# Syracuse workers find out the hard way that converting the minimum wage to a “living wage” is an economic fallacy

## It\'s true, even if Barack Obama *did* promise a pair of chickens in every pot

The “living wage” debate has been ongoing for far longer than it should have been at this point, with feel-good liberals demanding that minimum-wage workers be paid twice or thrice their current rate so that they can “afford to live” without rising above their bottom-of-the-line jobs (or, I suspect, rising above what those same liberals consider their “station” in life), and with folks who live in the real world (where consequences are a natural result of every decision) warning that, with a finite resource pool, raising workers’ compensation across the board will result in fewer hours and/or fewer jobs.

The mathematics behind this is so simple one of my mother’s third grade students could do it. Let’s look at the wage pool as a large pizza. Cut into twelve slices, that pizza can hold over twelve individual people while they’re between meals or looking for a snack to provide them energy while looking for another, bigger meal.

The argument made by the pro-”living wage” crowd is that the folks among that dozen who have families can’t adequately feed themselves and their dependents with that size a slice of pizza – an assertion which is most likely true. The answer, though, is not for those with the power to do so to mandate that, in the interest of seeing that families can be fed without the provider actually moving up in life, every person should get one and a half slices of pizza. As any third-grader can tell you, if you take a large pizza that is currently feeding twelve people, and redistribute it so that every person getting pizza receives a slice and a half, you suddenly run out of pizza once you’ve fed the first eight folks.

So, as a result of your feelgood policy, you’ve frozen four people out altogether.

To take this a half-step further, consider this question: can a person who subsists on a single slice of pizza feed himself and however many more people he may have at home with only a half-slice more (or even a full slice more, meaning that six of the original twelve would now be frozen out of the wage (or pizza) pool) than he originally had?

Of course not. This is why the idea that increasing the minimum wage by 50% (or even 100%) would allow more people to be able to provide for their families more effectively is facially absurd.

That’s also why heads of households, if working extremely low wage jobs at all, should be doing so as they work themselves toward better opportunities, not as a permanent job.

Workers in Syracuse, New York have recently found this out the hard way. According to the Syracuse Post-Standard:

Ten weeks after a Syracuse City Court judge found that Murbro Parking was required to pay a “living wage” to workers who staffed city-owned garages, the employees are tired of waiting for answers.

In November, they started earning the \$13.11 per hour required by the living wage law enacted in 2005 to keep workers under city contracts out of poverty.

But a week later, the employees experienced a less welcome change — their 40-hour workweek was cut back to 35 hours. Managers’ hours were cut, too. One manager said the result was a reduced paycheck, after overtime was eliminated and regular hours were cut below 38.

“How is that helping us get out of poverty?” one garage employee wondered. “It’s giving us one thing and taking something else away. Why are they hurting us?”

Let’s go back to the question I asked a moment ago, about whether a person who subsists on a single slice of pizza can feed himself and however many more people he may have at home with only a half-slice more than he originally had, because it’s incredibly apropos here. In Syracuse, \$13.11 per hour is considered a “living wage.”

With no money removed for taxes, that wage – assuming full-time work – comes out at just over \$27,000 per year. Can anyone actually raise a family on that? Not likely.

Further, the reason for the cutback in hours is obvious. Murbro Parking didn’t suddenly come into more money — a bigger pizza, if you will — which it could then spread around evenly. In order to raise managers’ salaries by about \$3 and other workers’ by about \$5 (the article notes that “[p]ay is now consistent among all Murbro workers,” something which may reflect the communist ideal, but which does not reflect any kind of a market (or reality) based scale), Murbro had to reallocate that money from within that same wage pool – thus, the trimmed work schedules, leaving the workers’ paychecks looking roughly the same.

The other option, of course, was to pay a smaller number of people more, and to trim staff accordingly.

The Syracuse workers are hoping to receive back pay for the time worked since the 2005 living wage law was passed — though they don’t see their current employment as being a long-term proposition.

The employees, some of whom have worked for Murbro more than a decade, said they’re particularly worried about getting the back pay quickly because they may soon be out of a job. Nearly all city-owned garages will change management within a couple of months.

Murbro, which runs Onondaga Tower, AXA Towers, Sibley, Washington Street and Fayette Street garages, will lose all but Sibley to other management companies. Murbro will take over Madison-Irving and Harrison Street garages from Central Parking. From the Post-Standard:

New management companies are urged by the city to retain the current employees, but they are not required to do so.

“We’re all probably going to be out of a job anyway,” one garage attendant said. “I don’t understand why they won’t just give us the back pay and give us our 40 hours.”

Because the money just doesn’t exist, Mr. Garage Attendant. Because the money just doesn’t exist.

• momac

“So, as a result of your feelgood policy, you?ve frozen four people out altogether. ”

Worse than that– say you went from 12 to 8 jobs: those 8 are not as productive as the 12 were, so the entire pizza they share is smaller than the original. It’s just stupid.

Products and labor are worth what they’re worth– what someone is willing to pay for them. Any intervention in pricing signals makes things worse. I mean ANY intervention, including things like anti-price-gouging laws.

• http://jeffemanuel.net Jeff Emanuel
• Rottimer

The majority of economists agree with you and feel that even minimum wage laws hurt the economy overall. There’s more to that though, where many of them also feel that an earned income credit (EIC) is better than a minimum wage at combating poverty. The problem is that most democrats are for both minimum wage and an EIC. That entirely defeats the purpose of having an EIC.

• NightTwister

With no money removed for taxes, that wage – assuming full-time work – comes out at just over \$27,000 per year. Can anyone actually raise a family on that? Not likely.

I actually did it in 1979. I made \$5.00/hr (\$12.47 equivalent today) and supported a wife and daughter. It wasn’t easy, but it can be done. We lived within our means and over time I worked hard and learned more, which improved my salary as my experience increased.

The difference for me was, I was not content to stay at that wage. I did what was necessary to improve my situation.

Another thing people don’t realize is as jobs are eliminated, families have to subsidize their children longer. My son has been trying to find a job for months, but due to recent minimum wage increases it’s been hard to find anything. A family with multiple teenagers like mine is hit hard by these decisions.

• http://jeffemanuel.net Jeff Emanuel

…those in the bottom income brackets are huge purchasers of automobiles, superfluous electronics, and other things above their means, and you have a recipe for prolonged poverty and very, very poor credit.

• birdmojo

When I first got married in 1998, I made 12 bucks an hour and got 1 week of vacation a year. My wife did not work. We lived in a rathole of an apartment (our neighbors explained to us that we were the only ones in the complex who did not sell drugs). We drove a paid-for car that cost me \$1,200.

It is now 10 years later (as of October 26th!) and we both work now. I get two and a half weeks of vacation a year and a week’s worth of sick time. We live in a house. We drive a paid-for car that cost us \$12,000.

The biggest difference I’d say between those two situations is that the kids in the first situation were kids whose work experience consisted primarily of either food service or customer service. The adults in the second situation have about a decade of either Information Tech or Managerial experience each.

The best advice I could possibly give any kids who find themselves working to support a family on diddlysquat an hour is this: Don’t give up! Never give up! Never, never, never ever give up!

• http://impudent.blognation.us/blog kyle8

Because I was in the same boat.

(1) only have ONE credit card, period

(2) no matter how little you make put some into a savings account every month in an automatic withdrawal

(3) Beans, rice, and cabbage is good and filling, and cheap, Fast food is expensive.

(4) don’t buy consumer goods on credit, if you need something like a washing machine, every city has those want ad free newspapers. that’s where you can get something that works for a few bucks.

• Raven

Kid turns 18, he’s got to feed himself. If he stays at home, he needs to pay rent and still feed himself.

By “subsidizing” these kids, parents are teaching them that there’s no need to get out and work hard for their dinners.

There is ALWAYS an opportunity. These kids need to do one of 3 things:
Look/work harder for the jobs that are out there
Create job opportunities
Consider doing something they had previously thought “beneath” them

• http://impudent.blognation.us/blog kyle8

I work with teenagers and I can tell you that it is DAMN hard for them to get anything like enough hours. Sure there are jobs in fast food, and retail, but they don’t let teenagers work enough hours.

The kind of jobs that I used to do, like lawn work, you can’t get those jobs around here (Houston) at all unless you are an illegal alien.

Some kids try to get multiple jobs, but that is difficult because each job will want you to work on the same shifts although neither wants to give you enough hours.

The management like to have a horde of part timers that they can plug into any shift and give them only about sixteen hours a week, that way they discourage any of them from staying too long, Most people will want raises if they work some place long enough.

This also allows them to have someone available when the less than reliable age group are famous for not showing up.

• Raven

The vast majority of this nation is physically able to do something you seem to be forgetting. Graduate from HS and pass the ASVAB and don’t be a career criminal or a druggee and voila! Full-time job…

• NightTwister

And they’re all still in secondary school. My 17yo will be until he’s almost 19.

You were saying?

In any case, my statement stands (based on agreement with Jeff’s blog). Because of the increase in the minimum wage, there are less entry-level jobs that are commonly filled by teenagers. This doesn’t mean my son won’t find a job, it just means it’s harder.

This comes from a person that has never once taken a dollar of unemployment compensation (due solely to the Grace of God).

• Next93

My family is from Syracuse, The minute I was able to, I got out of that part of the country so fast that I’ve always wondered if that was what caused the hole in the ozone layer. I was surprised they didn’t have armed guards to keep people in, but to tell the truth, I wouldn’t have had many qualms about killing someone to get the hell out of there. I wouldn’t move back there unless someone had an Uzi jammed in my ribs, and even then I’d have to think about it.

There’s something about that region that sucks the life out of people; it’s a gray city under a perpetually grey sky, and the people all have grey souls. They’re notorious for spending more time bitching about how “the system” won’t let them succeed than they spend actually trying to succeed. They get an entry-level job, put in just enough effort to avoid getting fired, and spend the rest of thier lives complaining because they don’t get promoted. And they’ve done this for generations.

They never even THINK about trying to get a better job because they’re convinced that a dead-end, joyless job is all anyone has a right to expect. And they go to great lengths to make it a self-fulfilling prophecy; they makesure that any job they get becomes dead-end and joyless.

And here’s the political part: It’s not the worker’s attitude that’s to blame, it’s “The System”. It’s always someone else’s fault, the only choice the individual has is WHO to blame; rich people, white people, black people, the Italians, the Poles, the Irish, the Joooooooos, everyone has a handy excuse for stagnation. I think there’s a ceremony when you turn twelve, where you select your own personal scapegoat. We happened to be living out of state when I turned twelve, so that explains why my brother and sister have thiers, but I never got mine.

Those people who’ve been working at a parking garage for a decade or more have probably never even thought about cracking a book, getting a GED, or signing up for a vocational training class. But hey, you can’t blame THEM, they’re too busy; beer pot don’t drinksmoke itself, you know! (Don’t beleive me? Try counting the number of bars within 10 miles of GM circle some time!)

As for the “Syracuse Sub Standard”, the fish in upstate New York went on strike when I was in college, demanding that they not be wrapped in a better paper. Can’t say that I blame them. I’m sure it was one of the news outlets that complained this summer about the lack of jobs for high school and college kids, blaming it on Bush even though it was exactly what anyone with a lick of economics education told them would happen after raising the minimum wage.

• Next93

And the last paragraph should say “demanding to be wrapped in a better paper”.

• deepredpatriot

and it’s a proven fact that people who work at minimum wage jobs are their because of the choices they have made in their lives. America is the land of opportunity. The rich are rich because they worked hard, and the poor are poor because they didn’t. People get pissed at me when I say it, but it’s a fact. All those whiners out their wouldn’t have trouble paying the bills if they threw away their multiple IPods and their fancy jewelry.

The minimum wage should be abolished. All it is is charity for the poor, and that’s not Uncle Sam’s job.

• Achance

To force the diaspora of the surplus agricultural labor in The South in the days of the New Deal. It served to break the ever downward wage spiral as the owners plaiyed the Blacks against the White in competition for wage jobs in the realtively few wage jobs that existed in the South in the first half of the 20th Century.

People forget that a major part of the New Deal was getting America’s peasants and kulaks off the land. We had the same problems the Soviets did; the Soviets starved them or killed them, we relocated them, paid them minimum wage, or, in the rich states, put them on welfare. When WWII came, we put them in the Army or in the defense plants.

In a sane world, it isn’t charity for the poor, it establishes a floor so that there isn’t a racial or class competition for the bottom of the barrel. Unfortunately, illegal immigration and under the table work keep it from doing what it was intended to do.

• http://impudent.blognation.us/blog kyle8

SInce the exodus away from the farm was well underway before minimum wage, and continued after minimum wages had fell below the actual wage due to inflation.

So I doubt that it was ever necessary. I actually believe that it was enacted as a SOP to organized labor. Many union contracts had provisions which caused automatic increases in all wages when the entry level wage went up.

• deepredpatriot

….used against Americans by liberals who seek to give handouts to inner city voters. The fact that this tools hurts america doesn’t concern them.

• chemjeff

Here’s the real problem: Read carefully what this garage attendant guy said:

?I don?t understand why they won?t just give us the back pay and give us our 40 hours.?

So, his employer is just supposed to give him back pay that he didn’t really earn and just supposed to give him 40 hours which he isn’t entitled to have. You get this mindset if you think employers are just fat-cat capitalists with infinite pockets just waiting to exploit people. We conservatives work very hard to contradict this Marxist foolishness by arguing against insane economic policies like the minimum wage and for pro-growth policies like tax cuts, but we undermine our own position when we play up the populist rhetoric against the eeeeeeeeevil banks and CEOs like what was posted on the very same front page as this article. We should not be arguing that JPMorgan Chase’s every transaction with the bailout money be made publicly available, for the same reason that garage attendant guy is not entitled to be given absurdly high wages: it’s the company’s money and they can do with it what they like. In the case of Murbro, this is obvious. In the case of JPMorgan Chase, it is not as obvious but it is still true. The government traded money for preferred stock. End of story. AFAIK the strings on the bailout money never included posting every transaction to the Internet. So while I think it was an incredibly stupid idea to create a \$700B slush fund in the first place, it has been done. Leave the populist nonsense to the O’Reilly’s and the Democrats. Principled fiscal conservatives should not go down that low road.

• bk

Once a friend of mine was getting a pizza and asked how many slices are in a large. She was told eight, and I told her that if she was really hungry that the guy would probably be willing to cut it into twelve.

• USNJIMRET

Yeah, factual as far as it goes.
Difference is that in the case of the Garage Management Company, they aren’t using a penny of MY money for anything.
The “Government” is.
When we accept that the “Government” is some kind of independent, unaccountable entity, THAT is a problem.
I may not need, or even want, to know where every penny of taxpayer provided funds went in the case of JP Morgan, etal, but I damn sure want the option to find out!
Particularly when the promises made by Democrats, Republicans and everyone else looking to sell this pig in a poke, don’t appear to be working out.
Paulson and others have pulled the greatest Chicken Little, “the sky is falling” con in history!
To the tune of hundreds of billions of dollars, and the potential ruin of anything resembling a free market.

• chemjeff

That is true for any transaction, not just TARP bailouts. If I give you \$1 and you give me an apple, to both of us, the apple is worth at least \$1. So I don’t have any right to know how you spend that \$1 because I have the apple, which represents the \$1 that I exchanged for it. If I did, I would be attempting to exercise control over \$2 worth of wealth – the apple, and your \$1.

I understand that it’s easy to mistrust banks. Healthy skepticism over any large institution wielding power is a good thing IMO. But we should not villify them; that is what the Democrats do, and that is what leads to the entitlement mentality of Garage Attendant Guy. And I understand that government money should be spent wisely and there should be accountability built into how the money is spent. That accountability should have been in the legislation. AFAIK it wasn’t, or not very strongly. That’s too bad for us.

Yet one more reason we should never have become Bailout Nation in the first place.

• USNJIMRET

analogy leaves out one thing.
It’s a deal between you and me.
Not the “Government” and some other ‘private’ party.
Now if you take that \$1 dollar from me, to buy an apple, do I have a right to demand who gets that ‘apple’ next?
Or have we sunk to the point that we just accept the “government” taking our money, buying “apples” and throwing them in the trash?