The Minimum Wage

I'm in favor of raising the minimum wage, at least to the point where someone working 40 hours a week can raise a family an be above the poverty line. It's one of those situations where the free market advocates will say that we should not even have a minimum wage, yet we can easily see that having millions of workers working full-time and still needing food stamps is dysfunctional, but hey, free markets, yay!

As I wrote earlier this month, free markets have their limits. Let's consider a case that has no direct connection to minimum wages. Put two tire factories side by side. They both make tires that are the same quality; however, one dumps chemicals into the water and puts smoke into the air, and the other runs a reasonably clean "green" plant that produces much less pollution. The "dirty" factory sells tires for $50 each, and the cleaner factory sells them for $60 each. The residents in the area generally agree that they would rather pay $60 for their tires and have a clean factory than pay $50 and have a lot of pollution.

So what tire do they choose? Well, in reality, a lot of them will choose the cheaper tires. Why? Because they know that their individual decision won't shut down the dirtier factory, and that if they choose the more expensive tires, their neighbors can undermine their good environmental intentions by buying cheap tires. They just don't have the power individually to change the situation.

What to do?  The answer is, you write some laws (otherwise known in Republican-speak as burdensome government regulations) that say the factories have to minimize their pollution. In other words, the people collectively make a decision as consumers that they cannot practically make on an individual basis.

Companies like McDonald's and Walmart make billions of dollars, and they have executives and stockholders who are making tons of money, while their workers get paid so little that they have trouble affording food and housing. Yet nearly every worker for those companies is essential to the process; you can't sell a billions burgers unless someone cooks them, and someone runs the cash register. You have to wonder if the free market is just giving out the wrong answer, if the contributions of the lowest-level employees to these multi-billion-dollar profit machines are so paltry that they don't deserve to be paid a living wage, or if, maybe, they are just getting screwed, and someone else is being overly-rewarded.

So people get together and decide that, if people are going to work, they should be paid enough that they can eat. If companies cannot afford a decent wage, their business model is broken.

The free market true believers will tell you that this is interference in the free market, and it will hurt the economy, but I think we have to look at it differently.  It seems to me that people getting together and making decisions collectively, as a society, that they cannot reasonably enforce as individuals, has to be considered a part of the free market. It just doesn't make any sense that people should not get together and agree on some rules to put restraints on enterprises simply because those restraints cannot logically be instituted through individual transactions. Certain limits have to be enforced by society as a whole, by government, because it's the only means to enforce them.

The idea that all restrictions on business are bad just handcuffs us as all, keeping us from trying to make things better. I think someone is trying to fool us with their free market garbage.  Raise the minimum wage, give the workers a bigger piece of the economic pie.  Americans who do the work to make other Americans rich should not have to live in poverty.

Doing the Housewife Thing

First, let me say that I am beginning to understand better why Jackie did not like being stuck at home all those years, even when I was making enough money that we could afford it.

OK, that's out of the way.  I have been home long enough between jobs this time that I am beginning to take my role as homemaker a little more seriously than I have previously.  I get up and feed the dogs, help Jarrod get breakfast and lunch together, clean and put away the dishes, do laundry, clean the house, go shopping, pick up Jarrod at school when necessary, take him to Boy Scouts, pay the bills.  I do some volunteer work, keeping the books for the scout troop.  It keeps me busy.

There are some advantages.  The commute is great.  The dress code is very relaxed; I am wearing shorts right now, but even that is optional.  The hours are flexible.  I can mostly schedule my own time.  All together, it's not as much work as working.  I take time to watch TV or play on the computer or write a blog post.

There are also disadvantages:  You don't get paid for running a household.  Nevertheless, it isn't a vacation; you can't just enjoy the time.  The work is not very rewarding, and I think that this is the big factor.  Yesterday I had a busy day, went to the bank, did some Boy Scout accounting and made a deposit at their bank, bought groceries, checked on having programs printed for Lucas's Eagle Scout ceremony, steam-cleaned the carpet in the loft, did a load of laundry, did dishes, cleaned up after Jarrod in the loft and his room, got Jarrod after school, made dinner.  Important stuff, no doubt, but the problem is, none of it feels like much of an accomplishment.  I can see why some people might learn to take a lot of pride in their cooking, or their knitting, or even in how shiny their floors are, because you want to feel some sense pride in something.  You can feel good over time about raising a kid, but day to day most of it is getting them to school, making sure they do their homework, feeding them, clothing them, doing their laundry -- boring stuff.

And like many jobs, it never ends, and it never feels like enough.  After you have dusted every surface, pulled every weed, paid every bill, waxed every floor, cleaned out the refrigerator, cleaned under the refrigerator, power-washed the driveway, and changed the furnace filters, you still haven't washed all the windows, straightened up the garage, or repainted the walls, and they need it.  Then you can start all over.  You never get there; you just trudge along.

So yeah, maybe I need to work.

The Limits of Free Markets

On both ends of the economic scale,  increasing the minimum wage and reducing CEO pay, conservatives like to make the argument that the market is the best mechanism to set the right value for those jobs.  I actually think this is sort of ridiculous; you start with the assumption that the free market will set the right value for a commodity, then you plainly see that this is not the case and the value looks out of whack, so rather than adjust the assumption, you decide that the value must be correct, because free markets always work.  Even when they obviously don't.  Or something like that.

However, there is a great deal of theoretical and empirical support for the value of free markets, so I would not just dismiss the idea.  I just think that, before we accept the idea that CEO pay is currently very reasonable, and the minimum wage should be left alone or abolished altogether, because free markets are the answer, we ought to consider some evidence.

So here are a few things that free markets have given us:

• Slavery
• Discrimination against minorities
• Discrimination against women
• Discrimination against older workers
• Discrimination against gays
• Starvation wages
• Child labor
• Unlimited work hours
• 7-day weeks
• Unsafe working conditions
• Unsafe products
• Unfettered pollution
• Fraudulent companies
• Monopolies
• The stock market crash (1929, if you need to pick just one)
• The Depression
• Snake oil
• Bernie Madoff
• Enron
• The housing bubble
• And so on and so on and so on

On the other hand, government intervention in the markets has brought us:

• The end of slavery
• Laws against discrimination
• A minimum wage
• Restrictions on child labor
• 40-hour weeks
• Safer workplaces
• Safer products, food inspections
• Cleaner air
• The power to break up monopolies
• Prosecution of fraud
• Regulation of banks
• And so on and so on

Completely free markets don't work; that has been proven by experience.  Capitalism is a tool, and a very useful one; it brought us Microsoft and GE and Coca Cola and lots of good stuff.  But when you make the assumption that the market always knows best, there are plenty of reasons for doubt.