Being the profoundly intellectual and curious individual we all know her to be, Senator Elizabeth Warren is on the warpath for answers.* Her null hypothesis clearly remains that there is no such thing as a stupid question. Otherwise, she never would have asked the following:
“If we started in 1960, and we said that, as productivity goes up — that is, as workers are producing more — then the minimum wage is going to go up the same,” the Massachusetts senator said during the hearing. “And, if that were the case, the minimum wage today would be about $22 an hour. So, my question … is what happened to the other $14.75?” she asked University of Massachusetts professor of economics Arindrajit Dube:
Dr. Dube was a capital good sport. He not only didn’t laugh, he encouraged her nuttiness. He argued that the “fair”** minimum wage would currently equal $33/Hr. Personally, I think I want a pony. I also think that since the Federal Reserve can just print all the money we need, any time that we need it, the new minimum wage needs to be $50/Hr. That’s my definition of “Fair” and it’s just as good and happy as the one set forth by Dr. Dube. He’s just a plutocrat. What happened to my extra $17/Hr? #OWS!
Now there are some old fuddy-duddies out there. These veritable troglodytes claim that the Minimum Wage has historically been a conspiracy to keep blacks and pasty-faced teenagers from competing for low-skilled employment. Milton Friedman espouses such heresies below.
And we now move on to more enlightened thinkers from a far better age. We’ll ask Dr. Christine Romer. She did such an awesome job with the 2009 Stimulus Plan. Maybe her job was about the only shovel-ready one that fiasco created. But never mind. She teaches at Berkley, I’ll have you know!
I’m sure she’ll explain to us why Sen. Warren is magnificently correct about the Minimum Wage and why the Repair_Man_Jack $50/Hr Minimum Wage is the only moral way to go. Oh, wait…
SO where does all of this leave us? The economics of the minimum wage are complicated, and it’s far from obvious what an increase would accomplish. If a higher minimum wage were the only anti-poverty initiative available, I would support it. It helps some low-income workers, and the costs in terms of employment and inefficiency are likely small. But we could do so much better if we were willing to spend some money. A more generous earned-income tax credit would provide more support for the working poor and would be pro-business at the same time. And pre-kindergarten education, which the president proposes to make universal, has been shown in rigorous studies to strengthen families and reduce poverty and crime. Why settle for half-measures when such truly first-rate policies are well understood and ready to go?
But all hope is not forlorn. We’ll wheel out the big guns – the man who feeds and grooms Schrödinger’s Poor Little Pussy-Cat. None other than Nobel Prize Winner Paul Krugman. He’ll set these heathens straight but good! Oh, wait…Here he examines what he believes will be the impact of a hypothetical Living-Wage Law.
Indeed, only about one-fifth of the mandated increase in wages and benefits actually gets manifested in disposable income; the rest is taken away as benefits decline. Now to me, at least, the obvious question is, why take this route? Why increase the cost of labor to employers so sharply, which–Card/Krueger notwithstanding–must pose a significant risk of pricing some workers out of the market, in order to give those workers so little extra income? Why not give them the money directly, say, via an increase in the tax credit?
So I really wanted to be Librawl this fair and beautiful morning. I wanted redistributive Justus that I could stick in my wallet. I wanted to stick to the man, take it to the bank, and earn $50/Hr whether my sorry, scurvy butt deserved such generous remuneration or not. It was, after all, “Fair.”
But not even Christine Romer was willing to hand out that much stimulus. Perhaps she didn’t have her shovel ready. Heck, my fair and harmonious suggestion for deeper social progress was too liberal for Paul Krugabe. Ye Gods!
Oh well. I can only conclude the following with regards to Senator Liawatha’s innumerate and ignorant adventures into the land of deracinated logical farce. We will only ultimately earn what the market tells us we are worth. That market will not care particularly much if that makes us happy. If we don’t like what Mean, Old Mr. Market has to tell us; there is always an alternate wage we could earn: $0.00. That is all.
*-Oh Good Gawd this could get ugly early. Like the time I poked the hole in that watermelon and poured in Everclear…
**-I just love it when deep thinkers attempt a scientific assessment of “fair.” Go back to step 1. Give me a decent definition of “Just.”