The Moral And Economic Case For The Minimum Wage?

We are fighting for an honest day’s pay for an honest day’s work. It is a moral and economic imperative that we raise the federal minimum wage. People who work full-time in America shouldn’t live in poverty.

-- Labor Secretary Thomas Perez

Uh huh. Let’s look at this shall we?

● An honest day’s pay for an honest day’s work.

A wage is set when one person says, “I am willing to pay X for someone to labor for me,” and when someone else responds, “Sure, I’ll labor for that.” There is nothing more honest than that. Both parties have placed a value on the labor and they agree on that value. How is that dishonest in any way?

Dishonest is not paying what you promised. Dishonest is forcing someone to work or cough up part of their wages... like unions do and government and the mob. Nice company you keep Perez. The truth is that the free market provides the honest wage, it’s the government who tries to impose dishonesty.

● Moral imperative to raise the minimum wage.

What exactly is the moral case for the minimum wage? Wages are reached by the consent of those who will do the paying and the working. What is the moral case for some a-hole bureaucrat substituting his judgment about what should be paid? Perhaps if people were being forced to work at some price, then I could agree, but there is no such force. There is more than enough of a safety net to avoid working if the offer is too low and there are many means to increase your value so that others will bid for your services. There is nothing moral about forcing one side in a transaction to pay more just because someone claiming to speak for the other side thinks they should... dictating what someone will contribute is immoral, it’s called slavery.

● Economic imperative to raise the minimum wage.

Ha. The economic case against the minimum wage is clear. It kills jobs. It artificially makes workers more expensive without the dictates of supply and demand. That means employers will find ways to work with fewer employees... the phrases “work harder” and “replaced by a machine” come to mind. When someone talks about the “case for raising the minimum wage,” what they are really saying is “I want to sooth my conscience by pretending to help poor people, when the reality is that I’m encouraging employers to wipe out the very jobs poor people need to build their lives.” And not only does this wipe out jobs, but since the workers are still floating around, it results in lower wages for those with jobs and more power to employers to demand more work for less money because the workers are more easily replaced by the newly unemployed. Maybe this should be under the moral argument?

● People who work full-time in America shouldn’t live in poverty.

Agreed, but who are you talking about and how does raising the minimum wage help this problem?

The federal minimum wage has crept up to $7.78 an hour. That’s $16,182 a year if you work full-time. The federal government defines poverty as follows. For a one person family, it’s anyone earning less than $11,490. Hmm. For a two person family, it’s anyone earning less than $15,510 a year. Hmm. Strange. So someone working at the minimum wage for 40 hours a week for a year is above the poverty level even if they have a non-working spouse. It’s not until they add a child that they hit the poverty level: $19,530.

So let’s make this statement more honest: “People who work full-time in America with a non-working spouse and one or more children shouldn’t live in poverty.” Doesn’t quite have the same effect does it?

Now let’s add the obvious: no one who is offering “an honest day’s work” gets paid the minimum wage for very long. McDonalds starting wages are $7.85. Within a couple years of showing you can do your job, that goes up to $9.45. That works out to $19,656. Thus, you would now need a second child and a non-working spouse to qualify as “living in poverty.” Heaven help you if your lazy-ass spouse also worked at McDonalds. Then you’d need four kids just to keep that fun “in poverty” label.

Perez is shadowboxing against a straw man here. There is no one who works full-time and falls into his definition except by choice... too many kids, nonworking spouse. Having one of these jobs will never buy you a mansion and it won’t be as fun as coaching a professional football team, but you won’t live “in poverty” either as Secretary Perez wants you to believe. Moreover, over time, you and your spouse will actually slowly creep your way into the middle class. And if you work more than 40 hours, as every professional I know does, then you can go a lot higher than lower-middle class. Two spouses working 60 hours a week at minimum wage earn $49k a year and almost $60k at McDonald's non-entry wages.

What would help here would not be a raise in the minimum wage -- which would cost many their jobs, depress wages, and reduce employee bargaining power. What would help would be slashing the taxes on the wages these people earn and incentives for McDonalds to hire more people. More jobs in the same labor market means higher wages and more power for employees. That’s what’s really needed.