Sunday, July 14, 2013


This is from Dean Baker's wonderful blog on economics Beat The Press:
The Washington Post had a piece noting the rapid growth of automobile production in Mexico that raised the possibility that it would come at the expense of production in the United States. The piece points out that the auto companies now hire new workers in the United States at wages between $14 and $18 an hour.

It is worth noting that if the minimum wage had kept pace with productivity growth over the last 45 years it would be almost $17.00 an hour today. This means that newly hired workers would in many cases be working for less than a productivity indexed minimum wage. The minimum wage had largely tracked productivity growth in the three decades from 1938 to 1968. (The unemployment rate in the last 1960s was less than 4.0 percent.)
The bolding is mine. $17 a hour is $36,360, not a huge amount, not enough to maintain a household in the Twin Cities. According to the Jobs Now Coalition, a single parent with one child needs to make about $39,000 a year to make basic expenses in the Twin Cities. (A large amount of this is child care, which runs about $8,000 a year in the Metro Area according to Jobs Now. If we had publicly funded childcare, this small family could get by on a bit over $30,000 a year.)

This calculation assumes that the employer provides health care. Many employers do not. If the worker has to buy his or her family's health care, the cost of living in the Metro Area rises to over $45,000 a year.

Even though $17 an hour would not be adequate, it is a lot more than many workers with children are getting now.

So we either need a much higher federal minimum wage (it is now $7.25 an hour) or we need national health care or both. If we had national health care, Medicare for all, then a new federal minimum wage of $19.25 an hour would be adequate. If we had Medicare for all and state funded child care, then we could make do with a federal minimum wage of about $14.50, double what it is now.

I have no idea how working people get by.


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