Minimum Wage vs “Maximum Wage” in the USA May 26, 2006
During his presidency, Bill Clinton gave states the power to set their minimum wages above the federal level. Since then, 18 states have raised the minimum wage above the federal level of $5.15. On Tuesday, January 17th, 2006, Maryland became the 18th state in the nation to enact a law that will make Maryland’s minimum wage higher than the federal. Santa Fe’s $9.50-per-hour minimum wage is the highest in the nation, and there are plans to increase this wage to $10.50 in 2008.
$5.15 x 40 hours = $206/week x 4 = $824/month x 12 = $9,888 per year.
$5.15 x 60 hours = $309/week x 4 = $1,236/month x 12 = $14,832 per year.
$9.50 x 40 hours = $380/week x 4 = $1,520/month x 12 = $18,240 per year.
$9.50 x 60 hours = $570/week x 4 = $2,280/month x 12 = $27,360 per year.
For comparison, let’s compare that with a first year lawyer associates at a law firm or a physician who makes $150,000 (assume a typical 60 hour work week):
$52 x 60 hours = $3,125/week x 4 = $12,500/month x 12 = $150,000 per year.
And let’s compare that with a Fortune 100 CEO median compensation of $17.9 million (”maximum wage”):
$6,215 x 60 hours = $372,916/week x 4 = $1,491,666/month x 12 = $17,900,000 per year.
That’s over 1200 times more than someone making minimum wage working a 60 hour week and 120 times more than a lawyer or doctor making $150,000/year!
Ref:
- Wikipedia, US State minimum wages
- CEO pay soars in 2005 as a select group break the $100 million mark, USA Today
America’s Hidden Poverty May 8, 2006
When we were young, we were taught to help the poor, since we were American and privileged to be part of this great nation. We raised money, food and clothing to send through the Red Cross to countries such as India, Bangladesh, China, South America, and Mexico. Somewhere along the way, our nation neglected the poor among the Americans. An article in today’s NY Times about America’s Near Poor shows the vulnerability of middle and lower class Americans. Climbing poverty rates and rising level of debt suggests a deepening insecurity. More people work in jobs without health care or insurance. Because many of us, myself included, come from privileged backgrounds, we don’t notice the millions of Americans living in poverty. The article states:
About 37 million Americans lived below the poverty line in 2004, set at $19,157 a year for a family of four. But far more people, another 54 million, were in households earning between the poverty line and double the poverty line.
That’s a total of 91 million Americans earning $38,314 (double the poverty line) or lower. Our previous discussion of economic classes highlighted the growing gap between upper class and lower class. It’s sad to hear that approximately 1 out of 4 families earn less than $40,000. Americans are at a period of growth, but at the expense of the lower class. We still have the thought of kids with distended stomachs in India as the picture of poverty. But the tables have turned and it’s countries like China and India who are supporting Americans with our debt addiction. We can’t ignore/hide these problems in our own backyard.
Source:
America’s ‘Near Poor’ Are Increasingly at Economic Risk, Experts Say
By ERIK ECKHOLM
Published: May 8, 2006
Economic Classes in the USA April 25, 2006
Our family grew up in what I think is an upper class neighborhood. I had friends whose family had huge homes, nice cars (Ferrari, Porsche, Benz), and parents who owned businesses or were executives. Our family was comfortable, but we didn’t own the 6000 sq. ft. mansions, sports cars. In other words, I believed that we were upper middle class family in an upper class neighborhood. Our discussion about class in America prompted me to think about what class I am in. Although I knew that the lower class didn’t have much net worth or did not hold management-type jobs, I never thought about what made a family middle class vs upper class.
According to wikipedia, the US has no legally-recognized social classes. Elites exist, but are numerous and there is no universally recognized hierarchy of people. Generally, sociologists use a five class model:
- Upper class
- Middle class: Upper-middle classs
- Middle class: Middle-middle classs
- Middle class: Lower-middle classs
- Lower class
| Upper class | Upper-middle classs | Middle-middle classs | Lower-middle classs | Lower classs | |
| Proportion | 1% to 3% of the U.S. population | 10% or so of the U.S. population | 40% or so of the U.S. population | 30% or so of the U.S. population | 20% of the U.S. population |
| Net worth (not including home) |
above $500,000 | between $250,000 and $500,000 | between $125,000 and $250,000 | $50,000 to $125,000 | $0 to $50,000 |
There’s a lot of fuzzy borders between the classes, and there are no clear cut answers, but this gives us some idea of the classes in America. It’s said that the wealth of the top 1% in the United States equals the wealth of the lower 95%. I belive that the spreading wealth gap is causing a smaller proportion of middle class in American society. The reason may be downsizing in some industries of the American economy, competition from lower-paid foreign workers and contractors, and the systematic elimination of unionized labor.
There’s also a lot of discussion on Oprah’s message boards about class in America where there’s some interesting perspectives. Do you ever think about what class you’re in? Do you worry about the widening income gap between classes?
Source:
Wikipedia - Social structure of the United States
http://federalreserve.gov/pubs/bulletin/2006/financesurvey.pdf
Women Shopping Habits and Class in America April 24, 2006
According to a Financial Times article today, lower-income women (with less than $45,000 annual household income) confined their weekly shopping to the mass merchandisers, super-centers, and dollar stores while high-income shoppers (with annual household income of more than $75,000) shopped in drug stores, department stores, specialty stores and warehouse clubs.
…women shoppers were “even more prudent and price conscious and even less willing to pay a premium for convenience” than two years ago. Their attitudes to shopping are all focused on saving money.
From what I’ve seen with friends and family, it seems that every family, regardless of economic class shops at discount warehouse stores (such as Sam’s Club or Costco) and are more conscious of prices. Perhaps the growing gap between low income and high income shoppers widening is a big reason that the lower, middle, and upper middle class are increasing in number.
Speaking of classes, The Oprah Show had an episode about class in America. Jamie Johnson, an heir to the Johnson & Johnson Pharmaceutical company, shares with Oprah some interesting and depressing facts about the rich and poor gap:
- The top one percent of Americans own roughly 40 percent of the country’s wealth.
- The top one percent possesses more wealth than the bottom 90 percent combined.
- An average member of the top one percent earns roughly $862,000 a year while a majority of Americans earn only $34,736. That’s what the average CEO earns in less than one day of work!
Do you think this lopsided wealth, concentrated on the top 1% of Americans is related to the topic of shopping habits above?
Source:
Shopping Habits Shift as Women Watch Their Wallets
by Lauren Foster of Financial Times
Thoughts on “The Broke Generation” February 8, 2006
There’s an article that interviews Tamara Draut, the author of Strapped : Why America’s 20- and 30-Somethings Can’t Get Ahead about why people in their 20s and 30s feel that they can never get ahead with their finances.
Draut claims the gloomy conditions have less to do with extravagant spending habits and more to do with skyrocketing housing prices, college tuition increases, credit card debt, depressed wages and increasing health costs.
I have to agree that although there are lots of 20 and 30 year olds who are “Lazy. Spoiled. Irresponsible,” there are many who just can’t get ahead due to rising housing prices, tuition, and gas prices. For those who are doing everything they can by saving and paying down debt, things will get better. Paying down $200 here and there every month doesn’t seem to make a dent on your credit card balance, but with discipline, the debt goes away. The 20s and 30s is a period of self investment and sometimes that means a big investment in university and graduate school, so getting to the next income bracket is not in the forefront of their thoughts.
update (2/9/06):
MSNBC’s article from 2/8/06 also discussees the Broke Generation, or ‘Generation Debt’. One stat that grabbed me is:
Between 1983 and 2001, credit card debt for 25-to-34 year-olds nearly tripled, according to the Federal Reserve, from $3,989 to $12,000.
$12,000! I had credit card debt after college for $5000 and I thought I was never going to pay it off. But $12,000 is pretty steep, given that many first college graduates don’t make too much more than that. Draut talks about selling her CD collection to pay off her loans, but nowadays, college students don’t have a CD collection to sell, since they’re downloading their mp3 music onto their iPod.