One of the problems of working is that I often I miss interesting posts and comments on Ricochet. One of them was @katebraestrup’s Free Money! No Strings Attached from April which discussed the guaranteed basic income as an alternative to the welfare state. I’ve been thinking about welfare reform — specifically, about the new pushes for minimum wage — but wonder if there isn’t an approach that might be more in-keeping with conservative views. Mind you, everything that follows I’ve phrased in relative terms; I’m offering what I hope is a least-worst alternative, not an ideal one. So, let’s begin with what I regard as the inherent dishonesty of the minimum wage:

1. It presupposes that any occupation, if plied for eight hours a day (why not six or ten) provides social value equal to a living wage.
2. Since the costs of the minimum wage are generally passed onto consumers, it represents a hidden tax on those buying goods and services from companies hire minimum wage employees.
3. Companies subject to minimum wage requirements often compete with foreign competitors who are, of course, not subject to our laws. This makes the minimum wage an internal tariff on domestic labor.
4. The minimum wage also acts as a tariff on labor as compared to automation. Thus, apart from the supply/demand effects (higher price lowers demand, i.e., jobs), an increase in the minimum wage increases the incentive to automate jobs.
5. It provides an incentive to hirer illegal immigrants.

But real and harmful as these effects are on workers and consumers, this overlooks the harm minimum wage laws cause employers. First, the laws imply that employers are too tight-fisted to treat their employees fairly without government intervention. Second, it imposes all the burdens of implementing a minimum wage on the employer (whether to raise prices, whose job to eliminate, cajoling supervisors and middle managers to stay on without a raise to help absorb the wage increase, etc.).

So, instead of setting a wage floor, what if we subsidize job creation? To keep numbers very simple, if the employer pays $12.50 an hour ($500 a week), he or she receives a tax credit of $10 an hour. Cost-wise, this is a comparable to Kate’s suggestion of paying $20,000/year to everyone, except: (a) Nobody gets paid without working and (b) The work has to produce a value of at least $2.50 an hour plus the employer’s overhead and ROI.