Minimum Wage, Except It Works
A key talking point of today’s economy is all about the “one percent” and “raising minimum wage” to help the “worker”. Except these are talking points of the past 100 years and is really just a tactic by politicians for you to need them both today and in another 10 years when inflation goes out of control again because they wanted to print 6 trillion dollars to make sure their investments don’t tank. The conversation always divulges into “tax the rich” and “help the poor”, but there are some key issues with both sides of the arguments as well as the suggestions to overcome these issues.
Minimum Wage
The key issue with the minimum wage is that it forces out low wage workers, which are usually the poorest of us, and causes businesses to “slim” their workforce just to meet the demands of the minimum wage. This, if done too rapidly, will cause a major fallout effect of the lower class and a major dependency on big government. If done too slowly it can leave people behind, causing a major dependency on big government. But regardless, a static minimum wage is bad for everyone involved except politicians and big corporations/special interest. If for no reason it gives you something to vote for every 5-10 years, and you’ll need them to keep on raising it. In other words the current minimum wage system is job security for politicians and activist.
Tax the Rich
Another key issue we see all of the time is this idea of “Taxing the Rich”. One of the common comments is that the tax rates use to be in the 90% range in the 40’s/50’s. The key is when you look at the taxes paid during that time frame, it was closer to 10%, if at all. During this era, tax evasion was actually one of the most prevalent crimes of the times. But once again, taxing the rich only makes them poorer, it doesn’t actually help anyone else. The tax money is just going to go to ‘pet projects’ of the bureaucrats, like blowing up kids in Lebanon or some kind of gender study on frogs for a local university where the director pockets a large sum of the grant. It isn’t going to actually poor people looking to better themselves at the local textile plant just trying to make ends meet.
Help the Poor
The last concept that we hear is trying to help the poor. But this is almost always limited to financial help, and never to actual help. Mostly because poor people don’t have other issues, they’re poor, not weak or stupid. So you don’t need to educate them, even though some of them would benefit from some form of formal training. They’re not weak, although they might not have access to quality consumables which causes nutrition deficits. Which brings me back to my point - often times the help is just in the form of cash payments. Which somehow always seem to come just before a big major election. It rarely actually helps the poor.
The real issue here is a lop sided effect of a major power grab coupled with single layer thinking. The single layer thinking is “I am struggling, so I don’t make enough money” or something like “I see these people being successful and having something I want, but I can’t possibly achieve that goal”, all of these lines of thinking usually end in a thought of the system being corrupted or unbalanced and the rules need to be changed to meet your needs or wants. But there is also a power grab and a effect not forgoing progress for perfect. So a politician says ‘hey, I’ll fight for your minimum wage to be raised to $15/hour” which is a arbitrary number with no real backing other than it makes people happy and feels like a nice round number. Then they’ll spend 10-15 years fighting for this goal, never achieving it even though a simple bill introduced would probably pass, but yet continuing to promise you something like this duping people into believing in them.
To be clear I’m not one of these people who think “poor people are poor because they don’t know how to spend their money”, far from that actually. It’s just the issues that poor people face are very real. But the solutions proposed for, virtually my entire life, are non-sense that either make the issue work or just kick the can down the road. Once again, giving job security to politicians and big profits to CEO’s. So what is the real solution that avoids all of this chaos? Well, there is no one solution. But, maybe there are three.
Poverty Based Minimum Wage
The first thing we need to do is finally solve this minimum wage issue. While I personally am not a huge advocate for minimum wage, I understand it’s need and popularity to the point I’m willing to admit that maybe my opinion on it is wrong. But, my biggest issue is really the process of minimum wage. It is some arbitrary number that someone thought would strike some kind of balance of cheap labor and living wage. And it really does neither. Instead, we need to look at my thoughts on defining poverty. And once that is established we can proceed to talk about what a minimum wage needs to be, because the whole point of a minimum wage is to not exploit people and put them into servitude.
But it also has to strike a clear balance of being able to afford livelihood along with allowing low wage workers to continue to provide a presence in the workforce without some kind of mass firing of people that are already the poorest. The best number I could come up with is minimum wage is 48 weeks at 40 hours a week, at 80% total compensation of poverty. Since the poverty formula takes into account health care and other elements that some people might not first consider, I don’t think it is right to just limit this to the initial wage of work when the poverty equation assumes even more.
Some people will say it needs to be 70%, others will say 90% or even 100%. But, the truth is if you increase it to 100% then you’re going to find rampant inflation along with the poorest people losing jobs at a rate never heard of before. It’s just not possible to introduce that kind of shock. Not to include it incentivizes things like single living instead of marriage, which should be a goal of any civilization, among other key traditions. Maybe I could be pushed on the target percentages, but honestly I think 80% is the right number to mediate everything well.
Guaranteed Minimum Income
The next part of this is a radical change, first the elimination of all social welfare programs not named Social Security. We’ll get to a Social Security solution later. Then a singular social welfare program for working able individuals, that subsidizes peoples wages up to the point of poverty. This requires only 3 things:
You have a job.
The job must make minimum wage.
You can not be the owner of the organization responsible for the employment.
Otherwise the subsidy will ensure that you’re able to make basic needs, and with these few stipulations it will ensure that people are receiving a massive subsidy for non-production companies like “My consulting company” where you take one 2 week job once a year, or even a non-viable electrician company (something that should be profitable, but for random reasons it isn’t able to keep up with other demands).
This will help ensure productivity in the society, because people will have to get a job (even one they might not want) and work hard to keep that job (because without it the subsidy goes away). And with this in mind, it also gives people a lot of freedom and confidence to actually perform at their job without the daily stresses of stretching paychecks beyond their capabilities. Which can improve both their productivity in limited cases and in a lot of cases improve the overall community outlook, which benifits everyone - including people not directly collecting on these subsidies.
They key thing is how do we pay for this? Well, I think the best way to do so is through trade tariffs with underpaid nations. If another nation wants to undercut our minimum wage, then we just tax the difference used to pay for these subsidies. No American is directly impacted and it ensures that companies won’t move jobs over seas just to save a quick dollar, which will increase the job pool and competition. This will drive cost of goods and services down, wages up, and quality of products much higher while also ensuring that corporations and high level management doesn’t sit on huge piles of cash needlessly.
Pay Multiplier Limits
All of this brings me to my final suggestion, a per company pay multiplier limitation. I have no issue that Jeff Bezos went from relatively nothing to the richest man in the world, or that Bill Gates vaulted past everyone in the 90’s/00’s off the release of basically one product. What I do have a issue with is that Jeff Bezos gained his fortune by paying warehouse workers (mostly in under-impoverished areas) just peanuts over minimum wage.
The key issue here is get as rich as possible, without walking on the backs of others to get there. So the way something like this would work is no person at a company can make more than 100x anyone else inside the same company. Of course, 100x can be anything we like, maybe 50x is a better number, or 150x. That part is trivial. Jeff Bezos in late 2015 was worth about $50 billion, in early 2018 he was worth over $100 billion. That is about $20 billion per year (assuming the remaining $10 billion was made in the last part of 2015 and early part of 2018) assuming that the average warehouse worker (not the lowest paying) made 5 times minimum wage would put their yearly earnings (with no time off) would put them at $75,000 a year. That is a difference of 266,667 times over. So a pay multiplier of even 1000x would have forced Bezos and Amazon to pay their employees nearly 200 times more.
And keep in mind, this is assuming the average employee made 5x the minimum wage, there is no way they make that much. Starting pay for a facility close to me was $22 per hour, and that assumes no time off. This kind of policy would force the difference from the LOWEST paid to the HIGHEST paid to be narrowed. The average employee is bound to make much more than the lowest paid, so the difference in our example would be even more. And of course, when I mention pay I don’t just mean salary. This has to encompass total compensation, including retirement plans, healthcare subsidies, and any other type of compensation. This could also include vacation homes for the CEO or similar that might raise the cost to individuals.
The real benefit of a policy like this is that it wouldn’t impact average small businesses at all. A 10 employee plumber business wouldn’t even have to consider this, because a plumber making $60,000 a year isn’t going to make their employer $600,00,000 over half a billion dollars. And if the owner of that small business did make that much money in one year from this business, then to be quite frank and honest - I don’t care if he has to pay his employees more at half a billion dollars you should do all you can to help your employees, they’re the reason you’re able to live in that level of luxury.
With these three policies solidified into law, you’re going to see clear differences. First a minimum wage that moves with inflation and specifically with the cost of living, freeing up this debate once and for all with politicians and now we can move onto other issues. Second a guaranteed minimum income, ensuring that everyone is lifted out of poverty, paid for directly by a tax on “Massive Holdings” or Trade Imports from questionable countries. And lastly a pay multiplier that ensures if the rich get richer, they can’t do it without ensuring their employees and their dependents are taken care of. Put it all together you have a fair system for people to go out and “earn their best life” and it ensures that no one is left out in the cold without a way to make it on their own.