Friday, March 11, 2005

What $9 million can buy 

Chad the Elder discusses the economics of Wendy Wilde
She had been discussing the proposal to raise the minimum wage, especially Senator Bachmann's opposition to it. Then, just as she was going to a break, she mentioned the $28,000 in pay raises that members of Congress had given themselves since 1996 (the last time the federal minimum wage was increased) and calculated that those raises totaled somewhere around $9 million (not exactly sure how the math works on that one). She then asked:

"Couldn't they have spared a few pennies of that $9 million to go toward raising the minimum wage?"
.According to the last survey available, there are 545,000 workers earning exactly the minimum wage. That means that we could distribute $16.51 to each minimum wage worker instead of the $9 million she thinks is paid additionally to Congress. Since these workers are probably working around 1500 hours a year (two-thirds are part-time workers, mainly teens) and since this is distributed from 1996 to current, I think, it's unlikely $9 million could raise wages even one cent.

Of course, minimum wages are paid by firms; Congresscritter wages are paid by taxes. In Wendy Wilde's world, those might seem to be the same thing.