Living Wage Rage. Why $15/hr Solves Nothing.

More money.  For those with too much of it, the mainstream media, politicians, left leaning pundits, and union leaders have influenced massive amounts of Americans on who is to blame for their current economic status.  Essentially, the reason why many of us are poor is because there are few at the top holding all the wealth. This has been a prominent stump speech talking point bellowed by Senator Bernie Sanders, a Democratic Presidential Candidate in his continuing push for income equality.  Now I will say, I don’t in any way give any clemency to the major financial institutions who’s lending practices during the mortgage crisis helped cripple the middle class.  Or disastrous or unfair trade agreements that has allowed major manufacturing, which was once

Bernie Sanders has lead the charge for Federal 15/hr Increase.
Bernie Sanders has lead the charge for Federal 15/hr Increase.

the backbone of the American economy, to take their manufacturing overseas and across our borders.  Tax benefits and lower cost of wages have also contributed greatly to the manufacturing job exodus.   With a great majority of good paying jobs gone, those in the service industries, namely the fast food sector, have decided to make a stand and demand higher wages per hour, and that higher wage per hour has a sweet spot.  $15.

FIGHT FOR 15

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This week, the Governors of California and New York signed legislation that would allow the minimum wage to increase up to $15/hr over the course of the next few years.  This signing comes on the heels of other municipalities such as Seattle, Washington, already offering $15 an hour.   Though progress has no doubt been made on the municipal and state levels, federally, the mandate still remains unchanged at $7.25 an hour.  For this reason, Bernie Sanders, who has championed an increase in the Federal Minimum Wage to $15 an hour, has been heavily supported by young college attendees, and those working in service sectors such as fast food workers.  It is unclear as to why specifically “15” is the target number.   Perhaps $15 is the best high ball number to use to begin negotiations to compromise on a more reasonable middle ground number.  Democratic Presidential Candidate, Hillary Clinton is in favor of $12 per hour.  However, her positions are subject to change depending on how many more Sander supporters she’d like to steal.  As for why $15?  Supporters may argue that at $15 an hour, would be enough to maintain a comfortable and sustainable living.  Essentially the “living wage” buzzword that drives the movement.  It’s within that lies some harsh realities that supporters of “living wage” or “Fight for $15” fail to realize.  A “living wage” is subjective, and poor financial management, and planning will perpetually doom you.

Living Wage is Not One Size Fits All

By who’s uniform living standards should we forge a “living wage” from?  I would assume the cost of living of someone living in New York City, or Los Angeles, or even Seattle, Washington, would greatly be different than say someone living here in the Rio Grande Valley.  To determine adequate pay, who’s average cost of rent, groceries, utilities, and other living “essentials” will be used to determine the right wage point for hourly compensation? Perhaps multiple analysis and wage points should be crunched to factor family size, single or married, and other statistical variables. Let’s also not pretend that the “living” aspect of “living wage” extends beyond earning enough for basic essentials, but also having enough for basic or extended luxuries.  As stated, the idea of a “living wage” is subjective to the person.  Personally, I may be satisfied earning enough in the crunch to simply pay for “reasonable” rent, groceries in which I make essential nutritional  choices, money for utilities, fuel or transit cost, and whatever excess I have to place into savings, or into trade education.  That in my eyes maybe a sustainable living for myself.  However, someone else may feel that they should earn enough to also have a few of the things that the middle class or the affluent take for granted.  Example being, the ability to purchase the latest IPhone, video game consoles, and software with online gaming subscriptions,

Living Wage "essentials."
Living Wage “essentials.”

wide-screen televisions, high speed internet (can’t blame them on this, couldn’t live without it myself), eating out at restaurants, and excess money for movies, concerts, shows, the list goes on and on.  And yes, all this while flipping a hamburger. This goes beyond just having “enough” to put food on the table.  For a significant portion of those fighting for “living” wages, the entitlements to things that those in the middle class or affluent enjoy, should be right fully theirs as well.

https://www.youtube.com/watch?v=Q437BX7IXd8

Notice how many times “entitled” was thrown out.

Now personally, I’m not opposed to those making low income from enjoying life, and having things many others enjoy.  It’s that realities need to be accessed, and limits need to be understood.  I’m willing to wager that for many of those fighting for “living wages” or “$15 an hour”, if an analysis were to be conducted on these individuals, you’ll discover that the majority will exhibit high consumer product consumption and very poor financial management skills.  If you simply throw more money at these individuals, you’ll see the margins of consumption increase in proportion.  Nothing will change!  Only now they’ll be living paycheck to paycheck at $15/hr, rather than 7.25 because they brought their spending up to match the increase.  Then as the gap between the wealthy and affluent and those on the lower income totem pole continuously erodes, those at the bottom will no longer be satisfied at $15/hr since their economic conditions have not improved!

The Valley Connection

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There is no doubt that hundreds if not thousands of Rio Grande Valley workers are watching the Fight for 15 with great interest.  Just recently, the Rio Grande Valley area, namely Cameron and Hidalgo County were deemed high poverty in proportion to their population.  Going further, the U.S. Department of Labor reported that workers residing in Hidalgo County averaged about $625 weekly, whereas workers in Cameron County earned about $615 weekly.  Therefore, for those barely getting by, being able to pull a higher hourly wage would be a God-send. However, at theorized above, simply adding more money to the problem, without proper financial education, only serves to create a bigger problem.  As evidenced by a National Survey taken in 2011, that revealed Harlingen, TX as the city with worse credit score in the nation, clocking in at 686 and with an average debt of $25,074.  There’s little doubt that neighboring cities across the Rio Grande Valley fair any better.  Simply giving more money to regions and people with no financial education could be disastrous, and provide more incentive for over consumption and credit spending.

As evidence below. The depths and debts valleyites will go to in order to “save” money.

Results So Far and the Future

It may be far too early to know whether an increase $15 an hour will have an adverse effect on the U.S. Economy.  For many municipalities, 15 is the number to arrive to after several years of gradual increases to allow economic flexibilities. As for some of these cities, there has been some growing pains. Some stores have closed, and many businesses have made adjustments to offset labor cost.  Most interesting were a few reports of employees asking for reduction of work hours as to still maintain government subsidies such as housing.  Businesses are taking preemptive measures to blunt the effects of minimum wage hikes.  McDonalds, who’s brand has become somewhat synonymous as antagonist against the “Fight for 15” have installed automated kiosk in hundreds of their

As you can see, these models come without ear lobe gauges.
As you can see, these models come without ear lobe gauges.

restaurants.  Where once stood an underpaid and over joyed cashier now stands a warm and welcoming self-service touch screen.  Going further, the CEO of Carl’s Jr and Hardees, Andy Puzder, is looking to invest in the first non-employee fully automated restaurant.  Puzder has been a constant opponent of minimum wage hikes.   While there’s no doubt that thousands of low skilled employees throughout the country have enjoyed the fruits of wage increases thanks in part to social movements, it remains to be seen on whether the push has ultimately expedited the potential for joblessness down the road, and for those with the money now, on whether they’re financially educated enough to even see that uncertain economic conditions on the horizon, and prepare for it.

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