Tuesday, September 3, 2013

Rogers on Justice at Work: Minimum Wage Laws and Social Equality

Rogers_profileBrishen Rogers (Temple) has just posted on SSRN his new article entitled: Justice at Work: Minimum Wage Laws and Social Equality.

Here is the abstract: 

This article develops a new normative defense of minimum wage laws. Existing legal academic debate asks how effectively such laws deliver resources to the working poor compared to transfer programs such as wage subsidies and negative income taxes. Such transfers have clear advantages in terms of redistribution, for they target the poor rather than all workers, and they do not cause unemployment. Legal scholars have therefore criticized minimum wage laws both on utilitarian grounds of aggregate wealth maximization and on liberal egalitarian grounds of fairness toward society’s worst-off.

Accepting for the sake of argument that minimum wage laws cause inefficiency and unemployment, this article nevertheless defends them. It draws upon philosophical arguments that a just state will not simply redistribute resources, but will also enable citizens to relate to one another as equals. Minimum wage laws advance this ideal of “social equality” in two ways: they symbolize the society’s commitment to low-wage workers, and they help reduce work-based class and status distinctions. Comparable tax-and-transfer programs are less effective on both fronts. Indeed, the fact that minimum wage laws increase unemployment can be a good thing, as the jobs lost will not always be worth saving. The article thus stands to enrich current increasingly urgent debates over whether to increase the minimum wage. It also recasts some longstanding questions of minimum wage doctrine, including exclusions from coverage and ambiguities regarding which parties are liable for violations.

As Congress will no doubt be debating the raising the minimum wage soon, Brishen provides an excellent argument for why the US should follow an approach that embraces both an increase in the minimum wage (to a level beyond poverty wages) and a wage subsidy in the form of the Earned Income Tax Credit (EITC) or something similar.  As Robert Reich recently argued on YouTube, both a higher minimum wage and EITC are an essential part of rebuilding this nation's economy with better paying jobs.  Brishen's article provides another important justification for raising the minimum wage.



Scholarship, Wage & Hour, Worklife Issues | Permalink

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You academics will never get it... You need to spend some time in the field running a real business... until then, this is all... academic.

In an economy where a business owner only have 3 real levers left to pull on (on a typical P&L, that's: Labor, COGS, & Controllables). Government regulation at every level (federal, state and local) has created so many un-controllable costs that is all that is left, even after taxes, insurance, advertising, maintenance, licensing and bank loans.

Increase the wage floor, and business owners will do more with less. There won't be mass layoffs, but jobs will disappear over time thru natural attrition in the workplace. Do you want the economically under-privileged to have no job opportunities at all?

In inner cities, what types of opportunities are there really? Small businesses - like independent or nationally franchised restaurants, hotels, automotive care, and retail. Drive up their costs, and squeeze that tight P&L some more with a mandatory wage increase and watch jobs erode over time. No mass layoffs, just natural attrition and workplace economics will lead to less job opportunities.

Who will replace those businesses when they are gone? Will your fancy university move its entire campus to Detroit and hire these poor people as TAs or researchers? Will Google, Intel or Boeing or Ford move to the Bronx and hire scores of un-skilled labor?

Will the darlings of the progressive left--clean energy startups--move to Baltimore and hire thousands of un-employed, poor and un-skilled inner city youth who didnt finish high school?

Nope, the only real opportunity at getting that first foot on the ladder out for these forgotten about Americans are restaurants, retail, hospitality jobs. And a $10.10 wage is not going to be paid to someone with little to no job experience in the first year.

Posted by: Adam | Sep 4, 2013 10:48:10 AM

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