It’s not obvious that it’s a subsidy. This would be a subsidy only if an employer would have to pay a person less here compared to a market with no minimum wage laws and no social security. For example, imagine that in such a market a person’s wage is $4 per hour (who is currently almost certainly unemployed in California due to the $8/hr min wage). Now let’s analyze what happens to the prevailing wage of a person of similar skill with the above scheme where the government ensures that a person makes at least $6 an hour. The marginal utility of money is lower for the aforesaid person given that he is already guaranteed $6 an hour. This will cause some of the people to not work (whereas in the min wage + fixed social security for the employed scheme, all the people fitting the above profile wouldn’t be working). Since there are smaller number of people of the same skill level competing for the jobs, employers will actually have to pay more money to make it worth the while of the employees! So if anything it is the very opposite of a subsidy for the employers who will now be employing all the people who cannot command minimum wage, and are unemployed now.
It’s not obvious that it’s a subsidy. This would be a subsidy only if an employer would have to pay a person less here compared to a market with no minimum wage laws and no social security. For example, imagine that in such a market a person’s wage is $4 per hour (who is currently almost certainly unemployed in California due to the $8/hr min wage). Now let’s analyze what happens to the prevailing wage of a person of similar skill with the above scheme where the government ensures that a person makes at least $6 an hour. The marginal utility of money is lower for the aforesaid person given that he is already guaranteed $6 an hour. This will cause some of the people to not work (whereas in the min wage + fixed social security for the employed scheme, all the people fitting the above profile wouldn’t be working). Since there are smaller number of people of the same skill level competing for the jobs, employers will actually have to pay more money to make it worth the while of the employees! So if anything it is the very opposite of a subsidy for the employers who will now be employing all the people who cannot command minimum wage, and are unemployed now.