December 8, 2013
KEEP DOING WHAT WE'RE GREAT AT, FIX WHAT WE AREN'T:
The True Cost of a Higher Minimum Wage (ZACHARY KARABELL, DEC 7 2013, Atlantic)
There is growing income inequality in the United States, which has accelerated in the past few decades. Wages for labor have flattened while capital has flourished. As Goldman Sachs chief executive officer Lloyd Blankfein recently remarked, "This country does a great job of creating wealth, but not a great of distributing it." And he would know. The top 10 percent of earners in the United States have gone from constituting a third of all income in the U.S. in the 1970s to half today. The top 1 percent accounts for 20 percent of the nation's wealth.Meanwhile, the minimum wage of $7.25 an hour is actually much less than it appears, relative to the past. In 1996, the minimum wage was $4.75 an hour. Today's $7.25 is only a few cents above that, when adjusted for inflation, and both minimum wages were significantly below the equivalent wage in the 1950s, 1960s, and 1970s. Today's lower minimum wage has contributed to the rise in inequality over the past thirty years.What's not clear, however, is whether mandating a higher wage will do anything to change that. Nearly 20 states have a higher minimum wage than the federal rate. That means that the federal law has little effect in wide swaths of the country. What's more, according to the Bureau of Labor Statistics, only 5 percent of all workers are paid at or less than the current minimum wage. Thus, increasing it will make precious little difference in most people's lives.
As Mr. Blankfein suggests, market wages help us to create wealth. Rather than endanger wealth creation with mandatory wage hikes, just redistribute the wealth more effiectively once it's created, as universal HSAs and O'Neill and personal SS accounts would do, making even the poor into part of that flourishing capitalist class.Posted by Orrin Judd at December 8, 2013 6:55 AM