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Full Time Wages Should Not Mean Poverty Wages

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As it presently stands, someone working full time for the federal minimum wage makes only $1,160 per month, and that’s before payroll taxes. It’s difficult for a single person to make ends meet on that little, and it’s almost impossible for a single-parent family to have food, shelter, and clothing on less than $1,200 per month. Parents start taking second jobs and the kids become latchkey kids. They wait at home or on the street without supervision, and there’s no one there to help them with homework (or even to make sure they do it); soon there’s another juvenile delinquent causing problems and costing us taxpayer dollars.

In his State of the Union address, President Obama called for a hike in the federal minimum wage. We have since been reminded of the Republican stance on the minimum wage since the GOP members of the House of Representatives voted unanimously against raising the federal minimum wage from $7.25/hr to $10.10/hr this past March 15.

Costco’s CEO Craig Jelinik recently called for that same increase in the federal minimum wage, as this Huffington Post article points out, quoting Jelinik:

‘At Costco, we know that paying employees good wages makes good sense for business. Instead of minimizing wages, we know it’s a lot more profitable in the long term to minimize employee turnover and maximize employee productivity, commitment and loyalty. We support efforts to increase the federal minimum wage.’ Costco is known for paying its workers wages that are generally above average for the retail industry. The average Costco worker made about $45,000 in 2011, according to Fortune. That’s compared to an average of about $17,486 per year for a worker at comparable Walmart-owned Sam’s Club.

 

And apparently the additional wage pays off. Costco makes more than $10,000 in profits per employee, while Walmart takes home about $7,400 per worker, according to The Daily Beast (Walmart and Costco aren’t exactly the same type of business, however).

In addition to offering its workers high pay and the opportunity to unionize, Costco also provides a benefit many of its competitors don’t: health insurance for part time and full time employees.

Those who think it makes economic sense to cut payroll as much as possible should read that again. Costco is paying its employees over two-and-a-half times what Sam’s Club pays theirs, and Costco offers benefits and unionization to boot. They’re still making big bucks despite the higher payroll, too (according to the same reference): “Costco reported a profit of $537 million last quarter, up from $394 million during the same period last year”

The article notes that Costco and Sam’s club are not exactly the same business, but they are certainly quite similar. Does this mean that every burger joint and hot dog stand should suddenly begin paying their employees middle-class wages? Of course not. But the benefit in paying higher wages, as the Costco CEO pointed out, is, “It’s a lot more profitable in the long term to minimize employee turnover and maximize employee productivity, commitment and loyalty.” And the numbers back him up.

The example of Costco as compared to Sam’s Club would seem like a distraction from the gist of this article, which is more concerned with the federal minimum wage. I included the example to show that the benefits of treating one’s employees right often outweigh the costs, especially as compared to those businesses that try to extract as much work as they can from their employees while paying as little as they can get away with.

Now, let’s get to the main issue: the federal minimum wage. Why is it that a person working a full time job should still need federal taxpayer assistance to be able to remain fed, sheltered, and clothed? This makes no sense. When someone with a full time job has to take federal assistance to make ends meet, then while the business may think it’s saving money, the nation as a whole is essentially subsidizing the wages that business is paying.

There’s been much in the news about how we need to cut entitlements such as food stamps and Medicaid, but the answer is obvious: we need to address the reason why full time workers still qualify for, and still need those programs. The solution is deceptively simple: if we want to slash taxpayer entitlements, then require that the minimum wage be sufficient for one to live just above the poverty level (for one’s particular state or region) as long as one works 40 hours per week.

Read that last sentence carefully. If such a law were passed only for full time workers, then we’d see many employers cut hours to where most of their workers no longer could be considered full time. I am saying that the minimum wage should be such that a worker remains just above the poverty level as long as that individual works 40 hours per week, regardless of how many different jobs he or she has to work to make up that whole 40 hours. By doing this, we would be rewarding those who work, we’d be slashing the taxpayer-funded entitlements that the Republicans hate so much, and the people would be standing on their own feet instead of depending on the federal dole.

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About Glenn Contrarian

White. Male. Raised in the deepest of the Deep South. Retired Navy. Strong Christian. Proud Liberal. Thus, Contrarian!
  • Ed Jones

    That might work, if jobs could not be exported overseas. But part of the reason 19 million Americans are looking for fulltime work while Asia is booming is that well-meaning liberals think wishful thinking can repeal the laws of economics. So they support adding mandate after mandate on business *within the United States*. Now those businesses are hiring abroad, so they can escape liberal mandates.

  • Jay

    I want to know why companies like WalMart are allowed to budget labor costs on the back of taxpayers. Why don’t people understand that, when they buy a product for $10, they are ALSO paying additional dollars for food stamps, etc. to employees selling that $10 product. Why is this allowed?

  • G l e n n C o n t r a r i a n

    Jay –

    That’s my entire point: by paying full-time wages so low that it’s flatly impossible to keep a family fed, sheltered, and clothed, we the taxpayer are forced to essentially subsidize through public assistance the wages these companies are paying.

  • G l e n n C o n t r a r i a n

    Ed –

    Hate those mandates? Ask yourself this: why is it that all – all – the non-OPEC first-world nations on earth are socialized democracies, complete with taxpayer-funded health care? Can you name single non-OPEC first-world nation that doesn’t have socialized health care in one form or another?

    No?

    Gee, I wonder why not?

    Here’s a clue that conservatives never seem to get, guy – the more a country improves its infrastructure (you know, the stuff like roads and electrical grids and communications and so forth), the better that businesses within that country are able to prosper. With me so far? Good. What’s the single most important piece of infrastructure within a country or a company? Its people. It’s just like any football coach will tell you – “take care of your people, and your people will take care of you”. Keep your people healthy, and they will work better and longer for you.

    THAT, sir, is why even with all the (austerity-caused) problems in Europe, they’re still first-world nations.

  • G l e n n C o n t r a r i a n

    And on a slightly different subject, the next time someone tells you they want to sell you a bridge, they might not be joking.

  • Dr Dreadful

    Now those businesses are hiring abroad, so they can escape liberal mandates.

    And yet Wal-Mart’s principal income continues to come from its on-the-ground retail business within the US. The reason for this is that it knows the US is its most lucrative market.

    One can hardly expect them to import hundreds of thousands of illegal workers from Asia to run their stores, so if they want to continue to do business here I don’t think it’s unreasonable to want them to pay their American employees a fair wage, especially since it doesn’t seem to bother its competitors to do so.

  • Dr Joseph S Maresca

    People should spend their money in local neighborhood stores. I do. This way local teens and adults can be hired in greater numbers.

  • Kenn Jacobine

    Price fixing never works and that is exactly what the minimum wage is. As the price of something rises the demand for it diminishes. If you raise the minimum wage you will get more unemployment. More unemployment costs taxpayers including Costco more in benefits, health care costs, job retraining programs and all the other big state schemes that Glenn and his ilk have had made into law these past 50 years. Even a monkey knows that raising the minimum wage right now with real unemployment over 15 percent is asinine.

  • G l e n n C o n t r a r i a n

    Kenn –

    Of course, of course you’d say that the minimum wage never works to the benefit of the nation.

    BTW, AFAIK pretty much all non-OPEC first-world nations have minimum wages and have had them for generations. So could you tell us once again exactly how it is that ALL non-OPEC first-world nations are big-government, social-safety-net-loving, minimum-wage-supporting first-world social democracies? And could you tell us once again exactly how it is that PRECISELY ZERO non-OPEC nations that don’t have big government, significant social safety nets, and minimum wages are first-world nations?

    If you were a manager of an MLB team, it would be like you saying that your way of managing is the only way to win the pennant, despite the fact that you’ve never won a pennant, and every single one of the teams that have won the pennant over the years are doing it in what you say is the wrong way. Tell me, Kenn – how long do you think you should keep your managing job of that team if your team never, ever comes close to being in the playoffs, much less wins the pennant, especially when you keep claiming that YOUR way is the right way and the managers of ALL the teams that DO win are doing it in the way that you say is sure to bring them to utter defeat?

    Good grief! But STILL you insist that all the non-OPEC first-world nations are doing it the wrong way.

    I know, I know – it is anathema for you to even consider for a moment that maybe, just maybe libertarian dogma might not be the solution you think it is…

    …regardless of all the obvious evidence in the world around us.

  • roger nowosielski

    “non-OPEC first-world nations . . .”

    If I were you, I’d dump this phrase from my vocabulary, Glenn, especially since it is you who created it as a prop to boost your argument(s).

    Well, it’s nothing of the kind, except in your own imagination and, rather than promoting an exchange of ideas, it’s a conversation stopper. You would be much more credible if you were to argue on behalf of “partial socialism” in terms of its possible merits (without having constantly to resort to a prop which none of us, if memory serves, have accepted as having any kind of validity).

  • G l e n n C o n t r a r i a n

    Roger –

    Maybe it is a conversation stopper. Maybe the best thing to do is to get the other guy to think, “Glenn’s going to come back with that again” and at some level he’ll began to realize that until he’s got a workable answer for that argument, that he’s got to go back to the drawing board…

    …that is, unless he wakes up and realizes that I’m right. Then it simply becomes a matter of waiting for his honesty to overcome his pride (which for many people is unlikely at best).

    Maybe that sounds too arrogant by half, but when it comes to which governmental systems are the most successful, there is no other system of government that has proven to be as strong, as prosperous, and as beneficial for the populace as a whole in the modern world as has socialized democracy.

    You can call it a ‘prop to boost my argument’ all you want, but until you show me something that works better for the populace as a whole in the real world, I’m going to stick with what I can plainly see works best.

    Roger, prove me wrong about what system of government is best and I’ll stop using that prop – it’s simple as that. Kenn can’t do it because he’s stuck on austerity, in love with libertarianism, and he can’t see how very wrong he is. OTOH, I’d be really happy if we could find a different system of government, one that was more beneficial for the people, the businessplace, national security, and the world as a whole than the sloppy mess we have now. Cindy gave it a good start when she turned me on to an anarchistic regional government in rural Mexico, but could that system be scaled up to be strong enough to economically and militarily survive against its neighbors? I have my doubts.

    Your turn. Got any better, workable, more practical ideas?