Minimum Wage, Maximum BS

The Boston Globe has one columnist who can routinely find the absolute dumbest position on pretty much any issue and run it right into the ground. That gentleman is Derrick Z. Jackson, and he gives knee-jerk liberal idiots a bad name.

Today’s exercise in silliness involves Mr. Jackson and the minimum wage. Apparently during the last Democratic presidential debate, the candidates were asked if they would serve as president for four years at minimum wage. Senators Biden and Dodd declined.

On the face of it, it’s absurd. Both Biden and Dodd have literally decades of experience in their current jobs, and are quite successful at it. (Politics aside, the proof of this is that they still have those jobs, having been re-elected by their constituents many times over.)

But Jackson is also using the fallacy that one can extrapolate the minimum wage into an annual income to get a fair reflection of what it’s like to be poor. It just doesn’t hold up.

For some time now, I’ve asked if anyone — especially those who claim to be so much smarter than I am about economics — to show me just how many full-time workers actually make just the minimum wage for an entire calendar year. It took Falze to unearth a study that indirectly shows that answer:

About 450,000.

Here are a few unpleasant truths about minimum-wage workers and jobs:

1) The workers simply don’t have the leverage to demand higher pay. This can be from lack of experience, lack of skills, lack of employment history, or a bad employment history. But these can all be corrected in relatively short order — if the worker is willing to work at it.

2) The jobs tend to be very undemanding, requiring little or no skills. Hence, the supply of workers who can perform them is very great. Simple supply and demand says that when there are more workers available than are needed for the job, the value of the job (as measured by the salary) goes down.

3) There is already a substantial social safety net. People who make minimum wage only qualify for a hell of a lot of public assistance.

This is a self-correcting system. Let’s take an example of a job that is often cited by the left: a janitor at Wal-Mart.

Just what demands are there to perform the job? Let’s see: show up on time, push a mop for eight hours. That’s the kind of thing that pretty much anyone can do. So the theoretical pool of potential employees is very large.

But who is willing to to that job for minimum wage? A vast majority of those who can meet those requirements would not be willing. So the supply of workers has been cut drastically. Eventually, the supply will be so low that Wal-Mart will have to change the equation — and offer more money, until the supply of applicants is sufficient to meet their needs.

Now we have a Wal-Mart with, say, a dozen janitors, all making minimum wage. A few months pass. Most of the janitors have done their job well, while a few have not. At that point, Wal-Mart will look at the situation with a cold eye and say “one janitor just isn’t doing his job, so we’ll fire him and replace him. Another three are doing adequately, so we’ll keep them — we remember how much work and money goes into hiring someone new. We just won’t give them raises, as a way of telling them to ‘shape up or ship out.’ Seven more are doing fine, so we’ll give them raises to keep them happy and not looking for another job. And one gal is doing so well, we’ll give her a raise and a promotion so she can help train the new worker and lean on those mediocre ones to do better.”

A few more months pass. The new guy is hired and goes through his first review. The probationary ones (the ones who didn’t get raises the first time around) are either given raises or let go. And the good ones are given another raise and/or promoted.

Six months have passed since the original dozen janitors were hired — and not a single one of them is still being paid minimum wage.

(I don’t know anything about Wal-Mart’s actual personnel policies, but the 90-day/180-day review calendars are fairly standard in most businesses. Substitute 30-day/90-day periods if you prefer — the point remains the same.)

The vast majority of minimum-wage earners are NOT the sole support of a family. They are young people, fresh to the job market. They are people working a second job for additional money. They are “transitional” workers, taking what jobs they can to pay the bills until their situation improves. They are retirees, staying active and supplementing their income.

Back to that study Falze cited: the total number of people who earn minimum wage for an entire year is roughly 450,000, of a workforce of about 135,000,000. One third of one percent. One in three hundred workers.

Let me repeat that: 0.333…%.

To raise the minimum wage across the board is the equivalent of killing a cockroach with a howitzer. Sure, it’ll take care of the problem, but would you want to live in the now-cockroach-free crater?

Would I want to work for minimum wage? Hell, no. I currently make well over double that at the Day Job, and I’ve earned that by proving my worth to my employer over and over, for nigh on a decade. Accordingly, they’ve rewarded me with raises and promotions. Admittedly, those raises have been decidedly skimpy on occasion and I’ve avoided certain promotions because I simply don’t want to deal with the headaches that come from being part of management in this company, but I’ve stuck with them and they’ve stuck with me.

But if I had no other choice, I would take that damned minimum-wage job and work my ass off at it — because I know that I’m better than that, and I won’t be at that rate for long.

Setting aside ego and just going on statistics, I have a 299 in 300 chance of being right.

But I’d like Mr. Jackson to conduct his own little experiment: why doesn’t he declare what would be a fair minimum wage, and then spend a year working for the Globe on just that amount of money? I think it would result in some truly great columns, discussing what he considers the “absolute minimum” for someone to earn, and then describing how he lives on it.

Considering the economic status of the Boston Globe (and its owner, the New York Times), it would certainly be beneficial to them as well. They could keep on a few of their lower-paid employees on what they save in paying Mr. Jackson.

(Update: final two paragraphs added and minor errors corrected)

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