The latest salvo in the minimum wage wars is a gimmick cooked up by the progressives at Americans United for Change called “Living the Wage.” The group, which is pushing Congress to increase the federal minimum wage to $10.10, challenged policymakers to try and live for one week on just $77, which is what they claim a current full-time minimum wage earner has left over after paying for housing and taxes (more on that in a bit).
It appears the group could only find three takers, all Democrats: Reps. Jan Schakowsky of Illinois, Tim Ryan of Ohio, and former Ohio Gov. Ted Strickland.
For the last seven days, the trio has been sharing their struggle to “live the wage” via social media and on cable news. Their quest hasn’t been very riveting. It’s mostly been mundane details of trying to stay on budget -- as you can see from this Facebook post by Rep. Ryan talking about eating two cans of sardines for dinner, and this picture of Rep. Schakowsky eyeing a bag of frozen vegetables at the supermarket.
But the exercise wasn’t completely devoid of good humor, though the best material came at the expense of the three play-actors. Rep. Schakowsky was roundly mocked after tweeting her “living the wage” weekend diet: “Mornings I had cereal & banana, for lunch I had tuna salad sandwich.”
“Gee. What a trouper. You realize most Americans eat like this every day -- correct?” said one commenter.
“A tuna salad sandwich? OH, THE HUMANITY!” needled another.
Sarcasm aside, for a Congress that has grown increasingly disconnected from the public it serves, it’s laudable to see a few of our elected officials making an effort -- albeit a gimmicky one -- to put themselves in the shoes of some everyday Americans.
And it’s been entertaining, in a perverse sort of way, to watch two members of Congress struggle mightily to pinch pennies and live within a strict daily budget even if they don’t see the irony in being members who constantly urge the federal government to borrow and spend vast sums of money despite already being trillions in debt.
But there are a couple of issues with the “living the wage” challenge, starting with the $77 number. It’s bogus. It’s calculated by multiplying $7.25, the current federal minimum wage, by a 40-hour work week ($290), less $213 for the average weekly cost for housing and taxes.
Progressives are quick to point out that a person working full time on a minimum wage salary leaves them below the poverty line. But this also means they qualify for a whole host of additional subsidies from the federal government, including monthly payments under the Supplemental Nutrition Assistance Program (or SNAP, formerly known as food stamps), assistance for housing, and health care under Medicaid. A true “living the wage” challenge would take those factors into account. Nor does this formula account for the Earned Income Tax Credit, a worthy (if fraud-ridden) federal program that actually pays money to the working poor instead of collecting it.
It’s also worth pointing out that those actually “living the wage” in America -- those working full time and paid hourly at minimum wage or less -- represent a very small portion of our society: 2.1 percent, to be exact, according to a 2013 report on the minimum wage by the Bureau of Labor Statistics. As the report points out, the vast majority of people earning the minimum wage in America are quite young (under 25), usually single, and working part time. They are also heavily concentrated in one industry: the restaurant business.
That’s the real beef with Jan Schakowsky and her “living the wage” comrades. As laudable as her effort to help the poor may be, she’s focusing on a very small portion of the country -- and an even smaller slice of her district, which has a median income $6,000 higher than the national average -- while only telling one side of the story.
It would be even more laudable if Schakowsky spent just as much time trying to understand the real world consequences raising the minimum wage would have on small businesses in her district -- and all across the country.
It’s not that hard to do. I spoke to a small business owner this week. He and his wife live in Schakowsky’s district and run a small restaurant. They employ fewer than 10 people -- most of them fitting the BLS profile: young, single, and working part time -- and they already pay above the federal minimum wage.
But being forced to increase wages to $10.10 an hour would place a heavy burden on their enterprise.
Most restaurants operate on thin profit margins to begin with, and over the last few years they’ve been struggling to cope with the sharply rising cost of utilities and food. Taking on an additional 25-35 percent increase in labor costs would leave most small businesses with two options: pass those costs along to customers by raising prices, or cut back the number of hours being worked each month by employees.
The owner I spoke to said he’d choose the latter.
“Labor is the one cost we can control,” he said. “We’d have to cut back on our staff.”
So all of the employees would be getting paid more per hour, but working fewer hours. Or some of the employees would benefit from a higher wage and the same number of hours, while others would be let go, leaving them much worse off.
Schakowsky could learn all of these things if she spent a week trying to run a small business. She could see first-hand the consequences and tradeoffs of increasing the minimum wage. She could even tweet it all out, #LivingtheSmallBusiness.