Sunday, August 18, 2013

Progressive Thinking (e.g. Wages)

Republicans drive me crazy! They have no idea what it means to be socially, politically and economically “progressive”.

Democrats drive me crazy! They have no idea what it means to be socially, politically and economically “progressive”.
Chicago Raise the Minimum Wage Rally (Think Progress)

Wages … all Republicans, and most Democrats, regard a rise in the minimum wage to $10 per hour as “progressive”. This is insane!

I came of age in 1979. Minimum wage was $2.90 per hour in 1979[1] and it sucked to earn minimum wage. If you earned $2.90 per hour in 1979, it would have had $9.33 in buying power in 2013.[2]

There is nothing “progressive” about wages that barely keep pace with inflation.

Let’s talk progressive!

The private sector employed 114,186 thousand people in July 2013; they worked an average of 34.4 hours per week and were paid an average of $824.91 per week. In the same period, 11,200 thousand people were officially listed as unemployed.[3]

Let’s do some math!

Imagine a policy with the target of employing people for 30 hours per week. If the total number of hours worked by private sector employees was divided by 30, it could employ all of the 114,186 thousand people that are currently employed plus all of the 11,200 thousand people who are officially listed as unemployed.

The private sector spends $94.2 billion per week on wages[4] and could pay 125.4 million people[5] working an average of 30 hours per week an average hourly rate of $25 per hour or $750 per week (that is $39,000 per year)[6].

Of course every employee would not work exactly the same number of hours or get exactly the same rate of pay … America isn’t ready for that. Some employees will want to work fewer than 30 hours, but employees should not normally work more than 32 to 35 hours per week and the maximum work week should be 40 hours.

One problem with the current policy is that it encourages workers to seek additional hours instead of better hourly rates. A policy that would discourage employers from asking employees to work additional hours AND would discourage employees from seeking additional hours would be one that punishes the employer without rewarding the employee.

Such a policy would fine employers 25% of the employee’s wages above 32 hours per week and 50% of the employee’s wages above 35 hours per week. The money collected from employers in the form of fines could be spent to offset the cost of benefits for unemployed or underemployed people.

Employing someone more than 40 hours per week would be a crime and the fine would be 100% of the employee’s wages over 40 hours and the possibility of jail time for employers depending on the circumstances. 

Now that’s “progressive”!

Most full time employees would work between 30 and 32 hours per week and earn between $20 and 25 per hour with annual pay ranges between $31,200 and $41,600 per year.

You might need some other policies to help people live on this new wage range like national single payer health insurance paid for from the general fund and tuition-free higher education.

You could also implement something called a guaranteed minimum weekly wages for households which would end the need for assistance to families with children, unemployment, disability and retirement.

Is this all a bit too simplistic? What did you expect in a few paragraphs? Economics is not a science for people who think that all of problems of world can be solved by memorizing John 3:16 and reciting it seven times a day.

The point of this article is that Republicans and Democrats drive me crazy! They have no idea what it means to be socially, politically and economically “progressive”.

Real progressives don’t think that raising the minimum wage to $10 per hour is “progressive”.

[1] Source: U.S. Department of Labor, Wage and Hour Division (WHD), History of Federal Minimum Wage Rates Under the Fair Labor Standards Act, 1938 – 2009, extracted from 08/18.2013.
[2] Source: US Inflation Calculator, extracted from 08/18/2013.
[3] Source: U.S. Department of Labor, Bureau of Labor Statistics, extracted from 08/18/2013.
[4] 114,186,000 employed people x $824.91 per week = $94,193,173,260 per week
[5] 114,186,000 employed people + 11,200,000 unemployed people = 125,386,000 people
[6] $25 per hour x 30 hours x 125,386,000 people = $94,039,500,000 per week