Alternatives to Minimum Wage hikes or Government Subsidies?

It seems like the most common solutions I hear to help out the working poor are either increasing the minimum wage or giving them some sort of government subsidy. I am leaning toward favoring a minimum wage set at a point where a full-time worker would not need any forms of government assistance; I think it is wrong for taxpayers to subsidize low wages for employers.

However, I was wondering today if there might be other ways of tackling the issue. Is there a way we could make it affordable for a person to live decently on $7.25 an hour?

We all use government assistance. The road you drive to worming doesn’t pave itself.

Single payer health care, family friendly workplaces and subsidized child care would go a long ways. But you’d need major changes in the private sector going away from a disposable workforce to do much good.

What sort of minimum wage for what sort of worker? Would a man with a 3 year old get a higher minimum wage than a single man with no family? Would someone who lives with their parents have a smaller minimum wage than someone living on their own?

You are right, so perhaps I should clarify. When I said government assistance, I was specifically referring to money being given out to individuals in the form of welfare, food stamps, rent assistance, and the like.

Is there a way to bring the cost of living down so that a minimum wage worker could support himself or herself.

For example: according to http://www.paycheckcity.com, the take home pay for a worker making $7.50 per hour, for 40 hours, here in Maine (Maine’s minimum wage is currently $7.50) is about 266.57, with two exemptions (If I remember right, from the last time I filled out a W-4, a single person who is the sole breadwinner can claim two withholding exemptions). Good luck finding a place to live for less than $500 per month here, so you can kiss your first two paychecks goodbye just to pay the rent. Add in utilities, if they aren’t already included, and that doesn’t leave much left over to buy food, clothes, or to save for emergencies, or just transportation costs to get to work (Maine has almost nonexistent public transportation). Yes, you can eat ramen every day of the week, but I wouldn’t recommend it.

I guess the other question is this: in a society with as much abundance as ours, how much of a person’s life should have to be devoted to work in order to provide such basic necessities as food, shelter, clothing, and heat? Should a person really have to work 60 or 80 hours a week just to scrape by?

I used to hear the question phrased in the opposite direction: how many people should one be able to support on a full-time, minimum-wage job? Back in the late 1970s, I remember debating this one with an officemate who thought a worker should be able to support a family of four on such a job.

I thought that was excessive, and still do - but I think an adult working such a job ought to be able to support him/herself and one child on the resulting income.

Is it purely conjecture that there might be another way nobody talks about? Do you have any vague ideas in mind that might be tenable?

The reason I ask is because the things you specifically ruled out, like food stamps and rent assistance, are the things we actually do to bring a person’s cost of living down. What could you do to reduce cost of living that wouldn’t be using tax dollars to subsidize the cost of living for poor people?

Eliminate vehicle inspections to increase the market for cheap unsafe cars? Modify housing codes so poor people can legally stuff a house full of roommates? Maybe we could make it easier for parents to legally put their children to work, so they can contribute to the household expenses.

If the government can’t spend money on poor people, it’s hard for me to see how it could reduce their cost of living short of eliminating regulations that are keeping prices high.

Sure. You could abolish all farm price supports, making food cheaper. You could relax or remove various building codes, zoning laws, permitting processes, and the like to make housing cheaper. You could revise regulations surrounding automobiles so that something dirt cheap, like the Tata Nano, is street-legal.

Those are off the top of my head. They all have downsides, of course: farmers that are marginal producers would go out of business, housing built very cheaply might far apart or catch fire, and people driving Nanos would be disproportionately killed in collisions (the car got a 0-star rating from a tester in Germany).

I started a thread in 2012 that suggests a possible solution (which I’m not sure I support, but was only suggesting as an exercise) – in short, the government could provide basic accomodation, food, and health care equivalent to that which prison inmates receive for free to anyone and everyone in America.

So basically, anyone can get crappy food, a crappy place to live, crappy clothes, and crappy health care for free. Anything like TV, internet, comfortable stuff, nice clothes, etc., needs to be paid for.

I wonder how much something like this would cost as compared to welfare, medicaid, etc? I’ll note that such living structures would probably require full time law enforcement on site to prevent them from turning into housing projects.

I was thinking you are opposed to a minimum wage, but you actually only said you oppose government subsidies. If you’re not opposed to interfering with the market you could set price ceilings on common things people need.

Reversing the trend of deregulating utilities would be a good start. Public utilities are still heavily regulated so it would be relatively easy. Set electricity and natural gas and heating oil prices so that minimum wage workers can easily heat their homes.

You could institute price caps on rentals nation wide so landlords lose out on all their income without giving them a pesky subsidy, but that would be a lot harder. Rentals aren’t very well regulated now.

You could do similar things with healthcare or food. If you want to make things cheaper for poor people without giving them tax dollars, just force businesses to lose money.

Is the crappy place to live in the form of a government-funded building, or a subsidy paid to private landlords? I didn’t see that addressed, upon skimming that thread.

I was envisioning a government-funded building. Not that I necessarily support it, by the way.

(Self-nitpick: I meant government-owned, as -funded could imply a subsidy to a private owner, but I think you understood what I was asking in spite of my mistake).

Very well. I was going to suggest that some idea of the cost of the program could be calculated by comparing it to the cost of the Section 8 program, but if the idea is for the government to build or buy housing itself, I don’t have the background to know what that would cost. Oh well.

In addition to hurting businesses, that approach hurts consumers who aren’t the working poor. When the price of an apartment is capped at a level the working poor can afforf on their wages, either apartments won’t get built at all, or they will be tiny and spartan so as to still be profitable at a low monthly rent. The young hotshot lawyer who wants an apartment in the city will thus either have no place to rent, or a tiny place he hates. The amount he’d have been willing to pay for a nicer place is a deadweight loss.

This effect gets more intense if the ceilings are applied to other things, like food, consumer goods (phones, for instance), or automobiles.

I agree it’s a terrible idea. I was just trying to stay within the spirit of the thread, which is that we can’t directly subsidize low wages with direct handouts from taxes.

**iiandyiiii’s **idea for government owned buildings, for example, seems contrary to the criteria **CoastalMaineiac **set when he started the thread.

As a landlord I own properties in a very rural area where the only renters are quite low income, and in a small city where plenty of professionals rent. If you visited my properties you’d notice the difference. They’re all clean and well maintained but there’s just no incentive to invest in nice fixtures and finishing in the rural area where anyone who can afford something nice buys their home.

Oh, sure, I was just trying to expand on another problem with that approach that you hadn’t mentioned.

Other than various ways to drive down the cost of things people need so as to make their wage go further, I’m about out of ideas that don’t require a subsidy of some kind.

It seems that way.

There ain’t no such thing as a free lunch, as they say.

OK, let’s look at this again (we’ve probably had at least one of these threads every year since I’ve been a member).

Making employers pay a “living wage” seems fair, on the surface, as compared to welfare, but let’s explore this idea:

  1. Who pays for the added cost? I don’t see any reason to think that employers are just going to absorb the cost. They either cut service, cut jobs, automate or raise prices. Maybe they sometimes absorb the costs, but I don’t think it’s reasonable for us to assume they will in most of the cases. So, the costs get absorbed by the consumers. Which is pretty much the same as saying “taxpayers”, except it’s regressive. When we pay for social services through taxes, those taxes are generally progressive. But who spends more of their money at McDonald’s-- rich people or poor people?

  2. Why should every single job in the country be such that a person doing that job can support a family? Some jobs just aren’t worth that, period. Some jobs are great for teenagers, some are great for 2nd income earners and some are just plain good for entry level folks who are single and childless.

  3. An earned income tax credit is a better way of spreading the cost across society, and keeping track of just how much this social service is costing us. With the MW, we can never know that.

  4. On the plus side, a MW has essentially zero administrative costs. Definitely has that going for it.

Also, obviously, a minimum wage increase does nothing for the jobless, who are the neediest…actually, it makes them worse off, due to the effects (price increases, fewer jobs available) John Mace noted in the above.

In the long run, not necessarily – some people will quit their 2nd jobs once their 1st pays a decent wage, and because low-income workers tend to spend all their money, minimum wage increases can really help the retail economy (as it has the last couple of times the min wage was increased).

Fair points, though I’d still argue a direct payment does more for the jobless than such indirect effects of a MW increase do, and faster.

I am not an economist, but any means, but it seems like the employers so far haven’t absorbed the cost because they don’t have to. They’ve succeeded in keeping business strong while raising prices, so that’s what they do.

Increase the minimum wage and I could see a couple of things happening - they raise prices again, but now the people who work there can afford to buy there. So the business does just as much business as before, if not more.

OR they raise prices to a point where people aren’t willing to pay. Maybe poor folks will finally start cooking instead of going to fast food restaurants. So then either they go out of business and more market appropriate options replace them and hire their workers, or they run a lot of “sales” or they permanently lower their prices and take the lower profits - which are still perfectly reasonable profits to allow for them to support themselves and their business, just maybe not at 23000% of the pay of their lowest paid employees.

That is, of course, assuming that the assertion that prices will have to meaningfully increase as a result of minimum wage increase is actually true. I don’t know that I accept that, and I know that economists don’t universally accept that.