Ownership Myth

And The Two-Income Syndrome

Published on September 14, 2004 By stevendedalus In Politics

The current median income for a family of four is about $55,000 or approximately three times that of the poverty line at $19,000 for a family of four. The problem with these statistics when trying to arrive at a “living wage” that often is juxtaposed to the horrific rate of $5.15 an hour or $10,500, which if adjusted for inflation should be at $7.50 or $15,000, is in the difficulty of determining how much of the median and the poverty line owe to two salaries. If those at the four-family poverty line consists of two-incomes at the minimal wage the income would place the family at above the line by $2,000 or a total income of $21,000. This example, however, does not consider the costs of child care, whether governmentally assisted or out of pocket. Nor does it take into account the erosion of parental quality under such duress. For the median $55,000 may constitute some cushion for child care but leaving little room for building wealth or “ownership.” Moreover, the payroll tax, respectively, $1400 and $3500, substantially reduces the subsistence level of both groups. As for the income tax, chances are the minimal level will not be taxed at all, and those frozen on the median will be helped somewhat by having dependents; in spite of this, the move to “ownership” is out of the question.

If, however, the minimum wage rose the necessary 8.7%, it would also affect the median by perhaps an additional 5% so that the low level increased some $1800 and the median some $2700 and from there adjusted for inflation annually, some progress would be made on the road to ownership, but more importantly would increase the rolls of the middle class. This, of course, does not address the shame of the two-income family where it directly affects the degradation of raising children. Only those above the median can find the right child care through comfortably retired, or one-income grandparents or professional nanas. For the rest, most leave to chance the well-being of their children.

http://stevendedalus.joeuser.com

Comments (Page 2)

Draginol

on Sep 14, 2004

Stevenendaous, my "struggling youth" was only a decade ago. I don't think costs have exactly sky rocketed.

The problem with the poverty rate is that it is a meaningless number. How much does it cost to pay for food, clothing and shelter? Less than $10,000 per year.

Can you afford to support a family on that? Of course not. So don't have children until you can afford to do so. There's nothing in the constitution that implies that the government will provide you with the means to pay for children.

I don't see in the constitution anything that implies that it's any of the government's business how much I charge for or pay for a product or service.

ShoZan

on Sep 14, 2004

If the Government wants to get in the Minimum Wage Business it should be raised to 8 dollars now, and adjusted with inflation, problem was last time they did it people were worried about losing jobs but I don't think that had anything to do with it.

Draginol

on Sep 14, 2004

Holy cow, you CAN'T be serious? In California, that wouldn't even pay rent for the year in a "low-income" apartment. I was renting a one bedroom apartment in a pretty ghetto neighborhood in Richmond, CA. Rent: $985/mo. You tell me how I'm supposed to pay for food/clothes/gas/water/electricity etc? Welfare? Food stamps? I thought that was temporary assistance. I urge you to reconsider that statement, and maybe take a good look at how little $10,000 a year is.

Well then you better get roommates. 10 years ago I was living in Kalamazoo Michigan with 4 roommates. I had one room in there. And my yearly income was well below the "poverty" line.

Since when is every citizen entitled to their very own apartment? If you can't afford the rent, find a roommate.

I'll ask again, if $8 per hour is a good idea, why not $80 per hour?

ShoZan

on Sep 14, 2004

I'll ask again, if $8 per hour is a good idea, why not $80 per hour?

Well, I am not an economist, so I don't know what I don't know about that subject and that's all I know.

After all, I believe that what I do not know I simply do not know.

Texas Wahine

on Sep 14, 2004

Well, I am not an economist, so I don't know what I don't know about that subject and that's all I know.

After all, I believe that what I do not know I simply do not know.

If I had an insightful left today, that would get it, ShoZan.

*I used them up giving a severe trolling to a deserving blogger*

ShoZan

on Sep 14, 2004

Thank Socrates, not I, for he has opened up my mind, from now I on, I will simply state what I know and what I don't know.

eieio

on Sep 14, 2004

One problem with raising the minimum wage that no one seems to look at is return on investment.

It goes like this. Suppose I own a factory making widgets. It's manual repetitive labor where the workers produce widgets at whatever rate they are able. Ideally I want to have workers that produce at a rate high enough to produce a profit for the company. So if I pay them $6.00 an hour, I need for them to produce enough widgets in an hour to pay for their wage and any overhead plus enough for a profit, so I can get more machines, hire more workers, etc.

Now suppose the government forces me to pay them $12.00 an hour. That means any workers that can't or don't produce at a higher rate to offset the wage increase must be replaced with workers that can produce at the higher rate. Well, I guess I could hire illegal aliens that would work for less, but let's say I choose not to do this. Also, if I can't find any workers that can produce at the increased rate, I go out of business. But, let's say I can and do replace the slow workers.

My point is that it evens out. There's a short term increase in the amount of money people make, followed by an increase in churn as the job market readjusts with workers changing jobs. Assuming the displaced workers find jobs.

The increase in minimum wage only works if there is sufficient profit margin in the majority of companies to be able to absorb the increased overhead caused by country-wide wage increases. And that profit cushion does not exist for the majority of companies, despite the few companies that are usually cited, by proponents of the minimum wage increase, as making 'huge' profits.

The simplistic (and short-sighted) solution often proposed is for businesses to raise the prices on the goods they sell to offset the wage increases. Ok, let's follow that. Prices increase substantially, so everyone pays more for everything. But who gets hit the hardest? The minimum wage folks. There goes that extra money they were earning and they are back in the same boat barely scraping by. Additionally, the people that were already in the middle income levels, who don't get an increased wage (they are called middle class, btw), now find themselves closer to scraping by, because of the increased pricing with no additional income.

Call it government sponsored inflation.

Mr_Frog

on Sep 14, 2004

Well then you better get roommates. 10 years ago I was living in Kalamazoo Michigan with 4 roommates. I had one room in there. And my yearly income was well below the "poverty" line

I didn't realize your target group here was college aged kids with the only worry about scraping together beer money. From what I read of the article, steve was concentrating primarily on the issue of a family of three or more subsisting on such a wage. Now, I'm neither for nor against raising the minimum wage, however I think it is a tad unrealistic to assume that any family can exist on $10k a year. It's hard enough for my family right now getting by on about $35k/yr, and we've been trying to pull together for a house for some time. This is on two incomes, and soon to be a third (I'll probably have to pick up a second job). It seems like everytime we're about to "break even" so to speak, something comes and puts it's foot up our financial ass. I couldn't imagine trying to live off $800 a month.

-- B

eieio

on Sep 14, 2004

Mr. Frog, at 35K a year I would guess you wouldn't qualify for an increase in pay if the minimum wage went up.

If it did, get ready for the increased prices to come along and put their foot up your 'financial ass'.

messybuu

on Sep 14, 2004

Simply because people DO get unemployed, messy...and look for work at any cost. MAYBE you should try a little less judgementalism!!!

Don't people receive unemployment though, or is that only in some states?

It’s society’s business. It’s generally accepted that the common interest is greater than the interest of a person or business. It is in society’s best interest to insure that people get paid a minimal amount for their labor.

Isn't it also society's business to make sure that people are employed? What's the point of raising minimum wage if layoffs will be made to compensate?

Gideon MacLeish

on Sep 14, 2004

Don't people receive unemployment though, or is that only in some states?

If the employer who terminated them doesn't fight it.

Not to plug my own blog, messy, but you might want to read my "Down and Out in America" series. We are on the brink of homelessness because every safety net we thought was there has failed us. My employer fought the unemployment (lying through her teeth), and TANF refuses to help. It's not as rosy a picture as critics want to paint it to be. Besides, even if I was getting unemployment, it pays less than minimum wage in our case (it's a percentage of your earnings).

Madine

on Sep 14, 2004

Moreover, the payroll tax, respectively, $1400 and $3500, substantially reduces the subsistence level of both groups.

This is a good reason why the payroll tax should fund ownership instead of entitlements.

stevendedalus

on Sep 14, 2004

This is a good reason why the payroll tax should fund ownership instead of entitlements.

The priority is to establish a safety net for the agéd, disabled and poorchildren, not to own a yacht.

From what I read of the article, steve was concentrating primarily on the issue of a family of three or more subsisting on such a wage.

Thanks for reminding them.

1tomot1

on Sep 15, 2004

There is something very simple currently being ignored in this discussion. Time and time again history shown that neither initial establishment of a minimum wage, nor any subsequent raises have wreaked any of the feared economic repercussions. Businesses have never failed because they have to pay the petty margins of increase in the minimum wage. Nor has it ever harmed the economy.

One kernel of truth in prior arguments is the reality that inflation eventually does catch up with gains in minimum wage. But where the argument goes from there misses the bigger point. The argument shouldn't be that 'inflation eventually negates wage increases, so why bother?' It should be a recognition that a minimum wage increase is only one small step that needs to be taken toward finding ways to insure that all Americans aren't in a constant paycheck to paycheck struggle.

If anyone ever beleived (does anyone still?) that America is the greatest nation, why accept that so many of us have to live on wages that are far less than great?

drmiler

on Sep 15, 2004

If anyone ever beleived (does anyone still?) that America is the greatest nation

Some of us still do!

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