Remember in school when they'd tell you to check your work? I did that recently. Well, someone else did it for me, that is. When the national debate began a few months back about raising the federal minimum wage from its current level to as high as $15 an hour, I set out to consider the likelihood of this possibility utilizing something very dangerous and potentially lethal to me: math.
I'm a words guy. Math isn't my friend. However, having been employed in a lowly minimum wage job once when the minimum wage was raised...by a full and hearty 75 cents, by the by, I was curious to calculate the feasibility of basically doubling the current wage.
One company bearing the brunt of the wrath about the minimum wage was Wal Mart. As such, I used Wal mart as my base example, researching the general number of wage-earners employed by Wal Mart, estimating (out of thin air, no less) what the average wage said worker earned and set about calculating the impact an increase of this size would have on a company of this magnitude.
What I came up with is a total of about $5 billion in added annual costs to Wal Mart's budget. It sounds like a lot, but when I calculated the overall impact this cost would have on consumers (because, let's face it, the Wal Mart heirs aren't going to eat a loss, not matter how big or small), it turns out the added amount for payroll would have next to no impact on a Wal Mart shopper's average total at the check out.
Of course, while I was confident in my equation, I wasn't too confident in my mathematical logic. Turns out, through some miracle of calculation, I was pretty close to accurate. This week, for some reason, a few videos have popped up on YouTube addressing this very subject. One video in particular, done by actual mathematicians and statisticians, contemplated the impact a so-called living wage would have on food stamps.
A living wage, per the video, is the amount needed to prevent people from relying on food stamps to any degree, which they suggested was just shy of $14, or a little more than a buck less than in my equation. The total cost to Wal Mart, they calculated, would be about $4.8 billion, which is close to the figure in my model. The bottom line increase for shoppers came to about 1.4%, or roughly enough to jack a 68 cent box of mac n' cheese up to about 69 cents.
The savings to taxpayers is about $300 million annually...and that's just if Wal Mart's minimum and low wage earners were given a livable wage increase. Of course, Wal Mart earns a lot of revenue from food stamps, which is a minor problem for them if a huge source of food stamp revenue disappears as a result of a living wage. Of course, their employees will have far more disposable income and will be capable of purchasing things with cash that they cannot with food stamps. The economic impact for Wal Mart, in that light, might even be a net gain. Even if the result is pure loss, if $4.8 billion added a penny to the cost of mac n' cheese, I'm sure an extra $300 million isn't going to add much more to the overall total. Consumers, I'm sure, can managed two or three extra cents in their budget if it saves them $300 million or more in taxes each year.
The real question at the end of all of this is why there isn't more political traction behind this? After all, the wage helps lift thousands out of poverty, which is a key Democratic ideal, eliminates the demand for food stamps, easing pressure on the federal deficit and creates an avenue through which taxes can be cut for millions of Americans, which is music to Republicans. It's tailor-made for bi-partisan agreement, and yet here we are.
It's something to consider the next time a member of either party approaches you for your vote.
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