Former Labor secretary nominee Linda Chavez did not know the minimum wage

 

In an attempt to discredit Senator John Kerry's proposal to raise the minimum wage to $7 per hour, Linda Chavez -- FOX News Channel contributor, former Labor secretary nominee, and author of Crown Forum's June release Betrayal: How Union Bosses Shake Down Their Members and Corrupt American Politics -- misstated the facts about who earns the minimum wage and overstated the current federal minimum wage.

 

Chavez was a guest on CNBC's Dennis Miller June 18:

 

CHAVEZ: We are a productive enough country that most people who are in minimum wage jobs are there temporarily. It takes time to climb that ladder, they may be immigrants, and after a few years in this country they'll climb higher, or they may be young people who will move onto better things. ... The problem with raising the minimum wage is if you make the minimum wage beyond what the market really will bear, then you'll end up having employers hiring fewer people, and so you'll have people earning a little bit more money in those jobs, but you'll have fewer of those jobs. So it ends up hurting people, and it ends up hurting blacks and Latinos the most, and young people.

 

Statistics do not support Chavez's apparent profile of minimum wage workers as young, immigrants, or racial and ethnic minorities. The Bureau of Labor Statistics (BLS) reported that, in 2003, 61.1 percent of minimum wage earners were 20 years old or older. BLS does not provide data on the number of immigrants who earn the minimum wage, but statistics do indicate that 77.2 percent of people working at the prevailing federal minimum wage are white.

 

Chavez's contention that raising the minimum wage would have a negative impact on job creation is directly refuted by a recent Economic Policy Institute (EPI) report that "failed to find any systematic, significant job loss" associated with past minimum wage increases. Chavez's assertion that raising the minimum wage "ends up hurting blacks and Latinos the most" is similarly rebutted by EPI's conclusion: "A disproportionate share of minorities would benefit from a minimum wage increase." While African Americans comprise 12.9 percent of the hourly-wage workforce, for example, they make up 19.3 percent of minimum wage earners.

 

When host Dennis Miller asked Chavez what the actual minimum wage currently is, Chavez didn't know:

 

CHAVEZ: You know, I don't know what it is, it's $5-something, $5.65, something like that an hour.

 

In reality, the current federal minimum wage is $5.15 per hour, where it has stood for the past seven years -- the second-longest span of time that the minimum wage has gone unchanged since its implementation in 1938. At the current rate, a full-time worker earns approximately $10,712 a year.

 

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I approve increasing the minimum wage... people these days need the most money they can get...

I approve increasing the minimum wage... people these days need the most money they can get...

This issue is not as cut and dry as some might think -

 

Let's say a small business owner has budgeted $107,120 per year for 10 minimum wage employees and is forced to increase the hourly rate to $7.00. In order to stay under budget he would be forced to lay off 2.5 workers (7.36 x $14,560 = $107, 120).

 

Does the small hourly increase offset/overcome the loss of 2.5 jobs?

 

:mischief2

I approve increasing the minimum wage... people these days need the most money they can get...

This issue is not as cut and dry as some might think -

 

Let's say a small business owner has budgeted $107,120 per year for 10 minimum wage employees and is forced to increase the hourly rate to $7.00. In order to stay under budget he would be forced to lay off 2.5 workers (7.36 x $14,560 = $107, 120).

 

Does the small hourly increase offset/overcome the loss of 2.5 jobs?

 

:mischief2 You missed in your equation how the Employer is going to produce without those 2.5 employees. He may have two choices:

 

1. Pay them more.

 

2. Outsource to India.

I think we have to closely analyze these studies before reaching premature conclusions. The study provided by the article in which it is concluded that an increase in hourly wage wouldn't affect overall employment rates is subject to further examination, as wage increases are usually related to high economic activity. The last wage increase seven years ago came at a time where the economy was able to absorve the higher operation costs with higher revenue from sales, trade, etc. Chavez's pointing out of the corelation between wage/employment rates is very logical indeed. As our economy lies in a recovery stage, I don't think a wage increase is appropriate right now.

What's the likelihood of 7.5 producing the same as 10? Even if they are paid more.

 

Wouldn't it be better to keep the jobs in the US than outsourcing them to a foreign country?

I think we have to closely analyze these studies before reaching premature conclusions. The study provided by the article in which it is concluded that an increase in hourly wage wouldn't affect overall employment rates is subject to further examination, as wage increases are usually related to high economic activity. The last wage increase seven years ago came at a time where the economy was able to absorve the higher operation costs with higher revenue from sales, trade, etc. Chavez's pointing out of the corelation between wage/employment rates is very logical indeed. As our economy lies in a recovery stage, I don't think a wage increase is appropriate right now.

I go back and forth on this issue. The loopholes in taxation and other Business regulations, provide corporations with "alternatives" that actually encourage them to go outside of the United States seeking cheaper labor.

 

I always thought that a wage increase would have an undesired effect on employment, but as the study points out:

 

[...]Chavez's contention that raising the minimum wage would have a negative impact on job creation is directly refuted by a recent Economic Policy Institute (EPI) report that "failed to find any systematic, significant job loss" associated with past minimum wage increases.

why is there a FEDERAL minimum wage? Is that for federal government workers' pay?

why is there a FEDERAL minimum wage? Is that for federal government workers' pay?

NO, it's federal b/c it then must be adhered to by the states... The whole express -v- implied thing.

 

The Bureau of Labor Statistics (BLS) reported that, in 2003, 61.1 percent of minimum wage earners were 20 years old or older

 

Like Twain said, lies, damn lies and statistics. This BLS stat does not include part-time employees, which make up a verge large segment of all minimum wage earners.

 

Anyways, the minimum wage is nothing more than a political football that has no tangible, contributory effect. Does anyone honestly think that raising hte yearly minimum income from 11K to 12 or 13K will really make a difference?

I don't think it would be wise to raise the min wage almost 2 dollars

 

basically I think it's just election posturing .. speaking of things that would never happen

 

I think the min wage should be increased in small increments over a course of time .. i think a min wage of $5.75 would be more appropriate then jumping to 7

 

another thing to consider is possible inflationary effects, especially since the markets should have an inflationary pressure naturally built in about now (amazingly has been holding off .......)

I always thought that a wage increase would have an undesired effect on employment, but as the study points out:

 

[...]Chavez's contention that raising the minimum wage would have a negative impact on job creation is directly refuted by a recent Economic Policy Institute (EPI) report that "failed to find any systematic, significant job loss" associated with past minimum wage increases.

yes, but look at the source.

 

theres no question that raising the minimum wage decreases the number of low-wage jobs available.

 

 

and as furman alluded to, there is a distinction between federal minimum wage and state minimum wage. federal minimum wage is the federally-mandated minimum for most types of jobs in the entire US. many states have their own minimum wage laws, which mandate that the minimum wage in the given state is a specified amount. for example, i'm sure its pretty safe to assume that the actual minimum wage in california and massachusetts (just a wild guess here) is higher than $5.15 per hour.

I don't think it would be wise to raise the min wage almost 2 dollars

 

basically I think it's just election posturing .. speaking of things that would never happen

 

I think the min wage should be increased in small increments over a course of time .. i think a min wage of $5.75 would be more appropriate then jumping to 7

 

another thing to consider is possible inflationary effects, especially since the markets should have an inflationary pressure naturally built in about now (amazingly has been holding off .......)

I'm with you on this one. I am weary that Unions are pushing too hard for this wage increase in order to control the job market better. A more systematic approach would be better.

I always thought that a wage increase would have an undesired effect on employment, but as the study points out:

 

[...]Chavez's contention that raising the minimum wage would have a negative impact on job creation is directly refuted by a recent Economic Policy Institute (EPI) report that "failed to find any systematic, significant job loss" associated with past minimum wage increases.

yes, but look at the source.

 

theres no question that raising the minimum wage decreases the number of low-wage jobs available.

 

 

and as furman alluded to, there is a distinction between federal minimum wage and state minimum wage. federal minimum wage is the federally-mandated minimum for most types of jobs in the entire US. many states have their own minimum wage laws, which mandate that the minimum wage in the given state is a specified amount. for example, i'm sure its pretty safe to assume that the actual minimum wage in california and massachusetts (just a wild guess here) is higher than $5.15 per hour. It's federal law.

 

The only variant is for service/gratuity-based employment, which holds the minimum wage at a much lower standard.

I approve increasing the minimum wage... people these days need the most money they can get...

This issue is not as cut and dry as some might think -

 

Let's say a small business owner has budgeted $107,120 per year for 10 minimum wage employees and is forced to increase the hourly rate to $7.00. In order to stay under budget he would be forced to lay off 2.5 workers (7.36 x $14,560 = $107, 120).

 

Does the small hourly increase offset/overcome the loss of 2.5 jobs?

 

:mischief2 You missed in your equation how the Employer is going to produce without those 2.5 employees. He may have two choices:

 

1. Pay them more.

 

2. Outsource to India. A small business is going to outsource to India? I don't quite think so.

 

And what you have to realize is the only reason outsourcing happens is because costs become INCREDIBLE here. The costs of moving the entire business, buying land, building a new factory, getting a means of transportation for your products, severance for workers, and alot of other different types of fees and payments you have to make, it doesn't make sense financially to just pick up and go to another country to make your products. It's only done as a last resort.

thank you alk. I was alluding to two main things that are closely related I guess.

 

1) a federal minimum wage seems useless to me. It should be up to each state, as cost of living from state to state, county to county is different....and it is up to each state....Georgia's minimum wage is different than Massachusetts' and New York's.

 

2) It seems interesting that people in Washington DC are telling us what we should pay our employees....seems waayyy too broad, and I think states should reserve that responsibility....or even counties. The same effect will be done. I mean, it's not like if we let states decide AND get rid of the federal minimum, wages will drop....state government officials will be in serious trouble! It just seems pointless to have a federal minimum wage.

since we have a central bank and min wages are tied to heavilty into fiscal policy then it's wise to have a federal min wage

 

i wouldn't mind giving states discretion as long as it is tied into regional data with the fed min being the low water mark

 

however that could setup a wage competative marketplace between states to negative economic effects

would it be that competitive? I mean are Georgia McDonalds workers gonna move to Florida to work at McDonalds for 25 more cents an hr?

 

It is simply a minimum wage.

yes .. it very well could be .. i grew up near the PA border and when they tightened welfare they moved to NY

 

same thing happened when DE tightened theirs, many moved up to philly

 

also corporations could try to lure workers or states would try to lure corporations by saying they have a lower wage

 

many variables .. i just dont' think it would be that effective

They need to lower the minimum wage. Everytime the minimum wage goes up unemployment goes up with it, as well as inflation

They need to lower the minimum wage. Everytime the minimum wage goes up unemployment goes up with it, as well as inflation

That'll be the day

I'm not sure how useful mininum wage. I mean, if you LIVE of mininum wage, you can't get by to begin with and employers just employ more illegal immigrants. I think we should get rid of it.

Minimum wage is a sacred cow. Not going anywhere.

Minimum wage is a sacred cow. Not going anywhere.

most definitely