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Doesn’t This Just Kill A Democrat Talking Point

Fair play to the man. He had the good sense to only date Hillary Rodham the once.

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?

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Spike
Spike
1 month ago

No, no gov’t mandate drives up wages. Even more welfare, if it means a new worker who’d be worth $12 to your business, can’t be had for $12, doesn’t get anyone more than $12. It only means there is no way to do that work. (Maybe the owner does it himself. Maybe he has the customer do it at a self-service kiosk. Maybe the customers vanish too.)

Spike
Spike
1 month ago
Reply to  Spike

PS – When Sanders/Warren say Walmart benefits from welfare, it only means they live in a world with welfare, and demagogues give themselves the credit for all the good that happens. “You didn’t build that!”

john77
john77
1 month ago
Reply to  Spike

You seem to assume that no-one will take on a job at a rate that provides a profit margin for the employer – I disagree. [Personally if I am asked to quote for a job I always quote at a rate that leaves the potential employer a profit margin unless that rate isn’t worth it to me in which case I quote what I’d like and it to him/her/them to say “No”] A government can mandate a minimum wage that will drive up the wages for some and put others out of work – as we have seen that Tony… Read more »

Spike
Spike
1 month ago
Reply to  john77

No, I do not assume no worker will agree to mutually advantageous terms. I merely stated what might happen if such terms became illegal—as in your useful example.

Bongo
Bongo
1 month ago

Sounds like this programme will boost opportunities for illegal workers. And why not, as people might see their way clear to a better immigration policy.

Boganboy
Boganboy
1 month ago
Reply to  Bongo

Here in Oz there’s a bit of a fuss at present about visas for seasonal workers being stifled by the covid restrictions. The covideers point out that there are plenty of loafers like me lounging in front of their computers who could be out picking fruit if the farmers’d only offer them enough money.

With the restrictions on entry, I don’t think it’ll lead to any more illegal workers though.

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