Chattanooga, TN should increase the minimum wage to $24.75 per hour.
Tennessee has more people paid minimum wage, or lower, than any state in the United States
I live in the Chattanooga metropolitan area and recently I have been reading about wages of employees and fairness of pay. It turns out that Tennessee has the highest percentage of minimum wage workers in the entire nation at a surprising 7.4% of the hourly workforce. This information was worked out based on data from BLS.gov check it out here). This means that Tennessee is a ripe place to discuss employee wages and potential solutions to wage problems in this area and other places in the country. In this article I try to show why a Single-Income per household living wage model is a good solution.
Two Income Households are Problematic
The rise of two income households began perhaps as far back as the 1940’s where about 30% of women worked (my numbers are from here). This number increased to around 40% by 1967. I located some numbers of inflation adjusted median house hold income from 1967 to 2012 which shows that the inflation adjusted median household income of 1967 was about $43,000 and in 2012 that value had increased to about $51,000. This represents just over $8,000 in increased median household income over 55 years.
Let’s compare that $8,000 increase in household income to the increased presence of women in the workforce over that same period. From 1967 to 2012 the percentage of women working increased from 40% to 57%. This amounts to a 17% increase in female prevalence within the workforce. Simultaneously, the median household income increased 18%. This may seem reasonable except that mass production has made prices cheaper and economically this was an exceptional growth period for the United States. The Dow Jones doubled in the same time period as can be seen in this 100 year chart. Comparing the market index chart to a CNN chart it seems that prior to 1968 the purchase power available to minimum wage was gradually increasing and so was the market. Though after 1968 as women’s role in the workforce increased the purchase power of minimum wage dropped.
When I look at this drop the more cynical side of me cannot help but think that the reduction of purchase power is a direct a result of corporate entities realizing that more and more of the work force was dominated by two-income households naturally they would realize that they could pay lower wages and the working class would accept these conditions. As peoples wages were decreased slowly over 55 years more households were becoming two-income households. It is not clear from the available data if this occurred from necessity or because people enjoyed the short-term luxury afforded by an increased household income. Either way the two-income household became the normal way of life within this country. The purchase power of minimum wage workers eroded and lower income families moved more towards the two-income household model.
The effects go beyond adults working more!
This might be easily dismissed and shrugged off as a situation where times are rough and people need to buckle down and get things done. The consequences instead are potentially massive. If we continue to accept a two-income household as the norm in our society then it will eventually, if it hasn’t already, eliminate the ability of vast portions of the american population the option to maintain a single income household where one of the adults doesn’t need to work.
Well maybe two-income households benefit society by increasing productivity and the single income household was a fluke? Surely there are some benefits to national productivity from a larger potential work force which certainly benefit the american people. However, what seems to be happening is that men’s income is being reduced while women’s income is being increased until they meet somewhere in the middle.
The current women’s rights movement is a push for equal wages between men and women. This is absolutely something which needs to be realized across the board in all areas where women work. They should get equal pay for equal work. The problem I have with this scenario is that we shouldn’t be lowering men’s wages to increase women’s wages. Instead men’s wages should be growing and women’s wages should be increased even more to close the gap.
Another problem is realized in the early child development in two-income households. Children raised in this environment have a less stable home life and perhaps more stressed and overworked parents. This can create a stressful environment for the children and could produce negative effects in growth and development. Additionally it prohibits the parents from providing as much attention to their children to teach and prepare them for taking over after we pass the torch on to them.
Business Wins and the American People Lose
American households stand to lose a lot. My personal opinion is that this is the cause of a lot of problems we are seeing today. Most importantly households are working more for less per hour of work. The businesses, and their owners, are making out like bandits. They have machines making products cheaper each day with a smaller work force. They have two-income households becoming the norm which allows them to reduce the incomes of their formerly single income household employees. We haven’t arrived there yet but my fear is that we are headed towards a way of life where households work 80 hours a week to provide what only 100 years ago was provided by 40 hours of work. This current model leads to a degradation of the american lifestyle.
Increasing Minimum Wage is the Answer
The situation can be changed to make the American citizens the winners and the businesses can become more profitable by real improvement instead of a false improvement where they get more labor for cheaper. American families are potentially harming the growth and development of the next generation by reducing the ability of parents to choose to keep a parent home to care for and raise the children. The best way, in this Authors current opinion, to fix this problem is to set a living wage based on what an American Household should be for size and for standard of living. The living wage should be based on a single-income household and if households have two incomes then naturally they should receive the full luxury of that second income. Additionally these minimum living wages based on Single-Income households should be indexed to the cost of living this is to prevent the business world from once again devaluing the work of Americans.
Currently the best charts I can find for estimating what a single-income family living wage might be are produced by Dr. Amy K. Glasmeier and the Massachusetts Institute of Technology at this website where you may look up your own community. In Chattanooga Tennessee if we call my family the average Chattanoogan household, two adults and 3 kids, then an appropriate living wage would be in the $24.75 ballpark. Sure there may be an argument for a smaller household size to be considered than my family of five but the basic premise holds true. Set a minimum wage at a living wage for a typical single income American household and index it to the cost of living.
Check out the MIT link for Chattanooga to see the $24.75 for yourself. Obviously this would have to be implemented over a longer period of time, perhaps a decade of annual pay increases to catch the American worker up with an appropriate salary while allowing businesses time to adjust and plan.
To discuss this issue please start a thread on our new forums. This is an evolving idea and maybe updated as more perspective is gained.