February 10, 2014

Letter: One way or another

Georgia’s state minimum wage is $5.15 an hour, and like many of the states around us we are some of the biggest users of food stamps. Thirty-eight percent of U.S. workers ages 20-29 are at or below the federal minimum wage ($7.25) which is, inflation adjusted, 33 percent below the minimum wage in 1968.

The federal minimum wage of 1968 was 55 percent of median full-time wages, while today’s is only 37 percent. To be equal to 1968, the current wage would have to be $10.78. But remember this is still just 55 percent and doesn’t address the issue of a “living wage.”

A “living wage,” free of most taxpayer-funded assistance and medical care for a family of four, starts around $35,824 (without child care), according to Massachusetts Institute of Technology calculations. Forty-three percent of Dalton’s households have incomes under $30,000. Sixty-eight percent of fast-food workers are adults (average age 29), and 52 percent rely on taxpayer-funded assistance amounting to $7 billion a year.

Research by Robert Pollin and David Card and studies involving Arindrajit Dube found a minimum wage increase has no effect on the rate of employment, hours or benefits. Within the research areas, economic activity grew. In neighboring areas not affected by the increase, business activity declined.

An overall minimum wage increase would be about 2.5 percent of total operating expenses of any business and could be covered by about a 1 percent price increase to the product or service. In the case of grocery stores the increase is only .25 of a percent because grocery store profit is derived from volume.

One study claims a 1.1 percent price increase would mean Walmart could pay $12 an hour and McDonald’s $15.23 an hour with just 22 cents added to a Big Mac. Increasing the minimum wage could lower turnover and absenteeism, raise morale and productivity, and lower the cost of hiring, training and administering labor.

Wages and salaries nationally as a share of the economy are back near the record low of 2011. Corporate profits as a share of gross domestic product are at a record high. Taxpayer-funded assistance paid to McDonald’s workforce nearly equals one-quarter of McDonald’s profits. And a lesson to Walmart, Costco pays an average wage of $20.89 per hour.

One way or another we are going to pay the working poor. Either tax the rich to pay for taxpayer-funded assistance or raise the minimum wage.

David Bean


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