Rick Ungar

Rick Ungar, Contributor

I write from the left on politics and policy.

2/16/2013 @ 12:02PM |6,041 views

The Minimum Wage Fight-Ground Zero In The Clash Of Conservative vs. Progressive America

WELLINGTON, CO - SEPTEMBER 03:  Migrant farm w...

According to the most recent figures published by the Bureau of Labor Statistics in 2011, 1.7 million Americans earned exactly the prevailing Federal minimum wage of $7.25 per hour while an additional 2.2 million had wages below the minimum. Together, these 3.8 million workers with wages at or below the Federal minimum made up 5.2 percent of all the hourly-paid workers who comprise 59.1 percent of the entire wage and salary workforce.

The study also reports that minimum wage workers tend to be young. Although workers under age 25 represented only about one-fifth of hourly-paid workers, they made up about half of those paid the Federal minimum wage or less. Among employed teenagers paid by the hour, about 23 percent earned the minimum wage or less, compared with about 3 percent of workers age 25 and over.

Yet, the impact of increasing the minimum wage goes well beyond the 3.8 million Americans directly affected as it is estimated that some 28 to 30 million Americans would be benefited as those working above the minimum wage level would experience increases in pay to keep them ahead of those on the lower wrungs of the company employee ladder.

While there is considerably less sympathy for teenagers working for the minimum wage so that they can pocket some spending money or  save for their college education, there is greater concern for those Americans (comprising more than 50 percent of those working for the minimum wage or less) who are attempting to support a family on the minimum wage—people who, despite 40 hour work weeks, achieve earnings that still leave them unable to rise above the federal poverty line.

So, is raising the minimum wage the right thing at the right time or is the net effect one that actually depresses the opportunity to increase jobs at a time when jobs are so badly in need?

In many ways, the debate is the perfect stage for expressing the core philosophical differences that exist between progressives and conservatives in 2013 America.

Conservatives tend to approach the minimum wage as something that is bad for the ‘me’ and, therefore, bad for the collective ‘we’ as they argue that an increase in the minimum wage would damage employment opportunities throughout the country. Meanwhile, progressives see an increase for lower wage workers as being good for the collective ‘we’ and well worth any potential problem for a given individual business operator—making the assumption that the increase would cause that operator any problem at all which is less than clear.

A conservative will likely tell you that raising the minimum wage is bad for ‘my’ business because I’ve only got so much money I can allocate to employee costs. Making me pay more to my minimum wage workers risks the possibility that some employees will have to go—particularly when you consider that it is not only the lowest paid employees who will need to get a raise. As pay for the lowest on the ladder increases, so too must the pay for the workers who have achieved higher standing in the employer’s workforce. As a result, even if the employer can manage to hold on to existing employees, the opportunity to hire more workers is greatly diminished—and that is bad for ‘you’, the job seeker, and the collective ‘we’ that rise and fall with the success or failure of the United States economy.

Progressives approach a minimum wage increase as being a very good thing for the collective ‘we’. They argue that it is good for the whole of the American economy because when we increase the pay of some 28 million Americans, we put more money into the pockets of these workers who will spend that money in the U.S. economy. As most small business operator will likely tell you, nothing is better for business than more sales. And if putting more money into the pockets of the lowest earning Americans means they are able to buy more things, the effect should be increased national employment as businesses hire people to meet the needs of the increased sales.

So, who is right?

Not surprisingly, Senator Tom Harkin of Iowa—a liberal Democrat and long-time champion of an increased minimum wage—tells us that the liberals are on the right side of this argument.

Appearing on NPR’s “All Things Considered” last year, Harkin said—

“People who are making the minimum wage, basically they’re spending just about all their money because they don’t have much left. So if you give them a raise, it means more for our gross domestic product.”


The Cato Institute’s Mark Wilson strongly disagrees with Senator Harkin’s position.

(Continue reading)

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  • I was taken aback the first time I saw that some people in the American service industry are not given a minimum wage and have to rely on tips. it made me wonder how so many states could be so backwards and your service industry is so poorly treated.

    The minimum wage too low and businesses know this but will fight it tooth and nail with the same old excuses that they have used since its inception… even though this is not a dramatic increase!

    People who have never had to save a dime, or worry about poverty or even ever want for a meal or anything in their lives will never be able to wrap their minds around feeling for someone who is impoverished.

    They give a little money to charity each year and expect the Government to look out for those who need more. Hell, even Congress will be using this excuse… they have enough,need no more and it will cause employers to hire less so more unemployment. (The same congress that protects the rich form closed loopholes or more taxes)

  • Russ Winfrey Russ Winfrey 1 year ago

    Redistribution By Any Other Name


  • macadvisor macadvisor 1 year ago

    In addition to increasing the minimum wage, let’s decrease the number of hours necessary to qualify for benefits. Let’s say anyone who works two eight-hour shifts per week qualifies as a full-time employee for benefits. That would give more people sick leave, vacation time, and access to retirement benefits. I also think we should adopt a national minimum paid vacation of at least two weeks per year.

  • After reading this article one thing is obvious, Rick Ungar has never run a business and like most progressives who spin fantasies out of their keyboards, has no conception of what it takes to run a small business or how government regulations impact a small business.

    Even a small change in calculations can put a small concern down because many operate with very small margins.

    Incredibly though, even Rick Ungar noted the voluntary system works in some cases but like all good shepherds of central planning Rick Ungar feels it is necessary to force those who are running a good business now to be forced into another central planning scheme under force of federal law.

    Rick Ungar claims that the minimum wage has never hurt anyone but that’s an argurment hard to prove one way or the other and he notes that.

    Amazingly, what’s being ignored in the scheme of things is that even state governments are now cutting hours in response to PPACA which will take effect in all its forms in January 2014.

    After that, let me idly speculate that the minimum wage will be the least of anyone’s worry. Millions of jobs will most likely disappear or be reformulated to avoid the penalties of PPACA aka Obamacare.

    Incredibly, the effects are already happening but the central planners move one, never caring about the ill effects of their central planning. In the long run they don’t have to make it work. They just have to think of it and throw the burden on others to implement. Sounds like a dictatorship to me.

  • Rick Ungar Rick Ungar, Contributor 1 year ago

    I guess it was just a matter of time until you fell into that particular trap. A little research would have spared you the error as parts of my business experience are hardly a secret.
    As many readers know-and are,therefore, likely enjoying your comment as a result- Rick Ungar has had a bit of business experience having run a NYSE company-of some fame I might add-which was ultimately sold for in excess of $4 billion to another rather well known company. Now, you could certainly still argue that this would not put me in touch with the problems of the small business operator- were it not for the fact that I have owned and operated small businesses since the day I graduated law school- most (not all) having become, if you will forgive my saying so, rather successful.
    Indeed, I still own a few small businesses-although I no longer operate them as they are in the very capable hands of my better half now that I spend most of my time in other ventures. But I still manage to stay in pretty close touch with these businesses as it is my money that remains on the line each and every day.
    You might also want to note that in all of my owned and operated businesses, employees were always paid fairly (no need to worry about minimum wage as it would never have occurred to me to pay employees so poorly) and…wait for it…always received healthcare benefits-and all from my own pocket as these businesses were-and are-wholly owned by my wife and I.
    And yet, despite paying fairly and providing appropriate benefits, the businesses managed to make a decent profit. Go figure. You see, I learned long ago that when you treat your employees with respect and value their work with respectable pay, benefits and an understanding that their families also need to eat, pay their bills when the kids get sick, etc., they return the favor by working hard to contribute to the success of the business. I have been very fortunate in how my businesses have worked out. But I understand all too well the important role employees played in that success. You’d be amazed how much money you can make without mistreating people or adopting an attitude of not giving a crap about their lives in the pursuit of improving your own. My experience has been in works precisely in reverse. Take care of the people who work for you and they will take good care of you. And, whether you like it or not, the results have more than proven the validity of the philosophy.
    So…nice try…but again, a large fail.

  • No trap there. I knew you were associated with several businesses. However much of an expert you may be in those areas your pontificating attitude does not display a knowledge of the fast food business which you have slammed on several occasions.

    Okay. So you ran a business. Big whoop. So did I. I closed it in Maryland in 2003 when Maryland threatened to institute a computer services tax. That tax meant I could not compete with a business right over the District line or Virginia. My company was a cash cow but small. The month after the computer service tax was announced a large company, over 1,000 employees, immediately closed shop in Maryland and moved to Virginia. Guess what? They never passed the tax then. However, the wisdom of the move proved itself when they came back in 2008 and passed the tax. Companies located in Maryland will be slammed when they try to bid on federal contracts and have to figure the tax in to the overall compilation. I since sold my business interest to a company in Virginia and now they’re making the money subject to Virginia tax laws.

    Paying people what you can afford to pay them means you stay in business and if someone wants to work for that wage who is Rick Ungar to claim it forces them to lead a financially depraved life? Talk about hubris.

    In short, I am happy you made all your money before Obamacare was instituted. Let’s see how you do starting in January 2014.

    Let’s make a deal Rick. If Obamacare leads to over 5 million jobs destroyed next year alone will you admit you have no idea of the market forces that create or destroy jobs?

    Of course you won’t. Pontificating blowhards like you will act like it never happened and claim it was due to unforeseeable circumstances.

    One further comment. What is it with you and your childish attitude that you’ve caught people in traps, etc? My, that’s a condescending attitude fed by a weak ego who apparently fears that others might observe that you really don’t know what you’re talking about.

    And that’s the biggest trap of all.

  • Rick Ungar Rick Ungar, Contributor 1 year ago

    Odd…if you knew I ran several businesses as you say here, why would you write-
    I’m afraid your slip is showing.
    And as for ‘my childish attitude’, I openly confess that there are a few of you that I do get a kick out of playing with simply because you aren’t interested in debate-you are interested in being as offensive as possible. The only way I can get through the stuff you print (because I pay attention to you although I rarely read your comments these days) is to have some fun with your nonsense. And to be completely honest, a lot of readers get a huge kick out of seeing me play around with those who can’t seem to make a logical argument without going for the “pontificating blowhard” and that stuff. I figure if that’s the way you like to do it, the least I can do is play along and return the favor.
    As for ‘my weak ego’… I hope all those who believe that my ego is anything but weak catch that. I’m clear that you didn’t intend it as a compliment but its nice to hear that someone doesn’t view my ego as outsized.
    Now, if you are going to suggest that I, or anyone else, doesn’t know what I’m talking about, you probably don’t want to state in a comment that it is “obvious I’ve never run a business: and then turn around in your very next comment and say you knew all along that I did have businesses. Why would want to knowingly misinform readers with your first comment if you knew it wasn’t true?
    One final note- your comment very much illustrates the difference between us. My businesses have had many challenges along the way-some far more difficult than a tax issue. And, you know, if never once occurred to me to close one of the businesses because of such a challenge because I always figured there is a way to overcome a challenge. While businesses will often reach their natural conclusion, or simply become less interesting than another place to invests one time and money, I have to say that I just don’t get closing up shop because of a tax challenge. You just find another way to get the job done. Apparently, for you it would have been a simple matter of relocating the business just across the border. Now, I may not be understanding you correctly on this as in one sentence you say you closed the business because of the threatened tax and then you later say you sold it, so this is a bit confusing.
    OK…insult away. But please..a little more creativity. You’ve used “pontificating blowhard’ a bit much don’t you think?

    OH- almost forgot — yes, if five million jobs are lost next year (for ANY reason other than a deep recession as I think even you would agree that Obamacare, in all its horrors, has never been pegged as a deep recession causing vehicle) I will dedicate a full article saying I was horrifically wrong about Obamacare!!! Now, you’ll probably see that as some kind of dodge-becuase I think that is who you are- but if you have any interest in being honest (I dont’ know if you do) you will be unable to find so much as one conservative economist who has suggested that the ACA-with all they hate about it- would cause a recession of the sort that would result in 5 million jobs disappearing.
    By the way, what is your plan if we continue to add jobs in 2014? What can I expect from you? A full printed apology for being a pontificating blowhard?

  • jmoe jmoe 1 year ago

    Well done, Rick. I think the kids call it “pwnage.” One of the best troll takedowns I’ve ever seen.

  • Thanks for the response but it opens up another issue. You like to play with people and your readers like it? Do you realize how that sounds? I don’t think it’s true in your case but that sounds like Megalomania.

    I apparently didn’t make it clear in my response but what happened was I closed my business in Maryland and simply moved it to Virginia. I had to do it to stay competitive. You see, the Maryland state law only applies to Maryland state businesses. If a Virginia computer company services a contract in Maryland they have a 6% pricing advantage because they are exempt from the law.

    If millions of jobs are created next year, besides those being created at the IRS, I will come back and admit there is a flaw in my approach. But don’t hold your breath.

    I just read today that the state of Virginia is cutting 10,000 employees back to 29 hours or less a week. Watch this tactic spread throughout the country. I’m not debating whether it’s right or wrong. It’s reality so it has to be dealt with.

    Why anyone would think this is good or preach this is good escapes me.

    If the minimum wage is now increased on top of Obamacare look for more jobs to go away and more jobs will be moved overseas. On top of that look for smaller employers cut jobs so they can get under the 50 employee threshold. In effect, the minimum would be just another form of a tax although it’s payroll.

    Here is now Obamacare is destroying the economy in one business in one state. I know you clap with glee at the advent of Obamacare but here is what the acolytes of PPACA are applauding. Remember, this is just one business in one state. Multiply this by one million and you will soon get a picture of 2014:

    Cook Medical, Inc. is the developer and manufacturer of medical devises such as stents, catheters, valves and filters which are increasingly in demand as the Baby Boomers age. In addition to the high tech products that they manufacture, Cook is also an innovator in job creation. Their business model calls for the purchase of unused manufacturing plants in the Rust Belt, reconditioning those plants and hiring the locals as workers. Each new plant would cost $20 to $30 million and generate up to 300 jobs locally. So, how many new plants will Cook build in the Rust Belt? None. Why? Because that $20 to $30 million is about what they will be paying annually under the new taxes imposed on medical devise manufacturers by Obamacare. Does that mean that there will be less of Cooks products? Of course not. Cook can sell all of the product that they can make, The new plants that manufacture those devises will simply be built overseas and employ foreign workers. As the old adage goes, “If you want to impede or halt a particular activity, just tax it”.

  • Glenn Darr Glenn Darr 1 year ago

    The Law of Unintended Consequences will apply here. Jobs paying the minimum wage are not exemplified by ones where there is a single provider supporting a family. Most likely it is a relativley small percentage with most being part time and/or second jobs, as noted many of these being young adults working part time. Jobs paying the minimum also are in businesses with low margins which cannot afford 10%-20% increases in wages.

    Probable result of further increase: more ‘jobs’ going underground (hard to include these in the studies); more ethnic ownership where the family members draw no salary, layoffs which result in the remaining workers picking up the slack with no or minimal increase in pay, more hiring of illegal workers along with increased numbers of illegals and possibly increased prosecution of employers hiring illegal workers.

    The wages paid should be between the owner and the employee. This is an area where intrusion which appears to be the right thing to do – ‘full time workers should not be earning below the poverty level’ – is a gross oversimplification of the issue and its consequences.