Saturday, December 8, 2012

The Disappearing Middle Class

The head of Papa John's Pizza was recently caught whining about how Obamacare is going to make him provide healthcare to his employees and that it would cost 14 cents per pizza to do so. 14 cents! I guess no one will ever buy another pizza if it cost 14 cents more. Seriously, if it only cost 14 cents per pizza to provide healthcare to your employees, then why in the heck has he not been doing so all along? I think we all know the answer to that question; greed. Today's workers have almost no bargaining power, if a worker attempts to hold out for better pay or benefits, they simply get fired and another waiting applicant fills the job.
Did you know that 50 years ago General Motors was the largest employer in the U.S. and their average wage was about $50/hour in today's dollars? Now our largest employer is Walmart with an average wage of $8.18 per hour. Is it any wonder that the middle class is disappearing to be replaced by full time workers who are below the poverty line? This needs to be corrected, hard working full time employees should not be working for poverty wages in America. These things tend to move like a pendulum and swing from one extreme to the other; back in 1962, GM workers were probably making too much and now today's Walmart workers are clearly making too little.
Here's a possible solution to how we can swing the pendulum back toward the middle. If the minimum wage had kept up with inflation, it would now be close to $12 per hour. We should raise the minimum wage to $12 and apply a cost of living adjustment to it (like we do with Social Security) so that it keeps up with inflation. Sure it will mean that we pay a few cents more for plastic doodads at Walmart but that seems to be as good a bargain as 14 cents per pizza.

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