Sunday, November 20, 2016

Christie on Vetoing $15 NJ Minimum Wage: “Sounds Great When You’re Spending Somebody Else’s Money”

New Jersey Governor Chris Christie vetoes $15 an hour minimum wage bill pushed by N.J. Democrats, reports the New Jersey Star-Ledger in a front page print article last summer. Titled “Tough Bananas”—a reference to the Pennington NJ supermarket where Christie announced his veto.

Christie argued forcefully against raising the minimum wage to $15 per hour. Refreshingly, Christie did not just restate the inexorable economic downside. He brought in the moral argument, saying that “the government doesn’t ‘have the right’ to impose increases on employers,” according to reporter Matt Arco. The Democrats had just one argument: People “need” the increase—never mind logic, morality, justice, or basic economic reality.

As the saying goes, these people aren't looking for handout, they're looking for a hand up. People who put in a full day should be able to afford food, a place to live, transportation and clothing without having to rely on public safety nets and charity.

I left these comments on Arco’s article, slightly altered for the editorial, edited for clarity:

In the Star-Ledger digital news article by Matt Arco, Christie is reported to have said “the government doesn’t ‘have the right’ to impose increases on employers.” He’s absolutely correct: Government has no right. The fact that he is inconsistent—he actually supports a lower minimum wage—doesn’t change that fact.

More specifically, minimum wage laws are immoral because they violate the rights of employers and job seekers to set their own terms of employment by mutually beneficial voluntary agreement. The proper purpose of government is to protect individual rights equally and at all times. This is the most fundamental principle of American government. Rights are guarantees to freedom of action, not an automatic claim on material benefits, including some pre-set minimum wage, that others must be forced to provide. Individual rights include the right to voluntary contract—an outgrowth of the right to freedom of association. Therefor, the government’s job is to protect contractual rights for all, not favor one economic faction at the expense of another, so long as the terms of the contract do not involve the intended or actual violation of anyone’s rights. A voluntary compensation agreement between an employer and a job seeker, whatever the hourly rate agreed upon, does not violate anyone’s rights, so the government has nothing to say about it until and unless one side or the other commits fraud or breach of contract.

Minimum wage laws are fundamentally immoral for several other reasons:

  • They are biased in their enforcement. If a minimum wage is violated, there are two law-breakers—the employer and the employee. Yet, only the employer is punished—and worse, the employee is usually rewarded for his law-breaking with back wages and the like, even though he voluntarily agreed to accept the sub-minimum wage and took the job willingly. Minimum wage laws violate equal protection of the law.
  • They are a handout to bigger, more established businesses that can afford the higher cost or can afford to automate. By forcing smaller, marginal, struggling businesses out, minimum wage laws suppress competition. This is cronyism.
  • They kick out the lower rungs of the economic ladder of advancement by killing  job opportunities for lower-skilled, mostly young people. Outlawing lower-paying jobs is a terrible injustice against the ambitious poor seeking a path to upward mobility.

The S-L claims that “these people”—workers demanding a higher mandatory minimum wage—“aren't looking for handout, they're looking for a hand up.” In fact, they’re looking for neither. Both a handout and a hand up imply voluntary charity or voluntary help. Minimum wage laws are not voluntary. They are force. That someone “needs” a higher wage is beside the point. What matters is the employee’s contribution to the productive mission of the business, as determined by voluntary employer/employee agreements in a free competitive labor market. Just as the businessman’s profit depends on creating value for the consumer, the worker’s compensation depends on creating value for the employer. Those who disconnect their compensation from their productiveness—by, say, claiming an entitlement to a “livable wage” just for showing up for work—are parasites. Need is not a license to steal—and those who get higher wages because the government forces the employer to pay are basically stealing the additional money, with the government as the hired gun. It’s legal organized crime. The only just wage is a wage voluntarily paid by the employer and agreed to by the employee. The only honorable way to “get a raise” is to make oneself more valuable to an employer by gaining experience and increasing work skills, or look for another job. Don’t tell me about “social justice.” Justice is getting what you deserve, and no one deserves to get by force what he cannot earn by voluntary consent.

And for those who will still have a job at the higher rate, that extra money is blood money, coming at the expense of the forced unemployment of other job seekers. As everyone knows, minimum wage laws are economically destructive. Employers are just like everyone else, including consumers—they consider cost before spending. If the price goes up, for labor as for goods, he is less likely to pay. The end result is fewer jobs, fewer businesses or less business expansion, and less worker opportunity for economic advancement and self-sufficiency, forcing more people onto the taxpayer-funded dole.

Supporters fancy themselves “compassionate” for wanting to help others by raising the minimum wage. They want to “give New Jersey workers a raise,” as the “liberal” New Jersey Policy Perspective put it. That’s really big of them. But as Christie pointed out, "All of this sounds great, raising the minimum wage, when you're spending someone else's money." But forcing others to pay for the luxury of their counterfeit compassion exposes them as phonies. Supporters of this bill are spiritual parasites, claiming credit for compassion without having to actually do anything. Minimum wage laws are gangster economics. They are immoral and economically destructive. Not only is Christie right to veto this bill. Existing minimum wage laws should be repealed.


The Democrats are now saying they will but a NJ constitutional amendment for a $15 minimum wage before the voters in 2017. Anticipating this move, Christie “urged business leaders to ‘speak up.’”:

“There’s going to be a large and, I hope, loud public discussion about this,” he said. “Those who choose to stay under the radar will lose. We need to educate the public on this issue.”

Hopefully, that education will include not just the economics of the issue, but also the morality of it. Business leaders need to loudly speak up for their moral right to run their businesses as they judge best, without coercive political interference. By doing so, they’ll also be speaking up for their customers and for job-seekers’ moral right to seek their own terms of employment and exert control of their own path to economic self-sufficiency.

Related Reading:

Some Fallacies Behind the Drive for the NJ Minimum Wage Increase Amendment


mike Kevitt said...

When I entered the labor force in 1962, nobody ever thought of helping the employer achieve his objectives. They just worked as much as they had to, if that, to get the money they had to settle for. They didn't really want to work at all. They didn't care that it took work to get what they want. They just wanted it anyway. If they could get it without working, they'd do that, and think no more about it.

Occasionally I'd try telling 'em different. I even told them if they worked harder and produced more and helped the employer make more profit, they could be paid more, the implication being they WOULD be paid more, or they could, at least, bargain for more. They looked at me like I was from Neptune. They might say something like, "Why do you think we have, and need, unions?" The older ones would say, "Years from now, when you're older, you'll see how you can KILL yourself working. The boss will work you to death while paying you pennies if he can.", etc.

This was nearly 4 years before I ever heard of Ayn Rand. I couldn't see how people could think and act so contradictory to what I thought was so obvious. It was like they thought 5+3= something less, like 4. I didn't realize this was just the beginning of a whole world of unreason out there (unreason of people, at least). I see more, now, how peoples' heads are turned forward, backward and inside out, and twisted into gordian knots.

Michael A. LaFerrara said...

I sympathize. Too many people don't take pride in their work. They think all they have to do is show up, put in time, do the minimum necessary not to get fired, and that makes them entitled to some legally mandated "living wage."

True, there are also ambitious, conscientious people out there. But even they don’t fully realize that hard work is not the source of their compensation. Value creation is. Obama says “there are a lot of hard working people out there.” True. But they don’t all create the same amount of value, so they don’t all contribute the same to the productive mission of their respective companies.