Not that we actually expect the folks at American Prospect to have principles, or even consistency, but they are, here, killing one of Bernie Sanders’ favourite rhetorical tropes. Which is that all that welfare system stuff – Section 8, SNAP and so on – is a subsidy to employers. Which, of course it’s isn’t. It’s a subsidy to workers.
If you get something solely because you’re in work then that could indeed be a subsidy to your employer. Because by being in work you get wages and the something – therefore maybe you have to be paid less in wages to do the job. If you get something purely because of your income level then it’s not a subsidy to your employer.
In fact, it increases the wages you must pay in order to gain workers. If you can get something for not working then someone has to pay you more to get you to come to work.
Sanders have been shouting for years that the American welfare state subsidises employers. It doesn’t as Prospect says:
Democrats lacked the votes to raise the federal minimum wage as part of the $1.9 trillion rescue package just approved by Congress. But the bill will hike wages nonetheless, by putting economic pressure on employers to raise them.
The package includes income subsidies, in the form of cash payments to families and extended unemployment compensation. Conservatives and business groups have expressed alarm that the payments are too generous, and that some workers will stay home rather than accept the lousy wages on offer for tedious and risky frontline work.
Just between us, the conservatives are right. Some people will indeed refuse to work for paltry wages, and more power to them.
And though the bill was advertised as a relief measure and not a stimulus package, $1.9 trillion in federal spending (almost 10 percent of GDP) will indeed stimulate the economy and cut the rate of unemployment. As unemployment declines, employers will have to pay more to attract workers.
As well they should. Nobody can live decently on $7.25 an hour. In much of the country, even $15 is woefully inadequate.
A strong recovery coupled with subsidies to families will raise what economists call the reservation wage. That’s the wage the boss has to pay to get someone to take the job.
Quite so and entirely correct. Which is why we’d better not hear any more from American Prospect about how welfare subsidises employers then, eh?