Minimum Wage vs. Human Capital

So while I was out running today, I had an idea. Suppose that there is a difference between the wage clearing rate and the current minimum wage. What if that difference could be captured and invested in human capital?

Let me back up here a minute. Human capital is the stuff that makes you more valuable as a person (think economically, not in terms of virtue). Education, training, and experience are all good examples of this.

What if there were to be some sort of massive government scholarship fund with this difference which could be used to invest in human capital for workers who meet certain requirements?

The Bureau of Labor Statistics (BLS) reports that there are 2 million workers earning minimum wage. Let's suppose that the wage clearing rate is w. With full time workers, 40 hours / week x 50 working weeks / year = 2000 working hours / year. Therefore (2,000,000)(2,000)(5.15 - w) would be placed into this fund each year. Even if this difference were 50 cents, that would still be $2 billion placed into this fund. At $40,000 / worker, this could improve 50,000 workers, or 2.5% of those working at minimum wage. In general, for each cent of difference between 5.15 and w, you would improve .05% of the workforce, which is quite significant for a penny.

When workers would leave this class (minimum wage class) of work, they would lower that supply of workers which would, in turn, raise the clearing wage price. Eventually, in the limit, this would actually raise the clearing wage (w) to the minimum wage ($5.15 in my scenario above).

Problems with this scenario would include:

Where would the money come from?
Probably a tax on the corporations paying the workers minimum wage. They're already losing the money via the minimum wage itself, so I'm not sure exactly what their objection to this would be. Most likely, they would prefer to train their own workers, and take the training costs as a tax deduction. Perhaps this could work as well.

Who would train the workers?
By providing a scholarship-esque program, this could utilize the currently existing capital improvement facilities (colleges, universities, trade schools, community colleges, etc.) for education. The burden shouldn't be too heavy on them (at 50 cents difference, that only makes for an additional 50,000 students nationwide).

Other odd results?
Well, I would suggest having some sort of wage-to-scholarship amount scale, or else you'll have people intentionally trying to work at minimum wage for the scholarship benefits. Intead, perhaps workers could receive scholarship amounts based on how much they earn, decreasing as their pay got farther from minimum wage. Someone working at a wage above (5.15 - w) + 5.15, for example, would receive no assistance.

This was some random idea I had, so please feel free to comment, especially with economic ideas. Remember, anyone can post on this blog.

New Wallpaper

PSA (Public Service Announcement): via Fark I found an awesome new wallpaper that I thought I would share with my faithful readers. It's a satellite image of Earth, which is updated every 5 minutes for the light and every 3 hours for the clouds. The night image can be set to a variety of different (although static and without the clouds) images, which look very cool. You can find the wallpaper here.

Construction Ahead

After visiting a few other blogspot blogs, I'm going to start playing with the coding of the template until its something a little more to my liking. If something looks really funny, just comment somewhere and I'll try to do something about it, since I most likely messed it up in the first place.

A Blow to Racism

Read This First

From dictionary.com:

rac·ism ( P ) (rszm) n.
1. The belief that race accounts for differences in human character or ability and that a particular race is superior to others.
2. Discrimination or prejudice based on race.

Universities are being forced to eliminate their racist scholarships. The difference is, this time the racism was against whites.

There is no denying that these scholarship and fellowships were racist. The second definition from dictionary.com clears that up rather nicely. These awards clearly discriminated on the basis of race.

Now don't get me wrong here - an individual private scholarship should be open to whoever the donor wishes it to be open to. If I get enough money together and form a scholarship for 90 year old female Polish accordian players, that's my business and I no one should be able to stop me from doing that. Sure that scholarship would be racist (as well as sexist, age-ist, and nationalist), but that's my right to decide that. However, it sounds like these scholarships were more public, school-sponsored ones that donors simply gave to a pool of money and the school awarded it.

I also find this quote from the article entertaining:

Advocates of focused scholarships programs such as Theodore Shaw, president of the NAACP Legal Defense and Educational Fund Inc., challenge the notion that programs for minority students hurt whites.

``How is it that they conclude that the great evil in this country is discrimination against white people?'' Shaw asked. ``Can I put that question any more pointedly? I struggle to find the words to do it because it's so stunning.''

Who said anything about a great evil? Why is discrimination against white people any different from discrimination against any other group of people? Why is anti-discrimination news stunning? Hasn't the NAACP been working for that for decades now? But I digress.

Public scholarships should be based on two qualifications: need and merit. Some public scholarships focus on one, and some focus on both, but those two characteristics should encompass it all. What does it matter to a college or university that the applicant is a minority student or not? Does this somehow change the need of the student, or their academic accomplishments? I think not.

Colleges and universities need to turn a blind eye to race in their decisions, both for admissions and scholarship awards.