Subsidizing low skill workers so that they are able to get work and acquire skills and experience is a good thing. Why must you say it with such a negative tone?
However, doing it through this weird reach-around where you have to make low-income earners a public charge (based on the immigration terminology) while subsidizing only the companies that pay so little as to require it - isn't IMO a rational approach. Have you seen how arduous Medicaid is? Food stamps? That's not a vocational training program, that's a punishment for being poor while having a system set up explicitly to make you poor. After all, this is not subsidizing the individuals, it's subsidizing the business.
It's a blunt instrument right now. Just paying minimum wage doesn't guarantee any sort of education or training. What corner store offers education and training programs?
The rational approach is to make companies pay a living wage as a baseline, and then if you want to encourage certain behaviors - like educational training, for instance - offer tax credits and rebates. Or, if you want to subsidize specific low value added businesses like corner stores, subsidize them directly.
Begin with a baseline of livability, and then, if the company wants to go above and beyond, reward them for doing so.
Corner stores don't need to be providing higher education to employees in order to be giving them skills. Basic jobs provide plenty of skills and lessons that cannot be learned while sitting at home, such as dealing with customers, time management, and basic problem solving in a work environment.
I think the better option is to guarantee a minimum wage through a subsidy, while abolishing all minimum wage laws. Like a negative income tax. So let's say you earn $12 stocking shelves, the government should subsidize $4 per hour to give you a total income of $16 per hour. If you make $15/hr, they subsidize $1. If you make $20, they subsidize zero.
In this way, the downsides of minimum wages are avoided (cutting back on hours, laying people off, raising prices, and pricing low skill people out of the workforce), while still allowing a decent income for anyone working full time.
You can tax the subsidy at a higher rate than your normal tax rate, so that businesses are still dealing with competitive market incentives and cannot pay a $1/hr leaving the remainder to the government, and so that employees are always incentivized to take the highest paying job.
If you run the numbers, providing every employee in america with a $16 minimum wage, working 40 hours per week, and assuming the average employee making less than $16 makes $12, would cost $500 billion per year. This is not an out of reach policy.
So if I set up a company and I'm paying my employees $4/hr, then the government need subsidizing $12/hr of my employees wage. This is completely broken, even more if the company is making tons of profit from paying their employees only $4/hr.
As I outlined in my comment, no one would take a $4 an hour job. They'd incur a higher tax liability than if they went to the guy across the street offering $10, or whatever he paid before the policy passed. Businesses would continue to compete for labor. It would continue to be to the employee's benefit to take the highest paying job.
No one pays minimum wage as it is. In my state it's $7.25 and no one pays that. They're all in the $11-$15 range. If your theory was correct, all entry level positions would be paying $7.25.
> the government should subsidize $4 per hour to give you a total income of $16 per hour. If you make $15/hr, they subsidize $1
Pretty bad example - where’s the incentive to work harder for the extra $3/hour when you get nothing?
And do you really mean to tax per hour rather than per year which is where we currently base income taxes on? Wouldn’t that continue to encourage 70, 80, 90 hour weeks which is really bad.
Your example had the $12 job giving you $16, and the $15 job giving you $16
What’s the difference?
What stops you doing a deal where you (on paper) work 80 hours a week for $8 rather than 40 for $16, you’d cost the employer the same, but you would get twice the income ($1280 a week).
You'd make more money taking the $15 job than the $12 job. Your W-2 says how many hours you worked (and how much overtime, if any). The federal government has access to those W-2s, and can determine the subsidy amount using it.
> Subsidizing low skill workers so that they are able to get work and acquire skills and experience is a good thing. Why must you say it with such a negative tone?
Let's say you and I are rich charitable types, and we each decide to spend $1000 helping a poor high school graduate get a good start in life. We narrow down our options for spending the money to three plans.
We could pay for them to go to school. If we want, we could insist they choose a cost-effective, good quality course and keep their grades up.
We could give them unconditional cash. That might be really efficient, as often the poor know what the poor need better than the rich do. And if they spend it all on partying or computer game lootboxes, so be it.
Or we could pay them to mow the mayor's lawn. The mayor thinks this is a great plan and that they're going to learn a lot.
Is the third option the cleverest use of our money? Or is that the the stupidest option, with the mayor taking us for fools?
