CONTEMPLATING THE MINIMUM WAGE. In the implementation of public policy, allocative efficiency can be a goal. But it doesn't have to be the only goal. A Froma Harrop column demonstrates that there can be
right ways and wrong ways to advocate.
One thing about this minimum-wage debate truly fries me. It's the idea that the minimum does not have to be raised because the people who get it don't need the money.
That topic sentence mischaracterizes the argument to follow.
“Many, maybe most, of the gainers from a higher minimum wage are not poor,” Nobel economist Gary Becker and U.S. Appeals Court Judge Richard Posner write. As examples, they cite retirees who want to get out of the house “and earn pin money.” On PBS, a businessman in Clarkston, Wash., explains that the servers making minimum at his pizza place aren't adults supporting families but kids who want to go home and “play video games.”
A policy might be more effective if it is implemented in such a way as to benefit the people it is supposed to benefit. If advocates of a higher minimum wage are doing so in order to make it easier for the working poor to support a family, perhaps the knowledge that relatively few minimum wage workers are supporting a family, and that not all minimum wage workers are working poor will sharpen the focus of that advocacy.
There is a conservative worldview that people who don't make serious money aren't serious people. Economic incentives are for entrepreneurs. For the low-of-wage, you put a bowl of nuggets on the ground and pat their heads.
Pure polemics. There is a
conservative worldview that labor markets allocate resources efficiently, and that a higher wage for entry level jobs means
fewer entry-level hires and more burdens for the remaining workers.
First off, it's not true that minimum-wage earners are overwhelmingly in it for the fun. The average such worker brings home more than half the family's weekly earnings, according to an analysis by the Economic Policy Institute. And 9 percent of the beneficiaries of a minimum-wage hike would be single parents.
Huh? Which average? And what do we know about the other 91 percent? On your weight-and-balance happiness scale, how much sacrifice by entry level workers is it worth to provide a modest pay raise to some single parents?
Rather than address that weight and balance, which would be a legitimate (and in my view more compelling) argument, the columnist decides to raise invidious comparisons.
I've not heard of a single case in which a board of directors delved into an executive's spending plans before setting compensation. Imagine their saying: “Our CEO has a house in Palm Beach and a ranch outside Aspen. If we give him an extra $5 million, he'd probably just blow it on another jet. Nope, he doesn't need it.”
That's an interesting logical approach. Yes,
Oliver Stone made a movie in which the protagonist justifies a hostile takeover of a company by pointing to the large number of vice presidents he has. But sometimes fiction imitates life.
Investor owned companies exist to make money for the investors, and those investors indeed have reason to
tame CEO pay.
The decision by Aflac Inc., made in response to a push by major shareholder groups, comes at a time when the public and the Securities and Exchange Commission are renewing the focus on rising executive compensation.
There are two major questions: whether bosses at large public companies deserve the tens of millions of dollars they sometimes earn, and whether their employers clearly spell out for shareholders exactly what's included in the executives' often-lavish salary, bonus, stock and perquisite packages.
As of late January, big investors have filed resolutions at 44 U.S. companies seeking to give shareholders a non-binding vote on executive pay.
Ms Harrop, however, leaves her envy card on the table, changing topics to make a statement wherein she doesn't fully grasp the implications.
Many conservatives like to both baby and worship the small-business person. They are especially fond of sob stories about how a raise in the minimum will drive a mom-and-pop into bankruptcy. Odd, but businesses seem to cope with increases in electricity rates, property taxes and the price of materials. Where is it written that wages can't go up? The minimum hasn't budged in 10 years.
If business owners can't make a decent profit paying their workers a minimum wage - that adjusted for inflation would still be lower than it was in 1969 - then perhaps, just perhaps, they shouldn't be in business.
In the conservative songbook, however, never is heard a discouraging word about the heroics of the small-business person. It's always some government regulation that's tripping them up - never that they took on too much debt, their burgers aren't as good as another guy's or they're selling the wrong thing.
"Conservatives" do? Is the continued regulation of electricity prices in notionally deregulated markets, or anti-big-box retail legislation, or a tax exemption for business property "conservative?" Such legislation is protective of small business, but it's worth remembering that small business owners are often defenders of free enterprise in the abstract, but quick to seek legislative or injunctive relief from the
slap of the invisible hand that sometimes comes from the mistakes enumerated in the final sentence I quoted.