I was having a discussion with a good friend the other day about the current economic situtation, and several issues about individual American work habits and personal habits that showed me that he, a successful business owner at a relatively young age, is having difficulty understanding why Americans do not want to work at current wage rates. At least, this is the implication. Workers are hard to find for small businesses at the common wage rates on which they have partially founded and now manage their businesses. In other words, “I’m not going to hire someone at a wage that is simply paying them an income and not making money…maybe even losing money.
A business consultant would tell this individual, the small businessman, to hire the best people, find the lowest level at which they will work (which now, probably thanks to Bernie Sanders and his fellow Progressive political allies, is a much higher, living, wage) and then re-calculate your prices based on a new formula that pays your workers what they consider a minimal living wage. Because, if this is a trend, and we may hope that it is, then prices will go up a little bit, but workers will stick with the job longer, because they can afford to and because they enjoy the work. All businesses will eventually raise prices, if this is a trend, so the sooner that businessman recognizes it and creates a new business plan to take advantage of it, the sooner he or she will begin to profit from it.
Many of these things are difficult to understand. Often, the people who put out the information that helps us to understand have their own agenda. Sometimes economists, for example, work for large associations of people who have a financial axe to grind. But let’s take something easy to understand. Let’s say you wanted to buy a new care in the year 2000, and you were a pretty poor guy. Let’s say you made close to the minimum wage. So, in the year 2000, the average price new car would cost you about, plus or minus, depending on the car and how fancy you wanted it, $21,850. By 2010 that price had risen to $29,200. In 2020, that same average new car would cost you about $37,700. But if your wages were only $7.25 an hour, assuming other things went up roughly at the same rate as an automobile, you have had a pretty difficult time keeping up. Now, if your minimum wage went up to $10 and hour in 2010, that might have helped. And if it went up again in 2020 to, lets say $13 an hour, that would have helped. And it would have helped much more if almost uniformly you could travel around this great country and find jobs that were paying those amounts.
Of course, the fallacy is that this is an actual wage. It isn’t. It is only a barometer of the comparative value of the worker compared to the employer. So, if the balance of political power–the ability to change conditions–is in the hands of those who support corporations, the wage will be lower and workers will have less money overall. If the balance of power is in the hands of the workers, the wages will be higher, workers will be able to come closer to the high end of the wage scale and more workers, particularly at the higher income levels, will be able to afford those increased automobile prices.
But we still sell the same or even slightly higher numbers of vehicles. What about that? Well, of course, the population does go up. In 2000 the population in the U.S. was 281,422,000, in 2010 it was 308,745,000, and in 2020 was 331.449.000. But we finance our cars, don’t we, most of us. In the late 20th Century, we financed a car for 36 months, then early in this century it was 42 or 48 months. Now, it is common to finance a car 40 60 or 72 months, 6 years of paying reasonably high interest rates (compared, let’s say to mortgages, or to the money you get in interest from a bank) and at the end of the 5 or 6 years, the value of the car is mostly gone. But we need cars. We’re an auto transported society.
So, over ten years, if, as has happened, (you could look it up if you have the time) if the Republican Senate had raised the minimum wage, then maybe things like cars and furniture and home remodels and college tuition would have been affordable by the average to slightly poor family. But if you are making the minimum wage or slightly above it, you live in what economists call “poverty” which is not middle class, is not secure and only leads to more poverty. $7.25 an hour which is the national (supposedly) minimum wage is what about 40 million of those 331 million people earn, which is about $15,000 a year. If you didn’t eat or have a place to sleep or have any other expenses, you could buy a car in about 2 years, maybe three.
People do work out of a minimum wage. In Chicago, the cost of living is such that the city declared $15 an hour to be the goal over several years, starting a couple of years ago. In New York and other cities it is also higher than the national wage. But in the West, there are exceptions, so that the minimum wage in Wyoming, Dick Cheney’s favorite state, is $7.25 but if you are a student or are under 20 years of age, you can be paid less. Let’s not give kids a break. How will they learn to work for starvation wages except by working for below starvation wages!
Jeff Bezos who just spent billions to take a short half-day vacation into space, pays no income taxes apparently. That is some kind of technicality because he must pay millions of all different kinds of taxes through Amazon…employment taxes, state excise taxes, and so on, and some minimums, which have to be in the hundreds of millions, one would think. But his ex-wife just gave away tens of billions of dollars to hundreds of worthy charities all over the world, I believe, something like $60 billion. And guess what? It takes time to give away billions. By the time she was through, people who do these kinds of estimates say that her income, over that period, from Amazon stock, had increased to the point that she was then worth the same amount as before she had given it away.