Minimum wage: my take
An excellent science fiction writer asked me offline, "...what's the counter-argument for the conservative/libertarian position of 'Look, if you raise the minimum wage, the employer will raise their prices to compensate, this will ripple down the chain of goods and services, and pretty soon Mr. Minimum Wage is right back where he started.' I reply:
For most businesses, especially the giant ones, the portion of costs which go to wages is quite small. When you add that to the less-obvious point that a large portion of the social services budget in the U.S. goes to pay for programs like the one I work for every day, which pays people's childcare costs out of general public revenues, so that they can "afford" to work at minimum-wage jobs... well, it's to me a no-brainer.
I'm not kidding: my program pays for childcare for people who make low enough wages to qualify. That means if you make a half-ass decent wage (say, $30K a year) you don't qualify. But if you are trying to support your family by driving school buses part-time at $9/hour for a contractor, and working as a Wal-Mart greeter part-time, and maybe flipping burgers at Mickey D's on weekends, we pay for enough daycare that you can leave your kids with strangers in order to further enrich your bosses. (And at these wages, paying for daycare comes ahead of everything including clothing and dental care.) Similar strictures apply to WIC, and food stamps, and what little is left of the old AFDC/welfare programs.
And not least of all: the working class notoriously spends its income, often with small businesses. The increased money being paid to the folks at the airport bookstore where my wife and I work part-time to supplement our state clerical wages, will mostly go back into the domestic economy, in the form of purchases of books and clothing and books and wool and books and donations to my Friends meetinghouse fund and books and trips to SF cons in the States and books bought at those cons and knitting needles and long-put-off medical exams and books and an occasional night out and books and better food for the aging cat and books and shareware fees and books... you get the picture. Notice that most of the above is sales-taxed in most states; and higher wages mean higher income taxes and Social Security payments, even down at this end, in every state.
Damned little of that new income will go into collateralized mortgage obligations tranches (and yes, I DO understand what those are) or vacations in Gstaad (I have no idea whether I spelled that right) or options on the VIX (yes, I do know what that is; did I mention that I used to be one of BARRON'S most faithful socialist readers, until I had to drop that little luxury?). Money paid to the janitor in the stockbroker's buildings and the senior citizen who sells him his takeout cheeseburger and the maid who cleans his hotel room and the security guard who watches the storage facility where he leaves his hobby plane, is money that comes back into the economy with amazing rapidity. Less-crappy jobs like that are also going to look more attractive than marginal criminality, to a valuable fraction of the kids trying to make those life-changing choices.
Are there a few small businesses that genuinely can't afford a higher wage? A few. But if you actually can't make your business model work without paying your employees a decent minimum, is your business model one that you can honestly not be ashamed of?
Would the effect be marginally inflationary? Yes. Would it be worth it in terms of increased prosperity? Hell, yes. Even that bastardly reactionary antisemite Henry Ford was too smart to ignore the facts: you can't make any money selling stuff, if your own workers can't afford to buy stuff.
For most businesses, especially the giant ones, the portion of costs which go to wages is quite small. When you add that to the less-obvious point that a large portion of the social services budget in the U.S. goes to pay for programs like the one I work for every day, which pays people's childcare costs out of general public revenues, so that they can "afford" to work at minimum-wage jobs... well, it's to me a no-brainer.
I'm not kidding: my program pays for childcare for people who make low enough wages to qualify. That means if you make a half-ass decent wage (say, $30K a year) you don't qualify. But if you are trying to support your family by driving school buses part-time at $9/hour for a contractor, and working as a Wal-Mart greeter part-time, and maybe flipping burgers at Mickey D's on weekends, we pay for enough daycare that you can leave your kids with strangers in order to further enrich your bosses. (And at these wages, paying for daycare comes ahead of everything including clothing and dental care.) Similar strictures apply to WIC, and food stamps, and what little is left of the old AFDC/welfare programs.
And not least of all: the working class notoriously spends its income, often with small businesses. The increased money being paid to the folks at the airport bookstore where my wife and I work part-time to supplement our state clerical wages, will mostly go back into the domestic economy, in the form of purchases of books and clothing and books and wool and books and donations to my Friends meetinghouse fund and books and trips to SF cons in the States and books bought at those cons and knitting needles and long-put-off medical exams and books and an occasional night out and books and better food for the aging cat and books and shareware fees and books... you get the picture. Notice that most of the above is sales-taxed in most states; and higher wages mean higher income taxes and Social Security payments, even down at this end, in every state.
Damned little of that new income will go into collateralized mortgage obligations tranches (and yes, I DO understand what those are) or vacations in Gstaad (I have no idea whether I spelled that right) or options on the VIX (yes, I do know what that is; did I mention that I used to be one of BARRON'S most faithful socialist readers, until I had to drop that little luxury?). Money paid to the janitor in the stockbroker's buildings and the senior citizen who sells him his takeout cheeseburger and the maid who cleans his hotel room and the security guard who watches the storage facility where he leaves his hobby plane, is money that comes back into the economy with amazing rapidity. Less-crappy jobs like that are also going to look more attractive than marginal criminality, to a valuable fraction of the kids trying to make those life-changing choices.
Are there a few small businesses that genuinely can't afford a higher wage? A few. But if you actually can't make your business model work without paying your employees a decent minimum, is your business model one that you can honestly not be ashamed of?
Would the effect be marginally inflationary? Yes. Would it be worth it in terms of increased prosperity? Hell, yes. Even that bastardly reactionary antisemite Henry Ford was too smart to ignore the facts: you can't make any money selling stuff, if your own workers can't afford to buy stuff.