Tag: Bernie sanders jobs program

Want to Help the Poor? Abolish the Minimum Wage

By Indri Schaelicke | United States

When it comes to the minimum wage, few people truly understand the complexity of the mechanism. Many believe that raising it is a quick fix to poverty. However, minimum wage hikes only increase the cost of living, hurting the economy for both the rich and the poor.

In 2014, Seattle signed a law that would increase the minimum wage there each year. By 2021, the wage will reach $15 per hour. While many support this law, libertarians are scratching their heads. Wages are an input of production, meaning that when a business produces a good or provides a service, part of its success is due to the employees and their necessary wages. When the cost of an input of production increases, the final price of the good or service must also increase. If all wages in a city increase, then all prices of goods and services will increase. Things will be no more affordable than they were before the minimum wage hike.

Minimum wage increases also lead to significant job losses. As mentioned before, when wages increase, the final price of a good or service must also. In order to combat having to charge high prices for their products, businesses can fire employees and move to automated systems that make use of the latest technology and do not require much human input. McDonald’s Restaurants recently started using automated kiosks in some stores to cut down on the amount of staff. This investment insulates McDonald’s from the fluctuations of the labor market and from the effects of minimum wage increases.

Kiosks like these have appeared in McDonald’s across the US as the fast food chain seeks to insulate itself from labor market fluctuations and increases in the minimum wage. Image Source

The minimum wage hurts those whose skills are worth less than a mandated minimum. As they are not worth, say, $15 per hour, employers cannot hire them at all. Someone whose typing skills only earn them $5 per hour is unable to find work at all. But, if the minimum wage ends, he or she will be able to find an employer willing to hire them. While $5 per hour is nowhere near the wage required to live a comfortable life, it is a stepping stone to higher paying jobs in the future. The person given in the previous example can work at improving their typing skills until they find employers willing to pay incrementally more. In this way, people are able to climb the socio-economic hierarchy.

Beyond just the minimum wage’s harm to the economy, it is also immoral, because it limits what terms two consenting adults can voluntarily negotiate a contract for. The state should not have any say in how a person values their labor. These terms are between employer and employee.

Abolishing the minimum wage will open up job possibilities for those that need them most. It is one step closer to a world where the state does not control every aspect of life. Individual sovereignty begins with being able to decide one’s worth.

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Featured Image Source.


Bernie Sanders, You Can’t Just Give Everyone a Job

By Mason Mohon | @mohonofficial

Bernie Sanders is back in the headlines, and he has brewed an economic wonder concoction that will supposedly solve every single one of the left’s discontents. It all takes the form of the dear old Senator’s jobs plan.

As the Washington Post reports, Sanders wishes to roll out a federal plan that would guarantee a $15/hour job, along with health-care benefits, to anyone “who wants or needs one.” The plan is expected to help the environment, infrastructure, and education, along with a reduction in racism and sexism.

It is probably the perfect program.

And its perfection is its fatal flaw.

As of now, there is not a hint of a funding plan for this program, nor is there any idea how it would be implemented. Sanders is just laying out exactly the type of socialist rhetoric his base wants to hear.

Because Sanders is not going to bother looking at the consequences of his actions, we should. This program would be immensely costly. The unemployment rate is currently 4.1%. Hypothetically, if Sanders gave each and every one of these people a $15/hour job, and they worked 40 hours per week and 50 weeks per year, the total would come out to $3.69 billion per year, and this is just for the wages. This figure does not include administrative costs and any costs in implementation.

The program would be a profound burden on American taxpayers.

At the same time, it would misallocate money. The reason that not everyone is paid $15/hour in the status quo is because not everyone does work worth $15/hour. Many do not operate at a level of productivity that is worthy of such a wage, so a jobs program would give artificially high wages to people doing less-than-adequate work.

One may object that anyone can work that hard or that skillfully if the incentive is there, but that is untrue. Some people are just less skilled than others, and it is the way things are.

Jordan Peterson outlines the jobs issue very well. He explains that “no, there isn’t a job for everyone, and no, you can’t train everyone to do everything.”

He explains that because of I.Q. distributions, within our increasingly complex society, there “isn’t anything for 10% of the population to do.” He is referring in this instance to the cutoff point for joining the military, which is at an I.Q. of 83. iq_bell_curve.gif

There are not areas of the economy where such people cannot be sufficiently productive to earn $15/hour. It is a harsh reality, but it is a reality. Bernie Sanders seems to think that we can just shove everyone in a job and expect them to learn a skill, but people who are less productive would start out with a much lower wage than $15/hour in other sectors of the economy.

At the same time, Sanders’s plan would artificially boost industries that there is not necessarily demand for. As is the problem with all government production programs, the emphasis on infrastructure and education in the employment category leaves the potential for there to be overproduction in parts of the economy there is no demand for. The result would be a misallocation, and hence, and a waste of resources.

Keep in mind, all of his waste is coming out of the pockets of status quo American workers.

The fact of the matter, though, is that most of these consequences are long-term consequences, and the long-term is something the government rarely concerned with. Bernie Sanders especially.

To put it kindly, Bernie Sanders is not in his prime (assuming he ever had a “prime”). The Senator is 76 years old so he will not have to see the long-term consequences of any program he puts in place. Rather, he, like just about every politician, is primarily concerned with the short term. The short-term to them is the next election.

Politicians make moves to get themselves re-elected primarily. That is the number one goal, because without it other political goals are not going to happen. With this goal, though, comes a phenomenally high time preference. Politicians are incentivized to only look at the next election, so the lie, cheat, slander, and make promises they cannot keep.

Once they reach the age that Senator Sanders is at right now, it is a whole nother ball game. At his age, it is time to go for the big promises and ignore the long-term. Why would one look at the long-term when they will not live to see it.

Sanders has a jobs program that is good at heart; he wants to see the downtrodden reach new comforts. His method is not the proper method, though. Voters, especially young ones, need to be incredibly wary of older politicians making such grand promises.

Entrepreneurship is the best solution to our problems, not state intervention.

Featured image source.