Let's talk about minimum wage. Unfortunately, a lot of people seem to be arguing about whether or not we should be raising it. I contend that's a non-starter position, and that the only question is how much we should be raising it. But before we get into all the standard arguments, let's talk about some very general principles, and see if we can at least agree on some basic goals.
First, and most important, let's agree on the purpose of minimum wage. This isn't as straightforward as it might seem. Is minimum wage supposed to be proof against poverty? That is, do we want to set it at a point where anyone who is working will be above the poverty line in terms of straight dollar numbers? Or, do we want to gear it toward families, so that one full-time income can support a stay-at-home mom and a couple of children? Or, is minimum wage just something for teenagers who want afternoon jobs to save up for a new X-box?
We can banter about ideas until the cows come home, and we may not reach any sort of consensus, so maybe we should back up one step further and ask a very basic set of questions. Let's begin with the most pressing:
- Is there enough money in America so that everyone can have food, clothing, shelter, education, and healthcare?
Thankfully, the answer to this question is a resounding yes. The top earners in America, just by themselves, could subsidize all the poor people in America without having to sell their kids' private jets. There's also no shortage of food. We throw away nearly half of what we buy. There are more empty homes in America than homeless people. The cost of our wars could pay for... well... damn near everything we lack. Even without all that war money, we could still pay for everybody who's going to college, essentially on existing public funds.
So let's begin from a new point, and ask a new set of questions:
- There are definitely enough resources in America for everyone to have enough food, clothing, shelter, education, and healthcare.
- Since this is the case, by what logic do we justify anyone going without any of these things?
This is the question that staunch capitalists, Libertarians, and neoliberals fail to address in their praise of dog-eat-dog economic models. But let's just say it plainly. In America today, the rich have more than they need and the poor are literally dying from all the things they lack. So, can we justify this? Is it okay to have a society where everyone could have enough, but millions do not?
Let's assume that this is not okay. Let's go on the hope that as a country, we do not believe it's okay to kill people to get a pay raise. From this point, we can start to look at ways to make sure everyone has enough to live comfortably -- and by that, I mean knowing that regardless of what else happens, they'll have food, a place to live, and necessities like healthcare and education.
Now we need to address a new question. How are we going to distribute our wealth of resources to everybody? We can do it in the form of money, if we like. That's the most direct way, since we can use money to buy nearly everything we need. This sounds good on paper, but we immediately run into another problem. Some people have jobs, and others don't. If everybody's getting the basics, and some people work while others don't, that's unfair, right?
Yes. It absolutely is unfair. However, we've got to choose. Are we aiming for dollar-for-dollar fairness, or are we aiming at providing for everybody? For those readers who would answer "fairness," you can quit reading now, because we're not on the same page. In this writer's mind, it is a far greater unfairness for some to die of want when there is plenty to be had, than for some to have more free time than others.
Once we have agreed that not everyone will work, but everyone will have the basics, we need to decide how to give it to them. In most First World countries, this is accomplished through some sort of national dole, where all the working people chip in a small percentage of their incomes to the government, which then distributes the money to people who aren't working, either because of age, poor health, student status, or whatever else.
This "poor tax" is often considered a burden by working folk, and sometimes, there is cause for complaint. If there are job vacancies left unfilled, and the employed are having to shoulder the burden of people who could be working but choose to stay on the dole, there is a problem. America should hope to have such a problem one day. Today, however, there are 3 unemployed Americans for each job opening, so this complaint does not apply to us.
Now, we get to the real crux of the matter. Another complaint about the dole system is that the burden is too high for working folks. Such taxes, it is often complained, cut into working people's cash reserves so much that they risk poverty themselves. This, as it turns out, is a valid complaint. Fully 80% of Americans are near poverty.
At this point, we can review our position and make some big policy decisions. Here's our checklist:
- There is enough for everyone to live comfortably
- We've decided that since there's enough, we're going to make sure that everyone has enough
- The dole system is widely used, and can get the job done
- Unfortunately, the dole system overly burdens taxpayers who are already close to poverty
So, we can't raise dole taxes on people who are already overburdened. How else might we provide for everyone? We could increase the number of jobs, of course, but in suggesting this, we must take into account that minimum wage is below the poverty line. Giving people jobs that keep them on the dole is no solution. And frankly, creating jobs is a very complicated procedure, and usually takes years. There are people right now who need help immediately. So while job creation is definitely important, it's not the immediate solution we need.
There's a relatively simple answer to this dilemma. We could raise the minimum wage to a point where anybody with a job wouldn't need public assistance! By doing this, we would first eliminate all the employed people from the dole in one fell swoop. That's no small thing, either. By taking all the employed people off of welfare, we would automatically add a lot of money to the existing welfare pool, which means we could increase the benefits of people who aren't working without substantially raising taxes. In other words, working people are making more money, and still paying close to the same taxes as they are now, and unemployed people get more benefits. Neat, eh?
At this point in the discussion, some people will be yelling about the increased price of goods when minimum wage goes up, and about unemployment rising. These concerns are important, but we also need to be careful not to overstate them. Previous studies have found slight drops in employment growth after minimum wage hikes, but it turns out, the methodology wasn't that great. More recent studies have demonstrated that in fact, other co-occuring factors account for the employment lag, not the raise in wage.
As for increased prices, that's not a thing to worry about, either. The reason for this is that the price hike in consumer goods is substantially less than the rise in buying power for workers: "The estimates from these studies cover a relatively wide range, suggesting that a 10-percent increase in the minimum causes overall prices to rise somewhere between 0.2 percent and 2.16 percent, with most estimates falling below 0.4 percent." Call me crazy, but I'll take a 10% raise in exchange for a 2% rise in the cost of goods any day of the week.
Once we've gotten these preliminaries out of the way, we are left with only one question: How much do we need to raise minimum wage before workers don't need to go on welfare? It's a great discussion to have, and it'll be nice to do it without all the shrieking and heckling from armchair economists who never bothered to think all this through.