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About this blog: I developed a special interest in helping seniors with their challenges and transitions when my dad had a stroke and I helped him through all the various stages of downsizing, packing, moving and finding an assisted living communi...  (More)

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A Modest Proposal for Paying a Living Wage

Uploaded: May 3, 2016
I know that this is not directly related to Seniors, but this proposal could have a profound impact on everyone’s life so I put it out there for discussion. This proposal for paying low wage workers a living wage was overheard on NPR last week. I apologize that I did not get the name of the Englishman proposing it, but I believe he was a long-time US resident/citizen and taking part in a spirited discussion of the minimum wage.

His proposal was to pay all low-wage earners a “living wage”, defined by enabling a person to pay for the basic necessities of life and not depend on any form of subsidy from the government. That would include food stamps, free or reduced-premium health insurance, or any other form of being on the dole. The way to pay for this “living wage” would be to give a tax credit to the business that was paying it that would cover the difference between the “standard” wage in their industry and the “living wage.” The tax deficit this would create would be more than made up for with the savings on the no-longer-needed public assistance programs many low wage workers previously needed to live.

The benefits to this approach would include stimulating the economy due to putting more money directly into the hands of low-wage workers which they in turn would spend varying portions of. So rather than simply raising the minimum wage to $15, for example, and the resultant reduction in the number of low-wage jobs this would likely cause, more jobs would ultimately be created, and government assistance programs would shrink to cover the truly needy.

Not being an economist, off the bat I can’t see the downside in this proposal. Please join the discussion and share your thoughts.

Comments

 +   6 people like this
Posted by Plane Speaker, a resident of Crescent Park,
on May 3, 2016 at 3:07 pm

As soon as anyone makes any comment that includes the phrases, minimum
or living wage, an "anti-social network" of shills usually busts in and starts
repeating anti-communist slogans from the 1950's and earlier shouting down
any reasonable discussion of facts.

The bottom line of these discussions to me always reduces down to what
comes first, money or people?

The discussion in the public space of these issues is totally suspect and
corrupted by what is complete incoherence.

We are supposed to think it is a Liberal position to support both the social
safety net and unlimited immigration at the same time, with issues of crime,
race, economics all thrown in and lit on fire for provocative rhetoric.

How are Americans supposed to survive when almost everyday we see
CEOs paid tens of millions of dollars, or in some cases ( Jack Welch paid
almost 1/3 of a billion dollars ) to stab America in the back while waving
the flag in the "Liberal Media" and lauded with books and bonuses to talk
about how great it is economically for Capitalism, the US and Democracy,
while at the same time allowing millions of people from the most desperate
countries to come in and work the most dangerous or low paying jobs, while
at the other end hundreds of thousands of high-tech workers coming in to
work the now leveling off numbers of well-paying tech jobs?

It's like America has applied a tourniquet to its arms and legs and left blood
flow only to its head and genitals figuring we can just hire low wage workers
to move us around and handle things for us, and our arms and legs just
take up resources and oxygen in our body politic. The vision of America
from the top elite is a return to raw power politics, and they have won.
If they want they can squeeze as hard as they want on the American people
and the people in the rest of the world. Maybe we even deserve it since
most Americans stood by and did nothing while people in foreign countries
were intimidated, murdered and stolen from.

The point is that the minimum wage discussion presupposes you have a
job, and as 1991 Robert Reich former Labor Secretary was telling us it was
all predictable that jobs and the economy were going to change in predictable
ways, that is education, networking and capital were going to be hugely
important, and everything else would be a cheap global commodity. Even
Reich had no idea how far and fast this would go, and he has changed his
tune drastically since the 90's and Clinton.

Our government is lying to itself ... passing trade deals they do not even
know what is in, because of the slogan - free trade is always good, and lying
to their constituents that they even know what they are talking about. The
disconnect from the truth has put all .... 100% of the uncertainty on American
citizens and workers, and none of it on corporations and business and capital,
which are the institutions that are supposed to work to minimize risk for the
rest of us.

The jobs that will be left Reich called "symbolic analysts", that is working with
information and corporate and legal structuring, media, finance - everyone else,
and I mean everyone sooner or later will be reduced to a contractable service
employee if you do not have political connections, world class expertise, or
lots of capital. Food service, Uber, taskrabbit, Starbucks, etc all at a wage
that does not allow positive survival, that is, all at a wage that kills you slowly
from lack of education, lack of health care, lack of shelter, transportation,
information, and being lied to and manipulated by a growing sophistication of
PR and advertising.

What are people supposed to do? The Conservative/Republican answer seems
to be the same as what you are supposed to do if you do not have health care,
die quickly.

The only alternative to this is for the government to pivot and start to enable
regular people. To support and buoy up people instead of seeing them as
welfare drags, homeless or criminalizing them. Either pay people a living wage,
or pay them some kind of universal basic income and let their resourcefulness
in the work world supplement that with working at jobs that have no minimum
wage.

That is, get rid of the minimum wage and subsidize people's basic needs so they
do not need to grovel or be enslaved to anyone. If anyone wants to start their
own business, they can do so. Or pay people also to go to school.

Start paying people for access to their meta-data as well. instead of just giving
big pharma the profits from what it discovers from other people's genes, or
analyzing their behavior, pay people for being part of the system.

The world is changing, and I wonder how far as we going to go pretending to
be confused or that we are doing the right thing which has resulting in the
destruction of millions of people and families already, and a huge social
liability cost. That is what we are doing today by pretending to the people
through the media that we cannot tell what is going on ... we know it, we've
known it for decades, like Exxon knew about Global Warming in the 1970's.

How can we call our country a democracy, republic or a free land when we have
to lie to the majority of the people just to keep it going?


 +   1 person likes this
Posted by musical, a resident of Palo Verde,
on May 3, 2016 at 9:24 pm

Does "basic necessities of life" include cigarettes?


 +   5 people like this
Posted by A different means to an end, a resident of Barron Park,
on May 4, 2016 at 9:21 am

A different means to an end is a registered user.

If the objective is to provide a better safety net for the vulnerable classes of society, it is a very interesting time as there are several methods currently being explored.

In the U.S. recently, the focus has been on raising the minimum wage. It has the following pros/cons:

Pros:
It rewards people who work.
It is relatively simple to understand and implement

Cons:
It taxes labor and concentrates the burden on businesses.

Issues:
There are concerns that arbitrarily raising the minimum wage above market rates increases unemployment particularly in those classes of workers the policy is attempting to help. Businesses continuously endeavor to cut costs and raising the minimum wage motivates them to invest in automation, reduce hiring or in some cases forces them out of business.

Not all jobs, workers or local costs of living are the same and attempting to apply a universal minimum wage across the board is a clumsy mechanism. That inefficiency can cause distortions in the marketplace thereby increasing costs and reducing flexibility for employers.

Another strategy that has gotten a lot of attention recently is various forms of negative income tax policies. The programs pay recipients an income sufficient to meet basic needs for food, healthcare and lodging directly if they meet a set of criteria.

Several pilots in Europe are being considered in France, the Netherlands, Finland and Switzerland under the name of basic income or unconditional basic income. A form of this approach has also been tried in the U.S. in Alaska and under the earned income tax credit.

Pros:
It can stimulate demand in the economy which can increase employment and wages naturally.
It is very efficient to implement and can potentially consolidate or eliminate the need for massive overlapping bureaucracies to administer food stamps, unemployment, social security, and medicare.
The tax burden can be spread over the entire population and collected with existing mechanisms like income, sales or value adding tax systems.

Cons:
Its affordability can be compromised by demographic trends like the baby boomer generation retiring or un-controlled immigration.

Issues:
Although not strongly supported by empirical data, there are legitimate concerns that basic incomes reward people for not working. More likely, as published tax rates rise to cover the cost of the programs individuals are motivated to hide supplemental income they may earn on their own and avoid paying taxes.

Personally, I favor negative income tax strategies over trying to enforce a living minimum wage. It would be vastly more efficient than the wasteful and redundant programs we currently have. In addition, it provides a more powerful and direct mechanism for the government to stimulate the economy (vs. manipulating interest rates or increasing spending) and yet still allows market forces to work normally.

Tax rates may appear to be higher but I think they will just actually be more accurate. In today's system, the true costs are hidden in non-transparent bureaucracies, fraud and unfunded budget deficits. Of course, there is also the political stigma of paying benefits to citizens even if they don't work.


 +  Like this comment
Posted by Online Name, a resident of East Palo Alto,
on May 4, 2016 at 4:18 pm

[Post removed.]


 +   2 people like this
Posted by DHF, a resident of Downtown North,
on May 9, 2016 at 7:57 am

If we as a society wish to help the working poor, then the Earned Income Tax Credit (EITC) is the way to go. And that is basically what was being proposed - a supplement (negative income tax) to poor workers' wages.

Minumum wage laws try to help poor workers by increasing their pay, but for the employer, a minimum wage is essentially the same as a tax on employing low-skilled labor. This discourages employment of the very people we would like to help. The EITC does no such thing. Sometimes, we forget that the one thing worse from having a low-paying job is to have no job at all.

Another advantage of the EITC is that it aligns society's values (helping low-skilled workers) with government spending. The minimum wage is hypocritical in this sense, in that we as a society are saying that we want to help low-skilled workers, but are not willing to pay for it, and hence put the burden on their employers.


 +   2 people like this
Posted by donnasue jacobi, a resident of Menlo Park,
on May 12, 2016 at 2:31 pm

the real problem of wages comes from the principles of companies who insist on getting enormous salaries/perks at the cost of the employees who actually do the work to make a company viable and successful. What needs to happen is for company execs to realize without good workers you don't have a product to produce or sell. How about starting to reward the worker bees who make a company alive. My father ran his business for 46 years and he said and believed that without his workers he wouldn't have had a successful business. The all had decent wages medical, profit sharing and bonuses at the end of the year and my dad still made millions in profits. Like he said without his trusted workers he wouldn't have had a successful business. It's time for companies to think about who makes their companies thrive--the CEOs or the workers.


 +  Like this comment
Posted by SEA_SEELAM REDDY, a resident of College Terrace,
on May 28, 2016 at 3:21 am

SEA_SEELAM REDDY is a registered user.

I believe in following Maslow's theory.

Humans basic needs need to be met.

Shelter and food are basic elements.

Can we work to provide 'shelter' a home (rental/buy) for every one?
Can we provide 'food'?

In return, we should expect a decent contribution based on their skill level.

I think we can. Supply and demand and no public programs are fine. Lets make it work.

respectfully



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