Boosting Wages

Alan Blinder proposes a number of approoaches to increasing wages in the U. S. Characteristically, he leads with redistributive strategies:

Impersonal markets may assign wages to particular “low productivity” people that are so meager that they can’t support themselves, let alone their families. More generally, even when abject poverty is not the issue, market wages may lead to levels of inequality that many in society find intolerable.

In such cases, governments may wish to intervene with measures such as minimum wages that are “above market” or so-called tax-and-transfer programs that raise after-tax net wages relative to pre-tax gross wages, such as the Earned Income Tax Credit.

I agree with some of his proposals and disagree with others. For example, I agree with this:

As a nation, we invest shockingly little in vocational training and apprenticeships, two aspects of education that would greatly benefit workers near and below the middle. Apprenticeships in the United States cover just 0.2 percent of the labor force, compared to 2.2 percent in Canada, 2.7 percent in the United Kingdom and 3.7 percent in Australia.

The over-emphasis in U. S. policy on higher education while ignoring vocational training or apprenticeships is, indeed, shocking. The reality is that such a policy throws half the U. S. population, the half that isn’t and won’t be prepared to do college work, under the bus. I don’t think we should take the step taken by many countries of prohibiting people from seeking higher education but we shouldn’t put all of our eggs in the higher education basket as we’re doing now.

He also emphasizes increasing the minimum wage, something about which I have mixed feelings. I think that any move to increasing the national minimum wage should be cautious, measured, and evidence-based. I don’t think Illinois, in particular, should raise its state minimum wage. I think that’s the path of economic disaster for the state.

However, I find it puzzling that Dr. Blinder devotes so little attention to the obvious factors behind the decrease in wage growth among the lowest earners over the last 35 years: immigration and globalization. IMO the single thing that would help American workers stuck in the lowest income tiers the most is a tight labor market at that end of the wage spectrum.

Additionally, I would support imposing duties or fees on imports from countries that do not have the labor, safety, and environmental regulations that we impose on our own businesses. Abusing your own people shouldn’t be a viable business plan for autocratic countries and I don’t understand why we tolerate it.

Still, I applaud Dr. Blinder for at least devoting a bit of consideration to the majority of Americans rather than just writing them off as most pundits do.

3 comments… add one
  • PD Shaw Link

    I have mixed feelings about imposing a cost on trade to account for the cost of domestic health, safety and labor regulations. At some level, I think all countries can make reasonable assessments of the pros and cons of various regulatory approaches. For example, our minimum wages laws don’t necessarily reflect an ideal labor cost that all nations should follow. Some of the support for increasing minimum wages is tied to the idea that reducing/eliminating low-productivity jobs is a good thing. Most recent environmental regulations are justified by the cost of U.S. healthcare. At some point, though I would agree, particularly on issues like exploitative child labor or environmental practices that impact the U.S.

  • ... Link

    The emphasis on higher education writes off more than just those in the other half. Effectively it hurts those that go to college but shouldn’t, for the wasted time & money/debt, and those of us that get degrees that are totally worthless, such as my degree in mathematics. (Native white mathematics students are out of favor, as we can be replaced by labor from the Third World that is both cheap and meets affirmative action requirements.)

    Effectively, the higher ed fetish is a program for redistributing wealth from the bottom ninety percent to the top ten percent.

  • Guarneri Link

    I think PD is going down the right path. The same people legislating corn-ethanol usage to “support the ‘Merican farmer” making duty and fee decisions?

    Pray that low wage countries making goods you like are treating their homosexuals and “little people” up to the standards of the do-gooders in that newly constructed Ministry of Importer Standards of Conduct and Thought building.

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