To raise or not to raise the minimum wage is quite topical right now. In his State of the Union Address President Obama just called for legislation to increase to the minimum wage paid to federal contractors from $7.25 to $10.10. It remains to be seen if Congress will get on board for that, the Wall Street Journal says the idea is already “stalled”.
In Ontario, Premier Kathleen Wynne’s minority Liberal Government has announced plans to hike the provincial minimum wage from $10.25 per hour to $11/hr, effective June 1st. Assuming that passes – which will require support from one other party, mostly likely the NDP – it will be the first such provincial wage hike since 2010.
Most of us have some first-hand experience with minimum wage, enough to know it’s hard (impossible?) to live securely on so little. This Ottawa Citizen profile of minimum wage earners in Canada’s capital makes the point that those who barely scrape by are always on a precipice – one mishap could spell disaster. And it’s very difficult to move out of that cycle, leaving many trapped in a growing underclass.
The pinch of poor wages is supposed to motivate higher education, more hustle or good old entrepreneurial spirit, to attain a better standard of living. It’s the Protestant work ethic and the American Way. OK, but here’s something I would like to see in the whole conversation: Liberals should admit that moochers and cheaters exist. Motivation and personal responsibility are good qualities. Meanwhile, conservatives need to acknowledge that effort is not the whole story. Sometimes even the hardest workers – who already are frugal – still can’t find jobs, or make ends meet.
Listening to those who say the minimum wage should be $10, $14 or even $20 sounds disconnected from reality. Face it, not every employee is worth that cost to employers. And employers can’t just whistle up extra money to pay arbitrarily-mandated wage scales. Bumping the minimum wage higher and higher doesn’t solve everything either. Not everyone can find or hold a job, and those people need to live too. Businesses that cannot afford higher payroll costs will cut jobs. Or close. Or they’ll have to raise their prices to make up the difference, meaning we’d all pay.
Which is why another idea is making the rounds: what if we quit dithering around with minimum wage, welfare, food stamps and that whole myriad of over-lapping, yet still inadequate, programs? We all might live better, happier lives if society tackled the problem through some government-assured minimum income. And this might be win-win, because reducing the many ways poverty drags people down could lead to more productive lives and greater prosperity for all. (Or so that theory goes.)
It’s not a new concept. No less than Thomas Paine favored some version of what he called a citizen’s dividend which he detailed in an essay “Agrarian Justice” published circa 1797. (It’s hard to remember this many decades later, but I’m pretty sure one of the official debate topics when I was in high school was either a guaranteed minimum income or a negative income tax, which is another way to attempt the same outcome.)
I’ve heard some interesting discussions about this recently. Unfortunately, I’ve forgotten where I heard them (CBC? NPR?) – a hazard of too much radio listening! But here’s more discussion of the concept, from the New York Times, Wikipedia and City Journal.
A raw, sink-or-swim economy isn’t all that pretty. But it doesn’t seem fair (or complete) to expect the business sector to solve income inequity by itself either. If this is a worthy societal goal, does it require a societal solution?
Suppose a guaranteed minimum income could eliminate most of the other safety net programs we already have, would that be worth considering? Or do you prefer a world where natural consequences and personal responsibility rule the day?