In an article for the Foundation for Economic Education (FEE), Preston Cooper argues for The "Sub-Minimum" Wage: An Escape Hatch for Young Workers, which is already a small feature of Federal minimum wage laws. Cooper argues correctly that minimum wage laws disproportionately harm the low-skilled, especially the young:
Teenagers and individuals in their early twenties often lack the skills that make them valuable to employers. Therefore, they must learn these skills on the job, while not producing much for the businesses who hire them. When states (or the federal government) set high minimum wages, hiring unskilled young people will not make financial sense for most employers.
True. But I respectfully disagree that sub-minimum wage laws are the way to go—not if the goal is progress toward free (or freer) markets. While a legal sub-minimum wage may make practical sense in the short term, it still represents the outlawing of jobs. Economically, the same arguments against minimum wage laws applies to any minimum wage. Granted, a sub-minimum wage would open up more job opportunities for some, but at the cost of a terrible philosophical surrender.Philosophically, it’s devastating to the case for free markets. The minimum wage debate is not fundamentally about economics. It is about liberty. Free markets rest on individual rights, freedom of association and contract, and freedom of choice. In regards to employee compensation, that means employers and employees/job-seekers must be free to negotiate their own arrangements without coercive government interference, including legally enforced minimums. As long as there is no evidence of fraud or breach of contract and the like, government should have no role in employer/employee relationships regarding wages.
There are times when piecemeal steps toward a fully free market are warranted: e.g., a flat-rate income tax, tax credits for education, or personal accounts within Social Security. In such cases, in my view, the political compromise advances liberty and restricts government controls. The goal for liberty champions should not be to make statist programs “work better.” The goal should be to reduce statism and advance liberty.
The sub-minimum wage is not a freedom-advancing compromise. Multiplying rights-violating wage standards just breaks the malignant cancer into multiple smaller tumors. It is a surrender to the statist principle that the government should have the coercive power to set minimum wages without any corresponding advance toward liberty. A better approach might be to call for eliminating the minimum wage for, say, those under 25 years of age. That would advance liberty, and represent a springboard for more advances. Under sub-minimum wage proposals, liberty is not advanced. Free market advocates shouldn’t waste valuable advocacy resources on such proposals.
Minimum Wage Amendments Violate Rights and Subvert Proper Constitutions