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Time to rethink minimum wage

| February 28, 2021 1:00 AM

President Joe Biden lost his bid to include a $15 an hour minimum wage component in his $1.9 trillion stimulus package. The president is seeking a gradual increase that would more than double the current $7.25.

Over many years this newspaper has steadfastly opposed government-imposed mandates that could seriously hurt small businesses, but it's time to rethink raising the floor of what workers can earn.

We acknowledge that some small businesses would bear the burden not just of paying their lowest wage employees more, but likely having to increase pay for longer term, loyal workers. The hit could be significantly greater than merely anteing up for that lowest rung on the payroll ladder.

But when Biden said during a recent town hall that “no one should work 40 hours a week and live in poverty,” the statement rang of truth. Let’s take a closer look locally to see why.

Meet Ten Buckanhour of Coeur d'Alene. Outside the service industry that includes wait staff, nobody makes $7.25 an hour. You’ll be hard-pressed to find anybody working full time for less than $10 an hour, hence our fictitious volunteer for today's experiment.

In the Coeur d’Alene area, average rent is $1,112 for a 901 square-foot apartment, according to RentCafe.com. Ten Buckanhour found one for $900 a month — a bargain by today's standards.

Ten Buckanhour has a car payment of $250 — a junker that will take Ten from Point A to Point B with a reasonable chance of arriving there on time and in one piece. With that comes an insurance requirement — let's say $100 a month, which is likely conservative.

School loans? Ah, not good, but thousands of Idahoans have them. According to Educationdata.com, the average student debt in Idaho is $32,600. Nationally, at 6 percent interest for 20 years, the average monthly student loan payment is $393, and Idaho’s would be a little higher. Ten Buckanhour didn't finish college and has a $250/month student loan.

On earnings, Ten Buckanhour is paying 6.2 percent Social Security tax, 12 percent federal income tax, 1.45 percent Medicare and 1.125 percent Idaho state tax. That comes to $334 in payroll deductions each month.

Thus Ten Buckanhour's gross pay of $1,600 a month, after taxes, student loan, car payment and rent leaves a grand total of negative $234 each and every month. And that’s without any food, utilities, clothing, gasoline, car repairs or incidentals.

If the minimum wage reaches $15 an hour, Ten Buckanhour would gross $2,400 a month. Net after all of the expenses above — and taxes would be higher — would leave $515 a month, or $130 a week for food, clothing, utilities and so on. And if there are children? Medical bills? Credit card debt to pay for car repairs? Then Ten Buckanhour is in deep, deep trouble.

Something has to be done. Hardworking people deserve a decent life, no matter their skill level. With a little math at our fingertips and compassion in our hearts, America can crack this difficult puzzle.