Economics for Dummies (or the Left)

I’m not an economist. Never have been, never will be. But I believe do look at things fairly logically.

I live in Illinois. We, like many states, have recently raised the minimum wage. Now, on the surface this seems like a very humane thing to do. Helping the guy at the bottom seems very noble. How can a family make it in the US making the minimum wage? The problem is, this is not the genuine reality.

According to the Bureau of Labor Statistics, the majority who actually work for minimum are between 16 and 24. Only 2 percent of workers above age 25 earned the prevailing minimum wage or less. The truth is that most of the minimum wage workers are young or second income workers and almost 70 percent only work part time. The myth that someone is supporting a family just doesn’t support the numbers. I know there are those that do, but this is not the norm.

What this does is artificially raises income for these workers. Most of the employers in who hire entry level workers at minimum wage in the US are small businesses. Most of these businesses are not able to simply absorb the higher cost of paying their workers higher wages just because the government says they should. The prices of products can only raise so high before consumers look for other solutions. The effect is actually lower employment for those who actually need it. Businesses may just move out of an area to reduce their costs.

A real solution would be to actually remove these artificial wage controls. Some jobs are not worth paying the prevailing minimum wage. Most jobs offer entry level for a reason – you’re not suppose to stay at that level. I’ve worked for minimum wage in many jobs, all while in High School or College. I have started all my other jobs outside of college as entry level and worked my way up. It’s the American way, or at least it used to be.

Of course, that’s just my opinion.

Rob’s Rant

Source:
http://www.bls.gov/cps/minwage2003.htm
http://www.heritage.org/Research/Economy/wm1186.cfm

Do the Rich Pay Their Fair Share?

In case your living under a rock, you know it’s an election year. When this happens, all kinds of pandering goes on – on both sides of the aisle. The most insidious lie that I always hear, mostly from the left, is that the “Rich” in America get all the tax breaks and the middle class and poor gets screwed. Sounds logical, but is it really true?

I was glad to find out that I’m one of those fat cats who is considered one of the rich. Funny thing, I didn’t know this. I have two cars, both paid off, but have well over 100,000 miles. I have a nice house, but not a mansion. I do alright at my job, but I wouldn’t consider myself rich.

The truth is, it doesn’t take much to be considered one of the “Rich” in America. The fact is that the Top 5% of wage earners pay over 50% of the tax burden. Further, the top 50% of wage earners pay over 96% of the tax burden.

Who are those 50% who are considered “Rich”? It will surprise you. If you made at least $29,000 filing jointly, you were in the top 50%. Hard to believe? The figures are directly from the IRS from the year 2003. Don’t believe me? Check it out for yourself.

If you ask, surely those under that level and the “poor” are paying taxes, aren’t they? The answer is no. There is something in the US called the Earned Income Tax Credit that actually gives a refund to those who either pay a little income tax or no income tax at all. This allows the recipients to receive all of their tax back in a refund, and sometimes more than they paid. Kind of like our current Social Security System – but that is a whole new topic.

So, if these politicians were really honest they would acknowledge the real facts. I’m really not that naïve, I know they are full of it and have no interest in the truth.

Of course, that’s just my opinion.

Rob’s Rant

Sources:
http://www.irs.gov/pub/irs-soi/04in06tr.xls
http://www.rushlimbaugh.com/home/menu/cy2003.guest.html (Chart)