Posted by
Elmer from Iowa on Thursday, October 30, 2008 8:18:14 AM
In his televised infomercial, Senator Obama let loose with one of the magic words. He said that her wants to make sure everybody makes a “living wage”. Sounds good doesn’t it? If everyone makes a living wage then there is no more poverty and all will be able to afford health care insurance and send their kids to college. What could be better that that?
So, what is a living wage? How much do you need to provide a decent living for your family? If you are married and have 2 children, how much will you need to earn? Would you need $40,000, $50,000, or maybe $60,000 to live on?
Let’s say a family of 4 needs $50,000 a year to own a home, a car, a 401K plan and health insurance. That’s nearly $25 an hour. Does the phrase “make a living wage” mean that everyone will make at least $25 an hour? A family in the Midwest might be able to live on that, but I doubt you could live in New York or San Francisco on that.
What if your job is cooking french fries at the local McDonalds. A mandated living wage could mean you have to pay that person $25, or more, to cook those fries. Good work if you can get it. I had to get training in computers and electronics before I made it to that level.
I have to wonder though, what effect will tripling the wages for your fry cook do to the price you have to charge for those fries? Will you still be able to get a small fry for only a dollar? When you last were in a McDonalds at lunchtime, I am certain there were several people working there. If they were all making $25 an hour (more for the managers) what will the price be for your lunch? Will you be able to walk in there with $6 and still get a meal? I don’t think so.
For most businesses, wages are their highest expense. Tripling wages for the lowest level will force them to also raise wages for skilled workers. When your largest expense grows, so does the amount you have to charge for your product. It’s either that or lay people off. If you are having problems now with inflation, what will you do when everything doubles in price? What will the new living wage be when prices double?
Entry level jobs are meant to not only help businesses keep prices down, but to provide non-skilled workers an entrance into the work force. It gives them experience and shows them what additional schooling and training will do for them. If you can make a living wage without even graduating from high school, what motivation is there for you to improve yourself? My first job paid me $1.70 an hour and I was glad to get it. But I knew even then it was time to finish school and get moving. I am a better provider for my family because of it.
I realize that Senator Obama wants to get elected and saying “living wage” automatically triggers sympathy in many voters. But what will the true cost of such a policy be for America? What will happen with inflation? How will that policy affect the desire of our kids to attend college if they can make that “living wage” without even graduating from high school?