8 ms·

The counter argument is that human labor has an actual cost. That is the cost to keep a human alive and in some level of comfort. Government benefits of many

The counter argument is that human labor has an actual cost. That is the cost to keep a human alive and in some level of comfort. Government benefits of many different types have "artificially" lowered this cost. Where employees refuse to pay enough for a human to live on, the government picks up the slack. Raising the minimum wage may be "artificial," but its not the first control placed on some otherwise natural labor market.

clarkmoody 11y ago
Critical omission on your part: not everyone needs to live on this wage. Think about high school kids trying to get a summer job. They don't need to survive on this wage, they simply need something productive to do over the summer. Should my business be required to shell out $15/hr for a high school kid, when the value of his/her labor is way less than that?
- NDizzle 11y ago
  I'm really interested to see what happens to the price of a season pass to the community swimming pool if/when doubling the minimum wage goes through.
  - VLM 11y ago
    Probably roughly nothing. I pulled my (small) suburban cities budget which is a many hundred page long PDF and parks and rec runs 40-something neighborhood city playground type parks and 2 pools on 2.3 million total per year. Of which staggeringly only 1.5 mil are wages (we live in a rough climate, maintenance costs are high, over $100K spend on electric bills alone, etc). On the revenue side the two public pools combined pulled in about 1/3 of a million from fees collected at the door. Its pretty cheap compared to commercial entertainment (movie, restaurant, etc), they could certainly charge more without excluding too many people, given how much it costs to live here. I know from experience that they have a couple kid lifeguards at each pool all the time so lets say 10 total staff at all instants (LOL no) at $15/hr for 10 or so hours per day (LOL no not open that much), open about 100 days a year (LOL no they'd be ice skating in the spring on the pool if that were the case), if I multiplied this out correctly in my head, at $15/hr, the kid lifeguards cost $150K/yr while bringing in $340K of revenue. Note that I don't have the misfortune of living in CA, so the actual cost of a seasons lifeguards at the two pools is more like $80K. The cities very gross profit margin if by a miracle pools were free to build and maintain, just revenue divided by kid labor, is roughly $340K/$80K right now and if the min wage were $15 it would "collapse" to $340K/$150K which still ain't bad. Honestly I suspect the pool spends more on chlorine and electricity than on the kids labor. The capital cost is no laughing matter. The most recent ADA compliant complete remodel was something like $2M which for that one pool is roughly a decades revenue. This quick analysis leads to the conclusion that open hours for the pool are insanely profitable, and the "pool biz" is overall dominated by capital costs. The kids pay is irrelevant.
    - justinhj 11y ago
      I don't expect public pools to be profitable anyway since they are subsidized by city taxes
- rskar 11y ago
  Per http://www.dol.gov/general/topic/youthlabor/wages http://www.dol.gov/general/topic/youthlabor/wages: The Fair Labor Standards Act (FLSA) requires a minimum of not less than $4.25 per hour for employees under 20 years of age during their first 90 consecutive calendar days of employment with an employer. After 90 days of employment, or when the worker reaches age 20 (whichever comes first), the worker must receive the minimum wage. Employers are prohibited from taking any action to displace employees in order to hire employees at the youth minimum wage. Also prohibited are partial displacements such as reducing employees hours, wages, or employment benefits. HTH
  - stevesearer 11y ago
    California: Although there are some exceptions, almost all employees in California must be paid the minimum wage as required by state law. Effective January 1, 2016, the minimum wage in California is $10.00 per hour. http://www.dir.ca.gov/dlse/faq_minimumwage.htm http://www.dir.ca.gov/dlse/faq_minimumwage.htm
- JamilD 11y ago
  It's worth noting that the average age of a minimum wage worker is 35, and the majority are women [0]. Middle-aged women, not teenagers, are the demographic which the minimum wage affects the most. [0] http://mobile.nytimes.com/2014/06/10/upshot/minimum-wage.html http://mobile.nytimes.com/2014/06/10/upshot/minimum-wage.htm...
  - clarkmoody 11y ago
    I would add that the minimum wage is also reflected in the unemployment rates, for those groups whose labor does not command even that low wage. This[1] BLS page has a granular breakdown of unemployment rate by age, gender, and race. The highest aggregate rate is among the youngest group (16-17 year olds). I would love to see tons of low-skill, low-pay jobs for young people who are looking, but instead we see very high unemployment for those younger ages. Also alarming is that the unemployment rate for young black men (16-17) is 45% right now. [1] http://www.bls.gov/web/empsit/cpsee_e16.htm http://www.bls.gov/web/empsit/cpsee_e16.htm
  - opo 11y ago
    Not sure how they came up with that. Pew Research summarized data from the Bureau of Labor Statistics: "People at or below the federal minimum are: Disproportionately young: 50.4% are ages 16 to 24; 24% are teenagers (ages 16 to 19). Mostly (77%) white; nearly half are white women. Largely part-time workers (64% of the total)." http://www.pewresearch.org/fact-tank/2014/09/08/who-makes-minimum-wage/ http://www.pewresearch.org/fact-tank/2014/09/08/who-makes-mi...
- chadzawistowski 11y ago
  42% of the American workforce makes $15/hr or less. http://fortune.com/2015/04/13/who-makes-15-per-hour/ http://fortune.com/2015/04/13/who-makes-15-per-hour/
- dv_dt 11y ago
  Teenagers don't need to live on this wage, but their parents need to have sufficient margin in their wages to support that.
  - clarkmoody 11y ago
    Yes, but the alternative is that the teen sits around all summer causing trouble instead of having a job because the minimum wage is too high.
    - wonderlust 11y ago
      Hobbies, friends, summer school, cheap or free youth groups, parent sponsered events...
    - st3v3r 11y ago
      No, that isn't the alternative. There are thousands of summer programs, most educational in nature, which would be teaching the kid much more useful stuff than how to scoop ice cream.
- falcolas 11y ago
  How about homeless high school kids? Or high school kids with one parent who are helping to supplement their household income?
  - moftz 11y ago
    There are other programs out there to support the homeless and single parents needing financial aid for their kids. A high school kid making money regardless of his family's wealth is making money as a supplement to what the parents or guardians should already be receiving from the government or otherwise, assuming they aren't emancipated but that is a very special case. If the parents can't afford to meet the basic needs of their child despite how ever much welfare they receive then why should the state allow for a child to remain in that home?
    - falcolas 11y ago
      This is, please forgive me, a very idealistic view of single parent families. It's very easy to earn too much money to qualify for welfare (or other government subsidies), while still not making quite enough to support a decent life. There are frequently waiting lists, restrictions (my favorite is disability, where you are not allowed to work, but are given barely enough money for yourself to live on), and miles of red tape associated with government subsidies. There's also the very real cost to the pride of the entire family associated with these subsidies. > why should the state allow for a child to remain in that home Because moving a child is incredibly traumatic for the child and expensive for the state?
- pwthornton 11y ago
  Employment of high school kids has been plummeting. This line of thinking you are exposing here has not kept up with the times and is more of a red herring. The teens most likely to work are not in school, and thus they actually need a living wage. Youth enrolled in high school had an employment rate of 18 percent. This is down from 36 percent in 1995: http://www.childtrends.org/?indicators=youth-employment#sthash.utkH3fj9.dpuf http://www.childtrends.org/?indicators=youth-employment#stha... And, again, the youth working while in school are more likely to come from lower socio-economic strata. They may in fact need that money.
  - jeffdavis 11y ago
    Maybe it's been plummeting because of minimum wage or other laws discouraging labor of HS students. And is that a good thing or something we should try to reverse? Employment has a ramp-up like anything else.
    - st3v3r 11y ago
      Well, what is better, or more desirable? A high school student earning some gas money, or someone else getting that job and supporting themselves?
      - mc32 11y ago
        An alternative is to have a two tiered system [as some countries have]. One for teenagers, another for adults, to compensate for lack of experience, or proxy for need.
        st3v3r 11y ago
        I don't trust crappy companies not to abuse the hell out of that system.
      - jeffdavis 11y ago
        A healthy career is a journey that often begins long before you depend on the money. A first job is more than just "gas money".
- st3v3r 11y ago
  "Should my business be required to shell out $15/hr for a high school kid, when the value of his/her labor is way less than that?" Yes. Otherwise why would you hire the someone who actually does need to live on that wage?
randyrand 11y ago
> Where employees refuse to pay enough for a human to live on, the government picks up the slack This would be the perfect system, but the current system is that the difference between the maximum employment wage (low) and minimum wage (high) is paid by the company, not the gov, causing unemployment. A negative income tax is the preferable system here.
RyanZAG 11y ago
Sure, but it's a low paying job vs no job. Minimum wage is stupid - if you need people to get a higher income than the value they can output, you need to supply that additional income through social grants. Forcing them out of work by allowing robots to undercut them is idiotic when they are willing to work.
- ecobiker 11y ago
  >> "higher income than the value they can output" Just so I can understand your argument better, can you elaborate this a bit more? How do you measure their output? How do you arrive at the dollar value?
  - gwright 11y ago
    It isn't really a matter of finding a specific dollar value but instead determining if the investment (a new worker) will result in a revenue increase that exceeds the cost of the new investment (ROI: return on investment). This is what it means to run a business, to ask and answer that question and act upon the answer. If you answer correctly in a sufficient number of instances, your business succeeds and you are profitable. If you answer incorrectly in too many instances, your business fails. A minimum wage puts a floor on labor costs and that will be an added constraint in the business model. For some business models, that added constraint may make the business unworkable. For others it may mean that prices need to be adjusted, or the number of workers and/or the type of worker hired needs to be changed. Perhaps it means changing the hours the business is open to manage staff costs. Maybe it means purchasing a machine to eliminate a worker because now the machine is cheaper than the worker whereas before that wasn't the case. If you have an opportunity to talk to a small business owner that employees part-time, close to minimum wage workers, ask them what they have already done to adjust and what they intend to do. The affordable care act has already forced many employers to cut hours to their part-time workers to avoid the extra fees that kick in at 30 hours. Many employers will implement changes to their staffing long before the actual minimum wage change kicks in. This is called "running a business", which means planning ahead.
dredmorbius 11y ago
Read Smith. "A man must always live by his work, and his wages must at least be sufficient to maintain him." https://en.m.wikisource.org/wiki/The_Wealth_of_Nations/Book_I/Chapter_8 https://en.m.wikisource.org/wiki/The_Wealth_of_Nations/Book_... An enterprise which cannot pay the full cost of its inputs isn't an economically viable activity. It's a charity benefiting its owner.
- ikeboy 11y ago
  Doesn't that argument apply to any government spending? If my enterprise relies on roads existing, and I cannot pay the full costs of maintaining the roads, say. (Ah, but roads benefit others, and we should only calculate your share! But welfare benefits others as well, it's a collective funding, so the same applies.)
  - rskar 11y ago
    Interesting what you've given us to consider, in regards to "charity benefiting its owner", to suggest these two things as comparable: (1) insufficient wages (per Adam Smith) as set by private enterprise (2) private enterprise usage of services/infrastructure as provided by government above and beyond their share of taxes Walmart was in the news recently enough (http://www.msnbc.com/martin-bashir/mcdonalds-employee-resource-advice http://www.msnbc.com/martin-bashir/mcdonalds-employee-resour... and http://www.bloombergview.com/articles/2013-11-13/how-mcdonald-s-and-wal-mart-became-welfare-queens http://www.bloombergview.com/articles/2013-11-13/how-mcdonal...) about their low wages and their advice to employees to avail themselves of government assistance programs (a.k.a. "handouts" - that's not a mean word, is it? http://dailysignal.com/2011/03/18/welfare-reform-self-reliance-not-government-handouts/ http://dailysignal.com/2011/03/18/welfare-reform-self-relian...). So, between Walmart (or MacDonald's, etc.) and such employees, who is the beneficiary of charity here (at least in the Adam Smith sense)?
    - ikeboy 11y ago
      My point was the reverse, actually. We're fine with companies benefiting off roads, because they pay taxes. Roads are a public good funded with public funds. I think we should be just as fine with companies benefiting from the public good of welfare. If we don't think it's a public good, we shouldn't fund it. Now, if they were directly contributing to an increase in public funding, then we might wish to discourage that. But if they wouldn't hire the worker, they would necessarily be paid less or not at all (else they would quit; abstracting away from inefficiencies which may make this inaccurate). So Walmart's decision to offer a wage that's the best the worker will get, yet is not livable by itself, still benefits the government, because otherwise the entire cost falls on the government. Mandating a minimum wage, and letting those workers become unemployed, just makes things worse. Of course, this assumes that increasing the minimum wage leads to a decrease in jobs, which is itself controversial.
wnevets 11y ago
i.e the walmart model.
evanpw 11y ago
That would be contrary to how labor markets work in other income ranges: e.g., if someone gets a big inheritance, you'd expect them to be more likely to reduce their work hours than increase them. Empirically, it seems like the same is true at the bottom of the income distribution ([1], [2]): if you give someone food stamps or cash assistance, they're less likely to work for the same wage. Means-testing the benefits makes the effect stronger, since the phase-out of benefits is equivalent to an additional tax and high taxes also discourage work. [1] https://www.economy.com/dismal/analysis/datapoints/253947/Government-Assistance-and-Work/ https://www.economy.com/dismal/analysis/datapoints/253947/Go... [2] https://www.cbo.gov/sites/default/files/112th-congress-2011-2012/workingpaper/10-25-2012-Recent_Research_on_Labor_Supply_Elasticities_0.pdf https://www.cbo.gov/sites/default/files/112th-congress-2011-...
dinkumthinkum 11y ago
You are very right. Wal-mart and companies like that are deriving significant labor cost subsidies from tax payors.

clarkmoody 11y ago

Critical omission on your part: not everyone needs to live on this wage. Think about high school kids trying to get a summer job. They don't need to survive on this wage, they simply need something productive to do over the summer. Should my business be required to shell out $15/hr for a high school kid, when the value of his/her labor is way less than that?

NDizzle 11y ago
I'm really interested to see what happens to the price of a season pass to the community swimming pool if/when doubling the minimum wage goes through.
- VLM 11y ago
  Probably roughly nothing. I pulled my (small) suburban cities budget which is a many hundred page long PDF and parks and rec runs 40-something neighborhood city playground type parks and 2 pools on 2.3 million total per year. Of which staggeringly only 1.5 mil are wages (we live in a rough climate, maintenance costs are high, over $100K spend on electric bills alone, etc). On the revenue side the two public pools combined pulled in about 1/3 of a million from fees collected at the door. Its pretty cheap compared to commercial entertainment (movie, restaurant, etc), they could certainly charge more without excluding too many people, given how much it costs to live here. I know from experience that they have a couple kid lifeguards at each pool all the time so lets say 10 total staff at all instants (LOL no) at $15/hr for 10 or so hours per day (LOL no not open that much), open about 100 days a year (LOL no they'd be ice skating in the spring on the pool if that were the case), if I multiplied this out correctly in my head, at $15/hr, the kid lifeguards cost $150K/yr while bringing in $340K of revenue. Note that I don't have the misfortune of living in CA, so the actual cost of a seasons lifeguards at the two pools is more like $80K. The cities very gross profit margin if by a miracle pools were free to build and maintain, just revenue divided by kid labor, is roughly $340K/$80K right now and if the min wage were $15 it would "collapse" to $340K/$150K which still ain't bad. Honestly I suspect the pool spends more on chlorine and electricity than on the kids labor. The capital cost is no laughing matter. The most recent ADA compliant complete remodel was something like $2M which for that one pool is roughly a decades revenue. This quick analysis leads to the conclusion that open hours for the pool are insanely profitable, and the "pool biz" is overall dominated by capital costs. The kids pay is irrelevant.
  - justinhj 11y ago
    I don't expect public pools to be profitable anyway since they are subsidized by city taxes
rskar 11y ago
Per http://www.dol.gov/general/topic/youthlabor/wages http://www.dol.gov/general/topic/youthlabor/wages: The Fair Labor Standards Act (FLSA) requires a minimum of not less than $4.25 per hour for employees under 20 years of age during their first 90 consecutive calendar days of employment with an employer. After 90 days of employment, or when the worker reaches age 20 (whichever comes first), the worker must receive the minimum wage. Employers are prohibited from taking any action to displace employees in order to hire employees at the youth minimum wage. Also prohibited are partial displacements such as reducing employees hours, wages, or employment benefits. HTH
- stevesearer 11y ago
  California: Although there are some exceptions, almost all employees in California must be paid the minimum wage as required by state law. Effective January 1, 2016, the minimum wage in California is $10.00 per hour. http://www.dir.ca.gov/dlse/faq_minimumwage.htm http://www.dir.ca.gov/dlse/faq_minimumwage.htm
JamilD 11y ago
It's worth noting that the average age of a minimum wage worker is 35, and the majority are women [0]. Middle-aged women, not teenagers, are the demographic which the minimum wage affects the most. [0] http://mobile.nytimes.com/2014/06/10/upshot/minimum-wage.html http://mobile.nytimes.com/2014/06/10/upshot/minimum-wage.htm...
- clarkmoody 11y ago
  I would add that the minimum wage is also reflected in the unemployment rates, for those groups whose labor does not command even that low wage. This[1] BLS page has a granular breakdown of unemployment rate by age, gender, and race. The highest aggregate rate is among the youngest group (16-17 year olds). I would love to see tons of low-skill, low-pay jobs for young people who are looking, but instead we see very high unemployment for those younger ages. Also alarming is that the unemployment rate for young black men (16-17) is 45% right now. [1] http://www.bls.gov/web/empsit/cpsee_e16.htm http://www.bls.gov/web/empsit/cpsee_e16.htm
- opo 11y ago
  Not sure how they came up with that. Pew Research summarized data from the Bureau of Labor Statistics: "People at or below the federal minimum are: Disproportionately young: 50.4% are ages 16 to 24; 24% are teenagers (ages 16 to 19). Mostly (77%) white; nearly half are white women. Largely part-time workers (64% of the total)." http://www.pewresearch.org/fact-tank/2014/09/08/who-makes-minimum-wage/ http://www.pewresearch.org/fact-tank/2014/09/08/who-makes-mi...
chadzawistowski 11y ago
42% of the American workforce makes $15/hr or less. http://fortune.com/2015/04/13/who-makes-15-per-hour/ http://fortune.com/2015/04/13/who-makes-15-per-hour/
dv_dt 11y ago
Teenagers don't need to live on this wage, but their parents need to have sufficient margin in their wages to support that.
- clarkmoody 11y ago
  Yes, but the alternative is that the teen sits around all summer causing trouble instead of having a job because the minimum wage is too high.
  - wonderlust 11y ago
    Hobbies, friends, summer school, cheap or free youth groups, parent sponsered events...
  - st3v3r 11y ago
    No, that isn't the alternative. There are thousands of summer programs, most educational in nature, which would be teaching the kid much more useful stuff than how to scoop ice cream.
falcolas 11y ago
How about homeless high school kids? Or high school kids with one parent who are helping to supplement their household income?
- moftz 11y ago
  There are other programs out there to support the homeless and single parents needing financial aid for their kids. A high school kid making money regardless of his family's wealth is making money as a supplement to what the parents or guardians should already be receiving from the government or otherwise, assuming they aren't emancipated but that is a very special case. If the parents can't afford to meet the basic needs of their child despite how ever much welfare they receive then why should the state allow for a child to remain in that home?
  - falcolas 11y ago
    This is, please forgive me, a very idealistic view of single parent families. It's very easy to earn too much money to qualify for welfare (or other government subsidies), while still not making quite enough to support a decent life. There are frequently waiting lists, restrictions (my favorite is disability, where you are not allowed to work, but are given barely enough money for yourself to live on), and miles of red tape associated with government subsidies. There's also the very real cost to the pride of the entire family associated with these subsidies. > why should the state allow for a child to remain in that home Because moving a child is incredibly traumatic for the child and expensive for the state?
pwthornton 11y ago
Employment of high school kids has been plummeting. This line of thinking you are exposing here has not kept up with the times and is more of a red herring. The teens most likely to work are not in school, and thus they actually need a living wage. Youth enrolled in high school had an employment rate of 18 percent. This is down from 36 percent in 1995: http://www.childtrends.org/?indicators=youth-employment#sthash.utkH3fj9.dpuf http://www.childtrends.org/?indicators=youth-employment#stha... And, again, the youth working while in school are more likely to come from lower socio-economic strata. They may in fact need that money.
- jeffdavis 11y ago
  Maybe it's been plummeting because of minimum wage or other laws discouraging labor of HS students. And is that a good thing or something we should try to reverse? Employment has a ramp-up like anything else.
  - st3v3r 11y ago
    Well, what is better, or more desirable? A high school student earning some gas money, or someone else getting that job and supporting themselves?
    - mc32 11y ago
      An alternative is to have a two tiered system [as some countries have]. One for teenagers, another for adults, to compensate for lack of experience, or proxy for need.
      - st3v3r 11y ago
        I don't trust crappy companies not to abuse the hell out of that system.
    - jeffdavis 11y ago
      A healthy career is a journey that often begins long before you depend on the money. A first job is more than just "gas money".
st3v3r 11y ago
"Should my business be required to shell out $15/hr for a high school kid, when the value of his/her labor is way less than that?" Yes. Otherwise why would you hire the someone who actually does need to live on that wage?

randyrand 11y ago

> Where employees refuse to pay enough for a human to live on, the government picks up the slack This would be the perfect system, but the current system is that the difference between the maximum employment wage (low) and minimum wage (high) is paid by the company, not the gov, causing unemployment. A negative income tax is the preferable system here.

RyanZAG 11y ago

Sure, but it's a low paying job vs no job. Minimum wage is stupid - if you need people to get a higher income than the value they can output, you need to supply that additional income through social grants. Forcing them out of work by allowing robots to undercut them is idiotic when they are willing to work.

ecobiker 11y ago
>> "higher income than the value they can output" Just so I can understand your argument better, can you elaborate this a bit more? How do you measure their output? How do you arrive at the dollar value?
- gwright 11y ago
  It isn't really a matter of finding a specific dollar value but instead determining if the investment (a new worker) will result in a revenue increase that exceeds the cost of the new investment (ROI: return on investment). This is what it means to run a business, to ask and answer that question and act upon the answer. If you answer correctly in a sufficient number of instances, your business succeeds and you are profitable. If you answer incorrectly in too many instances, your business fails. A minimum wage puts a floor on labor costs and that will be an added constraint in the business model. For some business models, that added constraint may make the business unworkable. For others it may mean that prices need to be adjusted, or the number of workers and/or the type of worker hired needs to be changed. Perhaps it means changing the hours the business is open to manage staff costs. Maybe it means purchasing a machine to eliminate a worker because now the machine is cheaper than the worker whereas before that wasn't the case. If you have an opportunity to talk to a small business owner that employees part-time, close to minimum wage workers, ask them what they have already done to adjust and what they intend to do. The affordable care act has already forced many employers to cut hours to their part-time workers to avoid the extra fees that kick in at 30 hours. Many employers will implement changes to their staffing long before the actual minimum wage change kicks in. This is called "running a business", which means planning ahead.

dredmorbius 11y ago

Read Smith. "A man must always live by his work, and his wages must at least be sufficient to maintain him." https://en.m.wikisource.org/wiki/The_Wealth_of_Nations/Book_I/Chapter_8 https://en.m.wikisource.org/wiki/The_Wealth_of_Nations/Book_... An enterprise which cannot pay the full cost of its inputs isn't an economically viable activity. It's a charity benefiting its owner.

ikeboy 11y ago
Doesn't that argument apply to any government spending? If my enterprise relies on roads existing, and I cannot pay the full costs of maintaining the roads, say. (Ah, but roads benefit others, and we should only calculate your share! But welfare benefits others as well, it's a collective funding, so the same applies.)
- rskar 11y ago
  Interesting what you've given us to consider, in regards to "charity benefiting its owner", to suggest these two things as comparable: (1) insufficient wages (per Adam Smith) as set by private enterprise (2) private enterprise usage of services/infrastructure as provided by government above and beyond their share of taxes Walmart was in the news recently enough (http://www.msnbc.com/martin-bashir/mcdonalds-employee-resource-advice http://www.msnbc.com/martin-bashir/mcdonalds-employee-resour... and http://www.bloombergview.com/articles/2013-11-13/how-mcdonald-s-and-wal-mart-became-welfare-queens http://www.bloombergview.com/articles/2013-11-13/how-mcdonal...) about their low wages and their advice to employees to avail themselves of government assistance programs (a.k.a. "handouts" - that's not a mean word, is it? http://dailysignal.com/2011/03/18/welfare-reform-self-reliance-not-government-handouts/ http://dailysignal.com/2011/03/18/welfare-reform-self-relian...). So, between Walmart (or MacDonald's, etc.) and such employees, who is the beneficiary of charity here (at least in the Adam Smith sense)?
  - ikeboy 11y ago
    My point was the reverse, actually. We're fine with companies benefiting off roads, because they pay taxes. Roads are a public good funded with public funds. I think we should be just as fine with companies benefiting from the public good of welfare. If we don't think it's a public good, we shouldn't fund it. Now, if they were directly contributing to an increase in public funding, then we might wish to discourage that. But if they wouldn't hire the worker, they would necessarily be paid less or not at all (else they would quit; abstracting away from inefficiencies which may make this inaccurate). So Walmart's decision to offer a wage that's the best the worker will get, yet is not livable by itself, still benefits the government, because otherwise the entire cost falls on the government. Mandating a minimum wage, and letting those workers become unemployed, just makes things worse. Of course, this assumes that increasing the minimum wage leads to a decrease in jobs, which is itself controversial.

wnevets 11y ago

i.e the walmart model.

evanpw 11y ago

That would be contrary to how labor markets work in other income ranges: e.g., if someone gets a big inheritance, you'd expect them to be more likely to reduce their work hours than increase them. Empirically, it seems like the same is true at the bottom of the income distribution ([1], [2]): if you give someone food stamps or cash assistance, they're less likely to work for the same wage. Means-testing the benefits makes the effect stronger, since the phase-out of benefits is equivalent to an additional tax and high taxes also discourage work. [1] https://www.economy.com/dismal/analysis/datapoints/253947/Government-Assistance-and-Work/ https://www.economy.com/dismal/analysis/datapoints/253947/Go... [2] https://www.cbo.gov/sites/default/files/112th-congress-2011-2012/workingpaper/10-25-2012-Recent_Research_on_Labor_Supply_Elasticities_0.pdf https://www.cbo.gov/sites/default/files/112th-congress-2011-...

dinkumthinkum 11y ago

You are very right. Wal-mart and companies like that are deriving significant labor cost subsidies from tax payors.