Wednesday, November 20, 2013

How would a tax on employment help workers?

I was asked to comment on this tweet from Michael Pollan and the study he references:

Michael Pollan (@michaelpollan)
Taxpayers pay $1.2 billion in public assistance to make up for MacDonald's lousy pay and benefits. Fascinaing [sic] study.

The "study" from the National Employment Law Project (NELP) basically makes this argument:

  • Many employees in the fast-food industry are also on some kind of public assistance.
  • The fast-food firms are profitable.
  • Therefore, the firms are costing the taxpayers for the amount of public assistance their employees consume. 

My review: In a word, that "study" is stupid. Totally nonsensical. It is so absurd it is closer to a parody than an actual public policy argument. Would we rather the employees not have jobs? That is the alternative. Not above market wages. Does NELP or Pollan have an argument that these employees are paid below market wages? If so, it is not in this report. CEO and top-executive pay should be disconnected from other employees' pay. An economy that would base employee pay on CEO pay would be a poor economy with lots of unemployment or very low wages. Likewise, an economy without profit flowing to owners is an economy without profit.

Thinking more about it I realize that what Pollan and NELP are essentially advocating is a tax on employment to be paid by the employers. Rather than have society in general pay for benefits we presumably want to provide for those in need, the businesses who employ them and lighten the load should shoulder the entire burden. Not only does this proposal fail an economics test; it fails a fairness test as well. 

I guess Hammer was right. It takes wages to make wage slaves.

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