Chart courtesy of Marginal Revolution University
The following commentary was published originally on Jan. 27, 2022, in Honolulu Civil Beat.
_____________
Last week Senate Bill 2018 — a proposed minimum wage increase to $18 per hour over the next four years — was introduced by state lawmakers. Al
Other places describe them as a “conservative think tank.”
So?
If the goal is the raise the minimum wage so that low income workers can take home more money to deal with the high costs of living then obviously them having their wage fall is bad along with the fact the article is trying to drive home that unless the key reasons for the high cost of living, excessive red tape and high taxes, then no amount of wage increases will be enough to offset the state’s high cost of living.
Context for their statements.
The study they cite doesn’t say take home pay falls. It says take home pay stays the same and hours are reduced. I agree that isn’t meeting the goal of raising wages, but it does allow more free time for workers. That is especially important where minimum wage earners have to work multiple jobs. Imagine telling some working 3, 20 hour a week jobs that they could make the same amount of money working just 2 of those jobs, but the policy is bad because they won’t make more money overall.
Yep, obviously this isn’t a cure all for income inequality. There are systemic issues that need to be addressed.
Cut taxes and reduce regulations doesn’t have a history in the US for helping people in lower income brackets. Replacing current taxes on the poor with higher taxes on the rich? That might work. I also don’t believe ‘let us develop more land and the cost of living will go down.’ Everywhere I have seen that in practice megadevelopers get rich creating suburbs. Maybe it would be a net good if the houses were allotted and free of cost to the Native Hawaiians who have been waiting decades for housing they have been promised to become available.
Of course it’s a bad policy if they’re working the same amount of money the whole point of minimum wage is to give low income people more funds to take home so it stands to reason that if they’re not taking home more money then that yes this policy is bad this is not even considering that different employers deal with minimum wage differently such as they may fire personnel which would cause a huge increase in the black market as they’re forced to seek out jobs underground as employers can’t afford/don’t want to pay them the minimum wage and increase in crime as they cannot find anyway to pay for their expenses legally and they could pass on the costs to the consumers which would cause a huge increase in the price of goods and services in the state.
Cutting taxes and reducing regulations haven’t particularly helped lower income persons in the US because they’ve only ever lowered taxes for high income people permanently and mostly needed regulations were cut and not excessive red tape. Progressive taxes are horrible way to solve inequality look no further than South Africa to see why that’s a bad idea a better solution would be workfare for all able bodied persons along with subsidization of the necessities, support from the government and charity for those that aren’t and eliminating any and all loopholes in the tax code. I’m not an expert in housing so I really have no idea on how to solve all across the world whether via government, the free market or a combination of both housing prices are extremely high so there’s no simple solution that I/anyone else could recommend.
You’re right that minimum wages are sold as putting more money in people’s pockets. I can see why you would focus on that benefit, but the whole point is to make people’s lives better. If someone offered me the same amount of money for working 20% fewer hours, I would take it. Assuming minimum wage doesn’t put more money in workers’ pockets, it improves quality of life by giving back time over the status quo.
Again, status quo is what it is. Individuals won’t be making less money. Same money + more free time = huge black market increase?
A progressive tax policy was just an example of something other than typical rich people/corporation cuts. My point is that the people publishing this article have an expressed intent to advocate for the reduction of taxes. In the US that means exactly what you’ve said - a reduction of taxes on the rich cloaked in the lie of helping everyday people keep more of their money. I brought it up as a reason to be skeptical of the conclusions they draw.
The low income worker wants more money in their pockets not more free time it doesn’t matter if they have more free time if they still don’t have enough funds to pay for their daily needs and have some left over for luxuries that’s what would make their life benefit more money in their pockets and that’s not what minimum wage is sold as that’s literally it’s purpose.
Did you even read what I wrote in which I clearly state that cutting hours is just a way one employer may choose to offset the minimum wage increase and that they could lay off workers instead.
Again if you read what I wrote you and if you read the blog posts of the author you would’ve realized that I’m advocating tax cuts for ALL income groups and that progressive taxes are at best a band aid for solving the issue of poverty and that there are much better ways to actually solve poverty.
All people want is more money? Any other benefit is not worth recognizing? This is not the world that I live in. People around me want to spend time on themselves (like looking for better work). They want to have waking hours with their families and friends. Extra time is a good thing even if it doesn’t also put more money in your pocket.
No its purpose is to make people’s lives better. The mechanism is raising hourly wages at the bottom of the pay scale. You’re conflating how with why.
Yes. I have read the article and each of your replies at least twice before responding and clearly stating something doesn’t make it true or worth responding to. You (and the article) make the leap from a population study to individual consequences. It is a common problem with the interpretation of studies. I pointed my response at the the actual issue instead of rehashing how research works when applied to the real world.
Again, I read, waited, and re-read before responding. I want to think you’re better than resorting to making your point by claiming someone else’s ignorance, but I have two instances in the same response to tell me otherwise. I’m out.
They want to have enough money to pay for their necessities and maybe even some left over for luxuries why is that so hard for you to comprehend. Look into why minimum wage was created or why anyone campaigns for it the purpose of minimum wage is to provide an amount that low income people can afford their daily needs not to give them more time off you can ask literally anyone why they want a minimum wage increase and they’ll tell you it’s that they can have more money to live a decent life and not more time off. You clearly didn’t read the part of the article where it stated because of the numerous amount of variables affecting employment there’s no sure way to accurately predict the effects of minimum wage but even in the best case scenario where there’s little to no change in the unemployment rate it still does a terrible job of it’s intended goal of poverty alleviation and that you could actually fix poverty with lowering taxes for low income earners and reducing red tape so that more businesses can easily set up shop in the state leading to job mobility, more money in low income earner pockets and lower costs of goods and costs in the state.