Thursday, February 27, 2014

A Minimum of Labor Could Determine a Minimum Wage

I have seen a whole lot of news articles (and solicitations for political contributions) about the proposal to raise the minimum wage.  Most refer to the idea of $10.10 as the new proposed figure (up from $7.25). This new "magic number" is kicked around by both sides, each claiming its side of the argument:  one says this will lift people from poverty, the other that it will cause loss of jobs.   The Congressional Budget Office recently weighed in, saying both statements are true:  their estimate was that 500,000 jobs would be lost, though some 16 million would have their standard of living improved significantly.  This assessment was criticized as being biased toward the right wing viewpoint, and Orange House Speaker Boehner was quoted  reaffirming an old statement that he would prefer suicide to putting a clean minimum wage bill on the floor.

This debate has taken a ridiculous turn, and mostly because of the all-or-nothing nature of the rise from $7.25 to $10.10.  "Take Small Steps" was the sage advice of the Jodie Foster character's dead father to her in the Carl Sagan-authored sci-fi epic "Contact", and this would be where I would start the debate.  Where did this $10.10 come from, anyway?

I'm guessing it is a calculation of the minimum wage which would be necessary to bring a family of X (three, maybe?) just above the poverty line for the median US cost of living given a annual level of 2000 paid hours. Either that, or it is a stunted rendering of a number selected for its sonorous qualities, two-thirds of a Herman Cain-type "nine-nine-nine" (nein?) random number generation.  Why not $10.00, which is at least a round number (in base 10, anyway)?   President Obama tried to round down and get support in his State of the Union address with a proposal to raise it to $9.00, which is the (only) other figure which the CBO analyzed.

What is missing from the CBO analysis is a simple graph with two axes showing the number of jobs lost, and the increased consumption resulting from increments in the minimum wage--these are both continuous functions, which CBO must have had some method of calculating in order to come up with these estimates. Someone intelligent should take a close look at this hypothetical graph and determine the optimal level--which would likely occur at an inflection points in one of the curves (neither of which should be linear)--that maximizes increased consumption for a given amount of job losses. It wouldn't take that long to figure out; then there would be a really strong argument for a bipartisan change in the figure (I am certain that $7.25 is too low, though).

Of course, there would be arguments against:  government interference blah, and states rights blah-blah (actually, a little more sound objection; there are differences in the economies among them, and there should be differences in the defined poverty level), employer discomfort blah-blah-blah.   Then there is the fact that the job losses and changes will not happen overnight, and that the making a fixed minimum wage for an indefinite period is putting a stake in the ground in the midst of a dynamic terrain.  The best program would be to make a smaller change now--perhaps about the amount President Obama suggested, though not the same amount (so that Republicans could not be accused of supporting one of his proposals--heavens, no!)--with a scheduled review and additional adjustment in 18 months or so (just before the general election campaign starts).  It should not actually be a political poison pill for anyone, but clearly 500,000 lost jobs is a tough one to swallow at this sensitive point in time.

Tips for Healthcare? 
I saw a reference to an interesting proposal the other day; I believe it was in Los Angeles.  The idea would be that 3% would be added to the bills of restaurants there and the funds would be applied directly toward payment for healthcare for the staff of the restaurants.  

I like this idea, in principle.  There is a fundamental problem in the healthcare system today for those workers (full- and part-time) for whom employers do not contribute anything toward their insurance, and restaurant workers, in general, are certainly among those.  3% is not such a high tax to pay for the benefit of those who are serving those diners.  The only problem would be if that money ends up being subtracted from the tips the staff receives:  far too many of them are mostly or completely dependent on the tips, being exempted from minimum wage requirements.  Americans are well-known to be the most generous in the world with the tips they habitually give; it would be a bit of a shame if those habits eroded, but less so if diners knew that their wait staff were guaranteed a decent wage and healthcare.

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