Friday, January 10, 2014

Minimum Wage Daze

If there's one issue on which liberals are almost always bound to get some public traction, it's an argument for raising the minimum wage. Even in my reddish neck of the woods, clear majorities support it at the polls. So it would be foolish for me to crap all over the idea of a minimum wage...but of course I'll do it anyway.

If you've followed the news lately, this issue has come up once again, as a number of states have raised their wage levels. One community around Seattle, in fact, now requires at least $15/hour pay from every business. And Democrats are only too happy to take this nationwide, demanding a hike in the federal minimum wage to $10.10 per hour. And of course there were all those protests recently by the fast-food workers, for whom, apparently, only making $7.25 an hour is the equivalent of having to stand in line at a soup kitchen. Sigh.

The minimum wage has always annoyed me, for mathematical and philosophical reasons. Firstly, having taken an economics course or two, I've been struck ever since by the public's ignorance that labor, like all commodities, follows the law of supply and demand: If you raise the price of it, buyers will demand less of it. In other words, the minimum wage tends to lead to higher unemployment. Proving this with economic data is tricky, because there are always so many factors at play, but consider this. States which have (or had) no minimum wage laws, such as Switzerland or Hong Kong, have historically had very low unemployment rates--around two to four percent. On the other end, there are the large European countries (France, Germany, the U.K.), which are famous for generous workers' benefits and chronic double-digit unemployment. These examples don't show causation, but they do suggest a very strong correlation between high minimum wage requirements and high unemployment.

Also, let's not overlook the fact that relatively, a very small number of people only earn minimum wage. The most recent numbers from the Bureau of Labor Statistics peg the number at less than 1.6 million out of a workforce of about 75 million, or barely two percent of the whole. And as is always the case, this small number is skewed toward the youth--the 16-19 age bracket alone makes up over 30 percent of that number. This makes the above argument even more compelling; a bunch of the people "suffering" from minimum wage are just teenagers in entry-level positions they'll quickly move out of anyway. Indeed, one could easily make the argument that an increase in the wage levels will make upward mobility more difficult, keeping employees at a lower average income during their career than they would have otherwise.

But hey. Let's throw all that out. Because no matter what, some liberal will inevitably come up with a case of some single mother with three or four kids who has to work two jobs, at night, has to eat off the Dollar Menu at McDonald's, and can't even afford a First-Aid kit, because the minimum wage is so terrible. Shouldn't we do something to help her? (By "something," of course, I'm referring to government aid, because that's what liberals are referring to. Private charity and other forms of voluntarism aren't at issue here.)

This is purely my observation, but it seems that all of our rational, statistical analyses don't really move people. It's not that the numbers are wrong, but the knee-jerk reaction seems to be "Well, at least the Democrats are trying to do something to help! Why do you have to be such naysayers?" The mindset on injustices and other social problems seems to be that anything, even a bad attempt at a fix, is better than the status quo. And that's a difficulty conservatives have not yet mastered.

The problem, in this as in so many other cases, lies with the failure to recognize that suffering is a part of human life. And it's not just liberals who have this problem; if it were, measures like this wouldn't be so widely popular. I don't think most people would disagree with the statement that mankind is not perfectable save by God (though I can think of a few who would), but in practice, we've all fallen into the trap of thinking that whenever some social ill raises its head, it must be legislated out of existence. Which is to say, in matters like the minimum wage we can see liberalism completely on display--the technocratic urge to tinker with society until everyone is fat and happy.

It's not good politics, and I'm not suggesting we make it our banner or something, but conservatives need to embrace the fact of suffering. Or rather, to embrace the notion that some forms of suffering are better than a random proposed panacea, which probably won't work anyway. And besides, in this case it's fairly certain that for a lot of people, a minimum wage of $10 or $12 will make things worse instead of better.

Conservatives shouldn't be falling into the trap of showing they want government to care about the right people, on this or other issues--especially when "showing you care" means throwing around lots of taxpayer money. Rather, they should focus on creating the conditions that will minimize these social ills as much as possible, while keeping it in mind that they will always be with us. That's why the minimum wage debate is so misguided.


Anthony said...

In a global market workers and even countries are not in a position to make demands of capital. Everybody's competing for jobs and those who offer the best terms to capital will get the jobs.

So the question isn't is one willing to accept the existence of low wages, the question is do you want the low wage jobs to be in your state (or country) or someone else's?

Its also worth keeping in mind that capital isn't really to blame. Consumers want low costs and high quality, so capital has to keep costs down.

I remember a buy America ads in early 90's where a mother explained to a kid that their father had been laid off because Americans preferred to buy cheaper foreign clothes, despite the fact that American clothes were just as good. As one might expect, such pleas didn't impress consumers at all.

*Shrugs* All that aside, this minimum wage debate will just help the Democrats paint the Republicans as the party of the rich and big business.

In fairness, that is a label the Republicans tend to embrace much of the time. I facepalmed when I heard Romney's 47% crack but what was even sadder and more predictable was that some people defended it despite the fact that there isn't a positive correlation between income and who one votes for (there are lots of factors at play including where one lives, what profession one works in, age, religion, race and gender).

The hard truth is that both parties are extremely comfortable with big business because both parties love the truckloads of money business throws their way (which tends to give the most to whoever looks like they will win because they care about influence, not ideology).

tryanmax said...

T-Rav, you're only preaching to the choir. Conservatives have no problem with accepting suffering--they've actually embraced it. It's the liberals who have zero pain threshold, and no amount of stalwartness from the right will move them. It just makes conservatives look like assholes.

This is purely my observation, but it seems that all of our rational, statistical analyses don't really move people.


That's not just your personal observation--that's the way it is. Statistics don't move people. Stories do. Arias do. Paintings do. But not statistics. A physical slab of granite will do more to stir the emotions than all the abstract "hard" data in the world.

The mindset on injustices and other social problems seems to be that anything, even a bad attempt at a fix, is better than the status quo.

Again, you hit the mark, but your reaction to it is off. No attempt at a fix will ever be perfect, because as you note, mankind is not perfect. Does that mean we should not attempt to fix anything? No! Because that only clears the way for the same tried-and-failed attempts to be tried again. "Let it be" are not in fact words of wisdom, and I'm stunned to find that an appreciable number of conservatives have seemingly turned to John Lennon for advice.

It may have been the case for many centuries that the average man simply accepted his cruel lot in life, but that was before the Democratic Revolution swept the globe. We are now a species of fixers--or rather of meddlers and tinkers in light of our aforementioned imperfections. There's no corking the genie in the bottle, again. The only way to stop a bad idea is with a better one.

I agree that legislation is not always the answer, but so long as conservatives leave the fixing to the politicians, those are the sorts of answers we are going to get. I could say quite a bit about what conservatives outside of politics should do, but as for the ones inside, we should expect them to legislate because that is the task they've been given. Sending a man to Washington to vote "no" on everything is ridiculous and unproductive. It's not enough to send politicians who dislike liberal ideas as much as we do. As you said, it's not good politics. Rather than embrace the suffering or throw ourselves on the winds of random, feel-good legislation from the left, we need to send individuals with ideas better than those of the opposition.

Conservatives haven't fallen into any trap of "showing you care." Far from it! You're absolutely right that conservatives should focus on creating conditions to minimize social ills, but you mute that message by what precedes it. You can't shout, "DO NOTHING!" and then mumble, "maybe do something" and expect the latter to emerge. The minimum wage debate is misguided because conservatives don't bring any alternatives to the table.

Individualist said...

T-Rav A friend of mine has the same complaint every tax season. His brother in law makes much less than he does and complains to him about his richness which annoys him as he feels he has enough trouble paying his own bills.

Every year this man files under the earned income tax credit and the government sends him a huge refund check because he gets a 5K credit. And every year this individual takes the money and spends it on a vacation to Disney World or some other extravagance even though he ends up unable to pay his rent during the middle of the year.

My friend is angered by this because although he has to sit around listening to this guy bellyache to him every Christmas as to how a guy like him who is lucky with a high paying job can't understand what he goes through being poor and not having things, my friend does not have the money to go on the same vacation. He does not get credits for being poor.

The minimum wage argument is nonsense. Ever notice that a premium value meal at mcdonalds always costs whatever the minimum wage for an hour is. Right now it is $7 plus tax. When I first worked fast food minimum wage was $3.35 and that same means was $3 plus tax. Raise minimum wage to 10.10 and almost overnight that meal will be 10$ and change. The truth is you can demand more dollars for a product but you cannot demand more value. That hour of labor is worth what it is worth and always will be.

T-Rav said...

tryanmax, would my proposal to repeal the minimum wage altogether fall into the category of "a better idea"? <:-)

There's a lot to tackle in your comment, but my response is this: I'm not trying to make actual policy suggestions here. These are more like some personal musings of mine. The point I'm trying to make is that endless "fixing" often ends up making the situation worse, from every point of view, as is the case here.

And frankly, a lot of conservatives may believe this, or think they believe it, but they rarely act it out. The debates between Left and Right in D.C. typically aren't ideological knife-fights, they're arguments over who can "deliver the goods" more effectively. Moreover, whenever some case of suffering pops up on the news, most people, regardless of party, will say, "Something needs to be done!" Which is understandable; no one wants to look like a jerk. (Well, I do, but I'm peculiar.) So I wouldn't agree that "preaching to the choir" is the best way to put it.

Now I'm not exactly sure what you mean by my being inconsistent--which, if I am, I apologize. If you mean my comment near the end that conservatives should focus on creating conditions that minimize these problems, my point was that we should do that while realizing that the problems will still be there, and that some people will get a raw deal, and being okay with that. That's what I'm trying (perhaps poorly) to say.

T-Rav said...

Indi, sounds like some people I know. (eyeroll)

In my experience (and perhaps this is just coming from an area where people were at one time genuinely poor), no one likes to be thought of as rich. Except the people with giant houses and ten-acre yards, who can't really avoid it. Most of us want to think of ourselves as either poor or at best middle-class. It's an effect of class envy--"I'm not like those rich folks!"

I think a much better way to go through life would be to focus on what you have, rather than what you lack. For example, my pay as a grad student works out to around $8.50 an hour (not minimum wage, but not too far above it), and I can't just go out and buy everything I want. But, I can afford a nice apartment, pay my electric bill, and have plenty left over to eat three square meals a day, buy clothes when I need to, keep my car running, go to the movies once in a while, etc. I've got it good.

So for your friend's brother-in-law, I have a very small violin to play for him.

T-Rav said...

Anthony, in all fairness, the "Buy America" stuff would go better if said products could compete price-wise with overseas goods. Thanks for that, labor unions.

But I do find it troublesome that people can't be bothered to buy their own countrymen's products; yet there was no other way that kind of campaign would have ended. Shame doesn't work when the target can just shrug it off or hold someone else accountable.

AndrewPrice said...

T-Rav, I agree that the minimum wage is a bad thing -- it's bad economics, it's immoral, and it hurts the very people it's supposed to be trying to help.

I also agree that we need to not get into bidding wars about who can bring the goodies because we'll always lose that and it only makes the public think liberals are right.

That said, however, politically, conservatives need to stop embracing the idea of suffering. Talk radio has made a fetish of this under the guise of tough love. Every time they talk about issues like unemployment and welfare it turns into how these people are all just lazy and stupid and if they were real Americans, they wouldn't be accepting government handouts etc. And this gets mixed with tons of schadenfreude about people who go from bad to worse or who fail at something. None of that is attractive to regular voters. In fact, it's repellant.

Conservatives need to get back into the business of offering conservative solutions rather than blasting liberal ones and mocking the public. Rand Paul is supposedly going to talk about poverty soon and I'm hopeful he has some ideas.

tryanmax said...

T-Rav, let's just say it isn't exactly a starting point at present. :-)

I don't say that you are inconsistant. Even now, the strong message I'm getting from you is "leave things alone." I'm countering that this is the wrong message, either from a policy standpoint or an individual one. I'm giving you a little benefit of the doubt that you do acknowledge late and briefly in your article that there is a smarter way to do things. But you may as well not say it for as dominant as the "Do nothing" message resounds.

I think the reason you find that even conservatives prefer a tinkering fix to doing nothing is because when something is broken, you don't just leave it. And to say that any of the things the public is upset about aren't broken is simply wrong. Dissatisfaction is the sign that something is broken. But moreover, the issue isn't merely that a critical mass of conservatives aren't content to stew; it's that you've got a whole other faction that won't stew, and and a mass in the middle would rather not if given the choice. In other words, something is going to be done. It may as well be done the best way we know how.

Now maybe so far I've been misreading you, but I don't think I have. Perhaps you are trying to tell conservatives to get on board with a right-wing tinkering fix, but just not to expect panacea as the liberals do. That's certainly a concept lost on many right-wingers who believe that if we just do X, that would solve everything! But that's just as wrong as thinking if we do nil, that would solve everything. So on the basic matter of accepting suffering as a part of life, I am completely with you. But just because pain is inexorable is not a reason to ignore it.

The pain of surgery is preferable to the pain of disease. That is something most people understand, and it is what they think they are choosing when one political party offers something against the other party offering nothing. Conservatives need to present themselves as the better qualified physician instead of the grump insisting you can walk it off, you weenie!

T-Rav said...

Andrew, hence my admission that this might not be something to put on a banner.

Now personally, I'm going to continue to mock the public to my shrivelled black heart's content. :-) But that's why I shouldn't be a politician.

T-Rav said...

tryanmax, I can't say as I completely agree with that.

Here's another way to look at it: Just as it's true that there's no such thing as a free lunch, there are rarely things so bad that no good can come from them. In this particular case, having to live on a minimum wage can teach you a lot of things (especially if you're in those teenage years). The value of budgeting, taking personal responsibility, developing initiative and job skills to rise out of that miserable pay level, etc. Who's going to care about gaining those qualities as much when they're getting ten or fifteen dollars an hour?

This is why I don't like tinkering. You really can't be certain, unless it's something very, very specific, what bad you might be causing with your "fix," or what good you might be erasing.

AndrewPrice said...

This is totally unrelated, but I just figured out my taxes. There are not enough expletives in the world to cover how I feel right now.

tryanmax said...

T-Rav, I'm not advocating raising the minimum wage. You've severely misread me. But the political alternative (and I realize you're not strictly talking policy) is not "do nothing." People will always choose something over nothing. So telling conservatives (a term which implies politics) to suck it up is all well and good as far as that goes, but it encourages inaction on their part which clears the way for liberal tinkering. The choices are leftist tinkering or rightist tinkering--maybe even centrist tinkering. There is no nothing!

Now in the case of the minimum wage, this could be turned to conservative advantage if conservatives presented an alternative idea. We know that the net result of a minimum wage hike as it pertains to wage earners is nothing. We are well versed in the mechanisms which explain that. (The value meal example above is excellent!) It would not be hard for a conservative to convince the average person that raising the minimum wage is an exercise in futility.

BUT, no one will listen unless you present a better idea. Otherwise, the response is predictable: "Have you got a better idea?" If the answer is "no" then people will still go with nothing that seems like something over mere nothing. Until conservatives understand that the only way to get their way is to have a way to begin with, they won't get their way. Status quo is an illusion. Even when you are not building you must be maintaining or there will be decay. Nothing doesn't happen.

AndrewPrice said...

tryanmax, I think that's right. The choice is either offer something or lose by default and let the liberals claim the compassionate/"we tried" label.

Personally, I would point out that raising the minimum wage hurts the poor by making the things they buy more expensive... and I'd ask why liberals hate the poor so much. Then I would propose killing the employment taxes on anyone earning less than $10 an hour. Not only does that provide a significant pay boost, but it makes those employees cheaper to hire.

tryanmax said...

Andrew, that's what I'm talking about! Stop the one idea with another. That's exactly what conservative Republicans need to do. Not only does it address the same issue the the minimum wage is meant to more effectively, it also puts some populist oomph behind a conservative goal of lowering taxes. That would really put most Dems in a hard spot b/c they can't even whine about losing the tax money to the federal budget. "So you expect the poorest to pay the way for government excess!?"

AndrewPrice said...

tryanmax, Exactly. In fact, what I'm proposing is effectively a cut in the minimum wage because those jobs would suddenly become 7.5-15% cheaper to fill, and they would become 7.5% more profitable. So I would expect more companies to hire more people to fill them.

At the same time, it would reduce tax revenues, which makes it harder for the government to spend money. And if liberals fight it, then you turn them into Grinches who hate the working poor, who hate small business, and who want to balance the budget on the back of the poor.

Tennessee Jed said...

seems to me the subject of a minimum wage would be easy pickings for a solid analysis showing just what has happened historically when the minimum wage has been raised. Is there a correlation between the minimum wage and reduction in jobs? Democrats are skilled at painting Republicans as heartless bastards. Look at yesterday's presser for extending unemployment benefits.

tryanmax said...

I'm just trying to imagine how Rush would oppose Andrew's proposal. I bet he would.

AndrewPrice said...

tryanmax, My guess would be thus...

1. This is all just a distraction from repealing Obamacare and stopping AMNESTY!

2. Focusing on low income people only promotes class warfare, so this plays into the hands of the Democrats. We should be talking about cutting the taxes of the productive rich! (Note the irony.)

3. This will endanger good solid conservative programs like Medicare and Social Security by sucking out the money. (Note the irony.)

4. The Democrats will never agree so Price is wrong to bring it up.

5. The people who earn the minimum wage are students and illegals and they don't vote for us, so why are we offering them anything?

6. Price's proposal doesn't say a word about the only job killer: Obamacare. Clearly, he loves Obamacare and, thus, we must hate him.

7. You can't trust these RINOs to do anything, so agreeing to anything is like slitting your own throat. We need to reject Price's Trojan Horse and vote them all out.

How's that?

tryanmax said...

Aye, that'll do.

AndrewPrice said...

I can actually see him making each of these points.

T-Rav said...

Andrew, congrats on at least getting your taxes out of the way. We'll probably be getting ours worked out the week before IRS Day, I'll write out the check, and then go bonkers.

AndrewPrice said...

T-Rav, Thanks, though talk about a Pyrrhic victory. My anger level at Uncle Sam is really high right now.

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