76°Partly Cloudy

Del Ken Plum: A More Realistic Minimum

by Del. Ken Plum — February 4, 2016 at 1:30 pm 21 Comments

Del. Ken Plum/File photoThis is an opinion column by Del. Ken Plum, who represents Reston in Virginia’s House of Delegates. It does not reflect the opinion of Reston Now.

Northern Virginia jurisdictions are among the wealthiest in the country. Yet we have in the schools in the region significant percentages of children on free and reduced-price lunches because of the low income of the households in which the children live.

In Fairfax County, 29 percent — more than 50,000 children — are on the free- and-reduced-price lunch plan. Some schools have breakfast programs for children who come to school hungry. Churches and nonprofits have started programs to send food home with children to ensure that they have something to eat on the weekend.

The disparity in income seen in our region exists throughout the country. There is no one solution to the problem, but 29 states and the District of Columbia and 23 U.S. cities have raised the minimum wage as a way to reduce income inequality.

My bill to raise the minimum wage in Virginia was defeated on a party-line vote of 6-4 in a subcommittee last week. This is the second year the bill has been defeated. Virginia’s minimum wage is the same as the federal $7.25 per hour, which the Congress has also refused to raise.

Since the minimum wage of 25 cents per hour was first adopted in 1938, national and state governments have periodically raised it to keep up with inflation and changes in the economy. The current rate of $7.25 was set by Congress in 2009. Most economists agree that the minimum wage had its greatest purchasing power in 1968, when it was $1.60.

My bill called for a “truing up” to the 1968 level of purchasing power  — that would be $9.54 per hour that I round up to $10 in the first year and increasing over time $15 in 2018. My bill was intended to restore purchasing power to consumers and to move them towards a living wage.

Working a 40-hour week at the current minimum wage of $7.25 per hour for 50 weeks produces an income of $14,500, which is below the federal poverty level. In Fairfax County, the median household income is $110,674 and in Loudoun County, $122,294. Representatives of the Reston, Loudoun and Fairfax County Chambers of Commerce, as well as the state chamber,  spoke in opposition to my bill.

Raising the minimum wage could directly affect 725,000 Virginians. Of these people, 90 percent are over age 20, 57 percent work full time, and 31 percent work more than 20 hours per week. Of these persons 82.4 percent have at least a high school diploma and 48 percent have some college education.

I fully support programs that feed and house the hungry, but at the same time I vigorously support programs that compensate workers more adequately for their work. I hope that community and business leaders can get behind future efforts to raise the minimum wage as a way to reduce income inequality in our community.

  • SouthRestonResident

    You do realize that the private sector will react to a raise in wages by an increase in automation, downsizing and automation at best. There will also be an increase in costs and they will be passed on to the consumer.

    In basic economics, something I doubt you have a grasp on, a general increase in wages will result in the rise of goods, not the result of purchasing power which you feel will occur.

    When you have to pay your average cashier at fast food establishment or grocery store $15, you will see these companies shift to automation (see Sheetz) to reduce the man hours needed.

    I’m sorry, but minimum wage jobs are meant for those with minimum skills – not for a career. And if you’re relying on the government to provide for you while making minimum wage – perhaps it would behoove oneself to not have children that one can not afford.

    Of course, I’m assuming since you’ve been an ‘elected official’ for close to 35 years you’re out of touch with reality and no longer understand how the private sector works.

  • Chuck Morningwood

    I applaud the effort to raise the minimum wage. While there’s no doubt that there will be some displacement in the economy, that displacement was going to occur anyway. Even at minimum wage, automation is generally cheaper over time. All businesses which can switch from labor to automation or self-service are moving in that direction.

    Considering the disparity between the top tier earners and the bottom tier earners — the so-called “wage gap”, there is little doubt that shareholders and top executives couldn’t absorb most of the wage increase for minimum wage workers. So, even if there’s an increase in prices, it could well be negligible.

    As to whether or not “minimum wage” jobs are “careers”, well, for some people that’s the best that they can do. Some people just don’t have the ability or capacity to move beyond the bottom tier of wage workers. Should they be punished for that with wages that won’t ever get them to the Federal minimum poverty line.

    So, I’m in favor of raising the minimum wage. $10 now with an increase to $15/hour in 2018 seems fair to me.

    • TheRealODB

      Why stop there? For true prosperity, why not $50 an hour? $100 an hour?

      Price controls are harmful to the market – and that’s what minimum wage is – a price control for the price of labor. All it does is price low skilled workers out of the job market. Want to see the damage price control does? try buying toilet paper in Venezuela.

      • Chuck Morningwood

        Actually, the minimum wage is a price floor in the labor factors market. Price floors typically create a surplus.

        One has to wonder, though, should employers be allowed to exploit people desperate for a job? And what about that whole “child labor” thing. Should we get rid of that too as it reduces supply to the labor factors market?

        • Mike M

          You are mixing ethics and morality with bad economics. The key difference is that minimum wage policies backfire! They don’t work as intended and both logic and evidence show they are actually counterproductive.

          • Chuck Morningwood

            There’s plent y of “logic” in both for and against. I would certainly like to see your evidence that minimum wage policies backfire and are counterproductive.

          • Mike M

            Just about every study on the topic shows that employment is affected negatively when minimum wage is hiked. It also causes price increases. There is really only one major study that claimed to find otherwise Card/Krueger in New Jersey Fast food joint versus Pennsylvania,and it was debunked repeatedly. Still the Democrats constantly site that study. So, there’s the many studies and there’s common economic sense.

        • TheRealODB

          You are correct that a surplus is created, but in the wrong direction. It creates a surplus of willing labor, but that isn’t the problem. The surplus is created because it shrinks demand for labor by employers. A surplus of labor, and a shortage of demand for that labor – ie, pricing low/un-skilled workers out of the workforce, exacerbating the problem (but Democrats love this because it places more people on government support, growing their power).

          And I like that you try to roll child labor into this argument. That’s an entirely different debate. Nice try, though, Chuck.

          • Chuck Morningwood

            Child Labor isn’t part of the Labor Factors market?

            I’m not going to argue that laws don’t have a distorting effect. But without them, the business environment would look totally different, and not necessarily for the best. Labor is just one aspect of business.

            And if you don’t think that business will come after child labor laws once they finish with the minimum wage, you’re only fooling yourself. Remember the child labor law was put into place precisely because child labor was being exploited.

        • TheRealODB

          AND, for the record, a price floor is a type of price control, so your slightly condescending “actually” was unnecessary.

      • east297

        Amen!

  • Ming the Merciless

    Gee, what has changed about Fairfax County and Virginia since 1968? Is there something that could have driven down wages, such as an increase in the labor supply? Yes indeed there was. But of course he would never suggest restricting the inflow of low-wage workers in order to raise wages and reduce income inequality.

  • Karen Goff

    You are welcome to try again without name calling.

    • Mike M

      Name calling? Is calling Ken a $ocialist for proposing what many believe to be $ocialist calling names?

      • Chuck Morningwood

        But is Ken a $ocialist. He certainly hasn’t said so. Just because he holds a few positions which are consistent with $ocialism doesn’t make one a $ocialist, any more than wanting to deport all illegals makes one a Raci$t.

        • Mike M

          Socialist is as socialist does.

      • Karen Goff

        Socialist wasn’t the word that got it caught in the filter. You’ve made your point.

  • east297

    Ken….please retire!!!

  • America if facing the same challenges that many other
    nations have experienced: – Greece, Rome, England etc. Republics produce strong
    nations which are attracted to resources from abroad. Wealth brought in makes the republic wealthieracross the board. But then slaves (Rome)are brought into do the work average citizens of the republic do not care to do. The wealthy push the envelope and the wealthy class grows while the middle class must be appeased with free games and low cost imports etc.

    In Rome there are more than 30 statutes of Gladiators who began as slaves fighting and killing each other to appease the crowds. In time the entertainment component elevated the fighting slaves to grand heroes and millionaires. But eventually the middle class loses an becomes bored and distasteful of a nation set on using cheap labor, imports from conquests and expanding of the ruling class.

    And America is becoming more like empires of the past and short
    of rethinking the republic we will fall like all the others. After all we now
    have American military personnel on the ground in 37 other countries etc.
    Wonder where Dennis Rodman’s statue will be located in DC?
    And, yes, raising the minimum wage would be a good step.

  • Virginia Harlow

    Didn’t I just read yesterday that a governor of some western state rescinded their brand new minimum wage law because of the effect? It was almost instantaneous.

  • quest4fire

    Let’s use a Fast Food restaurant as an example, for simplicity sakes let’s say the cook earns $8 , the cashier earns $9 and the manager earns $10 an hour. The cost of a cheeseburger is $5. The minimum wage is set at $10. So now you have the cook and cashier earning the same as the manager. Of course the manager is not happy, so the Owner bumps his pay to $12 an hour. The cashier feels she should make more than the cook, so the Owner bumps her pay to $11 an hour. Now the cheeseburger becomes $7. Every industry goes through the same ripple effect, the costs of goods go up and a few years later you are back where you started.

×

Subscribe to our mailing list