Bachmann Thinks Ending Minimum Wage Would Eliminate Unemployment
Presidential hopeful Michele Bachmann has figured out how to solve our jobs crisis.
More low wage jobs. Really low wage jobs.
Via Think Progress:
In 2005, Bachmann told the Minnesota state Senate that abolishing the minimum wage could “wipe out unemployment completely.” When Good Morning America’s George Stephanopoulos asked her for evidence to back up that claim today, Bachmann struggled to find an answer, initially dodging the question before finally referring to the minimum wage as a regulation that is “inhibiting job growth” and saying it needed to be examined:
STEPHANOPOULOS: Let me try this one more time. So you’re saying the minimum wage is one of those regulations you’d take a look at? You’d try to eliminate it?
BACHMANN: Well, what I’m saying is I think we need to look at all regulations. Whatever ones are inhibiting job growth, that’s what we need to look at.
STEPHANOPOULOS: And the minimum wage is one of them?
BACHMANN: All regulations, George. I think every department, we have just too much expansion of government, and what we need to do is tamp that down so the American people can keep more of what they make.
Ok, let’s actually take Bachmann’s concept at its literal meaning. The exact quote being referenced is “Literally, if we took away the minimum wage — if conceivably it was gone — we could potentially virtually wipe out unemployment completely because we would be able to offer jobs at whatever level.”
So say we have a business in Bachmann’s own Minnesota that could hire someone to work in their plant, but they only can allocate $5 an hour to pay that person without cutting into their profits more than they care to. Federal minimum wage is $7.25 an hour. State minimum wage is $6.15 an hour, although companies have to pay the federal level since that is higher (Minnesota is one of four states with a minimum wage lower than the federal level). Bachmann is stating that because the company cannot “afford” the $7.25 an hour, they will simply not hire a new employee, asking other employees to cover or finding some other way to make due without the needed hire.
Now, if companies did not have to follow minimum wage laws, the plant could hire someone for $5 an hour, giving that person a job and bringing down the unemployment rate. Even better, if the company could hire a person for $2.50 an hour, they could hire two employees, cutting the rate even more, logic would say. Right?
But here’s where it all falls apart — people cannot live on $5 an hour jobs. Not real people who need health care, or have to pay rent, or have children, or student loans, or even need a car or bus to get to work. If that newly hired worker is making $5 an hour for 40 hours per week, he or she is making $200 a week pre-tax, or $800 a month. That employee will be taxed at 10 percent, leaving about $700 or less after state and federal taxes, Social Security, etc. To get to and from that job on a Minnesota bus costs $4.50 cents a day, assuming the employee is traveling during rush hour, for $85 per month. A two bedroom apartment shared with a roommate is at least $300 per month per person, and just electricity, water and gas would cost at least another $100 per person total. Your employee now has $200 a month left for food, clothing, any illnesses that need to be dealt with since he or she isn’t getting health care from his or her employer (and if the employee is getting health care that is probably another $50-$100 a month from the paycheck).
In Bachmann’s own district, it is projected that a single person requires a living wage of $9.63 an hour simply to get by. A single adult with a child needs nearly twice that. In order to work $5 an hour jobs and be able to survive financially, a worker would need to hold two of these magical $5 an hour jobs that would end unemployment forever.
Allowing companies to hire for less than minimum wage will never fix the unemployment problem, because those who try to live on those jobs will need more than one to survive. All it can ever do is line corporations’ pockets with extra profits.
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