We can increase incomes, reduce taxes, accelerate automation, and grow the economy
Raising the federal minimum wage to $15 is at the forefront of policy debate right now after being pushed by Biden to be part of the reconciliation package where only a simple majority is needed to pass it, but it seems unlikely to make it into the signed bill after the Senate parliamentarian said it’s against the rules of reconciliation, where the only stuff allowed is stuff that increases or decreases federal spending or taxation.
A $15 minimum wage is very popular. Most recently this was demonstrated in Florida where Trump won the state, but so did an increase to $15 by 2026 with more than 60% of the vote. National polling shows support exceeds 60% as well, especially among voters who earn under $40,000 a year, in which case support exceeds 70%, including 56% of Republicans.
Republican members of Congress have even been pushing increases too, but lower, or with fine print attached. For example, Mitt Romney has suggested $10 within four years; Josh Hawley has suggested $15 but only paid by large corporations not small businesses, and also wage subsidies for those earning under $16.50/hr.
In response to the Senate parliamentarian’s decision, Democrats are already talking about indirect ways of raising wages to $15 like increasing taxes on companies that don’t pay $15, lowering taxes for those who do pay more than $15, and AOC said that if progressives had known the $15 minimum wage were going to be axed, they’d have pushed harder for the full $2,000 and more.
All of this is to say there’s a lot of support for raising the minimum wage above $7.25 because at this point, it hasn’t been raised in so long, it’s equivalent to $5.85 back in 2009 when the last increase happened. It’s just not enough.
As an unconditional basic income supporter, here’s my suggestion: combine a higher minimum wage with monthly direct payments, aka stimulus/relief/survival/recovery checks. If Republicans are saying $10 is something they can agree to as standalone legislation outside of reconciliation, then accept that offer, but only as long as monthly direct payments make it into reconciliation or its own standalone bill.
Monthly direct payments are as popular as a $15 minimum wage. 65% of Americans support $2,000 checks every month for the duration of this crisis, including a majority of Republicans. These proposals can be combined.
A $1,000 monthly stimulus check is equivalent to getting a $6/hr raise at a 40-hour per week job or a $12/hr raise at a 20-hour per week job. A $1,200 monthly stimulus check is equivalent to a $7.70/hr raise at 40 hours and $15.40 at 20 hours. Based on the existing $7.25/hr minimum wage, $1,200 checks would bump incomes to a $15/hr equivalent for full-timers, and would do far more for part-timers. Or as another option, $833 monthly checks would boost a new $10/hr minimum wage to $15. Obviously, different combinations are possible. The question is what combination could enough voters demand and members of Congress get behind?
The combination of a higher minimum wage and monthly direct payments would do far more than just a higher minimum wage alone, because raising wages to $15 doesn’t help anyone who is unemployed (and don’t forget that only about 28% of the unemployed get unemployment insurance). Higher minimum wages also don’t help the non-employed, like for example all unpaid care workers. Higher minimum wages also don’t directly help those earning more than the new wage floor (although there will be new pressure for employers to increase wages). Higher wages can also result in fewer jobs (although this effect tends to be mitigated to varying degrees by greater spending which creates new jobs). A higher minimum wage can also result in no net income increase due to reduced hours, and also more automation, and it’s these last two I really want to highlight.
Fewer hours and more automation tend to be argued as reasons against raising the minimum wage, but I think they are exactly why we should. We work too much, and we have a situation, especially right now, where there are lots of people working too much while at the same time, there are people entirely unable to find a job. So let’s share employment better. If we cut 10 million full-time 40-hour jobs in half, we’d immediately create 10 million new jobs where 20 million people could now be working 20-hour weeks instead of 10 million people working 40-hour weeks with 10 million people unemployed. Reducing hours would increase well-being and productivity. The problem is that it would also reduce income unless wages were increased. That’s where the higher minimum wage and monthly direct payments come into play.
If raising minimum wages results in fewer work hours, such that people see no loss or gain in income, then great, they’re still happier thanks to having more time, and direct payments would provide the desired income increase. For those who want to earn even more, they could use their increased free time to choose paid work over more leisure.
If raising wages results in more automation, such that fewer people are able to find employment, then great, they’re still happier thanks to having more time, so long as they have a monthly income they can count on as always being there, and if workweeks are say 4-day instead of 5-day, it’s going to make it a lot easier for people to find a new job to earn additional income on top of their monthly direct payments.
Human labor is too cheap. The minimum wage is so low that even though technology exists to replace workers, businesses don’t invest in the technology, because it doesn’t make sense to invest in a $14/hr equivalent robotic worker when people are willing to work for $8/hr. But if we make it illegal to pay humans less than $15/hr, suddenly investing in a lot of automation makes a lot more sense. And that’s great for everyone, as long as robot paychecks flow to everyone instead of only their owners.
I see so much concern that people will stop working as soon as they don’t have to work thanks to having a monthly income that’s disconnected from work, but what I don’t see is the realization that forcing people to work for cheap is not only wrong, but it means that machines aren’t doing for us what they could already be doing for us.
What if as part of the reconciliation process, some member of Congress suggested that the United States should subsidize automation? What if instead of talking about punishing businesses for not paying enough and rewarding businesses that did, they instead started talking about punishing businesses for not automating enough and rewarding businesses who did? We’d see a lot more unemployment, that’s for sure. But we’d also see a lot more productivity. We’d see lots of machines making stuff for people who couldn’t buy anything, unless we made sure everyone could still buy what the machines are making.
Unemployment is not the problem. So what if automation creates more unemployment, or that a $15 min wage could create more unemployment? If we see these things as creating more self-owned time, they’re great. The problem is that we withhold income from the unemployed, and thus withhold spending from customers. All we have to do is stop doing that, and instead make sure that everyone starts each month with some amount of money to buy the stuff our economy is making.
Additionally, if everyone started each month with an income floor instead of a wage floor, they’d have more power to withhold their labor until their demands are met. Those demands could mean wages even higher than whatever the minimum wage is, or those demands could mean finding a job that pays less than similar jobs, but offers a great deal more meaning and purpose, for example choosing a non-profit $50,000 job instead of a $70,000 oil industry job.
Republicans have long said that tax cuts pay for themselves by increasing disposable incomes. That’s how they were able to pass their Tax Cuts and Jobs Act in 2017 through reconciliation. Well, every stimulus check is an advance tax rebate, which is a tax cut, so the argument should be that a monthly tax cut would grow the economy every month in the same way the $600 stimulus check just increased retail sales by over 5% in January, blasting past expectations of 1%.
Don’t worry about increasing the deficit, especially when monthly checks would also grow GDP. Republicans should recognize stimulus checks for what they are, GDP-growing tax rebates, and should make their argument for a higher minimum wage using them as their way to get Democrats to agree to a less than $15 counteroffer.
Raising the minimum wage and introducing monthly direct payments is something Democrats and Republicans should both be able to get behind, as long as Republicans truly do want to lower taxes for the bottom 80% instead of just the top 1%, and if Democrats truly do want to increase incomes, instead of just increasing tax revenue.
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