...But Liars can Figure
Back on August 31st CNN Money ran an absolutely idiotic piece about the wealthiest and poorest areas of the nation....
The typical Maryland household earned $65,144 in 2006, propelling it past New Jersey, which came in second with earnings of $64,470, but had led the nation in 2005. Connecticut finished in third place both years, recording a median income of $63,422 in 2006.
Maryland's income was nearly double that of Mississippi, which, with a median of $34,473, was the nation's poorest state. West Virginia, where the median household earned $35,059, was second poorest and Arkansas, at $36,599, was third.
While blathering on about the average incomes of various states and towns, they not once stopped to note the actual cost of living in those various locations. Can they really be that stupid?
An apartment that rents for $500 in Tulsa would rent for more that 10 times that much in New York City. (I actually called and New York City and got prices) Housing costs shift tremendously from location to location. And "surprisingly" the average income of a state or location is directly proportional to the housing costs in that state or location. Housing is one of the single largest expenses for the average American family, ignoring that variable makes any claim about "wealth" meaningless.
But pretending that the entire nation has a homogenous economy is how dishonest politicians rationalize a national minimum wage, which ultimately hurts the poor as well as businesses, and helps only politicians.
Posted by Danny Carlton at September 4, 2007 6:20 AM
Housing is not directly proportional to income. Direct proportionality assumes a linear relationship. In this case you are saying (housing cost = median household income * a constant variable). If this were true Tulsa, OK would have significantly lower median household incomes (currently estimated at $35,316) in order to be directly proportional to the rates being seen in NY. My town Asheville, NC has a lower median household income than Tulsa, OK (currently estimated at $32,772) and one would be hard pressed to find an apartment under $600. I can't speculate an exact comparison as you didn't include details of the apartment size which you evaluated. Wealth depends on the type of economy in a location (i.e. manufacturing, industrial, tourism, etc.). None of the information provides any benefit without a comparison of median household to the mean household income (in order to understand the outliers). You are however attempting to predict an exact pattern for housing and income, something that you just spoke out about as ignorant in this very post. Also food cost and transportation cost, though not as high as housing do compromise a significant portion of the American budget and need to be figured into any real wealth calculations. Additionally what benefits are workers within specific localities provided needs to be factored in. The CNN study lacked vital components of such an economic analysis, but yours did as well. You also failed to mention income inequity in the US which is what a minimum wage attempts to correct (http://www.trinity.edu/mkearl/strat.html).
What would you propose then to fix wage problems in the United States? Market forces are going to rely largely on automation and specialization of skill sets which will inevitably drive the value of a worker down. In an increasingly accredited society, education is not a viable option for everyone as not everyone can afford to incur large sums of debt in order to break into a skilled or academic position. Recent studies have shown (I apologize for not providing a reference) that workers are making less now compared to what workers were making in the previous generation. It seems now that large corporations are doing pretty well with a minimum wage that is laughable as are the politicians. I have yet to encounter a small business that pays minimum wage, but have been offered positions at several corporate entities at well below the fair wage. Small business relies on customer service and well-trained employees, corporate business relies on employees with a pulse (something you might be able to find at minimum wage). Further a local regulatory body can provide more strict regulation for a locality (i.e. a higher local minimum wage). There is a need for a national baseline that at allows for workers to support their families.