wage double? You kids could stay with a parent at home to be raised.

Anyway, I thought this was interesting. Thank the Gods we have the Federal Reserve looking after us... making sure inflation doesn't cut into the value of our dollar.



IF you think: Hmmmm the system isn't working for me. Then you may want to consider voting for Ron Paul who is the ONLY politician who will bring in real change. If his policies don't work out, then we'll try something else... and we'll keep trying something else until something does start working for you. But, rest assured, he's given decade of thought to why you're in the mess you're in and he's trying to do something about it. OR if you'd prefer to just hear about change, and like the taste of fluff - and want no real change, then vote for Romney or Obama - whichever, it isn't going to matter which one you choose.

[786]

There shouldn't be any minimum wage laws to begin with.

But nooooo...'they will pay us 50 cents per hour if it weren't so'... I wonder why doctors, engineers, scientists aren't being paid minimum wages? Because they actually have 'skill' and knowledge.

Want higher wages? Get more qualified. Its really that simple.

Those who can't get jobs could probably get 'underpaying' jobs- mostly because they are not qualified for the jobs available, or there just isn't enough demand for workers. But at least being 'underpaid' is better than not being paid at all. You 'get underpaid' and gain skills and knowledge and move up the ladder of qualification for future higher wages. But no. We like the easy way out. Minimum wage. So matter how stupid, uneducated, how unskilled I am, at least I'd make this much.

Minimum wage laws essentially discriminate against low-skilled workers. They have harder times getting a job because the employer isn't willing to pay 'that much' when they aren't skilled enough.

[billvon]

The adjusted minimum wage in the USA is now LOWER than what it was at in 1968. Which probably isn't a surprise for most people attempting to live on it.

Uh, you realize that Ron Paul wants to abolish the minimum wage altogether, right?

[786]

Uh, you realize that Ron Paul wants to abolish the minimum wage altogether, right?

Not in vaccum. He'd want to change the monteary system responsible for the devaluing dollar as well.

Economics is never a 'vaccuum' thing.

[spidergoat]

Some states have their own minimum wage. In Oregon it's $8.80. How are people supposed to get more qualified if college costs money?

[cosmictraveler]

If there was no minimum wage most companies wouldn't pay starting people very much to come and work for them and that's a fact. You'd see starting saleries at less than 2.00 per hour if that with no benifits.

[786]

Some states have their own minimum wage. In Oregon it's $8.80. How are people supposed to get more qualified if college costs money?

Perhaps you should then look at why college costs SO MUCH. And in all honesty college is over-rated. I think many things like apprenticeships and vocational schools should be considered as well, which would cost a lot less and could be easily 'work your way through school', again first assessing the reason college is so costly which I think is the government to begin with.

[786]

If there was no minimum wage most companies wouldn't pay starting people very much to come and work for them and that's a fact. You'd see starting saleries at less than 2.00 per hour if that with no benifits.

I doubt it.

[Tiassa]

Perhaps you should then look at why college costs SO MUCH. And in all honesty college is over-rated. I think many things like apprenticeships and vocational schools should be considered as well, which would cost a lot less and could be easily 'work your way through school', again first assessing the reason college is so costly which I think is the government to begin with.

It's an interesting point. To the one, college doesn't create as many well-rounded students anymore. To the other, apprenticeships and vocational training are even more specialized. Economic stratification depends in no small part on specialization.

And you make an excellent case for getting government out of education. As we know, private universities are much less expensive than the bureaucratically bloated, tenure laden public schools.

[quadraphonics]

Ever had that feeling like things were getting shittier not better for you? Or when you read on the news about how you're in a rich 1st world nation.... but your life sucks and is actually worse than your parents. Ever wonder why the real wage of Chinese is doubling every 10 years or so while yours is stagnant or decreasing. Why you were raised by your mother but your kids are raised in a pen at a "day care center". Don't you kind of wish you could move over to a third world nation and have your wage double? You kids could stay with a parent at home to be raised.

What does any of this have to do with minimum wage? Sounds like you're confusing it with median wage, living wage, etc.

Also begs the question of what behavior we'd like to see the minimum wage exhibit. Is it suppose to enforce a living wage for everyone? Should it gradually tend towards zero (in real terms) as society as a whole becomes more wealthy? Stay more or less constant? Or what?

Bear in mind that almost all of the people who work for minimum wage are either teenagers (who live with and are supported by their parents) or young, part-time females (who live with and are supported by their spouses).

IF you think: Hmmmm the system isn't working for me. Then you may want to consider voting for Ron Paul who is the ONLY politician who will bring in real change.

Ron Paul's recommendation for the minimum wage is to lower it to exactly zero. Not sure how you get from complaining about a declining (real) minimum wage, to suggesting that the answer is to reduce it all the way to zero.

If his policies don't work out, then we'll try something else... and we'll keep trying something else until something does start working for you. But, rest assured, he's given decade of thought to why you're in the mess you're in and he's trying to do something about it.

But, have you? Because the policy remedy that you are suggesting for the putative problem of a declining real minimum wage, is the total elimination of minimum wage. This makes little sense, on its face. Unless this is all some obtuse jab at Ron Paul that I failed to catch?

[786]

And you make an excellent case for getting government out of education. As we know, private universities are much less expensive than the bureaucratically bloated, tenure laden public schools.

Public schools are paid by the government, and that 'cost' is subsidized. So the real cost is higher than what you're 'paying'. The problem is when government gets involved with public schooling it drives the prices up, with everything related to schooling. Private schools are not collecting taxes from you to pay for their costs like how Public schools are funded

Private schools are competing for the same resources as public schools, but since public schools drive the prices up of those resources, that directly impacts the Private schools, and since private schools are not being subsidized by the government for most of their costs, the private schools are bearing that cost as well, which makes them even more expensive.

You have to realize this is still a 'market'. If one thing drives the prices up, the others prices will automatically have to adjust for that.

So the point that 'private schools' are more expensive is failing to understand economics. Its looking at the symptoms, not the cause, which is what government does. Creates a problem, looks at the symptoms, throws money at the symptom, doesn't even try to find out the cause.

[quadraphonics]

Public schools are paid by the government, and that 'cost' is subsidized.

Most private schools are themselves subsidized by either religious organizations or philanthropic endowments.

So the real cost is higher than what you're 'paying'.

Well, yeah, obviously, since you generally don't pay anything (directly) to send a kid to public school.

But, again, the same is true of private schools - the real costs are much higher than the tuition prices, and the difference is made up with philanthropy. The thing to note is that most of those schools are religious schools, and so cannot accomodate significant growth in their student bodies (unless the kids' parents join the congregation in question, and start paying contributions to them).

The problem is when government gets involved with public schooling it drives the prices up, with everything related to schooling.

How do you figure?

Private schools are not collecting taxes from you to pay for their costs like how Public schools are funded

No, instead they collect tithes from churchgoers (or donations from alumni and other philanthropists) to pay for their costs.

Private schools are competing for the same resources as public schools,

What "resources" are those? Teachers? Textbooks? Chalk?

but since public schools drive the prices up of those resources, that directly impacts the Private schools, and since private schools are not being subsidized by the government for most of their costs, the private schools are bearing that cost as well, which makes them even more expensive.

If the costs are being driven by competition for scarse teaching resources, then we'd expect to see teachers making very large salaries. But we do not - teachers are, in fact, among the lowest-paid of all college-educated professionals. So this theory of resource competition doesn't seem to stand up. Where is the scarce resource with the exploding price that your theory predicts?

You have to realize this is still a 'market'. If one thing drives the prices up, the others prices will automatically have to adjust for that.

In a market, the normal response to the advent of more competition (which is what public schools are - competitors for private schools) typically drives prices down. After all, why send your kid to costly private school, when the public school is "free?" The only way for private schools to compete with that is to either lower their costs, cater to religious nuts (this is what most of them have always done), or try to offer a better product/service for the money (boarding schools, elite institutions, etc.).

So the point that 'private schools' are more expensive is failing to understand economics.

You don't seem to have much of a grasp on economics, that I can see. I'd refrain from lecturing anyone else on such, if I were you.

[786]

Most private schools are themselves subsidized by either religious organizations or philanthropic endowments.

Government has far more resources put in education. We in fact have a Department of Education?

How do you figure?

Easy money drives prices up? If I agree to pay you a million dollars for your tie even if you bought it for $5, you'll charge me the Million i'm willing to pay. Government guarantees the money.

No, instead they collect tithes from churchgoers (or donations from alumni and other philanthropists) to pay for their costs.

Which is a fraction of what government puts in public schools.

If the costs are being driven by competition for scarse teaching resources, then we'd expect to see teachers making very large salaries. But we do not - teachers are, in fact, among the lowest-paid of all college-educated professionals. So this theory of resource competition doesn't seem to stand up. Where is the scarce resource with the exploding price that your theory predicts?

Or if resources (money) are just poured into public education, it forces the private industry to invest more into their school system as well. Which isn't competition that drives prices down because you're pouring a huge amount of resources.

If Government just released a 55" OLED TV today and sold it for $2000. The private industry is in no way capable of doing it. The private industry will still put out a OLED TV for consumers, but they'll have to charge more.

You're forcing the industry to invest more than necessary because you're allocating crazy amount of capital in something. Government has a lot more capital directed in education.

In a market, the normal response to the advent of more competition (which is what public schools are - competitors for private schools) typically drives prices down. After all, why send your kid to costly private school, when the public school is "free?" The only way for private schools to compete with that is to either lower their costs, cater to religious nuts (this is what most of them have always done), or try to offer a better product/service for the money (boarding schools, elite institutions, etc.).

In a market no one is being guaranteed money like students are in public schools.

You don't seem to have much of a grasp on economics, that I can see. I'd refrain from lecturing anyone else on such, if I were you.

Or more like you don't understand resource allocation and how that affects the market. There is more than just 'competition' at work here.

[786]

Anyways we're going off topic. The thread is about minimum wage. Not why private universities are more expensive.

And his comment was how could people pay for college if there were no minimum wage, which means any college not just public vs private which means to answer the question: Why are the cost of colleges, PUBLIC INCLUDED so high and increasing so fast as well?

So there is no reason to look at why private universities are more expensive. The idea is education public OR private is expensive and getting more expensive every year.

How was the education cost compared to 'wages' before minimum wage laws?
And to address the question today, why is the cost of education rising so fast?

[Michael]

The point I was making regarding the minimum wage is simply to illustrate that things are not getting any better under the current monetary system. Over the last 40+ years the minimum wage has actually decreased. And well all know only too well that for most American families, unlike 1968, BOTH people have to work - stuffing their kids in daycare just to barely make ends meet. A lot of Americans are trying to LIVE on minimum wage.

The Federal Reserve system has not improved the lot for your average American, if anything one could argue our standard of living is actually decreasing.

That's evidence for seeking a change to the monetary system.

[Michael]

This overall average masks some tiny gains for minority children, such as a 3 to 5 percent rise in the scores of African American 17-year-olds. But even these modest improvements can't be attributed to federal spending. Almost all of the gain occurred between 1980 and 1988, a period during which federal spending per pupil actually fell. And the scores of African American 17-year-olds have declined in the twenty years since, even as federal spending has shot through the roof.

[cosmictraveler]

I doubt it.

Well would you take the risk of eliminating the law just to find out who is correct?

If you were an employer and one prospective employee came to you and said they would work for 2.00 per hour and another one said they needed at least 5.00 an hour to make ends meet , which one would you hire if all other things they had to offer were the same? Be honest .

[Michael]

$2 an hour used to be a good wage - why isn't it now?

[cosmictraveler]

$2 an hour used to be a good wage - why isn't it now?

You're kidding aren't you?

You know that everything has gone up in price and that the dollar has lost its value too. So if you take all of that into consideration you'd understand why the minimum wage has risen to keep up with all of the increases that have taken place over the past 30 years or so. Back when the minimum wage was 2.00 the gas prices were only .90 cents per gallon just as one example

[Kittamaru]

The problem with not having minimum wage laws in this country is simple - in some areas, there are people (not naming names or ethnic groups or anything else) that WILL do jobs for a pittance and send that money overseas to their families where, thanks to the conversion rate, it is a livable income. Here in the states, $2.00 / hour is not a livable wage, no matter how you split it (unless, of course, your basic human needs are being taken care of for you, such as someone in jail/mental hospital/living with parents/etc).

The problem we face today isn't even minimum wage per-say... it's that company heads and execs want to make more and more profit... and they are doing that not by selling better and more worthwhile products, but by cutting costs elsewhere, ie materials, testing, Quality Control, and oh yeah, the manufacturing line...