The death of wages is sin

Federico gives a 6 point plan to cure youth unemployment. It is less complicated and revolutionary than his usual fare; he suggests policies like abolishing the minimum wage and slashing labor regulations. I expect it would work exactly as well as he thinks it would.

After all, minimum wage cuts the bottom out of the labor market. Everyone who would otherwise be working in jobs worth less than $7.25/hour suddenly becomes unemployed. This seems like a bad thing. People making $6/hour seems better than people not being employed at all, right?

Back when there were communists around, some of them would fight against minimum wage laws or occupational safety regulations. Their theory was that these would dull the pain just enough to make workers hate their bosses less and prevent revolution, but not enough to matter. The medical analogy would be a patient who comes in with bone pain, receives a painkiller that pushes the pain back below the threshold of “annoying enough to make me visit a doctor”, and never bothers seeking further medical treatment on what turns out to be bone cancer.

I admire the communists for their sheer Xanatosishness, but I don’t know how kindly historical hindsight has treated their strategy. On the one hand, they were dead right that better working conditions dampened interest in communist revolution. On the other hand, it seems relevant that a communist revolution would’ve been horrible, whereas a series of progressively stronger labor regulations actually achieved far more than the communists would have reasonably expected. So this sort of gambit seems potentially very risky.

But this is how I would question whether people making $6/hour or $3/hour or whatever is obviously better than their not being employed at all.

[Before you continue, read this Mother Jones article (h/t: commenter “Nestor”) to calibrate your notions of how bad jobs can be for the rest of the article.]

There are probably a lot of people whose labor just isn’t worth $7.25/hour. There are probably a lot of people whose labor just isn’t worth $3/hour.

As technology continues to advance, I expect the number of these people to increase. I have been accused of the Luddite fallacy for this and I accept the challenge that the historical data present. But there’s also this reductio ad absurdum where we can manufacture androids exactly as smart as humans in every way for $1. In this world, it seems obvious that all companies would buy androids (who work for free) and fire all their human workers, meaning an end to human employment.

So what’s the difference between the past, when technological advances have never caused long-term unemployment, and the android-world, where it does? My guess is that in the past, there have always been areas to shunt the displaced human workers to: maybe machines can manufacture cars, but they can’t drive taxis; maybe machines can sew textiles, but they can’t predict fashion trends. Technological employment will become a problem only when machines can do everything better than humans, which won’t be until after the Singularity, by which time we will have much bigger problems to worry about.

Except that’s not really true. There may come a time when machines can do most blue-collar jobs better than humans even if they haven’t mastered the white-collar ones yet. And shunting former blue-collar employees to white-collar jobs seems like a hard problem. I don’t even think the hard problem is IQ, I think it’s some sort of meta-education which is complicated enough that society hasn’t figured out how to train it yet. No doubt some blue-collar people will be able to adapt to white-collar jobs, and other people won’t. As tech level rises and we approach the android scenario, the number of people who can’t adapt gets larger and larger.

Suppose we do what Federico wants. We promote full unemployment. Well then, these growing masses of people aren’t going to be unemployed. They’re going to be underemployed at $3/hour or something like that.

The minimum wage is sometimes called “the living wage”, and there are both lots of sob stories about how it’s impossible to support yourself on the minimum wage, and lots of counter-sob-stories by people who claim it’s totally easy as long as you don’t blow it all on alcohol and expensive hookers. I don’t know enough to have a strong opinion but my guess is it could go either way depending on circumstance. But I am pretty sure $3/hour is not a living wage. $3/hour either necessitates you to work 20 hour days, or actively drains your income because having a job is expensive (commuting costs, professional clothing costs) but people refuse to give you charity if there are $3/hour jobs available and you haven’t taken them.

On the nationwide scale, which is less dystopian? One in which half the population is unemployed and living off government benefits? Or one in which half the population is working 20 hour days at $3/hour jobs like the ones in that Mother Jones article and still struggling to support themselves?

The former situation seems very likely to evolve into a Basic Income Guarantee, about which I have written before in a very similar context and which seem like a proper end state for the economy which may even be preferable to our current situation in many ways (and of course after a basic income guarantee is in place there’ll be a much stronger argument for eliminating labor regulations) But the latter situation seems like a disaster, and worse a stable disaster that no one has any incentive to make less disastrous.

This strikes me as the strongest argument for the minimum wage and other job-killing labor regulations: that they are turning otherwise-miserably-employed people into unemployed welfare recipients. “Too many people are unemployed and receiving welfare” seems more like a problem society will actually try to solve than “too many people are miserably employed”, and maybe the solution will actually do us some good.