Minimum Wage and Poverty

The Fight for $15 minimum wage proponents have established a McDonald’s employee sect that claims racism and threatens “to do whatever it takes” for a $15 minimum wage and the right to join a union.  Along with the demands they claim that the company is guilty of corporate greed, collusion, intimidation, and widespread sexual harassment.
 
The National Labor Relations Act already allows them to unionize, and if there is substantiation to other accusations, then the FTC, the EEOC, the SEC and perhaps some other government acronym would be willing to look into it.  Except maybe for the corporate greed, whatever that is.  Nevertheless, it seems that these once-atrocious practices would suddenly become acceptable at 15 bucks an hour.
 
The racism claim seems to stem from two conditions that offend them.
 
They say that the company targets “communities of color” (i.e., nonwhites) in its advertising, spending more than $30 million every year in “Black-targeted media”.  On the other hand, McDonald’s reportedly receives the largest portion of the $22 billion that black consumers spend annuallyin quick service restaurants, so it appears that blacks enjoy patronizing McDonald’s.  If it’s wrong for a company to advertise to its loyal customers then they might at least propose alternatives.  For example, would it be better to hire more whites for ads?
 
The second offense is that the company’s low wages are “disproportionately hurting workers of color”.  In other words, a company has been willing to hire a disproportionate number of nonwhites who asked to work for it, so the company is to blame.
 
Near the bottom of the McDonald’s employment main page is, “Committed to being America’s best first job.”  The idea here is to work hard and learn valuable skills when you’re young, and then move along when you’re ready for bigger and better things.
 
In rural areas teens begin to develop character and other life skills by bailing hay and tending livestock, and in the suburbs they mow lawns and shovel snow.  In urban areas, what shopkeeper could give a kid a chance and let him sweep floors and stock shelves at $15 per hour?
 
For more than fifty years, an endless cascade of politicians and private sector rabble-rousers have promised the glory and spoils that, somehow, never materialize (except for the agitators themselves).
 
Again and again, government-mandated price floors and ceilings have been shown to help a select few in the short run but end up hurting everyone, including those who were purported to benefit.  About the $15 minimum wage in particular, George Mason University economist Walter Williams explains how and why “A minimum wage not only discriminates against low-skilled workers but also is one of the most effective tools in the arsenal of racists.”  Even so, the NAACP backs the Fight for 15 gang.
 
Some companies (including Wal-Mart) have voluntarily raised wages and offer excellent benefits so they can attract and retain the best people.  If the 15ers do somehow get a $15 minimum wage law rammed through, then small businesses will necessarily reduce staff and/or cut back on hours of operation, and some will be forced to close their doors.  In an effort to remain viable, the larger and wealthier companies could easily reduce the low-skilled payroll expense and invest more heavily on kiosks and robots.
 
They do correctly state that nonwhite Americans are trapped in poverty.  After all, poverty has steadily worsened for all shades since war on it was declared.
 
Researchers with the UC Berkeley Center for Labor Research and Education 2015 study, The High Public Cost of Low Wages, claims that the public cost of poverty-level wages costs U.S. taxpayers $152.8 billion each year in public support for working families.  “At both the state and federal levels, more than half of total spending on the public assistance programs analyzed in this report—Medicaid/CHIP, TANF, EITC, and food stamps—goes to working families.”  In other words if the minimum wage is high enough, then these programs can dissolve.
 
Even though income is only one side of a budget, for decades we’ve been hearing the term “living wage” and finally this study has specified it.
 
These researchers define a working family as one that has “at least one family member who works 27 or more weeks per year and 10 or more hours per week”, so a single mother of four working 270 hours per year could qualify the family.  To pull them out of poverty she simply needs to earn $109 for every hour of work, and at $190 she could even achieve our county’s median household income.
 
Five years ago a Brookings Institution study identified three behaviors that teens can follow to increase the likelihood of pulling themselves out of poverty:
  • Finish high school (at least);
  • Get a full-time job;
  • Wait until age 21 to get married and have children.

It was reported that when these three simple rules were followed, only about 2% of the American adults remained in poverty and nearly 75% had joined the middle class (defined as earning around $55,000 or more per year).

 
McDonald’s claims that its Archways to Opportunity program provides eligible U.S. employees an opportunity to earn a high school diploma, receive up-frontcollege tuition assistance, access free education advising services, and to learn English as a second language.  The funds reportedly can be put toward trade school, a community college or a four-year university.
 
In a recent Magnify Money survey of more than 3,000 college students, 39% of those with debt would consider dropping out of school before they add more debt and, among these, 52% owe more than $20,000.  People who worked their way through college and those who will take student loan debt to their grave can only imagine the relief of someone else freely offering to pay for their educations.
 
Though there is a grain of truth to many common stereotypes, within most any large group there is a wide range of individual differences.  We can only do our best with the hand that we’ve been dealt.
 
The growing gig economy, estimated to be about 34% of the workforce at least part-time, can be a good thing or not depending on your viewpoint.  If you do decide to work for a company that offers benefits that will improve your circumstances, then make use of them.

 

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