The minimum wage fallacy

Nancy Pelosi has declared that she’ll raise the Federal “minimum wage” her first 100 hours in office as Speaker of the House. Sounds good doesn’t it? All of those hard-working people will be lifted out of poverty by increasing their $5.15/hour a buck. Of course, who are those people that’ll be lifted from the depths of despair with an extra $40  every week?

According to the Bureau of Labor Statistics, out of 75,609,000 workers in 2005, 1.8 million are working at or below the minimum wage. Of those, 1.003 million are between 16 and 24 years old – high school and college aged. adobe creative cloud . So there are less than 800,000 people over the age of 25 working at or below the minimum wage.

What kind of work are these people doing? BLS says that the large majority of these people are working in “Food preparation and serving related occupations” at 1.13 million in 2005. That’s over half of all minimum wage earners and it includes waiters, cooks, dish washers, bag boys – well, you get the idea.

Here in the DC area, most of the restaurants pay minimum wage to their wait staff, but those waiters take home a coupla hundred bucks in tips every week – which is their incentive pay. Their employers guarantee a minimum wage, but if the employee works extra hard, they get a fat tip – more than Democrats would get them with a minimum wage increase. Sounds capitalistic doesn’t it?

So there’s no breakdown by age by occupation, so we can only speculate on how many of those 800k people over the age of 25 (1.16% of the entire work force) actually make minimum wage, but I tend to believe that its statistically insignificant.

Democrats are only appealing to their base to assuage their guilt about the way they feel the rest of us are doing.

There’s probably very few Americans who are looking for a new house and car because the Democrats are finally putting those items within reach with their promise of a minimum wage increase.

And if you include the tax increase the Democrats want to hit us with, how much will minimum wage earners really get in the end? When George W. Bush cut taxes in 2001, minimum wage earners didn’t have to pay their 15% income tax bill any longer – that has the effect of giving them a $30.90/week raise – $.78/hour – the effect of raising the minimum wage to $5.93/hr. And it didn’t cost employers anything – that’s probably what pisses off Democrats more than anything.

So how many minimum wage earners will be pouring out in the streets to vote for Democrats so they can get their big wage increase? How many are buying new suits in hopes of landing that fat $6/hour job? More than likely, there’s only some pimple-faced kid hoping to get his new PSP a few weeks earlier thanks to Nancy (drain the swamp) Pelosi.

Category: Economy, Politics