[wahern]

> If anything, there’s plenty of literature showing that social programs and tax exemptions on the poor make underpaying them possible to begin with.

That literature is playing fast & loose with terminology to justify a preexisting conclusion.

Anyhow, we know what life was like before Great Society programs, and it wasn't higher wages for the poor, we've just forgotten because it's been so successful. That memory hole oddly works in favor of both those who promote expanding welfare and those who oppose it.

> Walmart couldn’t pay $12/hr. if tax exemptions and SNAP and other aid didn’t fill the gap.

From a basic macro economic standpoint, most welfare programs push wages up by marginally reducing the labor pool. In a free market, how would Walmart be forced to pay a "livable wage" if entitlements didn't exist? Do you really think people would just choose not to work and starve if their wages didn't cover all their expenses? Out of spite? It doesn't make sense, and it certainly doesn't comport with history. It makes even less sense when people buy this argument yet also support minimum wage laws.

The counterexample is the Earned Income Tax Credit (EITC). EITC increases as your wages increase, theoretically incentivizing work, rather than diminishing as you earn more. This would increase labor supply. What tends to happen to prices (i.e. wages--price of labor) when supply increases but not demand? Presumably the more cogent literature bemoaning Walmart's labor practices is primarily relying on EITC while hoping the reader glosses over the distinction.

[AnthonyMouse]

> Anyhow, we know what life was like before Great Society programs, and it wasn't higher wages for the poor, we've just forgotten because it's been so successful.

That doesn't tell you the answer because the programs were instituted prior to the productivity increases in the 20th century. Are people better off now than they were before the general availability of electric light or mechanized transportation? Probably, but that doesn't mean you can trace the development of modern agriculture to the existence of SNAP.

> In a free market, how would Walmart be forced to pay a "livable wage" if entitlements didn't exist?

People frequently have choices between jobs that are easier or otherwise more pleasant and jobs that pay more. For example, long-haul truck drivers get paid significantly more than short-haul drivers, but they also sleep in their trucks and don't get to see their families most nights. Likewise, a lot of jobs require you to get a degree or certification, which can be a lot of work, which people may not be willing to do if they don't need to.

If you give them "benefits" then they take the easier job over the better paying one. Which allows the employer offering the easier job to pay less and still get applicants. It also creates a poverty trap if the benefits are contingent on not making more money, because then the compensation advantage of the higher-paying job is much smaller -- in some cases negative.

> EITC increases as your wages increase, theoretically incentivizing work, rather than diminishing as you earn more.

Except that it does diminish as you earn more, because it has an aggressive phase out. For a single person with no dependents, the phase out kicks in below federal minimum wage. If you had a minimum wage job at 30 hours a week and wanted to work 40 hours, increasing your hours would cause you to receive a smaller EITC.

There is a reason the EITC represents ~0.1% of the federal budget, and it's not because it's a bad idea, it's because it's implemented in a way that prevents people from getting much from it.

[wahern]

> People frequently have choices between jobs that are easier or otherwise more pleasant and jobs that pay more. For example, long-haul truck drivers get paid significantly more than short-haul drivers, but they also sleep in their trucks and don't get to see their families most nights. Likewise, a lot of jobs require you to get a degree or certification, which can be a lot of work, which people may not be willing to do if they don't need to.

That's a slight of hand. There's value in choice, and that value is being reaped by the worker precisely because poverty programs make it possible.

But let's go with that example. You're assuming the number of truckers and trucker-hours would remain constant. But they wouldn't. That's just not how dynamic systems work. There are other people for whom short-haul trucking is the less desirable choice than what they're doing now, or who work fewer hours than they're doing now. Without the welfare subsidies, the supply of short-haul trucking labor would likely increase--more people working more hours. Similarly, you're assuming the demand for short-haul trucking would remain the same at higher wages. But demand in economics is not the same thing as "I would like" or even "I need", and at higher wages the demand would likely diminish.

The whole argument is the economics equivalent of a perpetual motion machine, and it's sold by throwing contrived complexity at people and hoping they don't think it through. Like perpetual motion or free energy machines, at the most miniscule scale there are exceptions and caveats (maybe short-haul wages in particular would rise, especially after accounting for the totality of labor economy changes), but those exceptions don't scale to a systems level. That doesn't stop con artists from selling their Rube Goldberg machines, though, knowing the vast majority of people won't think it through.

What the rhetoric is trying to do is bolster support for a livable wage through radical policy changes by drumming up anti-corporate sentiment. It's in service of a normative argument (a "livable wage" is a reasonable social ask, IMO, notwithstanding its amorphous nature), but disguised as a scientific argument that can only result in failure by setting wrong expectations about how markets and policy operate, ultimately reinforcing cynicism.

[AnthonyMouse]

> There's value in choice, and that value is being reaped by the worker precisely because of poverty programs make it possible.

It seems like you're ignoring the same thing you're objecting to: It's a dynamic system.

If long-haul trucking companies offer less desirable but higher paying jobs and easier jobs aren't paying a living wage then people would pick the harder job that lets them not starve. Which means the easier jobs would have to pay more in order to attract workers, unless those workers can get government assistance. If they can, the easier jobs can get people to work without paying more, because the assistance programs let them pick the easier job even at lower pay. In other words, the subsidies were supposed to go to the poor and instead they went to the lower-paying employers.

In a dynamic system the long-haul companies would then have to respond if it became more desirable to work somewhere the pay is low enough to get government assistance, but the phase outs give the low-paying employers another advantage.

Say the undesirability of the job is good for $15k/year in additional compensation. However, if you got paid $15k more, you'd lose $10k to government benefit phase outs and additional taxes. To actually get paid $15k more, you'd have to "get paid" $45k more. Which is to say, the employer with the low-paying job can pay you $45k less.

But it's a dynamic system, so they might "only" pay you $35k less and then hire more people. The trucking companies would then have to pay $45k more than them when it used to be $15k. Even with Walmart paying less than before, their relative advantage has increased. And there are two ways to get something a long distance over land: A long-haul truck the whole way, or a short-haul truck to the rail yard, a freight train, and then another short-haul truck. So then instead of a truck driver getting higher pay per mile over 2000 miles of driving, a different one gets lower pay per mile over 60 miles of driving twice, and a rail company gets the rest.

So the low-wage subsidies cause the amount of higher-wage labor demand to go down by making it less competitive with non-labor alternatives to perform the same function, as labor is diverted to the lower-paying jobs even while enabling them to pay even less.

> There are other people for whom short-haul trucking is the less desirable choice than what they're doing now, or who work fewer hours than they're doing now.

All of that is already baked in to the existing numbers; the long-haul drivers get paid more because fewer people want to do it.

> Like perpetual motion or free energy machines, at the most miniscule scale there are exceptions and caveats, but those exceptions don't scale to a systems level.

Only they're not exceptions. If you subsidize something you get more of it. What happens if you subsidize low-paying jobs but not higher-paying jobs?