Episode #43

Minimum Wage: Too Low? Too High? Just Right?

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Friday, February 15, 2013

President Obama's surprise call for a minimum wage hike during his State of the Union address Tuesday seems to have the entire nation pondering the same question: What should the minimum wage be?

The president wants the federal minimum wage to go from $7.25 to $9 an hour to help lift millions of Americans out of poverty.  Not all economists, however, agree that it will have that effect on the country's economy.  

This week on WNYC's Money Talking, contributors Joe Nocera of the New York Times and Rana Foroohar of Time magazine discuss what an increase could mean for employment, worker productivity, poverty and income inequality in the United States. 

As a map from the U.S. Department of Labor shows, the minimum wage depends on where you live. The city of San Francisco currently has the highest rate in the country: $10.55 an hour. In New York City and state, workers earning the minimum wage make the federal rate of $7.25 an hour.

Several New Yorkers WNYC asked thought the current minimum wage and even the President's proposal were far too low. 

"I think it should be more than $9. Nobody can live on $9. Maybe $12," said Sharon Vassell, an office manager in Manhattan. "That would be a good minimum wage."

Of course, small business owners have a different take because they worry rising wages will hit their bottom line.  

What do you think the minimum wage should be and why? Tell us in the comments section below or tweet us: @MoneyTalking. 

Also in this week's episode, a discussion of the recent spate of high-profile mergers and acquisitions, including the proposed $24 billion buyout of Dell.

Hosted by:

Charlie Herman

Produced by:

Daniel P. Tucker


Rana Foroohar and Joe Nocera
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Comments [18]

Hank from NJ

Econ 101 states that our economy is the circular flow of capital, labor, supply, and demand in that the Firms depend on the Households for capital, labor and demand and the the Households depend on the Firms for jobs and goods and services.
However, our apparent interpretation and implementation of capitalist philosophy mandates that the Firms endeavor primarily to concentrate wealth. In the interest of concentrating wealth they are mandated to be as efficient as possible and in the interest of efficiency they are mandated to reduce or eliminate labor costs.
The fatal flaw is that as the Firms concentrate wealth (withdrawing it from the circular flow) and reduce or eliminate labors costs (further constricting the flow of the lifeblood of the economy which is demand) the economy becomes stultified; which is what we are currently experiencing. We have a dual econmy where 20% possess 93% of the financial wealth and 80% possess 7% of the financial wealth.
We have passed the point of diminishing returns in the concentration of wealth and the reduction or elimination of labor costs if we wish to live in a single society. And the fact is that we really have no choice because a.)no one can escape the function of the extant economy and b.) biology identifies with context; we become one with that with which we exist.

Feb. 25 2013 10:37 AM
Annie B.

If minimum wage was tied to productivity like it once was, the minimum wage would be something like $16/hr.

No one seems to have a problem with CEOs making beaucoups, so why should it be any different for the other end of the economic spectrum.

And while an extra 10% in income will just mean a few more extra luxury cars for the rich, raising the minimum wage could mean the difference between affording health insurance, avoiding bankruptcy or meeting basic bills for folks on the other end.

This is a total no-brainer. It disgusts me that it's falling into a political pawn, like most Americans' lives are these days.

Feb. 22 2013 02:32 PM
Truth & Beauty from Brooklyn

Before anyone legislates what they think a minimum wage should be, they should live on it in various parts of the country for a few months. If they can pay rent/mortgage, health insurance premiums, transportation (either public or personal vehicle), buy groceries and clothing, give their kids birthday presents and still put something away for retirement on that minimum wage, then it's fine. If not, they picked the WRONG number.

No matter how many small businesses complain about the increase in minimum wage, if they don't treat their employees fairly, the employees will move on. If you pay your employees well, so that they can afford to live without counting every penny every day, then you can feel good about yourself. If not, you'll have constant turnover, employees who won't know how to do their jobs well, who come in sick because they can't afford to lose a day's pay and can't afford to see a doctor, and ultimately your business will fail.

Feb. 22 2013 08:52 AM
Susan from New York

$9/hour; 40-hour week. $360 before taxes. Let us see how these lawmakers who proposed this amount fare living with this income for a month. If they succeed (I doubt it), then let them raise a family on this amount. If they can do it, then the amount might be in the ball park.

However, I believe all of them would fail and realize that poverty wage only benefits the wealthy who can exploit the workers.

Feb. 21 2013 11:39 AM
Pieter Bull from Brooklyn

Instead of a "minimum" or "living" about a ratio requirement: the lowest paid employee receives compensation that is no less than, say. 1/20 of the highest compensated employee. (This would have to take into account bonuses and other forms of compensation in addition to base salary.) This is a variation on the Republican "rising tide floats all boats" theory. This would have two positive effects: it would give the greedy bankster types an incentive to limit their excessive compensation to a more reasonable level, and it would ensure that folks at the bottom get to share in the profits that their hard work helps create. The income disparity in this country is a fast track to third world status...or, eventually, an unstable society.

Feb. 20 2013 11:39 PM
Josh Levine

what is the point of minimum wage, if not a "living wage?"

as an american, I consider it my minimum duty to make sure that all businesses i interact with are treating their employees fairly and with respect.

if an employer complains he can't pay workers more b/c his rent is too high, for example, then it's his or her job to push back against the landlord, and so on.

if it means that strawberries cost a dollar more a pint because the pickers are being treated properly, so be it. It's a free country, maybe I'll eat a few less berries. or maybe i'll take action with my dollars and eat more of them.

if big business is willing to separate morality from law then it is our job to mush them back together.

Feb. 19 2013 06:02 PM
Jenn from Queens

I don't believe minimum wage at 9 or even 12 dollars is enough especially in New York. I make almost 14 dollars an hour working in Long Island and I have trouble making ends meet. I help support my elderly parents and I have to pay for school, and insurance (since work insurance is too expensive) rent, food, utilities etc and I don't have enough to save at the end of my check and With transportation cost( gas and insurance or even public transport since I live Queens) it is even worse. If I were to suffer some emergency where I wouldn't be able to work, I would be screwed and so would my family. I don't go out with friends to social events because I can't afford it. If i'm lucky I can afford to go out once a month for lunch. the minimum wage increase to 9 dollars an hour doesnt make a dent to the working poor like me.

Feb. 19 2013 12:20 PM
Anthony Armstong from Brooklyn, NY

Keeping the minimum wage at $7.25 because small businesses' would be adversely affected by a federal enforcement of a higher wage seems misguided. Because the cost of living in New York is so high, the small businesses are already paying the cost to support the workers through public assistance. If the minimum wage is attached to inflation the minimum wage earners at least have a larger stake in not just the tax base, but would have stronger consumer participation that is not government funded.

Feb. 18 2013 02:38 PM
Eileen Cain from N.Y.

I fully support President Obama's call for a minumum raise increase to $9.00. Justice demands that we do more to help those in poverty.

Feb. 17 2013 06:57 PM
Marty-Ann Kerner from new york

It's a great idea, and while it won't solve all the problems people have who work at lower paying jobs, it is a start. I know some small business owners consider it like a tax, but I think we need to think of our social responsibilities. If the employee is worth having work for you, then she/he is worth paying a fair wage.

Feb. 16 2013 05:05 PM
landless from Brooklyn

What is not discussed in the minimum wage debate is whether low wages subsidize inefficient businesses and divert resources into non-productive industries. Restaurants and retail rely on minimum wage workers,but such industries do not require major capital investment. Food processing in California relied for years upon hiring illegals instead of purchasing machinery. The discussion on the minimum wage should also be a discussion on how the economy is structured and which industries are encouraged.

Feb. 16 2013 10:17 AM
Beefbone from Oregon

While minimum wage is very tough to live on, the problem with a minimum is that it draws a counterproductive line... if the employer doesn't want to pay that minimum -- whatever it is -- that job opportunity simply disappears. It eliminates opportunities for young folks looking for summer jobs. It eliminates opportunities for older folks who just want to supplement their Social Security income. It eliminates opportunities for recent immigrants who just won't be able to work their way up to better jobs. All minimum wages are just feel-good solutions for people who really don't understand economics. Minimum wage should be eliminated.

Feb. 15 2013 10:23 PM
Irv from California

Federal minimum wage requirements ignore regional differences in cost of living. It, I am sure costs a lot more to live in the New York City area than it does in Bancroft, Iowa.

Feb. 15 2013 07:00 PM
landless from Brooklyn

Minimum wage supposedly sets a floor on wages, but with with so many illegals working for less, many, natives and illegals, are working for wages inadequate to buy food, pay rent, much less child care, health care, and tuition. A labor shortage would give workers the ability to demand higher wages but government uses immigration to flood labor markets, (nurses and tech workers are good examples). Minimum wage even raised to nine dollars would be inadequate, but it provides a minimum level of protection for workers and should be defended and improved. It requires less government effort than lowering rents and tuition.

Feb. 15 2013 06:21 PM
Daniela from Bed Stuy

Well, no one making minimum wage would ever say it is enough, so that tells you something.

The issue of a LIVING WAGE which NYC passed a law, mandates a set amount when a project received public subsidies. Fresh Direct though is evading the Living Wage requirement, they should NOT get cash to pollute and pay workers below Living Wage requirements

Feb. 15 2013 04:14 PM

Is there nothing that this man won't do to pander to his electoral base? It is shameful how, through his policies, he is prepared to mortgage the economic and cultural future of this country and to undermine the rule of law just to buy votes for his party. Short-term, un-Presidential behavior at its worst. Bread and circuses anyone?....and then Rome burned.

Feb. 15 2013 03:57 PM
Caroline from Jersey City

I think it's a terrible idea. Wages for the middle class have remained stagnant since the '80.... minimum wage hasn't. This is just going to cause inflation; it's basic economics. You'll have minimum wage earners making 18,000 a year, middle class worker making 30,000 a year(while paying back the loans for the degree they needed to get that job) and the people at the top making much more. This will eliminate the middle class by putting the low income earners without high school diplomas at the same income level. When did rewarding low level achievers become a good idea? Terrible idea.

Feb. 15 2013 09:59 AM

Should the minimum wage be a living wage? Not necessarily. The too human tendency to 'Do the minimum' and not much more would take over and we could all suffer.

That said, middle-tier incomes have fallen, relative to GDP for the last three generations, to the point where a minimum wage workers' income in 1968 commanded more goods and services (about 25% more) than the AVERAGE wage worker does in 2013 ($42,000).

Our GDP has been growing 2% faster than the cost of living over the last 45 years, and those compounded gains have NOT been hitting the pockets of the middle class.

Tax policy, private campaign financing, education - It's a lot to fix but it doesn't happen at all if we spend all of our time navel-gazing over manufactured budget issues.

Feb. 15 2013 09:47 AM

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