WEBVTT 00:00:00.000 --> 00:00:03.020 Welcome to the Deep Dive. If you've followed, 00:00:03.120 --> 00:00:05.960 well, any policy debate in the last decade, you've 00:00:05.960 --> 00:00:07.960 probably heard two terms thrown around that sound 00:00:07.960 --> 00:00:11.220 almost the same. Minimum wage and living wage. 00:00:11.380 --> 00:00:13.900 They get used so interchangeably. And it's frustrating 00:00:13.900 --> 00:00:15.800 because they're used to talk about a floor on 00:00:15.800 --> 00:00:20.019 pay. But the philosophical, historical and economic 00:00:20.019 --> 00:00:22.300 evidence we've gathered shows they are built 00:00:22.300 --> 00:00:24.539 on fundamentally different, often conflicting. 00:00:25.359 --> 00:00:28.019 And that's the core confusion we're really here 00:00:28.019 --> 00:00:30.079 to cut through today. Our source material for 00:00:30.079 --> 00:00:32.359 this is incredibly rich. I mean, it provides 00:00:32.359 --> 00:00:35.679 comprehensive definitions and historical context 00:00:35.679 --> 00:00:37.899 stretching all the way back to ancient Greece. 00:00:38.140 --> 00:00:40.140 Oh, it's amazing. It is. And then it goes into 00:00:40.140 --> 00:00:42.820 contemporary philosophical justifications, global 00:00:42.820 --> 00:00:45.960 examples, and maybe most importantly, the core 00:00:45.960 --> 00:00:48.079 arguments driving the really intense economic 00:00:48.079 --> 00:00:50.719 debate today, including, you know, these competing 00:00:50.719 --> 00:00:53.100 quantitative models. So our mission is pretty 00:00:53.100 --> 00:00:56.200 straightforward. Cut to being truly well informed 00:00:56.200 --> 00:00:59.020 on this. We want to precisely delineate the difference 00:00:59.020 --> 00:01:01.479 between these two ideas, the moral aspiration 00:01:01.479 --> 00:01:04.180 versus the legal price floor, and then analyze 00:01:04.180 --> 00:01:07.599 that intensely contradictory economic evidence 00:01:07.599 --> 00:01:10.280 on their real world impact. So you walk away 00:01:10.280 --> 00:01:13.540 understanding the costs, the benefits and the 00:01:13.540 --> 00:01:15.700 deep underlying political tensions surrounding 00:01:15.700 --> 00:01:18.219 each approach. OK, so let's start with the standard 00:01:18.219 --> 00:01:20.640 that is fundamentally a moral and needs based 00:01:20.640 --> 00:01:24.079 concept. The living wage. Right. The core definition 00:01:24.079 --> 00:01:27.079 of a living wage is based on human need, not 00:01:27.079 --> 00:01:30.280 not on market forces. It's the minimum income 00:01:30.280 --> 00:01:33.159 necessary for a worker to meet their basic needs. 00:01:33.340 --> 00:01:35.519 And basic needs is a really important phrase 00:01:35.519 --> 00:01:37.920 here because it's defined quite broadly, isn't 00:01:37.920 --> 00:01:40.159 it? It is. It's explicitly defined to include 00:01:40.159 --> 00:01:42.620 things like food, of course, but also adequate 00:01:42.620 --> 00:01:45.560 housing, clothing and other essential necessities 00:01:45.560 --> 00:01:48.400 like utilities, transport and very often child 00:01:48.400 --> 00:01:51.010 care. The crucial element here is the goal of 00:01:51.010 --> 00:01:53.609 that income. It's not just about a biological 00:01:53.609 --> 00:01:55.609 minimum to survive, which is what we used to 00:01:55.609 --> 00:01:58.930 call subsistence wage. It sounds like the living 00:01:58.930 --> 00:02:01.109 wage is aiming for something much higher and, 00:02:01.109 --> 00:02:04.290 well, more holistic. It is. The goal is explicitly 00:02:04.290 --> 00:02:07.750 to allow a worker to afford a basic but decent 00:02:07.750 --> 00:02:10.189 standard of living just through their employment. 00:02:10.389 --> 00:02:12.550 So without having to rely on government help. 00:02:12.860 --> 00:02:14.979 Exactly. Without having to rely on government 00:02:14.979 --> 00:02:17.699 subsidies for day -to -day survival. It's about 00:02:17.699 --> 00:02:20.960 dignity and self -sufficiency, which automatically 00:02:20.960 --> 00:02:23.199 makes it higher than a mere subsistence wage, 00:02:23.479 --> 00:02:26.240 which, as you said, only accounts for the biological 00:02:26.240 --> 00:02:29.199 minimum required to keep you going. That concept 00:02:29.199 --> 00:02:31.740 also connects back to that historical idea of 00:02:31.740 --> 00:02:35.240 the family wage, the idea that one worker's income 00:02:35.240 --> 00:02:38.280 should be enough to support not just themselves, 00:02:38.379 --> 00:02:41.870 but also to raise a family. Yes, though many 00:02:41.870 --> 00:02:44.409 modern living wage calculations, they tend to 00:02:44.409 --> 00:02:46.530 start with the needs of a single adult and then 00:02:46.530 --> 00:02:48.229 they scale it up for different family types. 00:02:48.330 --> 00:02:51.229 And that adaptability, or you could call it calculation 00:02:51.229 --> 00:02:53.889 flexibility, is where all the complexity and 00:02:53.889 --> 00:02:56.810 frankly, the massive local variation comes from. 00:02:56.930 --> 00:02:59.889 The definition of needs is flexible because the 00:02:59.889 --> 00:03:02.469 cost of those needs vary so much by location 00:03:02.469 --> 00:03:05.370 and household type. A decent standard of living 00:03:05.370 --> 00:03:08.389 in, say, Manhattan looks fundamentally different 00:03:08.389 --> 00:03:10.810 from one in rural Alabama. Completely different. 00:03:11.229 --> 00:03:13.490 To understand this, let's look at how different 00:03:13.490 --> 00:03:16.409 groups actually calculate it. It's not just economists 00:03:16.409 --> 00:03:18.650 with spreadsheets. It's often based on these 00:03:18.650 --> 00:03:21.729 really detailed baskets of goods and services. 00:03:22.009 --> 00:03:24.719 A literal shopping list for a decent life. Pretty 00:03:24.719 --> 00:03:26.539 much. For example, in the United Kingdom and 00:03:26.539 --> 00:03:28.759 New Zealand, advocates define the living wage 00:03:28.759 --> 00:03:31.759 very holistically. It means a person working 00:03:31.759 --> 00:03:34.659 a standard 40 -hour week with no other income 00:03:34.659 --> 00:03:37.500 should be able to afford the full package necessary 00:03:37.500 --> 00:03:40.919 for a modest but decent life. And that package 00:03:40.919 --> 00:03:43.539 includes what? Well, that bundle has defined 00:03:43.539 --> 00:03:46.259 allowances for housing, utilities, transport, 00:03:46.560 --> 00:03:49.060 basic health care, and crucially, child care. 00:03:49.469 --> 00:03:51.610 They aren't just calculating the cost of one 00:03:51.610 --> 00:03:53.870 bedroom rental. They're trying to model a real 00:03:53.870 --> 00:03:55.509 life. And then you have a completely different 00:03:55.509 --> 00:03:57.289 method, like the one used by the Greater London 00:03:57.289 --> 00:03:59.930 Authority, the GLA, which links the required 00:03:59.930 --> 00:04:02.710 wage directly to the prosperity of the community 00:04:02.710 --> 00:04:05.490 it serves. Yes. The GLA calculation is fascinating 00:04:05.490 --> 00:04:07.810 because it doesn't just look at expenses. It 00:04:07.810 --> 00:04:10.330 benchmarks against general income levels. They 00:04:10.330 --> 00:04:13.050 calculate the threshold wage as an income equivalent 00:04:13.050 --> 00:04:15.509 to 60 percent of the median income in London. 00:04:15.930 --> 00:04:17.990 Okay, so it's relative. It's relative. And then, 00:04:18.009 --> 00:04:19.670 because they recognize that life isn't always 00:04:19.670 --> 00:04:22.829 predictable, they add an extra 15 % allowance 00:04:22.829 --> 00:04:25.449 on top of that for unforeseen events or emergencies. 00:04:25.889 --> 00:04:28.569 A little cushion. A cushion. This method makes 00:04:28.569 --> 00:04:31.310 sure that the living wage tracks overall societal 00:04:31.310 --> 00:04:34.389 prosperity, at least somewhat, rather than just 00:04:34.389 --> 00:04:37.889 inflation on, you know, bread and fuel. If London 00:04:37.889 --> 00:04:40.410 gets wealthier, the calculated living wage rises, 00:04:40.509 --> 00:04:42.730 so the working poor don't get completely left 00:04:42.730 --> 00:04:45.310 behind the average standard of living. To really 00:04:45.310 --> 00:04:48.029 drive home just how much local variation there 00:04:48.029 --> 00:04:50.810 is in the United States, we have to look at the 00:04:50.810 --> 00:04:54.050 striking estimates from groups like the National 00:04:54.050 --> 00:04:56.089 Low Income Housing Coalition. Their approach 00:04:56.089 --> 00:04:59.509 is so powerful. It really is. They tried to calculate 00:04:59.509 --> 00:05:02.089 the necessary wage purely through the lens of 00:05:02.089 --> 00:05:04.769 housing affordability, using that basic rule 00:05:04.769 --> 00:05:06.850 of thumb that no one should have to spend more 00:05:06.850 --> 00:05:09.389 than 30 percent of their income on housing. And 00:05:09.389 --> 00:05:11.910 the results, the resulting disparities are just 00:05:11.910 --> 00:05:14.620 incredible. I mean, they're often shocking. In 00:05:14.620 --> 00:05:17.980 2019, based on that 30 % rule for a fair market 00:05:17.980 --> 00:05:21.019 two -bedroom apartment, the necessary full -time 00:05:21.019 --> 00:05:24.160 hourly wage ranged from a staggering high of 00:05:24.160 --> 00:05:29.180 $36 .82 per hour in Hawaii. Wait, $36 an hour? 00:05:29.399 --> 00:05:32.839 $36 .82. That's nearly $76 ,000 a year just to 00:05:32.839 --> 00:05:34.600 afford a decent two -bedroom apartment without 00:05:34.600 --> 00:05:37.379 being house poor? I mean, that single number 00:05:37.379 --> 00:05:39.879 tells the whole story of the housing crisis in 00:05:39.879 --> 00:05:42.600 high -cost areas. Better than any chart. It absolutely 00:05:42.600 --> 00:05:45.000 does. And the absolute lowest state they calculated 00:05:45.000 --> 00:05:49.379 was Arkansas at $14 .26 per hour, still double 00:05:49.379 --> 00:05:51.439 the federal minimum wage. And these numbers are 00:05:51.439 --> 00:05:53.879 just so starkly different from the minimum wage 00:05:53.879 --> 00:05:56.519 in those same areas. Well, exactly. The MIT Living 00:05:56.519 --> 00:05:58.759 Wage Calculator uses a similar expense -based 00:05:58.759 --> 00:06:01.279 approach, and it produces a U .S. heat map showing 00:06:01.279 --> 00:06:03.300 that even for a single adult with no children, 00:06:03.459 --> 00:06:05.920 the estimated living wage ranges from $15 to 00:06:05.920 --> 00:06:08.240 over $20 per hour across most of the country. 00:06:08.439 --> 00:06:11.939 So it confirms that $7 .25. is just, it's not 00:06:11.939 --> 00:06:14.060 a living wage anywhere, really. Not in almost 00:06:14.060 --> 00:06:16.600 any urban or suburban environment, no. Okay, 00:06:16.639 --> 00:06:20.860 so if the living wage is this highly variable 00:06:20.860 --> 00:06:24.220 needs -based goal, a measure of dignity, then 00:06:24.220 --> 00:06:26.180 the minimum wage is something else entirely. 00:06:26.279 --> 00:06:30.079 It's a legal boundary. Precisely. The core definition 00:06:30.079 --> 00:06:33.040 of the minimum wage is just the lowest remuneration 00:06:33.040 --> 00:06:35.379 that employers can legally pay their employees. 00:06:36.250 --> 00:06:39.449 It's a statutory wage, a legal price floor for 00:06:39.449 --> 00:06:43.050 labor, enforceable by law. Simple as that. And 00:06:43.050 --> 00:06:45.329 the key distinction, which is what causes all 00:06:45.329 --> 00:06:47.569 the policy conflict, is that the minimum wage 00:06:47.569 --> 00:06:51.129 can and often does fail to meet the requirements 00:06:51.129 --> 00:06:54.329 for that basic, decent quality of life. And that 00:06:54.329 --> 00:06:56.540 failure is a policy choice, isn't it? It is the 00:06:56.540 --> 00:06:58.699 central conflict in the modern debate. When the 00:06:58.699 --> 00:07:00.759 legal minimum wage falls short of a living wage, 00:07:01.040 --> 00:07:03.279 it means that worker cannot meet their essential 00:07:03.279 --> 00:07:05.860 needs through employment alone. Which forces 00:07:05.860 --> 00:07:08.100 them onto government programs. Exactly. Forcing 00:07:08.100 --> 00:07:10.259 them to rely on government programs for supplementary 00:07:10.259 --> 00:07:12.720 income. This is the heart of that welfare subsidy 00:07:12.720 --> 00:07:15.259 argument we'll get into later. Economically speaking, 00:07:15.459 --> 00:07:17.360 the minimum wage is a legal threshold, a non 00:07:17.360 --> 00:07:19.660 -negotiable floor, while the living wage serves 00:07:19.660 --> 00:07:21.920 as a guideline or a moral target for where that 00:07:21.920 --> 00:07:24.300 floor ought to be. That difference becomes just 00:07:24.300 --> 00:07:26.920 crystal clear when you zoom out to a global view. 00:07:27.540 --> 00:07:29.819 Let's look at how the mandatory minimum wage 00:07:29.819 --> 00:07:32.540 looks across different developed economies using 00:07:32.540 --> 00:07:37.180 2024 OECD data. And this data is adjusted for 00:07:37.180 --> 00:07:40.480 purchasing power parity or PPP, which makes the 00:07:40.480 --> 00:07:43.240 figures comparable in real terms. The divergence 00:07:43.240 --> 00:07:46.199 is dramatic. So who's at the top? At the higher 00:07:46.199 --> 00:07:48.560 end of the OECD, you find countries that effectively 00:07:48.560 --> 00:07:51.360 use the minimum wage as a near -living wage floor. 00:07:52.019 --> 00:07:54.459 Luxembourg and Germany are both around $17 per 00:07:54.459 --> 00:07:57.540 hour. The U .K. is at $16, and the Netherlands 00:07:57.540 --> 00:07:59.860 and New Zealand are also high. So these countries 00:07:59.860 --> 00:08:02.000 have national minimums that are relatively robust 00:08:02.000 --> 00:08:04.519 compared to their cost of living. Right. But 00:08:04.519 --> 00:08:06.399 then you have nations like the United States, 00:08:06.560 --> 00:08:09.459 where the federal rate is just a mere $7 an hour, 00:08:09.540 --> 00:08:11.079 though of course many states mandate higher, 00:08:11.220 --> 00:08:14.569 and Mexico is even lower at $3 per hour. That 00:08:14.569 --> 00:08:18.509 gap between a $17 floor and a $7 floor just shows 00:08:18.509 --> 00:08:21.050 these vastly different national attitudes toward 00:08:21.050 --> 00:08:23.389 what the minimum wage is even for. It reflects 00:08:23.389 --> 00:08:25.610 whether the minimum wage is seen as a primary 00:08:25.610 --> 00:08:28.470 anti -poverty tool or just a safety net against, 00:08:28.569 --> 00:08:31.730 you know, egregious exploitation. And this brings 00:08:31.730 --> 00:08:35.210 us to a very specific metric economists use to 00:08:35.210 --> 00:08:38.870 gauge this. The Kites Index. Tell us more about 00:08:38.870 --> 00:08:40.899 this metric. Why is it so telling? The Cates 00:08:40.899 --> 00:08:43.759 Index is simple, but it's really powerful. It 00:08:43.759 --> 00:08:46.120 is the ratio of the legal minimum wage to the 00:08:46.120 --> 00:08:48.299 median wage in that country. It tells you how 00:08:48.299 --> 00:08:51.059 close the floor is to what a typical worker makes. 00:08:51.240 --> 00:08:54.340 And among the OECD countries listed in our data, 00:08:54.519 --> 00:08:56.720 the United States has the lowest CAITS index. 00:08:56.840 --> 00:09:00.100 It's at 0 .25. So 0 .25 means the federal minimum 00:09:00.100 --> 00:09:02.419 wage is only one quarter of what the typical 00:09:02.419 --> 00:09:04.960 American worker earns. That is a massive gap. 00:09:05.100 --> 00:09:07.059 It is. It shows the minimum wage is not tracking 00:09:07.059 --> 00:09:09.480 national prosperity at all. Now, contrast that 00:09:09.480 --> 00:09:11.320 with, say, Colombia, which has a CAITS index 00:09:11.320 --> 00:09:14.860 of 0 .92. Almost one to one. Almost. Or Costa 00:09:14.860 --> 00:09:18.139 Rica at 0 .87. In those countries, the minimum 00:09:18.139 --> 00:09:20.519 wage floor is nearly synonymous with the median 00:09:20.519 --> 00:09:23.480 income. So this index clearly shows whether a 00:09:23.480 --> 00:09:25.940 country is setting a very low baseline for entry 00:09:25.940 --> 00:09:28.620 level work like the U .S. or if it's trying to 00:09:28.620 --> 00:09:31.559 use the minimum wage as a primary forceful tool 00:09:31.559 --> 00:09:34.759 for wage equalization. The index itself is a 00:09:34.759 --> 00:09:37.299 proxy for the whole philosophical debate. That 00:09:37.299 --> 00:09:39.740 comparison really drives home the point that 00:09:39.740 --> 00:09:42.100 before this was a policy debate or a statistical 00:09:42.100 --> 00:09:45.059 argument, it was a profound question of societal 00:09:45.059 --> 00:09:47.919 fairness and human dignity. Okay, let's unpack 00:09:47.919 --> 00:09:50.639 this. The idea of a needs -based wage stretches 00:09:50.639 --> 00:09:53.220 back far beyond modern industrial economies. 00:09:53.460 --> 00:09:56.000 That's right. The concept of an income that ensures 00:09:56.000 --> 00:09:58.500 the communal good or just basic fairness can 00:09:58.500 --> 00:10:00.500 be traced all the way back to ancient Greece. 00:10:06.539 --> 00:10:09.559 And Aristotle's contribution is particularly 00:10:09.559 --> 00:10:12.600 significant here because he explicitly linked 00:10:12.600 --> 00:10:15.440 income to quality of life and the ability to 00:10:15.440 --> 00:10:18.820 participate fully in society. He certainly did. 00:10:19.299 --> 00:10:22.340 Aristotle saw self -sufficiency, a life that 00:10:22.340 --> 00:10:25.039 lacked nothing essential, as a requirement for 00:10:25.039 --> 00:10:28.299 happiness. And he defined happiness as that which 00:10:28.299 --> 00:10:31.100 on its own makes life worthy of choice and lacking 00:10:31.100 --> 00:10:34.159 in nothing. That's a high bar. It is. And crucially, 00:10:34.200 --> 00:10:36.539 he placed the responsibility for ensuring that 00:10:36.539 --> 00:10:39.340 the poor could earn a sustainable living squarely 00:10:39.340 --> 00:10:42.100 on the state. These weren't just abstract moral 00:10:42.100 --> 00:10:44.779 points. They were political arguments about how 00:10:44.779 --> 00:10:47.899 to maintain a functional society. And this philosophical 00:10:47.899 --> 00:10:51.019 bedrock, it then evolved into theological discussions 00:10:51.019 --> 00:10:53.799 during the medieval period, particularly around 00:10:53.799 --> 00:10:55.919 trade and fairness. Right. Scholars like Thomas 00:10:55.919 --> 00:10:58.840 Aquinas argued for a just wage, and he directly 00:10:58.840 --> 00:11:01.360 correlated it with the concept of just prices. 00:11:01.700 --> 00:11:03.860 Just prices were those that allowed everyone, 00:11:03.980 --> 00:11:05.840 regardless of their status, to get access to 00:11:05.840 --> 00:11:08.080 life's necessities. Though a wage that didn't 00:11:08.080 --> 00:11:10.879 allow for that was unjust. It was considered 00:11:10.879 --> 00:11:14.620 inherently unjust because it imperiled the virtue 00:11:14.620 --> 00:11:17.299 and moral capability of those without access. 00:11:17.679 --> 00:11:20.320 If a worker couldn't afford food or shelter, 00:11:20.620 --> 00:11:22.840 how could they possibly uphold their spiritual 00:11:22.840 --> 00:11:26.000 or civic duties? The theological concern was 00:11:26.000 --> 00:11:28.860 that poverty forced individuals into sin and 00:11:28.860 --> 00:11:32.019 vice, and therefore an unjust wage imperiled 00:11:32.019 --> 00:11:35.220 the soul. And then we get to the earliest form 00:11:35.220 --> 00:11:38.159 of state intervention. which ironically was born 00:11:38.159 --> 00:11:39.919 out of a crisis where the state was trying to 00:11:39.919 --> 00:11:42.200 suppress wages. This is a fantastic piece of 00:11:42.200 --> 00:11:44.279 historical irony. We're talking about the ordinance 00:11:44.279 --> 00:11:47.940 of laborers in England in 1349. The Black Plague 00:11:47.940 --> 00:11:50.139 had wiped out a third of the population, creating 00:11:50.139 --> 00:11:52.480 this severe labor shortage. So supply and demand 00:11:52.480 --> 00:11:55.000 kicked in. It did its thing and wages soared. 00:11:55.519 --> 00:11:57.700 Landowners and the ruling class panicked and 00:11:57.700 --> 00:11:59.659 enacted the ordinance, which was designed to 00:11:59.659 --> 00:12:02.220 set a maximum wage a ceiling to stop workers 00:12:02.220 --> 00:12:04.659 from demanding too much. They were trying to 00:12:04.659 --> 00:12:07.500 rewind the clock on market forces, but that policy 00:12:07.500 --> 00:12:09.820 failed and it laid the groundwork for the exact 00:12:09.820 --> 00:12:13.740 opposite policy decades later. Precisely. The 00:12:13.740 --> 00:12:16.299 policy evolved. It became the statute of laborers. 00:12:16.320 --> 00:12:19.639 By 1389, instead of setting a simple ceiling, 00:12:19.840 --> 00:12:22.460 it was fixing wages to the price of food, trying 00:12:22.460 --> 00:12:25.279 to stabilize the system. That state mechanism 00:12:25.279 --> 00:12:27.740 of setting a wage based on calculated needs, 00:12:28.019 --> 00:12:30.919 even if the initial goal was constraint, created 00:12:30.919 --> 00:12:33.639 the institutional machinery. And this leads to... 00:12:33.720 --> 00:12:36.120 The first minimum wage. Eventually, this long 00:12:36.120 --> 00:12:39.519 history culminates in King James I's 1604 Act 00:12:39.519 --> 00:12:42.179 fixing a minimum wage, specifically for textile 00:12:42.179 --> 00:12:45.220 workers. The initial attempt to set a wage ceiling 00:12:45.220 --> 00:12:47.720 inadvertently paved a way for the first formal 00:12:47.720 --> 00:12:50.740 minimum wage floor, a surprising lineage for 00:12:50.740 --> 00:12:52.700 the modern system. It's important to remember 00:12:52.700 --> 00:12:55.419 that this moral imperative didn't just die with 00:12:55.419 --> 00:12:57.919 the rise of industrial capitalism. Even the canonical 00:12:57.919 --> 00:13:00.539 figures of classical economics recognize the 00:13:00.539 --> 00:13:02.559 necessity of adequate pay. You're talking about 00:13:02.559 --> 00:13:04.919 Adam Smith himself. Exactly. We often think of 00:13:04.919 --> 00:13:07.159 him as the champion of free markets. But his 00:13:07.159 --> 00:13:09.840 work, Wealth of Nations, recognized that rising 00:13:09.840 --> 00:13:12.360 real wages were a significant advantage to society. 00:13:12.840 --> 00:13:15.600 Smith was very clear on this. He argued, and 00:13:15.600 --> 00:13:18.120 I'm quoting here, that those who feed, clothe 00:13:18.120 --> 00:13:20.360 and lodge the whole body of the people should 00:13:20.360 --> 00:13:22.440 have such a share of the produce of their own 00:13:22.440 --> 00:13:25.120 labor as to be themselves tolerably well -fed, 00:13:25.279 --> 00:13:27.620 clothed and lodged. More than just subsistence. 00:13:27.759 --> 00:13:30.340 Way more. He advocated for an equitable share. 00:13:30.519 --> 00:13:33.419 For Smith, higher wages actually increased labor 00:13:33.419 --> 00:13:35.840 productivity. A well -fed worker is a better 00:13:35.840 --> 00:13:38.820 worker, which benefited the entire economy. He 00:13:38.820 --> 00:13:41.200 saw higher wages as a driver of overall growth, 00:13:41.399 --> 00:13:44.139 not just a cost to be minimized. And the moral 00:13:44.139 --> 00:13:47.039 foundation was continuously reinforced outside 00:13:47.039 --> 00:13:50.419 of secular economic theory, especially by powerful 00:13:50.419 --> 00:13:52.860 religious institutions. Yes, the Catholic Church 00:13:52.860 --> 00:13:55.379 has provided long -standing philosophical support, 00:13:55.620 --> 00:13:58.879 starting with Pope Leo III's 1891 encyclical 00:13:58.879 --> 00:14:02.179 Rerum Novarum. This document clearly articulated 00:14:02.179 --> 00:14:04.419 that wages should be sufficient to support the 00:14:04.419 --> 00:14:07.600 family wage concept. And that view has been consistent. 00:14:08.059 --> 00:14:10.059 Very consistent. It's been reaffirmed across 00:14:10.059 --> 00:14:12.940 the centuries, most notably by Pope John Paul 00:14:12.940 --> 00:14:16.879 II in 1981, who stated that a just wage is the 00:14:16.879 --> 00:14:19.740 concrete means of verifying the whole socioeconomic 00:14:19.740 --> 00:14:23.299 system. The moral imperative spanning from Aquinas 00:14:23.299 --> 00:14:26.259 to the 20th century has consistently placed the 00:14:26.259 --> 00:14:28.379 needs of the worker and their family above the 00:14:28.379 --> 00:14:32.200 pure pursuit of profit. This rich moral bedrock 00:14:32.200 --> 00:14:35.100 really informs the contemporary arguments, which 00:14:35.100 --> 00:14:37.340 frame the living wage not as a temporary anti 00:14:37.340 --> 00:14:40.200 -poverty patch, but as a fundamental right essential 00:14:40.200 --> 00:14:43.169 for a functional, sustainable democracy. Modern 00:14:43.169 --> 00:14:45.610 proponents typically rely on three powerful ethical 00:14:45.610 --> 00:14:48.029 frameworks. First, there's the rights perspective, 00:14:48.350 --> 00:14:51.450 championed by thinkers like John Ryan. He argues 00:14:51.450 --> 00:14:53.509 the living wage is a right derived from the concept 00:14:53.509 --> 00:14:55.990 of the common bounty of nature. So if private 00:14:55.990 --> 00:14:58.409 ownership stops laborers from accessing essential 00:14:58.409 --> 00:15:01.149 resources, the owners have an obligation. That's 00:15:01.149 --> 00:15:19.639 the argument. That's a strong claim. That the 00:15:19.639 --> 00:15:22.340 right to a decent life is superior to an employer's 00:15:22.340 --> 00:15:25.379 right to set wages based only on market clearing 00:15:25.379 --> 00:15:27.879 prices. It is. And this connects to the second 00:15:27.879 --> 00:15:30.440 framework, the argument based on community health 00:15:30.440 --> 00:15:33.100 and stability, the communal civic republicanism 00:15:33.100 --> 00:15:35.840 perspective, as articulated by Gerald Waltman. 00:15:35.919 --> 00:15:38.509 And his view is that poverty is just. Bad for 00:15:38.509 --> 00:15:41.490 everyone. Right. Waldman views poverty and extreme 00:15:41.490 --> 00:15:44.330 inequality as inherently destructive to a healthy 00:15:44.330 --> 00:15:47.529 community. A living wage ensures basic autonomy. 00:15:47.870 --> 00:15:50.629 It prevents that societal fissure that develops 00:15:50.629 --> 00:15:52.409 between the extremely rich and the chronically 00:15:52.409 --> 00:15:55.330 poor. And it ensures all classes can participate 00:15:55.330 --> 00:15:57.950 meaningfully in civic and political life. If 00:15:57.950 --> 00:16:00.110 you're working three jobs just to survive, you're 00:16:00.110 --> 00:16:02.149 not going to be an engaged citizen. You lack 00:16:02.149 --> 00:16:04.350 the time, the resources, the mental capacity. 00:16:05.179 --> 00:16:07.919 It compromises social sustainability and cohesion. 00:16:08.120 --> 00:16:09.740 Okay, here's where it gets really interesting 00:16:09.740 --> 00:16:13.539 for me. Connecting that moral failure directly 00:16:13.539 --> 00:16:17.620 to hard economic costs through the concept of 00:16:17.620 --> 00:16:20.360 negative externalities, particularly from the 00:16:20.360 --> 00:16:22.940 perspective of Donald Stable. Stable's moral 00:16:22.940 --> 00:16:25.120 economic thought links the lack of a living wage 00:16:25.120 --> 00:16:28.059 to profound economic inefficiencies. He argues 00:16:28.059 --> 00:16:30.679 that by paying subliving wages, businesses are 00:16:30.679 --> 00:16:32.720 not paying the full cost of maintaining their 00:16:32.720 --> 00:16:35.320 labor force. They're pushing that cost onto someone 00:16:35.320 --> 00:16:38.399 else. They are imposing a negative externality 00:16:38.399 --> 00:16:41.179 on society, essentially exploiting and exhausting 00:16:41.179 --> 00:16:44.279 the workforce. This failure to internalize the 00:16:44.279 --> 00:16:46.840 true cost leads to a mispricing of products. 00:16:47.340 --> 00:16:49.980 If your low -cost widget relies on the community 00:16:49.980 --> 00:16:51.710 to cover the health care and housing, of the 00:16:51.710 --> 00:16:54.269 worker who built it, that widget is artificially 00:16:54.269 --> 00:16:56.509 cheap. And this leads directly to the core of 00:16:56.509 --> 00:16:58.929 the well -known welfare subsidy argument. Precisely. 00:16:59.190 --> 00:17:01.610 Economists like Mullenberg, Singh, and Grimshaw 00:17:01.610 --> 00:17:04.410 reiterate that externality argument. They state 00:17:04.410 --> 00:17:06.650 clearly that welfare programs, housing assistance, 00:17:06.950 --> 00:17:08.990 food stamps, school meals, they effectively act 00:17:08.990 --> 00:17:11.650 as a direct taxpayer -funded subsidy to employers 00:17:11.650 --> 00:17:14.190 who pay low wages. So taxpayers are covering 00:17:14.190 --> 00:17:16.769 the true cost of labor for private companies. 00:17:17.069 --> 00:17:20.000 That's the argument. Society, via its taxes, 00:17:20.140 --> 00:17:22.099 is covering the true cost of maintaining the 00:17:22.099 --> 00:17:24.920 workforce, while the employer enjoys the low 00:17:24.920 --> 00:17:27.400 labor cost and retains the profit. This became 00:17:27.400 --> 00:17:29.839 a high profile political issue when politicians 00:17:29.839 --> 00:17:32.900 criticized large retailers like Walmart, arguing 00:17:32.900 --> 00:17:35.380 taxpayers shouldn't have to subsidize the wealthiest 00:17:35.380 --> 00:17:37.759 corporations just so they can pay low entry level 00:17:37.759 --> 00:17:41.460 wages. It flips the moral critique into an economic 00:17:41.460 --> 00:17:44.230 inefficiency argument. That moral argument didn't 00:17:44.230 --> 00:17:47.549 just disappear, it crashed head -on into neoclassical 00:17:47.549 --> 00:17:50.630 economic theory. Now we transition from philosophy 00:17:50.630 --> 00:17:53.809 to formal economic models. Minimum wage implementation 00:17:53.809 --> 00:17:56.210 is analyzed as a classic price floor intervention, 00:17:56.509 --> 00:17:58.890 and the debate rages because the simple theoretical 00:17:58.890 --> 00:18:01.890 predictions clash so intensely with complex empirical 00:18:01.890 --> 00:18:04.710 reality. The classical prediction is really the 00:18:04.710 --> 00:18:07.250 cornerstone of opposition to minimum wage hikes. 00:18:07.369 --> 00:18:10.089 This model assumes a perfectly competitive labor 00:18:10.089 --> 00:18:12.410 market, where labor is homogeneous and workers 00:18:12.410 --> 00:18:14.950 are perfectly mobile. So in this textbook world, 00:18:15.109 --> 00:18:17.309 the minimum wage acts like a classic price floor 00:18:17.309 --> 00:18:19.619 on labor. Just like a price floor on corn or 00:18:19.619 --> 00:18:22.859 oil. Exactly. And if this price floor is set 00:18:22.859 --> 00:18:25.599 above the equilibrium wage, that's the market 00:18:25.599 --> 00:18:28.299 clearing price where supply meets demand. Standard 00:18:28.299 --> 00:18:30.720 theory dictates a surplus of labor will occur. 00:18:30.880 --> 00:18:34.160 And that surplus is. By definition, unemployment. 00:18:34.599 --> 00:18:37.539 It is because firms demand fewer workers at the 00:18:37.539 --> 00:18:40.099 higher price. And at the same time, more workers 00:18:40.099 --> 00:18:42.220 are willing to supply their labor at that higher 00:18:42.220 --> 00:18:44.680 statutory rate. And the consequence of this, 00:18:44.819 --> 00:18:46.980 according to the standard model, is that the 00:18:46.980 --> 00:18:49.460 job losses are concentrated among the most vulnerable 00:18:49.460 --> 00:18:52.039 workers. The theory predicts that the minimum 00:18:52.039 --> 00:18:55.079 wage prices the services of the least productive 00:18:55.079 --> 00:18:57.859 workers out of the market. These are the individuals 00:18:57.859 --> 00:19:00.200 with the lowest wages to begin with, typically 00:19:00.200 --> 00:19:03.250 those with limited skills or education. or young, 00:19:03.309 --> 00:19:05.730 inexperienced workers. So if a worker's productivity 00:19:05.730 --> 00:19:08.529 is less than the new wage, the employer won't 00:19:08.529 --> 00:19:11.430 hire them. A rational employer won't. Critics 00:19:11.430 --> 00:19:13.569 also argue that this accelerates labor substitution, 00:19:14.049 --> 00:19:16.410 encouraging employers to quickly replace low 00:19:16.410 --> 00:19:18.589 -skilled labor with capital -themed self -checkout 00:19:18.589 --> 00:19:21.230 kiosks or automation further depressing entry 00:19:21.230 --> 00:19:23.809 -level positions permanently. The classical prediction 00:19:23.809 --> 00:19:26.630 is simple. Mandated high prices lead to less 00:19:26.630 --> 00:19:29.299 demand. But modern labor economists have pushed 00:19:29.299 --> 00:19:32.299 back hard against that simple theoretical certainty, 00:19:32.559 --> 00:19:35.440 questioning the core assumption of perfect competition. 00:19:35.920 --> 00:19:38.539 They argue that labor markets are often imperfect, 00:19:38.859 --> 00:19:40.799 and that's where the alternative models gain 00:19:40.799 --> 00:19:42.920 their power. That's where the monopsony model 00:19:42.920 --> 00:19:46.200 provides a powerful and often highly relevant 00:19:46.200 --> 00:19:49.480 counter -framework. A monopsony is a single buyer. 00:19:49.700 --> 00:19:52.519 In a labor context, it means an individual employer 00:19:52.519 --> 00:19:54.940 often has some degree of wage -setting power. 00:19:55.200 --> 00:19:57.279 How does that happen? It happens because workers 00:19:57.279 --> 00:19:59.279 aren't perfectly mobile, maybe because of high 00:19:59.279 --> 00:20:02.339 search costs or geographic isolation, non -compete 00:20:02.339 --> 00:20:04.940 clauses, or just the dominance of one big employer 00:20:04.940 --> 00:20:07.119 in a small town. So if a company is basically 00:20:07.119 --> 00:20:09.740 the only game in town, they don't have to compete 00:20:09.740 --> 00:20:12.359 aggressively on wages, right? Precisely. They 00:20:12.359 --> 00:20:15.400 can pay workers less than the actual value the 00:20:15.400 --> 00:20:17.319 workers create for the firmless than their marginal 00:20:17.319 --> 00:20:20.359 revenue product. When that happens, the market 00:20:20.359 --> 00:20:22.680 is failing. So the minimum wage could actually 00:20:22.680 --> 00:20:25.420 fix the market. In this scenario, a moderate 00:20:25.420 --> 00:20:27.940 minimum wage doesn't cause unemployment. It actually 00:20:27.940 --> 00:20:30.859 corrects the market failure. By fixing a price 00:20:30.859 --> 00:20:33.019 floor closer to the marginal product of labor, 00:20:33.240 --> 00:20:36.619 it forces the monopsonist employer to raise wages, 00:20:36.819 --> 00:20:39.440 which can actually increase labor demand, potentially 00:20:39.440 --> 00:20:41.819 increasing both employment and efficiency at 00:20:41.819 --> 00:20:44.579 the same time. The minimum wage in this view 00:20:44.579 --> 00:20:47.660 is a necessary regulation policy. That completely 00:20:47.660 --> 00:20:50.380 flips the script. But how does the macroeconomic 00:20:50.380 --> 00:20:53.599 view, the Keynesian view, support this? The Keynesian 00:20:53.599 --> 00:20:56.200 view focuses on aggregate demand. A minimum wage 00:20:56.200 --> 00:20:58.819 increase necessarily shifts income from high 00:20:58.819 --> 00:21:01.480 income earners who tend to save a lot to low 00:21:01.480 --> 00:21:03.700 income workers who have a very high propensity 00:21:03.700 --> 00:21:06.180 to spend their entire paycheck immediately. So 00:21:06.180 --> 00:21:08.619 more spending in the economy. Right. This increase 00:21:08.619 --> 00:21:11.200 in purchasing power for low income workers stimulates 00:21:11.200 --> 00:21:14.099 aggregate demand across the economy. That increased 00:21:14.099 --> 00:21:16.420 demand for goods and services encourages companies 00:21:16.420 --> 00:21:19.579 to expand production and therefore hire more 00:21:19.579 --> 00:21:22.000 workers to meet the new sales volume potentially. 00:21:23.549 --> 00:21:27.710 And beyond these entire economic models, there 00:21:27.710 --> 00:21:30.250 are specific critiques of why that simple supply 00:21:30.250 --> 00:21:33.549 -demand model just doesn't translate well to 00:21:33.549 --> 00:21:36.430 real -world business decisions. One major factor 00:21:36.430 --> 00:21:39.369 is inelastic demand for the final product. If 00:21:39.369 --> 00:21:42.029 the demand for a firm's product, say fast food 00:21:42.029 --> 00:21:45.130 in a highly convenient location, is highly inelastic, 00:21:45.309 --> 00:21:48.250 management can absorb the cost increase by passing 00:21:48.250 --> 00:21:50.910 it on to consumers as higher prices without reducing 00:21:50.910 --> 00:21:53.910 jobs. And labor costs are often a smaller piece 00:21:53.910 --> 00:21:55.609 of the pie than people think. They often are. 00:21:56.000 --> 00:21:57.980 Then you have the counterintuitive idea that 00:21:57.980 --> 00:22:00.339 paying more can actually save the company money. 00:22:00.480 --> 00:22:03.160 The efficiency gains argument. Exactly. Higher 00:22:03.160 --> 00:22:05.779 wages often lead to significantly reduced employee 00:22:05.779 --> 00:22:08.740 turnover. Low turnover means the firm saves money 00:22:08.740 --> 00:22:11.099 on constantly recruiting, interviewing, and training 00:22:11.099 --> 00:22:13.460 new employees. It also means employees are more 00:22:13.460 --> 00:22:15.859 experienced and productive. These saved costs 00:22:15.859 --> 00:22:18.980 can, in some cases, fully or partially offset 00:22:18.980 --> 00:22:21.240 the higher wage rate. Finally, we noted that 00:22:21.240 --> 00:22:23.799 the most complex mathematical models, they deal 00:22:23.799 --> 00:22:25.480 with the sheer friction of the labor market. 00:22:25.839 --> 00:22:27.960 the difficulty of finding the right job or the 00:22:27.960 --> 00:22:30.900 right worker. Absolutely. In labor markets, with 00:22:30.900 --> 00:22:33.420 frictions like search costs or lack of perfect 00:22:33.420 --> 00:22:36.480 information, the model suggests significant nuance. 00:22:36.579 --> 00:22:38.920 They show that if the minimum wage is set at 00:22:38.920 --> 00:22:41.700 a sufficiently low level, it can actually boost 00:22:41.700 --> 00:22:43.859 the job search effort of the unemployed and decrease 00:22:43.859 --> 00:22:46.059 the overall unemployment rate. Because the reward 00:22:46.059 --> 00:22:49.000 for finding a job is greater. Exactly. Conversely, 00:22:49.019 --> 00:22:51.599 they confirm that a very high minimum wage is 00:22:51.599 --> 00:22:54.849 still detrimental. This suggests the impact isn't 00:22:54.849 --> 00:22:57.750 just binary. It's highly sensitive to the exact 00:22:57.750 --> 00:23:00.589 level set relative to the median wage and productivity. 00:23:01.009 --> 00:23:03.750 OK, this is where theory meets reality and where 00:23:03.750 --> 00:23:06.329 the consensus among economists truly collapsed 00:23:06.329 --> 00:23:08.829 over the last few decades, forcing a dramatic 00:23:08.829 --> 00:23:11.329 reevaluation of long held assumptions about the 00:23:11.329 --> 00:23:13.829 minimum wage. For decades, I mean, until the 00:23:13.829 --> 00:23:16.690 mid 1990s, the economic consensus was almost 00:23:16.690 --> 00:23:19.289 monolithic. The minimum wage unequivocally reduced 00:23:19.289 --> 00:23:21.750 employment. especially for young workers. This 00:23:21.750 --> 00:23:24.210 changed decisively with the 1992 New Jersey, 00:23:24.269 --> 00:23:26.670 Pennsylvania study by David Card and Alan Kruger. 00:23:26.829 --> 00:23:29.089 This study became famous because of its methodology. 00:23:29.549 --> 00:23:32.509 They focused on the fast food industry, a major 00:23:32.509 --> 00:23:35.170 employer of minimum wage labor, after New Jersey 00:23:35.170 --> 00:23:39.329 raised its minimum wage from $4 .25 to $5 .05 00:23:39.329 --> 00:23:42.069 per hour, while neighboring Pennsylvania's rate 00:23:42.069 --> 00:23:45.279 held steady. The methodology was crucial, a difference 00:23:45.279 --> 00:23:47.700 in differences approach. They surveyed fast food 00:23:47.700 --> 00:23:50.160 restaurants in both states before and after the 00:23:50.160 --> 00:23:52.380 New Jersey hike, and their initial surprising 00:23:52.380 --> 00:23:55.380 finding was that the minimum wage increase slightly 00:23:55.380 --> 00:23:57.400 increased employment in the New Jersey restaurants. 00:23:57.579 --> 00:23:59.680 Increase it. Slightly increased it compared to 00:23:59.680 --> 00:24:02.819 Pennsylvania. This result fundamentally contradicted 00:24:02.819 --> 00:24:05.559 the supply and demand prediction. Their 1995 00:24:05.559 --> 00:24:08.559 book, Myth and Measurement, didn't just challenge 00:24:08.559 --> 00:24:11.259 the consensus, it shattered it and ushered in 00:24:11.259 --> 00:24:13.759 a new imperialism. empirically driven era of 00:24:13.759 --> 00:24:16.400 minimum wage research. But that finding didn't 00:24:16.400 --> 00:24:18.680 end the debates. It ignited a methodological 00:24:18.680 --> 00:24:21.799 war. Subsequent research immediately tried to 00:24:21.799 --> 00:24:25.019 refute their findings. Exactly. The debate immediately 00:24:25.019 --> 00:24:28.019 became a battle over data sources. David Newmark 00:24:28.019 --> 00:24:30.500 and William Washer later reexamined the data, 00:24:30.619 --> 00:24:33.319 but they used official payroll records from large 00:24:33.319 --> 00:24:35.660 fast food chains instead of the phone surveys 00:24:35.660 --> 00:24:37.940 Card and Kruger had conducted. And they found 00:24:37.940 --> 00:24:40.710 the opposite. Newmark and Washer claim to find 00:24:40.710 --> 00:24:44.049 the predicted employment decreases. This methodological 00:24:44.049 --> 00:24:46.650 dispute surveys versus administrative payroll 00:24:46.650 --> 00:24:48.910 data became the core tension in labor economics 00:24:48.910 --> 00:24:52.430 for years. Later, analyses have tried to reconcile 00:24:52.430 --> 00:24:54.829 these differences, showing that maybe positive 00:24:54.829 --> 00:24:57.470 employment effects were localized in small independent 00:24:57.470 --> 00:25:00.410 businesses, while large corporate chains showed 00:25:00.410 --> 00:25:03.009 the negative effects more clearly. So after all 00:25:03.009 --> 00:25:05.730 this back and forth, what does the weight of 00:25:05.730 --> 00:25:08.690 modern evidence tell us about the actual impact 00:25:08.690 --> 00:25:11.609 on the goal of fighting poverty? When analyzing 00:25:11.609 --> 00:25:14.490 the impact on poverty, the sources draw a subtle 00:25:14.490 --> 00:25:17.170 but clear line. The evidence suggests that living 00:25:17.170 --> 00:25:20.089 wage legislation modestly reduces urban poverty 00:25:20.089 --> 00:25:23.289 rates. But not minimum wage laws. In stark contrast, 00:25:23.549 --> 00:25:25.829 state minimum wage laws often fail to show this 00:25:25.829 --> 00:25:28.130 measurable, direct effect on poverty reduction. 00:25:28.529 --> 00:25:30.650 But we have to factor in the limited scope of 00:25:30.650 --> 00:25:33.619 living wage laws. Right. They usually only apply 00:25:33.619 --> 00:25:35.599 to businesses that have government contracts. 00:25:35.819 --> 00:25:38.180 That limitation is fundamental to understanding 00:25:38.180 --> 00:25:40.980 their societal impact. Because of their limited 00:25:40.980 --> 00:25:43.420 application, it's estimated that only one to 00:25:43.420 --> 00:25:45.960 two percent of the bottom quartile of the wage 00:25:45.960 --> 00:25:48.559 distribution actually qualify for living wage 00:25:48.559 --> 00:25:51.720 legislation. So while they might be locally effective, 00:25:52.200 --> 00:25:54.940 their overall impact on national poverty is small. 00:25:55.500 --> 00:25:57.940 Let's dive into the hard economic tradeoffs. 00:25:58.220 --> 00:26:00.680 Using the Congressional Budget Office, the CBO, 00:26:00.960 --> 00:26:03.099 their projections on raising the U .S. federal 00:26:03.099 --> 00:26:06.019 minimum wage significantly. This gives us the 00:26:06.019 --> 00:26:08.220 clearest look at the predicted cost. The CBO 00:26:08.220 --> 00:26:10.759 projected in 2021 that raising the federal minimum 00:26:10.759 --> 00:26:15.000 wage incrementally to $15 per hour by 2025 would 00:26:15.000 --> 00:26:18.000 be a massive policy intervention. It would directly 00:26:18.000 --> 00:26:20.859 increase wages for 17 million workers and lift 00:26:20.859 --> 00:26:23.799 900 ,000 people out of poverty. Those are significant 00:26:23.799 --> 00:26:26.299 poverty reduction gains. They are. But this is 00:26:26.299 --> 00:26:28.900 where the policy tradeoff becomes stark and unavoidable. 00:26:29.019 --> 00:26:31.299 The other side of the ledger. Absolutely. The 00:26:31.299 --> 00:26:33.940 CBO also projected that the same policy would 00:26:33.940 --> 00:26:36.720 reduce employment by approximately 1 .4 million 00:26:36.720 --> 00:26:39.480 people. Furthermore, it would lead to a slight 00:26:39.480 --> 00:26:42.059 decrease in overall economic output and cause 00:26:42.059 --> 00:26:45.599 prices to rise. So for critics, that 1 .4 million 00:26:45.599 --> 00:26:48.660 lost jobs number is definitive proof that the 00:26:48.660 --> 00:26:51.299 standard model still holds true at scale. And 00:26:51.299 --> 00:26:54.119 for proponents, the 900 ,000 lifted out of poverty 00:26:54.119 --> 00:26:56.779 makes the policy worthwhile. It forces an ethical 00:26:56.779 --> 00:26:59.359 choice on policymakers. We even have more recent 00:26:59.359 --> 00:27:02.349 specific data from California. following a significant 00:27:02.349 --> 00:27:06.130 $16 to $20 per hour fast food minimum wage increase. 00:27:06.369 --> 00:27:09.049 Yes. Studies tracking this immediate sharp height 00:27:09.049 --> 00:27:12.289 estimated a 2 .7 to 3 .6 percent decline in fast 00:27:12.289 --> 00:27:14.289 food employment in California compared to the 00:27:14.289 --> 00:27:16.609 rest of the U .S. during the same period. This 00:27:16.609 --> 00:27:19.390 translates to an estimated 10 ,000 to 23 ,000 00:27:19.390 --> 00:27:22.109 lost jobs in that highly specific sector. So 00:27:22.109 --> 00:27:24.190 the empirical evidence here supports the classical 00:27:24.190 --> 00:27:26.769 prediction for sharp, focused increases. Yet 00:27:26.769 --> 00:27:29.289 we can't ignore the non -economic benefits that 00:27:29.289 --> 00:27:31.519 accrue, especially for employers. who voluntarily 00:27:31.519 --> 00:27:33.559 adopt the higher ethical standard of a living 00:27:33.559 --> 00:27:36.180 wage. Research consistently supports these soft 00:27:36.180 --> 00:27:39.059 benefits. A study in Canada found that workers 00:27:39.059 --> 00:27:41.299 who received a living wage showed significantly 00:27:41.299 --> 00:27:43.799 higher effective commitment to their organization, 00:27:44.140 --> 00:27:46.680 meaning they genuinely liked and felt loyal to 00:27:46.680 --> 00:27:49.000 their employer, and they had lower turnover intention. 00:27:49.420 --> 00:27:51.640 And this translated into better behavior. It 00:27:51.640 --> 00:27:53.980 did. They protected the company's public image, 00:27:54.200 --> 00:27:55.980 and they were more willing to help colleagues. 00:27:56.240 --> 00:27:58.579 This is interpreted through social exchange theory. 00:27:59.079 --> 00:28:01.740 You treat me well, I feel a mutual obligation 00:28:01.740 --> 00:28:04.519 to you. It improves overall organizational stability. 00:28:04.940 --> 00:28:07.900 And moving beyond the workplace, minimum wage 00:28:07.900 --> 00:28:09.759 increases have been linked to some surprising 00:28:09.759 --> 00:28:13.319 social benefits that reduce societal costs. Yes. 00:28:13.500 --> 00:28:15.900 Studies show that higher minimum wages are correlated 00:28:15.900 --> 00:28:18.400 with a decline in property and drunk crimes among 00:28:18.400 --> 00:28:21.779 ex -incarcerated individuals. And even more profoundly, 00:28:21.960 --> 00:28:25.099 one study found that for every $1 increase in 00:28:25.099 --> 00:28:27.579 the minimum wage, the annual suicide growth rate 00:28:27.579 --> 00:28:31.630 fell by 1%. Wow. When economic pressure is reduced, 00:28:31.869 --> 00:28:34.130 mental health outcomes improve. Finally, let's 00:28:34.130 --> 00:28:36.289 circle back to that crucial question of who ultimately 00:28:36.289 --> 00:28:39.910 pays the pass -through of costs to the consumer. 00:28:40.069 --> 00:28:42.809 Yeah. How significant is that erosion of the 00:28:42.809 --> 00:28:45.190 nominal wage increase? That pass -through is 00:28:45.190 --> 00:28:48.430 a consistent finding. A 10 % minimum wage hike 00:28:48.430 --> 00:28:50.150 is typically translated into higher consumer 00:28:50.150 --> 00:28:53.309 prices. Specifically, studies suggest this might 00:28:53.309 --> 00:28:56.289 translate to about a 0 .4 % increase in grocery 00:28:56.289 --> 00:28:59.230 prices. And for fast food? In the fast food sector, 00:28:59.390 --> 00:29:01.670 studies on McDonald's found a 10 % minimum wage 00:29:01.670 --> 00:29:04.690 increase translated to a 1 .4 % increase in the 00:29:04.690 --> 00:29:07.390 price of a Big Mac. What this means in practice 00:29:07.390 --> 00:29:10.029 is that low -wage workers, who are also customers, 00:29:10.309 --> 00:29:13.240 end up paying slightly higher prices. So the 00:29:13.240 --> 00:29:15.240 increase in their real wage, their purchasing 00:29:15.240 --> 00:29:17.759 power, is slightly less than the nominal increase 00:29:17.759 --> 00:29:20.440 suggests. The journey of economic opinion itself 00:29:20.440 --> 00:29:22.400 is one of the most compelling narratives in this 00:29:22.400 --> 00:29:25.619 whole deep dive. The declining consensus is just 00:29:25.619 --> 00:29:29.420 dramatic. It's a huge story. In 1978, a staggering 00:29:29.420 --> 00:29:32.200 90 % of surveyed economists agreed that the minimum 00:29:32.200 --> 00:29:34.380 wage increases unemployment among low -skilled 00:29:34.380 --> 00:29:36.859 workers. That certainty has been completely eroded. 00:29:36.920 --> 00:29:39.619 What's the number now? By 2000, that number in 00:29:39.619 --> 00:29:42.819 full agreement had dropped to only 46%, although 00:29:42.819 --> 00:29:45.839 74 % still agreed with the statement if you included 00:29:45.839 --> 00:29:48.740 various provises like, only if it is set too 00:29:48.740 --> 00:29:51.859 high. This shift is entirely attributed to the 00:29:51.859 --> 00:29:53.920 debate sparked by the Card and Kruger research. 00:29:54.299 --> 00:29:56.440 It forced the profession to acknowledge the limits 00:29:56.440 --> 00:29:59.099 of the simple textbook model. It did. And when 00:29:59.099 --> 00:30:01.299 we look at the highest level meta -analyses, 00:30:01.400 --> 00:30:03.519 the studies that synthesize all the research, 00:30:03.579 --> 00:30:06.039 the current professional assessment is, well... 00:30:06.279 --> 00:30:08.099 It's nuanced. What's the bottom line? The most 00:30:08.099 --> 00:30:10.579 recent ones suggest a minimal employment effect 00:30:10.579 --> 00:30:13.480 overall, while confirming a significant increase 00:30:13.480 --> 00:30:16.440 in earnings for low paid workers. Many of these 00:30:16.440 --> 00:30:19.000 analyses explicitly correct for historical publication 00:30:19.000 --> 00:30:21.779 bias, where studies that found a negative result 00:30:21.779 --> 00:30:24.160 were more likely to be published. So what's the 00:30:24.160 --> 00:30:26.420 honest assessment now? The honest assessment 00:30:26.420 --> 00:30:29.240 as of 2021 is simply that there is no consensus 00:30:29.240 --> 00:30:31.279 on the employment effects of the minimum wage. 00:30:31.480 --> 00:30:34.220 We are truly in a period of intense intellectual 00:30:34.220 --> 00:30:37.390 uncertainty. And this lack of consensus in theory 00:30:37.390 --> 00:30:40.269 has led to really diverse policy responses globally. 00:30:40.769 --> 00:30:43.130 The application of the living wage model is most 00:30:43.130 --> 00:30:45.349 visible in these large -scale social movements, 00:30:45.509 --> 00:30:47.690 often leading to voluntary standards that aim 00:30:47.690 --> 00:30:50.410 to surpass government mandates. The UK Living 00:30:50.410 --> 00:30:53.809 Wage Foundation, LWF, is a perfect example of 00:30:53.809 --> 00:30:57.529 a successful voluntary system driven by grassroots 00:30:57.529 --> 00:30:59.990 activism. It started in London, right? It did, 00:31:00.109 --> 00:31:03.549 launched by London Citizens in 2001. It's a coalition 00:31:03.549 --> 00:31:06.910 of community organizations and unions. And they 00:31:06.910 --> 00:31:09.690 don't lobby for legislation. They promote a voluntary 00:31:09.690 --> 00:31:12.849 accreditation scheme for employers to pay a wage 00:31:12.849 --> 00:31:15.210 calculated to meet the costs of a basic decent 00:31:15.210 --> 00:31:18.109 life. It creates a moral incentive for firms. 00:31:18.369 --> 00:31:20.200 And it's crucial. to draw that line again between 00:31:20.200 --> 00:31:22.460 the voluntary living wage and the government's 00:31:22.460 --> 00:31:25.079 mandatory floor. Absolutely vital. When the UK 00:31:25.079 --> 00:31:26.920 government introduced the mandatory national 00:31:26.920 --> 00:31:29.920 living wage in 2016, it sounded like they'd adopted 00:31:29.920 --> 00:31:32.160 the movement's goal. But the government's rate 00:31:32.160 --> 00:31:35.240 was and remains a lower statutory minimum for 00:31:35.240 --> 00:31:38.180 older workers. It's distinct from the LWS calculation, 00:31:38.380 --> 00:31:40.809 which is based purely on need. The voluntary 00:31:40.809 --> 00:31:43.450 standard maintains an ethical high ground. This 00:31:43.450 --> 00:31:46.329 movement is also really active in targeting multinational 00:31:46.329 --> 00:31:49.190 supply chains in the developing world, where 00:31:49.190 --> 00:31:51.690 the moral argument is perhaps the most urgent. 00:31:51.869 --> 00:31:54.490 That's the mission of the Asia Floor Wage, AFW 00:31:54.490 --> 00:31:57.390 coalition. They tie up multinational employers 00:31:57.390 --> 00:32:00.609 in textile manufacturing across 11 Asian countries. 00:32:01.109 --> 00:32:03.910 Their goal is to implement a true living wage 00:32:03.910 --> 00:32:06.690 in sectors where wages can be exceptionally low, 00:32:06.890 --> 00:32:10.500 sometimes as low as U .S. $38. per month in places 00:32:10.500 --> 00:32:13.000 like Bangladesh a decade ago. So they're pushing 00:32:13.000 --> 00:32:15.420 the moral framework onto global commerce. Exactly. 00:32:15.759 --> 00:32:17.920 They're asking multinational brands to cover 00:32:17.920 --> 00:32:20.619 the true externalized cost of labor in their 00:32:20.619 --> 00:32:22.859 supply chains. In the Republic of Ireland, the 00:32:22.859 --> 00:32:25.900 campaign also focuses heavily on objective calculation 00:32:25.900 --> 00:32:29.640 to drive voluntary compliance. Since 2014, the 00:32:29.640 --> 00:32:32.119 Irish campaign has been very active, using academic 00:32:32.119 --> 00:32:34.539 research into a minimum essential standard of 00:32:34.539 --> 00:32:37.680 living, MEASL, to set its targets. The MEASL 00:32:37.680 --> 00:32:39.759 research determines the minimum necessary income 00:32:39.759 --> 00:32:41.700 for different household types. And has it been 00:32:41.700 --> 00:32:43.900 effective? The social pressure has been effective. 00:32:44.299 --> 00:32:47.140 Major companies, including supermarkets like 00:32:47.140 --> 00:32:49.619 Little and Aldi, committed to paying the living 00:32:49.619 --> 00:32:53.099 wage in 2020, illustrating the impact of a clear, 00:32:53.200 --> 00:32:56.920 verifiable, ethical standard. In the U .S., living 00:32:56.920 --> 00:32:59.140 wage policies have historically been localized 00:32:59.140 --> 00:33:01.559 and served as policy laboratories, though their 00:33:01.559 --> 00:33:04.029 scope is limited. Right. U .S. living wage laws 00:33:04.029 --> 00:33:06.789 typically cover only businesses with government 00:33:06.789 --> 00:33:09.609 contracts or receiving state assistance. Early 00:33:09.609 --> 00:33:12.329 examples include Santa Fe, San Francisco and 00:33:12.329 --> 00:33:15.230 critically Miami -Dade County in Florida, which 00:33:15.230 --> 00:33:17.970 in 1999 became the first location in the South 00:33:17.970 --> 00:33:20.589 to pass such an ordinance. And these policies 00:33:20.589 --> 00:33:23.069 often try to bridge the gap by tying the wage 00:33:23.069 --> 00:33:25.900 to inflation. They do. For instance, the Miami 00:33:25.900 --> 00:33:28.440 -Dade rate reached over $12 an hour with benefits 00:33:28.440 --> 00:33:32.720 or $15 without by 2018 rates significantly higher 00:33:32.720 --> 00:33:35.019 than the federal minimum. And sometimes the moral 00:33:35.019 --> 00:33:37.079 argument needs more than just a well -researched 00:33:37.079 --> 00:33:39.880 proposal. It needs direct action to pierce the 00:33:39.880 --> 00:33:41.819 public consciousness. The University of Virginia 00:33:41.819 --> 00:33:44.519 Living Wage campaign in 2012 is a great anecdote 00:33:44.519 --> 00:33:47.460 of this. Twelve students initiated a hunger strike 00:33:47.460 --> 00:33:49.779 to publicize the issue of low -paid contracted 00:33:49.779 --> 00:33:53.059 workers, bringing intense public and media scrutiny 00:33:53.059 --> 00:33:55.880 to the university's labor practices. It shows 00:33:55.880 --> 00:33:58.220 that the moral and ethical components are often 00:33:58.220 --> 00:34:00.740 the most powerful tools activists have. Let's 00:34:00.740 --> 00:34:04.299 pivot to a foundational global precedent. Australia's 00:34:04.299 --> 00:34:06.900 legal system provides an incredibly early, powerful 00:34:06.900 --> 00:34:10.500 example of mandating a human dignity wage. The 00:34:10.500 --> 00:34:13.699 1907 Harvester Judgment in Australia is a landmark 00:34:13.699 --> 00:34:17.070 ruling. It set the stage for defining wages based 00:34:17.070 --> 00:34:20.130 on social necessity. The ruling mandated that 00:34:20.130 --> 00:34:22.329 an employer pay a wage guaranteeing a standard 00:34:22.329 --> 00:34:25.230 of living reasonable for a human being in a civilized 00:34:25.230 --> 00:34:27.809 community living in frugal comfort. And it mandated 00:34:27.809 --> 00:34:29.969 regardless of the employer's ability to pay. 00:34:30.170 --> 00:34:32.329 Exactly. It firmly established that labor laws 00:34:32.329 --> 00:34:34.530 should guarantee a standard of living based on 00:34:34.530 --> 00:34:36.809 social decency, not just the market's current 00:34:36.809 --> 00:34:39.449 ability to clear prices. Finally, we have the 00:34:39.449 --> 00:34:42.030 tragic case of Lebanon, illustrating what happens 00:34:42.030 --> 00:34:44.289 when the legal framework, however robust, robust, 00:34:44.389 --> 00:34:47.090 is rendered meaningless by macroeconomic collapse. 00:34:47.530 --> 00:34:50.289 Lebanon provides a stark lesson in fragility. 00:34:50.750 --> 00:34:53.070 Following the financial collapse that began in 00:34:53.070 --> 00:34:56.690 2019, the local currency plummeted, pushing three 00:34:56.690 --> 00:34:59.349 quarters of the population into poverty. The 00:34:59.349 --> 00:35:01.849 minimum monthly wage, which had been about USD 00:35:01.849 --> 00:35:06.090 $450 pre -crisis, lost virtually all its real 00:35:06.090 --> 00:35:11.000 value. It sank to barely $30 by 2021. This failure 00:35:11.000 --> 00:35:13.099 occurred despite Lebanese law mandating that 00:35:13.099 --> 00:35:15.420 the minimum pay must be sufficient to meet essential 00:35:15.420 --> 00:35:18.039 needs. It shows that macroeconomic stability 00:35:18.039 --> 00:35:21.019 is absolutely essential for even the most ethically 00:35:21.019 --> 00:35:23.920 sound statutory minimums to work. Since the minimum 00:35:23.920 --> 00:35:26.400 wage is frequently criticized, especially due 00:35:26.400 --> 00:35:28.699 to the empirical evidence showing that at scale, 00:35:28.920 --> 00:35:31.940 it carries the risk of job cuts, economists often 00:35:31.940 --> 00:35:34.480 propose alternative policy tools, things that 00:35:34.480 --> 00:35:36.980 aim to achieve the same anti -poverty goals without 00:35:36.980 --> 00:35:39.019 directly interfering with the price of labor. 00:35:39.369 --> 00:35:41.110 And let's start with that fundamental economic 00:35:41.110 --> 00:35:43.550 criticism that remains powerful, even with the 00:35:43.550 --> 00:35:45.949 shift in consensus. The unemployment risk. Right. 00:35:46.050 --> 00:35:49.329 If the legal price floor is set too high, it 00:35:49.329 --> 00:35:51.550 leads to unemployment and reduces the availability 00:35:51.550 --> 00:35:54.849 of crucial entry level jobs. This is also linked 00:35:54.849 --> 00:35:57.349 to the argument that a business voluntarily adopting 00:35:57.349 --> 00:36:00.409 a high living wage will struggle to compete with 00:36:00.409 --> 00:36:02.869 rivals who pay lower market rates. The second 00:36:02.869 --> 00:36:05.010 major criticism is that the minimum wage is just 00:36:05.010 --> 00:36:08.449 a blunt instrument poorly targeted for poverty 00:36:08.449 --> 00:36:11.320 relief. Correct. Critics argue it's an inadequate 00:36:11.320 --> 00:36:13.920 anti -poverty tool because the benefits often 00:36:13.920 --> 00:36:16.679 miss the intended target. Many beneficiaries 00:36:16.679 --> 00:36:19.000 are secondary earners in relatively high income 00:36:19.000 --> 00:36:21.639 households, like a college student working a 00:36:21.639 --> 00:36:23.940 summer job while living at home. So the policy 00:36:23.940 --> 00:36:26.840 doesn't target the actual working poor efficiently. 00:36:27.500 --> 00:36:30.280 A 2000 survey of labor economists showed only 00:36:30.280 --> 00:36:33.420 31 % viewed minimum wages as the most effective 00:36:33.420 --> 00:36:35.960 tool for fighting poverty. They preferred other 00:36:35.960 --> 00:36:38.440 methods that target income directly. So if the 00:36:38.440 --> 00:36:40.500 minimum wage is a blunt instrument that may cause 00:36:40.500 --> 00:36:43.420 job loss and is poorly targeted, what do economists 00:36:43.420 --> 00:36:45.860 propose as a cleaner solution to help the working 00:36:45.860 --> 00:36:48.309 poor? The alternatives are designed to solve 00:36:48.309 --> 00:36:51.190 the low wage problem by using the tax code or 00:36:51.190 --> 00:36:53.690 improving worker value rather than dictating 00:36:53.690 --> 00:36:55.570 a price floor that interferes with the labor 00:36:55.570 --> 00:36:57.630 market. And the alternative most highly supported 00:36:57.630 --> 00:37:00.929 by economists is tax based income support. That 00:37:00.929 --> 00:37:03.550 is the refundable tax credit, specifically the 00:37:03.550 --> 00:37:07.449 Earned Income Tax Credit or EITC in the US. In 00:37:07.449 --> 00:37:10.530 that same 2000 survey, 98 percent of economists 00:37:10.530 --> 00:37:13.690 views this type of policy as an effective anti 00:37:13.690 --> 00:37:16.099 -poverty measure. How does it work? It works 00:37:16.099 --> 00:37:18.199 by supplementing the income of low -wage workers 00:37:18.199 --> 00:37:20.980 through the tax system. Crucially, the credit 00:37:20.980 --> 00:37:23.059 is targeted only at those with earned income, 00:37:23.300 --> 00:37:26.340 reinforcing the work ethic, but it avoids subsidizing 00:37:26.340 --> 00:37:28.380 low -income workers from high -income families, 00:37:28.460 --> 00:37:30.880 making it far better targeted. And it was championed 00:37:30.880 --> 00:37:32.980 across the political spectrum, which speaks to 00:37:32.980 --> 00:37:35.619 its effectiveness. It was. President Reagan famously 00:37:35.619 --> 00:37:39.139 called the EITC the best anti -poverty, the best 00:37:39.139 --> 00:37:43.090 pro -family, the best job creation measure. Economically, 00:37:43.150 --> 00:37:45.530 its effectiveness is often undisputed because 00:37:45.530 --> 00:37:48.130 it doesn't directly raise the cost of hiring 00:37:48.130 --> 00:37:50.869 labor for the employer, minimizing the job loss 00:37:50.869 --> 00:37:53.949 prediction. The CBO agrees. The CBO itself found 00:37:53.949 --> 00:37:56.670 that the EITC delivers larger monetary benefits 00:37:56.670 --> 00:37:59.530 to the working poor at a lower overall societal 00:37:59.530 --> 00:38:02.789 cost compared to minimum wage increases. It's 00:38:02.789 --> 00:38:04.690 a more efficient alternative. The other major 00:38:04.690 --> 00:38:07.489 alternative is the complete support model, basic 00:38:07.489 --> 00:38:11.420 income. Basic income, or UBI, involves providing 00:38:11.420 --> 00:38:13.780 every citizen with a periodic, unconditional 00:38:13.780 --> 00:38:16.420 sum of money sufficient to live on, regardless 00:38:16.420 --> 00:38:19.760 of employment status. Proponents argue this radically 00:38:19.760 --> 00:38:22.239 changes the dynamic. It increases worker bargaining 00:38:22.239 --> 00:38:24.900 power. Significantly. If you have a guaranteed 00:38:24.900 --> 00:38:27.320 floor of income, you aren't desperate, and you 00:38:27.320 --> 00:38:30.460 can refuse a substandard job. This allows individuals 00:38:30.460 --> 00:38:32.920 time to search for a better job or invest in 00:38:32.920 --> 00:38:36.199 education. Proponents also argue it's more economically 00:38:36.199 --> 00:38:38.920 efficient because it bypasses the employer entirely. 00:38:39.340 --> 00:38:41.699 We also noted that some highly developed economies 00:38:41.699 --> 00:38:44.380 manage wage floors without any statutory minimum 00:38:44.380 --> 00:38:47.519 wage. Yes. Countries like Sweden, Denmark and 00:38:47.519 --> 00:38:50.059 Italy. They rely exclusively on collective bargaining. 00:38:50.300 --> 00:38:53.139 They achieve very high minimum earnings by sector 00:38:53.139 --> 00:38:55.119 through agreements negotiated directly between 00:38:55.119 --> 00:38:57.519 strong employer groups and powerful trade unions. 00:38:57.760 --> 00:39:00.239 But that system only works because of high union 00:39:00.239 --> 00:39:02.809 density. It's only viable because of the very 00:39:02.809 --> 00:39:05.289 high union participation rates in those countries, 00:39:05.429 --> 00:39:07.909 which gives labor the necessary power to negotiate 00:39:07.909 --> 00:39:10.789 effectively across entire industries. And finally, 00:39:10.889 --> 00:39:14.030 a strategy focused not on regulating price, but 00:39:14.030 --> 00:39:16.829 on increasing worker value itself. Education 00:39:16.829 --> 00:39:19.909 and training. This strategy attempts to fundamentally 00:39:19.909 --> 00:39:23.389 alter the supply curve of labor. By providing 00:39:23.389 --> 00:39:25.829 state -funded apprenticeships or technical training, 00:39:25.909 --> 00:39:29.130 like Germany's renowned dual system, low -skilled 00:39:29.130 --> 00:39:31.550 workers are enabled to increase their value and 00:39:31.550 --> 00:39:34.489 move into higher -paying roles. This decreases 00:39:34.489 --> 00:39:36.969 the supply pressure on the low -skill labor market. 00:39:37.210 --> 00:39:39.650 It focuses on mobility and investment rather 00:39:39.650 --> 00:39:42.150 than regulation. Precisely. We've covered a tremendous 00:39:42.150 --> 00:39:44.989 amount of ground today, transitioning from Aristotle's 00:39:44.989 --> 00:39:47.190 philosophy all the way to 21st century empirical 00:39:47.190 --> 00:39:49.909 data. To synthesize the key knowledge nuggets 00:39:49.909 --> 00:39:52.250 we've extracted, the living wage is fundamentally 00:39:52.250 --> 00:39:54.530 an ethical standard demanding a decent quality 00:39:54.530 --> 00:39:57.610 of life without government subsidy. Contrasting 00:39:57.610 --> 00:39:59.610 sharply with the minimum wage, which is just 00:39:59.610 --> 00:40:02.809 a legal price floor, we traced the history of 00:40:02.809 --> 00:40:05.349 the needs -based argument from Aristotle's self 00:40:05.349 --> 00:40:08.389 -sufficiency principle to Adam Smith's call for 00:40:08.389 --> 00:40:11.170 equitable shares. And we also thoroughly dissected 00:40:11.170 --> 00:40:13.869 that major split in economic theory, the classical 00:40:13.869 --> 00:40:16.809 supply and demand model versus the modern monopsony 00:40:16.809 --> 00:40:19.110 and frictional market models, which shows why 00:40:19.110 --> 00:40:21.769 the longstanding consensus on job loss has eroded 00:40:21.769 --> 00:40:24.250 so dramatically. And the real world evidence 00:40:24.250 --> 00:40:27.449 confirms this complexity. We see these real quantified 00:40:27.449 --> 00:40:30.869 tradeoffs like the CBO projecting 900 ,000 left 00:40:30.869 --> 00:40:33.750 out of poverty versus 1 .4 million lost jobs. 00:40:33.889 --> 00:40:36.630 But we also saw evidence of non -economic benefits 00:40:36.630 --> 00:40:39.230 like reduced crime and higher employee commitment 00:40:39.230 --> 00:40:42.050 when a living wage is implemented. This leads 00:40:42.050 --> 00:40:44.880 us back to the final necessary conflict. If the 00:40:44.880 --> 00:40:47.119 core policy fight boils down to who ultimately 00:40:47.119 --> 00:40:49.260 pays the cost of maintaining a low -wage workforce, 00:40:49.480 --> 00:40:51.440 the consumer, the taxpayer, or the employer. 00:40:51.679 --> 00:40:54.039 And we know empirically that minimum wage increases, 00:40:54.099 --> 00:40:57.019 like that 1 .4 % price hike on a Big Mac, are 00:40:57.019 --> 00:40:59.340 often passed on as price increases to the consumer. 00:40:59.599 --> 00:41:02.159 Then, what happens to the core ethical mission 00:41:02.159 --> 00:41:05.179 of the living wage when the poorest workers who 00:41:05.179 --> 00:41:07.360 benefit from the higher paycheck end up paying 00:41:07.360 --> 00:41:10.320 a hidden sales tax on the very goods and services 00:41:10.320 --> 00:41:13.420 they buy? That conflict, the erosion of the real 00:41:13.420 --> 00:41:16.179 wage through cost passed through, is the core 00:41:16.179 --> 00:41:18.880 tension of distributive justice worth mulling 00:41:18.880 --> 00:41:21.500 over long after this deep dive is complete, an 00:41:21.500 --> 00:41:23.500 economic problem where the solution seems to 00:41:23.500 --> 00:41:25.840 be part of the cost. Thank you for diving deep 00:41:25.840 --> 00:41:26.659 with us. Thank you.