Minimum Wage I: Arguments Against

Minimum Wage In Paraguay, one simple figure

Minimum Wage In Paraguay, one simple figure (Photo credit: WageIndicator – Paulien Osse)

The United States government, like many other government, sets a minimum wage. This is the lowest (with some exceptions) that an employee can be paid per hour. There is considerable debate regarding the minimum wage ranging from disputes over the exact amount of the wage to arguments over whether there should be a minimum wage at all.

Some arguments over the minimum wage are grounded in concerns about economic facts. For example, there is some dispute about the economic impact of the minimum wage. Some contend that increasing it would increase inflation (which would presumably be bad) while some claim that increasing it would boost the economy by increasing spending. In terms of what should be done, these disputes fall nicely within the realm of consequentialism. That is, settling them involves sorting out the facts about the consequences. There would also be some moral aspects to the matter as well, such as sorting out the positive values and negative values based on who they impact and how.

Other arguments about the minimum wage are more ideological in nature and have minimum (or no) connection to matters of economic facts. These arguments tend to be philosophically interesting because of the strong connection to matters of morality.

One argument against the minimum wage is based on the notion that it causes a culture of dependency that interferes with the mobility of labor. The idea, at least as presented in various talking points in the more conservative media, is that a higher (or any) minimum wage would encourage people to simply stick with the minimum wage job rather than moving upwards in the economic hierarchy.

On the one hand, this has a certain appeal. If a person believes that she is earning enough and making a comfortable living, then she might very well be content to remain at that job.

On the other hand, there seem to be some rather obvious problems with this argument. First, unless the minimum wage were increased dramatically, it seems unlikely that anyone would be able to make a comfortable living on such a wage. It also seems unlikely that most people would be content to simply stop at the minimum wage job and refuse opportunities for better employment. People generally stick with minimum wage jobs because they cannot find a better job not because they think they are making quite enough. I would not claim that it is impossible for a person to live what he thinks is a comfortable life on minimum wage nor that a person might be content to just stick with such a job. However, such a person would be an unusual exception rather than one among a vast crowd.

Second, this sort of reasoning seems to be based on the problematic principle that it is necessary to pay people poorly in order to motivate them to move up the economic hierarchy. One problem with this principle is that it would warrant paying people poorly all the way up the economic ladder so as to allegedly motivate them. After all, if people are content to coast at minimum wage, then they would surely be willing to coast if the pay was better. This would thus seem to entail that only the topmost position in a hierarchy should not pay poorly since there would be nothing above that position and hence no need to motivate a person to move beyond it. Interestingly, this does seem to match the nature of CEO salaries—it is common for the CEO to make many times what lesser employees make. Since the number of topmost positions is rather limited, this would seem to be rather unfair. In fact, if this principle is pushed, it would seem to point towards having one position in total that has good pay—thus motivating everyone to attempt to get that one position.

Another problem with this principle is that it seems to be untrue. As a matter of fact, people do attempt to get higher paying jobs when they are available, even if their pay is not poor. People mostly seem to stick with a minimum wage job or a lower paying job because they cannot find one that pays better (there are, of course, other reasons).

As a final point, the idea that paying people to do work creates a culture of dependency seems to indicate the view that the workers are mooching or sponging off the employer. This is, obviously enough, absurd: the worker is getting paid for work done which is the exact opposite of mooching.

A second ideological argument is based on the notion of liberty and rights. The idea is that employers are having their liberty (or rights) violated by being forced by the state to pay a minimum wage.

This line of reasoning does have a certain appeal. After all, people (and corporations are the best sort of people) have rights to liberty and property. If the state tells employers that they must pay a certain wage, the employers are being denied their right to liberty via the coercive power of the state.

There are at least two obvious responses to this line of reasoning. The first is that workers are also people and hence would also have rights, including property rights to their labor. These rights can be used to argue for a minimum wage (or more)—after all, theft of labor would seem to still be theft.  The second is that being part of a society involves, as Locke and Hobbes argued, giving up some rights. While some employers would like the liberty to pay whatever they wanted (which might be nothing—slavery was and is rather popular), it makes sense that such complete freedom would not be consistent with society. Having a civil society, as Hobbes argued, does require the coercive power of the state. As such, the fact that the state is imposing on the liberty of the employer does not automatically entail that this coercion is wrong. The stale also imposes on the liberties of those who would like to steal and kill and these impositions are hardly wrong.

The obvious reply is to contend that while the state has a legitimate right to limit some liberties, this right does not extend to coercing job creators into paying at least a minimum wage. This cannot, of course, be simply assumed—what is needed is an argument that employers should have the liberty to pay as they please. Even if such a liberty is assumed, surely it would have at least some limit. At the very least, it would seem that an employer has to pay more than nothing. Then again, some might like to see slavery put back on the table. There is much more to be said about minimum wage and more essays will follow.

 

My Amazon Author Page

Enhanced by Zemanta
Leave a comment ?

11 Comments.

  1. “The first is that workers are also people and hence would also have rights, including property rights to their labor.”

    I guess the difference here is that the state cannot force someone to give up their labor at a certain price.

  2. Minimum wage diminishes the trickle up into the pockets of the CEO. Of course it’s a bad idea.

  3. Michael,

    Depends on the state. Also, even the United States does force people to give up their labor at certain prices: prison labor is one example. In the past, conscription also involved the same thing-a person was forced into a job and assigned a wage.

  4. Pox on this debate. May the invisible bugs of the market invade the sleeping places of the minimum wage liberals and conserving-for-themselves to eat their longs and shorts.

    It is reprehensible that a minimum wage is needed. Curse on the education system for failing to make every child able for full and fair employment. Think about that. We pay kabillions for schools and teachers, and they deliver about 16% (by rule of halves and thirds) of their ‘outcome’ as less than fully employable and economically valuable for themselves.

    And what kind of moral cretin would want to run a business that can only survive by paying its people less than a living wage. Still, this is not a problem that you can solve by waving some words in the air.

    Curses all around.

  5. For a German-speaking Frenchman like myself, the American social system and health safety look atrocious, horrible and shameful.

    Countless persons having never chosen the circumstances of their birth are victim of it.

    I was really disappointed by Obama in that respect.

    Lovely greetings from Germany
    Liebe Grüße aus Deutschland

    Lothars Sohn – Lothar’s son
    http://lotharlorraine.wordpress.com

  6. “it seems unlikely that anyone would be able to make a comfortable living on such a wage. It also seems unlikely that most people would be content to simply stop at the minimum wage job and refuse opportunities for better employment.”

    Yep, they pull themselves up by their own boot straps and get themselves a second minimum wage job.

    There is a reason why employers like many fast food chains limit the work week of their employees to a half week (benefits, and precariousness that benefits the employer). The typical Burger King employee is working 20 hours a week, and then they go to some place like Baja Fresh and work another 20. They’re permanently a part-time employee, even though Burger King owns Baja Fresh.

    But the most screaming absurdity, is how the arguments are always presented. As if it’s just two guys on equal terms. And the minimum wage employee is playing dirty by employing the coercive power of the state. “I create a job for you, and this is how you repay me….shame on you…shame”

  7. I think I’m like-minded with JMRC. Or at least I hope I am, because then I’d know a lot more. But that is not why I write. I want to say that minimum wage liberals are cheap screws.

    I use the expression as a technical term. In manufacturing, ‘cheap screw’ is a least cost component that is used with little or no regard to its effectiveness.

    Do minimum wage laws work to ensure that each and every employee is paid a wage on which the employee can subsist? No. Therefore, shame on wishy-minded liberals.

    The next curse is for the selfish minimum wage conservatives but not now.

  8. minimum wage

    I prefer to view this particular issue as an issue of economic concern, not of ‘views’ or ‘ideological arguments’.

    Boiled down, it all depends on the opportunity cost of the employer vs. what they are paying the employee and the generated revenue from said employee. If the employer cannot make enough profit to hire the employee, there is no incentive to hire them. When someone artificially raises someone else’s wages, that removal of profit has to come from somewhere. Just as you said that folks are motivated to attain a higher wage, employers are motivated to attain higher profits. By cutting their higher profits via artificial wage increases, you are de-motivating them from hiring people, since you are devaluing their profits.

    Secondly, the notion that minimum wage increases help anything at all is a misnomer. I view this particular thought exercise as a lake filled with water. Every employee on the water is a boat, the prices of objects bouys and the like. When the minimum raise, being the water goes up, the wages and income, of course, goes up, but so do the prices of everything. When the water rises, everything rises with it.

    You flippantly remarked that inflation would ‘presumably be bad’. The fact is that as the costs for creating products go up (wage increase would increase cost) the cost of the product itself would go up. So, really, there is no point in increasing wages, considering you get no tangible gain out of it. In the short term, there would be a net loss as employers shed costs, i.e. workers, to regain profit margins.

    Check out this YouTube video for more: https://www.youtube.com/watch?v=IFbYM2EDz40

  9. I don’t think the slavery argument works very well. The whole idea underlying the rights argument is individuals freely selling their services. From these models the rights of the state are naturally limited. Thus there needs to be an affirmative argument that min wage laws fit such exemptions not the other way around.
    The ability to work for free is not slavery. “slavery” as defined as work without pay would need other incentives such as chances for connections (i.e. internships) or a chance for power (in earlier societies bureaucratic power could be limited to eunuchs, for example) However, Slavery usually involves depriving people of their liberty to sell their labor as their labor is assigned to another in perpetuity. The only normally accepted reasons for this are either punishment (prison work gangs) and the preservation of the state (conscription)

    Your rebuttal to the second argument does not deal with the framework from which classical liberals derived their limited state. One which trusts Smith’s assertion that competition and self-interest are enough to regulate.

    To these questions, liberal political writers in nineteenth-century England answered almost unanimously that individual initiative is the motor of the system and competition in the free market its regulator.
    (Quote from early part of Waltz’s man, state and war chapter “The Second Image”)

  10. @Chris “Secondly, the notion that minimum wage increases help anything at all is a misnomer. I view this particular thought exercise as a lake filled with water.” Why do you view it this way. It’s an interesting analogy, but you don’t provide evidence for it being an accurate analogy. You say that when the water level rises, it brings with it the prices of everything else, including the labor…but there are lots of reasons why those buoys might be tethered to the lake floor, or sinking. Technology gains can drastically lower the cost of a lot of items, and this decrease in cost can outstrip the increase inflation might put on it.

Leave a Comment


NOTE - You can use these HTML tags and attributes:
<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>