A minimum-wage increase is unnecessary

Funny

I hate to say it but some people just don’t know how recognize “facts” or ideology when they see them. For instance pointing out that a certain percentage of workers are younger than 24 or senior citizens, which is a fact derived from a report, and then making up claims about these workers motivations for working, i.e., “they work for the fun of it”. Gutman has absolutely no facts to support the claim that young people and senior citizens aren’t working for the money, no such data is presented in the report she references. This claim is pure conjecture that not only defies common sense, but also defies numerous other studies that have found in fact that seniors have had to go back to work or delay retirement for purely financial reasons, and that young people are working to pay for education and relieve financial stress on their families.

From an economic perspective it doesn’t actually matter why people work, THAT they work, earn income, and spend it, is the critical factor. Dollars that young people spend are no less valuable than dollars anyone else spends. In fact, dollars that young people spend as disposable income boost certain sectors of the economy. Employers have no business deciding what their employees spending priorities ought to be. Who’s to say that saving for education, or car insurance, even spring vacation, is less important than rent? Basically employers are saying that unless an employee is on the verge of economic catastrophe they’re not entitled to a living wage… and even then they should apply for food stamps.

Others have already pointed out that the whole idea that some kind of labor “free market” exists is pure fantasy. Labor isn’t a product that’s developed and sold by entrepreneurs. Labor is required to survive, and at a time when 90% of all of our labor is “at-will” the disparity in power between employers and employees is greater now than it has been in over a hundred years. Job applicants are even supposed to ask how much a job pays lest they sabotage their job interviews.

No matter what anyone says, employers, given a choice, will invariably pay workers as little as they can. The only exception are employees with contracts i.e. executives or unionized work forces. It’s not about what’s good for business, its about putting as much of the business revenue as they can in their own (or investors) pockets. There’s nothing “fair” about this. when you pay your workers less than a living wage your not only harming your worker, your taking money out of my pocket because I’m making up the difference with my tax dollars and safety nets.

Look, here’s what we know about trickle down economies: they’re bad for everyone below the top 10%. It’s not that trickle down doesn’t work, it just doesn’t work for the vast majority. All economies and all governments redistribute wealth. The only difference is to whom and to what extent a given economy or government redistributes.

Here’s another fact: the US has now sunk to the bottom of developed nations in terms of class mobility. The wealthy stay wealthy, the poor stay poor. If you want people to have a shot at the American dream you have to make it possible earn a living and have time to pursue interests. As long as people have to work 70 hours a week just to get by, they can’t explore their dreams.

There’s one last thing we need to start clearing up. Liberals invented “limited government” AND Capitalism. Historically conservatives were Monarchist that believed in absolute rule by absolute rulers and resisted the transition from the feudal economy to the capitalist economy. This idea that conservatives are responsible for “liberty” and liberals are enemies of “liberty” is simply ridiculous, on the contrary. This is why totalitarian regimes always emerge from the conservative end of the spectrum. There was by the way nothing even remotely Liberal about the Soviet Union, the Soviets hated liberals and established totalitarian regime that violated almost every liberal principle of individual liberty. “Left” and “Right” don’t always align with “Liberal” and Conservative” on the political spectrum when you get to the extremes. This is why Libertarianism and Anarchism share some basic principles although there’s are considerable qualitative differences.

Here’s the thing…

You have to remember that those of us who have argued for living or higher minimum wages have been studying this for decades. This didn’t come out of nowhere and it didn’t just pop up last week. We’ve seen all these arguments.

One difference between liberals and contemporary Tea Partyish conservatives is intellectual integrity. Absolutely you have to try to measure the benefits against the costs of any public policy. Absolutely you have to look whether or not a living wage will do more harm than good for minimum wages workers. Absolutely you have to consider the effects on the over-all economy, inflation, and unemployment. Thing is unlike Tea Party conservatives liberals aren’t don’t let ideology or “principles” displace reality or reason.

These guys are all pointing to a CBO study released a few week ago while living wages advocates have been studying this for decades. Sure these are legitimate questions, but lets not pretend these questions have no answers or have been answered, they have. I think anyone reading these comment threads can see that. You can read the CBO document for yourself, it’s really only 21 pages, the remaining pages are index materials. All of these questions are asked and answered:

1) There is no reliable prediction regarding over-all employment effects, it cold be zero, or it could be a million, this is the conclusion of the authors themselves, they have no confidence in their own projection. However if you look beyond the CBO to the aforementioned decades of research you find that the current consensus is that wage around $10.00 an hour indexed to inflation will NOT cause any significant long term unemployment numbers. In some scenarios it could actually create jobs and decrease unemployment.

2) The effect on government budgets is probably zero.

3) 16 million people will see rise in their income and almost a million will be lifted out of poverty.

4) In general the benefits for low wage workers, other workers, and the economy in general outweigh the negatives.

My experience is that resistance to living wages is driven (and I’ve seen this for decades) by simple contempt for low wages workers and disdain for any sympathy for anyone other than the wealthy or employers. You can see it here, low wage workers are lazy, don’t really need the money, can’t raise themselves up etc. etc. I don’t think I even need to respond these claims, their absurdity is self evident. Suffice to say that this is not about economics although it may be about maintaining economic oppression.

What’s funny is that the same Tea Party conservatives that are constantly complaining about having the “fruits” of their labor outrageously “taken” by the government (taxes) are arguing that low wage workers are entitled to less fruit than anyone else despite the fact they are often laboring harder than many other people. I say we’re all entitled to the fruits of our labor, included low wage workers, and our fruit should be enough for us to live on although with varying degrees of affluence.

Listen: Ayn Rand’s Utopia of free markets and self leveling power is actually nightmare. Opponents of living wages don’t simply want to hold them down, the want to eliminate minimum wage altogether. And they want to eliminate Social Security, unemployment benefits, food stamps, etc. all because the “markets” will provide. We’ve seen what that world looks like, and if you want to see it today go to Bangladesh. I’m guessing you wouldn’t want to live there and I notice there’s no great exodus of Tea Party conservatives to the low tax free market Utopia otherwise known as Somalia.

Fairness

I think when you look certain relationships it easier to model fairness than others. The problem with labor is that here in the US we have such weak labor laws and low labor union participation that employers almost always have a disparate lock on the power. With few exceptions (the recent dust up with orchestra musicians for instance) employers like Walmart simply impose wages on at-will employees. Our subsidies clearly enable that. The labor market could only be considered “fair” if wages were negotiated and subject to contract.

Fortunately with wages we have a measurement, cost of living, that gives us a metric by which to calculate fairness. Simply put, we can argue that no employee should work for wages that put or keep them below the poverty level. We can define a “successful” business as one that not only generates a profit for it’s owners and investors, but also creates living wage jobs. This is “fair” because it delivers acceptable benefits to all players, labor AND investors. The alternative, poverty wages, delivers benefits to one group at the expense of another, which we can effectively argue is “unfair”.

The other arena of “fairness” we can address with living wages is the business subsidy. I’m not apposed to all business subsidies, but I think we should only subsidize business’s in such a way that benefits as many people as possible or promote economic growth or equity. If you look at the effect of our minimum wages subsidies you see that they do more to promote and maintain poverty and have very little if any stimulus effect. Denying $5,000 a year to a worker so I can buy my taco for 10 cents less is beyond inefficient, it borders on absurdity. One can argue in effect that subsidized low wages are unfair not only to the workers trying to live on them but to the community that subsidized them as well. Again, the vast majority of people simply believe that employers should bare the cost of their employees, not the taxpayers.