Which Came First? Social Programs or Minimum Wage?

     How many times have you heard that nobody can live on minimum wage?  The answer must be quite long actually. Otherwise, the wage would go up on its own.

     Before the economic downturn, very few jobs paid minimum wage in my area. You could go and get an entry level job in most places above the current minimum wage. At the time they needed people to fill jobs, and offered what they could to draw in people.

     The problem I have with minimum wage, is that it is pushed by the same people who want to expand the social safety net. That has led me to ask the question, which came first Minimum wage, or the growth of social programs?

     After looking at Wikipedia.org, it appears that Social Security was signed into law August 14, 1935. And Minimum wage was first tried in 1933, then overturned by the courts in 1935, to be reestablished in 1938.

     The real question now becomes, do social programs suppress wages to necessitate an arbitrary minimum on wages?

      If you are getting subsidies for food, housing, health insurance, daycare, communication and retirement. Then the employee does not feel compelled to ask for a higher wage to cover these necessities. Especially, if making a higher wage may result in the loss of some or all of these subsidies.

      A few months ago, there was a political meme going around about feeding your family on $29 a week. Now in reality, the $29 dollars was per person. So, if you have a family of four, you could receive the equivalent of $116 per week. That sounds suspiciously like my normal grocery bill. Granted, we do not spend a lot of money on premade or high end products. Most of the budget goes for milk, meat, produce, stock items, and a few snack items. However, $116 a week would be a substantial portion of my income if provided by someone other than my employer.

      To break that down to a forty hour week. That represents $2.90 an hour for food. Throw in $2.25 / hour for the EITC, add in housing and insurance subsidies, and you would average about $15/ hour with a minimum wage job, and I am wondering why I don’t quit my job and get a part-time job at a fast food restaurant, and have more free time at home.

     That is the problem with government subsidies, it drives down the actual living wage requirements, forcing the government to always force up the minimum wage artificially.

     The biggest problem is, that when wages hit $15 /hour minimum wage, it will still be a minimum wage, and be the new poverty level. It is a short term fix that eventually elevates the cost of living to a point where you will not be able to live on $15 / hour, then the minimum wage must be raised again. It is like a dog chasing its own tail. It may catch it, but then what?

     There is no magic buttons that the government can push to create a balance, but that is not the goal, the goal for government is to be needed. Therefore, we will continue to chase our tail, catching it every once and a while, and ignoring until we decide it needs chasing again. It is time to reevaluate the whole system.