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Minimum Wages: A Modest Proposal January 3, 2013

Ron Unz, generally considered a conservative but quirky, came out for a radical increase in the minimum wage here last year, not something you generally expect of conservatives, but then Ron Unz and his magazine, The American Conservative, generally take positions we’re not used to expecting of conservatives. He has several arguments.

He admits that increasing the price of low end labor will decrease the demand for it in the short run.  He is not one of those people who treat American business like Moses’ rock, which you can just strike with a rod and more water will come out.  But he contends that those who do get their wages raised will spend more money and in doing so may create enough new low-end jobs at the new minimum of $12 an hour to make up for those lost in the short run.  [I might have added that a high minimum wage would encourage businesses to invest in technology and machinery – and there would be new jobs created, but whether those displaced from the old jobs would have the skills to take the new jobs is something to doubt.]  And Unz also crusades against the supposed need for universal college education.  I can see his point; I think my father’s Bachelor of Science in Economics in 1927 is quite the equivalent of today’s MBA.  And his high school diploma from Central High School in Omaha, Nebraska, in 1923, probably reflects the same level of knowledge as the average liberal arts BA degree today.  To be candid I suspect what has happened in the meantime is a lot of dumbing down [K-12].

Unz points out that the job categories that are growing are office and administrative support; sales; food preparation and serving; child care workers; personal care and home health aides; janitors and cleaners; etc. And I would add that if industrial assembly lines are moving overseas, fixing things is not.  My iPhone may be made in China, and my car partly in Japan, but I don’t propose to send these things to East Asia every time I want them fixed.  And Polish plumbers may be a cultural phenomenon in Britain and France, but the plumbers are coming to the plumbing; the British and French do not send their plumbing to Warsaw to be fixed.

Unz admits that the price of a Big Mac may be driven upward, but then again couldn’t this be a good way of boosting the price of unhealthy food, better than the Big Gulp tax?  And yes unfortunately the poor live off that food, so they will lose part of what they gain if the price goes up.  But as I have maintained in this blog several times before [Elizabeth Warren], the decrease in the standard of living of the poor and middle classes has not come from the cost of consumer goods, but from the costs of health care, tuition, and housing, not much of which can be outsourced to Bangalore.  Wal-Mart gives back with one hand what it takes away with the other, but Wal-Mart does not do health care, tuition, or housing.

Unz also hopes that the illegal aliens in the sweatshops will be in fact priced out of the market and go back to Mexico or wherever.  I can’t be as optimistic about this.  Sweatshops by their nature are not the most law abiding businesses, and I think instead of going back to Mexico or Central America many of these workers will simply go into the all-cash informal economy, where many of them already are.  And in my proposal for the reform of the meaning of ‘under the jurisdiction of the United States’ of the 14th Amendment which I have made in another post, a job with taxes withheld would qualify one as being ‘under the jurisdiction’ and a cash under the table job would not.

I am willing to support a radical experiment.  Increase the minimum wage to $12 an hour for anyone between the ages of 26 and 65, but keep it at the current level for anyone under 26 or over 65.  It is, after all, the people between 26 and 65 that are most likely to be supporting families and need a ‘family wage.’  We shall then see whether employers flock to hire the young, helping them to lose their employment virginity [the one kind of virginity they really need to lose] and the old, who are often quite healthy now, and we do need to raise the age of retirement and Social Security eligibility to about 75, I think.  Social Security would be fine, with no benefit cuts needed at all, if we did that.

In Response to: “Raising American Wages…by Raising American Wages” by Ron Unz at The American Conservative

 

One Comments
Menikov 01/05/2013

Excellent analysis. It would be good for several states to do the $12 per hour and see what happens.

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