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Minimum Wage and Your Retirement

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February 22, 2014 – Comments (8)

In 1968 a minimum wage worker was worth more than at any other time since the inception of the idea that people should be paid for working. I think it was $1.60/ hour in 1968 dollars, which would be about $9.50 in 2012 dollars. Had minimum wage kept pace with the US workers productivity it would be between $22.00 and $18.50 today depending upon your details in the calculation.

If minimum wage growth had kept pace with worker productivity every minimum wage worker since 1968 would have contributed more into SSI than they actually have for the last 44 years. 

If minimum wage growth had kept pace with worker productivity, then todays 3.6 million 'at or below the Federal minimum wage' workers would have contributed $6,514,559,982. more into SSI than they actually did in 2012.

If minimum wage growth had kept pace with worker productivity then the 60% of the US workforce currently earning less than $22.00/ hour would have all contributed quite a bit more than they actually did into SSI. 

If minimum wage growth had kept pace with worker productivity, we would not be talking about saving Social Security, or raising the retirement age. We would be talking about retiring at 50 and lowering the cap on taxable income and the SSI "safety net" would be a steel reinforced concrete foundation to build the next century on, and Bill Gates would still be the richest man in the USA.

The only real question we need to answer now is how hard do we have to tax the financial industry for the bad advice it gave us, in order to set things right and reward honest work, instead of idle income.

Best wishes,

Steven 

 

 

8 Comments – Post Your Own

#1) On February 22, 2014 at 8:12 PM, awallejr (79.40) wrote:

Well I still submit changing the tax code on top income had more to do with the downfall of the middle class than anything.  If you taxed away excessive income off the rich they would have still been incentivized to take advantage of the deductions by increasing salaries and bonus's.  Afterall better to spend the money in the business instead of giving it away to the IRS.

This is a line of argument that the Kudlowites simply don't grasp. Low taxes on the high end hurts job growth it doesn't help.  It never ever has.

Actually just raising the minimum wage without a corresponding tax cap on top wealth will probably just lead to inflation sooner than we expect since the costs will just be passed down since top earners still get to keep a good chunk of the income.  Gold's rising is starting to tell us that.

Either we push for real immigration reform by opening the borders or we go back to the Eisenhower tax code.  Absent that the 99% still gets screwed.  And the Republicans won't let either happen.

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#2) On February 22, 2014 at 11:57 PM, awallejr (79.40) wrote:

They have eyes but they cannot see. Good old Norquist continuing his effort to screw the masses:

 http://caps.fool.com/Blogs/outperform-with-dividends-in/194976

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#3) On February 22, 2014 at 11:59 PM, awallejr (79.40) wrote:

Ack:

 http://finance.yahoo.com/news/thirteen-billboards-one-paint-shop-205158725.html

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#4) On February 23, 2014 at 7:17 AM, devoish (97.24) wrote:

awallejr,

I do not get the direct connection to immigration reform from either SSI or taxes.

I agree that you could incentivise higher pay and increase employment through higher taxes on capital gains and corporate profits. I am curious as to the tax structure you would set up. As a taxpayer and neighbor I am pretty tired of seeing politicians give tax breaks to corporations in exchange for the deferred income of an overpaid corporate consulting job.

I would also be on board with partially financiing Government services through any flat tax, sales tax, or VAT tax that includes the sales of investment products, business's, corporations, and stocks. Without sales taxes on investment products flat tax, VAT tax, and sales taxes are just shifting the cost of providing Government funded military benefits to multinational corporations and capital investments on to employment income and subsistence spending.

Best wishes,

Steven 

 

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#5) On February 23, 2014 at 12:08 PM, awallejr (79.40) wrote:

Re immigration reform I refer to it because it can be a means to spur stronger growth and add to GDP and hopefully grow the middle class.  We have 4 million unanswered jobs mainly because we lack the skilled population.  We can open the "door" to outsiders.  Also by trying to find a path to citizenship for the illegals would take them out of the shadow economy and contribute to GDP.

The problem is these people will not vote Republican mainly because of the Republican agenda. So I doubt we will ever see anything on this front.

As for income tax reform, we already had a model that worked.  Just go back to the Eisenhower code and do some inflation adjustment.  The main reason why the tax code is so convoluted is because it is predicated on the  notion of "incentivizing behavior."  That is why you have many "so called" loopholes.  They are there to encourage certain behavior.  A classic example is the charitable contribution deduction.  We want people to give.

There really is no social need to have billionaires. I have no problem with wealthy people. I have a problem with obscene wealth.  And it is because of the reduction in taxes which created this inequality.  We incentivize the 1% to now squeeze whatever they can instead of sharing the wealth through raises and bonuses as what was happening in the 1950s. This is why the middle class is doomed.

And it is not going to change.  There is no political force to push a middle class agenda.  Look at the resistant to the move just to raise the minimum wage.  Of course big business is against it since it means higher costs and less profit. And their lobbyists have too much sway over Congress.

 

 

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#6) On February 23, 2014 at 1:33 PM, devoish (97.24) wrote:

It is changing. Occupy changed everything by voicing what so many were already thinking. 80,000 people just marched against Republican policys in Chattanooga. 

I also do not think there is really a skills gap among employees as much as there is an "I don't want to pay for your skills gap" among employers. Or worse, an "I don't want to pay to train you, let the Government do it or get a loan from the bank gap" among employers.

So a kid goes and gets debt with his training and then no job is actually promised or available. I believe we call that screwed and it is about the worst thing we have done to kids since indentured servitude.

Meanwhile investors and CEO's are riding out a recession saying "thank god we didn't pay to train them". That sure saves the Billionaires some bucks and some risk.

Nope. I don't buy that Brooklyn Bridge to debt slavery at all.

If corporations want to profit from the labor of trained employees, then corporations should feed them, train them, and pay them.

Best wishes,

Steven 

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#7) On February 23, 2014 at 1:54 PM, awallejr (79.40) wrote:

There actually is a shortage and a lot of it has to do with booming energy growth.  We need more engineers.  This is a problem in Europe too.

While OWS brought attention to the issues.  It kind of died down.  There also seems optimism for Republicans this off year election (low turn outs favor them).

The 99% really does need to wake up or the disparities will only widen.  But it does require booting incumbents out of Congress, slapping term limits and doing something to reign in all these PACs. 

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#8) On February 25, 2014 at 3:51 PM, devoish (97.24) wrote:

I like Elizabeth Warren. I do not want to limit her term or boot her incumbent back-side out, though I am sure the financial industry would like her gone.

If there really is a shortage of engineers then companys with forsight can invest in training them and get a competitive advantage. They could even do it their own expense and risk, not at the students expense and risk.

There really is nothing going on here other than trying to negotiate the lowest pay they can for the people they want to do your work for them. And that is true whether those people work at McDonalds, Walmart or are engineers at GE.

Ultimately it is low pay that has left SSI in such bad shape and the investment industry so well off.

Best wishes, 

Steven 

 

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