Yesterday I saw this idea floating around, the idea that if we adjusted for inflation and if income distribution stayed the same as it was back in 1968 we would have a minimum wage of 21.16. Let me say first of all the idea of a minimum wage is a bit insulting, it implies that people are born with a minimum worth, and that just is not true, I have met some pretty worthless people in my day.
I wanted to address the differences of 1968 and today from a business standpoint and I am sure there are many.
Lets start off with the fact that the business normal tax rate was 22 percent in 1968, today it peaks at 39 percent. So physically businesses are being milked for more by the government.
As far as I can tell the idea of employer offered health insurance started shortly after ww2, but back then the cost was very low.
In 2010, the U.S. spent $8,402 per person on health care, and 18%of the U.S.economy was devoted to health care. Health care spending is consuming an
increasing share of economic activity over time and has exceeded economic growth in every recent decade.
Health care costs per capita have grown an average 2.4 percentage points faster than the GDP since 1970.
This is a cost your employer eats up quite a bit seeing as they pay on average 85 percent of your premium if you have employer insurance.
Costs for employer-paid health insurance are rising rapidly: since 2001, premiums for family coverage have increased 78%, while wages have risen 19% and inflation has risen 17%, according to a 2007 study by the Kaiser Family Foundation. Employer costs have risen noticeably per hour worked, and vary significantly. In particular, average employer costs for health benefits vary by firm size and occupation. The cost per hour of health benefits is generally higher for workers in higher-wage occupations, but represent a smaller percentage of payroll. The percentage of total compensation devoted to health benefits has been rising since the 1960s. Average premiums, including both the employer and employee portions, were $4,704 for single coverage and $12,680 for family coverage in 2008.
National health expenditures went from $198 per capita in 1965 to $336 per capita in 1970.
Health care is really just one peace of the puzzle however, and we should now take a look at unemployment insurance.
This one is pretty simple when unemployment insurance began by the passage of the Federal unemployment tax act the tax rate was 3 percent, it is now 6 percent. there is a lot of information to disseminate and apparently we use experience rating, which in short says companies that cause more unemployment pay more, but the data honestly is a bit hard to sift through.
Workers compensation is another issue at hand. By 1949 all states had a workers comp policy in place, and rates vary by state and what insurance policy they use. In Montana I was unable to obtain old data for back in the 60’s but he average wage loss claim is 60,000, and 67 percent of this cost is medical services, a cost we have already established was much much lower in 1968.
In Montana as far as I can tell workers comp cost employers 2 percent of wages paid.
The real point here is that numbers are not black and white, and even if we simply took the 10 dollar number offered for inflation adjustment only, many issues such as the cost of goods in the global market (china) and overheads that did not exist back in the day are not taken into account when you run raw numbers. I have spent an hour researching the data I provided here, much more than some random news reporter would, seeing as they have many more pressing issues to cover, and I have learned one very important thing I will share with you all.
The government, has way to many hands in business. There are so many things a person must consider while running a business, it is truly amazing we have any business.