Minimum Wage: Useful Knowledge Is All We Have To Sell

W.A. Beatty

The minimum wage is once again in the news.  It seems that fast food industry workers in fifty U.S. cities went on strike for higher wages.  One particular paragraph in a NBC News article caught my attention:

The strike comes as a growing number of minimum wage fast food workers are not teenagers, but adults trying to support families, particularly since the Great Recession. Only 16 percent of fast food industry jobs now go to teens, down from 25 percent a decade ago. More than 42 percent of restaurant and fast-food employees over the age of 25 have at least some college education, including 753,000 with a bachelor’s degree or higher, according to the U.S. Bureau of Labor Statistics.

That paragraph seems to support Labor Secretary Thomas Perez’s contention that the minimum wage needs to be raised.  From a political perspective, Perez, political hack that he is, is correct.  But only from a political perspective.  There are (at least) two economic reality problems that, upon further reflection, become apparent, both of which NBC and Perez ignore: the (so-called) Great Recession and its consequences, and the fact that the fast food industry now hires an increasing number of people who have (at least) some college education.

usa_small2 Minimum Wage: Useful Knowledge Is All We Have To Sell

And how does NBC know that a growing number of minimum-wage fast food workers are adults trying to support families?  NBC never got around to revealing where it got that fact.

So, let’s see if there is a relationship among the economy, useful knowledge, and the minimum wage.

True, the Great Recession began while George W. Bush was president, but (and there’s always a “but” when Obama is involved) after five-plus years, the U.S. is still in an economic recession.  Obama, in 2009, said “that if he didn’t have it [the economy] fixed in ‘three years’ then his presidency would ‘be a one-term proposition’.”  Well, even though he got re-elected, his economic prowess has not ended the Great Recession.  Being generous and ignoring the economy he says he inherited, let’s examine Gross Domestic Product (GDP) growth from 2010 to the present.  The growth rate under Obama has been a whopping 2.31 percent.  For reference, economists say the “ideal” GDP growth rate to end a recession is about 3 percent, and that the growth rate should be sustained.  By the way, this is Obama’s economy — he said so.

The fast food industry, as a result of the Obama economy, is hiring more people with “at least some college education.”  While the NBC article is long on quotes, it never identifies who is being hired.  So to see just whom the industry is hiring, examining the unemployment rate by college major might prove useful.  A higher unemployment rate usually means that people will work for less in wages, or in the fast food industry.  And as the following table illustrates, there is a relationship.

Major

Unemployment Rate

ARTS

7.1%

HUMANITIES AND LIBERAL ARTS

6.1%

COMMUNICATIONS, JOURNALISM

6.0%

PSYCHOLOGY AND SOCIAL WORK

5.9%

BUSINESS

5.3%

ENGINEERING

4.9%

Source: “Hard Times: Not All College Degrees Are Created Equal”

It seems that majors requiring less academic rigor and that provide less useful skills have higher unemployment rates, and people with less useful majors are thus more likely to go to the fast food industry.  So useful knowledge comes into play here.

Dear Leader Barack Hussein Obama, on February 12, 2013, in his State of the Union speech, said, “Even with the tax relief we’ve put in place, a family with two kids that earns the minimum wage still lives below the poverty line. That’s wrong.”  Obama said that raising the minimum wage is a matter of economic fairness.  But he failed (on purpose?) to mention just how it’s fair for those who don’t/won’t work to get educated deserve to get a raise.  So, with Obama’s statement ringing in our ears, let’s examine the minimum wage from an education attainment standpoint.

Education

Percent Working For Min Wage

Less than a high school diploma

10.3%

High school graduates, no college

4.1%

Some college or associate degree

2.5%

Bachelor’s degree and higher

2.1%

Source: Table 6.  Employed wage and salary workers paid hourly rates with earnings at or below the prevailing federal minimum wage by educational attainment, 2012 annual averages

Perhaps Obama will say that failure to work to get educated is wrong.

To reinforce the above tables, look at the following table of earnings and unemployment by education level attained.  These figures come from a Bureau of Labor Statistics table, so they are no secret.

Education Attained

Unemployment Rate

Median Income

Less than high school diploma

12.4%

$471

High school diploma

8.3%

$652

Some college, no degree

7.7%

$727

Associate’s degree

6.2%

$785

Bachelor’s degree

4.5%

$1,066

Master’s degree

3.5%

$1,300

Doctoral degree

2.5%

$1,624

Professional degree

2.1%

$1,735

Source: Bureau of Labor Statistics: Earnings and unemployment rates by education level attained

So, using the government’s own numbers, there is little to support a minimum wage hike for those who don’t/won’t work to avoid the minimum wage.  People with more education in the way of useful skills to offer make more money — period.  That attitude, of course, does not endear the lazy and/or the uneducated.  But they vote, especially for Santa Claus…er, Obama.  Hence the economic mess we’re in.

Pay should be based only on what the cost of educating/training a replacement would be.  Using that criterion, how much will it cost to train a replacement to say, “Would you like fries with this order?”

The National Restaurant Association says that that only about 5 percent of fast food workers (about 650,000 people) earn the minimum wage, and those who do are predominantly part-time workers, and half of those earning minimum wage are teenagers.  The strike, then, seems to be much ado about very little.  But when politics enters the picture, that number is multiplied, because there are many “bleeding heart” liberals and/or Democrats who sympathize with them.

Statement from McDonald’s: “McDonald’s aims to offer competitive pay and benefits to our employees. We provide training and professional development for all of those who wish to take advantage of those opportunities.” (Emphasis mine.)  The path from minimum wage is there for all who are willing to work their way out.

From Scott DeFife, executive vice president of policy and government affairs at the National Restaurant Association, we get this: “We welcome a national discussion on wages, but it should be based on facts.”  (Emphasis mine.)

As John Adams said, “[f]acts are stubborn things.”  And as Senator Patrick Monyhan said, “Everyone is entitled to his own opinion, but not his own facts.”  Discussion based on facts?  Not gonna happen as long as politics and Obama are involved.

Dr. Warren Beatty (not the liberal actor) earned a Ph.D. in quantitative management and statistics from Florida State University.  He was a (very conservative) professor of quantitative management specializing in using statistics to assist/support decision-making.  He has been a consultant to many small businesses and is now retired. Dr. Beatty is a veteran who served in the U.S. Army for 22 years.  He blogs at rwno.limewebs.com.

From: http://www.americanthinker.com/2013/09/minimum_wage_useful_knowledge_is_all_we_have_to_sell.html#ixzz2eAAjHtAt