This blog is related to the previous one. I said that I was not for a national minimum wage of $15 since the standard of living varies greatly from one area of the country to another. Then a couple of GOP politicians made speeches against the wage increase which serves to make me more for the increase.
Both politicians said that they worked for minimum wages while in school and it was good enough to get them to where they are today. I understand the allure of the self-made man. But is the situation the same today? I am probably a little older than these guys. But let's assume that we worked for around the same wages back when we were young and they paid for their schooling like I did with medical school. Back then, the average minimum wage was around $2.80 and my medical school tuition was a little over $3,000 a year. Today the tuition at my alma mater is over $35,000, more than 11 times when I went there. So to be able work at minimum wage and save for medical school, the comparable wage would have to be over $30 per hour. I know that inflation is not as bad in most things as in education, but you get the idea. So those two guys are actually making a case for increasing the minimum wage.
I can understand moderate Democrats who are in red states like Joe Manchin need to look like they are preventing the progressives from jamming the minimum wage increase down the throat of the Republicans. But I wonder how the people in poor states like Manchin's West Virginia feel about not getting an increase?
Then there is the unemployment benefits in the stimulus package. Manchin was holding out for $300 instead of $4oo. He finally gave in when the Democrats agree to $300 with the first $10,000 benefits not taxed. I didn't know that unemployment was taxable. If you are giving money to help people out, why are you taxing that money at all?
Contrast this with the lower tax rate of dividends and capital gains vs earned income. Since I am retired, most of my income is from dividends and capital gains. So I am glad that these profits are taxed at a lower rate than the money I made working before. I am sure people richer than me pushed to pass these tax laws for their benefit. But who is looking out for the people who needed the help of unemployment benefits?
I think in the big picture, this proves there is a wage gap in the country and there is an erosion of the middle class as it used to be. It used to be that a family could get by on one income.
ReplyDeleteSo, the old idea that the minimum wage was for jobs that part time people and kids would take. Now, people are using these jobs to make a living which goes against what it used to be. The thing is, when some people see that it would be increased to $15 an hour, that takes those wages to what other full time wages are.
So I understand the concern of increasing the minimum wage. I also agree it would be difficult for businesses, especially small businesses to survive with an increase.
So, it is a tough situation and way above my level of expertise. We've heard a lot of economists back the increase as well. My other concern is that businesses will increase prices, so the people who are in the middle class will have a harder time to pay for things.
The stimulus was passed today. It will be interesting to see what political fallout will happen after this. It's still early in the term but some who have elections next year will have to explain why they voted the way they did. I am a little surprise that the votes were down party lines. I don't like that the vote became a partisan thing, but as we're seeing, this is now the norm.
-LBOAYM
When I think about it, it seems to me there is not much downside for the Republicans to vote against the stimulus bill even if most Americans are for it. If things don't go well in the next two years despite the stimulus bill, the Republicans can say that "I told you so". Even if things improved, there can still be problems with the economy the naysayers can complain about. After the Obama bailout and passing of Obamacare, the GOP complained everyday even if things are working better than 2008. The recovery was not fast enough and Obamacare is socialism, they complained. The Republicans can run on those attacks even if things improved in 2022.
ReplyDeleteEven if things are great in 2022, the GOP incumbents are not necessary dead for voting against the stimulus. When things are going great, people tend to vote the status quo, ie, for incumbents. So I don't think there is a great downside for the GOP to vote against the stimulus bill. But imagine if things are worse next year and a Republican had voted for the bill this year, he/she would be fried by his/her base.
I suppose you're right about that. Heck, if things go well in the economy they'll just spin it and either say that things would have been better had they adopted the Republican plan (non-existent) or that luckily they made sure their parts of the plan passed by the senate were in there. And those parts were the main reason for the recovery!
ReplyDelete-LBOAYM