It would have to be a lump sum handout to everyone in the population per hour worked, but perhaps implementable as an income tax deduction for high wage earners.
This still has the problem where zero is a minimum wage, preventing negative wages.
It would have to be a lump sum handout to everyone in the population per hour worked, but perhaps implementable as an income tax deduction for high wage earners.
This still has the problem where zero is a minimum wage, preventing negative wages.
2 comments :
Employers can't send wages to zero.
It may be possible to push certain jobs to a net zero, which you could define as the point where the expenditure to perform the job is exactly equal to the compensation of the job, but a gross zero, where the job does not sustain the employee is not possible... for instance I could not pay ANYONE to work for me for 1 cent an hour, as they couldn't eat enough on that wage to continue to show up. I might, however be able to provide meager housing, food and clothing only, no wage, and get a few, desperate people to show up, until we factor in competition.
As a thought experiment, lets clear the slate and make all jobs pay only the minimum net zero wage. This is sustainable as long as there are fewer jobs than there are employees. However, if job growth exceeds population growth, as it nearly always does since economic work performed by the employee produces economic growth (under capitalism... this is not always the case in other models, such as feudalism, socialism and communism), then employers must incentivise above a net zero wage in order to attract employees. This will always create a equilibrium above the net zero wage for the most pleasant jobs, which we might call, the "natural minimum wage". Jobs of a less pleasant nature, or those with more specialized skill requirements would all have a wage above that of the "natural minimum".
Notice that this "natural minimum" might entirely consist of things like tips in some jobs. The wage need not be directly paid by the employer for this to work.
Additionally, in capitalism, the set of employees vs employers is not static. So, employers actually must compete with the employees themselves as potential self employers which further pushes up the natural minimum wage.
If the government will give a handout, $5.15/hr, to anyone earning less than a certain threshold, then the wage the employer pays may become zero.
Suppose I am willing to take a certain job if I get paid at least $5.16/hour. The employer offers a wage of 1 cent per hour, and the government gives me a handout of $5.15, making my total income $5.16. Thus, I would be willing to take this job.
A troubling scenario is if I am willing to take the job if I get paid at least (say) $4.15/hour. The employer offers a wage $-1.00/hour, that is, I pay him for the privilege of working for him! Nevertheless, with the government handout, my net income is $4.15, so I take the job, however the government has failed to achieve income redistribution.
I think the solution is the government handout must be lump sum, period, not per hour you worked.
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