Why Raising the Minimum Wage Will Not Fix Everything

My life has been spent mostly as a political outsider. After a brief stint writing for Republican newspapers during my college years, I dropped out of politics and never looked back.

So it is with this outsider’s perspective that I have always seen what appears to be a major, glaring problem with any minimum wage policy: it’s not the private sector’s job to ensure people’s financial needs are met.

Here’s what I mean. Corporations are private-sector entities. Outside of basic human rights obligations to be decent to workers and not harm or defraud customers, they don’t have any obligations to anyone. They exist for their own benefit, which typically means they exist to help their owners turn a profit. Which, in a capitalist economy, is a-okay as long as no one is being abused or taken advantage of.¹

However, the debate over what the minimum wage should be typically pivots around the question of whether it is a “livable wage.” The minimum wage as it is now is too low to support someone, so should we raise it to $10? But in some areas of the country, even $10 or $12 an hour is not enough to support an individual or a family, so what about $15? All sorts of economic facts are whipped out in support for one side or another, and debates about what the minimum wage ought to be often devolve into debates about the price elasticity of fast food and the relative effect of minimum wage policy on inflation.

But to me, these issues have always seemed kind of… beside the point. Corporations aren’t obligated to provide anyone a living wage in the first place.

Yes, companies are obligated not to take advantage of workers, but that’s not quite the same thing as being obligated to provide a living wage. It just means companies have to make square deals with employees and not pressure, coerce, or blackmail them into financial arrangements to which they don’t consent.

This isn’t to say it’s not anyone’s responsibility to make sure people have livable wages. It’s just not the responsibility of corporations.

As it turns out, we actually have an organization tasked solely with ensuring the health and welfare of the population. It’s called the government, and it’s their job to make sure everyone’s taken care of, not the private sector’s.

This pressure on companies to provide a “livable wage” actually prevents companies and employees from coming to square deals that benefit both parties. As conservatives like to point out…

• If every job must be accompanied by a “livable wage” no matter what, it will be more difficult for teenagers to get part-time jobs because companies will not be able to afford to pay adolescents livable wages — which is fine because most adolescents are not supporting their family and do not need a livable wage anyways.
• Apprenticeships and training programs will have a hard time getting started. Most professional training roles are either compensated at a below-livable-wage or for no wage at all because it isn’t profitable for companies to pay people for extensive training unless they get binding employment contracts. And if it isn’t profitable for companies to provide those kinds of opportunities, they won’t provide them.
• People looking for intermittent or part-time work will have a harder time finding roles because companies won’t be allowed to offer positions unless they are accompanied by the federally mandated minimum wage, so fewer positions will be on offer.

This would all be a reasonable price to pay to ensure that everyone in poverty had access to a living wage, but minimum wage policy isn’t the only way to ensure everyone has access to a minimum wage.

Universal Basic Income

Universal Basic Income (UBI) is an economic policy advocating that, in essence, the government ensures everyone’s income meets a minimum annual level.

For instance, if the UBI income is $30,000, and you are completely unemployed, the government will cut you a check every two weeks for a salary equivalent to $30,000. If you only make $10,000 a year, the government will cut you a check equivalent to a $20,000 a year salary.

This policy has a number of advantages over minimum wage policy:

1. It ensures everyone has a livable wage, not just people fortunate enough to have employment. There are many people who aren’t able to maintain full-time employment, and they deserve a livable wage as well.
2. It frees corporations from the responsibility of having to ensure the survivability of their workers, a responsibility that was never theirs in the first place, and places the mantle of responsibility back where it belongs. This is especially important for small businesses, which are often choked out of existence by the manacles of federally regulated obligations.
3. It puts bargaining power back in the hands of workers. Now, instead of being forced to accept a 60-hour workweek job because there’s no other way to put food on the table, employees will be able to fall back on their UBI and tell their fast-food employer to get lost. Corporations will be forced to provide better conditions and more fulfilling jobs for their workers because their workers will no longer be wage-slaves.
4. It drastically reduces the power corporations have over our society. Right now, the financially-driven and lobby-enabled American corporate machine has an incredible amount of power over society — possibly even more power than the citizens themselves. But if corporations aren’t in charge of whether people are able to survive anymore, they won’t have nearly as much leverage, and they won’t be able to fuck people over at the legislative level nearly as much. This could have an incredible impact on everything from slavery in the developing world to improving the public health by reducing the prevalence of processed food.

The main objection people have to UBI policies is the same objection poorly-educated middle managers have to giving their employees freedom: “But if we loosen the reins, people are just going to take advantage of the system!” In other words, if we don’t design a system that forces everyone to work, everyone will just kick back and live off their UBI.

First of all — and this will sound really bad to people who are adherents of the cult of hard work — but would that be so bad?

We know we can afford it. There are a zillion economists who have done the math to show that American corporations and the upper class could entirely fund a UBI program and not even see sizable dents in their fortunes, so it’s not like the economy would crater if that happened. The most profitable industries (the tech sector, finance) don’t take up most of the manpower in America, so large swaths of the population retiring to live off of UBI wouldn’t threaten the economic machine that funds it.

If you’re a believer in the value of hard work, though, you needn’t worry, because it’s highly likely that people would keep working anyway.

Psychologists are pretty convicted by now that “laziness” doesn’t exist. It turns out humans are instinctively motivated to work. If we don’t do something meaningful with our lives, we wither away into depression and chronic health problems. People who aren’t doing something meaningful with their lives — men who live in their mother’s basement, drug addicts, so on and so forth — are trapped by circumstances like mental illness and lack of access to appropriate care, not by some intrinsic quality called “laziness.”

We see this already in the American upper class. Wealthy Americans provide for their children a form of UBI; they pay for their children to go to college, complete with housing, textbooks, vacations, and other life-enriching activities. Do these trust fund kids sit on their asses and play video games all day? Occasionally — but more often, they apply themselves diligently to their studies and end up as lawyers, surgeons, human rights activists, and all that other good stuff.

In fact, for most parents, providing their children with enough prosperity to give them all these advantages is their overriding goal. Immigrants come to this nation and spend decades working themselves into the ground on the mere hope they can give their children this kind of experience.

All UBI legislation will do is make the experience of the upper class available to everyone.

Universal Basic Income does not signal the end of capitalism. If anything, it enables capitalism; a population protected unconditionally by Universal Basic Income is one where regulations on businesses can be repealed, certain in the knowledge that the workers will be cared for no matter what.

Really designing and enacting UBI legislation will not be so simple. It would be an enormous undertaking, even at the state level. To pass UBI would be a legislative act on the order of passing another New Deal. But just because it’s difficult and new doesn’t mean it isn’t worth doing.

America clearly needs to turn over a new leaf. This might be it.

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1: And that’s the big if, isn’t it? So many modern corporations only survive because of slavery in the developing world and environmentally destructive manufacturing processes. But I digress…