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re: Our President tweets on Amazon

Posted on 3/30/18 at 9:28 am to
Posted by 90proofprofessional
Member since Mar 2004
24445 posts
Posted on 3/30/18 at 9:28 am to
quote:

You're going to have to walk me though this logic, because it sounds like something straight from a textbook that doesn't really relate to the real world.

Obviously the assumption is that taking away handouts would force the unemployed to find work or starve.

Not a problem, I like talking through intermediate theory. Hopefully this thread is still active and not a total abortion, as I'm just checking my post replies.

Yes, that was the framing we're working under here. You said they need 30k "to live" in this hypothetical.
quote:

This makes sense to an extent, though it does not account for those who are (or potentially are) skilled who would leave the minimum wage labor pool in search of higher paying jobs.

I do agree this would happen to a nontrivial portion of workers with the potential. But if they actually need that 30k to survive, the human capital investment they'd need to make would pretty much have to come out of their leisure time- not their earning time in the present. Note that even this response would not serve to decrease labor supply in the long run.

(We'd have some formerly-low productivity workers having moved up into higher-productivity, with some new low-prod workers moving up into the low-wage potential role the old ones were at before. If this were not true, the current MW wouldn't be binding to begin with.)
quote:

But if you continue that trend (of lowering take-home income) via taxation with those whose needs are more than met, then they will work less, right?

Yes, their leisure time would become relative more valuable than before, compared to the income they'd earn working. For those who are ABOVE the true "living wage" threshold, they'd be incented to work less.

But this is only relevant if they are above that point of making enough to survive. And we're supposed to be talking about those who are below what you're calling a "living wage", no?
quote:

So your theory requires that everyone's needs be met, and that requires a certain about of total income.

Yes, and the $15 living wage argument explicitly claims that we are well below this threshold.
quote:

If we reduce the total income by taking away entitlements, then it must be replaced by higher total wages, right?

And it would be incumbent on the earner alone to make that happen. Earlier you suggested three main ways to do this: increased hours they're willing to work, increased willingness to invest in their own training/education to earn more later, or willingness to earn illegally.

I agree with you there to an extent- I agree those would be the three main possible labor supply responses, but it sounded like you were implying one would increase while the others would decrease. I say that what we'd actually see is an increase in all three, leading to an unambiguous increase in labor supply in both the long and short term.
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