Thursday, January 30, 2014

Not a Guaranteed Income, But Income Guaranteed to Cover Certain Costs

A comment I made on an Atlantic Cities article:
A minimum wage indexed to (a) local CoL and (b) inflation would (should) yield a minimum wage with equivalent local buying power, which I would argue constitutes the key "equal protection" here.

That is to say: a standard minimum wage of $10/hr buys a lot more in Alabama than California. But an indexed minimum wage should be designed such that the same amount of work-hours would be needed to buy, for example, a month of rent in Alabama as in California (and furthermore, that the amount of work-hours needed to buy a month of rent in either would be the same at any given time). That would be the equal protection a minimum wage provides.

One way of implementing this idea would be for the federal government to not set any minimum wage, but rather set a standard buying power for a minimum wage. States would have a legal obligation (mandate) so set a minimum wage equivalent to this buying power; other entities (like cities, counties, and municipalities) can augment this as they see fit, based on local buying power.
 A few comments:
  1. This standard buying power would be an assertion of certain economic rights extended to all Americans. (At a certain level, this is actually a stronger assertion than a basic income, as the latter only states you have the right to make x, whereas the former states you have the right to make enough to cover the cost of x. This harks to the x-f(x) distinction in Taleb's work; it is easier to find f(x) in a system defined {x|f(x)} than x itself--that is, in very complex systems, it is often easier to to isolate a function of a variable than the variable itself. Combine this with a couple of other provisions and you have the framework for a guaranteed minimum income.) 
  2. Such economic rights could be informally stated as:
    1. The right to shelter
    2. The right to transportation
    3. The right to healthcare
    4. The right to adequate nutrition
    5. The right to adequate clothing
    6. The right to save
  3. A better formalization for (2) would be that the minimum wage standard would be such that a person making the minimum wage would be guaranteed to make enough to cover:
    1. one month's studio apartment rent + basic utilities*;
    2. one monthly bus pass**;
    3. one month of health insurance;
    4. 60,000-90,000 Calories/month***;
    5. 1/36 the cost of a standard 10-day wardrobe, monthly^;
    6. Σ(i=1, n=5)a(i), that is, the summation of the other costs^^.
  4. The state's responsibility, then, would be to index these requirements to prevailing local costs. Once those costs are ascertained, the minimum hourly wage becomes 1/160 this cost^^^. Cost-indexing it also has the nice side effect of inflation-indexing it; the state's cost index would be required to be updated annually; a state found to be using a cost index more than three years out of date would be subject to the withholding of federal funds (and class-action suits).
  5. These economic guarantees also allow for a shrinkage in the welfare-state bureaucracy, as the 90k Cal/mth guaranteed obviates the need for food stamps for any employed person, and the health insurance purchase guarantee likewise obviates the need for Medicaid for any employed person. These two programs, in particular, form one of the most insidious forms of corporate welfare: corporations paying workers below the CoL, thereby forcing them into public programs to make up for the shortfall, such that the financial benefits from such programs accrues from the government to corporations. (The housing guarantee likewise obviates the need for public housing.)
  6. These guarantees are extended on the condition of employment (as is implied by their structure as a minimum wage cost index). To have truly universal economic freedoms, however, one needs to find some way of extending certain of these guarantees to the unemployed. This, then becomes the next challenge.
*Gas, water, electric, (mobile, not home) phone, Internet. Yes, this implies a right to Internet access. I think it's essential for doing much of anything nowadays, don't you?
**Why? Well, (a) regardless of what zoning enforces, at this level of income, car ownership is a very expensive luxury, and we don't want to encode low cost/benefit ratio things (like car ownership giving access to jobs), and (b) our nation's bike system and bike culture are not yet developed to the point where universal bike access would be a fair formal statement of the right to transportation.
***60k Cal = 2k Cal/day * 30 days; 90k Cal = 3k Cal/day * 30 days; that is, the daily caloric intake generally needed to maintain weight for women and (slightly greater than) men, respectively.
^TBH, I have no idea how to calculate this cost, although what I have in mind is the cost of completely replacing a "professional" wardrobe, at outlet prices, every three years--hence 1/3 the cost/year, 1/12 that cost/month, 1/3*1/12=1/36.
^^Based on the budgeting principle that half of one's income should go to the aforementioned outlays; that is, the minimum wage should be tailored to the lowest feasible rate which one can keep a balanced budget.
^^^The costs being computed monthly: four weeks in a month, so 1/4 the cost weekly; 40 hours in a full-time workweek, so 1/40 the weekly cost hourly; 1/4*1/40=1/160, i.e. one works 90 hrs/mth to make ends meet, and 160 hrs/mth to make a living wage.

No comments:

Post a Comment