Could This Be a Possible Solution To Income Inequality?

MinimumWageWordCloudOn a recent visit to a friend’s house I noticed a woman running around his place dusting, scrubbing, vacuuming and generally making his place look five star hotel room clean. I always thought he was just a fastidious “Felix Unger” type of guy who quietly and obsessively cleaned his place when we weren’t looking.

I quizzed him further on his cleaning person and realized this could be one part of the solution to the Income Inequality and Minimum Wage Debate.
First of all… My Friend’s cleaning lady was not some young shapely woman clad in a tight black and white uniform. And she most certainly was not a character out of Dowton Abby. She was a middle-aged jeans and sweatshirt wearing busy-bee focused on making fast work of cleaning every corner of the house. She did a great job and was done in two hours. That might not seem

like a lot of time to clean a four bedroom/five bath home but she is a professional with all the right tools and no distractions.

Wecandoit

So how much does this cleaning woman make and what does it have to do with Income Inequality and the minimum wage?  Stay with me on this math. I guarantee you will see a payoff.

My friend’s cleaning lady makes $100 for each visit. She spends plus or minus two hours working at a very fast pace.

Okay so let’s look at the numbers here….

Now lets look at some of the other practicalities… Taxes!Basically she is making $50/hour. Well above any minimum wage. Some might say that just dividing her cleaning fee by the number of hours worked may not be accurate. So then lets say she only does this one cleaning job that day. Then divide her $100 fee by eight hours. That comes out to $12.50/hour.  Well above the minimum wage in most states and localities I know of.

Pictures-of--The-Cleaning-LadyWhen my friend paid his cleaning woman he handed here a crisp new $100 bill. The transaction was between him and her. Uncle Sam and our wonderful representatives in D.C. did not seem to be part of this transaction in any way except that they printed the currency used. I am assuming that this hard working woman probably is not keeping records at a level satisfactory to the Internal Revenue Service or her State/City/Local Taxing authorities so they are not going to get their “fair share” of her hard work that day. This means that her $100 is equivalent to somewhere around $125 earned in a regular W2 reporting job.

That brings her hourly up to $60/hour or in my worst case where she only does this one job a day she is earning $15/hour.

Minimum-Wage1If that $15/hour number sounds familiar it is the dream number hourly fast-food workers have been fighting for. While they dream, demonstrate, and complain this cleaning woman has found her solution on her own. And she is her own boss. She sets her own hours.

But could her real bottom line look like?  This next part may not make a few college graduates living in their parent’s basement too happy.

If this Cleaning Lady is even 10% as good a business person as she is at cleaning houses she probably has three cleaning gigs a day for five days of the week for a weekly tax free equivalent take of  $1,800 or around $93,000 a year. And my friend tells me she did not go to college so she doesn’t have and crushing debt to pay off.

The-Cleaning-Lady-Now the what ifs to think about….

What if the government used the tax system as an incentive for people to do more of these kind of cash-for-work type of jobs? What if there were some type of internet service to match people with jobs to do with those willing and able to do them? Something like TripAdvisor with ratings and recommendations.

And… Do you think the possibility of making $93,000 a year might get an unemployed college graduate out of the parental dungeon?

What about possible unintended consequences?

I’m sure there could be many unintended consequences but the first that comes to my mind is that as hordes of fast-food workers discover the joys of working fewer hours for much higher pay the supply of fast-food workers will drop. And as that supply drops those wages will need to increase on their own. Everyone could win here.

Quick your minimum wage job and get one of these?

Quit your minimum wage job and get one of these?

Oh by the way… If you think that $93,000/year number is a high… When this cleaning lady drove away she was in a bright shiny new red Corvette. When I commented to my friend he said, “Oh did she drive the Corvette today? She has a black Range Rover and a Ford Pickup, too.”

 

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