The Wage Trap

timwilliams By timwilliams, 5th Sep 2013 | Follow this author | RSS Feed | Short URL
Posted in Wikinut>News>Business

The recent attempt to gain support for raising the minimum wage is a little short sighted.

The Wage Trap

The recent push to increase the minimum wage from the fast food workers actually does point to a much deeper concern for the state of the US economy today. We have to remember that it wasn't too long ago where fast food workers were the bench mark for high school and college students employment opportunities. In many cases the money earned went for petty things like Friday's date and then again to augment student expenses on campus. In both cases the money earned wasn't earmarked for mortgage, utilities or even child care. That responsibility was on the shoulders of parents. Boy, how things have changed. Today, fast food workers are not the Soda Jerks of a bygone era but now are parents themselves many of whom have lost their main source of income only to find work at Mickey D's.

But, this latest effort to have the minimum wage increased is a bit short sighted. In many cases everything is relative. Take for instance when the Alaska pipeline was being built, to attract workers meant that wages was the bait that lured so many to Alaska. But the catch was the overall cost of living only increased relative to the wages that were being offered. The same thing is happening in North Dakota today where the oil boom is in full swing. Everyone wants a piece of the pie sort of speaking. But when wages increase without safeguards in place to insure that inflationary trends don't settle in to the cost of everything else, the people receiving those higher wages actually loose.

Today, the balance between wages and the cost of living is way out of line. That is one of the key factors as to why the United States has the highest wage disparity gap in the world. But, lets but this case of our fast food workers in perspective. Today, the employment opportunities are not readily available with corresponding living wages. The United States has lost millions of middle class wage jobs that are most likely not ever coming back. Corporate America has literally turned it's back on the middle class job opportunities for the past 25 years. The United States economy has shifted from a strong manufacturing base to one of today a service and technology base. The hard cold reality is the fact that 90% of service related jobs of which Mickey D's is pay just a little more than the minimum wage set by the state or Federal government. Another sobering statistic is that the national unemployment rate is much higher than what our "most trusted" news and governmental officials keep emphasizing.

What these fast food employees seek in trying to increase the minimum wage is an attempt to gain economic mobility that has been completely unavailable. We have to remember it is not the fault of the fast food industry that tries to stay competitive that workers are paid a little over the required minimum wage. But, when the cost is transferred to customers in keeping up with mandated higher wages, and it will, these fast food businesses will eventually fold. The net result would be more unemployment. That is the last thing this country needs.

To close the wage gap there must be available economic opportunities with corresponding living wages. So far what we are witnessing is a move to gain attention to the fact that those living wage job opportunities have become extinct for millions of job seekers and low income workers all over the country. How then will the United States be able to create those living wage job opportunities and make them readily available so that many of these low income workers can actually gain employment in those living wage jobs?

In order to do that we first have to determine what is the criteria in establishing a real living wage. It must not be confused with the minimum wage set by the United States government. A living wage is completely different in that enables individuals to contribute to the overall economic stability of any given community instead of being a drain on an already diminishing tax base. The most correct way in determining a living wage is to figure out what the medium cost of rent or mortgage is in any given county. An example say, in Hillsbourgh County Florida the average cost for monthly rent or mortgage is $1,000, Now, to compute the living wage for this county we need to multiply the medium cost of $1,000 by 4 to come up with the living wage of $4,000 per month for this County. That is an annual salary of $48,000 per year. Factor in the cost of living for the region you will find that this living wage is not exorbitant in fact it just covers the basic needs to keep the community economically solvent.

It is time many employers step up to the plate in realizing that paying a living wage is not only good for the local economy but very beneficial for their business growth, profitability, and stability. In fact paying a living wage for full time workers say in manufacturing, education, health, engineering, construction, and certain service related industries, spurs real economic growth for all.

When employees receive living wages more and more people will be able to purchase the goods and services that are produced, which in turn means more business, which means more production with the end result being more profitability for all businesses. There is another real factor that must be considered when establishing a living wage is that a recent report has stated that the biggest cause of domestic violence , divorce, and abuse is due to the fact of the lack of financial support within the family unit. This does nothing to improve our or any society. Our country was founded on the principle of a strong and stable family unit. Today what has and is happening all over the country is a rapid deterioration of the family unit; compound the massive job losses that are still unabated, we have a very discouraging situation.

The solutions that have been proposed and implemented by the President only cover up some the real roots of much greater problems. One of which is to remedy the continuing exodus of middle class wage jobs. One example would be to ease the credit restrictions for small business. By easing credit restrictions like the current high credit scores now in place and lowering them so that business will be able to expand would be a first step. When these businesses are able to grow they can now afford to embrace new technology for the creation of better and more efficient products. They will now be able to continue to research for more efficient and environmentally safe ways of developing more innovative goods and services. All of which contribute to offering living wage job opportunities.

What the government must do to felicitate more economic expansion would be to reestablish a WPA type program similar to the WPA that was established under FDR in the 1930's and infusing living wage standards to all. By revamping our trade agreements and emphasize equal trade instead of the free trade agreements that have only encouraged the exodus of the living wage jobs from the United States would help reduce our trade deficit. This would also encourage companies to stay or relocate in the United States with living wage standards to be offered to all full time employees. By establishing Universal Health Care all across the country in this way it will free additional revenue now for companies to be able to pay living wages that they would not be able to without the establishment of Universal Health Care.

The guidelines to receive mortgages, refinancing, lines of credit, or purchases say, of used or new cars have to be more assessable for all. Today one missed or late payment on just one bill will send the credit score down so low that individuals will no longer qualify for any assistance what so ever. That is one of the biggest causes why foreclosures are still so high. The credit score should not be the only criteria for any individual who is applying for assistance. The easing of credit scores will most likely have a very significant effect toward economic growth because these people will now be able to stave off foreclosure and or be able to stimulate the local economy by purchasing that used or new car.

But, for the workers that are employed by our fast food industry if this country actually resolves the issues that have led to the dire economic conditions too many Americans are in they too will be able to expand their own economic mobility by moving up to jobs that now are available with living wages. In the end chains like McDonalds will still be able to continue to prosper.

Our future as a country and the future stability of the world starts right here in the United States and that begins with establishing living wage standards for most of today's workers. Until corporations and business leaders realize more profits and greater growth start with the employee being a viable and valuable contributing factor in ones own community business every where will continue to suffer and the United States will continue to languish in a continuing spiral of economic and social upheaval that America might not be able to resolve.


Jobs, The Economy, Wages

Meet the author

author avatar timwilliams
I am a feature writer for The Tampa Bay Examiner and The American chronicle. Earned Ph.D in Economics

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author avatar Fern Mc Costigan
6th Sep 2013 (#)


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