National Review
AOC terrible minimum wage argument
“In Scandinavia, we don’t have poverty,” a Swedish economist once told Milton Friedman. “This is interesting, because among Scandinavians in America we also do not have poverty,” Friedman reportedly replied. I think about this interaction whenever I see progressive arguments about imaginary Scandinavian utopias, like this one from Alexandria Ocasio-Cortez: It is extremely embarrassing that “paying people enough to live” is a position that is still under debate. Replace the congressman and increase the salary. McD’s workers in Denmark are paid $ 22 / hour + 6 weeks paid vacation. $ 15 / hour is a deep commitment – a big one, considering entry into phase. – Alexandria Ocasio-Cortez (@AOC) March 3, 2021 The most obvious problem with Ocasio-Cortez’s claim is that Denmark, like other Scandinavian nations, does not have a legal minimum wage. Industries and workers engage in sector-to-sector wage negotiations, which may well undermine intra-sector competition, but which is a much better idea than the fixed national wage floor sold by Democrats. So this popular, progressive view of Denmark’s miraculous middle-class fast-food worker doesn’t make much sense to begin with. Especially when you consider that the median per capita income in the United States is virtually the same as in Denmark – a feat, given that we are a pluralistic nation of about 330 million people that naturalizes another 900,000 people each year, many of them poor and that Denmark is a homogeneous country with less than 6 million citizens that, in recent years, has effectively closed its borders to poor immigrants. Denmark’s generous welfare state is underpinned by shared social and cultural norms and institutions that are usually insulted by American progressives: unimpeded international trade, low regulatory burdens on business and, sometimes, oil and gas controls – Denmark and Norway is Western Europe’s largest oil producer and gas producer. (In that sense, I have a book that will come out later this year unmasking many of the left-wing mythologies about European supremacy.) Then there is the question of how much exactly $ 45,000 – the salary of an employee who earns $ 22 an hour full time base would earn – means in each country. Denmark can pay for its system because high taxes are paid by all its citizens, not just the rich. Danish fast-food employees who earn $ 45,000 not only hand over about half of their earnings to the government, but also pay a 25% value-added tax on most purchases, as well as a number of other fees. In return, the Danes receive all kinds of services provided by the government. Presumably, Ocasio-Cortez approves that agreement. In any case, Americans whose eyes shine with the prospect of earning $ 22 an hour must know that nearly $ 11 of that goes straight to the state. Also, how much does a hamburger cost in Denmark? Spoiler: considerably more. If the federal government forced fast food chains to start paying employees $ 22 an hour, and giving them six weeks of paid vacation, health care and all the other benefits that progressives want to compel companies to offer , American consumers must be prepared to pay more for food or to be served by robots. The last time there was pressure for a $ 15 minimum wage in 2015-2016, McDonald’s quickly launched a renovation of the touchscreen self-service kiosk. Since then, this technology has only gotten better – and cheaper. The big chains like to offer a rhetoric that appeals to the activist left, but in the end, they are not charities, but deals with interested parties. And profits are important. Now, I understand that the socialists would be happy to create a permanent proletariat that depends on the government to fix their wages and dictate all the benefits. And there is certainly nothing degrading about taking a job at a fast-food restaurant. For many young people, it is a temporary stop where they can take responsibility for the first time and earn some money. For others who need these jobs, it offers flexible hours and part-time work. Most people do not build a career by working at Wendy’s. Fast food chains have massive employee turnover rates. Some experience a 100% turnover each year. The other day, Ocasio-Cortez, argued that, “[w]When we keep the minimum wage artificially low, this has a huge cost for our government. . . they are essentially huge subsidies for Walmart. ”The notion that Ocasio-Cortez is concerned about government subsidies is, of course, laughable. But she is also wrong. Walmart, which revolutionized shopping by offering millions of cheap low-income American products (progressives never mention that part of the equation), recently raised its domestic minimum wage to $ 13- $ 19 an hour for most workers, while Amazon, Target and Costco increased their minimum wage to $ 15 an hour. this is a good idea? We’ll see. As Thomas Sowell once vigorously observed, all public policies are about compensation. The increases will help some workers, no doubt. But they will also cost jobs, either by leading to fewer general hires or by forcing consumers to pay “artificially” high prices, rather than spending the difference elsewhere. The Ocasio-Cortez rhetoric implies that there is something artificial at a minimum wage of $ 7.25 an hour, but nothing artificial at a minimum wage of $ 15. This is ridiculous. The only non-artificial minimum wage is zero – which, incidentally, is what 1.4 million people the CBO says would lose their jobs due to a $ 15 national minimum wage would earn if the AOC side of the argument won.