An editorial in the News Sentinel about the minimum wage was complaining about Bob Caylor’s opinion on it. Well I would like to add my 2 cents worth. What a person is paid is between them and their employer. I worked for minimum wage ($1.65) for a few days and looked for another job and found one. The complainer said there were 1.9 million workers who were paid minimum wage and they were the ones who would do better under a higher wage. Well, that is not totally true.
As the United States Average Wage increases, so does the replacement rate for each year you worked. This replacement rate is the difference between the US Average Wage in the year you turn 60 and each previous year. Each year you worked will have a unique replacement rate and each cohort will be different. Assuming the minimum wage does not reduce employment among the group affected, the US Average Wage will increase, which in turn will increase the initial Social Security Old Age Benefit for everyone not yet retired. It won’t be a lot, but let’s face it; Social Security does not need more problems.
The consumer price index will increase. This is not fiction, but fact. The price of labor will go up, the employer will pay 7.65% on each dollar to Medicare and Social Security. Unless the owners do not pass the costs onto consumers, inflation will increase. But even if owners do not pass the cost onto consumers, the Federal Income Tax or corporate tax paid by employers will decrease. A decrease in Federal Taxes increases deficits, which no one likes and hurts everyone.
As inflation rises due to the increase in FICA tax (yes it is factored into the CPI), retirees COLA will increase, putting more strain on a bankrupt Social Security program.
A minimum wage in my opinion not needed. Many of the companies pay only minimum wage as starting wages and then increase them to a competitive level. 1.9 million out of 160 million workers is just over 1%. Think about who this 1% are? The vast majority are young people who are working their first job. Government does not have the expertise nor wisdom in setting what an individual should be paid.
The Price of Corn
Who would have ever thought the price for a bushel of corn would go over $4.00? I certainly did not, but it reached $4.12 a bushel. For those who listen to radio and watch television, the price of oil has been dropping these past few months and actually went below $50 for a short interday time. Unleaded gas went for $1.37 (commodity price before federal and state taxes). These two commodities have something in common and that is energy used to run automobiles.
Ethanol, a liquid energy converted from corn using propane and electricity (generated by coal) yields about 1.5 gallons per bushel of corn. Corn is a raw material input and at 1.5 gallons per bushel is worth about $2.06 with unleaded gas at $1.37 (before tax). But Ethanol has 70% of the energy content of unleaded gasoline. This means you need to fill up sooner and get fewer miles per gallon. This means the value of a gallon of unleaded is about 95 cents. When the price for corn is greater than $1.42 per bushel, ethanol producers should hang it up.
However, the fact is more ethanol plants are being built. Who is paying for these plants? All you need to do is look in the mirror; it is you and I. That is right. Unleaded gas costs $1.37 before taxes, but $1.90 after taxes at the pump. Gas stations and producers pay no federal or state taxes, which means you and I are giving these producers 52 cents for every gallon they distill.
At over $4.00 a bushel, how on earth will these Ethanol producers make money? If the close, who will clean up their site? Who will be left holding the debt and unpaid bills? Mitch Daniel’s, Senator Lugar and Congressman Mark Souder need to stop subsidizing these wasteful, inefficient producers of Ethanol and let the industry sink or swim on their own. They should stop using taxpayer money to fund this con game.
The reality is for every gallon you pay $1.90 for, you are also paying some fraction of the 52 cents per gallon for those who use Ethanol.
The Social Security "Fix" of 1983
How many believe that the legislation passed in 1983 raising taxes, base and retirement age from 65 to 67 for those born after 1937 fixed social security? How many believe that all congress did was legislate a patch that cost workers since 1983 $7.67 trillion?
Did you know of the total $8.957 Trillion taxes paid by workers to social security OASI since 1937 that $8.053 Trillion as been paid out in benefits to retirees? 90 cents of every dollar paid into social security has been paid out in benefits.
Baby boomers of not which one of us has retired and drawn an OASI benefit, have paid over $4 Trillion in taxes to OASI. The value of this amount is very close to $9 Trillion! The problem is the OASI trust fund does not hold $9 trillion in US Treasury notes or anything close to this. It has a total value of about $1.82 Trillion as of the end of 2006.
If the "FIX" of 1983 were truly a fix, the trust fund would contain or total over $9 trillion. Our representatives have used Enron Style Accounting to swindle, con and steal our hard-earned money. Mark Souder has been in Congress for 12 years and all he has to say is:
Social Security as a "shell game." He stated, "For people under 30 its probably going to be income based. I am not saying we're going to pass that. It will probably be passed after I am dead." He continued "If you're 40, you might make it through the system. But if you're under 40, and certainly under 30, you had better start planning because if you want to have a decent retirement you’re going to need supplemental funds." Prime Time 39 on 3-12-2004
If you do not speak up now, your representatives are getting ready to "fix" social security again! What is left? Raise taxes, cut benefits, raise retirement age? Pay more for the same benefit? Maybe pay the same for less? Maybe pay more and retire later resulting in less. Anyway you slice it, dice it or cut it, you and your children will pay for their ineptness. The only good thing is that there are over 117 million potential voters under age 46, only 36.5 million over age 62 and less than 40 million between age 46 and 62. If you want to take control of your future and keep congress out of your retirement, I ask for your support in 2008.
Check out my plan.
Full Day Kindergarten
The News Sentinel reported that some group has done a survey of Indiana Citizens on Full Day Kindergarten. I have spoken with people in Warsaw, Roanoke, Huntington and Fort Wayne about this and not one supported the idea. I truly question the accuracy of this survey. If anyone is able to find a link to it, please respond to this and let me know.
I ask that all write editorial and contact their representatives voicing their concern and opposition to this proposal. There is no evidence that full day kindergarten improves student performance past fifth grade. It may give them a step up, but they loose it over the next five years as others catch up. Maybe they should read the story about the tortouse and the hair.