When you hire someone, you have to pay social security taxes, unemployment, workers’ compensation, and ensure worker health and safety. It’s a lot to put up with. What if you could get people to do the same work without taking on these responsibilities? As it turns out, you can.
Back when I studied economics, we “proved” in class that a minimum wage causes unemployment. But that proof depends on assuming a perfectly competitive market. Big low-wage employers like Wal-Mart have substantial market power; they can deliberately under-staff operations to force down wages. In that case, a minimum wage increase can actually create jobs–if it can be enforced.
The new Congressional Budget Office report projects that the Affordable Care Act will lead to a decline in full-time equivalent workers of 2.5 million. This is people voluntarily deciding to work less–like mothers with small children, or workers in poor health or close to retirement. That should mean higher wages for the remaining workers.
The inequality and growth debate is a red herring. It just doesn’t matter. The problem is inequality, and its solution is simple.
How can sales of super-luxury cars grow at super-fast rates during a recession? The answer is simple: it’s not a recession for everyone.
Greed is not good, and high inequality is making all of us greedier than we should, or could, be.
For the past forty years American men’s incomes have stagnated, but women’s wages have risen. Unfortunately, the years of catch-up are now over. We need policies to raise wages for everyone.
Economists will give you all sorts of answers based on technical factors, but in the end it all comes down to one word: inequality.
It’s not popular today to stand up for the poor, the homeless, the addicted, or the imprisoned. But progress means progress for everyone. There’s no such thing as progress for a few.
Would it be such a terrible thing if fast food workers got a twenty percent raise this year while executives took a pay cut? It’s not our economy that needs rethinking; it’s our ethics.