Friday, September 11, 2015

Earning a living

I mentioned something in my post on Social Security and Welfare - that is, that 73% of those who earn welfare are in working families (families with at least one person working a full time job).  There are a few reasons why this might be the case.

Imagine that you are someone who has work experience, has a 4-year degree, but has been out of work for a while.  In your particular town or city, the work you're qualified for either doesn't exist or has too many people working in the field.  You don't have a bad reputation, you just can't get work.

You used unemployment while it was available, and you didn't slack off looking for work during that time, but you still failed to find anything.  Now, those unemployment benefits have run out, and your family is hungry.  During a more prosperous time in your life, you and your spouse had two or three children, but that prosperity dried up.  Now, you have mouths to feed.

Your spouse has similar problems finding work.

What do you do?  You take a job.  Any job.  Anything at all that can help put a roof over your kids' heads, food in their bellies, clothes on their backs. 

So you go to work at a fast food restaurant, and you find a job paying $7.25 an hour.  It's the only thing that's offered.  And so you work.

Working there pays $290/week.  Even the cheap apartment you found costs twice that, so you're left with only about $600 for the entire month to try to get through the month.  Your spouse can't afford to work full time - someone has to be there for the kids, and babysitting or daycare would cost more than your spouse could bring in at minimum wage. 

For reference, it costs about $50/month in clothes, $50/month in healthcare, $100/month in food for each child.  That's the entire monthly budget right there, and we haven't even touched transportation (if your cheap apartment isn't anywhere near your minimum wage job, or if you have to travel to see the doctor or go to the grocery store) or costs associated with education... or, for that matter, what you or your spouse will eat.

Sure, you have qualifications that could rescue you from this lifestyle at some point, when some kind of job opens up.  Until then, though, you're out of luck and out of money. 

This is the sort of situation the vast majority of people receiving government assistance are in.  The abysmal pay of those minimum wage jobs are exactly the reason why they need the government to help lift them up and keep them eating and getting to their jobs (if you thought "they don't need a car, they can use the bus" - congratulations on picking the government-sponsored transportation option), and exactly the reason why the government is now helping get them health insurance to keep those medical costs down and help them stretch their budgets further.

Of course, it costs us all money in the form of taxes.  A tiny amount of money.  For every $1 of taxes you pay, 0.0059% of that dollar is welfare; that is, if you pay $10,000 in taxes, you pay about $59 toward welfare (source).

But if that's too much for you, then perhaps you'd be OK with the alternative.  You see, if people such as I described were earning a reasonable living, then their need for welfare would disappear.  Raising the minimum wage to $15 would increase that person's pay from $290/week to $600/week.  If this person also had no tax burden (with 4 dependents, he or she would likely get 100% of taxes back), that means being ale to pay for everything I described and still have about $300 left for transportation or education (such as putting money back for the kids' college), or for finding a bigger place, like a house where they can actually be saving money in equity rather than throwing it out on rent.

That would take the vast majority of that 73% on welfare and remove them from welfare.  It'd mean decreasing that personal bill from $59 out of $10,000 in taxes to just $16 per $10,000. 

"But that will hurt the economy" you might think.  "Raising the minimum wage will make my hamburger cost more, meaning I'll be making functionally less."  Or, "It'll mean fewer jobs for minimum-wage workers."

All I can offer you there is what 600 economists said about the issue:
In recent years there have been important developments in the academic literature on the effect of increases in the minimum wage on employment, with the weight of evidence now showing that increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market. Research suggests that a minimum-wage increase could have a small stimulative effect on the economy as low-wage workers spend their additional earnings, raising demand and job growth, and providing some help on the jobs front. (source, emphasis mine)
Suddenly, those minimum-wage workers would have the money to buy things, such as things from restaurants and department stores where other minimum-wage workers work.  The increase in sales volume would more than make up for the losses such companies would endure paying more to their employees.  While certainly some of the more reprehensible companies (I'm looking at you, Papa John's) will protest and say that they'll have to cut hours or reduce the number of employees, the facts just don't support this at all.

 Join the effort for a nationwide increase in minimum wage today, https://berniesanders.com/

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