Wednesday, July 13, 2005

downhome economic theory

You hear a lot about earning a living wage. I like the idea, meaning I want a family to be able to live on what they earn. Now, I am also honest enough to admit I do not know at the moment what we should do about a job that does not provide a living wage. Anyway, I thought I would try my hand at what seems to be a living wage to me.

I would hope that if a family had two adults and two children, that if one of the adults worked a full 40 hours a week, they could:

Live in a small home (apartment if in NYC, San Fran, etc.) Probably 2 bedrooms. Basically safe neighborhood.
They could afford one 5-10 year old used car.
They could go to eat at a medium price restaurant maybe twice a month (thinking Chili's on the expensive side, maybe Country Buffet)
Their children could go to school through 12th, and then could attend some 4-year institution (not necessarily any 4-year, just some decent 4-year place)
They are able to save for their own retirement so that they do not lose their home and can make it for a couple decades after 65.
They have one TV in the home, and it's 30" max - probably use the antenna.
Each person would have a couple nice pieces of clothing, and everything else is basic.
Medical care - I don't know here. I just don't. I am not convinced good medical care is a right, but it is awfully sad if Americans' mortality rates are based on income level.

So, if someone works full-time, I would want their wage to allow them to live about like this, no worse. However, there would be times when it is tight, and to make it all work, they would have to manage their money well. This is what minimum wage for a worker should provide.

Of course, I would hope lots of people can work for above minimum wage so they can do more, but in this vision a person could raise a small family, providing food, shelter, clothes, basic transport, with any full-time job. This seems to be about what those old union jobs you used to hear about where their old man worked in the factory for 40 years got you - just the basics. And I would like that to still be the case. You could push me and make a case that I am asking too much. Perhaps an extra part-time job should be necessary to live this life. The other adult could work as well, increasing the earnings. However, it is ideal if that is an honest choice - it is not necessary for both adults to work full-time to lead this basic life - but if they do, then they can live in a little more material comfort than I have prescribed here. In the end, it just seems right if one salary can make ends meet for a family - all families.

So who cares? The reason I am thinking of it is due to all the discussions lately of taking reponsibility for oneself or having an "ownership" society. I would be much more open to such concepts if everyone who works 40-60 hours a week can really make a life. But if our jobs are such that not everyone even can provide for their families with hard work, then the "ownership" idea seems to be no more than just letting some people fall by the wayside.

All this depends on the idea that someone will have the minimum jobs. Sure, a single individual can work super hard and get a better paying job, but someone is still left handing out the fries. They need to be able to live too.


Serena said...

Honestly, we have been living on far less than that but we do live in mid-America. I don't know if that makes all that much difference since I have heard that the wages are higher in the places where the cost of living is higher.
It really has to do with your convictions and how much of that list you really think you have to have. We home-educate our children and teach them to think for themselves and be hard workers. They can pursue higher education if they want to but we don't consider it a right or an obligation. It is something that is almost worshipped in our culture, but you can get a very good education on your own. That degree that others think you have to have a better paying job is a problem, though, and one reason my husband is back to college in his 50's.
Most things that you really need can be obtained used. We really don't have much that is new but once you buy something and use it, it is used. We have made some mistakes financially and one of the big ones was using credit cards to take care of bills and groceries when times got tough. Once the cards were maxed, we found our Father is faithful to provide without them. Now we just have the debt hanging over our heads as the result of our lack of trust in the first place.
I do agree that a living wage is needed, but I just don't know how much I want government involved in it. The problem I see more than that is those that think they have to have so much stuff, and all new, and then both parents are working to get it. The children suffer for it. I know a lot of people would not want to be in our shoes right now, but we are not really suffering. We have the basic necessities of life. I do remind myself that the poorest people in the US still are in the top 8% of the world for wealth.
As far as medical care goes, if we could afford insurance I would not get it. We are users of alternative medicine and take care of a lot of problems ourselves. Catastrophic insurance might be nice but I still would have to really weigh in on it. I think the best insurance is to eat right and live right. The life expectancy for doing that is pretty good and then it is just unforseeable accidents that are the problem. I still have to trust my life and my family's into my Father's hands.
That was a thoughtful post and I enjoyed reading it.

pacatrue said...

You discuss two of the biggest questions I had, which I still have no interesting answer for - 1) medical care and 2) how we get living wages. As said, I just don't know on the first. On the second, I am not clear. I can think it might be reasonable to have a mimimum wage law, so that would be government interference of course, which forces a business to pay its employees a salary they can live on. But there are pitfalls to that - the practical one being the many ways that employers are smart enough to get out of it. So I don't know. It would seem that the laws should be targeted at those businesses which are here to stay. This is compared to subsidies of some sort. As a believer in free markets, if another person - in another county, state, or country - can provide better goods at cheaper prices, I would be against taking money from one person and giving it to another person who simply can't compete. But there are other industries that seem here to stay. Many of the service industries seem permanent, and we need a way to perhaps force those companies to pay their employees a salary they can eat on.

Serena said...

In the world we live in today, I don't think there will be an answer to this one. Actually, the way we are heading more and more towards a one world system, I think this is going to become even more difficult. Right now, we as Americans are in the top 8% of the world as far as wealth is concerned and a lot of other countries would like to see our wealth redistributed.

I know there are lots of pros and cons on health care, too, but actual health care would be mainly educating people how to maintain health and a huge part of that is nutrition and exercise. What the "health care system" does is put people on drugs that need more drugs for the side effects of the first drugs, or cut parts of people out which is greatly influenced by the financial needs of the hospital and the doctor. I don't see either of those as being healthy.

Personally, I do not believe mankind will be able to solve those problems. What one person deems a living wage is not the same as another does. I know lots of women who have chosen to be stay-at-home moms even when it means they have to really tighten the belt to do so. It really comes down to what someone thinks is the most important. When government starts legislating these things it really just causes more problems that need to be solved.


pacatrue said...

Been pondering this a bit, and I think I am going to go with Serena to the extent that I am not sure the ability to send your children to college should be part of Minimum wage, emphasis on the word minimum. It is asking too much, especially since a college eduation is really useful, but not a real requirement for decent life, like shelter and food, etc. This is not to say that our nation as a whole has no interest in everyone having the opportunity for higher education. After all, brains don't come with family money, and we are best off if our best brains, no matter their economic background, get into college. But the fact that our nation is better off that way is likely a separate question from government-mandated minimum wage. It should be discussed another day.

Now, I did pick up an Economics textbook recently, since I know nothing about economic theory. I came across an interesting point. It had an opinion arguing against goverment minimum wages, because it removed the opportunity for some to bid low for their services. I get the point. The reason that much of our production is moving to the Third World is exactly because they have the ability to bid low wage-wise. If they could not work for less, our work would not go there at all. However, there is a possibility that this is missing some information if it is intended to be a complete policy rationale. What I am thinking of at the moment is that it is middle class wealth that most benefits our economy. I don't mean of course that everyone must be average - that's borderline contradiction. What I mean is that the poorest share no wealth due to having to spend every penny to make ends meet. The wealthiest often share less because if I have 10 million or 11 million, will my spending habits change much? It is the middle class whom consumes such to drive our economy, and if a minimum wage moves more people into the class of those who consume, then that will benefit our economy.

These are incomplete thoughts, so completion is welcome.