QUORA: ‘What does economics have to say about the statement “If a company can’t afford to pay their workers a living wage, they shouldn't be in business.”?

 QUORA: ‘What does economics have to say about the statement “If a company can’t afford to pay their workers a living wage, they shouldn't be in business.”? Is that an economically sound argument?’

I posted this answer:

By “they shouldn't be in business,” does the questioner imply that anyone who doesn’t think the employees are not being paid what he imagines equals a “living wage” can physically threaten or attack the business and its owners, including the use of violence, unless they raise the wages or close the business? Or by “they shouldn't be in business,” does the questioner mean they shouldn't be legally allowed to be in business?  If the first, you are a criminal. If the second, you are worse than a common criminal; you are a fascist.

I don’t think economics has anything to say about this statement, because this is a moral, not an economic, statement. Economics is the science that studies production and trade. Morality covers individual rights, which underlies the premise of the question. (economics and morality are actually integrated, but in modern thinking they are not.)

A job is a two-way street. It is a mutual, voluntary agreement between employer and employee. A worker is entitled to compensation he agreed to, and what the employer agreed to pay him. An employer is entitled to a worker’s labor only according to the compensation a worker agreed to accept. If a worker agrees to work for something less than what some busybody calls a living wage, it’s the worker’s business, no one else’s. It would be immoral for any outside interest to force any labor contract agreement on unwilling parties. 

“Living wage” is a political, not economic, term. When an employer and employee agree to an employment agreement, it is none, and shouldn’t be any, of anybody else’s business, including the government. The premise “If a company can’t afford to pay their workers a living wage, they shouldn't be in business” is neither an economically nor morally sound argument.

Related Reading:

Taking vs. Earning a "Livable Wage"

Tuesday’s ‘Fight for $15’ is about Imposing Demands by Government Aggression

Earned Pay vs. Need-Based Pay--or, Justice vs. Injustice

"Greed" is a Two-Way Street

If We’re to Have Labor Laws, Should They Work Both Ways?

"Greed" is a Two-Way Street

Business vs. Workers' Jobs: Who Makes Who Possible?

Minimum Wage Doesn't Belong in the Constitution--or Law