An awful lot of us are tired of living on the edge. Or so you might think after noticing the proliferation of suggestions about making us feel a lot more secure.
How about making the economy fairer? Would that be the best cure America's bad mood?
...For decades, business owners have resisted higher minimum wages by arguing that they destroy jobs, particularly for young people. At some theoretical level, high minimum wages will distort job creation, but the best empirical evidence from the past decade is aligned with common sense: a minimum wage drawn somewhat above the poverty line helps those who work full time to live decently, without having a significant impact on other job seekers or on total employment. (For example, a study of pairs of neighboring counties with differing minimum pay found that higher wages had no adverse effect on restaurant jobs.) Even so, a federal minimum wage of ten dollars or more will not solve inequality. It will not stop runaway executive pay or alter the winner-take-all forces at work in the global economy. Yet it will bring millions of Americans closer to the levels of economic security and disposable income that they knew before the housing bubble burst.
... A higher minimum wage can be only part of the solution. We also need to expand the earned-income tax credit, and strengthen the social-insurance system, including child care and health care (the advent of Obamacare will help in this regard). Fast-food jobs in Germany and the Netherlands aren’t much better-paid than in the U.S., but a stronger safety net makes workers much better off. We also need many more of the “middle-class jobs” we’re always hearing about. A recent McKinsey report suggested that the government should invest almost a trillion dollars over the next five years in repairing and upgrading the national infrastructure, which seems like a good place to start. And we really need the economy as a whole to grow faster, because that would both increase the supply of good jobs and improve the bargaining power of low-wage workers. As Jared Bernstein, an economist at the Center for Budget and Policy Priorities, told me, “The best friend that low-wage workers have is a strong economy and a tight job market.” It isn’t enough to make bad jobs better. We need to create better jobs.
When workers are paid more, they tend to work harder, and quit less readily. Firms, knowing they can’t simply rely on low wages, have an incentive to invest in new equipment and training programs. All of these things can boost productivity, which is the lynchpin of prosperity. Finally, there is the moral issue. (Prior to the twentieth century, economics was considered a “moral science.”) With the decline of trade unions and the spread of aggressive management techniques, low-paid workers now have little bargaining power and few legal protections. Only the government can ensure that they receive a living wage.
We can, I think, measure our self-respect by looking at where we wind up on a chart like that one.
The issue will be open to public discussion on December 3.
Ezra Klein will host a debate over whether this is a good idea for making a more efficient and fair welfare state--or a nutty European fantasy. Doors open at 6:00 p.m. Tuesday, with the debate beginning at 6:30. The location is the DC Improv, at 1140 Connecticut Ave. NW. Attendance is free but you must register here. We hope to see you there!
