Nobrainer’s Think Tank

As you may already be aware, Chicago has recently passed legislation requiring “big box retailers” to pay a living wage. This evening, the alderman who proposed the legislation was a guest on Kudlow & Company. His argument, was that it is a societal imperative that anyone working 40 hours a week should be living above the poverty line–a common belief.

As you, my loyal readers have guessed, this legislation bothers me. It doesn’t only bother me in the general living-wage-argument way; the guy defending this legislation bothered me, too.

In the general way, nobody, no one, no way, never addresses the real situations at play here. Everyone operates on assumptions. For example, the proponents generally suggest that anyone not making less than the living wage is living in poverty. That wouldn’t be true if a worker has a spouse who earns $60,000/yr. A person in this situation benefits from the legislation for reasons other than those stated supported the new law. So how often does this happen? How many people who will get the new wage are actually living in poverty? How many are high school kids with affluent parents? How many of those affected aren’t even full time? Where is this data in the nightly news report?

But what gets me even more, is the alderman’s words. He suggests that it is unconscionable for companies to pay less than the living wage. So why, then, is his legislation so restrictive? The guy is extremely concerned… but only if the store fits his definition of big box retailer.

The guys in Chicago should spend less time playing politics and more time figuring how to get the Cubs to win the World Series.

Update: Of course the guys at Cafe Hayek are blogging about this as well. Russell Roberts is bothered by the NY Times’ coverage:

Ah, only some economists are worried. But many poverty experts are not. The implication is that the optimists outnumber the pessimists. There’s a comfort, don’t you think? The Times lets us hear from one of the optimists: [snip]

It’s awkward to have a person from a law school make a claim about the economic impact of the ordinance. So to reassure the reader, we are told that she has done economic studies. So she must know, I guess, of where she speaks.

No economists worried about the impact of the law are quoted.

Update 2: Don Boudreaux weighs in on minimum wages and the difficulty of truly measuring their effects. A portion of which I will extract here:

But while hiring fewer hours of work from low-skilled workers is indeed one possible employer response to a hike in the minimum wage, it’s not the only one. Another possible response is to extract more output per hour from each low-skilled employee — for example, by increasing employees’ work pace, by giving employees fewer breaks, or by being less-forgiving of employees who report to work late.

Rarely, if ever, will you hear a living-wage proponent suggest that proposed living-wage recipients should increase their productivity in proportion to their increase in pay. This makes sense though. If the amount of work to be done remains constant, higher productivity directly leads to fewer workers. But since most living-wage activists maintain that jobs won’t be lost, they can’t suggest productivity increases. They can suggest that the employers can afford to pay more. They want to mandate someone else’s level of charity. Isn’t that sweet of them.