Of course, we can’t just lower the minimum wage for the long-term unemployed to $4 an hour and leave it at that. Society must have as a goal that no one who works full time and heads a household lives in poverty. This policy would have to be paired with an expanded earned-income tax credit, or with more straightforward wage subsidies -- federal transfer programs that supplement a worker’s labor market earnings with tax dollars.Wal-Mart couldn't have said it better: Let the taxpayers pay our workers, since we won't. Strayton also worries about the (possibly) undesirable consequences of paying Americans Third World wages. Not that that would be bad for the workers, but what about the poor employers?:
How would such a program operate? At the government level, with as little red-tape as possible, although government must protect current workers by guaranteeing they will not be subject to any wage lower than the one they now earn. At the employer level, hiring $5-per-hour personnel must be balanced against the risk inherent in the often-inexperienced people such a wage attracts. As an incentive, the IRS can allow a 50% tax deduction on all wages paid at the $5 level during a test period. Facing workforce mobility issues (prospective employees without cars, bikes or gas money), employers can offer transportation, water, food and necessary material services for which they may also claim tax deductions.I hear West Virginia has some otherwise unsalable water that benevolent employers could foist off on their Ricardian hires as "drinking water" and get a tax break at the same time. Woo! Woo! Win, win. He writes, without evident irony, that "government must protect current workers." From whom, he is discreetly silent. Don't ask, don't tell.