Featured Quote

In 1913, Henry Ford wrote the following as the directors had been reaping the rewards of profits - "The wages we pay are too small in comparison with our profits. I think we should raise our minimum pay rate".

Saturday, February 1, 2014

Minimum Wage doesn't Raise Prices

Wages have been either stagnant or declining for the past 30 years.  That is a Fact, indisputable and supported by vast research.

Study Shows...
Real Wages...
Wages in America...

That last one has some fairly good statistics.

"The minimum wage is 21.4% less [in 2004] than it was in 1979"

"As one source has put it, "in 2000 a CEO earned more in one workday (there are 260 in a year) than what the average worker earned in 52 weeks. In 1965, by contrast, it took a CEO two weeks to earn a worker's annual pay". "

"With 1992 as base year, productivity was at 82.2 in 1979. It grew to 94.2 by 1989 and 116.6 by the year 2000. In [2003], moreover, it has exploded, putting it over 120. That's a nearly 40% increase"

 "The overall picture is abundantly clear: real average hourly ages of more than 100 million of American workers' are less today than 25 years ago; real wages of college educated workers have risen only modestly in the late 1990s and fallen since under Bush II; and real wages of the 10 million lowest paid workers have declined more than 21%."

With all that in mind,  Corporate profits over the same time period have soared!

Profits skyrocket...
After Tax profits...
Rise in Profits...

"The U.S. Department of Commerce recently reported that corporate profits (which includes both domestic and foreign profits) now make up the largest percentage of the country's gross domestic product (GDP) since the 1950s. This ratio currently stands at just under 13 percent of GDP, amounting to a total of US $1.9 trillion (see Figure 1). However, wage and salary disbursements have been slowly trending downward from 47 percent of GDP in 1985 to 44.4 percent in the second quarter of 2011 (see Figure 2). These trends seem to point to increased inequality between workers and managers, driven to some extent by the outsourcing of lower-skilled jobs to Asia."
 Income Inequality...

"the Top 1% has more than triple its income with fairly steady growth since 1980. The middle and lower classes have seen only about a 15% increase in real income with all of those gains coming after the early 90s."
 Looking at all this data from the perspective of a rising minimum wage - we can tell that there has been no such thing in the past 30 years, yet prices have still gone up.  What has gone up along with prices?  Executive compensation and Corporate profits.

The only thing that goes up with minimum wage increases is the health of the economy as a whole.

Study on Minimum Wage... (pdf)
Job Loss Myth...
Impact of minimum wage...

  • No evidence exists that teenagers or less-than-high-school-educated adults lost work as a result of the 1996-97 minimum wage increases.
  • Historically, analyses of the minimum wage’s impact on young workers have never shown the predicted large job-loss effects.

  • The small negative employment effects found in past analyses diminish over time and are no longer statistically significant.

  • Minimum wage increases are well targeted in the sense that 63% of the gains from a dollar increase in the minimum wage would be expected to accrue to working households in the bottom 40% of the income distribution.

  • Of the 8.4 million workers (age 18 to 64) whose wages and incomes would increase with a one-dollar raise in the minimum wage, 2.7 million (32%) are the parents of 4.7 million children. Of the 2.7 million parents who earned at or near the current minimum wage in 1999, 63% had family incomes below $25,000.

  • Most minimum wage workers are adults (71%), age 20 and up.[2] Women and minority workers are over-represented among the minimum wage workforce. Slightly less than half (48%) of the minimum wage workforce are full-time workers.