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I was thinking about this the other day. What we need is a tax on businesses that don't pay the area's single-income, livable wage. If companies pay more, they

I was thinking about this the other day. What we need is a tax on businesses that don't pay the area's single-income, livable wage. If companies pay more, they get out of the tax. If they pay less, they pay the tax. That tax then goes into making things like childcare more affordable. It's a way of forcing companies to internalize the externalities of paying below-livable wages.

ljlolel 2y ago
Why is this downvoted? This is similar to Bernie Sanders’ idea to tax companies whose employees are on welfare
paxys 2y ago
This is just a roundabout way of saying raise the minimum wage.
- Retric 2y ago
  There’s some subtle differences. The minimum wage is a hard floor, bumping it to 10$/hour isn’t going to destroy a significant number of jobs, but 25$/hour might. If you set the minimum wage at say 10$/hour and the livable wage at say 20$/hour then you might tax the company 30% of the difference between your livable wage and the actual wage. (Effectively minimum wage becomes 13$/h, but that doesn’t all go to the worker.) It’s still adds upward wage pressure because higher pay attracts better workers and your out a significant percentage of the difference either way but it reduces the risk of a big spike in unemployment when you raise the livable wage. It also means systemic wage theft more strongly attracts the attention of the IRS.
  - paxys 2y ago
    So then raise the minimum wage by 30%. I can't see how adding the government as an expensive middleman only to transfer the same amount of money from a company to a worker makes any sense.
    - Retric 2y ago
      Because 13$/hour isn’t a livable wage and there’s little incentive to increase it beyond exactly what you set the minimum wage to. We’ve decided it’s ok to pay low enough wages that the government is subsidizing low wage workers working a full time job. 40 * 52 * 7.25$/hour is well below the threshold for 100% free health insurance for single people and families get major subsidies well past 13$/hour. Effectively forcing you to set it at ~20$ or subsidize companies.
      - gruez 2y ago
        I don't see any meaningful difference between compelling to employer to pay $3/hr in extra taxes (ie. the living wage tax as described by the OP), compared $3/hr in extra salary (ie. a minimum wage bump). Is this purely a branding exercise?
        Retric 2y ago
        I don’t think it’s branding when you’d need several other changes to achieve similar effects. Currently the government is effectively boosting workers past the minimum wage, because we’ve set the acceptable standard of living above minimum wage. However, we reduce benefits as wages increase which means workers have reduced incentive to seek minor changes in wages. This system partially reverses that effect. A company paying an extra 1$ out of pocket increases the wages of a worker by 1.3$/hour so when they lose 0.3$/h in benefits they still see 1$/hour in higher wages. (Numbers are illustrative not necessarily how it would be implemented.) PS: Think of it like having both a minimum wage and universal healthcare, in such a system there’s no penalty to higher wages.
        gruez 2y ago
        >However, we reduce benefits as wages increase which means workers have reduced incentive to seek minor changes in wages. >This system partially reverses that effect. A company paying an extra 1$ out of pocket increases the wages of a worker by 1.3$/hour so when they lose 0.3$/h in benefits they still see 1$/hour in higher wages. This still feels like you're playing shell games. The only reason your example works is that prior to that marginal dollar, you added a 30% premium to the cost of labor, so you could return some of that 30% when wages go above some arbitrary amount. There's no free money. For people earning exactly the minimum wage, the effect to employers is exactly the same as hiking the minimum wage by an equivalent amount. Moreover, this is arguably a tax on the employee as much as the employer. For people earning exactly minimum wage, employers are forced to pay $3/hr (or whatever) in employee costs, but none of that went to the employee. Had the minimum wage simply been bumped, the employee would be free to spend the money however he sees fit, but with your scheme he gets nothing. Sounds a lot like a minimum wage bump to $3/hr, and then the government immediately clawing it back. In other words, a tax.
gruez 2y ago
>It's a way of forcing companies to internalize the externalities of paying below-livable wages. How is paying someone under the minimum wage an "externality"? If the employment relationship is canceled, does that magically make the past employee not poor?
osigurdson 2y ago
Instead of "livable wage", we should aim for everyone being fantastically wealthy.

ljlolel 2y ago

Why is this downvoted? This is similar to Bernie Sanders’ idea to tax companies whose employees are on welfare

paxys 2y ago

This is just a roundabout way of saying raise the minimum wage.

Retric 2y ago
There’s some subtle differences. The minimum wage is a hard floor, bumping it to 10$/hour isn’t going to destroy a significant number of jobs, but 25$/hour might. If you set the minimum wage at say 10$/hour and the livable wage at say 20$/hour then you might tax the company 30% of the difference between your livable wage and the actual wage. (Effectively minimum wage becomes 13$/h, but that doesn’t all go to the worker.) It’s still adds upward wage pressure because higher pay attracts better workers and your out a significant percentage of the difference either way but it reduces the risk of a big spike in unemployment when you raise the livable wage. It also means systemic wage theft more strongly attracts the attention of the IRS.
- paxys 2y ago
  So then raise the minimum wage by 30%. I can't see how adding the government as an expensive middleman only to transfer the same amount of money from a company to a worker makes any sense.
  - Retric 2y ago
    Because 13$/hour isn’t a livable wage and there’s little incentive to increase it beyond exactly what you set the minimum wage to. We’ve decided it’s ok to pay low enough wages that the government is subsidizing low wage workers working a full time job. 40 * 52 * 7.25$/hour is well below the threshold for 100% free health insurance for single people and families get major subsidies well past 13$/hour. Effectively forcing you to set it at ~20$ or subsidize companies.
    - gruez 2y ago
      I don't see any meaningful difference between compelling to employer to pay $3/hr in extra taxes (ie. the living wage tax as described by the OP), compared $3/hr in extra salary (ie. a minimum wage bump). Is this purely a branding exercise?
      - Retric 2y ago
        I don’t think it’s branding when you’d need several other changes to achieve similar effects. Currently the government is effectively boosting workers past the minimum wage, because we’ve set the acceptable standard of living above minimum wage. However, we reduce benefits as wages increase which means workers have reduced incentive to seek minor changes in wages. This system partially reverses that effect. A company paying an extra 1$ out of pocket increases the wages of a worker by 1.3$/hour so when they lose 0.3$/h in benefits they still see 1$/hour in higher wages. (Numbers are illustrative not necessarily how it would be implemented.) PS: Think of it like having both a minimum wage and universal healthcare, in such a system there’s no penalty to higher wages.
        gruez 2y ago
        >However, we reduce benefits as wages increase which means workers have reduced incentive to seek minor changes in wages. >This system partially reverses that effect. A company paying an extra 1$ out of pocket increases the wages of a worker by 1.3$/hour so when they lose 0.3$/h in benefits they still see 1$/hour in higher wages. This still feels like you're playing shell games. The only reason your example works is that prior to that marginal dollar, you added a 30% premium to the cost of labor, so you could return some of that 30% when wages go above some arbitrary amount. There's no free money. For people earning exactly the minimum wage, the effect to employers is exactly the same as hiking the minimum wage by an equivalent amount. Moreover, this is arguably a tax on the employee as much as the employer. For people earning exactly minimum wage, employers are forced to pay $3/hr (or whatever) in employee costs, but none of that went to the employee. Had the minimum wage simply been bumped, the employee would be free to spend the money however he sees fit, but with your scheme he gets nothing. Sounds a lot like a minimum wage bump to $3/hr, and then the government immediately clawing it back. In other words, a tax.

gruez 2y ago

>It's a way of forcing companies to internalize the externalities of paying below-livable wages. How is paying someone under the minimum wage an "externality"? If the employment relationship is canceled, does that magically make the past employee not poor?

osigurdson 2y ago

Instead of "livable wage", we should aim for everyone being fantastically wealthy.