What Should USA Minimum Wage Be? Welcome to my Economic TED Talk

Current national minimum wage is $7.25/hr. Been level at this rate since effective July 24, 2009. In Election 2016, Bernie Sanders called for a $15/hr minimum. To catch up with the popular and beloved senator, Hillary proposed a $12/hr minimum. President Trump and Congress didn’t take action. Over the past year, the most rich have increased their wealth; middle class families have not.

wealth

Most Democrats in Election 2020 called for increasing the beginning worker rate. President Biden has proposed a $15/hr hike for federal workers and contractors, and a bill introduced by Democrats would increase the wage floor to $15/hr four years after the new law’s effective date.

On January 22, 2021, President Biden issued an executive order instructing the Director of the U.S. Office of Personnel Management to “provide a report to the President with recommendations to promote a $15/hour minimum wage for Federal employees.”

The Congressional proposal would first increase the minimum rate to $9.50/hr the day the law becomes effective. Annual increases would follow until reaching $15 an hour.

Some larger corporations have raised their minimums. Amazon’s starting hourly wages are at least $15/hr for all full time, part time, and seasonal employees and contractors. Walmart posts their new wage ranges for hourly team lead roles start between $18/hr and $21/hr, and can go up to $30/hr in Supercenters. Average Apple Retail Sales Associate pay in the U.S. is approximately $15.71/hr.

Advocates for America’s smallest businesses, who struggle with pandemic lockdowns, closures and reduced customers, as well as possible increases in unemployment taxes, warn such an increase could stall an already challenging economic recovery on the road back to stability from the health crisis.

Workers are demanding more; employers say this is not the time. How do we find some middle ground and compromise? Let’s use Lena’s comment as a starting point.

lena

Wanted to check her math. What’s the #6 Combo? Found some prices online. Let’s use this information for our analysis. So, our question: Does Lena understand “what the f*ck ” she’s talking about? 🤣

wendy_prices

Min Wage in 1998: $5.15; wages $7.25 (140% of min) … #6 Combo: $4.45
Wages-to-meal ratio: 1.63

1) Using Dave’s Hot ‘n Juicy 1/4 lb Single With Cheese — Combo
Min Wage today: $7.25; wages $9.00 (120% of min) … #6 Combo: $6.19
Wages-to-meal ratio: 1.45

2) Using Dave’s Hot ‘n Juicy 1/2 lb Double With Cheese — Combo
Min Wage today: $7.25; wages $9.00 (120% of min) … #6 Combo: $7.19
Wages-to-meal ratio: 1.25

Earnings to Minimum Wage Compared

Summary: the fast food worker’s earnings in 1998 were 140% of minimum; today 120%. This suggests wages have fallen since 1998. Most American workers believe this. To be equivalent to 1998, with a minimum wage of $7.25/hr today, the fast food employee should earn $10.15/hr.

These are considered part-time jobs, but annualized at 40/hr per week (50 weeks), employees made $14,500 working for $7.25/hr in 1998. Today, a similar employee earning $9.00/hr makes $18,000. If the worker’s wage was $10.15/hr, they would make $20,300.

As a comparison, if President Biden and Democrats mandate a minimum of $15/hr, workers would earn $30,000. Corporations are paying this wage today. Small businesses claim they cannot.

Wages to Price Comparisons

Summary: Wages-to-meal ratio shows Fast Food Prices today are HIGHER relative to wages. The 1998 worker earned $7.25/hr and combo meal cost $4.45 for a ratio of 1.63. Today, the wages-to-meal ratio shows employees can’t buy as much: 1.45 (#1: single combo meal) or 1.25 (#2: double combo meal). This fits most other economic analyses. Wages have gone up more slowly than prices have increased. Most American families feel the financial squeeze.

If workers made $15/hr, wages-to-meal ratio for the more expensive #2: double combo meal would be 2.09. This suggests $15/hr is too high relative to the cost of the meal. To match the 1998 wages-to-meal ratio, the employee’s current average compensation of $9.00/hr should be increased to $11.72/hr. This is nearly a $3/hr raise and likely would make employees a bit more comfortable financially.

Examining this another way, if the Democrat-controlled Congress raises the minimum wage to $9.50/hr as proposed, using the 1998 earnings-to-minimum wage ratio of 140%, Wendy’s should pay their employees $13.30/hr rather than the average $9.00/hr. This would be a $6.30/hr increase.

Recommendations

Both analyses show: 1) the federal minimum wage at this time is too low; and 2) employee compensation has lost buying power compared to 1998. Does this shock anyone? Workers and middle class families know the pain. Certainly no surprise to them.

benefits

President Biden and Democrats can move legislation forward without bipartisan support from Republicans. Two months ago, Republicans exerted their party unity and power to nominate and quickly confirm SCOTUS Justice Amy Coney Barrett. Republicans apologized to nobody.

Democrats should immediately increase the minimum wage to $9.50/hr as proposed. Smaller companies should ensure non-minimum wage employees earn at least $12/hr, if not $13/hr. We should applaud companies and corporations paying workers $15/hr or more.

Minimum wage positions should be reserved for part-time or full-time entry level employees. At $9.50/hr their annual compensation would be about $19,000 or slightly more than $1,500/month. This is sufficient if one lives at home with parents or shares a place with friends.

For non-entry level employees, an average wage beginning around $12/hr earns them $24,000/yr or $2,000/month and allows the worker to manage the basic requirements of an adult life.

Thank you for coming to my economic TED Talk!!!

Apparently for researching this issue, social media now offers me many advertisements to Wendy’s. Haven’t eaten there in years and have no plans to do so. Kind of creepy how we are being watched and tracked all the time. Guess that’s why Mark Zuckerberg is making billions.

wendy_ad


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Ko’olau of Kaua’i. I am the Defiant One
“I Believe We Can”

9 thoughts on “What Should USA Minimum Wage Be? Welcome to my Economic TED Talk

  1. “For non-entry level employees, an average wage beginning around $12/hr earns them $24,000/yr or $2,000/month and allows the worker to manage the basic requirements of an adult life.” Sorry, but the definition of the “basic requirements of an adult life” DOES NOT assume your CAREER is making burgers at Wendy’s… If THIS is your aspiration in the greatest of countries you were NOT paying attention in school (and need to get a degree in a field that demands your training and capabilities)!

    1. Aloha Kenny, appreciate your comments. You’re a smart guy! Many good points. Just to clarify, consider minimum wage jobs to be targeted toward entry-level part-time or full-time workers who live at home, go to school or are just starting out in the world of work. For non-entry level employees, an average wage beginning around $12/hr earns them $24,000/yr or $2,000/month.

      After taxes, they should clear enough to pay for their share of an apartment, car & insurance, food, clothing and basic essentials. This allows them to start an adult, professional career. Certainly agree with you this should not be their final destination. We all hope (and expect) the worker continue to train, learn on the job, and move upward to more exciting, as well as demanding, positions.

    1. Aloha e ragnarsbhut … appreciate your comment and thanks for participating in this discussion. Do you also oppose child labor laws or maximum weekly hours (40-hour work week), etc?

      1. I oppose mandated child labor, if that is what you are asking me. A 40/hr work week is something I have no real opinion on one way or another.

      2. Feel free to read, follow my blog and leave me any comments. If you have any suggestions for items you would like for me to review, mention them in the opening post.

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