There’s been a big push lately to increase the minimum wage to $15 an hour. Seattle was the first to do it, and other places, like New York and Los Angeles, are pushing to up the minimum wage to the same level. But there’s a lot of push back, because doing so puts the onus on the business. They have to eat the costs and pass them on to their customers. And it still doesn’t mean that someone who wants a job can get it. The conventional wisdom says that there will be less jobs with these higher minimum wages. Of course, thanks to the value of those extra dollars to the people who have the least, there might be a boost to the local economy as they spend their new dollars.
But there’s another option. Guaranteed basic income (GBI) would pay everyone a minimum amount yearly. Yes, everyone. You can sit on your ass and get the money. No means tests, no hassles over whether you are on drugs, just a check. It would also eliminate all other social support programs, like welfare, food stamps, and social security. And, of course, it would eliminate the minimum wage. The simplicity of it appeals to both liberals and conservatives.
But the best reason to implement GBI is that it gives labor the power back. Your survival is no longer dependent on your employer. You have the money to provide for your basic needs, any work you do pays for your extra ambitions. Right now, we’ve got a ton of people working multiple, low-paying jobs just to provide for their family. McDonald’s hands out tips on how their employees can survive on minimum wage, including how they can get food stamps.
Now imagine if those people did not have to work those jobs in order to make ends meet. A lot of people would be happy just getting the basics and would drop out of the labor force. These jobs would have to pay some amount that makes that job worth it to an individual. Would pay rise? Maybe. Employers would definitely have to do more in order to attract workers. You wouldn’t see 11,000 people apply for 400 Walmart positions, though.
The other thing it would do is make up for a lot of the productivity gains from the past 40 or so years that workers haven’t seen. A lot of that has come from automation and computer technology. The employee is still doing the same job, albeit with a computer or with the help of robotics. Why pay them more? And computerization and automation is only going to increase. When we are replaced by robots, we’ll need to feed ourselves somehow.
The current government fix for poverty and financial stress is a combination of welfare programs and tax breaks. Welfare programs are often labyrithine and frustrating, especially if you work another job and have to schedule time in their offices around you work. Tax breaks help only those with enough income to afford a tax specialist. Neither of these have been very effective. Maybe it’s time to try something new.