Could You Live on $11,940 a Year?

A couple of months ago, Fox News host Neil Cavuto went on a rant against fast-food workers striking for higher wages, explaining that when he was but a wee pup of 16, he went to work at an Arthur Treacher's restaurant for a mere $2 an hour, setting him on the road to becoming the vigorous and well-remunerated cheerleader for capitalism he is today. For all his economic acumen, Cavuto seemed to forget that there's a thing called "inflation," and the two bucks he earned in 1974 would today be worth $9.47. That's less than the striking fast-food workers are asking for (they want $15 an hour), but significantly more than the $7.25 today's minimum-wage workers make. Not to mention the fact that so many of them are not teenagers but adults trying to survive and support families. (According to the Economic Policy Institute, 88 percent of those who would benefit from an increase in the minimum wage are over the age of 20; that and much more data on the topic can be found here.)

Yesterday, the California legislature passed a bill raising the state's minimum wage to $10 an hour, which would make it the highest in the nation. Governor Jerry Brown intends to sign it. Of course, business interests howled that paying people such a handsome wage would destroy the state's economy, which is what they always say whenever the minimum wage is raised, despite the fact that it never seems to happen. The California increase is going to be phased in over two-and-a-half years; the minimum in the state will rise from its current $8 to $9 next summer, then to $10 at the beginning of 2016. Since this issue seems to be coming back to the fore as it does periodically—the mayor of Washington, D.C. just vetoed a living-wage bill that was aimed primarily at Wal-Mart—I thought it might be worthwhile to compare the value of the minimum wage today to what it has been in the past:

The peak during this period was in 1978, when the minimum wage of $2.65 was worth $9.49 in today's dollars. At that rate, if you worked 40 hours a week for 50 weeks a year, you'd gross $18,980. That's still below the poverty level for a family of three, but it could be worse. The low point came in 2006, the last year at the minimum of $5.15, or $5.97 in today's dollars. At that rate, a full-time worker would make $11,940 a year. Think you could live on that?

President Barack Obama has proposed raising the federal minimum to $9, and there's a bill in Congress sponsored by Representative George Miller and Senator Tom Harkin to raise it to $10.10. Most importantly, their bill would index the minimum wage to inflation, so it would go up automatically. That would mean people wouldn't have to wait around while the minimum wage got smaller and smaller every year in real terms until Congress finally roused itself to do something about it. In the meantime though, at least states where Democrats are in charge can take action.

Comments

Has anybody investigated Neil Cavuto's claim that he was general manager of the Treacher's at age 16 or 17? It's not that I can't imagine a minor who is capable of being general manager, but in a food service setting there typically are machines that minors are forbidden to operate by employment safety rules, as well as complications from having a minor in a position to bind a business to contracts. Even if Cavuto were as gifted as he claims, it's difficult to believe that anybody but an owner-manager would go for that, such that he would be present to deal with such issues as training employees to use equipment that was off-limits to minors - in which case Cavuto would have been an assistant manager. But hey - maybe the owner wasn't a very good businessman....

Any member of Congress who believes the minimum wage, as it is now, is perfectly adequate, should voluntarily submit to a salary of minimum wages for a full 2-year term. I'd be willing to bet there would be few takers on that condition.

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