If you ever want to stump a supporter of the minimum wage then you should always ask them: “If the minimum wage is so good then why not raise it to $50 per hour or $100 per hour?” Their response is usually one of caution and will say, “Well, that can’t be done because…”
This hesitation is already an admission that raising the minimum wage would come with some negative consequences, like job losses.
But one celebrated economist says it doesn’t matter if a $15 minimum wage leads to job losses. How come? Because it’s morally just.
Robert Reich, an economist and the second-most celebrated Keynesian/liberal economist in the United States behind Paul Krugman, wrote a blog post entitled “The Morality of a $15 Minimum.” It outlines the morality behind a $15 minimum wage. He also attempts to quash any ideas that such a minimum wage would cause widespread job losses.
Here is what he wrote:
“Even if a $15 an hour minimum wage risks job losses, it is still the right thing to do.”
So it’s quite evident, at least for Reich, that raising the minimum wage is $15 is actually a moral crusade and not an economic initiative. Interesting.
Photo: “Robert Reich at the University of Iowa, Sep. 7, 2011”. Licensed under CC BY-SA 3.0 via Wikipedia – https://en.wikipedia.org/wiki/File:Robert_Reich_at_the_University_of_Iowa,_Sep._7,_2011.jpg#/media/File:Robert_Reich_at_the_University_of_Iowa,_Sep._7,_2011.jpg
When to $10.10 federal minimum wage was supported by Mr. Obama the CBO estimated a 500,000 job loss and the NY Times opined that it was OK no matter how long it took for 500,000 from 500,000 families to get a new job and no matter the hardship they had to endure. A nationwide minimum of $15.00 would no doubt eliminate about 5 million jobs and and getting those people back to work would take many years. Few marriages could withstand the strain.
When economists analyse financial policy they do not consider the human cost of the unintended consequences and they rarely consider better alternatives. For example we could start with a $9.00 federal minimum wage and let states and cities make it higher if their economy permits. Bill Gates has even stated that a replacement of the job killing payroll taxes (perhaps with a small 4% VAT and business tax expenditure reform) would be a better way of helping workers and increasing salaries.
Reich unfortunately feels he must support the party line even when it is wrong.
Who pays the VAT? It is just replacing one tax with another. If the price of goods and services goes up because of any tax who does it benefit? Bill Gates does not like to pay the payroll tax because it is a direct tax on employers, of course he wants to do away with it.
Record corporate profits, record low wages for the average worker adjusted for inflation over the last 40 years has only benefited the employer. Higher minimum wages in states that are above the Federal Minimum has not hurt the state”s economy. $15 may be too high today, but we should index minimum wage to inflation so that the working poor do not continue to fall behind. When you put more money in the average worker’s pocket they spend it and this creates more jobs and keeps more people employed. Higher wages are a good thing and will over time move more off of welfare.
About $59 billion is spent on traditional social welfare programs. $92 billion is spent on corporate subsidies. So, the government spent 50% more on corporate welfare than it did on food stamps and housing assistance in 2006.
It is time for the government to stop picking winners and losers with the tax code and let every business rise or fall on their own.
Time for a tax code that taxes everyone the same with the first $50,000 exempt from income tax for all.
Also, all food should be exempt from State sales tax, this would help the poor greatly.
Workers pay 15.3% on ever dollar with a payroll tax. A 4% VAT applies only to VAT purchases so workers do much better under the change.
Oh, if we all through innovation and hard, smart work could just find a way to get more and more quality products and services, and pay less and less for the entitled convenience.
While the incomes to support it all will just fall out of the sky somewhere like they did before. Lol…
I made $9.10 per hour in 1975, loading trucks for Gallo Wine in Commerce, CA. I was right out of High School, no experience, just a strong back, we worked 12 hour shifts, 3 days per week, no one was paid overtime. But, I bet the CEO did not make 300 to 400 times what the average worker made in 1975, like many do today.
The last time I looked Gallo Wine is still at that location and is still in business, today..
Today, I am sure many would think that no company could make it paying over 4 times the minimum wage to its workers.
Also, a 4% VAT would not be high enough to replace the Social Security revenue. The worker only pays 7.65% the employer pays half, also.