It`s funny Alissa mentioned CEOs and what they might earn, because the CEO of my company makes close to $4 million in bonuses alone, which is exactly 50 times my salary!!! And no, I don`t get all excited about my salary because the cost of living here is almost prohibitive. At a combined salary of over $200K my husband and I must both work to maintain our financial commitments and lifestyle. Our minimum wage, the lowest in Canada, is $9.75 per hour. The average is over $10. People who serve liquor have a lower wage because they are expected to earn tips. At my last waitressing job that I started in 1998 I was making $8 an hour, and that went up to $10 when I was a supervisor. I still claimed tips so that I would owe at tax time. However, now we get back more than $10,000 in refund because we max out our deductions and pay over $14,000 per year in childcare expenses.
Well you won't hear me say this often, but I agree with every word of Melissa's post!
CARRIE and DH 7/14/07
Again, I don't "hate" CEOs. I actually have a picture of myself and the CEO of my company wearing pimp hats and making faces taken in photobooth at a company function hanging on my file cabinet even as we speak. I kept it and hung it up not because I'm trying to kiss up or something (trust me, he doesn't swing by my desk very often...lol) but because a) it's a funny picture b) I look cute in it, and I'm very vain and c) I genuinely like and respect our CEO. He's a freaking hoot to hang out with, and he does a good job that I admire. He deserves to be very well paid for what he does.....but 380 times what the average worker makes may be pushing excessive. Just a little.
To those that say that it's impossible to narrow the wage gap in America, I just wanted to point out that if you look at the historical data, the wage gap actually used to be much narrower. For example, in 1965, the average CEO made about 25 times what the average worker made. Still a lot more, right? But that's part of why people "back in the good old days" were able to live on a one person income. I know you'll all be screaming "People only had 1 car and no iPhones back then!" and that's true, but it's certainly not the whole story. You could live and support your family working at the locally owned grocery store back then. You might not have been rich, but you could survive. Think about what has changed from then to now. It can't ALL be blamed on iPhones, can it? I pay about $120 a month for my husband and I to have iPhones. We're not within $120 a month of living on his teacher's salary.
Research Desk: How has the CEO/employee pay gap changed? - The Washington Post
I would also point out that not all businesses rely on the "pay your employees as little as you can legally get away with" business model to keep prices low. Costco is an example of this.
I think that there is a big disconnect when people talk about how minimum wage jobs aren't supposed to be jobs that you can support a family on. Somebody has to fill those positions if you want to keep shopping at those stores or eating at those restaurants, and it can't just be teens and retirees looking for part time work to get them out of the house. First of all, I'm not certain that we have enough teens and retirees to replace the 20-65 age group in the minimum wage workforce, even if we could put every single one of them to work in our fav fast food establishments and gas stations and box stores, but even if we could, the teens would only be working after school and the retirees presumably wouldn't be working full time (other wise, that's not much of a retirement; why would I retire from my nice cushy desk job to go work the fryolator at McD's full time? If I want to work full time, I would stay at the job where I am comfy.) Somebody has to work those jobs other than teens and retirees, or else those places would close, so if you like having those places open, stop disparaging the people that work there and make it possible for them to be open like "Well geez, they shouldn't work there then." Somebody has to, right? Or else they close.
Melissa, in answer to your question of a practical solution to the ever growing wage disparity problem, I admit that I don't have one. The American Capitalist that I was raised to be also balks at the idea of the government setting wage caps; it's not an idea that I relish either. I guess the Polyanna in me wishes that companies that could afford to would correct the problem themselves, as Costco is trying to do, by voluntarily paying their "average" workers more and paying their C-Level Management less, and that the C-Level was accepting of that. I wish we could change our culture to recognize that you don't have to make $12MM a year plus stock options and bonuses in order to feel recognized at that level, that maybe you could make $400K a year like, I dunno, the freaking President, and that would be considered a really good living. I realize that's all mushy and baby tigers and idealistic, but that's all I've got. I wish we were different.
-Alissa, mom to Tristan (5) and Reid (the baby!)
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I agree. My grandfather co owned a concrete company. Both he and his brother in law supported families. My grandfather had 5 kids, my grandmother stayed home. They owned 1 house and a summer house. They weren't rich by any means and some times were tough if concrete work was scarce but they were able to survive and support themselves. Not even close to what I can do now with 2 incomes and 2 kids.
No one would argue that there is a huge disparity and that the gap has grown exponentially larger. I look at this recent crisis and see in in action ~ if you have cash right now you are swooping up houses at other peoples losses and someday will recognize huge gains. If you are investing heavily personally or vi your 401K or other investment vehicle you are reaping huge rewards right now thanks to the market ~ but of course if you are living hand to mouth you are not seeing those gains.
I'm not saying that you should be able to raise a family on an entry level salary ~ but that if you are decent at your job you will rise above entry level/minimum wage pay. I did it myself, without a college degree, making the move from a 25K entry level salary to making heavily into the 6 figures before I left my career to raise a family. I know that my experience is not the norm, but I don't believe that a motivated person making an minimum wage with a limited skill set remains at that salary, unless they are not motivated to do more, work harder, earn more etc. Set every entry level position up at a comfy 40K or whaever salary and lose your motivation to work hard, better oneself, etc .
At the end of the day I agree with this:
However, the percentage of minimum wage jobs has declined. According to the Bureau of Labor Statistics, just 5.2 percent of all hourly paid workers in the U.S. make the minimum wage, which is a smaller percentage than in 1979:The proportion of hourly-paid workers earning the prevailing Federal minimum wage or less declined from 6.0 percent in 2010 to 5.2 percent in 2011. This remains well below the figure of 13.4 percent in 1979.Even fewer adults work in minimum-wage jobs full time. Most minimum-wage workers are 25 or younger, and 69 percent work part time. The typical minimum-wage employee is a high school or college student with a part-time job, a major reason so many have attended—but not completed—college.
The primary value of these jobs is not the low wages they pay today. It is the on-the-job training they provide. Minimum-wage jobs teach inexperienced workers basic employability skills such as taking directions from a boss and working with co-workers. Acquiring these skills makes minimum-wage workers more productive and enables them to earn raises. Two-thirds of minimum-wage workers earn raises within a year.
The problem with minimum-wage increases is that they reduce access to these entry-level jobs. It is a basic tenet of economics that when the price of something rises, people buy less of it. This is as true of businesses hiring unskilled workers as it is of Americans buying household goods. Heritage economist James Sherk finds that “two-thirds of all recent studies show that raising the minimum wage reduces jobs.”
This is common sense. If someone’s labor raises earnings by $8 an hour, no employer will hire him for more than that. The business would lose money—and would soon be out of business. Raising the minimum wage to $9.80 an hour, as Senator Tom Harkin (D–IA) suggests, would price many unskilled workers out of the labor market.
Is it really compassionate to tell inexperienced workers that they cannot work if they cannot produce $9.80 per hour of value? Is it compassionate to deny them the opportunity to gain skills and experience, become more productive, and earn raises?
Upon first thought, raising the minimum wage sounds compassionate. Thinking a second time shows that it would hurt the very workers its supporters want to help.
The law was set in place years ago to ensure workers would make enough to live, even minimally. Unfortunately, the minimum wage has not increased like the cost of living has and the "law" has now fallen by the wayside. Minimum wage does need to increase so people can live minimally but still be able to rent an apartment, etc. It doesn't mean they won't work hard to make more but without being able to afford anything it is hard to get to a place above poverty no matter how much they want to.
It is possible but not in many areas of the country unless one spouse has a very high paying job.
In my experience, States that have a higher cost of living also have a higher pay rate. For example, DH is an interpreter in GA. We have family in Washington, DC and have looked into moving there (decided against it). Yes, it costs more for a house and living there, but the going pay rate is 3x what DH makes now. If we were to move there, we would still be a single income family for the same profession.
Again, depends on the profession. DH's company makes the same for here as it does elsewhere. I do get a slightly higher rate of pay than someone in a similar field elsewhere but it is no where near the difference in costs to live here.
An example, years ago a cousin of mine worked for a grocery store chain. She was making 20.00/hr. They were bought out and the new parent company was not New England based. They wanted to drop their pay to 10.00/hr because where their headquarters were that was a decent rate of pay. That means nothing here.