Minor Thoughts from me to you

Minimum Wage Hurts the Marginal Employees the Most

The minimum wage isn't bad because it hurts employers. It's bad because it hurts employees.

Armed and Dangerous » Blog Archive » Marginal Devolution

What these guys have in common is that they're only marginally employable. What borderline mental illness has done to one, mediocre skills and the unintended consequences of anti-discrimination laws have done to the other. As long as I've known both (and that would actually be most of my years, for both of them), they've worked dead-end jobs and put their passion into science fiction and wargaming. They're decent, honest, unambitious men who have never wanted anything but steady work, a normal life, and a hobby or two. They're not stupid and they have respectable work habits; in fact they're probably more conscientious and safe than average. Now they don't quite fit; too old, too geeky, too male, too quiet. The job market has discarded one and the other is hanging by a thread.

When I look at these guys, though, I can't buy the explanation most people would jump for, which is that they simply fell behind in an increasingly skill-intensive job market. Thing is, they're not uneducated; they're not the stranded fruit-picker or construction worker that narrative would fit. Nor does offshoring explain what's happened to these guys, because their jobs were the relatively hard-to-export kind.

No. What I think is: These are the people who go to the wall when the cost of employing someone gets too high. We've spent the last seventy years increasing the hidden overhead and downside risks associated with hiring a worker -- which meant the minimum revenue-per-employee threshold below which hiring doesn't make sense has crept up and up and up, gradually. This effect was partly masked by credit and asset bubbles, but those have now popped. Increasingly it's not just the classic hard-core unemployables (alcoholics, criminal deviants, crazies) that can't pull enough weight to justify a paycheck; it's the marginal ones, the mediocre, and the mildly dysfunctional.

Again, the minimum wage isn't bad because it hurts employers. It's bad because it hurts employees. It makes employees more expensive to hire, more expensive to take a risk on, and easier to fire. As soon as someone costs more in salary, benefits, and regulatory costs than they generate in revenue, they become a liability. And few businesses can afford to keep such employees just for the thrill of being charitable.

(Obamacare delenda est)