The $24 An Hour Minimum Wage

I know every progressive committed to high marginal tax rates is convinced that under a progressive regime we will have super-sleuth tax auditors at the I.R.S. who will crack down on avoidance/evasion schemes, but we have never seen the required levels of diligence here or anywhere else. My expectation is that if we have very high levels of progressive taxation is that we won’t see the money, but we will see explosive growth of the tax shelter industry, another major source of inequality. (Hiding rich people’s money pays very well.)

This is why I want to change rules of corporate governance so CEOs cannot rip off the companies for which they work. (Their $20 million paychecks are not explained by returns to shareholders, which have been historically low for the last two decades.) If CEOs got $2-$3 million, and we saw corresponding pay cuts for other at the top of the pecking order, there would be much more money for everyone else.

In the same vein, the government can make patent and copyright monopolies shorter and weaker, and in some cases, like prescription drugs and medical equipment, not rely on them at all for financing research and development. This would reduce the money going to the top by several hundred billion dollars annually (2-4 percent of GDP).

We should also crackdown on the massive waste, and associated high salaries, in the financial sector. The place to start here is a financial transactions tax and cracking down on the abuses by private equity companies and hedge funds. And, we should subject our most highly paid professionals, in particular doctors and dentists, to the same sort of international competition that autoworkers and textile workers now face.

If we made these sorts of changes, we could realistically talk about a $24 an hour minimum wage in 2020. With an economy that was not structured so as to redistribute so much income upward, there is no reason that the minimum wage could not track economywide productivity.

And think of what a difference it would make if the lowest-paid worker, say a custodian or dishwasher in a restaurant earned $24 an hour, or $48,000 a year for a full-time full-year job. That comes to $96,000 a year for a two-earner couple.

If this is the floor, presumably someone working for 15 to 20 years can expect to earn at least 15 to 20 percent more, which would be putting them over $55,000 a year for a full-time job. In this world, we could really imagine that everyone had a comfortable and secure standard of living, especially if we had national health insurance (which would likely mean higher taxes on our low-wage earners) and free or low-cost child care.

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