I am not arguing wages are altered based on whether an employee is getting government benefits. I am saying that an employer’s ability to purchase labor is measurably altered by the existence of government benefits. Why do you think companies like Walmart are literally helping employees sign up for food stamps? I am not the only one making this argument. Someexamples. Another study on the issue states it this way:
Now if you want to get into a semantic thing about it not being fair to call it a subsidy, I really don’t think it’s worth debating. The situation is what it is no matter how you want to characterize it.
OTOH, if you are arguing that it’s an unfair characterization because employers would pay what an employee is “worth” with or without the existence of government benefits, then I would counter that employers typically pay as little as they can rather than what an employee is worth, and that the existence of benefits alters the minimum amount they can reliably pay people. Especially benefits like the EITC and CCS.
The only plausible argument that this setup isn’t in fact a subsidy is that these programs can discourage work, and that reducing the pool of low wage workers means these companies have to pay more to attract workers. However, I don’t think there is much evidence that that line of reasoning describes what we are seeing in the real world given many of those people would not be considered employable for a variety of reasons, and many others would choose (nd do choose) other, informal work relationships.
No, it’s not incorrect. Your definition ignores the various distortions that affect what someone is willing to pay, or the price someone is willing to accept. If you think the world is such that nothing that is purchased or sold is ever over or underpriced, then I’d suggest your perspective is foolish.
In individual cases, and/or in the short-term, sure. In the long-term, no.
As a hurricane approaches, the price of plywood, bottled water, and gasoline will go through the roof. During the aftermath, construction workers will command a premium. All of those things are valued at market price, by definition. Labor is no different that plywood in terms of pricing.
If you think otherwise, then I’d suggest your perspective is foolish.
You meant only in the long term? Sure didn’t sound that way when you made your previous ridiculous and definitive statement.
But even granting your caveat, the notion is nonsensical. Worth is a static attribute with variable price. At any given moment, the worth of something can change, yet wages are sticky and not really based the variable price of an individual’s worth to a large extent. This is why McDonald’s generally pays it’s new employees at the same level the same amount despite them having different qualifications, potential, and worth. This is why many careers, from teaching to the law, pay in large part based on experience without regard to actual, individual worth. This is why we generally don’t cut the wages of pregnant women or people temporarily less able bodied.
Your comment also ignores the very real distortions caused by collective bargaining, contracts, individual desperation, or the hundred other things that affect the value or price of something in a given moment. This is why it makes perfect sense to say Lebron James is underpaid because he is labor is not being compensated as well as it should be based on the value he creates. This is why many employers don’t voluntarily pay employees with increased skill and value more on a regular basis unless they are pressured to do so. This is why the gap between worker pay and productivity is not a static number.
You are confusing a market price with market value.
In a free market, price and value are exactly the same.
Is our market 100% free? No. Should our government policies, through action or inaction, strive to make it as close to 100% free as humanly possible? Absolutely.
Ah, so when you confidently stated your axiomatic belief that people are always paid (in the long term) what they are worth, you were talking about a hypothetical free market that doesn’t exist in reality? That’s seems pretty unhelpful and useless to point out.
No. People are paid in the long term what they are worth to the people who employ them. The price of bananas are also exactly what they are worth, to the people who buy them.
While you dismiss Reich without any supporting evidence that there is a problem, indicating that you are simply expounding partisan rhetoric rather than actually addressing issues.
There us one point he didn’t mention. Some people will tend to produce what you pay them. WalMart was having a problem with its workers not giving a shit because of low pay and all around abuse. Costco does pay, and I’ve never seen a Costco worker who wasn’t hustling. So if one justifies WalMart pay by lower productivity one has it backwards.
Sorry I’ve been distracted. Back to business. I don’t find the pay/worth topic terribly interesting. But I think the price we pay for something is usually less than the value we assign to it, otherwise we wouldn’t buy it. That includes the frozen yogurt place that has a usually unpurchased product that’s worth a lot more to me after a hot ride on the DC metro, and my labor, which I’m betting is worth more to my employer than what they’re paying me for it. So I disagree with D’Anconia. But I think that Reich link has a lot of problems too. This might be a better topic for a different thread.
It looks like brickbacon’s unlinked quote from below is from NELP (PDF) if anyone wants to read it.
The actual report referenced by the two summary pieces linked below is here. It suffers from the start by presenting the stagnation myth, which is what you get when you just use limited CPS inputs instead of a more thorough analysis, e.g. performed by CBO (PDF).
Jacobs, Perry, and MacGillvary looked at the cost of benefits to families with one or more member working at least 10 hours per week for 27 or more weeks. They tally this up as “a hidden cost of low-wage work”, which is preposterous; the single earner of three-person household working the minimum to be counted in this study would have to make over $74/h to be above the poverty line, and over $96 to hit the 130% line for some benefits. That is not “a cost of low-wage work.” That is the cost of not enough work. Someone with children will receive more benefits than someone without. That is not “a cost of low-wage work.” That is the cost of people having dependents they cannot afford.
I don’t present that as a value judgement of the people in those situations. Not everyone can work full time or two jobs. And situations change even for those who plan carefully.
If a middle-class teenager quits a job to be replaced by a previously-unemployed person receiving assistance, and if that person now requires less assistance, that is costing me less. But it counts as more cost for the purposes of that study.
So yes, there are other people making an argument about the public cost, but I’m not buying it. What the linked pieces don’t appear to be arguing is that “employer’s ability to purchase labor is measurably altered by the existence of government benefits.” If it’s measurably altered, I would like to see that measure. There actually is some work in this area, particularly pertaining to EITC; I just don’t think we’ve seen it yet in this thread. If you don’t have any scholarly works on hand, I can try digging some up. We also have several “benefits cliffs” that discourage additional earned income. Whether and how those two effects balance each other would be an interesting comparison.