Data to Virtue

"Wisdom is to know what to do next; virtue is doing it." -- David Starr Jordan, American Naturalist -- Observation collects data from which we build knowledge. Wisdom makes sense of that knowledge. However, it is not enough to merely develop wisdom, we must act on what we know. That is virtue--and the purpose of this blog--from data to virtue.

Saturday, March 04, 2006

Minimum Wage

THE FIRST FIGURE:
In this figure you can see how minimum wage has changed with time. The green line is in the value of the year and the black line is the minimum wage adjusted to 2000 $'s, aka adjusted for inflation. For an explaination of the business at the bottom of the figure see the data detail. (Click on the figure for a larger version.)
THE TAKEAWAYS:
There are several things to take away from this figure.

- We are in the longest stretch where minimum wage has not increased.
- There seems to be little advantage to democrats over republicans in raising minimum wage.
- Since 1950, once minimum wage is adjusted for inflation, there are clearly two periods, the pre-Reagan days and the post-Reagan days. In almost every year minimum wage was
effectively higher pre-Reagan than every year post-Reagan and the minimum wage currently has the lowest "buying power" in 50+ years.

THE SECOND FIGURE:
In the figure below I have taken minimum wage and divided it by the average of the top 20% of incomes (red line) and by the rank and file congressional salary (dotted black line). Note to compare an hourly wage to a yearly salary, I assumed a 2,000 hour work year. For an explaination of the business at the bottom of the figure see the data detail. (Click on the figure for a larger version.)
THE TAKEAWAYS:
Again these two periods emerge. Pre-1980, minimum wage as fraction of a congressional salary oscillated around 10% and has steadily declined since to it's lowest level in 60+ years.

DISCUSSION:
In this current 10-year stretch where minimum wage has not increased, congress has had 7 salary increases. Note,
coincidentally the congressional salary is representative of a salary in the top 20% of incomes. It doesn't matter who's in the house, senate, or is president. Neither party seems to be a true champion for minimum wage.

Annual pay increases in congressional salaries are linked to the general schedule of federal employees. The ethics reform act of 1989 provides for yearly cost-of-living adjustments; the increase rate not to exceed that of other federal employees. This cost of living adjustment is automatic for congress unless they vote specifically to decline it (which happened three times in the last ten years while minimum wage was not adjusted).

SO WHAT?
Write your congressmen and senators and tell them to introduce a bill to lock minimum wage (based on a 2,000 hour work year) to 10% of the salary of a rank and file congressmen. That way if congress doesn’t want to raise minimum wage, all they have to do is vote to decline their own cost of living adjustment.

DATA DETAIL:

Along the bottom, below the zero axis, shows the relative strength of a given political party (red = republican, blue = democrat). The first line is for the presidency, the second line shows the majority in the senate, and the third shows the majority in the house. A blue area (down) shows a democratic majority. A red area (up) shows a republican majority. Below the party strength lines are the periods of recessions and wars.

Congressional salary data are from http://www.congresslink.org/print_basics_pay.htm. Minimum wage data are from http://www.dol.gov/esa/aboutesa/history/whd/whdhist.htm.

1 Comments:

At 7:47 AM, Anonymous Anonymous said...

First off, wages are always based upon how valuable you are to the company or organiation. Raising your minimum wage will just make everything more expensive for the poor. Remember, it's the poor who works at the Walmarts, the McDonalds, or at the affordable stores in America. To compensate for the raise in wages, the store will etiher hire less employees, or raise the prices, or maybe do both. So the cheaper things will get more expensive eventually, and the poor...will still be poor.

Capitalism is truly the cure to poverty. And remember, just because you start at minimum wage, if you work hard, you can hopefully get promoted to a better position. Didn't you hear that the president of Viacom used to work in the mailroom at one time...

 

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