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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

by 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.
      - Retric 2y ago
        > Sounds a lot like a minimum wage bump to $3/hr, and then the government immediately clawing it back. In other words, a tax. Sure it’s a shell game, but reducing benefits when workers now make the new minimum wage is just as much a shell game. Reducing benefits sounds like government savings not a Tax, but at the end of the day money is money and this money isn’t ending up in the workers pockets either way.
        gruez 2y ago
        >Sure it’s a shell game, but reducing benefits when workers now make the new minimum wage is just as much a shell game. It's not a shell game when it's doing what it says on the tin. Considering the fact that minimum wage predates welfare programs such as food stamps, it'd be difficult to argue that the reduction in benefits was some sneaky loophole. It was always the intended effect. >Reducing benefits sounds like government savings not a Tax, but at the end of the day money is money. "government savings" is cold comfort to all the people earning near minimum wage, who are at the greatest risk of getting laid off (or their hours cut) from such a change, and stand to gain nothing from such a law. At least with the minimum wage you could say the risk of losing their job is justified by higher wages.

by 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.
    - Retric 2y ago
      > Sounds a lot like a minimum wage bump to $3/hr, and then the government immediately clawing it back. In other words, a tax. Sure it’s a shell game, but reducing benefits when workers now make the new minimum wage is just as much a shell game. Reducing benefits sounds like government savings not a Tax, but at the end of the day money is money and this money isn’t ending up in the workers pockets either way.
      - gruez 2y ago
        >Sure it’s a shell game, but reducing benefits when workers now make the new minimum wage is just as much a shell game. It's not a shell game when it's doing what it says on the tin. Considering the fact that minimum wage predates welfare programs such as food stamps, it'd be difficult to argue that the reduction in benefits was some sneaky loophole. It was always the intended effect. >Reducing benefits sounds like government savings not a Tax, but at the end of the day money is money. "government savings" is cold comfort to all the people earning near minimum wage, who are at the greatest risk of getting laid off (or their hours cut) from such a change, and stand to gain nothing from such a law. At least with the minimum wage you could say the risk of losing their job is justified by higher wages.