On my way into the grocery store, I was asked to sign a petition to get a minimum wage measure on the ballot. I told the lady that I couldn't because I'm a labor economist (sort of) and I know minimum wage laws hurt the very people she's hoping to help. She asked if I had solutions for how to help that group of people and I said "stop taking options away from them." It wasn't a productive conversation.
What bad economic policies are people trying to bring to a ballot near you?
When people talk about increasing the minimum wage here are two solutions I usually suggest as a better option.
a) In Canada we have a basic personal amount tax credit that is currently around 12,500, so you don't pay any tax on your first 12,500 in income. My suggestion is to make that amount whatever the poverty line is. If the poverty line is 25k in Canada then double the basic personal amount. Why should people in poverty be paying income taxes to the government. Someone making say 32k a year (approx yearly income of full time minimum wage worker in Canada) would save $4244 in taxes a year compared to earning only an additional $950 a year after tax if the minimum wage went up by $1 per hour. That's a 250/month difference for them. Not insignificant.
b) every private sector worker should be able to opt into being paid as an employee or a contractor with an employment contract. Opting to be a contractor gives them more flexibility in negotiating salary, benefits etc but also under tax law allows them to offset some of their income with expenses. You can lower your effective tax rate drastically by lowering your taxable income through write offs, even if you are very conservative about it.. It has benefits to the employer as well because you get to decide if you want to renew the contract every year, 2 years, 5 years whatever the term, so if you have a crap employee that's been around a long time, you don't have to pay them a fortune to get rid of them or feel compelled to keep dead weight around because it is too expensive to terminate them.
These ideas have the added benefit of starving the government of income.
reply
Your second point reminds of when I realized that functionally employers and customers are the same. It's interesting that the employee-employer relationship has so much more baggage than customer-contractor.
reply
I live in California, the land of the bad policies... sigh
Anyway, when it comes to minimum wage, I just tell them it's like a small bandage when you need to stitch up the actual wound. If all you use are bandages without treating the wound, the patient will die. And then I tell them the wound is why there is so little economic opportunity. Then I tell them how burdensome regulation makes it hard for people to get a small business off the ground, about how the big corps and well-connected people are tapped into an endless source of money...... and we're on our way to Bitcoinlandia 🚀🚀🚀
I don't really bother with arguing that minimum wage doesn't even help..... to me it is a lesser point, not worth arguing about, than talking about the underlying ills of the economy
reply
I wasn't really trying to argue with her, the opposite actually. I wanted her to know I wasn't just being a jerk by not signing her petition, but that I knew that issue well and disagreed.
However, I think minimum wage is one of the clearest "seen vs unseen" examples, so it's well worth arguing about, imo.
reply
transparent california search for police, firefighter, nurse, ultrasound etc... it's so depressing how quickly they incinerate our tax dollars :'(
reply