Monday, February 22, 2016

Ken takes a coffee break. That was then. This is now.

I recently stopped at a local fast food restaurant to pick up a coffee and noticed a help wanted poster in the window.  It stated that the job paid $9.50 per hour, substantially below the $15 per hour being sought by a number of minimum wage crusaders.

Perhaps to counter the shortfall, the poster also stated that health insurance was available for both individuals and families, that employees were eligible for up to $700 of educational assistance and that they got five paid days off.

It made me harken back to my own first job.  I wondered how today’s numbers compared to my experience.  It was 1967 and I was working at a meat market.

I washed trays, swept the sawdust out of the freezer and did whatever else I was told.  Not the greatest job, but it put a few dollars in my pocket.  And it was a good experience; it taught me both responsibility and accountability.

Back then the minimum wage was $1.25 per hour.  Out of curiosity, I checked the Consumer Price Index (CPI) to see what today’s equivalent would be.

Around since 1913, the CPI measures “changes in the prices of all goods and services purchased for consumption by urban households.”  According to the CPI calculator the average annual inflation rate has been 4.07 percent since 1967.

That adds up to a cumulative rate of just over 607 percent.  The $1.25 per hour I earned in 1967 would be equivalent to $8.84 per hour today.  So at face value, the $9.50 today is far better than the $1.25
I earned in 1967.

By this comparison alone, a $15 per hour minimum wage would be far better than my $1.25.  But, there’s much more to the equation.

For example, in 1967 the total amount withheld for Social Security was 3 percent, one half each by my employer and me.  Today, that amount has skyrocketed to 12.4 percent, again, split two ways. 
I mention minimum wage in a personal finance column because many of my readers and clients are small business owners.  As a small business owner myself, I’m sensitive to the employer viewpoint.

Over the years, I’ve also spoken to many young students about to graduate high school.  I feel these young people benefit from the responsibility learned from their first job experience.

Yes, I’m very concerned about people trying to live or raise a family on minimum wage.  It’s an extremely difficult challenge.  But, as a society we need to emphasize that minimum wage jobs should be educational launching pads, not lifelong careers.  The way it was in my day.

Somehow, as a society we need to help people move up the economic ladder.  Not just to get on it and be content.

Determining a fair and equitable minimum wage is a polarizing and controversial topic.  Both sides have valid points.  But at the end of the day it’s the employer that makes payroll, not Uncle Sam.

If the bar is set too high, I fear many young people will miss out on the first job experience because there simply won’t be any first jobs.  Wages, like housing costs, vary throughout the country.  For that reason, I believe the minimum wage should be set at the state level, not by Uncle Sam.

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