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House passes Minimum Wage of $15/hour

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    The House of Representatives passed a minimum wage increase of $15/hour by the year 2025. The vote was 231-199 vote with six Democrats opposing it and three Republicans supporting it. It is not expected to pass the Mitch McConnell Republican controlled Senate if it even comes up for a vote.

    The wage is phased in as follows: $8.40 in 2019, $9.50 in 2020, $10.60 in 2021, $11.70 in 2022, $12.80 in 2023, $13.90 in 2024 and $15 in 2025. After 2025 it is indexed to future increases in median wage gains.

    The bill eventually abolishes the lower minimum wage for tipped workers and eliminates a seldom used pay floor for teen workers that pays them less than the minimum wage.

    By reference, the current minimum wage is $7.25 per hour passed a decade ago. However, 29 states and Washington, D.C. have higher than the federal minimum wage, and seven of those have approved $15 per hour minimum wages.

    I did a quick calculation of what the minimum wage in 1963 (my high school wage) would be today if it was indexed to inflation. My 1963 minimum wage of $1.25 per hour would be equivalent to $10.46 per hour in 2019. Then assuming a 3 percent inflation rate from now until 2025, the 1963 minimum wage indexed to inflation to the year 2025 would be $12.49 per hour.

    Looking at the 1963 wage of $1.25 per hour another way, as mentioned before it is $10.46 per hour in 2019 adjusted for actual inflation, but the $15 per hour wage in 2025 would necessitate a 6.2 percent inflation between 2019 and 2025 to be equivalent to the 1963 minimum wage.

    I'm sure no one is impressed with my calculations, but I like to throw them out anyway to put things in perspective.

    Thoughts?

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    Schmidt:

    A couple of years ago, one of our conservative relatives posted an article that implied it was ridiculous to pay a "burger flipper" $15 an hour, when people in the military made the same wage.

    This one is a complicated topic, and it generated a VERY lengthy response.

    The short version, of course, is that the first sentence above is a silly argument, since it does not take into consideration a number of factors.

    The other surprise is that the Republican Party of Eisenhower sounds an awful lot like the Democratic Party of Barack Obama:

    https://tohell-andback.blogspot.com/2017/06/is-it-time-to-raise-minimum-wage.html

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    Most non disruptive way to raise the minimum wage would be a Job Guarantee as it immediately adds to sales creating market forces that support the private sector’s higher wage bill. You still need a statutory minimum wage bc you want to be able to prosecute abusers and can’t assume the JG will catch all workers (although it is supposed to do that).
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    Carlitos:

    I'm of the opinion that a higher minimum wage is a better solution, since it mitigates the problem that a job guarantee won't.

    According to Forbes, the average Walmart cost taxpayers between $900,000 and $1.7 million a year because its employees don't make enough to pay for food, housing, insurance, and food on the wages they earn working:

    https://www.healthnutnews.com/report-walmart-workers-cost-taxpayers-6-2-billion-in-public-assistance/

    A related issue to a job guarantee is a guaranteed annual income, a concept that was proposed by Governor Huey Long in 1934. His program was called "Share the Wealth":

    https://en.wikipedia.org/wiki/Share_Our_Wealth

    A few of the elements of the program eventually became national law:

    An old-age pension would be made available for all persons over 60.

    To balance agricultural production, the government would preserve/store surplus goods, abolishing the practice of destroying surplus food and other necessities due to lack of purchasing power

    Veterans would be paid what they were owed (a pension and healthcare benefits)

    Free education and training for all students to have equal opportunities in all schools, colleges, universities, and other institutions for training in the professions and vocations of life

    Variations of the first and last parts of his program are still under consideration by at least some of the Democratic candidates for president, at least by those who espouse raising taxes on wealthy people (e.g. Elizabeth Warren).

    The downside of a job guarantee is that it doesn't mean a guaranteed income, and the best example is the approach used by the Soviet Union:

    People joked “We pretend to work, and they pretend to pay us.” But the upside was that a fired worker could always find another job, since — thanks to the low wages — there was a labor shortage.

    https://democratherald.com/news/opinion/one-way-to-full-employment-soviets-used-very-low-wages/article_05d180be-fdf5-11e0-8055-001cc4c002e0.html

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    House passage is meaningless without the senate on board. McConnell won't even bring it to the floor.

    15 an hour should start now, not at the end of 2025. 15 an hour in 2025 will be behind the time, people will need at least 20 an hour in 2025 to survive.

    Tax breaks as incentives for corporate to hire new and allow higher wages for present workers is smoke and mirrors.

    I would suggest lawmakers are out of touch with reality, when was the last time any of them pumped their own gas or grocery shopped?

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    Seattle was the first city in the country to pass a $15 per hour wage, which it did in 2015. Overall, the higher minimum wage had more positive than negative impacts.

    https://www.msn.com/en-us/money/markets/laboratories-of-democracy-what-seattle-learned-from-having-the-highest-minimum-wage-in-the-nation/ar-AAEHffw?ocid=spartandhp

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    UBI is inherently inflationary.

    But not all basic or non basic income schemes are bad or disruptive, especially when limited in nature, e.g. social security for disabled or retired or meager benefits for unemployed.

    Criticism of a job guarantee on the lines that it would be ‘make work’ could just as easily be applied to all government employment, as that’s what many anti-gov right-wingers claim now. The WPA and CCC programs during the Depression were not thought of as ‘make work.’ Those folks worked their tails off.

    But the point of the MMT JG is not the work done per se but that the workers ‘transition’ to ‘normal’ employment. That’s how it’s anti inflationary bias works. So while we want to see tangible gains for society from the work done, that’s an add-on benefit. The point is to get people back in the private sector.