On Labor Day, President Obama delivered an inspirational message to America’s workers via YouTube. I’m going to skip over the fact that Obama makes it sound like the workers and the nation are two different groups. I want to talk about the action plan that he announced in the second half of the video.
After telling Americans that they work hard, Obama announces that he wants to raise the minimum wage because “in the wealthiest nation on earth nobody who works full time should have to raise their children in poverty.”
Now, I don’t think that anyone should settle for a career at minimum wage, but just for the sake of argument, let’s say that’s all someone can find. Obama’s right, if someone works forty hours a week, that person will make a little over $15,000 a year. This is about $4,500 below the poverty line for a family of three. However, he fails to mention some important facts.
1. If a mom has two children and make $15,000 a year, the earned income tax credit will boost her well above the poverty line. See? We as a nation have already addressed that problem. But you might say, “Why should the government be paying this mom instead of making her employer pay more!” Well, that’s a good question. The answer is that maybe her labor isn’t worth more than $7.25 to the employer. (It might not be worth even that much.)
2. In order to bring this hypothetical mom above the poverty line based on her minimum wage, businesses would have to start paying almost 30% more per hour. That’s a pretty steep increase. Will business be able to charge 30% more overnight? No. Will they be able to sell 30% more overnight? No. What will they do? Cut back on hours. They’ll get more work out of each employee. I actually experienced this ten years ago when I worked at Starbucks. Starbucks decided to have a social conscience and they started new employees above minimum wage. They also adjusted all the old employees up to the new pay scale. It was great for my paycheck, but it was tough for other people putting in applications. Starbucks cut back on hours to compensate. On shifts that used to have four baristas they told us to give the same stellar service with three. On late shifts that used to have three closers, we cut back to two. If you pay our hypothetical mom more per hour, it might be harder for other hypothetical moms to get their foot in the door.
3. But all that’s just smoke and mirrors. Here’s the real issue. Why is someone trying to raise children on one minimum wage salary? The real problem with poverty is that mothers and fathers don’t live together and raise their kids together. If you have two parents raising three kids on two minimum wage salaries, they’ll be above the poverty line. (And like I said, no one should be staying at minimum wage their entire career.)
That’s the problem Mr. President. Too many single parents. Fix it.
Mr. Obama knows what the problem is, and he knows that there’s not a single thing that government can do to solve it. He’s merely attempting to score some political points with all this minimum-wage talk. He knows he probably won’t get it raised, and then he can claim the Republicans hate the proletariat. He also knows that even if he raises it, he won’t be able to raise it by 30%. That’s okay because he knows that most people won’t realize his action was hollow because they won’t do that math.
All the wonks know that there is only one proven way to keep people above the poverty line: mothers and fathers living together as they raise their children. Saying that, however, doesn’t score Mr. Obama any political points with his voting base.