Economic inequality

There was a strike the other day, by people who clearly don’t understand what the word “strike” means. In an irony of the English language, their “demonstration” demonstrated that they were not qualified for what they were screaming they were qualified to receive. Economic inequality is a factor of having an economy. If we were all equal, it would be called “Communism”.

People who earn minimum wage, which is the amount the federal government has set as the absolute minimum an hourly worker can be paid, would like more money. The federal minimum wage is $7.25 per hour, unless you are a “tipped employee” (typically waitresses), for whom minimum wage is $2.13 per hour. This is not enough money to own a house, drive a car, and raise children. Conventional wisdom would suggest that if you are earning minimum wage, you should not own a house, drive a car, or raise children. Conventionally, people who earn minimum wage are not wise.

I do not mean to suggest that people earn what they deserve. I will state quite emphatically that many people earn far more than they deserve. Some of those people own businesses, some of them serve hamburgers.

I can’t recall the precise moment, but I know it was before I was eight years old I learned life isn’t fair. I was quite a bit older when I realized fairness cannot be legislated. We are all created equal, we are empowered to create inequalities through education and training. Sometimes we are blessed with talent. Some people fall upon lucky breaks, some people don’t know the right people. Life isn’t fair, but it is fair in the distribution of unfairness.

With the rate of unemployment holding at over seven percent, and arguably well over fourteen percent in reality, many people who are qualified to earn more money are working in minimum wage positions. Typically, these people are capable of understanding that although they may be very talented microbiologists, their value to McDonalds is far less than their actual “value” to society. The average minimum wage earner (and I use the term “earner” loosely) has a much higher opinion of his value to the corporation. The job determines the pay rate, not your desires.

National Public Radio, which is usually a defender of the poor and under educated, chose spokespeople for the strikes that fit the stereotype most Americans hold of minimum wage workers. Barely literate buffoons, unable to clearly express themselves and unable to understand when they are being set up. NPR host: “Are you aware that the local franchise owners set wages, not the corporation?” Spokesperson: “I mean, yeah, we don’t want to hurt the franchise owners, we takin this all the way to the top”. Maybe NPR chose this approach because fast food workers are not the only people who are paid minimum wage, and NPR may have a vested interest in keeping minimum wage right where it is. NPR sells the idea that having worked for them will look good on a resumé, and pays college graduates minimum wage.

Following a misquoted news item, in which it is reported that the minimum wage in Seattle is $15.00 per hour, fast food workers are demanding an increase in the federal minimum wage to $15.00 an hour. The reality is Seattle Tacoma airport, or “Seatac”, has enacted a $15.00 minimum wage for its employees. Take a position as a janitor at the Jimi Hendrix museum and you’ll be paid $9.19 per hour, the minimum wage in Washington state.

The “strike” took the form of workers walking off the job. What they fail to realize is their employers are under no obligation to retain them. They do not belong to a union, so they have no right to strike. There are literally people waiting in line to work for minimum wage. In addition, there was a call through social media to boycott fast food outlets. Think this one through. You own a fast food outlet, and your workers walk out. You consider paying more so you can serve your customers, but the costumers boycott your establishment, so you don’t need the workers. This explains why fast food workers, and not economists, were at the fore of this job action.

Market forces drive wages. Where workers are at a premium, wages exceed minimum wage. Where there is a glut of workers, a bachelors degree is required to work at a fast food job paying minimum wage. If the federal minimum is increased, what happens to those workers who had advanced to positions that paid $10 0r $15 per hour? Do they see the fruits of their labor erased? What about the skilled employees earning $20.00 per hour, who now find themselves making just above the very minimum allowed by law?

What about the small business owner, who paid her employees above minimum wages to attract better workers, but is now losing money as her old employees find work and pay commensurate with their skills, and she pays more than she had before for employees who don’t understand they are required to be at work every day?

How long does it take for the inflationary wave to pass through the economy?

In a related story, the next item on NPR was about nutrition. The guest proposed a rebate on healthy foods (defined as vegetables) when purchased with food stamps. While this woman was allegedly an economist, she didn’t explain where this money was supposed to come from. Would grocers lower the profit margin on vegetables, or would they pay farmers less? Or would this be paid by tax dollars, collected from farmers and grocers and fast food workers?

That evening, I heard that the President is once again pushing to extend unemployment benefits. My head did not explode, but I am unable to get out of bed this morning. The unemployment rate is down only because some people have been out of work so long they are no longer looking for work, and thus not counted as unemployed. Some have taken jobs at minimum wage, some have just given up. Fewer people are paying the unemployment insurance tax, and many of those are paying less as their income has decreased. But they would like to extend the coverage for those people who lose their jobs when businesses close due to an increase in the minimum wage?

One theme of the feminist movement was “Equal Pay for Equal Work”. The chant of the wankers is “Equal Pay, Period”.

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4 comments on “Economic inequality

  1. 2001tpc says:

    Very complicated subject. We’ve reached a point with our stagnating, no growth economy where some economists are starting to believe that a little inflation would be good for seniors and marketplace workers. It would get banks back into the the business of behaving like banks and away from living on the life-support IV drip of quantitative easing. It would also put the fear of God in the heads of our trading partners in the Asia who seem to be hoarding a lot of US denominated cash–if they worried about inflation, they’d all be here tomorrow trying to invest in real estate.

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  2. 2001tpc says:

    We had a similar episode in the early 1980s (back then it was Japan who was shadow banking arbitraging our economy). The US sold them a couple of banks and some big ticket commercial real estate, it worked. Some of the best things that Reagan did as leader of the US were essentially acting jobs.

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  3. Mike Reith says:

    Has anyone noticed that governments create greater problems when they set out to change things? The War on Drugs has given us full prisons and more drug use. The War on Poverty has given us more people receiving money from the government than the amount brought in by taxes. In the same way minimum wages lead to no wage when you are the one that is let go to allow the business owner to increase the salaries of others.

    Greed and envy, and love the power, have no end, it seems.

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