Tuesday, May 5, 2009

More on the practicality of doubling today's minimum wage (at Thoma's)

>>>>And of course, that it wouldn't cause a spike in unemployment among minimum wage workers, including increases in teenage unemployment which wouldn't be so great for crime and poverty.<<<<

I almost don't know where to start -- but there are few teenage Mexicans working fast food in Chicago, nor many teenage Chinese working fast food in San Francisco, the other city I have recent experience in.

If the minimum wage were $500/wk (up all of $100 since 1968 -- TWICE the average income later) a lot of gang members would remember the desperate reason they joined a drug selling gang in the first place; and would not stick around long.

Recently, the Illinois minimum wage jumped all the way from $5.50/hr (in 2009 dollars) to $8.00/hr. I and other customers of my neighborhood Ronald have noticed a distinct uptick in business -- all in the third world end. IOW, a minimum wage increase feeds the pockets of minimum wage employees who are most likely to patronize a minimum wage business out of proportion.

Prices went up but not enough to keep anyone else out. Wouldn't you pay 1/3 more to go to Ronald's if you had to? Enough higher paid people would to keep Ronald going I am sure. But, if fast food is an overextended business dependent on low price Mexican labor to keep its market share then so be it -- let some Ronald stores close up. A few years ago Ronald closed 733 stores that were not making a profit -- nobody took notice -- not even Mexico.

Fast food price is 1/3 labor -- by far the highest of any business -- and a business that uses mostly minimum wage labor. If Ronald can survive doubling the minimum wage it should have little impact on any other business.

Ultimate effect to be hoped for: higher paid workers who have more bargaining power will get their inflation raises to cover the extra 2 1/2% inflation and less money overall will be left for the top 1% or earners to take home because American workers are too asleep to grab it before it percolates all the way up.

I'm not saying: For the want of a higher minimum wage everybody else is underpaid. "Everybody else" had better get in touch with something called sector-wide labor agreements -- and then the minimum wage earners and "everybody else" can squeeze back the 15% of overall income that percolated to the top 1% of earners since 1973 in our uniquely warped out of shape American labor market.

1 comment:

Anonymous said...

It can be discussed infinitely..