A Philosopher's Blog

Minimum Wage

Posted in Business, Ethics, Law, Politics by Michael LaBossiere on October 17, 2011
$2 minimum wage poster

Image by sylvar via Flickr

I was recently involved in a minor debate over the minimum wage and this inspired me to write a bit about the matter. I have worked a few minimum wage jobs and I must say I prefer my current employment to all of them.

There are various stock arguments against the minimum wage. I will not consider all of them, but commentators can feel free to bring up their favorites.

One main argument against the minimum wage is that the government should not have the right to tell corporations what they can or cannot pay people-this should be set by the market and is a matter of freedom. This does have some appeal, but can be countered.

One counter is that just as the state has a legitimate role in protecting citizens from criminal elements who would harm them and take from them, the state would seem to have a role in protecting citizens from financial exploitation. Allowing businesses to pay people whatever they wish with no lower limit would certainly seem to open the door to terrible economic exploitation that would seem comparable to legalized theft. After all, the businesses have a significant advantage in power-somewhat like an armed criminal has an advantage over an unarmed citizen. Naturally, those who claim that the state has no duty to protect the citizens would not accept this sort of reasoning, nor would those who contend that the state should serve the interest of business people over the interests of the other citizens.

Another counter that is limited to certain contexts is noting that the state sets limits on freedom and many of the folks who argue for freedom for businesses are the same folks who argue for various restrictions, such as banning same-sex marriage or marijuana use. However, if the state should not interfere with business decisions about pay, then the same principle of non-interference should also apply consistently across the board and thus would seem to entail that the state should not interfere with what people wish to do in their bedrooms (be it same sex activities or pot smoking). Unless, of course, it is argued that business people are entitled to a special category of liberties and other citizens are to be subject to regulation by the state.

A third counter is that while the free market is a spiffy ideal, the reality is that the market is far from free. Rather, it is dominated by established players (who have crafted the legal rules of much of the game) and, as noted above, the employer has the power over the employee. As such, an appeal to a free market is largely on par to an appeal to Santa Claus or the Tooth Fairy-there just is no such thing.

A second common argument for getting rid of the minimum wage is that it causes job loss. After all, a business that can pay an overseas worker a pittance or use a robot to do a job for less than paying humans minimum wage will go with the more lucrative option-and wisely so. If business could pay Americans $1 an hour or less, then they could leave these low-paying jobs here and provide Americans with a taste of the third world.

This does have some appeal. After all, keeping the money (however minimal it might be) in the United States would presumably be better for the United States. There is, however, the question of whether such grotesque exploitation is morally justified or not. My inclination is, of course, that the mere fact that a company could get away with paying so little does not entail that it is right or permissible to do so. After all, the folks paying out these pittances would probably agree that it would be wrong for a stronger organization (a state, for example) to use its power to exploit them-even if they could get away with it. As I see it, using superior power to unfairly extract value from a person is theft, whether this is done by an armed robber, a business or a state. As such, a minimum wage serves for the poor what a tax cap does for the rich-it is supposed to provide some protection from being robbed by a greater power.

As a final point, it is worth considering what some folks say about CEO compensation in this context. It has been claimed that CEOs are entitled to their pay because 1) they earn it by the value they contribute and 2) getting the best people requires paying well. This same line of reasoning should apply across the board. So, if a CEO should be paid based on what s/he contributes, the same should be true of all workers. Also, if companies expect people to do good work, then they should pay well-be it to get good work from a good CEO or from the lowest worker. Of course, the principles seem to somehow change when certain folks switch from talking about the rich to talking about the poor.

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18 Responses

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  1. magus71 said, on October 17, 2011 at 6:39 am

    First off, I’d like you to explain how you can view yourself as having anarchist/libertarian leanings. I suspect it is as most people who think they have such leanings: They want fewer rules for themselves, but think the rest of the world is not wise enough to carry on without such rules. Please name one aspect of the social welfare state that you are not for.

    Secondly, you jump to the conclusion that minimum wage actually does what proponents want it to. It does not increase the standard of living for the poor. Studies show that approx. 30% of minimum wage workers are teenagers and many of those are from families whom are not poor. Most of the people who lose their jobs(partially because of higher minimum wages) are people whom are NOT teenagers and actually have to support themselves. So, increased minimum wage increases poverty.

    http://www.nd.edu/~mbamicro/datafiles/articles/minimum_wage_economist.pdf

    • Anonymous said, on October 17, 2011 at 1:06 pm

      Increasing the minimum wage does not increase poverty. It MAY increase the number of people who are unemployed but it doesn’t increase poverty. Going by the definition of poverty meaning “state of being poor: the state of not having enough money to take care of basic needs such as food, clothing, and housing” If you go from two people making 3 dollars an hour to one person unemployed and the other making 5 dollars an hour, both would still in poverty (in fact one more dollar per hour would go to the company, not a worker).

      If 70% (using your numbers) of the people on minimum wage depend on it to live, then wouldn’t you want to ensure that those people can live on the amount of money that they earn at their job? It WOULD be nice to not have a minimum wage but capital(ism) has shown itself again and again to excel at exploitation, not at ethics.

      • magus71 said, on October 17, 2011 at 1:41 pm

        “It WOULD be nice to not have a minimum wage but capital(ism) has shown itself again and again to excel at exploitation, not at ethics.”

        Been to North Korea lately? Let me guess: They’re just not doing it right…

        Read the link–it puts people who need the money out of work and replaces them with high school students who don’t need the money because they come from well off families. Being unemployed would tend to make one poorer than working a minimum wage job.

    • Michael LaBossiere said, on October 17, 2011 at 1:32 pm

      Well, one basic principle of mine is that the state has no moral right to interfere in our behavior except to prevent us from harming others. Another is that the government, like all bureaucracies, should only be large enough to fulfill its legitimate purposes (mainly preventing us from hurting each other).

      What about the other 70%?

      • magus71 said, on October 17, 2011 at 1:52 pm

        As the article claims, minimum wage is a dull weapon in the war on poverty; it’s net effect on jobs is considered by most economists to be slightly negative.

        Also, by artificially increasing wages, all that happens is the difference is made up for in prices. It doesn’t work. I’ve looked at several sources and it’s pretty consistent that at best it’s a wash, which makes sense because what’s important is buying power and any additional costs to the employer get made up for in other costs.

  2. T. J. Babson said, on October 17, 2011 at 7:53 am

    I am all in favor of helping the working poor, but how best to help them is a technical, economic question best answered by analyzing actual data. In the article Magus links it claims that the Earned Income Tax Credit is the best way to go.

    I am also in favor of teenagers getting real life work experience, and here I am sure the minimum wage hurts them as employers are reluctant to spend too much to train a new worker who will most likely be gone in a month or two.

  3. WTP said, on October 17, 2011 at 8:33 am

    Mike, I will ask again…If, as you assert, the amount of wealth is constant and we are all fighting over the pieces of a finite pie…

    There are more people alive today than ever before and they are all wealthier than those in the relative hierarchic economic layers of the past. Where did this extra wealth come from?

    Once we get through that perhaps we can discuss:

    Where does wealth come from? How is it created?

    Perhaps THEN we can discuss minimum wage laws, etc. Anything less is a waste of time.

  4. ajmacdonaldjr said, on October 17, 2011 at 9:33 am

    Good topic. I agree with what you wrote here:

    “It has been claimed that CEOs are entitled to their pay because 1) they earn it by the value they contribute and 2) getting the best people requires paying well. This same line of reasoning should apply across the board. So, if a CEO should be paid based on what s/he contributes, the same should be true of all workers. Also, if companies expect people to do good work, then they should pay well-be it to get good work from a good CEO or from the lowest worker.”

    The government is the only societal institution powerful enough to protect the people/workers from exploitation by corporations, which is why we need government regulations, such as OSHA and a minimum wage. Our problem, today, is that our government protects corporations and helps them to exploit people/workers. The Republican juggernaut will only make this already bad situation even worse, as the Republican governors are now doing in various states.

  5. T. J. Babson said, on October 17, 2011 at 12:24 pm

    Mike is getting very tribal these days. I can’t remember the last time he expressed an opinion that would raise an eyebrow at the DNC. http://en.wikipedia.org/wiki/Democratic_National_Committee

    Metaphysics is the finding of bad reasons for what we believe upon instinct…F. H. Bradley

  6. magus71 said, on October 17, 2011 at 1:55 pm

    Isn’t this the problem with many liberal ideas: They just don’t do what they’re supposed to do.

  7. T. J. Babson said, on October 17, 2011 at 8:51 pm

    A ray of hope. Some people are waking up:

    Today, full page ads appear in the L.A. Times, Daily News and La Opinion taken out by Don’t Hold Us Back — respected organizations calling out United Teachers Los Angeles and LAUSD for letting kids fail. The new supergroup includes The United Way, The Urban League, Community Coalition, Alliance for a Better Community, Families in Schools, Asian Pacific American Legal Center and Communities for Teaching Excellence.

    The ad’s bland wording at first seems a bit “so what?” but it’s actually written in code to UTLA leaders, who have helped the local teachers union gain a reputation as one of the most anti-reform big-city education unions in the U.S. Here’s a translation:

    In one line, the ad says teachers should “be rewarded for academic excellence.”

    That sounds normal, right?

    But in fact, that idea has for years been vehemently opposed by UTLA. UTLA has fiercely fought efforts to reward the most effective teachers, or the teachers who take on the toughest assignments, by giving them financial sweeteners — merit pay.

    Another line in the ad seems equally inarguable — that kids should have well-trained teachers “regardless of where their school is located.”

    Who would oppose that?

    ​UTLA, for one. Thanks largely to the union, the most experienced teachers in L.A. are not assigned to difficult, poor schools — Watts, or the Eastside, for example.

    Instead, LAUSD sends inexperienced newbie teachers to the poorest, most difficult neighborhoods.

    Education reformers find the practice appalling.

    The ad urges newspaper readers — presumably a lot of people with kids in school — to call or email Superintendent John Deasy, individual members of the elected Los Angeles Unified School District Board, and the UTLA led by Warren Fletcher.

    Veronica Melvin, of Communities for Teaching Excellence, headed by ex-LAUSD board member Yolie Flores, says the ad is intended to clue in the public to the fact that there’s “a movement afoot to really push the district and union toward making progress — to realize quality education for L.A.’s youth.”

    What’s fascinating about the crowd behind this ad is that it is heavy with key minority groups and most of the groups have serious, real track records in helping under-served people. And: these groups are dominated by Democrats.

    Ten years ago, most of these people would have been extremely reluctant to call out UTLA.

    That would have been seen as anti-union.

    But with Los Angeles kids circling the drain (and remember the frightening fact that LAUSD educates one in every eight or nine kids in all of California) and with the union fighting most attempts at change, those days seem over.

    This ad is more proof of that.

    “Everybody, including the African American community, none of us should sit on the sidelines,” says Marqueece Harris-Dawson, president of Community Coalition. “We live with the consequences. We’ve got to weigh in and weigh in early.”

    “Without public pressure, both sides will stalemate,” says Melvin.

    Don’t Hold Us Back is demanding a new contract for teachers that firms up what school reformers (including LAUSD Superintendent Deasy) have been suggesting for years:

    — a way of evaluating teachers based on their own performance in the class

    — an end to the “last hired, first fired” practice that looks solely at teacher seniority and not at teacher competence

    — reinstituting full Public School Choice, which allows outside groups to take over flailing public schools. The LAUSD Board of Education weakened Public School Choice in late August.

    http://blogs.laweekly.com/informer/2011/10/dont_hold_us_back_utla_lausd.php

  8. magus71 said, on October 19, 2011 at 1:35 am

    “I have worked a few minimum wage jobs and I must say I prefer my current employment to all of them.”

    What? You mean lower paying jobs encouraged you to do well in school so that you could do the job you really wanted to do and make more money?

    • Michael LaBossiere said, on October 19, 2011 at 11:44 am

      Getting pushed around as a kid encouraged me to learn how to kill people with my hands, but I would not say that is a reason in support of bullying. Likewise, the fact that minimum wage sucks is hardly a good argument for it.


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