A better argument against raising the minimum wage

A better argument against raising the minimum wage
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According to the website raisethemimimumwage.com, the government-mandated wage was established in 1938, and reached its greatest relative value in 1968 when it was $1.60 an hour. The reason for the push to $10 an hour is that if $1.60 were corrected for the artificially induced inflation of the Federal Reserve Notes we use for money, the Bureau of Labor Statistics would put the equivalent value at $10.56 today.

Those on the left will say, “It’s just fairness, you can’t live on the minimum wage, we need a living wage,” and so on. Conservatives, who have a bad habit of letting the left control the language of the debate, usually respond with “People will get fired, the economy will be hurt, and small businesses will suffer.” None of those arguments matter because the motivation in people’s hearts goes to raising their own wage because they want either a higher mandatory wage, or a greater wage difference above the mandatory wage. So the driving factors here are greed and envy. There is no sympathy for the employer because most people are employees. So again, if a conservative uses the prejudicial word minimum in any discussion of wages, he loses, because you can’t argue your way out of giving people less than the minimum.

If the economy as the left believes is a “zero sum game,” where someone wins only because someone else loses, shouldn’t there be a compensatory loss of hourly income for every raise? Say for example that one person gets an hourly raise from $7 to $10. Shouldn’t someone else have to go from $13 back down to $10 an hour to maintain the zero sum? In addition, if you mandate a wage increase from $7 to $10 an hour, can an employer also require $3 or 30% more work per hour to justify the increase?

We need new language here. The obsolete term minimum wage is a socialist throwback to the Depression and in no way reflects the revenue capacity of people today, when there are tons of taxpayer transfers that didn’t exist during the Depression. From now on think only of the total revenue index. (Yes, I made it up.) This is a new measurement that records the total earning capacity of people at the beginning level of the revenue scale.

Here is how it works: The total revenue index takes into account every possible source of revenue available to individuals and families, of which wages are only a part. The idea is to combine all the sources of income available, total them up for the year, and divide that amount into months, weeks, days, and finally hours to get a dollar amount per hour. You can figure a regular 40-hour week, and an Obamacare 29-hour week. Take the dollar amount for the total revenue index and compare it to the minimum wage, and the results should be both shocking — and perfect for making the minimum wage measurement irrelevant.

The Human Services Agency (HSA) of San Francisco, my town, lists a variety of revenue sources available to both single adults and families. Cash (revenue) assistance for adults without children is available under the County Adult Assistance Program. This includes Personal Assisted Employee Services, Cash Assistance Linked to Medi-Cal, Supplemental Security Income Pending, and General Assistance. There is also the Cash Assistance Program for Immigrants and the Refugee Cash Assistance Program, which is just for single adults. Add whatever one is eligible for from these programs, on top of whatever wages are earned, for the total revenue index.

HSA also offers coordination with the Federal Government, the State of California, and City of San Francisco, for funding child care programs, vouchers, children’s services, and homeless programs, which are all revenue. CalWorks offers aid to needy families in the form of cash (revenue), child care (revenue), health care under Medi-Cal and subsidized Covered California (revenue), transportation (revenue), food stamps under CalFresh (revenue), and other services (more revenue). There is job training and placement services from the California Employment Development Department which is a cost that doesn’t have to be paid by the client, so more revenue. There are eviction prevention services (revenue), transitional housing (revenue), rental assistance (revenue), and the biggest cost of living subsidy, Section 8 housing. All of these programs have to be added into a person’s total revenue index for a total picture.

Michael Tanner of the Cato Institute wrote a brilliant article for National Review documenting how welfare is often a better deal than work. So the next logical step is to link welfare and wages as integral components of the total revenue index, and no longer think of them as separate issues. Cato found that in 2013 the value of welfare packages went from a low of $16,984 a year in Mississippi to a high of $49,175 in Hawaii, with a median nationwide of $28,500. If that were broken into a total revenue index of a 50-week employment year at 40 hours a week, that would be $8.49 an hour for Mississippi. However, the Obamacare-avoidance 29-hour week gives a total revenue index of $11.71. For Hawaii the total revenue index from welfare is $24.58 an hour, and $33.91 for the Obamacare week. The U.S. median would index at $14.25 and $19.65 per hour.

It makes no sense to argue for a $10 an hour mandated minimum wage when a total revenue index of up to $33.91 per hour is already available. Tanner also points out that welfare benefits aren’t taxed, and beginning-level income earners can get the Earned Income Tax Credit and child care tax credits. Tanner reports that in Hawaii one would have to earn $60,590 a year to be better off than untaxed welfare. That’s a total revenue index of $30.29 per hour for a 40 hour week, and $41.78 for the Obamacare week.

What I don’t know, and will leave up to the brilliant economists who make a whole lot more money than I do, is how to calculate the total revenue index (TRI) for certain levels of income, combined with local, state, and federal welfare packages, for a representative and comprehensive total revenue index, for various locations around the country. Then we will have a real index that uses all available present-day information to accurately assess a person’s total revenue capacity from all sources. This information could be used to make law and policy changes to address the welfare/wage balance within the total revenue index. This information could well serve conservative organizations, research institutes, the Tea Party, conservative candidates, office holders, policy makers and the Republican Party. Well, maybe not the Republican Party.

So if a leftist comes up claiming the minimum mandated wage has to be raised, tell him what the total revenue index is, and why the total revenue index makes their minimum wage terminology obsolete, irrelevant, and moot.


Greg Penglis

Greg Penglis

Greg Penglis is a flight instructor and author of the sarcastic and blunt "The Complete Guide to Flight Instruction." He has written for American Thinker and is host of "Penglis Online News," on YouTube.

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