Something for Neil Harding and other economic dunderheads. Like, say, She Who Must Not Be Named For 17 Days Or So.
This opposition by rightist types to a minimum wage is, of course, simply because we rightist types are rightists who want to grind the faces of the poor into the dirt so that we may abuse them further. Obviously there can’t be any other explanation for it.
So, how about a view of the minimum wage from someone who is not a rightist? An economist even? One well up there on the list of potential Nobel nominees? A John Bates Clark Gold Medal winner even? A stalwart of the New York Times editorial page? Someone who, in more normal times (like when he’s not talking about economics) sends us righties into paroxysms of rage?
Mark Thoma digs out an old Paul Krugman piece (yes, for it is he) on the minimum wage.
Clearly these
advocates very much want to believe that the price of labor–unlike that of
gasoline, or Manhattan apartments–can be set based on considerations of
justice, not supply and demand, without unpleasant side effects. This will to
believe is obvious in this book: The authors not only take the Card-Krueger
results as gospel, but advance a number of other arguments that just do not hold
up under examination.
…
They also argue that because there are cases in which companies paying
above-market wages reap offsetting gains in the form of lower turnover and
greater worker loyalty, raising minimum wages will lead to similar gains. The
obvious economist’s reply is, if paying higher wages is such a good idea, why
aren’t companies doing it voluntarily? But in any case there is a fundamental
flaw in the argument: Surely the benefits of low turnover and high morale in
your work force come not from paying a high wage, but from paying a high wage
"compared with other companies" — and that is precisely what mandating an
increase in the minimum wage for all companies cannot accomplish.
…
Consider, for example, the effects of "Plan Y" (never mind) on the
hypothetical head of a household, currently making $5.43 an hour. According to
their estimates, as long as he or she remained fully employed, the living-wage
law would raise earned income from $10,860 to $14,500–and also mandate $2,500
in health coverage. (This is, incidentally, a 57 percent increase in the cost to
employers; you have to have a lot of faith in Card-Krueger not to worry that
some jobs might be lost.) According to their numbers, that family would
currently pay less than $900 in taxes while receiving some $9,700 in benefits
such as food stamps, Earned Income Tax Credit, and health care. Their
calculations also show that most of the gains from the living wage proposal
would be offset by reductions in these other redistributive programs. Indeed,
only about one-fifth of the mandated increase in wages and benefits actually
gets manifested in disposable income; the rest is taken away as benefits
decline.
Now to me, at least, the obvious question is, why take this route? Why
increase the cost of labor to employers so sharply, which–Card/Krueger
notwithstanding–must pose a significant risk of pricing some workers out of the
market, in order to give those workers so little extra income? Why not give them
the money directly, say, via an increase in the tax credit?
…
In short, what the living wage is really about is not living standards, or
even economics, but morality. Its advocates are basically opposed to the idea
that wages are a market price–determined by supply and demand, the same as the
price of apples or coal. And it is for that reason, rather than the practical
details, that the broader political movement of which the demand for a living
wage is the leading edge is ultimately doomed to failure: For the amorality of
the market economy is part of its essence, and cannot be legislated away.
Worth reading the whole thing as the saying goes.
May I also just make plain and clear for people like Neil Harding and SWMNBNF17DOS, we rightists don’t oppose a minimum wage because we wish to continue to immiserate the poor, shaft them yet further. We oppose it because it doesn’t bloody work. OK?
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