Why We Need a $50-an-Hour Minimum Wage

And a shiny hat, to boot

And a shiny hat, to boot

 

It’s simple, really. In a progressive society, everyone needs a basic level of sustenance. A $9/hour minimum wage as proposed by the President, although a step in the right direction, means a mere $18,000 for someone working 40-hour weeks with 2 weeks’ vacation. That’s hardly enough to sustain any kind of lifestyle, especially for people with children. Especially for people with multiple children. $18,000 is a step up from the current $14,500 a full-time minimum wage earner would make, but it’s nowhere near enough.

Our proposal – $50/hour – guarantees the dishwashers and housekeepers of Our Great Nation at least $100,000 a year. Every man a king, right? Why should internists and litigators be the only ones to benefit from 6-digit incomes? A sharp, sudden jump in the minimum wage would finally bring the equality that most politicians only pay lip service to. $50/hour (and remember, that’s just a minimum. Employers are encouraged to pay more) is the difference between a society of wildly disparate incomes, and a society in which no one, no matter their education level or background, ever has to do without again. Furthermore, a 6-fold increase in the minimum wage will spur consumer spending and make the economy hum again. With more money in their pockets, the working classes will have more for outlays, getting the money circulating and creating greater prosperity for all. It’s just good business sense. Politicians of both parties need to reach a bipartisan consensus on this and pass meaningful reform, right away. No more half measures.

(We couldn’t expand this post to regular length and keep it fully satirical. Time to go earnest on you.)

Reality time. A wage isn’t just remuneration that an employer decides to pay you. It’s a function of your worth to said employer – how much you can bring in. Johnny Depp’s next endeavor is allegedly worth $90 million. If that’s true, will he receive such a windfall just for being that much more breathtakingly handsome and charismatic than your average minimum-wage worker? No, or the person writing these lines would be making at least as much. Johnny Depp commands that kind of money because the previous 5 movies in his current series have grossed $2.8 billion on a budget of barely a billion. For whatever reason, millions of people like to see him on screen. If those numbers are legitimate, the $90 million might even be on the stingy side.

The franchisee who runs the Burger King that you work at isn’t paying you $7.25 an hour to man the counter because he’s cheap. (He might be, but that’s beside the point.) He’s doing it because that’s all you’re worth. Granted, you’re not “bringing in” money in as direct a way as Johnny Depp is, but your position still has value. Consider the alternative; not having someone on the premises to take customers’ orders.

Say the $50/hour minimum wage was enacted. Then what? That franchisee would have to raise prices to the point that he could cover his employees’ new salaries yet continue to make something of a profit. Even if you think profits are evil, he might still need to recoup $1.2 million in startup costs. But no one’s going to pay $17.50 for a patty on a bun, meaning the franchisee would have to close up shop and lay off his entire staff, raising the unemployment rate that much more.

A $9/hour minimum wage differs from a $50/hour minimum wage only in degree, not in kind. Raise a job’s wage beyond whatever the market clearing price is, and at some point that job becomes no longer economical.

The pro-increase forces have managed to convince a gullible public (ah, but we repeat ourselves) that the average minimum-wage earner is an exhausted single mother with 5 kids, living in the projects, of darker complexion than your average U.S. senator, and just trying to make a go of it in a system that’s stacked against her. Multiply her by tens of millions, and that’s Obama’s Bush’s America. Welcome to dystopia.

It’s a load of crap. You know how many true minimum-wage jobs there are in this country?

1.7 million. Which means 99.3% of people in the workforce are making something more than minimum wage.

Furthermore, most of those 1.7 million are under the age of 25. And almost all of those are teenagers.

You turn 14, your parents stop handing you things, and you start earning your own money. It’s called growing up. And so at the onset of your work career, you make very little money. Why? Because you’re one step above useless, and you haven’t developed any skills. But it’s OK. You’re not supposed to have developed any skills, because you’re 14. Also, you’re not paying for room and board. If anything, we should be lowering the minimum wage. There are plenty of kids who’d be happy to have a little extra cash for swinging a mop and a bucket, but who can’t because prospective employers would rather hand the job off to an unpaid family member than hire someone at $7.25 an hour.

An Experiment Gone Awry

 

Yeah, the sun is at the center of the electric tower. It's not symbolism, it's just a cool photograph.

Yeah, the sun is at the center of the electric tower. It’s not symbolism, it’s just a cool pic.

Last week we broke down the Dow Jones Transportation Average, which is the older and less excitable sister of the famed Dow Jones Industrial Average. There’s also a younger and similarly low-key sibling, the Dow Jones Utility Average. It was founded in 1929 – for multiple reasons, a notable year for stocks – when all the major utility stocks were removed from the Industrial Average and left to create their own index.

Thus the DJUA consists of the prices of the shares of 15 power companies and their ilk, summed and multiplied by a constant. You probably haven’t heard of more than 5 of them, yet they’re far more important to the progression of the economy and your day-to-day comfort than Google or Facebook will ever be.

The utilities include

  • 11 electric companies
  • 2 multiutilities
  • 1 pipeline company
  • 1 gas distributor.

Applied Energy Services, based in suburban Washington, D.C. Founded by a couple of federal bureaucrats, AES operates all over the world – with 12 million customers not just in the U.S. but Mexico, the Dominican Republic, Colombia, Brazil, Argentina, Chile, the U.K., Spain, France, Belgium, the Czech Republic, Ukraine, Hungary, Bulgaria, Turkey, Nigeria, Cameroon, Jordan, Oman, the United Arab Emirates, India, Pakistan, Sri Lanka, Kazakhstan, China, the Philippines and we might have missed a couple. AES does coal, hydro, diesel, gas, oil – all the usual suspects, plus a wind project that they’re very proud of.

American Electric Power is headquartered in Columbus, and fires up 11 states. (Ohio, Texas, and much of the Illiteracy Belt.) AEP’s transmission system is bigger than all the others in the United States combined. 2/3 of their power comes from coal, 2/3 of the rest from natural gas and oil.

Con Ed – Consolidated Edison – is New York City’s major electricity and gas supplier. It also operates in New Jersey and northeastern Pennsylvania. In addition to the juice and the gas, Con Ed also supplies a peculiar 19th century relic form of energy – steam. Yes, they move simple water vapor through tunnels that manage to heat swaths of Manhattan. Cogeneration, they call it: the steam is a byproduct of electricity generation, and with a little ingenuity Con Ed does something beneficial with it instead of just letting it rise into the atmosphere.

Dominion, based in Richmond, electrifies much of Virginia and North Carolina. It also supplies natural gas to several neighboring states.

Edison International, not to be confused with Con Ed – is based in suburban Los Angeles and is the parent of Southern California’s biggest electric company. There’s another subsidiary that owns fossil fuel plants as far away as Turkey, or did until the subsidiary filed for Chapter 11 bankruptcy last month.

Chicago’s Exelon also sells electricity and natural gas, specifically in Illinois, Pennsylvania and Maryland. Many of Exelon’s assets derive from last year’s merger with Constellation Energy. Exelon also owns all or most of 17 of America’s static supply of nuclear plants.

Yeah, this is a laundry list and kind of dull. But we’re almost done and besides, we committed to this in last week’s post on the Transportation Average and now we have to finish it. And if you think this is boring you should check out how our muse Trent at The Simple Dollar spent the first couple weeks of the new year.

FirstEnergy, headquartered in Akron, has 10 operating companies that among them provide power to 6 million souls who live in the more refined parts and outskirts of Appalachia. Much of the infamous 2003 blackout that affected almost the entire Northeast and much of central Canada occurred thanks to FirstEnergy’s failure to, if you can believe this, trim some trees around a few of its high-voltage lines in Ohio. Almost 2/3 of FirstEnergy’s power derives from coal, and half the rest from nuclear.

NextEra, with offices north of Miami, generates power in 28 states and 3 provinces. Like most of its cohorts on the DJUA, it has several divisions that it operates under (Florida Power & Light, etc.) NextEra is America’s biggest distributor of solar and wind energy, which still makes up a trivial portion of the nation’s energy generation. As you might be discerning by now, the biggest differences among most of these companies is geography.

Pacific Gas and Electric, based in San Francisco, provides natural gas and electricity to customers in northern and central California. 2 years ago one of their gas pipelines burst, killing 8 people, or infinity times more than the number of people killed in nuclear accidents since the first commercial application of critical fission.

Alright, maybe this wasn’t our best idea. For those of you who’ve made it this far, we’re pretty impressed. Send your requests for future 2-part Control Your Cash pieces to info at this site’s URL. Public Service Enterprise Group of Newark gives ¾ of New Jerseyites their electricity and natural gas fix. Here’s their boring Twitter feed, and they’re still riding that solar train, too.

Atlanta’s Southern Company deals exclusively in electricity (hydro, coal etc.), not gas, and is building the first nuclear plant this country has seen in the last 30 years (near Augusta, Georgia.)

Duke Energy, headquartered in Charlotte, is a holding company. Like Southern, Duke is strictly electric, with 8 nuclear plants, 17 coal-fired plants, a dozen oil-and-gas fired plants, and 30 hydro stations among its assets. Last summer Duke merged with Progress Energy, the new combined board named Progress’s CEO to run the company, and 20 minutes later that guy resigned to spend more time with his family and pursue other opportunities. Seriously. For his tenure at the helm he received $45 million. Duke’s erstwhile CEO replaced him, and more than a few board members think they’d been duped.

CenterPoint Energy, based in Houston, sells electricity and natural gas to customers in Texas, 4 surrounding states, and Minnesota. CenterPoint is the successor company to Reliant Energy, the company that a) plastered its name on Houston’s NFL stadium and b) still exists, but as a different entity. In fact, it’s one of CenterPoint’s biggest customers. CenterPoint doesn’t sell directly to households and businesses, but rather to retail electric providers – the middlemen in the chain.

NiSource is headquartered in Merrillville, Indiana, not too far from Chicago. Its natural gas and electricity customers range everywhere from New England to the Heartland to the Florida Gulf Coast. They have an “unwavering commitment to top-tier safety and reliability, collaborative stakeholder relationships, inclusive and engaging work environments, strong governance and transparency, and forward-looking environmental practices and stewardship”, and again, if you think today’s post is dull try reading a few corporate mission statements.

One more, and let us never break down another Dow Jones index as long as we live. Williams Companies, based in Tulsa, does primarily natural gas and oil with a smattering of electric. Ten years ago Warren Buffett floated the company an emergency loan so it could hold off bankruptcy. No word on what interest he charged. Interestingly, to the extent that anything in today’s post is interesting, Williams inadvertently helped modern telecommunications flourish. The company ran fiberoptic cable through defunct pipelines.

We’re so sorry. A better post Friday, as God is our witness. Still, now you know a little about 15 enormous companies that collective employ tens of thousands, serve hundreds of millions, and pay next to nothing in tax while literally keeping the lights on.

A Thrilling Multimodal Friday Ride

Transforming the world, 33' at a time

Transforming the world, 33′ at a time

 

The Dow Jones Company creates dozens of indices. By far the most recognized and quoted of those is its Industrial average, 30 stocks that are supposed to comprise a representative cross-section of the American economy. Dow’s 2nd- and 3rd-most noted indices are its Transportation and Utilities averages, one of which we’ll discuss today and the other we’ll talk about Wednesday unless something more exciting comes along.

First off, why is the New York Stock Exchange stuck in the 19th century? Why “Industrials”, “Transportation” and “Utilities”? Shouldn’t they have given way to something like “Telecommunications”, “Software”, and “Health Care” by now?

Well, because industry (however you define it), moving stuff and people around, and keeping the lights on are still pretty important.

The Transportation index was created 129 years ago. Originally it was nothing more than the total of the stock prices of 9 railroad companies, a steamship company and Western Union. With the exception of Western Union – which is now exclusively in the business of transferring money – and Union Pacific, every one of those companies is defunct.

Of course, Dow Jones added and subtracted other companies to and from the index over the years. Much like its Industrial counterpart, the Transportation index consists of the prices of several (30 for Industrials, 20 for Transportation) stocks, summed and multiplied by a constant. The Transportation companies are as follows:

  • 5 airlines
  • 4 trucking companies
  • 4 railroads
  • 3 deliverers
  • 2 shippers (as in ships)
  • 1 rail lessor
  • 1 truck lessor.

The airlines, you’re probably familiar with. Delta, United, Southwest, JetBlue and Alaska, which are respectively America’s 1st-, 2nd-, 3rd-, 6th- and 7th-largest by passenger volume. 4th is American, which filed for Chapter 11 last year and was thus replaced on the index by Alaska. 5th is US Airways, which filed for bankruptcy in 2001 and again 3 years later.

The trucking companies have a more direct effect on your life than the airlines do, yet it’s doubtful you’ve heard of more than a couple.

C.H. Robinson, based in the Twin Cities, is what they call a “3rd party logistics” company. They don’t actually own trucks, but instead agree to ship customers’ freight using other companies’ trucks. And ships and planes. Also railcars, which C.H. Robinson does own. But the vast majority of C.H. Robinson’s revenue, $7 of every $8, derives from trucking. Landstar, headquartered in Jacksonville, is similar to C.H. Robinson in that it doesn’t own vehicles. Two of the other trucking companies, Ann Arbor, Michigan’s Con-Way and J.B. Hunt (based in Northwestern Arkansas), you’ve seen proof of up close if you’ve ever driven on an interstate.

The 3 delivery companies probably need no description, or at least 2 of them don’t – FedEx and UPS. The 3rd one is Expeditors, a Seattle-based company that specializes in international cargo shipments. (Is that redundant? “Cargo shipments”? Could we just say “cargo”? And why do shipments often involve a car while cargo involves a ship? Also, why do we park on a driveway and drive…)

The railroads on the Dow transport cargo, rather than passengers, because a) there’s a government-mandated passenger railroad monopoly in this country and b) that monopoly loses obscene amounts of money. They include the nation’s largest railroad (and, as we pointed out, the only one that’s been on the DJTA since Day 1) –Union Pacific, which is headquartered in Omaha. If you live east of the Mississippi, you’ve probably never heard of Union Pacific. Trust us, it’s huge. Vice versa for Jacksonville-based CSX, whose operations transverse the eastern United States and select parts of Ontario and Quebec. Crossing much of the same territory is Norfolk Southern, which covers the eastern states save New England and Florida, and whose western terminus is in Kansas City. Speaking of which, Kansas City Southern is the final railroad, with operations in the south central United States and much of central Mexico.

The two shipping companies are Matson and Kirby. Matson, based in Oakland, has one core and lucrative business – shipping stuff to and from Hawaii. Matson also ships to Guam, Micronesia, and a few ports in China. Kirby, with operations based in Houston, is the nation’s premier tank barge operator. They transport oil throughout the Mississippi and its tributaries, along the Gulf Coast, and to Alaska and Hawaii (the freak states.)

That leaves two, including the rail lessor, Chicago’s own General American Transportation. They lease railcars throughout the U.S. and Europe, and operate American Steamship, which crisscrosses the Great Lakes.

The truck lessor is Ryder, based in Miami. Yeah, they rent trucks, but they’re also “a FORTUNE® 500 provider of leading-edge transportation, logistics and supply chain management solutions. “

(God, does anyone working in the communications department of any major corporation know how to, y’know, communicate?) That means Ryder leases commercial fleets. The company also manages warehouses and drivers for companies that own their own trucks but want someone competent to handle the (sigh, hate this phrase) “supply chain”.

Which ones should you invest in? Primarily Kirby, but that’s not the point. We’re just trying to avail you a little of how a lot of the stuff you take for granted helps the economy roll. As the XXL t-shirt says, “If you bought it, a trucker brought it”. And picked it up off a dock where it was delivered by a container ship that was loaded from a railroad.