Yesterday, I discussed Robert Reich’s plan to raise minimum wage. This video is part of a series he’s putting on with MoveOn.org to promote “10 Ideas to Save the Economy.” So, raising wages is one of his 10 ideas. Another one of his 10, interestingly enough, is to lower wages.
Reich argues for, among other things, universal childcare and mandatory PTO, the costs of both of which will be borne by employers and taxpayers.
All employees, whether they are salaries or hourly, a CEO or a janitor, receive a compensation package. That package is some combination of wages and benefits. That compensation package is also related to the productivity of a worker. If certain benefits are mandatory, such as universal childcare and PTO, and such costs are to be borne by employers (even if its just partially), then the cost of such would necessarily have to come in the form of reduced wages.
Now, I have no doubt in my mind that Reich doesn’t intend this to be the consequences of his plan, but economics teaches us to look beyond the intended and see the unintended.
HT: Tim Worstall