Sunday, July 9, 2017

Minimum wage alternatives for helping low-wage earners

In a recent conversation about the minimum wage (revolving around this groundbreaking new study) an acquaintance who agreed with me that the minimum wage is ineffective and undesirable asked "what [do] you think would be better economic policy to help low-wage earners?"  I'm glad she asked!


The line between what counts as “economic” policy and what counts as some other sort of policy is sort of blurry, because obviously all policy reforms have economic implications. Personally, I think the best way to help the economic condition of low-wage earners is to focus on removing the structural barriers which have impeded them from achieving high-wage employment first. This starts with market-oriented education reform, which starts with K-12 school choice. It continues with choice in higher education, achieved first by undoing the cost death-spiral created by federal aid, and then by scaling back the Department of Education’s role in accreditation so as to allow radically customizable and specialized degrees (likely with a heavy dosage of online classes).

Next up is comprehensive criminal justice reform. This starts with ending the war on drugs. Legalize pot and regulate it the same as alcohol. Decriminalize all other drugs, focusing on treatment instead of punishment. While you’re at it, legalize all other victimless crimes too – gambling, loitering, firearm possession, public drunkenness, prostitution, vaping, etc. – with the effect of reducing police interaction with civilians altogether (and thereby reducing police violence and incarceration rates). For those things which remain crimes, radically reform the criminal justice system, to include the repeal of all mandatory minimum sentencing laws.

At the state and local/city government level, we need to end eminent domain abuse (which, from my view, is really any use of eminent domain at all). We also need to the reduce local property taxes, which are contributing to gentrification and the rising cost of living in big cities across the country. We need to remove occupational licensure requirements for as many professions as possible, starting with taxi driving, cosmetology, hair and nail artistry, fashion advisory(!), funerary services and midwifery. An amazing 1 in 3 professions currently require some form of expensive/time-intensive state license for permission to legally operate, which falls hardest on the poor and low-wage earners.

Finally, once all these impediments (and any I forgot) are removed – once the state is well and truly “out of the way” – we should consolidate all current entitlement programs (welfare, food stamps, Social Security, Medicare, Medicaid, Obamacare and other federal subsidies, etc.) into one lump-sum cash payment with no strings attached. Call it a negative income tax, call it a guaranteed minimum income, whatever you want but the basic premise is “trust people to manage their own budgets and lives to their own maximum benefit” without micromanaging what those funds must be spent towards. Those programs combined currently amount to so many trillions of dollars that the take-home sum of our poorest Americans would likely dwarf whatever hotly-debated marginal increase in income the minimum wage was supposed to provide them. And, importantly, it would provide that income to all Americans, *whether or not they happen to be employed*, which is philosophically more consistent with BOTH the liberal values of universal empathy for the poor AND the conservative realization that your employers should have no larger a responsibility to guarantee your quality of life than anyone else in society.

TL;DR – The minimum wage doesn’t help poor people – but even if it did, there are dozens of much better ways to help poor people.

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