Saturday, January 21, 2012

why we work

"Now is the time to make an adequate income a reality for all God's children. Now is the time for City Hall to take a position for that which is just and honest."
     - Dr. Martin Luther King, Jr., addressing striking sanitation workers in Memphis, March 18, 1968 

The living wage movement uses MLK's words as a rallying cry to require employers to pay enough for people to get by. A noble aim, but it's an example of how a simplistic view of our role in the economy leads to self-defeating policy. Unfortunately, you shoot yourself in the foot when you target wages.

We should consider why we work in the first place: to pay for the things we need to get by. I can tell you that if everything were free, I wouldn't be a worker at all (if only!). It follows, then, that our interests as consumers should take precedence over our interests as workers, and that we are better served ensuring the adequacy of our income by focusing our efforts on reducing the cost of living rather than increasing our means to meet it. Not only would we more directly address the essential problem at hand, we would avoid the self-defeating aspect of increasing aggregate income, a scenario where the benefit of higher wages is offset by the inflationary pressure pay raises put on production expenses. Your standard of living doesn't improve if your raise is offset by price increases. Lazy people like me appreciate how this dynamic sends us in the wrong direction.

Perhaps this sounds uncomfortably similar to the supply-side economics championed by the right since the days of Reagan. Still, we can't ever let partisanship triumph over reason, and it's a valid observation that we should prefer cutting costs to raising income (if food were free, wouldn't you join me in a life of leisure?). The distinction we need to draw is in the policy implications of this simple insight. While events have thoroughly discredited the Republicans' sloppy and simplistic tactic of making rich people richer, a smarter, more precise approach would achieve the ultimate goal of broadly shared prosperity. As I will argue in future posts, in order to do so, the left will need to reconsider its take on some of its favorite villains, including corporations and globalization.

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