Wednesday, January 10, 2007

The Washpo and the Minimum Wage

Please, read this and let me complain about it. The first comment is that it's a public interest story about a serious issue. That practically guarantees that the story is going to be distorted. As it turns out, I wasn't disappointed. Well, I was, but I was right that the story would be distorted.

Quote: "Passage is expected, with Senate approval soon to follow, and if President Bush signs the resulting bill into law, as he indicated he would, the U.S. minimum wage would rise for the first time since 1997, ending a debate about whether such a raise would be good or bad for the economy."

(Me:) The last part of that quote is stupid. I mean technically it would end the debate, it just wouldn't resolve it. It would end the debate in the senate, I guess. But that's not the point.

Quote: At the store where he got the money order, the worries are about Wal-Mart, which not only supports an increase but also built a Supercenter on the edge of town that has been sucking up customers since it opened three years ago.

(Me:) Go Washpo! Way to distort the relationship between Walmart and the rest of the world! Good work!

Quote: "As for Iles -- who keeps $70 out of every paycheck to cover two weeks' worth of food and gas and in a matter of minutes was already down to $26.54 -- his worry was as basic as how fast to drive home."

(Me:) If he keeps 70 dollars out of every paycheck, at 7.25, then he's getting paid of ten hours of work. If the washpost wants to imply that 70 hours of his work is getting taken by the government, I'm all for it. However, what they're really saying is that he's made choices that force him to spend 400 dollars a month on a brand new car, along with the car insurance necessary for that brand new car.
He does lives with his parents, which this confuses the issue for everyone.
It's very true that raising the minimum wage would buy a teenager more chimichangas and gas.
And, since that person would also be me, I'm all for it...however, I don't really think it's a good idea.

(note: they later explain what he spends his money on, but that's fishy for other reasons that I'll deal with then.)

Quote: "The debate about the minimum wage usually comes down to jobs. If Congress approves the increase, it will result in raises for an estimated 13 million Americans, or about 9 percent of the total workforce."

(My friend says:) I just can't believe how people think it's a magic formula, like money just comes out of nowhere or out of the pockets of the greedy capitalists.
(Me:) 9 percent of the workforce does not get paid the minimum wage, they must be thinking that people just above the 7.25 line will get paid more too...

(note: they later explained that the 9% figure also included people who were paid around the minimum wage. Which is around 7 million jobs out of the 12 million they were citing. Warning: I really estimated the numbers here. They are close enough)

Quote: "At the store where Iles works, for instance, the owner thinks the minimum wage should be increased as a moral issue but worries about which employees' hours he will have to cut to compensate.
At the store where he bought the chimichangas, the cashier who makes $6.25 worries that a raise will force her out of her subsidized apartment and onto the street.
At the convenience store where he bought gas, the owner worries that he will have to either raise prices, angering his customers, or make less money, "and why would I want to make less money?""

(My friend:) Yeah, oh, I love that.
(me:) Read that last part, especially. Could they try to make the "capitalist" look bad in a more blatant way? The first part is good... and the second part is proof that the government should stay out of welfare programs - if that girl were living in an apartment provided by the church or the rotary club, or the progressive party or whatever, then she wouldn't get forced out until she could support herself.
(My friend:) Right, which they (the charity) would know because they're actually there on the ground.

Quote: "A onetime Wal-Mart vice president, Bower moved back to Atchison several years ago to teach and ended up buying the old J.C. Penney store, and now runs a business where the meaning of a dollar is displayed on shelf after shelf. The jar of Peter Piper's Hot Dog Relish? That's what a dollar is worth. The Wolfgang Puck Odor Eliminator that a customer was looking at as she said to a friend, "I just don't know how I'm ever going to make it. My ex-husband's not paying his child support"? That's a dollar, too, as is the home pregnancy test, the most shoplifted item in the store."

Comment: Presented without comment.

Quote:"Soon after, he bought his car, a used 2005 Dodge Neon, and just about every workday since then he has spent his lunch break in the driver's seat, eating a bologna sandwich with the engine off to save gas, even in winter."

(me:) shouldn't he be doing that anyway, to keep us all from dying from global warming?

Quote:"Bill Murphy, who said that if he had the chance to talk to new House Speaker Nancy Pelosi, he would ask one question. "Where does she think the money will come from? And that is the question," he said. "My wages are going to go up 10 percent.""
"Employees at $7.25 will want $8.25. Those at $8.25 will want $9.25. Economists classify such workers as the ones who would be indirectly affected by a minimum-wage increase. Of the estimated 13 million workers expected to get raises, 7.4 million are in that category. "

(me:)Good work Bill! And this is where they explain the nine percent thing. With 300 million people in this country, why are we making life hard for everyone to benefit 13 million? Especially since the jury is far from unanimous that it would actually help those people.
(my friend:) I like how the broke entrepreneur is going to be even worse off after they do this

Quote: "And yet he will pay it, he said, and compensate with price increases, which he worries will be inflationary, even though most economists say that won't happen. He will raise prices, he continued, because the only other option would be to earn less money, which he doesn't want to do because he owes $1.5 million on his businesses and wouldn't want to default."

(Me:) Bingo, my friend.
At this point, my friend went into spasms and used words inappropraite for the context of this blog. However, I am here to sumarize his points. He said: "We should just raise the Earned income tax credit! That's exactly like giving a raise to everyone who falls under the poverty level, doesn't cost our employers any more, and doesn't really cost the government that much money. What little it costs (because people in that tax bracket pay precious little in taxes already, in fact, the EITC is a negative tax for some, meaning they always get a refund.) would be offset by the savings in welfare because less people would need it." And then he said:
(my friend:) AND FIX OUR SCHOOLS!!

(me:) but that concept is too difficult to explain to people. On a related mater, I would like the washpo to explain to me how most economists think that a minimum wage hike will not cause inflation... at least an inflation like effect on the people affected by the wage hike. Though this inflationary affect would only exist for the short term, the rise in prices and decline in real wages would be permanent.
(My friend:) So, the thing people do to try to help actually ends up hurting the people it was supposed to help. Who could have see that coming?

Quote: "Wal-Mart won't say how many of those workers earn less than what the new minimum wage would be, but if the Atchison store is an example, starting pay is $6 an hour. Nonetheless, in October 2005, Wal-Mart chief executive H. Lee Scott Jr. said in a speech that the "U.S. minimum wage of $5.15 an hour has not been raised in nearly a decade, and we believe it is out of date with the times." He went on to say, "Our customers simply don't have the money to buy basic necessities between paychecks.""

(Me:) A whole decade! The minimum wage hasn't been raised in a whole decade! I didn't realize it was so out of date! Now I agree with raising it! We should put it at 10 dollars! It's been ten years!

Quote: "When it comes to Wal-Mart, however, just about any announcement that affects public policy is greeted with suspicion, and that has been the case with the minimum wage. Some have said that Wal-Mart, in need of good publicity, is supporting an increase for public relations reasons; others have declared it an attempt to drive small, independently owned stores out of business."

(Me:) That translates from lefty-talk to: Wal-mart is evil, even when they agree with me...

Quote (Out of order): "Seven dollars and twenty-five cents an hour equals $15,080 per year, and out of that comes $313 for the car loan and $100 for car insurance, Iles said, going over his monthly bills. An additional $90 for the 1995 car with 135,000 miles on it that he is buying from a friend for his mother, $150 for the family phone bills, $35 on his credit card, $100 for gas, $100 toward the mortgage on the trailer. "That's about it. Oh yeah, $20 in doctors' bills," he said, and totaled it up on fingers scarred by surgical stitches. Nine hundred and eight dollars. "I bring home 900 a month," he said. "So I very rarely have any money for myself.""

(me:) This is where they explain what he spends his money one. And, by the way, even though he didn't have insurance, he seems to have gotten a good deal on paying for his doctor's bills. He owes 8000, which at 20 dollars a month will take him 33 years to pay it off without interest, which is how long he is supposed to pay for it. Sounds like he got a good deal.

(me:) This situation is hardly generic, or representative.
(My friend:) All of this is an argument for charity, not for poorly thought-out gov't interventions

The closing quote: "Life at $7.25. Should that be the minimum wage? "Yes," Iles said. Even if it hurts job opportunities for people like him, as Dennis Garrett had suggested? "Yes." Or causes price increases, as Bill Murphy had suggested? "Yes." Or damages businesses such as Always Low Prices? "I mean, it's tough for me, and I'm already making $7.25 an hour." Or causes Jack Bower to reduce hours for one of his employees? Perhaps for Iles himself? "It's just so hard for people. I mean, it's hard," Iles said, and then he went to work."

(me:) Well, I guess that seals the deal! We should do it based on the advice of an undereducated person working for the minimum wage! I could also comment on why I think this family came to the country illegally - strike that, use "without documents" instead - because they aren't getting welfare for an obviously disabled family member, but I don't think I will. Because this one young man is supporting a family of three while getting paid the minimum wage. It's not exactly pretty, but it works. And, he's young and will only get raises.

Note - The illegal angle could be a big deal here, but it's these types of people that I'm ok with welcoming to my country. He should have waited for the papers, but he's obviously willing to work hard and overcome serious hurdles to succeed. There are many born-here-as-citizens Americans that would give up and start taking welfare long before they were in this situation. And I think that makes him someone to be admired, not kicked.


  1. I was (am) very curious about the $150 per month for phone bills... seems like an area of savings - 18% of the budget???

  2. You're absolutely right - it looks like each member of the family has a cell phone plus a home phone line. Or, maybe he's buying cable/internet and they're including it in the phone bill.

    Either way, it's not exactly the kind of image they want to portray...

  3. Exactly...

    Let's face it, whatever is in that $150, it's not a necessity for someone trying to eke out a living.

  4. Right.
    I think the line taken by some other bloggers with this article was that the WashPo inadvertently showed all the reasons we shouldn't raise the minimum wage - doesn't really help, won't affect that much, and will cause inflation. I think that's mostly true.

    However, we might need to give them more credit for the article. I think that it's meant to lend credibility to the minimum wage raise, but since there is so much in here that goes against that, perhaps it was meant to be unbiased.
    I know that would be a surprise, especially since it's coming from a mass media newspaper, after all. But it might be the case here.