The “living wage” and “Wal-Mart subsidies”

Last updated on: December 20, 2013 at 8:52 am by Jane the Actuary

The “living wage” and “Wal-Mart subsidies” 2013-12-20T08:52:00-06:00 Jane the Actuary

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OK, so it’s bad form to have two scare quotes in the title of my post, but here’s something I was thinking about this morning:

I’ve said a couple times that, as a matter of principle, to the extent that it can be balanced with labor force dynamics, the minimum wage ought to represent the amount of money an individual needs to live in a very basic manner, and that I disagree with claims by progressives that it ought to be sufficient to support a family (especially when that family is headed by a single parent whose salary has to pay for daycare as well as usual living expenses).

These same progressives like to claim that, whenever Wal-Mart employees collect welfare benefits (food stamps, childcare subsidies, Medicaid, Section 8, etc.) because their pay is low, it’s the equivalent to a taxpayer subsidy for Wal-Mart itself.

Never mind that Wal-Mart can’t control whether its employees are teenagers or singles, retirees supplementing Social Security and pension, second-earners in a two-income household, or, in fact, single moms with multiple children. And never mind that Wal-Mart can’t control what government benefits are available to low income individuals, or the thresholds for eligiblility.

But even according to that premise — that all employers should pay all employees enough for none to receive any government benefits, what counts?

Food stamps and subsidized childcare generally make these list-makers’ lists. What about Medicaid? If you count Medicaid under the old rules, what about the new “133% of poverty line” rules? What about the fact that anyone who earns less than 400% of poverty is eligible for a government healthcare subsidy? Is any such employer paying less than this threshold, and not offering health insurance themselves, a “taxpayer subsidy via welfare benefits” recipient?

Heck, the poor don’t pay their way when it comes to education, either — a single mother in a low-rent building with a couple kids is not pulling her weight when it comes to the cost of the public schools her children attend. For that matter, what about Pell Grants and other forms of financial aid for higher education?

That’s silly and over-the-top, you say? Only basic needs that are provided by government means-tested programs and are intended for the poor, “count”? So does that mean that if we had single-payer healthcare and universal free daycare, the “living wage” could drop accordingly? But what if we clawed it back at higher income levels, or created a sliding scale for copays? This really starts to fall apart. . .

And here’s another stray thought on the minimum wage. Supporters of a minimum wage increase claim that it won’t affect unemployment, and will be a net plus for employers because turnover will be reduced. Now, there are a lot of deficits in logic between comparing employers with lower turnover due to voluntarily offering a higher-than-minimum wage for equivalent work, and the mandate that all employers offer this higher starting wage, but let’s suppose, for the sake of argument, that turnover in minimum wage jobs is caused by the low wage itself creating stresses on the employee that cause employees to unpredictably quit, rather than the fact that the job is by definition a minimum wage job, with nothing to set it apart from all other such jobs. Under this supposition, that turnover decreases, then the number of such jobs available will contract, as employers will simply need fewer employees if they don’t need to make allowance for continually training new employees. . .

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