Sunday, March 7, 2021

Progressive thinking: "Minimum wage SHOULD be $24 an hour"

The daffiest of the Progressives contend that the minimum wage should be $24-an-hour based on inflation and increases of productivity.

They also point to Belgium, home of the EU, and what a McDonalds worker makes as another leg of their argument.

The fourth leg is that the minimum wage is not a "living wage" in the sense that a single wage earner could raise a family on that amount of money.

I want to discuss each reason in turn.


The inflation numbers are cooked and you can make them any number you want by how you weight the market-basket and what time-frame you cherry-pick.

Not that long ago the cheapest cell phone of 2021 did not exist for ANY price. Nor was there cable TV. Only the very rich had air conditioning (even a window unit). One reason prices rose is because expectations have gotten bigger. More square-feet per person of living space. More gadgets. Hot-pockets and Tombstone pizzas instead of cornflakes, chicken and potatoes.

Increases in productivity

This is my favorite "leg" and I will write a great deal about it.

Who should benefit from the increase in productivity? Should it be the minimum wage worker who did absolutely nothing to make themselves more productive or should it be the owners of the "factory" who plowed their income back into the enterprise to install expensive, more productive equipment? 

Basic justice suggests that benefit should go to those whose actions created the incremental wealth. The minimum-wage-worker eventually benefits when the price of his output drops and he can afford to consume more...because it is less expensive.

I suppose one could make a credible "productivity" case if the workers entering the work force from high school had better skills or were physically more capable than the new-workers of the 1960s but that is a difficult case to make. My sense is that today's new workers are more entitled, less capable of understanding written directions and less physically fit than the population of the 1960s.

Another fact about productivity is that it is not an even coat-of-paint where every sector of the economy, every enterprise experiences the same rate of productivity increases. 

Some sectors became so productive they no longer exist in any meaningful way. Back in the mid-1980s, we had three secretaries for fifty-two engineers. Today they have zero because every engineer is expected to type up his/her own reports using computer software. They are expected to take their own phone messages using Voice Mail and keep their own schedules. 

What is the increase of productivity when you go from three people doing a task to zero people? It is an infinite increase in productivity. So should the minimum wage be infinity?

On the other hand, there are many jobs that are not easy to automate: changing diapers and cutting up chickens come to mind. Those are the type of jobs that minimum wage earners tend to be in: physical jobs that require attention to detail and are unpleasant to the senses. Can a person in a chicken packing plant cut up a chicken any faster today than they did fifteen years ago? I would guess that on average the answer is "No".

An implication of of using productivity as a basis for increased wages is that it is a back-handed argument for paying piece-work rates. Is that where the Progressives want to go? We should pay farm workers (for instance) based on how many 40 pound bales of hay they load on a wagon each day or the number of bruise-free apples they put in the bin? A bunch of people are going to starve if we start doing that!

McDonalds in Brussels

Let's throw a dart and randomly (not) chose a country to use as a benchmark for the US.

Hey! My dart hit Mogadishu! Let's use that as the basis for the minimum wage. After all, we have seen a large influx of immigrants from Somalia. Let's turn the US into the western hemisphere's Somalia and let's start with wages.

The McDonalds in Brussels is a classic case of cherry-picking and it can work both ways.

Living wage

Adjustments in the minimum wage happen at the state and city level which, in part, make adjustments for the variations in the cost-of-living from region-to-region.

It is not possible for one, national minimum wage to comprehend that variation.

At a more micro level, in many places the minimum wage serves those workers who are not yet a good fit for the work-place culture.

  • They don't follow directions.
  • They don't show up to work.
  • They are sloven and smell bad and don't smile.
  • They don't follow directions.
  • They curse the boss and customers.
  • They don't follow directions.
  • They continuously look at social media while they should be working.
  • They don't follow directions.
  • They have poor ability to pay attention to their work for more than two minutes.
  • They don't follow directions.
  • They lack physical stamina
  • They are clumsy
  • They don't follow directions 
  • They are susceptible to physical injury
  • They gossip and create drama
  • They come to work stoned or hung-over or off-their-meds

Did I miss anything?

The starting worker who comes to the work place with those habits can quickly become worth more than minimum wage after they lose a few of those bad habits they picked up in the education system.

The minimum wage is not intended to be a "living wage", it is a "transition-to-becoming-a-productive-worker wage". The employment market is a competitive ecosystem and minimum-wage jobs fill a very specific niche.


  1. Re; Increases in productivity.

    When my brother ran his Christmas tree cutting crew, he paid them by the many trees they harvested in a day as counted on the truck. If he had paid them by the hour, he would have lost money and so would the workers because to compensate for the loss of production, the hourly wage would have been minimum wage for often back breaking work in sub optimal conditions.

  2. Oh, my. Joe, Joe, Joe. There you go again using logic and making sense. Nothing, and I mean absolutely nothing about Leftist demands are required to make sense or to actually work in the real world. In fact, the more irrational or unworkable their demands are the better as far as they are concerned. Then when it predictably fails, they can blame greedy capitalists, and then throw even more of other people's money at it, thus ever increasing government's involvement and control. That is a twofer as far as they are concerned.

    Having said that, I passionately believe in the minimum wage. I think there absolutely needs to be a federally mandated minimum wage.....of $0 dollars and $.00 cents.

  3. EREJ: Any thoughts about the perspective that asserts that the minimum wage was a racist initiative, presented in order to price Negroes out of the labor market?

    Here is one reference citing this argument (, authored by Chris Calton. It contains a (dead) link to a Milton Freidman editorial in Newsweek presenting a similar case.

    1. I cannot speak intelligently to that point.

      I have seen that increasing the lowest wages by unionizing results in the elimination of the most repetitive jobs as those are the easiest to automate. The larger equipment base requires more people to maintain so the number of job for people who are willing to up-skill increases even though the total number of jobs is reduced.

      Anybody who is not prepared to up-skill or cross-train will be roadkill.

      I wonder if Negroes (as they were politely known back-in-the-day) had more cultural resistance to cross-training, up-skilling or perhaps they had far fewer opportunities since they were still primarily rural.

    2. The discussion from the body of the article asserts that the primarily rural nature of the population was a considerable part of the issue. In addition, per the article, the minimum wage accelerated mechanization of the agricultural processes, both because the minimum wage increase diminished the number of low wage jobs available, and that, subsequently, correlated with the historic migration of folks from the south to the urban north, and employment in the factories there.

      My take from the article is fewer non agricultural opportunities. In concert with fewer agricultural jobs, led to the migration.

  4. You forgot they don't follow directions. And oh yeah, the phone thing.

  5. What this is really going to do is to 'kill' entry level jobs that can be replaced by robots/AI systems.

  6. 1) Old NFO is right - I designed business automation systems for 34 years prior to retirement, and recently have been receiving calls asking if I'd like to come back.
    2) The labeling is a problem - it's not "a minimum wage," which creates the impression someone could live on it, it's "a training wage during the probationary period" to determine if you're suitable for the job and, as such, is about 30% too high.


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