Saturday, April 29, 2006

Tiny's: The American Dream is alive!

The American Myth Is Alive Too!

Tiny's story was great (even though I never got a ride in that Porsche and it has since been replaced by a truck - and that is SO WRONG Tiny!).

Here's a bit of how the MSM in the form of the Oprah Winfrey show (broadcast just a few blocks away from my place here in Chicago) tries to keep us feeling bad about our country and our economy.

Oprah recently had a show entitled: "Inside the Lives of People Living on Minimum Wage." Which would be great except that it went on to lie about it. Oh, you'd like an example, here you go:

Oprah claimed that 30 million Americans earn the minimum wage of $5 an hour. Well, the federal minimum wage is $5.15 but we'll cut her some slack on that one.

But here are some real numbers: "According to Current Population Survey estimates for 2004, some 73.9 million American workers were paid at hourly rates, representing 59.8 percent of all wage and salary workers. Of those paid by the hour, 520,000 were reported as earning exactly $5.15."

Wow, 30 million or 520,000? That's a huge difference! And all those Oprah watchers are now convinced that 30 million people live on the minumum wage, nice.

But wait, there's more: Workers earning the minimum wage or less tend to be young, single workers between the ages of 16 and 25. Only about two percent of workers over 25 years of age earn minimum wages.

"According to the U.S. Bureau of Labor Statistics: Sixty-three percent of minimum wage workers receive raises within one year of employment, and only 15 percent still earn the minimum wage after three years. Furthermore, only 5.3 percent of minimum wage earners are from households below the official poverty line; forty percent of minimum wage earners live in households with incomes $60,000 and higher; and, over 82 percent of minimum wage earners do not have dependents.

The U.S. Department of Labor also reports that the "proportion of hourly-paid workers earning the prevailing Federal minimum wage or less has trended downward since 1979."

Poor people are not poor because of low wages. For the most part, they're poor because of low productivity, and wages are connected to productivity. The effect of minimum wages is that of causing unemployment among low-skilled workers. If an employer must pay $5.15 an hour, plus mandated fringes that might bring the employment cost of a worker to $7 an hour, does it pay him to hire a person who is so unfortunate as to have skills that permit him to produce only $4 worth of value per hour? Most employers would view hiring such a person as a losing economic proposition.

Two important surveys of academic economists were reported in two issues of the American Economic Review, May 1979 and May 1992. In one survey, 90 percent, and in the other 80 percent, of economists agreed that increasing the minimum wage causes unemployment among youth and low-skilled workers.

The problem with the MSM is that they view things through a bizarre prism. The picture of poverty in America is not static. I was once one of those people working for less then the minimum wage, now I'm a fairly affluent young professional. People in America move progress through the income spectrum, usually according to their ability.

So yes, the American dream is alive! Just don't listen to the MSM!

2 comments:

Tiny said...

Yo Splash,

Well I'm planning on another Porsche purchase...I'll make sure you get to drive this one! It is amazing how many people take what they get from TV and the MSM at face value. If you didn't do your own homework and just listen to Opra, or the MSM, you would think our economy sucks along with every other aspect of American life.

Splash Two said...

Ain't it the truth! I need to give credit to Walter Williams since I found that info from his column at Townhall.