Minimum-wage debate produces maximum rapport
Ameya Pawar, Allen Sanderson have a surprising meeting of the minds on training workers and universal basic income
By Ted Cox
A progressive North Side alderman and a free-market University of Chicago economist agreed to disagree on the minimum wage, but found a surprising meeting of the minds on training for displaced workers and a universal basic income in a Hyde Park debate Tuesday night.
Chicago Alderman Ameya Pawar and U. of C. economist Allen Sanderson met in the college's Kent Chemistry Lab lecture hall before a packed house of about 200 students.
"I'm sure the alderman and I disagree on almost everything," Sanderson said. But Sanderson immediately lauded Pawar's considered approach compared with his 49 colleagues in the Chicago City Council and, citing that he's a Hyde Park alumnus, said, "Thank you for upholding University of Chicago standards."
They differed, albeit respectfully and diplomatically, on the minimum wage. Sanderson labeled it a "regressive tax" and, using McDonald's as an example, said it would result in higher prices paid by the very poor people it was meant to help.
Decrying "laws that make poor people poorer," Sanderson insisted, "If you raise your wage $2, who pays for that? Poor people."
Pawar urged "raising the minimum wage to a living wage," but quickly added, "It is not enough to raise the minimum wage," pointing out it's part of a "spectrum" of "worker protections" essential to leveling the economic playing field and reducing income inequality — issues like health care, child care, fair scheduling, and sick leave.
"All of these policies would be great if we addressed them at the state level. It would be better if we addressed them at the national level," Pawar said. But political "paralysis" prevented that, leaving it to municipalities, the only hands-on government still functioning, to do what they can. According to Pawar, 500,000 Chicagoans work at the minimum wage.
"There are things we have to do as elected officials to make government work to serve people, address the issues people face today," Pawar said. "I don't have the luxury to sit back ... to hope and wait for other levels of government to do their job."
Businesses stand to benefit from reforms, Pawar said, adding, "When you actually raise wages and workers' protections, you reduce turnover."
Pawar said government had been hijacked by those heeding Grover Norquist that "every tax is bad."
"Businesses are not the enemy," Sanderson insisted. "Businesses are part of the solution much more than they're part of the problem." He said that, in the current computer age, businesses have never had less control over their customers or their workers.
While warning against government programs that intrude on free markets, like the minimum wage and rent control, Sanderson pointed out that an aversion to taxes is not his approach. "I am in favor of getting more economic resources to poor people in this country," he said. "I want poor people to get a a larger slice of the economic pie."
He lauded Milton Friedman's proposal for a "negative income tax" in the form of the earned-income tax credit, saying, "It's probably a welfare program economists would like to see expanded."
That led him to express surprising tolerance for the notion of a universal basic income, which he called "a better alternative to minimum-wage laws."
Sanderson said, "It has to be a support" above a base employment income. "It can't be the end-all and be-all," he said, adding, "Given the choice between giving people things and giving people money, economists would rather give them money."
They agreed that the wave of computer automation threatens jobs, and on the need to retrain those displaced workers. "There are always jobs that come and jobs that go," Sanderson said, adding that hiking the minimum wage would actually discourage some from pursuing new skills. He advocated vouchers to retrain idled workers.
"There is a major investment that needs to be made," Pawar said, but he pointed out that, given the ongoing trend toward erratic scheduling in low-wage jobs, that makes it nearly impossible for someone in a transitional job to get that training. He called for a sustained government infrastructure program on the order of the National Recovery Act in the Great Depression, which produced lasting improvements in public resources.
Pawar also said that in the real world an unemployed middle-aged worker was more likely to feel bitter and express that in the voting booth than to pursue, say, computer training, thus producing "demagogues" in the political system.
Sanderson drew parallels from that to the current divide between urban and rural communities, which he said had also helped produce the current political administration.
Moderator was Davis Larkin of the UChicago Political Union, sponsor of the debate, but he might be disappointed to discover that, after giving Sanderson and Pawar left- and right-wing books on economics, counter to their political affiliation, as a thanks for taking part, they swapped them immediately afterward at Sanderson's suggestion.
In closing, and in the interest of full disclosure, let it be duly noted that Pawar is founder and executive director of One Illinois.