This is NOT MEANT TO DEVOLVE INTO POLITICS....
My concern is NOT what you think of minimum wage proposals, rather what life was like during the year when the federal minimum wage was at its highest, adjusted for inflation, which according to inflation calculators was around 1968. As $15 is all but certain at this point, I'm looking to forecast some financial trends in my personal life, and possibly start negotiating on various matters, and I need some raw data from those who were alive and earning the nation's highest wage in history (1968)
Realistically, what can we expect with a $15 minimum wage?
Around what percentage (guesstimate) did people make a higher amount?
In 1968, minimum wage was set at $1.60, and had the buying power of $11.90 today.
Throughout the 70s, it seemed to hover around the upper $9 to upper $10 range.
During the 1980s, minimum wage suffered (Reaganomics??) And seemed to fall to under $9 respectively, hovering in the $5-$7 range through the present day.
Of interesting note, we are currently living in the longest "dry spell" of wage increases (2009 to present) the second longest would be from 1981 through 1990.
My understanding was the 1980s also saw an economic downturn, however despite the raises in the 90s falling short of the "1968 bar", the 1990s saw quite the economic expansion.
Of note is $15 will be the highest wage (adjusted for inflation) in history.
Thoughts? Will be this be a boom or bust?
No politically biased answers please, just straight economics if you don't mind. This is going to happen whether we like it or not so we would be better to start planning on adjusting rather than complaining...
Hence the point of my post...
- Master Barista
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Study economic theory and tax rates in the Eisenhower years, the Johnson years, the Nixon/Ford years, the Reagan years, and the (W) Clinton years and decide where it went off the rails and where the terminal rot set in. Draw your own conclusions.
In 1968, one wage-earner could comfortably support a family -- himself (as that was the custom at the time), his wife, and their children. In 1988, it took one wage to support one person -- with little wiggle-room for children. In 2008 it was each wage-earner perhaps holding down two jobs. In 2018, it was all part-time and temp jobs with no security whatsoever.
I recall a comment that my grandfather made when it surfaced that the first new car I would up with (purchased for my by my dad as he didn't trust my old steed) was $5,000. It turns out that was the price my grandfather purchased the house I -- and my father -- grew up in; it was an enormous rambling place that used to be a boarding-house before he bought it. For $5,000. In the early 1940s. Today, $5,000 means almost nothing.
So, a $15 minimum wage? All that'll do is fatten the government's coffers at the expense of the wage-earner and the general public.
You're looking in the wrong place.
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regular gas about 26.9 cents a gallon
How blissfully carefree we were then. 52 years later We are now 16 and counting......(how much we've spent!)
And of course as wages go up, inevitably so will the cost of those services - to pay for the increase in cost to the business owner or the reduction in staff or hours. I’m not assigning a moral judgement on a minimum wage increase - but someone is going to pay for that wage increase (unless the gov’t pays subsidies, then they have to tax more or print money, hence inflation). Just as when health insurance became a mandate, some businesses cut hours for their workers so they weren’t obligated to cover insurance. That may be “evil” of them - but they are just doing what they need to run a profit. Where it gets tricky is what is an acceptable profit, whether golden parachutes for the top are OK, etc... but at the end of the day there needs to be a motivation for a company to continue producing, and last I checked only a few actually care about their employees.
A more measured approach by the gov’t would be a phased-in approach to an increase so there isn’t a big shock to the system, but when have they ever done anything the right way?
Well, there are a lot of metrics in place here in 2021 that didn't exist in 1968.
Personally, I feel the short end of this will be some modest price increases across the board, but nothing too extreme as those on retirement won't be having their social security checks doubled.
Small business may suffer somewhat, but only until prices are adjusted to compensate. I feel many businesses have been seeing this coming for a while and have moved towards automation and other trends like self checkout and kiosk.
I do wonder what the data would show if we could somehow graph raw productivity per worker today compared to 1968. Each individual person has to be churning out more now than then, considering the advancements in technology.
I suppose a good shot of inflation should serve to "devalue" the national debt, while perhaps increasing the overall GDP.
Time will tell.
As for taxes, just as the majority of middle-class wage earners pay the lions share of taxes, I figure so goes the taxes of the Mom and Pop economy. Them, along with their middle class wage earner counterpart are what keeps the economy humming, for as we know, the ultra wealthy tend to hoard everything up at the top... they are not buying bagels and cheeseburgers from the corner store.
They can't raise prices too much or I'll just stop eating out and just start saving my overtime instead... and I can't be the only one...
Interesting times lay ahead, but perhaps it won't be too bad.
But as they say... "it is what it is". We'll just have to adapt as best we can.
To pay tuition, I was working 20-30 hours a week at 1.35 per hour as a
short order cook to cover tuition and personal needs.
My car was a 1960 Ford Falcon that sipped gas. Yes,$1.00 of gas equaled
about 1/4 of a tank of gas. Even from empty to full it did not take $5.00.
Believe it or not, I had more than enough money for my needs. The
biggest part of this is that the college I attended was in my home town
and I was still living at home. If I had to provide my own housing - food -
etc. I would have starved to death.
Minimum wage is never truly the minimum wage. Students can be paid
as low as 60% of minimum wage (training program) or 85% of minimum
wage (student employee) - and tipped employees can also be
paid less than minimum wage as long as their tips (which are taxable)
bring them up to minimum wage.
My opinion of minimum wage is that it was a good attempt to help out
lower income people but it has failed. Inflation and price increases
have increased faster than the minimum wage putting unskilled workers
in a worse position.
What needs to be declared the "minimum" wage should be a "living" wage.
How much does it cost food, shelter, clothing, medical care, etc. all need
to be factored into a "living wage".
Many businesses no longer have "sick leave". It is simply called "paid time
off". Employees go to work when they are ill so that they don't waste their
paid time off while they are sick because that paid time off for a vacation
later in the year.
None of this is political, just the environment we find ourselves living in
today. I think that there are a great many things that need to be changed
in the area of worker compensation, but we all know that such changes
all come at a cost increase in the goods and services we buy. This gets even
more complicated when foreign countries who pay less with fewer benefits
are competing in the same market place.
This topic can be very thought provoking.
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5.00 would not only fill your gas tank but leave enough for a tip for the guy who pumped the gas
Some points of comparison from the UK, but not as far back as 1968.
I qualified as a secondary school teacher in England in 1975.
Shortly after I started my teacher training in 1974, teachers were awarded a substantial pay increase (23%) in the Houghton report to Parliament - a very pleasant and unexpected surprise (http://www.educationengland.org.uk/docu ... index.html, then view the whole report from the left-hand side, section 117).
Because of this pay rise, my annual salary for my first teaching year (1975-76) was £2045 before any deductions/tax - i.e. £170.41 per month, or £1.16 per hour (calculated on the standard basis of 1760 worked hours per year). My wife also had an administrative job, paying about £550 per year, working for the local health authority.
Together we were able to finance the purchase of a small house (cost £9000) in a village and run a very modest car. At the time, the rule-of-thumb for borrowing money on a mortgage for people with salaried employment (like teachers and local government employees) was up to 3.5 times the combined household salary. (Today, young people often borrow many more times their annual salary - I don't know how they can manage to make the payments!)
January 2021 Average price of a house in England £332,259 - https://www.zoopla.co.uk/house-prices/england/
Average secondary school teacher salary £29,603 - https://www.payscale.com/research/UK/Jo ... her/Salary
i.e. an average house costs over 11 times the salary of a (single) teacher, meaning that today he/she needs to be part of a working couple of teachers!
- Fred in Skirts
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All of us who live on a fixed income will be harmed as the money coming in will not go up but the money going out will.
Also the tax rate structures will be changed and we will pay more in taxes per dollar earned than we do now and we will lose some of the deductions that we now enjoy.
Just my two cents worth, what ever that's worth now
"The universal aptitude for ineptitude makes any human accomplishment an incredible miracle."
"It is better to be hated for what you are than be loved for what you are not" Andre Gide: 1869 - 1951
Here the rule of thumb is 4.5 times now, but the average house price here is now 9 times the median, so you need a double income basically. The only reason it works is because the interest rates are insanely low (2% p.a. for 30 year fixed) and that is deductible off your income, so your effective interest rate in 1.6%. If the interest rates go up then things are going to get really screwy (although not for the people who fixed their rates now).familyman34 wrote: ↑Tue Jan 19, 2021 3:42 pmAt the time, the rule-of-thumb for borrowing money on a mortgage for people with salaried employment (like teachers and local government employees) was up to 3.5 times the combined household salary. (Today, young people often borrow many more times their annual salary - I don't know how they can manage to make the payments!)
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Interest rates here are at record lows, which is fuelling the rise in prices, which in some areas have increased by as much as 30% in some capital city suburbs.
I owned a place with my brother but we sold that 4 1/2 years ago, and when I went looking to buy another place was told that we did not meet lending criteria at the time, which required two incomes, despite have an balance well over $100k. The banks tightened lending criteria in the wake of the GFC. My wife has not been able to find work in the 8 years she's been here in Australia, despite her being significantly more qualified than me.. Bit of a bummer, but that's life.
Now we're going backwards because we're having to pay for our place which is not in Australia, as well as where we are.... The company that was renting that was declared not legal in that country as they did not have the right permits to operate there, so they were sent back to China, where they came from. Then Covid-19 came along. At least we've got someone paying off our car park spaces that we've bought, we'll never have a car there anyway..
I'm just happy that when someone else is paying our mortgage on that lot, I don't have to.. I'm not a rich man.
Obviously at that age she didn't know much about the economic situation but seems to recall "times being somewhat tight".
She did say things seemed to get better through the 70s, but also noted that her father also got a better job.
As for me, I imagine the cost of living increases will serve to eliminate the buying power of the raises I've gained over the last 5 years or so, which means, yes things will be a little tighter, but even five years ago, we managed okay.
Also as Amber's income will double, there is no logical reason she can't start paying rent again. It's not right that Jenn and I have to completely support a 22 year old girl who just can't stay out of debt.
When she first started working we made an arrangement for her to pay about $160 per paycheck (biweekly)... that lasted one week, then it dropped to $80, then she couldn't afford that, and since then she's been living here essentially rent free for the last two years, and quite frankly, I'm getting tired of it. Note that with this rent agreement, we considered this "all expenses included", which means it included water, electricity, heat, etc... Hell, I even have her covered in my medical and dental plan at work which cost me an extra $80 per month on my paychecks.
I don't know, $320 per month to rent a room sounded reasonable to me.... Then she started buying a bunch of stupid crap off the internet and eating out every day on credit cards, and suddenly she can't pay her way anymore.
Anyway, I suppose over the next decade I can work to claw back what I'm about to lose when min wage increases to $15 per hour... just in time for people to start screaming to raise it it $25.
Hell man, just make it a trillion dollars per hour... that'll fix everything right...? Pffft....
The good news is, that with the last raise I received, even a small amount of overtime (<5 hours) amounts to a pretty decent shot in the arm, so hopefully as things get back to normal I might be able to get some of my overtime back, that alone should offset the COL increases.
 Our second son died of leukaemia in 2008 but he was married and in the RAF so was self-supportive.
 Our youngest son is buying a house that we owned outright from us so we have in effect provided the mortgage that he is repaying.
Just for interest I was 14 in 1968 so my interests didn't really include high finance.
Ha! When I was around 14 (1994ish) I recall my cousins and I erecting a tree house in the woods and scavenging the lumber and other supplies needed. We pooled together a few bucks for a box of nails, but when those ran out, we went back in the scrap heap and pulled old nails out of scrap lumber.
I remember getting quite good and beating them flat to reuse!
Needless to say, we learned the value of a dollar, and why to this day I still save lots of odd ball things like used butter containers for sending off leftover food to family and friends (cheaper than gladware, and better for the environment), and of course I always save random screws, nuts and bolts, pieces of wire, etc... pretty much anything that may find a purpose in the future.
Gotta limed up hot water tank? Hold it partner... let me get the thermostats and the top element out of that thing before you pitch it!
Why, just a few weeks ago I had a 25 year old blender that I could replace for $20 at Walmart on my work bench figuring out why it died... turned out to be a wire that came loose on the speed selector... $20 saved, and one less item in the landfill.
Planned obsolescence...? I'll be the judge of that....