In the short run, a business (or an individual) will continue to operate (or work) so long as at least a portion of its fixed costs are covered (that is: you're meeting the marginal cost of operation / labor).
By putting the subsidy of BI underneath an individual, you're covering that much more of their fixed costs, and it may well be that the person is ahead by working at a below-full-cost wage. And if the BI covers enough of those fixed costs, this can be sustained indefinitely.
Again: this represents a net subsidy of the business which is receiving this labor. There's a reason I'm saying BI and MW are complimentary. They address different market failures.
But with a sufficient stipend, all of the fixed costs can be covered. At which point there is no short-run loss-minimization problem, because costs will only be above pay if marginal costs are above marginal pay, at which point the individual will stop working.
I'm ... not convinced this fully addresses the other aspects of business subsidy presented by lack of a sustinence-level minimum wage. I'd need to think about it in more detail.
Comments
Look at the short-run loss-minimization problem.
In the short run, a business (or an individual) will continue to operate (or work) so long as at least a portion of its fixed costs are covered (that is: you're meeting the marginal cost of operation / labor).
By putting the subsidy of BI underneath an individual, you're covering that much more of their fixed costs, and it may well be that the person is ahead by working at a below-full-cost wage. And if the BI covers enough of those fixed costs, this can be sustained indefinitely.
Again: this represents a net subsidy of the business which is receiving this labor. There's a reason I'm saying BI and MW are complimentary. They address different market failures.
But with a sufficient stipend, all of the fixed costs can be covered. At which point there is no short-run loss-minimization problem, because costs will only be above pay if marginal costs are above marginal pay, at which point the individual will stop working.
I'm ... not convinced this fully addresses the other aspects of business subsidy presented by lack of a sustinence-level minimum wage. I'd need to think about it in more detail.