The argument often forwarded by liberals in support of minimum wage increases are simple: wages have stagnated, minimum wages, increase wages, therefore we need a wage hike. And the argument has a grain of truth to it: wages rise for those who stay employed. But it fails to take into account the fact that many workers become unemployed by minimum wage hikes, so having people have the wage of zero easily outweighs the beneficial impacts.
But the rest of it is incorrect. Wages have not actually fallen compared to productivity. This paper by the Heritage Foundation clearly details the problem with that argument. The argument uses wages and not total compensation, which includes benefits. Now, instead of having to pay for your own health insurance, your employer does it for you. Paid maternity leave has become more common, more vacation days, etc. All of this increases the purchasing power of the worker even though wages do not increase. In fact, had all of that gone into wages instead of paying for health benefits, there would have been wage increases. In fact, Walmart has actually lowered wages in order to pay for health benefits. So total compensation, not just wages, must be taken into account.
The statistics used to prove the point also use different methods to control for inflation and wages, which further muddies the waters. The Heritage Foundation, of course, finds that total compensation has increase 77% over the last few decades. This is a different narrative than what Elizabeth Warren, Paul Krugman, or the Employment Policies Institute announces. But many may counter: isn't the Heritage Foundation a conservative organization? Correct. But economist Martin Feldstein, who works with the nonpartisan National Bureau of Economics, has published a study on the issue as well. He agrees with the Heritage report and says the apparent gap between productivity and pay exists only when improper data is used, and when you correct for that, both wages and productivity change together. Even the liberal, pro-minimum wage think tank the Center for Economic Policy Research found no gap between productivity and pay, as well as coming to the same conclusion as both Feldstein and the Heritage foundation.
So yes, wages have increased. And even if they didn't, it could be that excessive government regulation, not the evil businessmen, were behind the pay gap. And it is crazy to think that merely raising the wage floor will raise wages when it makes wages zero for thousands of workers.
But the rest of it is incorrect. Wages have not actually fallen compared to productivity. This paper by the Heritage Foundation clearly details the problem with that argument. The argument uses wages and not total compensation, which includes benefits. Now, instead of having to pay for your own health insurance, your employer does it for you. Paid maternity leave has become more common, more vacation days, etc. All of this increases the purchasing power of the worker even though wages do not increase. In fact, had all of that gone into wages instead of paying for health benefits, there would have been wage increases. In fact, Walmart has actually lowered wages in order to pay for health benefits. So total compensation, not just wages, must be taken into account.
The statistics used to prove the point also use different methods to control for inflation and wages, which further muddies the waters. The Heritage Foundation, of course, finds that total compensation has increase 77% over the last few decades. This is a different narrative than what Elizabeth Warren, Paul Krugman, or the Employment Policies Institute announces. But many may counter: isn't the Heritage Foundation a conservative organization? Correct. But economist Martin Feldstein, who works with the nonpartisan National Bureau of Economics, has published a study on the issue as well. He agrees with the Heritage report and says the apparent gap between productivity and pay exists only when improper data is used, and when you correct for that, both wages and productivity change together. Even the liberal, pro-minimum wage think tank the Center for Economic Policy Research found no gap between productivity and pay, as well as coming to the same conclusion as both Feldstein and the Heritage foundation.
So yes, wages have increased. And even if they didn't, it could be that excessive government regulation, not the evil businessmen, were behind the pay gap. And it is crazy to think that merely raising the wage floor will raise wages when it makes wages zero for thousands of workers.
No comments:
Post a Comment