by Steve Miller
In 1968, when I graduated from high school, the minimum wage was $1.60 per hour. Working a 40-hour week, a minimum wage earner would earn about $3,328 per year. The economy was different then; gasoline was around 35 cents per gallon and the median household income was just under $8,000 per year. In today’s dollars, adjusted for inflation, that dollar sixty works out to around $7.75 per hour. It wasn’t a livable wage then and it isn’t now, nor was it ever meant to be.
Let’s go back a few centuries and look at when government first got into the business of regulating a worker’s wage. King Edward III, in 1349, issued a decree setting a maximum wage. It seems that the Black Plague had wiped out most of the work force and the short supply of workers drove up the demand. Consequently, wages skyrocketed, putting a dent in the good king’s wallet along with that of other wealthy landowners who depended on serfs to work their land. Setting a ceiling on what a worker could demand as compensation, and also what an employer could pay, put things back in perspective and kept the rich wealthy and the poor underpaid. So much for supply and demand. The United States got its first minimum wage laws in 1938 during the Great Depression. Many workers were willing to work for a few cents an hour just to bring some groceries home to their families. Business owners were eager to exploit them because there was no shortage of workers willing to work for damn near free. Congress enacted federal minimum wage legislation of a quarter an hour, which would be about $4.50 in today’s money.
Minimum wage was never intended to be a living wage. It was never intended to support a family or yield the median annual income. It was intended to keep employers honest and fairly compensate workers for the most menial and basic of tasks.
Minimum wage is intended to suck. Because of that, nobody wants to work at that rate for long. It was intended to provide the student who was living with his parents while going to school a fair remuneration for his work, or compensate a part-time worker who wanted to supplement their regular income. It was supposed to be for jobs that required no skills and only basic education.
Somehow the idea got started, most likely by labor unions, that a guy flipping burgers was entitled to the same compensation as a college graduate entering the workforce. The arbitrary fifteen dollar figure that’s being batted around works out to $31,200 per year. Not bad for a high school dropout. Not bad for a high school graduate, for that matter. College grads starting work with bachelor’s degree, and a brand new student loan to pay off, can expect about the same. At fifteen dollars an hour, a fast food worker would make more than an E-5 in the US military with over four years of service.
There will be some profound effects if the fifteen dollar minimum wage takes effect. Most employers have a fixed dollar amount budgeted for labor. Higher pay means fewer workers thus fewer jobs available. That equates to higher unemployment.
More competition for unskilled work will mean that disadvantaged and minority workers will have a harder time getting those jobs that are relatively easy to secure now.
Prices will go up in industries where employers require a fixed number of workers to get the job done. That means the fifteen dollar panacea that’s supposed to cure-all of our financial and social problems won’t go as far as it used to.
Minimum wage isn’t the cure to poverty. Education and development of marketable skills is. For someone who’s over 30 and making $7.85 an hour, well, I say that’s your fault. You had plenty of time to develop skills that would increase your income – if that’s what you wanted. Don’t expect someone to hand you thirty grand a year just because you have a couple of kids or want a new truck.
Those demanding the higher minimum wage will soon find themselves in the same situation that they are in today. Other workers will demand wage increases because their present compensation will then be close to minimum wage – hardly fair compensation for a semi-skilled trade. Nearly doubling the minimum wage will cause prices to go up. Inflation will mean that the fifteen dollar rate won’t buy nearly what it buys today. What then, another demand for doubling the minimum wage?
I would have much more sympathy for low-wage earners if they were to demonstrate for better access to education and job training. After all, if you give a man a fish he eats today. If you teach him how to fish, he eats for life.