I’m going to re-post something I wrote on AR earlier today. Something which has been bothering me about Schaeffer’s Number and the whole concept, but I haven’t been able to get off the tip of my tongue until today.
$3 trillion for health care expenses divided by 250 billion person-hours worked, both in a year, comes to $12 an hour.
$1 trillion for all K-12 public education, and that’s another $4 an hour.
The problem with Schaeffer’s Number and the economic and policy implications that people draw for it is this: Not all economic value added goes to labor. Not all Federal revenue collection comes from personal income taxes.
It’s mawkish to say and think that if you make $15 an hour, that you’re not even pulling our own weight with regards to education and health care alone. That’s because the economic forces from which you earn your $15 an hour are themselves productive and adding to the economy. And while lots of people are under Schaeffer’s Number, there are lots of people over it, pulling their own weight and the lot of other people’s weight.
While I think the Gross Domestic Product figures are questionable because they count too much intangible snake oil as productivity, (and it gets worse all the time), let’s play along. The $15.68 trillion GDP in 2012 divided by 250 billion person-hours worked makes $62.72 an hour. The real Schaeffer Number economy-wide is $62.72, which means if you make less than that, and almost everyone does, you’re not pulling your own economic weight. That much an hour works to $130,457 a year, which puts whoever earns it at the 96.3 percentile, i.e. the top 3.7% of individual income earners. So the whole economic-philosophical basis behind Shaeffer’s Number, taken to its logical conclusion, is that 96.3% of us are slackers and aren’t pulling our weight, and therefore, in the opinion of some (cough, cough, won’t say Ron Unz, cough cough), the minimum wage should be raised to $62.72 an hour.
Who really believes that?