Pole Tax

On Twitter, E.N. Brown asks:

Hey, #sexwork twitter: Any thoughts on Nevada declaring strippers employees, not independent contractors, who must be paid minimum wage?
— Elizabeth N. Brown (@enbrown) October 31, 2014

Concatenated, EE friend The Honest Courtesan replies: "I think it'd be better to leave them as contractors, but stop TREATING them like employees & cash cows. The biggest problem is that clubs SAY they're contractors, then charge extortive fees & impose draconian rules."

A glib take: the Uber of exotic dancing already exists, and it is called "escort services." The physical property of the gentleman's club (614 Wharf Ave.) acts as one or more of the following:

• A clearinghouse: it provides a centralized location to match clients with performers. A customer might want something in particular, but the act of browsing helps define specific desires. Nota bene, this works both ways. In a club, performers can quickly visually screen customers before approaching for private dances. Call-in services oblige escorts to haul clear out to the site before assessing whether or not the client is tolerable.
• A (for lack of a better term) sacred space. This land is for a single purpose. There may be libation here, but this is not where we drink. There may be food here, but this is not where we eat. There may be music here, but this is not where we go to get our Creedence fix (brb, getting my Creedence fix). This place is the place to see undulating flesh. This place is the place to be on the business end of an inviting smile. This place is the place to feel a tempting, inviting touch, to smell forbidden musk, to hear gracious lies, to forget your loneliness for a little while. This place is a place of great glamour, in the old sense of the word: a gratifying, glimmering shared falsehood that lifts the weight of the world if but for a fleeting moment. It is an important, valuable space and should be kept as such. 
• A warren. This is the less-charitable interpretation of the "sacred space" interpretation. Like it or not, a great many people are simply disgusted by sex work, no matter how sanitized or discreet it might be. Zoning legislation keeps exotic dancing segregated from the God-fearing, pearl-clutching types. I see quite a bit of this here in my uptight Northern Virginia suburban corridor. I won't Google any addresses here at my work machine, but I'm fairly certain that I'd have to make my way clear to DC to see a dancer half my age swivel her hips in my direction. The median constituent in my neck of the woods has uttered a pretty unambiguous "nope" towards pole grindin'. 
• A place of ordinary business. Payment for services rendered, like at the dentist.

Club owners can get away with extorting dancers because of the aforementioned land use restrictions (and if you think Nevada is some sort of free-for-all when it comes to opening a strip club, you have another think coming). In the terms of econ 101, clubs provide a rent, and the rents are generated by way of the first three above bullet points. The value added to the client, to the performer, and to the community accrue to the residual claimant, which under the ordinary rules of organization is usually the property holder, the person with his (and don't kid yourself, it's usually a man) name on the title deed.

Typically, Ray keeps the [value] streams separate through multi-part tariffs. The cover charge and the drinks minimum goes to the club owner, the dancers get their tips (or some fraction after they tip out the DJ and staff [I presume]). The details almost certainly vary from venue to venue. The idea of treating dancers as independent contractors renting out space is actually quite a clever one—by paying a fixed charge to perform, the club obliges dancers to deliver de minimus that much value to the clients, thereby increasing the prestige of the club. Paying wages and heavily garnishing tips gives dancers an incentive to shirk (on the margin) and to hide tips (on another margin). Shirking and evading is evidence of a hostile relationship between owners, performers, and clients. This is less euvoluntary than a situation of mutual respect and service.

How to collect and distribute rents is a matter of negotiation. The minimum wage idea is perhaps one way to get to a just outcome, but it isn't the only one. Relaxed land-use regulations help to strip the location premium from the owner. Re-formatting the multi-part tariff might also help. Most of all, it's important to recognize which property rights regimes lead to the most efficient allocation of scarce resources. Treating exotic dancers like factory workers is probably a lousy approach. Then again, treating factory workers the way they're typically treated is no great shakes either. Hm.

Obligatory:

Poverty as Pollution: Buchanan's Basic Minimum Income

Are transfer payments euvoluntary? Don't be silly. Of course not. Don't be DAFT. They're plainly coercive, so asking about their euvoluntarity is facile. What we might want to consider is whether or not there's an arrangement in a reasonable choice set that is both less distortionary and less wasteful.

In The Bases for Collective Action (Collected Works of James Buchanan. Vol. 15. Liberty Fund p. 21), James Buchanan forwards the following:

Extending the notions of externality and environmental quality even more broadly, we can also encompass the potential role of collective action in providing for the relief of primary poverty. In one sense, the mere existence of very poor members reduces the overall environmental quality of any community. Any action aimed at removal of this poverty will impose an external benefit on all members of the community. There are clear gains to be made from cooperative or collective efforts to eliminate or at least to reduce poverty.

 In another essay (Social Insurance in a Growing Economy, ibid p.410), he argues for clear separation between the social insurance function and the poverty relief function. He was dismayed at the illiberal clumping of the two for both analytical and practical purposes. "One of the chief sources of crisis in the existing social security system is the observed tendency of politicians, especially in recent years, to confuse the achievement of social insurance objectives with the relief of primary and secondary poverty and to load the same set of institutions with these quite different burdens." With an economists' eye, this is plainly obvious. But what is obvious to the trained economist may be hazy or irrelevant to the typical voter.

And in the taxonomy of umbrella-twirling pedestrian intuition, far from the clipped cane-tapping of the prudential pocketwatch-checkers, caring for the poor engages more or less the same moral machinery as caring for the elderly. In both instances, we have examples of unfortunate outcomes: Skid Row panhandlery on the one hand, grandma eating cat food so that she can afford her heart medicine on the other. In both instances we have at least the presumption of collective action "failures" (remember that there are no solutions, only tradeoffs), and in both instances, we have an increasingly powerful taxation authority and a bountiful œconomy poised to clean up not merely our dunnage-strewn shores, but our drunkard-strewn boulevards.

So how about that basic minimum income? Mike has a piece published on the topic, and I've got a working paper on it, and we both motivate the discussion using poverty relief rather than old age insurance. In light of Buchanan's concerns and my hunch that in the moral intuition, OASDI and welfare get conflated, does the analytical argument for basic minimum income improve? Why or why not? Is a two-birds, one-stone approach inappropriate if it means that there should be significant efficiency gains to be had?

Or is consideration of this question meaningless if the core of the game is null? How would you buy out the bureaucracy?

Labor is not Euvoluntary: Golden Arches Edition

Buzzfeed reports on trouble in McDonaldland. Ray Kroc's company acknowledges that its line employees can't make ends meet on a minimum wage.

The BATNA for low-skilled work is always and everywhere ugly. This is an economic reality, one that can't be ignored by any amount legislative fiat. Low-skilled workers simply aren't that productive. That's what it means to be low-skilled.

The solution is to allow them to gain valuable skills. By letting them participate in the world of work. The solution is emphatically not to price them out of the market by making it prohibitively expensive to hire them and forcing firms to turn entry-level jobs over to automation.

It's true that entry-level work is not euvoluntary. All the more reason to avoid legislative meddling.