Readers React: The incredible, shrinking minimum wage

To the editor: Neither Daniel Flaming nor Edward Leamer mention the obvious when it comes to increasing L.A.’s minimum wage: In 1968, California’s minimum wage was $1.65 an hour, or about $286 monthly (if employment ran 12 months with no layoffs). My nice studio apartment in Corona del Mar was $85 a month. Gas was 25 cents a gallon, and a young adult’s health insurance was around $30 a month. (“Raising the minimum wage: Would it help or hurt L.A.?,” Op-Ed, Oct. 11)

Now, most nice studio apartments in Newport Beach and Irvine start at about $1,300. Food, gas, and healthcare also have all inflated. At $15 an hour (just $2,600 a month, less payroll taxes), rent would take up half the wage.

To have effective “buying power,” today’s minimum wage would have to be north of $20. That would mean many restaurant workers would make the vaunted “$20 or $30 an hour” these writers suggest is an ideal wage.

Grievously unmentioned: In 1968, the highest marginal federal income tax rate (now 39.6%) was 70%. CEOs made, on average, about 20 times as much as the typical worker; today, they make hundreds of times what their employees earn. Back then, unions still had clout.

How could Flaming and Leamer leave all this out?

Mark Davidson, Santa Ana

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To the editor: I was struck by Flaming’s reliance on a 20-year-old, deeply flawed study of wage rates that purported to show that purchases of labor, unlike every other good or service in the universe, would not be affected negatively by an increase in its price. Ask yourself what service you consume that you would buy more of if the price increases.

Equally nonsensical is the idea that a higher minimum wage could stimulate the economy. Every extra dollar received by a wage recipient is one less dollar someone else has to spend. Most of these people are also local.

The only significant exception would be some shareholders, and they also notice. In 2011, CKE Restaurants Inc., parent company of Carl’s Jr., announced that it would be opening 300 new restaurants in Texas and zero in California.

What it’s really all about is stimulating voter turnout.

Jaco van der Colff, Woodland Hills

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To the editor: “If raising wages is such a good idea, why not go for $22?” Leamer asks. The obvious counter-question is: If keeping the minimum wage down is such a good idea, why not go for $5 or less?

This would be the way to go if Leamer’s arguments against raising the minimum hold water. Why not let the market forces work?

The catch is that the market forces are distorted by food stamps. Our society is making a “charitable contribution” (to use Leamer’s terminology) to the employers, by paying in food stamps part of the wages market forces would impose.

Rein Taagepera, Irvine

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To the editor: Leamer and Flaming agree that the underlying problem in the wage dispute is that there is a surplus of low-skilled workers that depresses wages. This can only be corrected by creating more jobs.

The private sector is no longer capable of doing this, as much of its investment goes to finance and technology. Neither of these are job creators. Only massive government-led investments in infrastructure, renewable energy, energy efficiency and education can create the jobs to alter this equation.

This is unlikely to happen anytime soon, leaving us to apply Band Aids to hemorrhages.

Michael Gitter, Pacific Palisades

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