Hold those phone calls from Ed McMahon and Publishers Clearing House! Tell Regis you’ll have to pass on a chance to get rich quick on Who Wants to Be a Millionaire?! On Feb. 2, the U.S. Senate approved — by a vote of 83-14 — a bill that’ll raise the minimum wage by $1. But the increase would happen incrementally, over a period of three years: At tortoise speed, the minimum wage would creep from $5.15 to the grand sum of $6.15 by March 2002.
Let’s see … that means a minimum-wage worker can make $12,300 a year, if he or she slaves away for 40 hours a week, 50 weeks of the year.
Oops — did I say “slaves away”? That’s because $6.15 an hour might be great for a grocery-bag-packing high-school kid who’s saving to buy that first car, and it might not be too bad for a college student working for a little extra pizza and road-trip money. But it’s not a livable wage for an adult trying to make ends meet — not by any stretch of the virtual dollar. Even if two adults in a household are working full time at minimum wage, they won’t, collectively, reach the brink of middle-classdom (which a political scientist at Arizona State University has calculated to be $27,000).
Once upon a time, the minimum wage meant a little something. In 1968, it was worth more than $7 per hour (translated into year-2000 dollars). And back in the 1940s and ’50s, the minimum wage better matched the average hourly pay in the U.S.: It equaled approximately 50 percent of the average wage paid in the private sector; but fast-forward to the late 1990s, and the minimum wage has slipped to less than 42 percent of the average hourly wage for an American, according to the U.S. Department of Labor.
While we’re at it, let’s do some quality-of-life math for the new millennium: At $6.15 an hour, full time, a worker won’t be able to afford much more than $307.50 in basic utilities and rent (or mortgage). [The U.S. Department of Housing and Urban Development calculates that housing costs shouldn’t be greater than 30 percent of household income, to be “affordable”; anything more, and there’s little money left for emergencies, savings, the down payment for a first home, or some stock in America Online.]
And someone earning even the new minimum wage couldn’t afford the average one-bedroom rental unit in Asheville (going for $535 per month, according to the Asheville Board of Realtors — and that was in 1998). Consider, too, that the average two-bedroom house cost $85,168 back then — also out of range for a minimum-wage worker.
Sure, such figures are skewed by those million-dollar homes perched on our ridge tops that might belong to, say, actor Tom Cruise. And there is cheaper housing to be had around these parts. West Asheville offers the most opportunities for finding homes marketed for under $100,000. But note the increased number of mobile homes popping up around Buncombe County in the past few years, as reported in several local studies — this, despite the 107-month-long economic boom U.S. citizens are reportedly enjoying. If things are so great, why can’t more citizens afford to buy stick-built homes — which appreciate in value, unlike mobile homes?
Tie this all into recent reports that the gap between the haves and the have-nots is growing wider than the Mississippi: For the richest fifth of Americans, annual incomes rose 15 percent from 1988 to 1998, according to studies done by the Economic Policy Institute and the Center for Budget and Policy Priorities (two nonpartisan, nonprofit organizations). And according to the Federal Reserve, the net worth of the “typical” family rose to $71,600 in 1998 — a 15 percent increase from 1995. For the poorest fifth, by comparison, incomes rose a mere 1 percent from 1988-98; and the net worth of families earning less than $25,000 per year plummeted by 25 percent in the three-year period that ended in 1998.
All these numbers aside, though, there seems to remain a prevalent train of political thought that wages should be market-driven, not regulated by the government. The theory appears to be that, if the government twiddles with the minimum wage too much, the bottom will fall out of our economic boom; at the very least, prices for every little thing will rise. (God forbid the price of a Big Mac should go up, if McDonald’s burger-flippers must be paid $6.15 an hour.)
But the market-driven wage theory might just hold some water. Few businesses today drop wages as low as the minimum wage (although, technically, workers under 18 years of age can be paid less than the minimum wage, for their first 90 days on the job). “I know of a local business that advertised a job at $8 an hour and got almost no response,” mentions local banker Ernest Ferguson, who chairs the Buncombe County Economic Development Commission. “They had to readvertise at a higher pay rate.” Nonetheless, he reflects, “The minimum wage is good, from the point of view of providing a safety net.”
Apparently, that net hangs so low that few workers will settle for it anymore — and almost no company will offer it, even to entry-level employees. Asheville City Manager Jim Westbrook points out, “We’re already having to offer higher … wages to retain workers, because of the tight labor market.”
During our 107-month economic “boom,” the unemployment rate has remained steadfastly below five percent, nationally — an indication that most working-age folks already have a job and won’t switch for mere peanuts, perhaps. Recently, the New York Times reported on a company that passed along 40-percent raises to its employees — primarily to keep them from being snatched away by upstart Internet companies.
Still, you can knock me over with a pay stub for not being so thrilled about the Republican-sponsored minimum-wage bill. I wonder if the abysmally low minimum wage paid to young and/or unskilled workers gives some hint of why we may have growing numbers of homeless people? I’m not swayed, either, by Republicans’ latest tax-cut offer as a way for the average Joe to keep more money in his pocket, even at low rates of pay: This tax bill includes a $30 billion, five-year, tax-cut package that would, allegedly, ease the burden on the poor. Funny thing, though: Almost half the tax-cut package goes for an estate-tax reduction for upper-income people who inherit heaps of assets.
Should these Republican bills pass in the House as well, President Clinton has sworn to veto them. But the Democrats’ proposals aren’t any better — they urge raising the minimum wage by $1 over a period of two years (whoopee-do — geological time frames seem faster than the pace of change in government).
Unimpressed by Congress’ efforts, several states and many local governments haven’t waited for the feds to raise the safety net a notch above knee-high to a grasshopper: They’ve passed living-wage ordinances, requiring businesses who contract with them to pay wages significantly higher than the current minimum wage.
As Asheville Mayor Leni Sitnick commented, “Our minimum wage is a national shame.”