The Vice of Moderation

January 26, 2015

An article appeared in the Washington Post the other day, a response to which must be made. [1] It congratulates presidential candidate Hillary Clinton for not endorsing the idea that the federal minimum wage rate ought to be raised to $15.00 per hour. The writer admits that the current rate of $7.25 per hour is too low, which is a worthy concession, since it is a wage that results in a yearly income of almost $10,000.00 per year under the poverty guideline for a family of four. [2] She also appears to support a minimum wage hike to $10.10 per hour, a wage that would put that family of four $4.050.00 under the poverty guideline annually. But $15.00 per hour, a wage that would lift that family out of poverty? No, that’s too much.

You see, there is a concern expressed, as there always is, that higher wages will adversely impact the economy. The writer is convinced that in certain parts of the country where wages are low, she names Arkansas and Mississippi, a hike in the federal minimum wage to $15.00 per hour would likely throw many people out of work (she thinks that the current $7.25 per hour is already probably too high for Puerto Rico). There is no mention of the fact that more money in the hands of workers will increase their spending power to purchase things from—that’s right—businesses, which will benefit from the increased sales, and be able to hire more workers. There is also no mention of the fact that there is something fundamentally wrong with an economic model, if the writer is correct in what she says, that requires the payment of poverty wages in order to run smoothly. 

The problem with the kind of analyses reflected in the article is that they give an appearance of being moderate. We like moderation. Aristotle told us that moderation is a good thing. And we all want to be moderate, because not being so is to be an extremist, and that’s like being a drunkard. So raising the minimum wage by a moderate amount, well, that’s okay. But we don’t want to go overboard and actually lift these people out of poverty.

But the writer does make a point when she says that a single, across-the-board, minimum wage is kind of a ham-handed approach. What it takes to make a living wage is not everywhere the same. And so she suggests adjusting “wages based on regional cost of living, and then” indexing “those levels to inflation going forward.” To make that work, she proposes utilizing MIT’s Living Wage Calculator. [3] 

So let’s do that. She specifically mentions Arkansas, where she tells us “the median hourly wage is $14.01.” The poorest county in Arkansas is Lee County, with a median household income of $25,034.00 (2009-2013). [4] According to MIT’s Living Wage Calculator, the living wage in Lee County for a family of one adult and two children is $24.03 per hour. [5] For a family of four with two adults and two children (with one adult working) the living wage is $20.83 per hour. The only situations where even the proposed $15.00 per hour qualifies as a living wage is where there are no children in the home, or there are two adults working with less than three children. As for the proposed $10.10 per hour minimum wage, that only qualifies as a living wage in Lee County if there are no children in the home, and, if there are two adults, both of them have a job.

Now let’s look at Mississippi, the other state the writer mentions, telling us that there the median wage is “an astoundingly low $13.76.” The poorest county in Mississippi is Holmes County, with a median household income of $22,325.00 (2009-2013). In that county, a $15.00 per hour minimum wage is a living wage only where both adults in the home are working, or there are no children, and a $10.10 minimum wage only amounts to a living wage if no children are in the home. [6] 

It is worthy of note that neither minimum wage proposal will provide a living wage for any single mother living in either Lee County, Arkansas or Holmes County, Mississippi. Thus, it appears, using the writer’s own criteria, that the $15.00 per hour proposal is rather a modest one indeed. It is past the time that we stopped worrying about making the economy work on the basis of preferred models, and started constructing an economy that actually works for people.

Jack Quirk