Comment Rescue: Minimum Wage Checklist
by Gabriel Conroy
Despite my strong misgivings about raising the minimum wage, the recent discussions here at the OT have compelled me to consider in what circumstances I would endorse an increase. This is not an “opposite day” post. I am willing to consider an increase based on what I write here.
I’d like to riff off a comment that Zic made in the thread to my OP. When I asked when/how a given regulation’s effect on jobs should affect whether we adopt said regulation, she offered a checklist of sorts. For any given policy, we should see
1) how they’re actually working and 2) if what you wanted is happening and 3) what are the things you didn’t anticipate, 4) what might you learn for future knowledge from this review, and 5) does what we’ve just considered suggest realigning the policy.
I have some things to add to Zic’s checklist, but overall I find is a good way of judging regulations. I should add that I’m not saying she necessarily agrees or ought to agree with the uses to which I put her checklist or with my overall policy positions.
EXAMINING ZIC’S FIRST FOUR POINTS
Here are my thoughts on her first four points.
Point 1. A few things to consider. Will there be layoffs? If so, will they be minimal or great. Will employers reduce hours and if so, how much? Will prices increase and if so how much and whom will they affect? I can imagine scenarios in which the answers would tend to favor an increase.
Point 2. I suspect that most people want one or both of the following from a minimum wage increase. First, they want workers who toil in some of the least satisfying jobs to get more take-home pay. Second, they’d like to see more money interjected into the economy, hoping for a multiplier effect that will benefit everybody. If raising the minimum wage does either or both of those things, that’s probably an argument in its favor.
Points 3 and 4. < These require study and an open mind. I can’t list what’s “unanticipated” because if I could anticipate them, they wouldn’t be unanticipated.
I’ll save Zic’s point 5 for the end, but first I’ll add two points of my own.
GABRIEL CONROY’S TWO ADDITIONAL POINTS
My first point: What’s the alternative?
I’d like very strong state supports for people and perhaps a guaranteed basic income. If it’s a good thing to help people through some sort of redistribution, why make employers the vector when some other redistribution scheme (progressive income tax or targeted sales tax + transfer payments) might work better?
But the problems with my preference are many, and indirectly help support an increase. With an increase, at least the worker receives the money directly and not filtered through some sort of state program. And raising the wage, however controversial, is probably more politically doable than increasing state supports.
My second point: The smell test.
It’s one thing for me with all my advantages to type up speculations about the minimum wage and job loss. It’s another thing for me to tell someone earning a minimum wage, “you shouldn’t get an increase.” I’m not going to break a “fight 4 15” protest line to order a hamburger. I’m not going to go to the counter and offer my unsolicited opinion. If asked, I’d want to be both honest and able to say it with a straight face.
The “smell test” isn’t only a vector for a self-flagellating middle-class guilt trip. It’s also a recognition that my own, admittedly simplistic, equation of regulation = fewer jobs, doesn’t tell the whole story. Even if it’s right, it neglects the realities on the shop floor and in the daily life of people. The “smell test” is a reminder that I need to listen, especially when I pontificate.
ZIC’S POINT NO. 5
To recap (and rephrase a bit), Zic’s point 5 is, does our analysis suggest realigning the policy?
This point deserves special consideration.
For me, the worst case scenario from a minimum increase–and from having a statutory minimum wage in the first place–is NOT the complete destruction of the American economy. I don’t believe any of the plans for a minimum wage increase, even the $15 per hour that some advocate, will “destroy” the American economy. My worst case scenario concerns the jobs foregone. For someone unemployed, a lower-than-minimum wage job might start to look attractive.
You probably see where I’m going, a downward revision (“realignment”) of the minimum wage during the next recession, which I hope comes later than sooner. Would it be possible in any conceivable political world? Probably not.
Ought the policy be “realigned” downward in the wake of a recession? Perhaps inflation already does the job for us. I’m familiar with the claim that in constant dollars, the minimum wage is actually less than it was during, say, the 1970s. Not knowing the full facts of the matter, I do wonder whether that includes cost of food and clothing. But I assume the claim has at least some truth.
By saying “realignment” is hard, I’m not trying to hold any and all minimum wage considerations hostage to the ” can it be rolled back?” objection. The fact–assuming it is a fact–that a rollback is difficult ought not bind us for all time. But it should be considered.
Fine. I say “should be considered” and I’ve gone through Zic’s excellent checklist, but I haven’t actually committed myself to raising the wage or identifying how much of a raise I’d support. I’m still ambivalent. But what I’ve outlined above are the kinds of things I’d consider if I had any substantive role in policymaking.