How low is too low?
September 15th, 2009 | Published in Economics idea | 2 Comments
Now that I am focused on what is happening to the bottom end of the income spectrum, a lower bound for what is acceptable needs to be found.
I don’t think there is much to be learned from by looking at the current minimum wages in different places. Minimum wages are set partly with an eye on how they affect unemployment and the competitiveness of different economies. My hope is to address the problem of unemployment directly so that issues of income distribution can be addressed separately.
I don’t think there is any purely objective measure of what an adequate minimum wage should be. I couldn’t think of any moral grounds for arguing that everyone should earn equal wages. I can’t think of any moral grounds for establishing a minimum wage either.
I don’t think a pragmatic approach helps either. I think it would be too difficult to translate an objective like reducing crime into a minimum wage level. There would be the analytical problem of establishing the connection between crime and the minimum wage level and the problem of determining what an acceptable level of crime is.
I think the best approach is to think in terms of long-term sustainability. How much do people need to earn so that they can live without relying on charity and have a decent chance of raising happy healthy children?
September 16th, 2009 at 12:28 am (#)
A few thoughts:
1. I know various countries and agencies define a “poverty line” based on different criteria. Do you know what any of them are? Are they any good?
2. If we were to define a certain minimum standard of living, would we make adjustments for lifestyle (single, married, kids) or the cost of living in different areas?
3. In Canada, there’s been debate lately over how the Employment Insurance system is structured. Do you know what the intention is for the difference between EI and welfare? Do we need to have both? Could we just enrich the welfare program for anyone who is not working?
Eric
September 16th, 2009 at 7:05 pm (#)
Eric.
1 – I’m planning to look into some of the definitions of poverty in later posts.
2 – I think you would definitely have to make adjustments for family size. Two people living together have lower expenses than if they lived apart. I’m not sure what I think about regional differences in cost of living. I’ll think about that more.
3 – The problem with a rich welfare system today is that finding a job is a difficult and often unpleasant task. If living on welfare was comfortable, the number of people who would up on looking for work would likely be too high. I’ll write more about this issue later.