MINIMUM WAGE

Are Minimum Wage Laws Really Helpful?

In Pennsylvania, along with a handful of other states, lawmakers passed legislation to increase minimum wages from the Federal minimum of $5.15 per hour to $7.15 per hour by July 1, 2007. Lawmakers are now looking at steady increases in Pennsylvania minimum wages so that by 2010 it will be around $9.35 per hour. Statements such as “minimum wages that provide dignity instead of poverty” are echoed throughout the political world. Certainly lifting people out of poverty and offering a better quality of life can’t be a bad idea right?

Who really benefits from higher minimum wages? In Pennsylvania, the state income tax deduction is 3.3 percent. Higher wages increases the income for the state based on the gross pay. Another 1 to 2 percent is taken out for local taxes. On the federal level, Social Security and Medicare get their share and the federal tax rounds out the deductions.

The two dollar per hour increase is about $1.20 actual increase or $48 per week. This is less than $200 per month, $2400 per year, an amount not likely to lift people out of poverty. If you take into account inflation, the minimum wage needs to be around $15 per hour in order for people to afford a middle-class lifestyle.

Another negative effect on people living in poverty would be state assistance programs that are based on income. This increase will eliminate many individuals and families that once qualified for state assistance programs, such as housing, food and healthcare. There were no indications that minimum assistance levels would increase along with the minimum wage.

People will now need to make a choice between higher minimum wages and state assistance. Given the prohibitive costs for healthcare, people may choose not to work full-time. This sounds counter-productive and illustrates that money is not a simple solution to our social problems.

Perhaps a better idea, instead of raising the minimum wage, would be to exempt any taxes and other tax deductions from persons making less than $20K per year. At the same time, make sure that the basic needs for security and safety are addressed by providing healthcare, food and utility coverage for persons earning under the $20K amount. At least the lower per hour wage is “real” and won’t deter employers from providing or people from taking low-end paying jobs. Isn’t this the hot issue behind the immigration policies?

Families earning more than one million dollars per year are growing at 7 percent a year while people falling into poverty are increasing by 14 percent a year. The median yearly income is less than $32K per year. This data points to the idea that wealth is becoming concentrated and not being returned to our communities. People who have had good fortune are responsible for those who don’t. That’s a basic tenet of civilization and certainly most religions.

If politicians are opposed to taxing higher income families, then families should show their compassion by donating money to non-profit organizations that feed, clothe and offer help to people living in poverty. Instead of giving to world causes where your money may or may not be effectively utilized, consider giving to local organizations that are run by your neighbors and people you know.

Until minimum wage laws actually rise to the point where people are self-sufficient, communities need their wealthy members to be more generous. Ironically, by helping people pay their bills and live securely, they will become consumers with more money to spend on the products that make wealthy people rich.

Credit Card Marketing

USA Today (10-02-06) reported that the largest colleges in the US earn millions of dollars every year by allowing credit card companies to market on campus. Further, colleges share/disclose students’ contact information and where they live on campus.

The average outstanding balance on student credit cards is $2169 and the average college senior holds five credit cards. When will parents get some protection from these greedy institutions that are well-endowed by alumni contributions, supported by state and federally tax dollars and have no reservations about raising tuitions at a pace greater than inflation? How much money does this country need to pay for advanced high school?

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