Republicans have lots of things to say about the problems in the job market. They don't want to raise the minimum wage because it "kills jobs". They don't want to extend unemployment benefits because it would be a "disservice". Obamacare is evil because it provides "an incentive to work less".
It's time somebody made them think through their position and see where it logically leads. Because it's truly amazing.
Start with their "free market" dogma: labor is a commodity like any other, and in a free market there is no such thing as unemployment, because wages will fall until the supply of labor equals the demand and everybody who wants a job will have one. If Max the grocer won't hire somebody to sweep the floor for $10 an hour, then maybe he will for $8, or $7…or $4. At some level of pay, the "market will clear" and involuntary unemployment will vanish. At least, that's the theory.
But there's a huge, giant, gaping problem with this, and Republicans are simply ignoring it. Read on to see what it is…
Here's where the whole thing breaks down, folks: our current high unemployment tells Republican ideologues that wages and benefits are too high and need to come down. There are two problems with this, one relatively minor, and one huge.
The "minor" problem has been pointed out by Paul Krugman and other Keynesians: wages are "sticky". Basically this means that both employers and employees are loath to actually cut pay. It's really hard for a manager to tell workers "Folks, times are tough and there are a lot of people desperate for jobs. Frankly, I could replace any one of you for 20% less than you're making now. But to show you what a great guy I am, I'm only going to cut your pay by 15%." By and large this doesn't happen, because managers know it has a devastating effect on morale. Imagine if McDonald's announced it was cutting the pay of its employees: the unrest and strikes we've already seen would no doubt proliferate and perhaps even turn violent. Not to mention the terrible publicity that McDonald's would receive, which could impact their sales and profits.
But the really big problem is: let's say the Republicans are right, and that wages need to come down to balance the supply and demand for labor. Unfortunately, we already know that it's impossible to survive on the current minimum wage without government assistance.
This puts the wage slashers in a difficult position: either they must be prepared to give more welfare to minimum wage workers (which of course would be an even bigger subsidy to McDonald's and Wal-Mart than they already receive), OR they must say, in effect, that they're OK with millions of starving, homeless people panhandling and dumpster diving to stay alive. We might have a technically lower unemployment number, but the plight of those at the bottom of the wage scale would be desperate indeed.
So which is it, Republicans? Expand the safety net? Or call out the National Guard to suppress civilian uprisings?