# Increase minimum wage or establish a living wage? **URL:** \ **Category:** Great Debates\ **Created:** [October 26, 2015, 4:08am UTC](https://boards.straightdope.com/t/increase-minimum-wage-or-establish-a-living-wage/735770 "2015-10-26T04:08:50Z")\ **Posts on this page:** 20\ **Page:** 5
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [October 27, 2015, 4:52pm UTC](https://boards.straightdope.com/t/increase-minimum-wage-or-establish-a-living-wage/735770/81 "2015-10-27T16:52:46Z")
> [@Cheesesteak](#): > > Understand, I favor a two pronged approach, a reasonable minimum wage, somewhat higher than what we have today, but not high enough to be considered a ‘living wage’, and a robust public assistance program for those who would still be in need. > > Why do I want the public assistance side? First, the government will do a better job of providing additional funds to those who actually need it, without providing funds (in large quantities) to those who don’t. Minimum wage is a very blunt instrument. > > Second, the government program can serve to transfer wealth from the most wealthy to the least wealthy. Minimum wage is paid for by everyone, rich and poor alike, in the form of slightly higher prices on goods and services. That’s fine in small doses, but when the majority of the higher wage is going to people without a desperate need for more money, we’re not only overfunding that program, but we’re getting much of that money from people who are at or near poverty levels to begin with. That’s reasonable. I wasn’t arguing against public assistance, just public assistance to prop up low wages. But to repeat, I’m against paying people what they “deserve” based on their financial and living situation. That’s a really hard decision to make. Given productivity growth and wage stagnation, we have lots of room to raise the minimum wage without rewarding the undeserving. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [October 27, 2015, 4:54pm UTC](https://boards.straightdope.com/t/increase-minimum-wage-or-establish-a-living-wage/735770/82 "2015-10-27T16:54:08Z")
> [@Bone](#): > > What is the advantage of having a minimum wage at all if there is sufficient public assistance? If the government will do a better job of providing funds to those who actually need it, I see no reason an inefficient system should be preserved in lieu of one that is more efficient. So, you’d be willing to pay more in taxes so that the owner of 20 McDonalds doesn’t have to increase wages? ---
**Author:** ![Bone](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bone/32/407_2.png) [@Bone](https://boards.straightdope.com/u/Bone)\ **Post date:** [October 27, 2015, 4:54pm UTC](https://boards.straightdope.com/t/increase-minimum-wage-or-establish-a-living-wage/735770/83 "2015-10-27T16:54:55Z")
> [@Voyager](#): > > So, you’d be willing to pay more in taxes so that the owner of 20 McDonalds doesn’t have to increase wages? Yes - though I’m not convinced it would be a net increase in tax. For the sake of that post I’m assuming that Cheesesteak’s assessments are correct. I’d support a negative income tax to replace all transfer payments and elimination of the minimum wage. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [October 27, 2015, 4:58pm UTC](https://boards.straightdope.com/t/increase-minimum-wage-or-establish-a-living-wage/735770/84 "2015-10-27T16:58:30Z")
> [@John\_Mace](#): > > I think the idea is to prevent people from leaving, which is what’s going on now. Although your point is well taken, we actually have a number of cities that have their own, higher, MW levels now, so we should be able to see what the effect is. > > For example, the MW in SF is \> $2/hr higher than the CA MW, and has been higher for at least 3 years. I have not heard of anyone complaining that too many MW workers are moving SF. > > I would be more concerned with inflation. Everyone suddenly has more money, so why wouldn’t landlords raise rents accordingly? They have in San Francisco - but it is not MW workers who are driving it. And MW workers are increasingly unable to live their because of high housing costs. But the Bay Area is a great example of the need for local laws. A MW which would be living level in Alabama ain’t going to cut it in Santa Clara county where the median income is over $100K. BTW, the Bell System had salary adders depending on where you lived, so the salary curve in New York was higher than Oklahoma City. ---
**Author:** ![octopus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/octopus/32/3716_2.png) [@octopus](https://boards.straightdope.com/u/octopus)\ **Post date:** [October 27, 2015, 7:14pm UTC](https://boards.straightdope.com/t/increase-minimum-wage-or-establish-a-living-wage/735770/85 "2015-10-27T19:14:56Z")
> [@Voyager](#): > > That’s reasonable. I wasn’t arguing against public assistance, just public assistance to prop up low wages. > But to repeat, I’m against paying people what they “deserve” based on their financial and living situation. That’s a really hard decision to make. Given productivity growth and wage stagnation, we have lots of room to raise the minimum wage without rewarding the undeserving. Not one person in this thread, that I can recall, advocated paying someone what they “deserve” based on how they lived. And raising the minimum wage will price out of the legal, domestic market those who no economically viable skills. Why would anyone who genuinely wants to help the poor want to do that? ---
**Author:** ![amarone](https://avatars.discourse-cdn.com/v4/letter/a/e0b2c6/32.png) [@amarone](https://boards.straightdope.com/u/amarone)\ **Post date:** [October 27, 2015, 7:33pm UTC](https://boards.straightdope.com/t/increase-minimum-wage-or-establish-a-living-wage/735770/86 "2015-10-27T19:33:40Z")
> [@Voyager](#): > > So, you’d be willing to pay more in taxes so that the owner of 20 McDonalds doesn’t have to increase wages? As opposed to forcing an increase in the franchise owner’s costs, so prices go up and his customers pay more? It seems to me that providing a helping hand through taxes (EITC) is at least a progressive solution as most lower income people pay little or no Federal income tax, whereas an increase in fast food costs is regressive as it hits all income levels equally (and maybe the poor more, as Mr. Moneybags dines at Ruth’s Chris). ---
**Author:** ![Cheesesteak](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cheesesteak/32/3694_2.png) [@Cheesesteak](https://boards.straightdope.com/u/Cheesesteak)\ **Post date:** [October 27, 2015, 8:47pm UTC](https://boards.straightdope.com/t/increase-minimum-wage-or-establish-a-living-wage/735770/87 "2015-10-27T20:47:09Z")
> [@Bone](#): > > What is the advantage of having a minimum wage at all if there is sufficient public assistance? If the government will do a better job of providing funds to those who actually need it, I see no reason an inefficient system should be preserved in lieu of one that is more efficient. I think there are some positive imacts from a MW. Stabilizing the job market, benchmarking wages, and preventing vulnerable workers from being taken advantage of, even if they can eventually supplement their income with public assistance. Also, letting the economy “naturally” support the bulk of a worker’s financial needs is preferable to having the government do it. The economy can readily handle a reasonable minimum wage, so let it do that and have the gov’t just fill in the gaps. ---
**Author:** ![Cheesesteak](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cheesesteak/32/3694_2.png) [@Cheesesteak](https://boards.straightdope.com/u/Cheesesteak)\ **Post date:** [October 27, 2015, 8:51pm UTC](https://boards.straightdope.com/t/increase-minimum-wage-or-establish-a-living-wage/735770/88 "2015-10-27T20:51:30Z")
Or, Bone, to use an analogy… when you’re carving wood, you use rough tools to get it close to size and fine tools to finish it off. Minimum wage is a rough tool, and public assistance is a fine tool. It’s more about balancing the load than saying one way is better than the other. ---
**Author:** ![octopus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/octopus/32/3716_2.png) [@octopus](https://boards.straightdope.com/u/octopus)\ **Post date:** [October 27, 2015, 10:08pm UTC](https://boards.straightdope.com/t/increase-minimum-wage-or-establish-a-living-wage/735770/89 "2015-10-27T22:08:05Z")
> [@Cheesesteak](#): > > Or, Bone, to use an analogy… when you’re carving wood, you use rough tools to get it close to size and fine tools to finish it off. Minimum wage is a rough tool, and public assistance is a fine tool. It’s more about balancing the load than saying one way is better than the other. Minimum wage is a fine tool if you want to enrich China. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [October 28, 2015, 12:10am UTC](https://boards.straightdope.com/t/increase-minimum-wage-or-establish-a-living-wage/735770/90 "2015-10-28T00:10:12Z")
> [@amarone](#): > > As opposed to forcing an increase in the franchise owner’s costs, so prices go up and his customers pay more? > > It seems to me that providing a helping hand through taxes (EITC) is at least a progressive solution as most lower income people pay little or no Federal income tax, whereas an increase in fast food costs is regressive as it hits all income levels equally (and maybe the poor more, as Mr. Moneybags dines at Ruth’s Chris). Absolutely. If we drive the poor to the more healthy and economical method of cooking that is a win. While the increased costs may hit the poor more (though there are plenty of middle class people who eat there) the benefits go almost entirely to the low income. And if this forces the franchise owner to be more efficient, it is good for the economy. Plus, while raising the MW might be difficult, raising EITC and the taxes to pay for it is going to be a lot harder politically. Republicans in Congress gleefully cut food stamps, after all. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [October 28, 2015, 12:14am UTC](https://boards.straightdope.com/t/increase-minimum-wage-or-establish-a-living-wage/735770/91 "2015-10-28T00:14:45Z")
> [@octopus](#): > > Not one person in this thread, that I can recall, advocated paying someone what they “deserve” based on how they lived. > > And raising the minimum wage will price out of the legal, domestic market those who no economically viable skills. Why would anyone who genuinely wants to help the poor want to do that? It was you: [QUOTE=you] Why would you want government subsidizing low wage workers? It’s simply the fact that need based aid is much better than an approach to shoe-horn everyone into one category based merely on income. If necessary expenses are low than the shortfall to live may be non-existent. Minimum wage is a flawed tool. For example in a two income family children who work don’t need $15/hr. A parent that is retired and staying with the children may not need $15/hr. Someone who has $5 million in retirement savings and wants to work for whatever reason doesn’t need a wage floor. [/QUOTE] ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [October 28, 2015, 12:16am UTC](https://boards.straightdope.com/t/increase-minimum-wage-or-establish-a-living-wage/735770/92 "2015-10-28T00:16:04Z")
> [@octopus](#): > > Minimum wage is a fine tool if you want to enrich China. For stuff that can be made in China, no possible salary that would allow someone to live and eat in the US is not going to enrich China. But a lot of MW jobs, like in retail, can’t be exported. ---
**Author:** ![octopus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/octopus/32/3716_2.png) [@octopus](https://boards.straightdope.com/u/octopus)\ **Post date:** [October 28, 2015, 12:43am UTC](https://boards.straightdope.com/t/increase-minimum-wage-or-establish-a-living-wage/735770/93 "2015-10-28T00:43:50Z")
> [@Voyager](#): > > It was you: No it wasn’t. You need to read that in complete context. To rephrase a “living wage” is not a constant because each individual’s circumstances are different. That’s why I advocate no minimum wage and a robust social safety net. ---
**Author:** ![octopus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/octopus/32/3716_2.png) [@octopus](https://boards.straightdope.com/u/octopus)\ **Post date:** [October 28, 2015, 12:46am UTC](https://boards.straightdope.com/t/increase-minimum-wage-or-establish-a-living-wage/735770/94 "2015-10-28T00:46:36Z")
> [@Voyager](#): > > For stuff that can be made in China, no possible salary that would allow someone to live and eat in the US is not going to enrich China. But a lot of MW jobs, like in retail, can’t be exported. Wouldn’t it be better for society for the unemployed to have a job that pays X and society pays (Y-X) instead of $Y? ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [October 28, 2015, 1:45am UTC](https://boards.straightdope.com/t/increase-minimum-wage-or-establish-a-living-wage/735770/95 "2015-10-28T01:45:17Z")
My sense has always been that if we were starting from scratch, I go the route that **octopus** is suggesting. But… the MW is so entrenched in our culture that getting rid of it would be near impossible. So you set it at some level that you determine to be “correct”, and then index it for inflation. Done. Set a federal minimum that is the lowest common denominator and let the states adjust it as necessary. The “living wage” never made sense since so many people working MW are not using that as their means to live. Also, we should not be encouraging people to settle into MW jobs. And further, as I noted above, I worry about inflation since people having more money drives up prices. And if you drive up prices, then what did the “living wage” get you? However, I would defer to actual economist on that item. We have seen that very small changes in the MW doesn’t seem to have a measurable effect on prices, but have we seen what a 30% or 50% rise in the MW would do? ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [October 28, 2015, 2:08am UTC](https://boards.straightdope.com/t/increase-minimum-wage-or-establish-a-living-wage/735770/96 "2015-10-28T02:08:23Z")
> [@Voyager](#): > > Not directly. But if some workers can afford to work for you at a lower salary thanks to EITC wouldn’t without it (including better ones) you are benefiting. EITC has no benefits cliff, so the worker always comes out ahead by earning more. I don’t know he’s receiving EITC, so it doesn’t come up in the wage negotiation. Where it can have an effect on wage is in increasing the labor supply. EITC puts people into the workforce, and I think that’s a good thing. Whereas unless increasing the MW magically has a positive PED, we’re not going to see that for a MW increase. Last I checked, labor isn’t Giffen. Regarding the OP’s choice between a flat rate and regional rates, a regional scale could be applied to EITC. Among all the enthusiasm for expanding EITC we see among conservatives, I haven’t noticed any mention of regional scaling, so it’s hard to say how that would go over. Since it’s funded from income taxes, I anticipate some reluctance to a perceived subsidy of high cost-of-living areas by low COL areas. While I keep harping on how EITC is actually directed at poor people and MW is not, the truth is that neither of them really addresses most poor people. That’s because something like 2/3 of adults living in poverty did not work in the past year. So while MW may be the blunter instrument, EITC isn’t exactly sharp. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [October 28, 2015, 5:48am UTC](https://boards.straightdope.com/t/increase-minimum-wage-or-establish-a-living-wage/735770/97 "2015-10-28T05:48:42Z")
> [@octopus](#): > > No it wasn’t. You need to read that in complete context. To rephrase a “living wage” is not a constant because each individual’s circumstances are different. That’s why I advocate no minimum wage and a robust social safety net. The common meaning of living wage does not depend on an employee’s situation. If you are redefining it, that is where I misunderstood your position. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [October 28, 2015, 6:00am UTC](https://boards.straightdope.com/t/increase-minimum-wage-or-establish-a-living-wage/735770/98 "2015-10-28T06:00:10Z")
> [@Ruken](#): > > EITC has no benefits cliff, so the worker always comes out ahead by earning more. I don’t know he’s receiving EITC, so it doesn’t come up in the wage negotiation. > > Where it can have an effect on wage is in increasing the labor supply. EITC puts people into the workforce, and I think that’s a good thing. Whereas unless increasing the MW magically has a positive PED, we’re not going to see that for a MW increase. Last I checked, labor isn’t Giffen. If you find it easier to fill jobs at a lower pay rate you are benefiting, even if it doesn’t come up in negotiations. But don’t get me wrong - I don’t think the EITC is evil. But I do object to subsidizing low paying companies. Internships are an interesting example of what happens without a MW. Now, my company pays interns well, but we know of the ones that don’t. Internships have become something kids whose parents can support them can afford, and not something for those who might need to make money over the summer. If internships are essential for getting jobs, they contribute to inequality. Now, if interns got subsidized by the government, any employer who pays interns and whose taxes go to subsidize competitors who do not is going to be unhappy - and will probably stop paying. BTW, a regional adder for EITC sounds like a good idea. ---
**Author:** ![octopus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/octopus/32/3716_2.png) [@octopus](https://boards.straightdope.com/u/octopus)\ **Post date:** [October 28, 2015, 6:02am UTC](https://boards.straightdope.com/t/increase-minimum-wage-or-establish-a-living-wage/735770/99 "2015-10-28T06:02:26Z")
> [@Voyager](#): > > The common meaning of living wage does not depend on an employee’s situation. If you are redefining it, that is where I misunderstood your position. No I am not redefining what a living wage is. I’m merely pointing out that legislating a wage and calling it a living wage may result in a minimum wage that is more than sufficient for some yet doesn’t meet the needs for others and is not, in fact, a “living wage.” I think the tool of minimum wage while seemingly noble is counterproductive and not flexible enough. That’s why I prefer to let the private sector generate wealth with maximum production and then let the government redistribute a portion of the surplus. We may not have the political will to do the more efficient thing now but to dismiss promoting the more efficient set of policies because we do not have the political will means we will always be stuck with a counterproductive system. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [October 28, 2015, 1:15pm UTC](https://boards.straightdope.com/t/increase-minimum-wage-or-establish-a-living-wage/735770/100 "2015-10-28T13:15:18Z")
> [@Voyager](#): > > If you find it easier to fill jobs at a lower pay rate you are benefiting, even if it doesn’t come up in negotiations. But don’t get me wrong - I don’t think the EITC is evil. But I do object to subsidizing low paying companies. My MW employee is going to receive MW from me regardless of whether she receives benefits or not. And she probably doesn’t, given the typical MW earner’s household income. EITC is an employee subsidy. There \*are \*employment subsidies available to employers, e.g. NISH; this isn’t one of them. Similarly, food stamps are not a farm subsidy, and Section 8 is not a landlord subsidy. Because it increases employment, the result is more total wages being paid to workers by companies. Since most of the effect has been with young mothers, we might weigh the benefits between EITC vs childcare assistance. Or having both. [Previous page](https://boards.straightdope.com/t/increase-minimum-wage-or-establish-a-living-wage/735770.md?page=4) [Next page](https://boards.straightdope.com/t/increase-minimum-wage-or-establish-a-living-wage/735770.md?page=6)