Wednesday, June 21, 2006

Ignoring those who need the most

At the end of 1997, the Consumer Price Index was at 161.3. Minimum wage was $5.15.

Today, the CPI is at 202.5, and the minimum wage will remain $5.15.

CNN:
WASHINGTON (AP) -- The Republican-controlled Senate refused Wednesday to raise the minimum wage, rejecting an election-year proposal from Democrats for the first increase in nearly a decade.

The vote was 52-46, eight short of the 60 needed.

"I don't think the Republicans get it," said Sen. Edward M. Kennedy, D-Massachusetts, who backed a proposal for a three-step increase in the current wage floor to $7.25 an hour. The federal minimum wage has been fixed at $5.15 an hour since 1997.

6 Comments:

Blogger Kvatch said...

Of course they did. Fortunately for those of us on the Left Coast and particularly in Babylon by the Bay, we've taken matters into our own hands. Here, the minimum is $8.81. Business howled...then raised their prices...then everything went back to normal.

Duh!

5:54 PM  
Blogger Ezzie said...

Raising the minimum wage would be terrible economically, resulting in higher unemployment and inflation. Period. (Basic economics.)

1:07 AM  
Blogger copy editor said...

CPI is up 25 percent since the last change to the minimum wage. Basic economics now states that a person working at that level can afford 75 percent as their antecedent from late 1990s.

1:09 AM  
Blogger Ezzie said...

So you want to cost 30% of them their jobs, ensuring that they can't afford anything; and thereby driving up prices, which means you've accomplished nothing for those you were trying to help.

3:14 AM  
Blogger copy editor said...

How on earth did you arrive at that number? I guess you just took the 30 percent increase in salary and assumed that would impact margins by 30 percent. Maybe it would for some businesses, however there are many other expenses in stocking the shelves.

Moreover, you missed my point entirely. Minimum wage and CPI should be somewhat related. Wages and CPI should be, and min. wage is one way to do it.

10:40 AM  
Blogger Ezzie said...

Why should minimum wage and CPI be somewhat related? Why should there be a minimum wage at all?

A 30% increase will most assuredly result in a 30% increase in unemployment unless businesses decide to cut profits (unlikely), productivity (unlikely), or raise prices by a ton (possible).

If I can afford 20 workers at $5.15/hr, I can afford 14 workers at $7.25/hr. That's a 30% cut in employment. Sure, I could keep them all, but how will I make up the extra 30% in costs!? I'm going to raise prices big-time.

All you're doing is increasing the very CPI which you want to keep pace with, resulting in a never-ending chase of increased inflation and minimum wage. It also increases the chances that companies will hire illegal immigrants over US workers, even with the risk of fines.

Raising the minimum wage is simply stupid economics. If you want to ease the burden on poor people, try to get the costs of their goods to drop. It's better for everyone.

8:21 PM  

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