Monthly Archives: February, 2014

A Personal Story About Pay

1174832_10151656005487971_300646792_nThere has been a lot of debate recently about whether or not to increase the minimum wage in the United States.  Many who work retail and fast food are considering it unfair they don’t receive higher wages.  I have a personal story to tell you about my time in the combat zone of Iraq.

As a Lance Corporal, deployed in support of Operation Iraqi Freedom, with 2nd Battalion, 7th Marine Regiment, I made approximately $25,000 during my tour of duty.  This was over the course of seven months. To many, it may seem like quite a lot, but there is some truth that needs to be discussed in this.

As infantrymen, my brothers and I were on duty 24 hours a day.  We could be woken up, have our meals interrupted, hang up our phone calls to loved ones, all at a moment’s notice if a mission were on hand.

Because of this, if you factor in the math of what we made hourly, as Lance Corporals (the majority of my squad in Iraq), it ends up being just around $5.79 per hour.  This job is also one of the most dangerous, intense, and demanding jobs on the planet.

I am not complaining in the least. I loved my time in the Marine Corps, and wouldn’t change it for the world.  But it is time for these burger flippers and shelf stockers to realize that their job isn’t demanding, and you get paid for the skill level you have.  Before you complain about how unfair your part time job is, it is time to take an honest assessment and realize that there are those with a harder job getting paid almost two dollars less than you per hour, and with their job, life is on the line every day.

Just wanted to highlight a little perspective for those whining about how unfair your lives are.

Raising the Minimum Wage Won’t Help

Up-Arrow-Money-ChartIn spite of the rhetoric delivered by the President and progressive members of the House and Senate, raising the minimum wage does not help the economy, nor the people who make minimum wage.  It all boils down to simple math.

Let’s take a look at the average salary of a president of a company: $141,226 (payscale.com)

Now let’s look at small business (those with 25 or fewer employees) and say the president meets the average.

Mr. President of ABC incorporated has 25 employees that make minimum wage. The U.S. government raises the minimum wage from $7.25 and hour to 10.10, an increase of $2.85 per employee.

His employees are all part time working 30 hours per week, which now costs Mr. President an additional $85.50 a week per employee.

There are 52 weeks per year.  This means that the additional pay Mr. President must give his employees becomes  $4,446.00 per employee per year  for a grand total of $111,150.  This leaves the president of the company with $30,076 per year.

Now to many this sounds like it’s fair.  But what happens when the employer makes less than the average?  What if the employer has 50 employees?

Now let’s take a look at this increase from the perspective of the employee.

You just entered a higher tax bracket.  So let’s do the math.  You didn’t pay any income tax before.  You kept everything minus FICA and Medicare.  You will now get paid a gross of $606.00 per pay period (bi-weekly).  You have withheld $125.80 for income tax (taken from the IRS Publication 15), leaving you with $436.33 after FICA and Medicare are also taken out.

Are you much better off than you were before?

Before you grossed $435.00, exempting you from income tax.  That leaves you with $400.59 after FICA and Medicare are gone.  The difference they want to give to you?

$35.74 a paycheck.  That’s it.  And unfortunately there is another problem not yet addressed: price increases.

In order to be able to pay the additional wages of employees and remain profitable, businesses must do one (or both) of two things: increase product prices or lay employees off.  That means the extra $35 you got is paying for more at the pump, the grocery store, and anywhere else that compensated for the rise in wage, or you lost your job and file for unemployment, which is only about 60% of what you were making before.

Do you see the problem?

If a company doesn’t voluntarily increase wages based on sales revenue and success, and is arbitrarily dictated by government, you are worse off.

The best thing to do? Make yourself more employable to a company that pays more.  That is really the only solution.

Raising the minimum wage sounds great coming from a politicians lips, but when rhetoric meets reality, we end up worse off.