by Peter Moon
On July 14th, Joe Biden announced a plan that would spend 2 trillion dollars to create green energy jobs, combat climate change, and generally improve American Infrastructure. A CNBC article, written by Jacob Pramuk, detailed Biden’s plan.
The further details of the plan are as follows: First, Biden’s initiative would plan to achieve carbon-free power generation by 2035-15 years in the future. If followed through, this plan would continue the decline of US Greenhouse Emissions that has been going on since 2007, according to a graph from statista.com.
The second goal of Biden’s proposal would be to create millions of union jobs-which would pay at least $15 an hour. These jobs would be created through the overhaul of roads, bridges, trains, the auto industry, and the US broadband system. This echoes the “Green New Deal”, put forth by New York House Representative Alexandria Ocasio-Cortez. On page 5 of the proposal, the author states, “1) it is the duty of the Federal Government to create a Green New Deal—“ and then goes on to state that (a) achieve net-zero greenhouse gas emissions through a fair and just transition for all communities and workers, (b) create millions of good, high-wage jobs and ensure prosperity and economic security for all people of the United States, (c) to invest in the infrastructure and industry of the United States to sustainably meet the challenges of the 21st century.
The entire proposal can be found here. So in a way, Biden is kind of pushing ideas which the congresswoman AOC is advocating for.
A big goal of Biden’s proposal is to reverse many of the environmental policies constructed and legislated by the Trump administration. The policies set forth by Biden also plans to target and attack pollution in minority communities, which the campaign claims has led to chronic health issues.
A big issue that the campaign did not address was how it planned to pay for such an expensive plan. The Democrat nominee says he supports increasing taxes on corporations and the wealthiest Americans - something the Bernie Sanders campaign also supported. A major blank the campaign has not addressed is whether the campaign will ban fracking - a proposal supported by former rival Bernie Sanders. States like Pennsylvania, Texas, and Alaska depend on exporting gas and oil, and a ban on the act would most likely slow or stop the industry.
If Biden does not strictly ban or enforce a ban on fracking, he would most likely face scrutiny from anti-fracking groups, like his boss former President Obama.
One of the biggest questions that must be answered is the 15 dollars minimum wage the proposal outlines for union jobs. The Federal Minimum Wage was started in the late 1930s, under the Franklin Roosevelt administration. The Department of Labor has a report on the wage, found here. The minimum wage (we’ll call it MW for short from here on out) started in 1938 at 25 cents. Back then, $1 was worth roughly $18 in today’s money. By 1968 (30 years later), the 1938 act stipulated that MW was supposed to be set at
$1.60 - an increase of $1.35. By 2008 (70 years later), the MW had skyrocketed to $6.55 - an increase of $4.95.
I was unable to find information on minimum wage projections in 2035, but one could guess that with the increases taking place, the minimum wage will probably not be $15 per hour by 2035. So if we were to guess that that is the case, then Biden claiming that union jobs will pay $15 minimum will be a criminal underpayment by unions. This also then brings into question how badly underpaid union workers might be in 2035 under the Biden plan-which would not make Bernie Sanders happy, as he has stated that the minimum wage must be a living wage. The usual argument against this idea is that a minimum wage job is meant as a stepping stone to a better-paying job. It’s meant to provide a little extra income while one is trying to get a better job, or while they are in a position where they can’t get paid full living-level wages (like while they’re in high school, college, or transition between the two). So thus, the Biden plan would lead to a future in which Bernie Sanders’ dream of a “living wage” would not be achievable. Another issue is inflation. If you were to buy a product for $10 in 2005, it would cost $13.20 (an increase of 32%). If that doubled by 2035, the product would cost around $16. That means if you work 1 hour of work, relieving $15, you wouldn’t be able to afford anything that was $10 in today’s money.
Isn’t that below a minimum wage? I hear some saying that “you can’t just assume someone will work 1 hour”. I agree, so let’s adjust this number. In 2019, The Balance Careers put out a report that stated: the average US worker aged 25-51 worked 40.5 hours a week. If we are to do the math, a 2-week paycheck would earn a $15-MW worker working 81 hours would only earn 1,215 dollars. In a 15 year period increasing inflation by 64.3%, the inflationary price of that number would be 1,996.223. Doing some tough math, we need to calculate the income of a $15 worker. Assuming no bonuses or raises are put in, this makes valuations a bit easier. First, we have the hours-per-week worked in 2019.
A study in 2015 was done to see the average hours a year worked by Americans. Since this is the most recent study done, we’ll have to grit our teeth and buckle down. We’ll use the statistics used in the study and then adjust from there. First, the average American worked 38.7 hours a week. Next, the average American worked 46.8 weeks out of the normal 52. Thus, we’ll need to multiply 15.00 by 38.7. That gives us 580.50. Multiplying that by 46.8 gives us 27,167.40 exactly. Now, to make this work we’re going to adjust for 2019 inflation (the last time a tax table was done). Adjusting from 2015 to 2019 gives us a 7.9% increase (27,167.40 to 29,303.96). The tax for a single (unmarried) American taxpayer who earned less than $39,000 but over $9,000 would be 12%. Let’s assume no crazed tax rates are raised or cut by 2035 (arguably impossible, but for the sake of my sanity and this article we’ll keep it here), we’ll adjust for a 64.3% inflation rate and then see how much 12% tax is worth in this hypothetical scenario.
First, inflation rates. A 64.3% inflationary increase of the “average wage” would be a massive one. In fact, it’s so massive it just kicked the average worker up a 2019 tax bracket. Going from 29,303.96 in 2019 would raise our wage to (get ready) 48,148.33. Now, we could adjust the former tax brackets. Let’s do that. Those making over 39,475 in 2019 paid a 22% tax. So increasing that level by 64.3% would force the barrier to 64,860.02. So...let’s mentally scrap that last statement-since the average worker is now making less than that. Kicking that tax rate back down to 12% allows our worker to pay 5,777.80 (with absolutely zero adjustments). This leaves our workers with only 42,370.53. Is this a living wage? No one can really tell.
Why must we focus on this impossible thought experiment? Well, for one thing, we as citizens must challenge the aspects of policy our government (and those wishing to rule in it) propose. In many ways, not challenging these policies will only lead to trouble in the future-problems we could have probably prevented by just asking “how would this work”, or “how would this go in the future?”. I understand the critiques of predicting the future. No one knows how our nation will turn out in 15 years. Heck, no one could have thought a virus would halt our economy or lead to an uncertain election. However, guessing and doing speculation is the chief job of journalists, and putting forth ideas and contradictory opinions is what allows us to stop and say, “Wait a darn second here” when hearing a proposal from our leaders.
All opinions expressed within the contents of this article reflect the views and values of the author, not Politics NOW.
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