Wednesday, November 04, 2015

A Slightly Different Take on the Minimum Wage

Since America’s minimum wage is lower than other industrialized countries—20% below the UK, for example, our labor participation rate should be higher than theirs. After all, we’re always being told that raising the minimum wage will increase unemployment. Surely lowering it, which is exactly what we have done over the last several decades, should increase employment. In fact, labor participation rates have fallen here more than in Europe, a trend that began well before the Great Recession. I don’t know why this has occurred, but the low wage regime obviously hasn’t prevented it. I suspect, though I certainly can’t prove, that what’s going on is that wages at the bottom are so low that they aren’t perceived as preferable to wretched idleness—it certainly isn’t because of the allure of welfare, which was vastly more generous in an era of higher workforce participation. Well, in the decadence of Soviet communism, the saying was “We pretend to work, and they pretend to pay us.” Maybe we’ve gone one step beyond to an era of “We don’t even pretend to work.”

There are two obvious remedies to the unwillingness of large numbers of people to work at current wage levels: you can raise the wage levels and make work more attractive or, as we’re apparently chosen, you can make unemployment more miserable or simply criminalize it. The Soviets outlawed unemployment, though the passive resistance of the unwilling workers was part of what did them in. We’ve opted to a version of the Manchester solution, with a gulag of purposely dreadful prisons in lieu of the poor houses. Rather like the ancient Spartans, we’ve decided to declare war on the helots at least once a year to keep them on the job and show ‘em who’s boss.

I doubt if our solution is really a solution or even makes sense in narrowly economic terms. Even if they aren’t more skilled, better paid workers may be more productive than underpaid workers. The scorn we endlessly lavish on the burger flippers and postal workers is not necessarily calculated to encourage good work habits. I guess it has a spiritual benefit, though. The happiness of the elect requires the suffering of the preterite; and in a secular age, we can’t depend on a loving God to build and staff the necessary Hell. We might all be better off in a more egalitarian economy, but what fun would that be?

No comments: