Economic Daydreams.

A lot of people are talking about an increased minimum wage these days, including President Barack Obama.  Locally, Washington State passed, barely, Proposition 1, which establishes the highest minimum wage for workers in and around SeaTac International Airport at fifteen dollars per hour.

I struggle with the minimum wage issue.  I have a lot of friends who are business owners, and some whom even have employees, and I’m certain that a high minimum wage will cause hardships for small businesses in particular (very large employers can afford it; don’t be fooled).  I don’t want to see those businesses struggle and fail due to an increase in already high payroll costs.  At the same time, I think that the only just way to run a society is to allow adults working full time to make a living wage.  That is, after all, why we work… we work because we have bills to pay.  This is why we don’t do it for free.

A post on the Stranger has been circulating on Facebook recently, that states that the average living wage in Washington state would be even higher than fifteen dollars per hour… by a little more than a dollar.  This is the average across the state; it includes both affluent King County and relatively inexpensive rural communities.  I live in a city that is probably somewhere in the middle of that scale, and by my calculations I need at least twelve dollars per hour, forty hours a week, to pay my bills, buy my gas and groceries and have just a little left over.  The Washington State minimum wage is currently the highest in the nation, at 9.19 per hour, and that minimum applies to tipped workers as well (many states do not apply the minimum wage to tipped workers, assuming that the tips will make up the difference.)  President Obama’s lofty and unlikely intent to increase the Federal minimum wage would just put it over ten dollars per hour… still not a living wage in many parts of the nation.

So what is the purpose of a minimum wage?  Presumably it’s to protect workers from having to work for a pittance just to have any money.  It protects workers in times when labor is abundant and weak (like right now) and many people are competing for the same jobs.  The problem is, what we’ve decided is a “decent” wage doesn’t allow people to live.  Since it’s not a living wage, the number seems pretty arbitrary, doesn’t it?

People will respond that if people want to make more money, they should get a better education and become a more desirable employee… well, the problem is that we are always going to have people who don’t go to post-secondary education, and to not allow these adults to make a living is ridiculous.  If we are going to require college degrees for people to make a living, we are going to have to start handing that shit out like candy.

Why?  Because consumer spending drives economic growth, that’s why.  The more people that have money to spend, the better off we all are as a group.  Companies are better able to sell their goods and services, and a portion of that money goes to government coffers to expand and improve services.  Another portion of that money goes to payroll, and employees then use that money to buy more goods and services, and we all prosper.

We have already tried to resolve the problem of the vanishing wealth of the recession by giving more money to corporations.  It hasn’t worked.  Companies aren’t going to hire people unless they need to, and so they won’t hire more people until they’re selling more goods and services.  The corporate tax holiday of 2004 shows this; companies were permitted to repatriate fortunes at a reduced tax rate, and instead of putting that into employing more people, they eliminated positions and issued bonuses and shareholder dividends.  That means an increase in demand for those goods and services is needed, but that’s not going to happen until people like you and I have the money to spend.  The problem is, we need less and less work done.

John Maynard Keynes, an economist, once predicted that increases in both wealth and efficiency would reduce the American work week to two days per week by 2030.  The problem is that there are no natural forces within the market itself to make companies pay on a scale with that increased efficiency.  So we have less work to do, we have more people that need work, and the wealth is not being shared out to workers in a just way.  The lack of wealth being shared among a majority of people is, as a result, hampering economic growth.  But imagine if everyone could just work two days a week and make enough to live on?  What would you do with that free time?  Certainly some of us would sit around and play a lot more video games, but others of us would go on more backpacking adventures, take more vacations, engage in creative endeavors, and work on starting businesses of their own.

My sister said that a lack or a reduction of perceived reward has a negative impact on innovation, and I think she’s right.  But I also think that an increase in perceived risk has a negative impact on innovation.  I would love to have more time to sell my art, to work on my various writing projects, to start a business of my own… but as long as I’m struggling just to get by, I feel as though I’m not able to do those things.

A two day work week, though, would make it so that people didn’t have to wait until retirement to satisfy their dream of writing that novel, taking that painting class, or learning to play that instrument.  Parents could spend more time with their children, and increased parental involvement has been shown to increase scholastic performance.  Reduced work hours could have a positive impact on stress, reducing all of the ills that accompany it, including obesity, depression, insomnia, etc.

Maybe this society of art, music, and leisure is what noted second president and less-noted first vice president of the United States John Adams envisioned when he said, “I must study Politicks and War that my sons may have liberty to study Mathematicks and Philosophy. My sons ought to study Mathematicks and Philosophy, Geography, natural History, Naval Architecture, navigation, Commerce and Agriculture, in order to give their Children a right to study Painting, Poetry, Musick, Architecture, Statuary, Tapestry and Porcelaine.”

The Swiss might be working toward this society of art and leisure… they’re going to vote on a proposed measure to provide everyone in the country with a minimum income.  Not a minimum wage, mind… a minimum income, for everyone, whether you work or not, of $2,800/month.  That seems extreme, but think of it… a steep reduction in perceived risk, an increase in consumer demand for goods and services… and a true financial baseline for all citizens.  What if we could guarantee a living wage to every citizen, working or not, and tell all companies and government offices to send home anyone they don’t need?  What would you do with that free time?

Of course, it’s important to understand that I’m not an economist, and I don’t know what I’m talking about.  I’m just a community college drop-out.  Even I can see, though, that to continue to do the same things and expect different results is foolhardy.  We need something to change… we need a new New Deal.

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