Low wages and the power to refuse

Europe has been discussing minimum wages for years, and the discussion is almost always the same: what level, with what exemptions, with what effect on employment. It is a useful and limited discussion, because a minimum wage operates on one dimension of the employment relationship — the hourly rate — and leaves everything else untouched.

A basic income operates completely differently, and it is worth seeing where the two instruments resemble each other and where they do not.

Two ways of setting a floor

A minimum wage is a prohibition: below a certain rate you may not pay. It is simple, immediate, and has the merit of costing the public budget nothing.

It has three limits that the economic literature has discussed for decades. The first is that it applies only to regular employment: people working informally, people formally self-employed, people on atypical contracts fall outside it. The second is that it concerns the hourly rate, not the conditions: a minimum wage does not prevent impossible shifts, imposed travel, toxic environments. The third, the most debated, is that if the floor is set above the value a firm attaches to a task, that task can simply disappear.

A basic income prohibits nothing. It changes instead the starting position of whoever is bargaining.

A worker who does not lose their home by turning down an offer can turn it down. Which means whoever is offering has to make the offer acceptable — not because the law requires it, but because otherwise nobody accepts. It is the mechanism by which markets work when both parties have alternatives, and which fails in the labour market precisely because one party often does not.

What changes beyond the wage

Here lies the difference a minimum wage cannot reach.

The things that make a job unbearable rarely concern pay alone. They concern the Sunday shift announced on Friday. The supervisor who humiliates. The unpaid on-call expectation. The transfer a hundred kilometres away. The safety corner cut because compliance costs money.

None of those can be prohibited by an hourly threshold, and many cannot be prohibited at all: they are grey areas where the law says something vague and practice follows the balance of power.

In a context where workers can leave, those practices become costly for the employers who adopt them: you lose people, you recruit and train continuously, you acquire a reputation that makes candidates hard to find. It is a mechanism that already works today, but only in sectors where labour is scarce — and it is instructive that in exactly those sectors conditions are better without any law having required it.

The objection: some jobs would disappear

This is the serious objection, the same one made against minimum wages, and it has to be faced without evasion.

Yes: if people can refuse, some activities that stand today because nobody can afford to refuse them would become unsustainable. They are generally low-productivity, physically hard activities with thin margins.

There are three answers, in decreasing order of strength.

The first is that part of those activities would not disappear: they would pay more. If unpleasant work is necessary and nobody will do it at the current price, the price rises. That is a market functioning normally, and it is exactly what does not happen today because labour supply is compelled by necessity.

This has a consequence that has to be stated: some services would become more expensive. Waste collection, home care, cheap catering. Supporters of basic income should say so, rather than implying that everything stays the same with money added.

The second answer is that part of those activities would be automated, which at current labour costs is not worth doing. That is an ambivalent outcome: it raises overall productivity, and it removes employment precisely where it was most accessible.

The third, the weakest, is that part would simply disappear, and that this is not necessarily bad. An economic activity that exists only because somebody has no alternative is transferring a cost onto a person rather than bearing it. But the reasoning needs caution, because behind those activities are also small firms without the margins to pay more, and writing them off as parasitic would be unjust as well as false.

Which sectors would be affected

It is worth being concrete, because abstract discussion conceals real choices.

The European sectors with the highest share of low-paid employment are known: catering, cleaning, logistics, seasonal agriculture, home care, retail. In each, the economic model rests partly on labour costs that stay low because supply is abundant and without alternatives.

A basic income would change that condition, with different outcomes sector by sector. Where demand is inelastic — care for someone who cannot manage alone cannot be postponed — prices would rise and be paid. Where it is elastic — a meal out can be skipped — part of the activity would shrink.

That is a real change, and supporters should say so. The political question is not whether there would be consequences, but whether it is acceptable that some services are cheap because the people producing them cannot refuse to produce them at that price.

Why trade unions should be interested

There is an aspect of this discussion that is largely absent from European debate: the position of organised labour.

Historically, part of the trade union movement views basic income with suspicion, for two understandable reasons. The first is the fear that it substitutes for bargaining: if the state guarantees a minimum, the employer can lower the wage knowing somebody else covers the difference. The second is deeper and concerns identity: a movement born around work struggles to adopt a measure that abstracts from work.

On the first point, the answer is that the risk is real and must be managed: a basic income without a minimum wage can indeed become a subsidy to employers who pay badly. That is an argument for keeping both instruments, not for abandoning one.

On the second, the observation is simpler: collective bargaining power rests on the ability to sustain a conflict. A strike lasts as long as workers can go without pay. A universal, permanent, tax-financed strike fund is perhaps the most powerful instrument a trade union could wish for — and no trade union has ever asked for it.

A caveat on the direction of wages

The opposite claim is sometimes made: that basic income would push wages down, because people would accept lower pay having a guaranteed income already.

It is theoretically possible and deserves to be taken seriously, because it describes a real mechanism: if I take a job to supplement an income I already have, my willingness to work for little rises.

The two effects — greater power to refuse and greater willingness to supplement — push in opposite directions, and which prevails depends on factors we do not know: the amount, the sector, the alternatives available, the local context.

It is reasonable to expect the first to prevail in the most unpleasant occupations, where refusal is the main margin, and the second in desirable but badly paid ones, where people would work anyway. In other words: wages rising where the work is hard, perhaps falling where it is sought after.

That is a plausible outcome and, from the point of view of people worst off, not a bad one. But it is a hypothesis, and anyone presenting it as a certainty is doing exactly what this site criticises in others.

The point to start from

The most defensible formulation of all this is also the simplest.

In any negotiation, someone who cannot get up from the table is not negotiating. Today, for a substantial share of European workers, getting up from the table means not paying next month's rent.

A basic income does not determine what an hour of work should be worth. It restores to the person selling it the ability to say that at that price it is not worth their while. That is less than a wages policy, and probably more than any wages policy has ever achieved.

A note on the figures

This site publishes no estimate of what a European basic income would cost, and the omission is deliberate. Every serious estimate depends on four choices nobody has yet made: the amount, who receives it, which existing benefits are absorbed, and how much is recovered through taxation. Change one and the answer moves by an order of magnitude.

The figures circulating in public debate — the alarming ones and the reassuring ones alike — are almost always constructed by fixing those four choices in whatever way suits the case being made. That is a way of arguing that works on people already persuaded and fails on everyone else.

The honest position is that the cost depends on a design that does not yet exist, and that producing that design is precisely what is being asked of the European institutions.

In brief

This article addresses one part of the problem, not the problem. A basic income creates no jobs, teaches no trades, does not fix pensions and does not replace the services that answer unequal needs. The claim argued on this site is narrower: that it is, among the available instruments, the one that makes the others workable. Training requires being able to live while training; changing occupation requires being able to be wrong; refusing indecent conditions requires being able to afford refusal.

Three objections remain standing, and this site gives each of them a page: the cost, which is real and requires serious fiscal choices; the effect on rents in markets with inelastic housing supply; and the absence of a credible transition plan. None of them shows the proposal is wrong. All three show it is not ready, which is why the demand made here is not immediate introduction but a serious European trial and a public study putting costs, routes and losers on the table.

If anything on this page is wrong or badly argued, telling us is the most useful contribution available: the address is on the Contact page, and reasoned corrections are published.