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phantom power

(25,966 posts)
Thu Mar 20, 2014, 04:52 PM Mar 2014

The Idea of Workers “Choosing” Their Hours, Pay or Conditions is Bogus

One of the Big Conservative Lies is that all human decision making is nicely modeled by Market Based Decisions. It's evil because it sounds superficially plausible and we're all sort of enculturated to think about decision making that way. But there's all kinds of ways that cause market-based decisions to go out the window. It would be nice if *those* were discussed more often.

Whatever planet Shales lives on doesn’t have actual workers. Choice? Who chooses to work certain hours? Yglesias used this formulation in his classic “it’s ok for Bangladeshi workers to die on the job because their country is modernizing” response to me after the Rana Plaza collapse. It makes no sense because it is totally disconnected from how people actually act. When the choice is “work or starve” that’s not a choice. People work because they are told they are working this long, whether it is a 20 hour week or a 50 hour week. The only things that have ever gotten in the way of this are unions and governments. Today, the former doesn’t have the power and the latter increasingly lacks the inclination.

The rest of it is just bog standard flat tax idiocy, hiding corporate greed in a rhetoric of worker freedom. But people who say workers “choose” these things are showing me they have no idea what actual working class life is like.

http://www.lawyersgunsmoneyblog.com/2014/03/the-idea-of-workers-choosing-their-hours-pay-or-conditions-is-bogus

People decide to work more (or less) than 40 hours a week because of a variety of factors including family life, education, hobbies and leisure time in general. But the biggest reason may be as simple as one word: taxes.

Americans would willingly work longer hours, earn more and be more productive if their marginal tax rates were lowered.

Across nations and decades, the Nobel-winning economist Edward Prescott found, tax rates largely determined the hours that workers put in. Heavily taxed workers in Europe put in fewer hours than more lightly taxed workers in the United States, he determined.

More precisely, taxes limited the hours that Europeans work on the books. In countries like Germany, he wrote, people work just as much as Americans; they merely record less of that work for the government by working in the black or gray markets, where their earnings are untaxed or less taxed.

What does that mean for the workweek in the United States? A progressive rate structure like ours starts out alluringly low, then raises rates as you earn more, taxing the last dollar earned more heavily than the first. The more progressive a rate structure, the less attractive working that extra hour, or getting that promotion, becomes.

Though most workers aren’t taxed at the top and heaviest rates, they can still feel the load of some rate increases. And most people are aware in a general sense that harder work has limits to its rewards because of the effect of progressivity.

If we flattened the code, so that the last dollar is taxed at the same rate as the first one, people would want to work more.

The hours we work should be a matter of genuine, individual choice, not determined by government policy.


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The Idea of Workers “Choosing” Their Hours, Pay or Conditions is Bogus (Original Post) phantom power Mar 2014 OP
People work less because they don't want to pay more taxes? abelenkpe Mar 2014 #1
In my 44 years, I've never met anybody who turned down a raise because of tax brackets. phantom power Mar 2014 #3
It's just so unrealistic abelenkpe Mar 2014 #4
Not normal hours, but they do for overtime. CFLDem Mar 2014 #8
It's just mind-numbing how they can make those claims... trotsky Mar 2014 #2
K&R Cleita Mar 2014 #5
The 70s called, they want their conservative mindset back JHB Mar 2014 #6
Free market economics has no answer to the problem of technology-induced permanent labor shortage. reformist2 Mar 2014 #7

phantom power

(25,966 posts)
3. In my 44 years, I've never met anybody who turned down a raise because of tax brackets.
Thu Mar 20, 2014, 05:22 PM
Mar 2014

It's a total mystery to me why this myth won't die.

 

CFLDem

(2,083 posts)
8. Not normal hours, but they do for overtime.
Thu Mar 20, 2014, 06:26 PM
Mar 2014

After a certain point the taxes get so ridiculous, it doesn't make any sense to keep working.

trotsky

(49,533 posts)
2. It's just mind-numbing how they can make those claims...
Thu Mar 20, 2014, 05:04 PM
Mar 2014

when we actually lived through a time when there were no labor laws or unions and workers supposedly had this wonderful power of "choice" to shape working conditions.

It was the worst time workers have ever seen in this country. Endless hours, dangerous conditions, child laborers, you name it.

They take us for fools - and it seems a lot of Americans are.

JHB

(37,131 posts)
6. The 70s called, they want their conservative mindset back
Thu Mar 20, 2014, 06:01 PM
Mar 2014

The only time this argument made any sense was the 70s, when income tax brackets were not indexed to inflation, so that even if your income kept pace with inflation (and thus just stayed even in terms of buying power) the higher tax brackets affecting you effectively set you back. That was "bracket creep".

After Reagan, not only have the brackets been indexed to inflation, but there are far fewer of them. We have minimal progressivity compared to the past, and all of it occurs at historically low levels.

When Obama came into office there were 6 income tax brackets, only one kicking in somewhere above $250,000 (for married couple filing jointly). He managed to add one more bracket at top, so now there are 2 that kick in above $250K. Both of them kick in below $500K.

In comparison, adjusting for inflation, in 1955 there were 24 brackets, 16 of which kicked in above $250K, and 11 of those kicked in above $500K. The top rate affected income above the equivalent of $3.3million.

All progressivity on very high incomes was eliminated under Reagan, and has not been restored.

Even the Roaring Twenties, when the top marginal rate was 25%, spread that over 23 brackets and the top one affected income above the equivalent of $1.3million.

Progressivity discourages work? More like "progressive taxation is for the little people".

reformist2

(9,841 posts)
7. Free market economics has no answer to the problem of technology-induced permanent labor shortage.
Thu Mar 20, 2014, 06:06 PM
Mar 2014

Their models would coldly predict that in such an economic climate, labor will be in permanent surplus, and so wages will collapse.

It may be a mathematically correct answer, but it's not a morally correct one. An economic system should exist for the benefit of humankind, not the other way around. When in the course of human events it becomes necessary to dump the economic system which we heretofore believed in...

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