Friday, April 17, 2015

Gravity Payments' Voluntary 'Minimum Wage' vs. Minimum Wage Laws

The CEO of a small technology company—Dan Price, chief executive and founder of Gravity Paymentsrecently made a splash when he cut his $1 million salary to $70,000 while raising all of his 120 employees to the same level, effectively establishing a company-wide $70,000 minimum wage.  

This development elated the liberal establishment. But it’s worthwhile to note that this “minimum wage” is instituted by a private company, by voluntary consent. So unlike coercive minimum wage laws, it’s not immoral. Is it practical to remove the incentive for individual employees to increase their income by improving their personal productive contribution? It’s doubtful, and I wouldn’t entrust my savings in the stock of a company that had this type of compensation policy.

Be that as it may, if Price’s company thrives, more power to it. If it fails, the company and its employees take the consequences, its customers taking their business elsewhere. Whatever the outcome, it’ll only prove workable, or not, for this one company. There is no one-size-fits-all compensation philosophy.

This is important to point that out because some on the Left are trying to equate Price’s policy to the broader issue of minimum wage laws. For example, in its editorial Who will be the next CEO to embrace a salary cut?, the New Jersey Star-Ledger asserts that the new wage policy at Gravity Payments “makes [Price] the polar opposite of the Koch brothers, who have used their vast fortune to fund candidates that fight minimum wage increase while cutting services for the needy.”

I left these comments:

Wrong. The actions of Price and the Koch brothers spring from the same moral premises.

Those who oppose minimum wage laws (or minimum wage increases) are fighting for the rights of private businesses to do exactly what Gravity Payments’ CEO did; set his own company’s pay scale voluntarily and without government interference. Polls of millionaires notwithstanding, the moral difference between the government imposing minimum wages by law and a private company setting its own “minimum wage” policy couldn’t be more black and white. To equivocate the two is like drawing no moral distinction between a cashier taking your money at the checkout counter in voluntary exchange for goods, and an armed street thug taking your money at gunpoint.

Such equivocation is a classic statist gimmick. Consider “cutting services for the needy.” What “services” is the S-L complaining about? Government-imposed services, since no one—not the Koch brothers or anyone I know of—ever proposed cutting private voluntary charity for the needy. But just as with the minimum wage, there is a black-and-white moral difference between, say, the SNAP food stamp program and a private food bank.

Statists blur the line between aggressive legal coercion and private voluntary action in order to expand government control and diminish liberty. This is how today’s Left is able to get away with relentlessly advancing its corrupt, egalitarian, achievement-hating Rawlsian concept of “economic justice.” In the process, they’re destroying actual, political justice.  

Real justice is rooted in political freedom and individual rights. Rights are sanctions to freedom of action in pursuit of personal advancement, not an automatic claim to material benefits—like an unearned guaranteed wage or free food—that others must be forced to provide. The government should be protecting individual rights, including the rights of all private employers and job-seekers to set their own compensation terms in voluntary contract—just as Price did with his employees at Gravity Payments and as the Koch brothers fight for. The government’s job is to protect us from criminals, not become the criminal.

Related Reading:

Obama's Corrupt "Equality" Campaign and the 99/1 Premise

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