Every time I even mention the idea of raising the minimum wage, I am immediately attacked on social media.
Opponents imagine that inflation will skyrocket; some have even claimed that ‘milk will be $10.00 a gallon’ if we raise the minimum wage. Oh, the hysteria. Milk is currently around $3.50 a gallon and that is up 25% from just ten years ago. Is that 25% due to rising wages? Sadly, no – wages in America have declined during that time. Must be some other economic force at work. (Read “Even Dairy Farming has a 1%” here.)
So, what if we raised the floor to a living wage, and paid non-tipped employees a minimum wage of $12.00 per hour? Oh, more hysteria. Opponents claim that will drive our costs up so much we will be unable to eat!
Let’s look at a few facts about minimum wage.
Who gets paid minimum wage? People opposed to raising the wage claim that ‘minimum wage workers are kids in high school; adults do not make minimum wage’. The fact is 25% of minimum wage workers are below the age of 19 – which means that 75% of all minimum wage earners are above the age of 20. That means they’re adults – not high school kids. In fact, almost half of all minimum-wage earners are above the age of 25.
Another fact: under the current minimum wage, a full time worker makes only $15,500 per year – before taxes.
Another fact: 64% of all minimum wage earners are women. Of that a whopping 66% are women above the age of 20.
Another fact: More than a third of minimum wage workers (35.8 percent) are married, and over a quarter (28.0 percent) are parents. The Economic Policy Institute estimates that if Congress raised the minimum wage, it would raise the standard of living for more than 21 million children.
The UC Berkley Labor Center studied the effects of raising the minimum wage to $12.00 per hour. They specifically looked at the nation’s largest employer, Walmart.
If the minimum wage is raised to $12.00 an hour, 37% of Walmart employees would see a raise ranging from $3,200 (part-time workers) to $6,500 (full-time workers). Another 14.6% would see a raise between $1,670-$2,640 per year.
But that’s completely wrong. According to the UC Berkeley study, increasing the minimum wage to $12.00 an hour would add only $3.21 billion to Walmart’s annual labor costs. To put that in perspective:
- Walmart made $15.7 Billion in profits in 2012.
- Walmart expects to pay out $6.2 Billion in dividends this year.
Giving all those workers a pay increase might cut Walmart’s profit margin by 20% – but it certainly won’t bankrupt the company.
Now, let’s assume that Walmart passed every penny of the minimum wage increase onto customers, rather than taking it out of profits or dividends. What would that mean to consumers? The average customer would see an increase of $12.49 per year – about 46 cents per visit – if Walmart executives passed the total cost along, rather than cutting their profits.
FOURTY-SIX CENTS per visit would ensure that all Walmart’s workers are paid a living wage.
That’s a lot less than the increase in the price of milk.
Would it be worth it, to help the nearly 4 million Americans who are currently working at or below minimum wage? Even if corporate executives pass the total cost along to consumers, rather than taking some of it out of their dividends. I think so.
A closer look at Walmart’s dividend payments: corporate “insiders” own more than half of Walmart’s stock. Once again, the people who run the company personally benefit from decisions about profits paid out as dividends.
For example, Walmart Director Jim Walton owns 10.5 million shares of the company. This year, the company paid out $1.88 per share in dividends. That means Director Walton received more than $19.7 million in dividends (which are taxed at about half the rate as executive salaries).
Walmart President and CEO Michael Duke owns about 1.2 million shares of the company – that means he personally received about $2 million in dividend income this year.
All that money to corporate executives. And some people claim Walmart can’t afford to give raises to its workers?