Free labor market & universal basic income (UBI)

Several times now I've seen clips of Megyn Kelly of Fox News, in discussing a universal basic income (UBI), demanding, "who will clean the toilets?" I wonder whether she realizes what an interesting meditation her question is on the need for regulation in promoting truly free markets, and what that says about the necessary regulation of truly free labor markets.

If we go back to Micro 101, Adam Smith, the law of supply and demand, and all that, and imagine that we have a demand -- clean toilets -- and a supply -- workers who are capable of cleaning said toilets -- how does a free market address that?

In the truly unfettered market, we must balance the fact that cleaning toilets is unpleasant with the fact that it is necessary. Hence, one would imagine, cleaning toilets would be a job that would be paid relatively well when compared to other menial but more-pleasant tasks, like, say, cleaning office space. At some point, the price people are willing to pay to have their toilets cleaned exceeds the marginal value workers get from avoiding the unpleasantness of cleaning toilets, and everyone is happy -- people get clean toilets, and workers get paid enough to feel good about having cleaned them.

But this is not the reality we live in. I think we all know that those who are -- I'm sorry to use this word, but I don't see a truer one -- forced to clean toilets are some of the lowest-paid workers we have. And in general, unpleasantness and indignities are characteristics we associate with lower-paying, rather than higher-paying, jobs. Going back to Microeconomics 101, this seems irrational. Granted, our highest-paying jobs are to those with difficult-to-replace talent, skills, and/or education, and most of those jobs are relatively pleasant for the worker performing them. But given that there is a great mass of unskilled work that varies in pleasantness, why is it that those with the greatest indignities do not, in general, command greater pay?

The answer is that we don't work in a truly free labor market -- as anyone who actually works knows. We do not live in a world where free agents independently contract their skills and labor to employers after negotiating a transparent market price. [...] The frictional forces at work mean having and keeping employment at all is so desirable that bosses gain an outbalanced level of power. If they say you're going to clean toilets, if the alternative is unemployment, you clean toilets, even if the pay is no greater than others in the workforce who perform less unpleasant tasks.

The devils are in the details, but a UBI could mean that those workers would be empowered to act more in that ideal market model: if a poverty-level income were guaranteed, some people would undoubtedly be willing to supplement their incomes by cleaning toilets, if the work was fairly paid. Others might prefer the UBI subsistence level to cleaning toilets -- or, more likely, would prefer some more pleasant supplemental work that paid somewhat less.

But Megyn Kelly has it completely backwards if she thinks the likelihood of people refusing to clean toilets for minimum wage is an indictment of the idea of a universal basic income. To the contrary, it shows how regulation on the margins can promote market forces when they'd otherwise be diluted. -- [don't know the author, c.2013]