If You Get $2 More An Hour, We Get $5 Million Tax-Free

Ezekiel Edwards

If You Get $2 More An Hour, We Get $5 Million Tax-Free

For nine years in a row, Congress has voted against raising the measly minimum wage, leaving many full time workers and their families living in poverty or barely treading middle class water. Now, adding insult to injury, Bill Frist and his Republican colleagues have said they will agree to a raise of the minimum wage, but only if the estate tax is simultaneously drastically reduced.

Here's Frist's plan: if the government is going to allow an increase in the hourly federal minimum wage from $5.15 to $7.25 an hour, phased in over a three-year period, then it must also exempt $5 million of an individual's estate and $10 million of a couple's estate from taxation by 2015, while also cutting the top estate tax rate from 46 to 30 percent.

In other words, if Wal-Mart has to pay its employees an actual living wage, the Walton family gets to put millions of its billions of dollars into a tax shelter while receiving a 33% tax reduction.

It is shameful that members of Congress are conflating the issue of raising the minimum wage (thereby helping people rise out of poverty, adequately feed and clothe their children, or save enough money to buy a home, send a child to college, or take a vacation) with the issue of repealing the estate tax (so super-wealthy people can remain super-wealthy, as opposed to very, very wealthy --- as if the current estate tax leaves America's millionaires destitute!).

If Bill Frist truly believed in "pulling yourself up by your own bootstraps", he would support raising the dismally low minimum wage so that millions of hard-working Americans could be better compensated for their toils and more likely to enter and remain in the middle class. Moreover, he would be uncomfortable with a repeal of the estate tax, which would permit limitlessly rewarding the children of wealthy parents for merely being the children of wealthy parents (but not because of their tireless work ethic and frugality). Does not Frist believe that rich kids have to do a bit of bootstrap pulling themselves, even if the straps are made of real gold and the boots Versace?

It is unacceptable that our representatives will consider passing legislation to help the poor and middle class (in other words, the bulk of our population) only if such legislation also helps the extremely rich. Our government should be trying to ensure equal economic opportunity for all instead of seeking to perpetuate our economically stratified society.

Comments

Not to mention, it's more income tax revenue, and the more money people have, the more they spend ...

I'm so glad I live in New York, where we at east have a *little* bit of a clue.

Just some facts which are clearly missing from these above commets. The sad truth is people like The Drum Major instatue do not know facts or just lie. As Congress debates raising the minimum wage, Congress should consider which workers?assuming that their jobs are not casualties of the higher minimum wage?the change would benefit. Data from the Department of Labor show that most minimum wage-earners are young, part-time workers and that relatively few live below the poverty line. A minimum wage hike, then, is more a raise for suburban teenagers than for the working poor. If Congress is serious about helping the working poor, it should look elsewhere than raising the minimum wage.

Relatively few Americans earn the federal minimum wage.[1] In 2005, 1.9 million Americans reported earning $5.15 or less per hour.[2] This amounted to 2.5 percent of all workers earning hourly wages and 1.5 percent of all workers in the United States. But these numbers include workers who also earn tip income. Many of those earning less than the minimum wage work in restaurants and so make more than the minimum after taking their tips into account. Using another measure of earnings that includes tips, 1.3 million Americans earn the minimum wage or less per hour, or 1.1 percent of the total working population.[3]

The Young

Most workers who earn the minimum wage or less fall into two categories: young workers, usually in school, and older workers who have left school. The majority of minimum wage-earners fall into the first category: 53 percent of those earning $5.15 or less per hour are between the ages of 16 and 24. [4] The remainder are 25 years of age or older.

Table 1
Demographic Characteristics of Minimum Wage Workers

16-24 years old 25+ Total
Men 35.2% 33.6% 34.4%
Women 64.8% 66.4% 65.6%
White 83.6% 79.5% 81.7%
Black 11.1% 11.8% 11.4%
Asian 1.7% 5.4% 3.4%
Married 4.8% 42.5% 22.5%

Wage and Income Characteristics of Minimum Wage Earners

Part Time 67.0% 55.6% 61.7%
Full Time 33.0% 44.4% 38.3%
Avg. Family Income $64,273 $33,606 $49,885
At or Below the Poverty Line 16.9% 22.8% 19.5%
Family Income > 200% of Poverty Line 64.7% 44.8% 56.1%

Education Levels of Minimum Wage Workers

Less Than High School 36.3% 22.0% 29.8%
High School Graduate 20.9% 38.5% 29.1%
Some College 35.6% 20.5% 28.5%
Associates Degree 3.4% 8.5% 5.8%
Bachelors Degree or Higher 3.4% 10.6% 6.8%

Source: Heritage Foundation calculations based on the Bureau of Labor Statistics, 2005 Current Population Survey and merged outgoing rotation group files

Minimum wage workers under 25 are typically not their family?s sole breadwinner. Rather, they live in middle-class households that do not rely on their earnings. For the most part, they have not finished their schooling and are working part-time jobs. These workers represent the largest group that would directly benefit from a higher minimum wage.

Here are a few important characteristics of the teenagers and young adults who earn the minimum wage or less:

Fully 67 percent work part-time jobs.
Their average family income is $64,000 per year.
Only 17 percent live at or below the poverty line, while 65 percent enjoy family incomes over twice the poverty line.[5]
They have less education than the population as a whole. Fully 36 percent have not completed high school, and 21 percent have only a high school degree. Another 37 percent have taken college courses but do not yet have a bachelor?s degree; many of these are college students working part-time while in school.
Fully 65 percent are women.
Only 5 percent are married.
Older Workers

Even the vast majority of older adults who earn the minimum wage live above the poverty line. They have an average family income of $33,600 a year, well above the poverty line of $19,806 per year for a family of four. Most of them choose to work part-time, and a sizeable number are married. The average older minimum wage-earner simply does not fit the stereotype of a worker living on the edge of destitution.

Here are a few important characteristics of the 47 percent of minimum wage-earners who are over the age of 24:

More than half?56 percent?work part-time jobs.
They have an average family income of $33,606 per year.
Just 23 percent live in poverty, while 45 percent have incomes over twice the poverty line.
They are better educated than younger minimum wage workers. Just 22 percent have less than a high school education, while 39 percent have only a high school diploma and 21 percent have taken some college classes.
66 percent are women.
43 percent are married.
Table 2
Minimum Wage Workers
All Hourly Workers

Proportion of
Single Parents
Working Full Time 4.2% 5.6%

Source: Heritage Foundation calculations based on the Bureau of Labor Statistics, 2005 Current Population Survey and merged outgoing rotation group files.

Many advocates of higher minimum wages argue that the minimum wage needs to rise to help low-income single parents. However, minimum wage workers do not fit this stereotype more than the population as a whole. Just 6.1 percent of minimum wage workers over the age of 24 are single parents working full-time, compared to 6.3 percent of all hourly workers.[6]

Conclusion

Many support raising the minimum wage because they want to help low-income Americans get ahead. But while some minimum wage-earners do live below the poverty line, these workers are far from representative. Only one in five minimum wage-earners lives in a family that earns less than the poverty line. Three-fifths work part-time, and a majority are under 25 years old. Minimum wage-earners? average family income is almost $50,000 per year. Very few are single parents working full-time to support their families?no more than in the population as a whole. It is not surprising, then, that studies show that higher minimum wages do not reduce poverty rates.[7] Instead of raising the minimum wage, Congress should look at other ways to aid the working poor that actually focus on providing help to those who need it.

Sandy,
where are your sources?

Rather than being mostly dependents or young people, the vast majority (72%) of people working for a minimum wage in this country are adults. Also, single mothers would disproportionately benefit from an increase in the minimum wage--they make up only 5.3% of the entire workforce, but represent 10.4% of workers making minimum wage. My point is that most minimum wage workers are living off the minimum wages they are making.

This website was really helpful in explaining who exactly would benefit from an increase in the minimum wage:
http://www.epinet.org/content.cfm/issueguides_minwage_minwagefacts

And here's a link to someone's potential monthly expenses:
http://www.alternatives.org/livingwage2005chart.html

Dear Sandy -
with your friends in the Bush administration raising the cost of a college education exponentially over the past few years those teenagers that will definitely need the extra money so they stand a chance of getting the education they need to succeed.

and yeah those teenagers are not the majority of minimum wage earners anyway.

and in NY where we raised the minimum wage it actually improved our economy by pumping more money back into the local economy. You just want to punish people for being poor. That's sort of Calvinist don't you think?