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Sophie's Choice on minimum wage vs. unemployment

The CBO does a study:*

A popular Democratic proposal to raise the minimum wage to $10.10** an hour, championed by President Obama, could reduce total employment by 500,000 workers by the second half of 2016. But it would also lift 900,000 families out of poverty and increase the incomes of 16.5 million low-wage workers in an average week.

So, great. Now we get to choose between helping 900,000 families and throwing 500,000 workers under the bus!

The political class sure is expert at creating these dilemmas for the rest of us, isn't it? (And especially insidious is the "lesser evil" Obot mentality, that always throws somebody under the bus -- but never them. Saw it in 2008, see it all the time with ObamaCare, seeing it right here.)

And these are, in fact, created, false dilemmas. A jobs guarantee -- or, I am coming to think, better -- a Basic Income Guarantee, makes the Sophie's Choice go away. Therefore, it's off the table. (It's also off the table with Obots, because one of the tasks of the "creative class" is to design, code, maintain, and support the mechanisms that enable these Sophie's Choices: The ObamaCare exchange in particular, but also any public-private partnership, and so forth).

$10.10. Jeebus. What a farce.

NOTE * I should have said "the non-partisan CBO." Sorry. I mean, it's non-partisan because both legacy parties are out to screw all of us.

NOTE ** Fuck $10.10, and why do I think these assholes chose "ten ten" for euphony? Why not round up to a whole quarter, and go for $10.25? Last I checked, the street level was going for $15.00; I had a post in mind on how the Democratic nomenklatura got involved, and $15.00 magically dwindled to $10.10, but never got around to the research...

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letsgetitdone's picture
Submitted by letsgetitdone on

Hah! Sure it's BS. One of the reasons is CBO modeling and projections. They're not even science fiction. They're neoliberal fantasies. Everyone knows it. We need to keep calling them out on their modeling and totally discredit it.

letsgetitdone's picture
Submitted by letsgetitdone on

BIG alone's not better because the MMT economists make clear that prices would just adjust to that and that the BIG would be worth very little or nothing after a time. On the other hand, I think a combination of BIG and JG would work. I proposed that long ago now, here and here, and exchanged with Warren Mosler, who defended the pure JG, about it.

I also discussed the JG rate here. Not sure whether I'd still propose a low JG rate of $10.00 per hour for the lowest cost rural areas in the US ranging up to $24.00 in NYC. Now, I might prefer a range of $12.00 to $26.00.

nihil obstet's picture
Submitted by nihil obstet on

BIG alone's not better because the MMT economists make clear that prices would just adjust to that and that the BIG would be worth very little or nothing after a time.

I've never understood why the value of money depends on its source. You know, like if there's a social benefit like social security, it makes you dependent. If you inherit an annuity, it doesn't. Or here, if everybody gets a BIG of $25,000, it would be worth very little or nothing, but if everybody gets a wage of $25,000, it would raise people out of poverty. I'm sure there are abstruse mathematical calculations and long explanations as to why only money that represents personal responsibility is any good to the poors.

Submitted by hipparchia on

my favorite biologist weighs in... the actual "sophie's choice" is more like "our best scientific wild-ass guess is that raising the minimum wage to $10.10 would destroy 500,000 jobs, but since we really don't have very good data, our estimate could be so wildly off that the minimum wage hike might even CREATE 500,000 NEW jobs."

I hated every single statistics course I ever took , but since we live in an increasingly algo-driven world, where statistics calculations, whether legitimately used or not, are being used to analyze (and justify) everything, I'm glad I finally mastered some of the basics.

Submitted by Hugh on

I agree with the consensus of beware of CBO projections and with the basic right to a meaningful job paying a living wage and/or a basic income. I would also say beware the definitions. The CBO is saying that 500,000 super shit jobs might be lost. I can understand the existence of such jobs in a kleptocracy but in a decent society not so much. And then too what does it mean to raise a family out of poverty? If the federal poverty lines are being used, these correspond to exactly nothing in reality. As a rough adjustment, these income lines would have to be doubled to get them into what most of us would consider as not poverty. Furthermore, income is not wealth. If a lot of these people are carrying a lot of debt, and even those with higher incomes, then we might have to make additional adjustments to the income lines to define "not poverty".

With regard to the underlying issue of wealth inequality, a $10.10 minimum wage does virtually nothing to it. Even the increases I am talking about would only have small effects on it. There can be no major redress of wealth inequality without marginal income tax rates of 90-95% on income from any source over $1 million, asset taxes of at least 10% on any wealth over $20 million, estate taxes of 100% on estates over $4 million. Wealth sheltering dodges such as personal and family foundations need to be banned and current ones dissolved. Hiding income such as in foreign banking havens would have to be subject to forfeiture of the assets and jail time for the perpetrators.

As I have often said, I am flexible on the amounts, but these are the principles to end the massive wealth inequalities currently inflicted on us by the predatory classes of the rich and elites. Even so this is not to punish them. What we are really talking about when we say "wealth" is society's resources, and ending wealth inequality is simply a way to free up these resources so that they can be used for society's purposes, that is building the kind of just, decent, and fair society we all, or most of us, want to live in.

paintedjaguar's picture
Submitted by paintedjaguar on

The figure I've heard is more like $20/hr to restore minimum wage purchasing power to its late sixties equivalent, but I can't say personally.

According to Henry George, just increasing wages is ultimately futile because rentiers will eventually capture any gains above mere subsistence by charging economic rents. His proposed answer was for the state to confiscate this rent in the form of a tax (Single Tax), to be distributed by purchasing public goods and by lowering or eliminating other taxes. People most often associate this proposal with a land tax, but in truth George meant it to apply to other kinds of monopolistic rents as well. We recognize this principle of keeping natural monopolies away from private control and profit when we set up public utilities.

I'm not always sure how deeply I buy into this particular model, but I definitely think George was onto something. It does seem as it rentier skimming and speculation are at the core of most of our economic problems as it was in the late nineteenth and early twentieth centuries.