Saturday, December 10, 2016

Minimum Wage Laws: It’s Not About What You Can ‘Get By’ On. It’s About What You Agree On.

One  argument used by proponents of minimum wage laws, as well as the current drive to dramatically raise the minimum wage rate, is to claim that people need it to maintain a minimally livable lifestyle. Leaving aside the fact that context differs from person to person and family to family—e.g., a single worker may “need” higher pay, while the second earner in a two-income family may not—the argument typically goes something like how the New Jersey Star-Ledger presents it in As wages go, $10.10 is the bare minimum in New Jersey. In advocating for raising the current NJ state minimum wage, the Star-Ledger asks “Think you could get by working for $8.38 an hour?”

Right off the bat, the Star-Ledger frames the debate in terms of need, not justice or economics—and only in regard to the single earner who lives alone and has no other source of income.

I left these comments:

No. That’s why I learned a skilled trade (2, actually), productiveness, self-responsibility, full development of my talents, the virtue of teamwork, the value of patiently gained experience, and other good traits that lead to the willingness of employers to voluntarily agree to give me higher pay.

No one is automatically worth or has any right to a “liveable wage,” whatever that means. A person is worth only what someone is voluntarily willing to pay them. Ultimately, competition and the market pricing mechanism—the law of supply and demand—will determine the appropriate compensation level for all jobs. Any other method of gaining higher pay is gangster economics.

More fundamentally, the only people with the moral authority to determine pay is the employer and the job-seeker, by voluntary agreement to mutual advantage. Legislators have no rights in the matter whatsoever, except in cases of breach of contract or fraud. Neither does walking into a voting booth convey any right to dictate to any employer the requirement to pay a worker more than he deems commensurate with his worker’s contribution to the productive process, or forbid any worker from agreeing to work for less than the voter approves of.

All minimum wage laws should be abolished. They are an infringement on the right to voluntary contract between employers and employees. It is an economic abomination to outlaw more and more jobs by wage fiat, under the guise of “giving low-wage workers a raise.” In the end, no one deserves to earn more than they are objectively worth economically. Nor is it even possible. Any business that attempts or is forced to pay their workers more than they are objectively worth won’t be around for long. Reality trumps the whims of politicians and voters who enact feel-good laws imposing one-size-fits-all wages at others’ expense. Reality trumps public opinion polls.

Related Reading:

How Minimum Wage Laws Facilitate "Wage Theft"—Against Employers

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