Minimum Wage Wishfulness

Can you dig deeply into your memory and recall way back when we would gather together for various events? On one such occasion, my husband delivered a speech for the economics department on a bucolic college campus. Before the talk, we were invited to a reception to meet professors, alumni, and donors.

I was seated next to a man who only a few years earlier had graduated from this institution with a degree in economics. At this point, he was running a small business. If memory serves me correctly it was some sort of printing operation. While he had been gratified with the growth trajectory of his enterprise until this point, he was now very unsettled. After chatting for a bit, he began to unburden his soul to me. I don’t use that language lightly; he was in the grips of a moral dilemma. 

Early on, he discovered that owning a business meant working long hours, both when his store was open and when it was closed. He learned that business problems come in every variety and rarely conform to textbook descriptions. He realized that when money was tight, he was the person who went unpaid. As he found his footing and started carefully building a team of employees, he began to envision offering new services and perhaps expanding to a new location. Therein lay the source of his angst. 

A raise in the minimum-wage was being proposed in his area. As a compassionate college graduate, this was the type of increase for which he had always voted in the past. Who wouldn’t want everyone to earn a decent living? However, for the very first time in his life the reality of this issue was smacking him in the face. While he appreciated his employees’ work, they were inexperienced and still acquiring basic soft-skills such as punctuality and a service-oriented attitude. Competence in those soft-skills was necessary before he would invest the time to train them in more job-specific expertise. In the future, they might well merit more money, but at the moment that wasn’t the case. A raise in the minimum wage would mean letting people go and doing more of the work himself. His chances of expansion would lessen and his ex-employees were going to lose not only their jobs but also the opportunity to gain experience and grow with a prospering company. 

I truly felt sorry for my table-mate. The sentiments he learned in college didn’t walk hand-in-hand with the real world. His (misguided) self-image demanded that he vote one way, while the facts in front of him dictated the opposite vote. 

After a pleasant evening, we parted and I have no idea what this college graduate is doing today. But the economic fantasy that accompanied him through college is once again raising its head.

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25 thoughts on “Minimum Wage Wishfulness”

  1. Rabbi Lapin
    There has been much in the news the last several years about the Minimum Wage. I have heard a lot from both sides. For a small business such as you described investing in training employees and paying them a decent wage will prosper the business long term. Being a business owner is a huge sacrifice.Many of the low paying jobs in the service industry are transitional for high school and college students along with some seniors who wish to work. Employers in the service industry expect a lot of turnover of employees for various reasons. The truly sad reality is that people living off government handouts from day one are given huge incentives to have children out of wedlock etc. They have all of their living expenses paid by the taxpayers and there is no reason to go out and work for the Minimum Wage with no benefits. Being a former government employee I know first hand the enormous freebies that millions receive. With the current political climate we live in it is only going to get worse. Something to think about. In 1960 only 1 person in 50 was getting Food Stamps. In 2016 it was 1 in 6.5! I would love to hear an Economist explain that!

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    1. It doesn’t take an economist, but it does take an understanding of human nature. You observed correctly that the cost/benefit of working vs. living off the taxpayers is weighted in favor of the latter for those who have limited education or job skills. In addition, our culture has changed dramatically! My grandparents, for example, proudly stated that during the Depression they never went “on the dole” or took WPA (make-work) jobs. Today, YOU are the “elitist bigot” if you dare shame or condemn someone who has the ability to earn but chooses not to. One of my past employers had a sister – IQ of >130 who came from an upper middle class family – who chose to forego high school graduation in favor of single parenthood. She literally “shopped” states by telephoning their FSSA offices in order to find the one offering the best welfare benefits, moved there, found a “boyfriend” (one night stand) to accomplish the pregnancy, signed up for bennies as soon as she was pregnant and lived off the fat of the land for the duration. When I first moved out on my own, I calculated that I would have to earn over 35K a year to match the lifestyles of my welfare recipient neighbors – and that was in 1982. The $15 an hour minimum wage is a farce, just as the idea of a “universal basic income” is – this was tried, failed and scrapped in Norway in 2019. Turns out that those paying the bills couldn’t keep up with the taxes, and those receiving the income believed they were entitled to more. But our arrogant congresscritters haven’t gotten the memo yet.

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  2. This issue is coming to bear very quickly for all as Biden raised minimum wage to $15/hr. I have always disliked the hourly wage system, I wish we had a better model of business, perhaps some form of profit sharing, this way when the business does well, gets paid, then so do the employees. Even more so in a manufacturing environment where one can get paid as per your output. Truth is though, minimum wage is not enough to live on in many situations. Something’s gotta give, maybe it should be the government regulations and taxes….

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  3. I teach introductory economics to large classes at a state university, and it is amazing how clueless some students are about reality. Minimum wage jobs should not be career employment. They are great as starter jobs or for picking up a few extra bucks if you are between jobs. But a living wage? Raising the minimum wage will only result in workers being laid off. We already see kiosks in fast food restaurants. We order more goods online with no minimum wage retail clerks. Low end jobs are disappearing, going away, and legislation to raise the minimum wage will only hasten their demise.

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  4. First of all, raising the minimum wage has done a lot to widen the gap between the wealthy and the poor. And God knows that I am in favor of minimum wage earners getting raises. However, because of what has happened every time the minimum wage has been raised, it hasn’t benefitted anybody but the wealthy and left everybody else worse off. Years ago (you’ll soon see just how far back I’m talking about) I told my uncle, who is now deceased, to watch what happened every time there was a raise in the minimum wage. I told him that he would see that when you first hear on the news that they were JUST TALKING ABOUT raising the minimum wage, when he went to the store he would find that the prices on everything had been raised. Months later when the raise was voted in, when he went to the store, he would find that the prices on everything had been raised again; and then months later when the minimum wage earners got their first nickel or dime an hour raise, when he went to the store he would find that the prices of everything had been raised again: Three price increases on everything by the time they got their first nickel, and later on dime, and eventually 25 cents an hour increase! Do you see how long I have been watching this play out now?

    My uncle did as I had instructed him to do, and he eventually came to me and told me that he had also been watching and I was right. I then shared with him at that time that not only had they (the owners of everything) passed the costs of the raises on to the rest of us, they had also increased their profit margins in the process. I remember a time when profit margins were 50%. The last time I checked (at least 5 to 7 years ago, profit margins had increased to 3,000 to 4,000 percent. The rich has gotten a lot richer while the rest of us have found it harder and harder to make ends meet due to the rise in the cost of living. And this was before they cut wages to attempt to bring the wages of Americans more in-line with the wages in other countries; of course NOT addressing the difference in the cost of living in other countries, which are a lot lower than our cost of living here in the United States of America. Examples: When the minimum wage was $5.25 or $5.35 an hour (I forgot exactly what it was), in the area where I live, a person could lease/rent a very nice place for between $300 and $400 a month. By the time the minimum wage was raised to $7.25 an hour, those same very nice places that leased/rented for between $300 and $400 a month, were now leasing/renting for between $800 and $1200 a month. When the minimum wage was $5.25 or $5.35 an hour, a person could purchase a brand new mid-size automobile for $15,000.00; but by the time the minimum wage was raised to $7.25 an hour, those same brand new mid-size automobiles were being sold for between $25,000.00 and $30,000.00, AND CLIMBING. So, now I respectfully ask, who did the raising of the minimum wage benefit??? The truth of the matter is without a freeze on price and rate increases, or at the very least some type of control, the rich get richer and everybody else finds themselves worse off. And the price/rate increases have gone from reasonable increases to literally “THROUGH THE STRATOSPHERE” price/rate increases (because the increases went “THROUGH THE ROOF” a while ago); and this was “BEFORE” talk of literally doubling the minimum wage. Just the thought of how high the price/rate increases will be behind this one sends chills down my spine. We are witnessing the worse abuse of wealthy “GREED” in not just the history of the United States of America, but in the history of the world!

    And what bothers me most of all, no one including pastors, evangelists, rabbis, etc. is saying anything about the out of control “GREED” of the wealthy driving the prices/rates of everything “THROUGH THE STRATOSPHERE” while they collect multimillion dollar yearly salaries and bonuses while taking more, and more, and more from the rest of us because of their insatiable “GREED”. They have even denied the rest of us reasonable “Customer Service” in their efforts to “GET MORE”; we have literally lost “Customer Service” to “Customer Nightmare”. This insatiable “GREED” has heaped financial burdens on the rest of us; and unless one is familiar with The Word of God, we would never know that Almighty God hates the “GREED” of the wealthy, even to the point where he is going to bring their great wealth to nothing. God is not against wealth, and neither am I. I wish that all could be wealthy. It is the “GREED” of the wealthy that God is not pleased with; never having enough and never being satisfied, always wanting more and willing to take from those who have much less so they can have more.

    I am thankful to Almighty God that I have been blessed with a comfortable life. I have always been considered middle-class and have been blessed with good paying jobs. But I am concerned about those who have not been as fortunate as I have been. The largest charity in the United States of America today is those who worked all their adult lives and had their livelihoods snatched out from under them because CEOs and top level managers wanted to collect yearly multimillion dollar salaries and bonuses. These are not people who depended on welfare, but worked for a living. Not only did they work for a living, but they gave the wealthy the wealth that they enjoy today by purchasing their goods and services. Some of those people are retired from their jobs today and live on “Fixed Incomes”. And sadly, some, if not most, wealthy people, people who are multimillionaires and multibillionaires, don’t even want to pay taxes on their first yearly million dollars that would go a long way to help those who worked and gave them the wealth that they enjoy today. Instead, they raise their prices, now “ENORMOUSLY”, to get more, and more, and more; eroding the comforts and lifestyles of those who gave them their wealth in the first place, especially those who are now retired and living on “Fixed Incomes”. With this kind of wealth, they wouldn’t even miss the taxes they would pay on their first yearly million. Where is the gratitude and appreciation? There is “NO” trickle down anymore. You can either have “Trickle Down” or you can have “Greed and Hoarding” at the top; but you can’t have both. It has become crystal clear in the recent past, that what we have here in the United States of America today is “Greed and Hoarding” at the top. This is an American “DISGRACE”!!!

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    1. Rabbi Daniel Lapin

      Dear Ramona-
      In your second to last paragraph you write of the greedy wealthy “…taking more and more and more from the rest of us…”. Pray tell, when last did ‘the wealthy’ break into your house and take more and more from you? Oh now, wait! That is coddled criminals. When last did the wealthy remove a hefty slice of your paycheck for their benefit? Oh no, wait! That is the government. This statement of yours reveals considerable gullibility to populist propaganda and reflects only one of many instance in your letter that needs correction. I appreciate you writing especially such an impassioned letter but it contains many things with which I don’t agree. In fact, I think you are very misninformed.
      Warmly
      RDL

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      1. O.k., I’m seeing responses to Ramona that I feel are a bit too forceful. When writing, most of us have the experience of finding that we didn’t say exactly what we thought we said or that we wanted to say. I think there is a collaboration between the government and some large businesses that does hurt most of us – for example, the combination of terrible government policy and insurance/medicine big business has led to many problems. If we sat down with Ramona, I have a feeling, we might all learn something and end up agreeing more than disagreeing. However, even if we are yards apart, I don’t like feeling that any of my readers are being yelled at, which I know is no one’s intention, but again, the written word leads to each of us reading it with the inflection we choose.

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        1. Thank you Rabbi. I really appreciate you responding to my comment. But I don’t agree that one has to break into my home to take more and more from me, or deduct (take a large slice out of) my literal paycheck to take more, and more, and more from me. After all, there is always more than one way to skin a cat so to speak. The literally “ENORMOUS” price increases is a way to take more, and more, and more from us; especially from those of us who are now retired, and who are now on “FIXED INCOMES”. And I would like to mention here that we, retirees, are not collecting “FREE” entitlements; we are collecting BOUGHT and “PAID FOR” BENEFITS that we “WORKED FOR” and “PAID FOR” with “EVERY” paycheck of our working lives, keeping our part of the agreement. I live in a very nice luxury apartment complex owned by multimillionaires (who very well may even be billionaires by now) who own several very nice luxury apartment complexes. They became multimillionaires raising the lease payments by $25.00 and $50.00 a month at yearly lease renewals. In the last four (4) years, my monthly lease has increased by $500.00 a month. Last year from January to March, I paid $64.00 for a 32 fl. oz. bottle of a supplement that I take for health reasons. In the month of April last year, the price of that same 32 fl. oz. bottle increased to $80.00 a bottle. All last year I paid $22.00 for an X-large pizza that I order, and pick-up, for my grandchildren when they come to visit me; this year the price of the same X-Large pizza increased to $25.25, pick-up. I am trying to understand how profit margins going from 50% to between 3,000 and 4,000 percent (and that was between 5 and 7 years ago before we started seeing the kinds of price increases that we have seen just in the last 4 years) can be anything else but pure “GREED”; especially when millionaires and billionaires got to be that wealthy long before the profit margins went to the 3,000 and 4,000 percent. I would be more than happy if you could help me to understand if there is something that I am missing. I really enjoy your program, and I really do learn a lot. And I do believe that if anybody can point out something to me that I am missing, it is you. I’m open, and will appreciate, anything you can teach me on this subject. One more thing, the reason for the high selling rate of homes (mortgages) in our country going on now is not because we have a strong economy, but because of the “EXTREMELY HIGH” lease/rent payments being charged. I tried to purchase a home and take on a mortgage myself, but because of the pandemic, my financing fell through.

          Susan, I do agree with you. I, too, believe that we all could learn something if we could sit down together and discuss this, and other, issues. I’m always interested in truth and learning; and I am the first to agree that I am not always right about everything. And when I capitalize and put something in quotes, I am not yelling at anybody; it is just something that I really want one to take note of. If I gave the impression that I was yelling at anyone, I’m sorry; that was definitely not the intended case.

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          1. Ramona, I just want to make clear that I was worried some responses to you might come across as too harsh, not that you were too harsh.

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      2. Thanks Susan; I’m glad that you understood my intent. I have been thinking about Rabbi’s reply to my first post. I hope he doesn’t think that I believe that all wealthy people are greedy. That’s not the case at all. Like I said in my post, I don’t have anything against people having wealth; I wish that all people can be wealthy. There’s two distinct groups of wealthy people: 1) The Wealthy, and 2) The “GREEDY” Wealthy. I have wealthy people in my own family; and I thank The Good Lord that they are not counted among the “Greedy” wealthy. In my last reply, I gave examples of some exorbitant price increases that I have encountered. I really do wish that we could communicate directly because there are examples of how other people, especially younger people, have been literally used and exploited by highly successful businesses. I do know that not all successful businesses engage in these unethical practices, and I really appreciate them; but as far as those that fall into group 2 above, I can’t even have any respect for them, unless Rabbi can help me to see something that I’m missing; but I would like to give him details of what I’m talking about so he can have an understanding of why I feel the way that I do first.

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    2. Carl August Schleg

      Having ‘Slept under bridges and dined with Ultra Wealthy’ I take grave offence to your Marxist mindset.
      IF you want to improve their lifestyle-Go forth and do it. I personally have probably picked up more hitchhikers, changed more tires and taught multitude of ‘poor’ out of poverty than you could fathom(sometimes putting my employment on the line). I just ‘PAY IT FORWARD’ and ask nothing more. To give a glimpse how old I am I have a favorite saying to the dictators we have today-‘YOU can’t promise me Viet Nam a second time’.

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    3. Ramona, I for one think you are 99% correct in all you said. I have lived and worked for 52 years. I started working for $2.50 an hour out of High School. I have seen exactly what you have said and believe it to be true. As the one gentlemen said below I’m also ignorance.

      Sorry Daniel I have to side with Ramona. Increasing to $15 minimum wage will not fix anything and will make the rich richer. This is all about Satan’s way of business which is the Left’s way, which started in the eighties. The cancer is out of control. And I should say that I’m referring to BIG Company’s.
      Gus

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  5. Melanie Ravizza

    Here’s a thought. If an employer must pay his “new hire” $15/hr, his more experienced employee who has earned a $15/hr raise recently will now be unhappy with his $15/hr. So the employer, in order to retain the experienced employee, must pay him more than $15/hr; and so on up the line. Thus, it will cost him much more in wages than merely paying a “new hire” $15/hr. Also, supply & demand sets in, and the cost of living goes up; and everyone is back to where they started. Just sayin’.

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  6. Another factor is the notion of a national minimum wage. It is nonsense to think that a “living” wage in NYC or LA is identical to what it is in the rural midwest. The federal government should concern itself with its constitutional duties like our defense and border. What a mess!

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  7. Ramona, your ignorance of “how the world really works” is truly staggering. Please go back and listen to one of RDL’s very first podcasts titled “Socialism’s sordid stain”. You can thus begin your long long road to rehabilitation.

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    1. Hi Skip, I do appreciate your reply. However, I would like to point out that all “Socialism” is not the same. Biblical socialism is different from man’s socialism: Example: God instructed the wealthy landowners not to glean the perimeters of their fields, but to leave the perimeters for the poor; that is socialism. FDR’s socialism (Democratic Socialism) is different from Marxist Socialism. FDR’s socialism brought the U. S. Economy back from the brink of complete and total collapse. Barack Obama’s socialism also brought the U. S. Economy back from the brink of complete and total collapse. The truth is mankind has corrupted “EVERYTHING”, and I honestly believe a large part of mankind’s corruption of everything is not knowing how to, or not wanting to, find an even medium; and it has only gotten worse. More and more, mankind has chosen to go to each extreme, from one end of the spectrum to the other. Nobody wants to meet somewhere in the middle anymore. And one thing that has become abundantly clear in the last two to three decades is “human nature unchecked will lead to “THE EPITOME OF GREED”.

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      1. One more thing, all those who lean toward some form of “socialism” are not all atheists; in fact, I believe most of them are God fearing believers. But they also do believe in fairness.

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      2. Hi Ramona, I didn’t get past this sentence: Example: God instructed the wealthy landowners not to glean the perimeters of their fields, but to leave the perimeters for the poor; that is socialism,” but I have to disagree. That is a charity direction for the individual farmer. It is not the State taking from him to give it away. I’ll try to read the rest tomorrow or over the weekend.

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  8. Thank you for bringing this topic up Susan. My husband and I have a small “mom and pops” print shop. We are about 10 years from retirement. At one time we had three other employees. Today, it’s just the two of us because we frankly cannot afford to hire anyone. The $15/hr minimum wage is deceiving. Yes, the employee is getting $15/hr, but the employer is paying much more than that. We pay a portion of the employee Social Security and Medicare expenses and we have to pay for health insurance. The health insurance premium can bring the wage up to $25/hr!

    It’s interesting, I just typeset an employee sign for a small business in our area. He has to REMIND his employees to be: more professional, more organized, more involved, more dependable, more responsible. When I started working in the late 1970’s, you better have all of those qualities or you would lose your job. Today, in my opinion, the inmates run the asylum. Employees have more rights than the owners.

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  9. Carl August Schleg

    Howdy ALL-Interesting times, but it has been building for decades. About 15 years ago, having read all 3, the last one several times, I see see America and the world going one of 2 directions. Either 1984/Brave New World or Atlas Shrugged. For those who want to ‘Earn a Living Wage-Start a business without Gov. help, and we will sit on the sidelines and watch you fail(that road to HELL is well paved with ‘Good Intensions). Our Colleges/Universities have failed miserably in promoting capitalism they themselves have become propaganda parasites.
    I personally just walked off a job( no details, Lives on the line is all I will say) due their GREED of doing less for more profit(cutting corners and risking lives).
    I also have a small business raising meat rabbits. They LOVE Kudzu( a deep southern delicacy for my rabbits). Across the street is a food pantry and Beth Israel Temple. In the box besides leaving bare necessities of food and toiletries we left a note for anyone WANTING TO DO YARD WORK. The job was piecemeal labor: $1/LB of fresh picked Kudzu leaves. Had one family leap on it and they were bringing me 50 lb. bags and happy to do it.
    My point is one can make it at what ever wage you want to EARN. The raising of minimal wages is nothing more than a covert means of forcing us into Communism (The Bolsheviks are here).
    It just boils down to the ‘White Army’ vs the ‘Red Army’, only we are better prepared this time.

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  10. Dear Warriors, seems to me that there is a rift between the secularists and the religious. In the case of the former, restriction of free will granted by God, is the casualty. Regards Tony.

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  11. I have had this conversation so many times.
    At some point in the discussion, I have to remind people that businesses don’t pay their employees’ salaries. They don’t pay for the cost of their benefits. They don’t pay the costs of regulatory and administrative burden. All of those items are paid for by customers. If the customer is unwilling, or unable to pay for a product, or service, the plant moves to China, or the company goes out of business.
    I also have to introduce the concept of overhead into these discussions. Depending on location and the nature of the business, overhead typically runs between 50% and 100% of salary. Therefore, an employee earning $15 per hour would need to generate somewhere $22 an hour to $30 an hour, or more, in revenue to justify their existence, as an employee.
    In conclusion, I sometimes add this little story. I watched the demise of the American textile industry during the 1970s from the factory floor. Once, when I was escorting a big wig from headquarters on a tour of our plant, I asked why we didn’t invest in some new equipment, so we could do a better job. The executive got that sad look typical of old men addressing a well intention, naive young person. He replied, “Well, I can expect around 3% return on investment from new textile equipment, or I can get 5.25% from passbook savings.”
    At that point, I knew our factory was doomed.

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  12. Dear Susan, I can’t get enough of the musings and I really encourage a book with a compilation of the best of them. God bless the Lapin family

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    1. That is so sweet of you, Francis. Hearing from people who read the Musings is a large part of what keeps me writing them.

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  13. Dear Rabbi,
    If God commanded that man should ‘live by the sweat of his brow’, then what right has man to restrict him from doing so by imposing the minimum wage?
    Thanks Tony

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