Jeb Bush, who is trying to brand himself as the sane alternative to the Republican Presidential field, just backed the repeal of the Federal minimum wage. So, that’s that.
Meanwhile, there is still time for Republicans to prepare a credible challenge in the 2020 Election. As we search for ways to restore some basic rationality to GOP politics, perhaps the minimum wage is a good starting point. The insights required to gain even a distant understanding of minimum wage economics would break apart dozens of damaging misconceptions about poverty, race, and social mobility in America.
First things first – Why do we need a minimum wage? Won’t a free market set wages at the correct rate?
A minimum wage is necessary to create a free market for labor. There is no free market if one side can coerce the other, or if one side has such disproportionate power that they can collude to manipulate prices. In a labor negotiation, particularly for low-end labor, one side has access to capital, political influence, and relative wealth. The other has a hungry family and a ticking clock. Remove the minimum wage and other protections and potential employers earn the ability to coerce potential employees, robbing them of value. That’s not a free market.
Over the long term, everyone including the employers ends up poorer, but no one can stop that downward pressure on overall wealth. This is just one of many examples of how an absence of regulation eventually destroys capitalism. A minimum wage allows us to bring some real market forces to the labor market with very little bureaucratic overhead. The minimum wage is one of the lynchpins of capitalism.
But doesn’t a minimum wage destroy jobs?
A minimum wage destroys jobs in exactly the same way that capitalism destroys jobs. In a series of escalating cycles, a minimum wage eliminates low-value activities replacing them with more sophisticated, higher-value activities, just like capitalism does. Overall, this creates declining demand for human labor which benefits everyone. Whatever jobs are rendered unnecessary as a result of a free market for labor probably didn’t need to exist in the first place.
To see this in action, take a look at child-labor laws. Opponents of child labor laws were concerned that Federal legislation would eliminate hundreds of thousands of jobs. They were right and it was good for everyone.
Elimination of child labor sped the adoption of new manufacturing and mining technologies. This created new, better paying jobs higher up the value stack making it possible for fewer employees working shorter hours to earn vastly more money, thereby supporting more people. More children could attend school and develop new skills rather than descending into the mines as soon as they could walk. Better living standards for more people enriched the entire economy and culture.
If you claim to love capitalism and markets then you shouldn’t be concerned about the jobs destroyed when workers gain more power to negotiate. That’s capitalism at its best.
Won’t markets force innovation even without a wage floor?
No, not always. Innovation requires capital to be invested and investment involves risk. Most of those new ventures fail. To the extent possible, capital owners will seek to extract rents from their capital rather than risking it by investing in technology. As long as they can continue extracting new revenue by pressing down wages instead of taking on risk, innovation will stall. Setting rules that limit the ability to squeeze rents from capital can press capital into new investment and create massive new economic growth.
Doesn’t a minimum wage limit opportunity for the poor and minorities?
Yes, a minimum wage limits the opportunity of poor and minority workers – to be coerced into work that will get them nowhere while dragging down the wider economy. This is a particularly ugly, condescending argument that deserves to die. Everyone who deploys it is making an ass of themselves.
Again, let’s refer back to child labor laws because exactly the same argument was deployed there with exactly the same realities sitting behind it. Child labor laws completely destroyed the ability of ten year old kids to earn money for their families by dropping out of school and working twelve hours days in dangerous conditions. That’s what it was designed to do and that’s what a minimum wage does.
The argument against the minimum wage assumes that this is a bad thing. It is not a bug, it’s a feature. Leaving the fourth grade to work in a sweatshop was an “opportunity.” Quitting school to feed your family with a WalMart job is a very similar kind of “opportunity.” Like child labor laws, a minimum wage is supposed to eliminate jobs that accomplish nothing for workers or the economy while encouraging the development of new, more valuable economic activities. What would this mean for the poor? Good things.
As usual, research backs up what experience demonstrates on the ground. Those who take low-wage jobs at any point experience depressed incomes for the rest of their lives. Jobs eliminated by a minimum wage are not an opportunity, but a trap.
Higher wages stimulate growth
This concept should be easy for a Republican to understand. The mechanics are very much like the effect of a tax cut in a supply-side scenario, except that raising wages actually works. When working people earn more money they spend more money. The money they spend feeds economic growth. Unlike tax cuts, this economic growth is accomplished without ruining public finances. As a consequence, while higher wages might cause some jobs to disappear, it tends to foster the creation of new, higher earning jobs.
Instead of two parents and their two children all having to work to make ends meet, three jobs might be eliminated. One, much higher-paying job might replace those three and be enough to support the whole family. Children can further their education. A parent might have time to care for the kids. And value is created all up and down the economy and the culture. See how easy that was?
Okay smart-ass, why shouldn’t the minimum wage be $35, or $100 an hour?
Maybe it will be some day, but like almost any innovation it pays to embrace evolution over revolution. It would take time to replace or automate every activity that currently pays between $10-20/hour. The capital investment cycle is not instantaneous. In theory, a large disruptive move could create long lags between the destruction of low value jobs and their replacement with higher-value activities. Given that assumption it makes sense to have a minimum wage set on an index which allows it to slowly climb over time.
We have implemented the opposite arrangement. US minimum wages have been in steady decline for the past forty years, dropping over 10%. That doesn’t make any sense, though it explains a lot.
When government intervenes in very small ways to create a credible market for employment, everybody wins. A minimum wage is a very simple way to build a richer, more dynamic economy with only a very light government intervention. Repealing the Federal minimum wage is one of the stupidest and most politically crippling ideas to emerge from the Neo-Confederate renaissance. Can we please stop talking about this and move on?
I have not read every post on this thread, but a fellow below made a comment that I caught scanning down. He said he couldn’t understand why liberals don’t acknowledge that people respond to incentives. His point, I assume, is that things like the minimum wage kill incentives for people to get better.
My feeling is that people do indeed respond to incentives, including companies. Chris made a great point by focusing on the elimination of child labor. One can imagine how that went down; executives on one side bemoaning the cost to their companies, and on the other side, social conservatives bemoaning the loss of “opportunities” for families who need to put food on the table. And yet not only did the market survive, it thrived.
Companies respond to incentives just like individuals do. If you can’t pay garbage wages to your workers, you find ways to compete in the new market reality, and it’s fair because nobody is allowed to pay those garbage wages; the competitive field is leveled on that particular issue.
Two recent prominent articles on student loan debt for reading – NYT, WSJ. We talk so much about the importance of education as an important tool for personal advancement out of minimum wage jobs, yet our young people who are pursuing just such a goal, are confronting a mountain of debt from student loan programs. Here are two views of the same issue for your consideration.
A simplex reading of the two articles might lead conservatives to their “aha” positions, i.e., get government out of the process and let the private banking industry manage it at a greater cost to borrowers. Or, it may be another example of government struggling to work within an existing budgetary framework that is inadequate to do quality assessment and management.
Interestingly, many other nations offer higher education either free or at more nominal costs. I leave this concept for future discussion, but our young college students are heading into life with an incredible burden without assurance that their future vocations will allow them the return on investment they hoped for.
lifer, I’m curious about how you would feel about a compromise. Instituting a universal “Basic Income” that you have written about and then removing the minimum wage requirements?
Other commenters, would like to hear your intelligent opinions, also.
I think about that a lot. With a basic income it’s not clear to me that a minimum wage would still matter. There’s reason to think that it would be irrelevant. If a political compromise like that were available I think we should take it.
I believe that is true also. But as a liberal Democrat, I hesitate to say too much. It may be the kiss of death. But if you can get a Republican to run on this idea, I will change party.
Lifer – Since you brought up Jeb in your post, here’s how he continues to evolve:
As a replacement for the 100+ separate anti-poverty programs we have now, each with their own bureaucracy, rules, and avenues for waste and fraud? Yes, it certainly has merit from an efficiency standpoint.
In addition to the above? Not a chance.
No, definitely not in addition to the existing safety net. Big question though – if you implemented a basic income, something around maybe $15,000/year, would you end Social Security?
Not sure if you will see this or if you are interested in my views or just in Doug’s more conservative outlook. But I think we could do away with SS in this case. If the minimum is supposed to keep a person out of abject poverty, it should be enough for the elderly also.
Replacement would be gradual to be politically accepted. Some SS recipients receive more than 1500. I do. But with a well thought out healthcare plan I don’t think we would be leaving older citizens to suffer. Surely the majority would be sufficiently cared for and for the few that were not, it would leave room for real charity.
….the elderly would be ok…..Catastrophic diseases and conditions (cancer, Parkinsons, Alzheimers, etc) are always costly, but when they occur at an age where income and savings are static, and the ability to work, doubtful, a lot of people could really be hurt. In a perfect world……The voucher Medicare concept would have to have a lot of caveats to protect against horrific medical costs.
The devil will be in the details, as always.
1mime, I agree that the details of how much we should spend on medical care of the elderly needs to be discussed. I would think those who want to streamline costs and take the decision making out of this would want a universal healthcare plan that is blind to personal situations and is “efficient” to apply.
Not only the elderly but the victims of auto accidents and shootings and other unfortunate situations. if we could discuss these without politicalization, we may find common ground.
RobA – Trying to understand why people vote against their best interests is one of the most difficult things about politics. Some reasons are more obvious: ego needs, status, race, religion, gender. The difficult group for me to understand is the educated, working middle class person. Democrats appear to be having trouble in this sector. This group seems to have bought the “conservative values” issue and the “fiscal superiority” of conservative leadership, despite historical data proving better economies under Dem leadership. And, then there is the race issue, which for emotionally secure people, is welcomed rather than feared or hated.
Rational people disagree. I get that. I get the “life” issue. What I don’t get is the lack of tolerance for other points of view to the extreme that it becomes a political wedge. The Salon article you posted spoke to this point quite succinctly.
I have been an active participant in the political process since my high school days. Yet, as I look at what is happening now, with all the spin and appeals based upon everything but rational thinking, I wonder – how to reach those whose allegiance is predicated on something disparate from their needs?. Is it money? Better packaging of the spin? Out-maneuvering of the system (gerrymandering, recognition of importance of seizing state level control, co-opt of SCOTUS, voter suppression)? Is true faith the province of conservatives?
I wish I had an answer for you. I worry for America and the direction we’re taking. All I can do is to read, study, vote, and help others who are receptive.
“Perhaps if we understood the minimum wage…”
That would be a good thing. Unfortunately, your post does nothing to further understanding. Quite the contrary. The first thing we need to understand is that people who must work for minimum wage do so because that’s all their talents will bring. Work is not so different than any other transaction in the marketplace: one person brings his skills and talents to market, and another buys them (or not). If you cannot produce a value to an employer above the wage asked, you will not have a job. If you’re on the cusp and the cost is artificially raised, again, you will not have a job. On the other hand, if you have the ability to produce value, your wage can be orders of magnitude above minimum wage. At least 97% of workers fall into this second category. We need to understand that we’re talking about less than 3% of the workforce, most of them teenagers and young adults, most who will eventually move to higher paying work. If you want to help out the poor who are incapable of being productive, there are more efficient ways to accomplish that aim than forcing employers to give more money to the pimply-faced kid selling popcorn at the theater whose dad is pulling down $100K.
“A minimum wage is necessary to create a free market for labor… Remove the minimum wage and other protections and potential employers earn the ability to coerce potential employees, robbing them of value.”
1. What “other protections”? I thought this was about minimum wage.
2. Artificially setting a price floor on labor is no different than price controls in anything else. It distorts the market. To claim a minimum wage is necessary to “create” a free market in labor is oxymoronic.
3. I would suggest that if minimum wage is the best you can do, you may want to hold off on the family until you’ve improved your skill set or worked yourself up the ladder a bit. “Doug, you’re a typical mean, insensitive RWNJ.” Save it. I’m only suggesting what I did myself: screwed up early in life, but delayed having kids until I went back to school and became productive. It was a very good decision.
4. The average family income of a minimum wage worker is $50K. Only 4% of minimum wage workers are single-parents working full time. The idea that minimum wage workers are poor, struggling parents trying to raise a family is great to tug at heartstrings, but it’s not the norm.
5. Coercion: How? There is not a monolithic bloc of minimum wage employers. There are thousands of employers who complete to buy labor, just as they compete to sell product. As a potential employee, one competes against fellow potential employees. If what you’re selling is low value along with millions of others, then yes, the price will fall. Find a way to distinguish yourself. But the market for that labor is too large and diverse for any collusion among employers, and low wages (just like high prices) in a free market are not evidence of coercion.
I had planned to comment on every section of the blog post, but this is already getting too long. I’ll hit the other main points later.
“The first thing we need to understand is that people who must work for minimum wage do so because that’s all their talents will bring. ”
And for some people, that may be the best they can do, even if they work hard. So do we go social Darwin on them and say, too bad, you’ll just have to starve?
This point has been brought up multiple times before, and I’ve yet to see you address it- when the gap between the wealthy and the poor grows too large, societies destruct. Without fail.
Fly: “when the gap between the wealthy and the poor grows too large, societies destruct. Without fail.”
And, we all fail in the long run as history has recorded many, many times.
“so we go social Darwin?”
As I mentioned in my post, the minimum wage is an inefficient and ineffective means to help the poor.
Societies destruct for many reasons. None are perpetual (so far). If the wealth gap is your concern, minimum wage is not going to help that. Sorry.
Doug, One thing you don’t lack is confidence in your own opinions.
Not all of them. Just the ones I opine about. 🙂
“As I mentioned in my post, the minimum wage is an inefficient and ineffective means to help the poor.”
Perhaps. But a minimum wage provides an incentive to work, albeit a small one. Why on earth would someone work for $5/hour today? The current minimum wage is $290/week, based on 40 hours a week, before taxes. You complain about handouts for the poor and you complain about programs that reward hard work. The result is a permanent underclass, a group of people who you would say should never have a family because, “they can’t afford it,” despite working full time. The result is a wage slavery that does our economy no good whatsoever and our moral standing as a country much harm.
No doubt a minimum wage is not as effective and efficient as anyone would like, but if there is no better alternative then that’s what we should do. I think Doug is arguing that “nothing” is a better alternative because free markets. Perhaps it is in theory, but when I look around I see a lot of flaws in the argument. Free markets are a great idea, but without a safety net things are going to get ugly sooner or later.
Of those “just three percent” how many have any other means developing their ‘talents’ as you put it? The newspaper just ran an article this week of rising poverty rates in local school districts and while you are right about ‘holding off on the family’, what good does that do for the child of the ones who don’t? Why do we have to pretend that the choices presented to the child must follow the choices of the parent, in effect creating economic royalty?
Our current job market and economy haven’t really followed some ‘natural’ laws of supply and demand, there were many ‘high value’ employees willing to do whatever they had to do to survive in 2008.
Guaranteed minimum income solves this too.
“Artificially setting a price floor on labor is no different than price controls in anything else.”
Except for the fact the beneficiary is the society rather than the owner. We have ‘price controls’ on ‘labor’ because ‘labor’ is human beings, not an economic abstraction.
“‘labor’ is human beings, not an economic abstraction.”
Labor primarily is a means to money. If you want to give the humans extra money, give them money. Let the market decide the value of labor.
I could make the same argument that food is human beings, because you’ll be a human being for a lot less time without food than without $10.00 per hour. If someone is hungry, do you make the supermarket lower its prices or do you give him food?
Well, now we hire about a bunch of liberal arts majors to administer a program by which one gets coupons to obtain some food, if this food item is on another list prepared by the same liberal arts majors of ‘approved’ foods. This incentivizes people to major in sociology, but doesn’t seem to do much about the lack of money to buy food.
Guaranteed minimum income, people either have incentive or they don’t, it is an intrinsic value which is as immune to outside influence as belief is to evidence.
I would argue (and did above) that a basic wage is preferable to the convoluted, bloated, inefficient system we have now. But then we’d have to treat people like adults, and trust them to spend it wisely. I wonder how long that would last. What happens when someone spends their money on hookers and blow, and the kids are still hungry?
“What happens when someone blows their money on hookers and blow…”
What happens when people make mistakes? We all make them. There are countless stories about people who worked and saved all their lives only to lose a good chunk of it due to events beyond their control. Do they deserve a hand up or do we regard them as foolish and undeserving? Then, there are those who make mistakes early in life who pull themselves up by their bootstraps and make a better life. That’s commendable as long as those people never forget that poor choices (such as who their parents are) or poor life circumstances are powerful dis-incentizers. Then there are those who are mired in situations we can hardly imagine. It’s easy for those who have been able to take control of their lives to sit in judgement of those less fortunate.
Take care of the kids and provide lawyers to the hookers?
And does blow cause poverty–or is it the other way around?
“Take care of the kids and provide lawyers to the hookers?”
I would legalize drugs and prostitution. The hookers wouldn’t need lawyers and the blow would be cheaper. Maybe there would be some money left over to feed the kids.
Doug – Kudos for making changes in your life that fostered personal success. Would that more could do so. We can agree on that. The minimum age issue speaks to an individual’s ability to rise above his/her existing position and move up. Being born white is a tremendous leg up in the process. Don’t you believe that the vast majority of parents want their children to do better than they have? Why, then, doesn’t it happen simply through hard work?
If one is poor, Black or Hispanic, it can be incredibly difficult to accomplish what you have done. Not impossible, but very difficult. You might develop more empathy and understanding of this group’s needs if you spent time working within this population. For them, just staying alive in a dangerous neighborhood is a challenge. Staying in school and keeping up in school when you’re a kid working after hours (minimum wage here) to help the family (or yourself if you’re on the streets) survive, not having enough time to study and prepare due to home and work issues, utter poverty, insufficient food, poor health. As a white person, I can grasp their struggle while not truly understanding how very difficult it really is. But I am not blind to its existence on a very large scale. And, in a country as prosperous as America, I find that appalling.
For these kids – minimum wages are life-sustaining when there is not the opportunity or money frequently to finish high school or attend college. If they’re lucky, they will have an opportunity to acquire training for a specific skill. Living on minimum wages without health care access is almost incredibly difficult.
My point is this. Minimum wages may be all one’s labors are worthfor a specific job, but the real opportunity for these young people and later adults to move beyond is daunting….not impossible, but daunting. To callously apply market forces to situations like this displays an incredible lack of empathy and understanding of poverty and class. This lack of awareness by most Republicans is what I find so hard to fathom and less to admire.
It’s not a lack of awareness. It’s a difference in philosophy. As I may have mentioned a time or two, people respond to incentives. That liberals deny this is hard to fathom.
You mention that it’s a daunting task for some people to move up. And I agree, it can be. So when you make it easier to live at the bottom, what happens to the incentive try this daunting thing?
Doug: “people respond to incentives. That liberals deny this is hard to fathom.”
You assume liberals deny this. Your sweeping statements are telling. Of course people respond to incentives. When they get them, which doesn’t happen much in the barrio.
You mention that it’s a daunting task for some people to move up. And I agree, it can be. So when you make it easier to live at the bottom, what happens to the incentive try this daunting thing?
So, assume you mean all those lazy stupid people like living on the bottom because the safety net has made it such a nice comfortable place to live and raise their families? There are people who feed off the trough rather than work. Most poor people work incredibly hard. You’ve got it all figured out, alright. Sad.
“And I agree, it can be. So when you make it easier to live at the bottom, what happens to the incentive try this daunting thing?”
Is it easier to do a full day’s work if you haven’t skipped a few meals in order to keep the lights on? Is it easier to devote all your attention to your job if you can afford some reliable child care? You focus so much on the people who choose to be irresponsible dumbasses, that you ignore those who could and would do most of the work of lifting themselves out of poverty, if they could just get a little bit of a boost. Hell yes, I want policies that make life easier for the working poor.
It does not follow that opportunity is destructive of incentive. As you and BW pointed out, and I lived myself, the minimum wage used to kind of allow a young person with a modicum of smarts regarding birth control to live on his own. Not great, but a small living space and a hoopty were within reach. If that had been enough, if a minimum income meant some people didn’t slave away at menial tasks until exhaustion, who besides Cain cares?
Doug – You say “people respond to incentives. That liberals deny this is hard to fathom” As an evolving liberal, I always want to improve. By evolving, I mean that I once considered myself conservative. As they say on facebook, it’s complicated. But anyway, this incentive thing you talk about.
Where government provides more to the masses, there should be less incentive to work, right?
So I found this link. http://en.wikipedia.org/wiki/Employment-to-population_ratio#Employment-to-population_ratio_in_the_world
You probably consider the US a generous welfare state. But I’m sure you also know that the Nordic countries are much more generous than us. And the European countries also. So, this is my question, why do they have higher employment ratio than us? What are the incentives that cause this?
Always willing to learn.
People do respond to incentives, just not always the way you think they will, or should.
Doug, what if the Chamber of Commerce (local and national) did a study that said that if all their members raised the salary of employees a certain percentage, their business would increase by that same percentage or more. And then they, the Chamber, clamored for a raise in the minimum wage, would you agree with it?
Did that happen? I can’t say I would agree or not without examining the study.
I doubt that the Chamber has done such a study. I was just proposing a hypothetical. Just trying to get a feel for where our differences arose. And I understand that answering a hypothetical is difficult.
So how do you feel about the question of replacing minimum wage with guaranteed minimum income?
Answered up top.
It’s not at all hypothetical. Henry Ford realized this a century ago and paid his employees enough that they could afford to buy the cars they were building. Not all companies are as forward-thinking as Ford was in the early 1900s, but it’s a sound idea.
COSTCO does the same plus provides health benefits. It can be done, but it’s not being done because too few businesses accept the basic premise that it’s in their best interests. Valuing employees as human capital is still seen as a cost to business rather than as assets. Consumers power the market in reality but if they don’t earn a living wage, they can’t become viable consumers. It’s that simple and one day soon, American business will wake up when demand for products/services impact their bottom lines.
Your data on minimum wage workers, often stated by right-leading entities such as Heritage, Forbes, etc. is accurate, as far as it goes. However, this data is misleading, as it obscures the actual problem.
First, the data only refers to workers earning the actual federal minimum wage. In 2011, ten out of the 50 states had minimum wages higher than the fmw,, including high-population states like California, Florida, Illinois, Ohio, and Michigan. Due to recent legislation, that number has grown to 29 states with higher than fmw–virtually none of the minimum wage workers from these states would be included in the statistics that you cite.
Further, and more importantly, by limiting your focus to those who are earning just the actual federal minimum wage, you are ignoring the wide swath of low wage workers, those earning around $10 per hour or less. The average age of these workers is 35, 88% of them are over 20, a little over half work full time, and 28% have children. In 2012, just under 30% of all workers earned an hourly wage at or below 150% of the minimum wage in their state. The wages of low-wage workers are often pegged just above the minimum wage, so if you raise the minimum wage, the wages of low-wage workers will also increase, as their employers are likely to keep their wage structure in place.
Finally, arguments against paying a minimum wage invoking the sanctity of the free market are garbage. There is no, and never will be, a free market–markets are regulated via policies set by government. Currently, there is no shortage of market distortions favoring top wage earners, but you don’t see the right wringing their hands over them. Of course, we can and do debate what regulations are necessary and desirable, and in this case, I side with Chris–a higher minimum wage would benefit all due to its stimulatory effects on the economy.
Outstanding response, MassDem. The one point I would add is that of healthcare access. The red states that refused medicaid expansion are not meeting the needs of their poor and unemployed. Further, even though federal law requires that health services be rendered via ER facilities or clinics (if they exist), most of these people are hourly wage earners, meaning – if they don’t work, they don’t get paid, or, worse, get replaced. Transportation access, etc. provides another hurdle. And, finally, indigent health care ALWAYS will find its way back to the individual taxpayers in either federal program cost or local/state taxes and crime. It is inescapable. Simply cutting programs and budgets will not solve the underlying problem.
In TX, as an example, the income cap for medicaid eligibility is $4K/year – an impossibly low income for survival. If people earn more than $4K but don’t meet ACA guidelines, they don’t qualify for subsidies either….IF the state even utilizes the ACA. What happens to these people?
As a civilized society and on a human level, America needs to do better by its low wage earners. Educational opportunity is a must, but most poor people live in disadvantaged school districts and even poorer neighborhoods. Safety net programs are good business if properly managed and utilized. No one disputes this, but these programs are continuously on the cutting table without regard for consequences.
This is not the hallmark of a great nation. We can have the legitimate discussion about abuse and fraud, but these problems don’t go away just because you cut budgets. Staffing and budgets have to be sufficient to allow these agencies to be able to be do their basic jobs before we can blithely criticize them for their inefficiencies.
Those of us who had the head start of good family support and educational opportunity, should not blind ourselves to the plight of those who are less advantaged. Sooner or later, it will bite us in the ass.
There are few ideas in general circulation that are more childish than the belief in a “free market.” There is no such thing as a free market. Remove every form of “government intervention” from a potential market and the market ceases to exist.
People often claim that there has never been a pure libertarian government attempted but that simply isn’t true. You can experience libertarianism in its purest form by moving your self, your family, and all your vast productive potential to Somalia or Haiti. Markets cannot exist without “intervention” in one form or another. Markets are a product of a well-ordered civilization. You cannot find them in any other setting.
“Milton Friedman once famously remarked that “there is no free lunch.” Every form of value comes with costs attached, regardless of whether those costs are visible to the consumer, or accounted for by the producer. By the same token we are coming to realize that there is no such thing as a free market. Our imagined ideal of markets operating with no government involvement not only doesn’t exist, it can’t.”
I’m not saying a market free from government. Of course you need government to ensure property rights and enforce contracts. You don’t need to travel to Somalia to see what the lack of those two does — simply observe the violence in the current drug trade where those two things don’t exist. But that’s a long way from the idea that government should set prices in the market.
I asked the question earlier in the post: what role do you see government performing? I think that is a good place to begin to begin our discussion. Further, in a Democracy, should the responsibility embrace all needs, or, focus principally on those who comprise the educated, well employed as they contribute “more” to general society? Where do you draw the line in regulatory control, services, funding?
In a federal budget in which more than HALF goes to defense, what opportunity does that functionally leave to run a country and meet basic needs? What constitutes a “basic need”, for that matter?
We are our brother’s keeper whether we like it or not. How efficiently and humanely we perform that role is the issue.
Doug – you are right about the low number of people making the minimum wage but you leave out the people working at a state minimum that is higher than federal minimum. Not sure how much higher. That would about double your number. Using your numbers that is 8 percent. And if the person has been on the job and earned a quarter raise, they won’t count as a minimum wager.
I would like to hear more of your struggles as a youth. I was born into a family that did not expect much out of life and did not stress education. And I was not exceptional.
So I am interested in your situation. Were you born in Appalachia? Born darker skinned than the norm in white America? Did your mother have a hard birth and was your brain oxygen deprived leading to learning disabilities? Born with a physical disability or just plain ugly? What hardships did you overcome? And do you expect everyone with similar problems to overcome them?
What advice would you give to someone is just stupid? Half of us are below average, you know. Would you say, Don’t be stupid?
Maybe we should replace “E Pluribus Unum” with “Don’t Be Stupid” on the dollar bill. We can replace the whole constitution with “Don’t be stupid cause social darwinism is the only kind we believe in.”
Sorry about the rant, feeling very unexceptional.
I have to say that the closing, “Can’t we please stop talking about this and move on” is a sentiment for most other political issues, but it isn’t the right response. Any issue which includes ‘beliefs’ needs to be as clearly articulated as you did for this-often and over and over until the beliefs change. Sorry. You’ll have to rerun this one in 2016 and 2018 and……….
Fascinating article about the behind the scenes power plays between Obama and Boehner.
I think Obama is really coming into his own. Much of what I criticized about his first 6 years was that he tried to much to compromise with an uncompromising opponent, coming across alternatly weak and ineffective.
It seems to be that since the mid term elections where the Dems took a beating, he just said “screw it” and decided that he couldn’t work with these people anymore and is just going to do things his way. And it’s a good look on him.
If the ACA ends up being a beloved and ingrained part of the social safety net (and I think it will as more and more people benefit from it) Obama could go down as one of the better presidents in recent decades. His achievements are impressive.
ugh, completely missed the ball on that one. That’s an old, old article. For some reason, I was assuming it was the chat that I saw Boehner and Obama having on the steps of the capitol on St. Patties day. Boehner even has a green tie!
My comment still stands, but……this is my “Dewey defeats Truman” moment for this blog.
Chris, how about a delete button? 😉
Excellent post. Thank you.
If I may add to the first point about the free market setting wages. We should remember that we have an official “full employment” that is not 100 percent employment. Not sure what it is now but it used to be at 4.5 percent unemployment.
So, if someone enters the market for a low level job as you say, “one side has access to capital, political influence, and relative wealth. The other has a hungry family and a ticking clock”.
He also has to worry someone else is not as hungry as he and his family. If so,he will be bidding his wage down until he “wins” the job. Official policy makes this more likely.
Unarmed: OT, but know you’re interested in this. Amazing. Open carry on college campuses going to be law in TX. Amazing. But you better not be packin’ at the State Legislature!
Thanks for the link 1mime, another head shaking face palm.
Firebug – “does anyone know when the term RINO originated?
Answer: When GOPlifer began his blog (-:
A subject near and dear to my heart, having worked my fair share of minimum wage and low wage jobs during my lifetime. I’ve even worked for tipped minimum wage, which is significantly lower than regular minimum wage and really stinks if you have slow shifts or customers who don’t tip because they’re on fixed incomes.
As I understand it, employee wages (and benefits) is the one area where employers can most easily cut costs–unless you’re Walmart, you don’t have influence over what your suppliers charge, and there’s a limit on the price you can command for your product…so sadly, there is terrible downward pressure on wages & benefits, especially for unskilled and less-skilled workers who are most easily replaced. Chris, you are absolutely correct when you say that higher wages will lead to a healthier economy (also a healthier society), but you are the rare person and even rarer Republican IMHO who can take that long view. Most management types seem to be focused on what will increase their company’s profits in the short term, NOT on how their decisions affect its long-term health, let alone the health of the overall economy. THOSE are the people that politicians are listening to, not the low- and unskilled workers who may or may not even vote.
Also, as Webb so clearly pointed out, our economy has fundamentally changed such that mini-wage jobs are no longer primarily held by teen-agers, part-timers, etc. but by people trying to live off of their earnings. A lot of older folks don’t get this at all.
More on minimum wage myths for those who are interested: http://www.dol.gov/minwage/mythbuster.htm
Thank you for writing this.
Now I think I am authentically nonplussed. I don’t get it, until I do, and that’s what’s kind of scary. I have no desire to undo the past one hundred years. I think they were pretty good for a middle class guy like me.
The left and right wing arguments are asinine. The problem is not that we are beholden to a pure course of action, it’s that we must take some course of action altogether.
It’s a good time to take stock in the USA.
Do you work for minimum wage? If not, why not?
I do not. Why? Because family support, education, and a galaxy of subtle privileges and advantages that came from being a white kid in the South made it possible for me to drive around the traps that might have dropped me into that position.
It wasn’t enough to stop me from composing run-on sentences, but it helped in other important ways.
I read several books a week and have since elementary school. I am now in my sixties. Lifer you are one of the best writers I have ever read. This is not apple polishing but true admiration.
Ah, the disease of language strikes again!
The first jobs that I had were minimum wage. Let’s see I could afford a tiny studio apartment, an old car which I could barely maintain, a thrift store wardrobe, and no pride whatsoever.
Not surprisingly, that was the period in time in which I experienced an intense feeling of connectedness to the conservative movement. Do you liberals get this? I can self transcend and abstract me from myself, so I understand why I was that way at the time. Therefore I can understand why someone else could feel exactly the same.
You see the well to do liberals and their chosen seconds advancing ahead of you with less effort and no duress. How hard is that to exploit?
Politics is a bloody damn mess these days, and that’s how “they” want it. Partition the human mind and the possibilities for rule become almost infinite. Syllogistic understanding is one of the basic cognitive functions of the human mind. If this, therefore that.
I’m more interested in getting my hands on an instruction manual written by Barry Harris and developing my ability as a musician than in politics. There’s really nothing that I can do that will have any meaningful impact on the political system, unless I can destroy it.
I sure as hell can’t conform to it.
In a modern society we won’t let the poor starve (although the USA gets close)
The net result is that if you pay your workers less than a living wage then we the taxpayers pay your workers so that they can work for you
In other words we pay our taxes so that you can have a business and be a plutocrat
The Economic Policy Institute reports that $45 billion per year in federal, state, and other safety net support is paid to workers earning less than $10.10 an hour. Thus the average U.S. household is paying about $400 to employees in low-wage industries such as food service, retail, and personal care.
If you can run a business – great!
more power to your elbow but I don’t see why I should subsidize you while you run something that is marginal or add to your profits
I’m with you. If you need to pay minimum wages to make your business plan, you need a new plan. Perhaps a new business.
What everyone keeps forgetting in the minimum wage discussion, is this: if you don’t pay your workers a living wage (at whatever hourly rate), we will all pay more in taxes as people get sick, get hurt, get old. There is a lot to be learned with working minimum wage as a start, not much upside, though. Educate your people for relevant jobs; provide health care access that’s affordable and quality – what is so hard to understand about the societal and individual benefits of doing this?
Exactly. Wal-Mart employees’ wages have been low enough to allow qualification for food stamps, Medicaid and other forms of income assistance paid for by taxpayers. This was effectively illustrated in the documentary “Wal-Mart: The High Cost of Low Prices.”
“more power to your elbow but I don’t see why I should subsidize you”
You are not. You are subsidizing the worker, making it possible for him to survive with few marketable skills.
So it’s survival of the “most marketable”. And those kids should have chosen more marketable parents.
So how does one determine at 18 what will be a ‘marketable skill’ at 40?
No the profit goes to the business owner
We are not “subsidising the poor” we are paying our tax money to the rich
Excellent post and very well reasoned. And nothing new. Adam Smith said as much centuries ago. True conservatism believes in gradualism in change not no change at all for the reasons you posted. And like you Lifer I do not want the government to tax and redistribute income or wealth.
But I do want it to create a level playing field for workers and capital owners. And that is best done with few but effective regulations. An effective but modest safety net gives workers more bargaining power. Which is the main reason why the drive by some of those with capital to worsen ours which is already one of the most niggardly of the developed world.
And we need to make it easier for people of few means to go school. That can be trade school, technical school or college. It should not bankrupt you to gain an education. Education is another monopoly which needs to be busted. My hope is that electronic learning on the Internet will do that.
I am the real deal. A free market believer. And think true capitalism is best for gaining the highest living standards for citizens. But you have neither with out a strong government to enforce effective regulations. Hence the shrink government to the size to be able to drown in a bathtub idea. Which is counter to having free enterprise. At the same time I know enough history and current events to know that Democracy and Capitalism are not the same thing. Socialistic countries can be democratic and Oligarchies can be capitalistic. No one can rule by them self. Even dictators always have help which is why I used the word Oligarchies instead of dictator. That is why for someone running for an executive office like president you have to pay attention to their staff.
So the flag wrapping by monopolist in warp ideas claiming to be both democratic and free enterprise turns my stomach. Ideas like yours Lifer can turn the demographic wave in our direction. You win minds by giving them a stake in the system. In our case the Republican Party. Most Latinos are conservative as are Black. But neither are really welcome in our party. And it’s current policies are destructive to their interest. These people are not stupid and while they do not like many of the Democratic Party’s positions they know they are currently better off with Democrats in power. But if the GOP readopts it’s historic values watch them come back into our column. We can win this game yet.
I’m recalling one of the former radio RWNJs (may have been Jon Matthews?) used to argue something like there shouldn’t be a minimum ware because there wasn’t a maximum wage. Make of that what you will.
Chris, I’ve been following your blog for some time and this is my first comment. I’ve been harping on the issue of minimum wage stagnation on my Facebook for some time. The responses to me usually consist of one or both of these:
1. Increasing the minimum wage will result in job losses. You’ve provided solid reasoning against that argument
2. Minimum wage jobs are meant as stepping stones, not life-long careers. Against this, I’ve argued that our economy has changed greatly since the minimum wage was established. The higher paying jobs in industries such as manufacturing and textiles aren’t there anymore, so folks are kinda stuck. And not everyone can or should get a college degree. If everyone did have a college degree, we’d have a lot of over-educated people minimum wage jobs.
And THANK YOU for correctly noting that consumer demand drives our economy, not wealthy “job creators.” Companies only hire when there’s strong demand for their goods or services, and then only grudgingly.
Thoughtful post, Webb, and hope you’ll chip in whenever the spirit moves ya. Couldn’t agree with you more. People are stuck in hourly jobs for all sorts of reasons…many working more than one job to make ends meet….lots of single parents…lots of kids trying to help families and themselves. It’s a great place to start off, not so great an ending.
The dirty little secret is that the Target and Walmart are increasing minimum wages to $9/10/hr, but hiring fewer full time employees to reduce eligibility for health benefits. We all hope to end up making a solid income but, for many, that is a dream, or, a nightmare.
In my best Monty Burns voice: “What good is capitalism if you can’t crush Joe-6-pack like a bug? Pish-tosh!”
I wish there were more Republicans like you. Lots more. In Congress.
And then there’s this:
“An employee of Florida’s environmental protection department was forced to take a leave of absence and seek a mental health evaluation for violating governor Rick Scott’s unwritten ban on using the phrases “climate change” or “global warming” under any circumstance, according to a complaint filed against the state.”
Remember, Miami is flooding more and more and Florida is one of the states most endangered by rising sea levels.
Sometimes karma gets off its ass and does its job. But it needs to go after Inhofe next.
I like better you reap what you sow. But same idea.
“I wish there were more Republicans like you. Lots more. In Congress.”
There used to be. I know some of our current GOP nincompoops are likely to brand Chris a RINO, but the truth is he’s speaking to the traditions of the Republican Party dating all the way back to its origins in the 1850s, and continuing until the disastrous sea change that started in the 1960s.
The party used to have progressive and conservative wings, epitomized respectively by Theodore Roosevelt and Calvin Coolidge. Current Republicans are not in line with either of those former parts of the GOP. What they most resemble is former Southern Democrats. They’re certainly not progressive, and they’re not truly conservative, either (since that would imply respect for the nation’s traditions and a distrust of radical change). What we have to call them is crazy. There’s no other word for it.
We should require more history to graduate High School. With out historic knowledge you are the equivalent society wise as an elder is with Alzheimer. You and I know what you wrote because we are not historically illiterate. But those who are not easily fall for the B.S. of the nuttier elements of both the Democratic and Republican parties.
Does anyone happen to know when the term RINO first came into use?
“Republican In Name Only (RINO) is a pejorative term used by conservative members of the Republican Party of the United States to describe Republicans whose political views or actions they consider insufficiently conservative. The acronym RINO, emerged for the term in the 1990s. The term has been compared to the No true Scotsman fallacy, in which a group destroys itself with internal debate over who among them is not actually loyal to the cause except for the simple fact that Republicans have a stated platform which they can reference in order to determine whether one is truly a RINO, where as there is no stated platform on what character qualities define a Scotsman.”
Forced to “seek a mental health evaluation”? That’s downright Stalinist.
Seattle is raising the minimum wage to $15 very soon. Lots of eyes will be watching, hopefully they can do some good.
In Florida we passed a constitutional amendment to increase the minimal wage and index it to inflation. The legislators were falling down on the job of representing it’s citizens. But special interest are well represented. Orange County wanted to push it higher locally by putting it on the ballot as a referendum. The Florida Tea Nut Legislators passed a law that we could not do that. So much for leaving decision making local rhetoric. And right now Orlando where I live has a thriving labor market. So much for the bogus argument that minimal wage increases hurt job formation.
“Remember, Miami is flooding more and more and Florida is one of the states most endangered by rising sea levels.”
Sea level has risen hundreds of feet since the last ice age. The rate of sea level rise is no different today than it was a century ago. When you build your city at sea level, pump groundwater, and drain swamps, you can expect to get a little wet.
So Doug, do you enjoy going out of your way to consistently ignore salient facts, misrepresent data, and just be willfully ignorant and misinformed? Is that some sort of wingnut initiation ritual?
You DO understand the RATE of sea level rise Doug? As opposed to overall rise over millennia?
“While studies show that sea levels changed little from AD 0 until 1900, sea levels began to climb in the 20th century.
Since 1992, new methods of satellite altimetry (the measurement of elevation or altitude) indicate a rate of rise of 0.12 inches per year.
This is a significantly larger rate than the sea-level rise averaged over the last several thousand years.”
NOAA said you were wrong and deliberately misused their data. Tsk tsk.
But not the least bit surprising.
The thing I don’t get, Doug, is how otherwise intelligent, sane and rational conservatives (I’m assuming you as one of these) are so easily convinced to vote against yourselves so much.
Certain issues I can see why they are partison. Abortion, for example, is a complex issue it makes sense to me that pro life would be a default position for pretty much any conservative.
But some issues are mind boggling. Why is climate change denial almost exclusively a conservative position? What does the fact that climate change is real and affecting our planet have to do with being conservative? It doesn’t. And yet, go to a tea party rally and 99% of attendees will firmly spout off about how CC isn’t real, or it’s faked by the “MSM”.
Why is this? I mean, I get why certain big business would have such an interest. I understand why the Koch bros are firmly against it, because carbon emissions regulations would directly impact their business. But you? And millions of other regular cons? CC is going to affect the lower and middle class disproportinately. It’s going to COST you and I. People like the Koch bros could lose billions if tough emissions regulations are enacted. But they’re always going to be rich. The only thing I can think is that the Koch bros, and Rush Limbaugh (and if you think guys like Rush and Beck aren’t taking massive amount of money from people like the KB’s, you’re crazy) keep telling you what to believe, and you just do it. No explanation even needed.
They don’t tell you why you need to be against something. Just that you need to be.
This article is a perfect example of that same tacctic. The GOP plans to appeall to women by…..cutting their paychecks and taking away their healthcare.
Check out the part where it’s the GOP’s position that the wage gap between men and women isnt due to ingrained sexism or prejudices. Nope, it’s because of old people watching porn at work! Of course!…….as worker get seniority, they don’t need to do as much work since they know their jobs are more secure. This allows them to slack off, and (among other things) watch porn at work. THAT’S the reason for the wage gap. And of course, who is responsible for seniority and job security? It’s those dirty unions, of course.
So, the GOP’s figured it all out. Once we get rid of unions, strip employees of the right to collective bargain for better pay/benefits, THEN the pay gap will narrow because people will be too afraid to slack off at work and productivity will shooot throught the roof! Brilliant!
……..although, there is that nagging thing about how unions pretty much created the middle class, because without the power of collective bargaining, the “owners of production” will continue to exploit workers who have no power to do anything else (if they want to feed their family). And there’s also the fact that it doesn’t take much of an imagination to thinkk of some pretty negative outcomes to reducing seniority and job security (“yes Ms, Jones, I’m aware you’re a month away from full pension, but unfortunately, we’re going to have to let you go for……uh……..reasons completely unrelated to the fact that we want to keep pension costs low” or “yes, Mr. Smith, I’m aware you’ve been here for 20 years…..unfortunately, that 20 year old over there will do the same job for 60% less then what you’re making. So, unless you want to accept that wage, better pack your things”
It’s literally insane how the GOP strategy is, in almost every case, to get voters to vote against themselves. It’s almost like at their strategy meetings, they start with the issues first and work their way back “ok, we got $1 billion from the Koch Bros, so we need to be against climate change. How can we spin that to get our voters to buy it?”
My guess is, that’s why the social issues are always front and center on the GOP card, and the bigger issues take a back seat. The GOP knows their base is crazy, and lunatic enough about social issues that if they harp and harp and harp on things like abortion, gay rights, gun control etc. enough to satisfy the base, the base will give them a pass on all the other issues. The REAL ones that the GOP is taking big money to defend (keeping min wage low, stopping emissions controls etc)
From what I’ve been reading, conservative climate change denial arises not only from powerful forces in the fossil fuel industry, but also from Christian fundamentalists. To the fundies it’s heresy to contemplate that human activities could possibly alter the course of God’s Holy Creation.
“Since 1992, new methods of satellite altimetry (the measurement of elevation or altitude) indicate a rate of rise of 0.12 inches per year.”
Yet the chart I posted from the same source shows the majority of the data points at 0-3mm/yr, with most of the rest at 3-6mm/yr. Some points are higher, and some actually show a decrease. NOAA’s “facts” do not even correlate to their own data.
@RobA : “The only thing I can think is that the Koch bros, and Rush Limbaugh (and if you think guys like Rush and Beck aren’t taking massive amount of money from people like the KB’s, you’re crazy) keep telling you what to believe, and you just do it.”
That’s funny. I would wager I’ve spent more time studying the issue than you have over the past 25 or so years. Obviously I can’t speak for anyone else, but it’s a fair assumption that many people on *both sides* only hear talking points, and retain those that fit with their beliefs. BTW, KB money to “deniers” is trivial compared to taxpayer money on the other side.
I do not deny climate change. It has been changing forever. Yes, it is warmer now than a century ago. What I deny are the alarmists who claim that man is the cause for most or all of the warming and that CO2 will destroy the planet. There are many reasons, but here are a few:
1. Claims of disaster are based on feedback, not direct forcing from CO2. NOBODY knows the even sign of the feedback, let alone the size. Nobody. If you disagree, please share the number.
2. We have about thirty years worth of climate models and disaster predictions since the global warming scare began (right after the global cooling scare). The models to date have been wrong. Why should they be more accurate with future predictions? Many of the disaster scares specified dates that have passed. None have come true. How many failed predictions would you suggest a person swallow before becoming skeptical?
3. Trying to predict anything a century out, much less spending money now to “save” the people in the future, is pointless and stupid. We have no idea what the world will look like a hundred years from now. If you asked New Yorkers in 1900 what the effect would be of tripling the population in a century, their biggest concern would probably be what to do with all the horse crap. It was a real problem then. Now, not so much.
In short (OK, too late for that) AGW has become a religion. I choose, based on my own study and free will, not to have faith.
The optimistic news is that renewables (especially solar and wind) are coming on strong. This article from Business Week (warning: it’s long) shows that the traditional methods for generating and distributing electricity may be doomed. Instead of building huge centralized power plants, much smaller local installations (or rooftop systems) will become the norm. And many large utility companies haven’t figured out how to cope.
March 20, 2015 at 11:24 am
“ ‘Since 1992, new methods of satellite altimetry (the measurement of elevation or altitude) indicate a rate of rise of 0.12 inches per year.’
Yet the chart I [Doug] posted from the same source shows the majority of the data points at 0-3mm/yr, with most of the rest at 3-6mm/yr. Some points are higher, and some actually show a decrease. NOAA’s ‘facts” do not even correlate to their own data.’
Really Doug? You double down on logical and factual willful ignorance by also adding basic 2nd grade mathematical incompetency to your wingnut delusional repertoire? Quite the trifecta you accomplished Doug. But I guess that is the only approach you can take to justify your unjustifiable positions based on reason, logic, facts, and basic math?
Doug, you apparently are unaware that 3 millimeters is equivalent to an eighth of an inch? Which converts in decimal to 0.125 inches per year. Which is .005 inches HIGHER of a rise than I noted from NOAA’s sources. and that would mean 6 millimeters is 0.24 inches or nearly a quarter of an inch but more significantly, exactly doubles my figures indicating accelerated sea level rise?
Thank you Doug for inadvertently and cluelessly confirming the accelerated RISE in sea levels is even greater than the alarmingly high rate I noted despite your best efforts to prove the opposite. And as NOAA and 1mime CORRECTLY noted.
You and OV represent the intelligence of the conservatives sooooo well Doug.
You wouldn’t happen to be related to bart/seriouscynic/usincrisis the consummate self immolating and self outing idiot sockpuppet troll, would you?
Ooops…I had a serious brain fart. Mea culpa. You are correct: 3mm is about 1/8″. Multiply that by 100 (one century) and you get about a foot. Are we supposed to change our way of life for a foot of sea level rise?
Here’s a link to the University of Colorado:
Where’s the increase in the rate? Shouldn’t there be a hockey stick? In fact, they write about their web site update:
“You may also note that rate of sea level rise over recent years ****has been less than the long-term average****. This is believed to be due to the recent La Nina’s we have been experiencing, though research on this is continuing. ” http://sealevel.colorado.edu/content/new-web-site-new-sea-level-release
According to Church and White(2011) : “[T]here has been a statistically significant acceleration since 1880 and 1900 of 0.009 ± 0.003 mm year”
While possibly statistically significant, that equates to about 4/100 of an inch per century. Why are you trembling over that?
Stop the sanity. Now!