If You Want to Help Poor Workers, Give Them Money, but Don’t Make It More Expensive to Employ Them.

Another Labor Day, another bold plan to increase
the minimum to help the working men and women of America!

On Monday, Los Angeles Mayor Eric
Garcetti will
announce a proposal to jack his city’s minimum wage
from $9.00 all the way up to $13.25 over three years. That puts him
ahead of President Obama, who has called for
goosing the federal minimum wage from $7.25 to
$10.10.

That’s the opening of a new Time column by me. Hikes in the
minimum wage are routinely sold as a quick and easy way to increase
the income of the working poor, but it’s actually a really rotten
way to do that.

University of California sociologist
Lane Kenworthy, a progressive who has called for a more generous
social safety net, argues that
virtually all increases in income for poor families in the U.S. and
other wealthy countries since the late 1970s have been a function
of “increases in net government transfers — transfers received
minus taxes paid.” That’s partly because workers in poor households
often have “psychological, cognitive, or physical conditions that
limit their earnings capability” and partly because today’s
“companies have more options for replacing workers, whether with
machines or with low-cost laborers abroad.”

To be sure, arguing that you want to increase direct aid to poor
families doesn’t give a politician the same sort of photo-op as
standing with a bunch of union leaders on Labor Day and
speechifying about the urgent need to make sure an honest day’s
work is rewarded with a living wage.

But making just such a case could have the benefit of actually
helping poor people in the here and now. Certainly a savvy
politician could sell that to voters who know the value of hard
work — and the limits of economic intervention.