A Philosopher's Blog

Minimum Wage II: Freedom & Coercion

Posted in Business, Ethics, Law, Philosophy by Michael LaBossiere on August 16, 2013

As I noted in my previous essay on minimum wage, one stock argument against minimum wage is based on liberty and rights.

Money

Money (Photo credit: 401(K) 2013)

The basic idea behind this line of reasoning is that an employer should have the right to set wages and that the state is wrong to use its coercive power to compel a minimum wage. A rather key assumption here is that such coercion is wrong. This assumption should be kept in mind for what follows.

Those who oppose increasing (or even having) a minimum wage often like to appeal to the notion of the free market of employment. The basic idea is that businesses should be free to offer pay as they see fit. Workers can then consider the pay being offered by each employer and refuse to work for a low-paying employer and instead elect to work for one who pays more. For example, if Big Burger is paying $7.25 an hour and this is not to Sally’s liking, she can keep walking past Big Burger and find a job with better pay—perhaps the CEO position at Big Burger for $7.25 million a year.

Naturally, Sally will face some reasonable limits here—there will be jobs that she is not qualified for. For example, if Sally is fresh out of college with a degree in chemical engineering, she will not be able to get work as a lawyer or doctor. But, it is often claimed, she is free to find any job she is qualified for via the workings of the free market.

Alternatively, Sally can create her own business (Sally’s Sandwiches perhaps) and endeavor to get the income she desires. Naturally, Sally will also face limits here based on her abilities. She will also face the obstacles put in place by the government, or so the narrative goes. However, Sally is supposed to have a shot at being the next billionaire—or so the stories go.

On this view, the situation is rather rosy: Sally and her fellows are free to seek their desired employment and potential employees are free to offer what they wish, with no coercion being used against anyone. Alas, the government tinkers with this beautiful scenario of freedom by compelling employers to (generally) pay a minimum wage. Such coercion, as noted above, is assumed to be wrong: the powerful state is pushing around the weaker businesses and leaving them no choice in regards to the lowest wage they can legally pay.

While this tale is appealing to certain folks, it is not just the state that has coercive power. In the case of jobs, the employers often enjoy considerable coercive power. Going back to the example of Sally, it is true that she is free to walk on past Big Burger and other places that are paying the lowest wages. However, it would seem that she only has a meaningful freedom if there are other jobs available that pay better. Otherwise her freedom is a matter of wo

rking for the lowest wage or not working at all.

It could be replied that she is still free—after all, there would seem to be no coercion or compulsion at play here: she can take the job or not. If Sally is financially independent or is supported by someone else (such as her parents), then she would not be coerced—she would not need the job and is thus free to accept or reject employment as she desires. However, if Sally actually needs a job to pay for food, shelter and other necessities, then she would seem to be in a situation that involves coercion.

The obvious counter is that she is not being coerced by Big Burger or their fellows. After all, they did not create a world in which people need to purchase the basic necessities in order to survive. And, one might add, Sally could avail herself of welfare—at least until her benefits run out. Even then, there is always private charity. Sally could even attempt to create her own business, although this would be difficult and she would likely be competing against well established and well-connected corporations.  As such, Sally is still free and Big Burger is merely offering her one choice among many. So, since Sally can chose to be unemployed, it would seem to follow that she is not being coerced by Big Burger or their fellows.

If Sally elects to take the job, then she has chosen to accept the low pay and is thus not coerced in this scenario either. After all, it is her choice.

Interestingly, Sally’s scenario is analogous to that of the employer that is required to pay minimum wage. An employer is free to decide to not pay minimum wage. This could be done by deciding not to hire anyone, by deciding to not have a business or by deciding to simply pay below that wage. A business could also decide to leave and go somewhere that has no minimum wage—just as Sally could move away from an area in search of a job. So, employers are as free as Sally—they have choices, although there may be no good ones.

It might be countered that the employer is not free—there would clearly seem to be compulsion at play here. However, those who enforce the law could say that they did not create a world in which people have to pay a minimum wage any more than Big Burger created a world in which people have to pay for necessities.

So, since a business owner can chose to not pay minimum wage, it would be the case that she is not coerced. As with Sally, if a business owner elects to pay minimum wage, then she has chosen this and thus is not coerced. After all, it is her choice. Just as it was Sally’s choice to accept or not accept a low paying job despite it being the only sort of job available.

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13 Responses

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  1. T. J. Babson said, on August 16, 2013 at 9:37 am

    Supply and demand. The best way to help those at the bottom of the economic ladder is to restrict the supply of unskilled labor by not allowing millions of people to work here illegally.

    Mickey Kaus:

    So far so good. Then we get to the solutions part, which for Matt involves the CEO of McDonald’s recognizing his “duty to help solve broader social challenges” and declaring that he was going to start paying $12/hour in selected cities, with elaborate studies of the results.

    It’s a plan. Here’s my plan: Stop importing unskilled immigrants until labor markets tighten and wages rise as employers compete for harder-to-get workers. Then admit immigrants only to the extent it won’t deny workers at the bottom reasonable wage increases.

    Read more: http://dailycaller.com/2013/08/15/corporatism-or-a-border-your-call/#ixzz2c8foavjr

    Father Guido Sarducci covers the fundamentals of economics in his 5 minute university:

    • WTP said, on August 16, 2013 at 10:16 am

      Unskilled immigrant labor is irrelevant to the problem. Unskilled immigrants are not working at McDonalds. The problem is that there is a huge swath of the labor force which lack the skills to do anything more than to show up on time and do what they’re told. The reason they are incapable is due to the “education” system where we reinforce infantile thinking, like what Mike perpetuates. Our education system is cranking out a society of whiners and cry babies, many of whom would never have turned out that way if the education system didn’t coddle them, providing excuses for why they can’t succeed. The problem is people like Mike teaching absolute crap, doing it on the taxpayers’ dime and wasting the students’ time.

    • WTP said, on August 16, 2013 at 12:46 pm

      BTW, I think the following video is far more appropriate in regard to discussing economics with Mike, or any leftist for that matter:

    • WTP said, on August 16, 2013 at 6:52 pm

      And whilst we’re posting videos, I might add this. Mike oft protests that he’s not liberal, and I agree. The man in this video is liberal. While this video goes beyond the topic of the this thread, I find this quote most pertinent here:


      “The people who taught me at Princeton 1960-1964 were probably disproportionately individuals of the left, but none of that was obvious from their curriculum, from their syllabi, or from their teaching. They did not see their task as producing disciples and clones in a classroom. In my sophomore year at Princeton, I took a course from a distinguished Marxist professor on 20th century European History. He gave us a remarkably diverse set of readings. One or two of which were things he himself had written. When he gave back the midterms, he stood before the class and he said you have shamed me. You’ve all written what you thought I wanted to hear. So I’m changing the final exam. I’m going to make one quarter of it on the work I most disagree with about the 20th century. I’m not going to ask you to critique that work. I’m going to ask you to recreate its arguments with intellectual empathy, so that I can be certain that you know views that are antithetical to my own. The book was Friedrich Hayek’s The Road to Serfdom.”

      http://davidthompson.typepad.com/davidthompson/2013/08/too-feeble-for-freedom.html?cid=6a00d83451675669e201901ed21692970b#comment-6a00d83451675669e201901ed21692970b

  2. ajmacdonaldjr said, on August 16, 2013 at 9:37 am

    As with any crime against a person, the State has the obligation to intervene in order to protect the innocent. This applies to business owners exploiting workers as much as it does to the robber in the alley. The only difference between the robber in the alley and the Robber Baron is only one of class.

    ++++++

    The Church, too, while it has at all times proclaimed the right to private property, has also insisted upon the social function of property:

    St. Peter writes to the early Christians: “As every man has received grace, ministering the same one to another.” (1 Peter 4:10). The apostle is here speaking both of spiritual and material gifts. St. Paul to his disciple Timothy as follows: “Charge the rich of this world … to do good, to be rich in good works, to give easily, to communicate to others.” (1 Tim. 6:17-18).

    St. Thomas Aquinas, in his Summa Theologica, offers us a clear and precise teaching: “With respect to external goods man has two faculties, to wit: (a) the faculty of procuring and distributing these goods; for what reason it is lawful for man to possess these goods as his own (right of property), indeed it is necessary to human life … (b) the faculty of using the the goods themselves; and as far as their use is concerned, man ought to consider external goods not as his own, but as in common, so that he may readily share them with those on need. (II-II, Question 66, Art. 2.).

    It follows from what we have termed the individual and at the same time social character of ownership, that we must consider in this matter not only their own advantage but also the common good. To define these duties in detail, when necessity requires and the natural law has not done so, is the function of the State. Therefore public authority, under the guiding light always of the natural and divine law, can determine more accurately upon consideration of the true requirements of the common good, what is permitted and what is not permitted to owners in the use of their property.

    Without doubt, the natural order established by God requires also private property. But this right of private property must not hinder the primary and fundamental right that grants its use to all men. While the Church condemns every unjust violation of the right of private property, she admonishes, however, that it is not unlimited nor absolute because it has precise social obligations.

    Catholic teaching holds a position midway between the communistic doctrine, that would suppress every right of individual and private property, and the liberal doctrine that does not recognize its due limits, thus justifying unjust inequalities.

    See: On The Right of Property in The Social Principles of the Catholic Church – http://wp.me/PPnn7-Mj

    • WTP said, on August 16, 2013 at 10:01 am

      The only difference between the robber in the alley and the Robber Baron is only one of class.

      Bulls**t. The man in the alley threatens the life of the victim. Nothing in that situation is voluntary except for the perpetrator to choose to threaten another innocent person. We all have options in what we choose to do with our lives. To equate those who create wealth and in the process provide people with the opportunity to work, for which they are paid, with the behavior of common criminal scum is a flat out lie.

  3. WTP said, on August 16, 2013 at 10:10 am

    The basic idea behind this line of reasoning is that an employer should have the right to set wages and that the state is wrong to use its coercive power to compel a minimum wage. A rather key assumption here is that such coercion is wrong. This assumption should be kept in mind for what follows.

    This is nothing but a straw man argument. The employer has the right to set the wages because that is the nature of reality. The employer exists to serve the needs of his customers, not the needs of his workers. If the employer did not exist, the jobs he provides would not exist. I will repeat it time and time again, though I’m sure I’ll never get it through your thick head, you do not understand the fundamental principles of economics. You offer nothing but sophistry.

    Here’s a thought, Mike…build yourself a straw man and put him on your pillow at night. Then, in your dreams, he can turn into a whole army of straw men, and you can slay them all with a butter knife. Perhaps that will fill this need you have to feel like you’re “preserving humanity”. These dreamy ideas you perpetuate out here in the real world do far more damage than you have the capacity to understand.

  4. T. J. Babson said, on August 16, 2013 at 11:58 am

    Having the government dictate wages or prices is doomed to fail and will probably end up hurting the very people you are trying to help.

    If the goal is to help the working poor the best way to do it is with the Earned Income Tax credit.

  5. WTP said, on August 17, 2013 at 2:43 pm

    And lest I repeat myself…

    Liberal rag The Nation accidentally proved conservatives right when they were forced to face their own hypocrisy on hiring practices by Walmart.

    Leftist news organizations have helped boost Obama’s efforts to shore up his failures in creating jobs by raising the minimum wage. These efforts defy free market realities that would force employees to hire fewer people if made to artificially pay employees more than the market rate.

    One of their favorite targets has been Walmart, who is the largest employer in America outside of the federal government. But when the economic illiterates at The Nation went after Sam Walton’s company, it fought back! Walmart’s senior director of communications sent this email with the heading, “people who live in glass houses…”

    The Nation—“America’s leading progressive print and online magazine”—recently encouraged its readers to sign an open letter demanding that Walmart increase wages to $12/hour and this article called our company one of the “biggest abusers of low-wage labor.”

    In an ironic twist, ProPublica recently reported that starting this fall, “interns at the Nation Institute will be paid minimum wage for the first time in the history of the 30-year-old program.” As ProPublica noted, The Nation has been paying its full-time interns a weekly stipend of $150 per week—less than the current federal minimum wage rate of $7.25 per hour.

    In fact, assuming the interns working a 40-hour week, the pay would come to $3.75 an hour! So that’s awkward.

    But it gets better!

    Seething that they had been trolled so effectively by one the largest corporations in the world, the editors at The Nation momentarily interrupted their massages, put down their cuban cigars, and rang their golden servant bells to summon their underpaid, malnourished interns to respond angrily to those corporate monsters!

    From the famished interns at The Nation:

    The internship program is an educational, time-limited engagement that provides a unique training ground for participants at the very start of their careers. Additionally, The Nation Institute is a small non-profit trying to raise money to support serious public interest journalism in a challenging fundraising landscape.

    All of those descriptors they applied to internships all apply to entry-level jobs everywhere. It doesn’t matter that Walmart has to survive in a challenging corporate landscape, I suppose.

    The socialist overlords at The Nation are now paying interns minimum wage – still less than the average Walmart pays it’s employees!

    But wait, there’s more!

    In a statement to Propublica, The Nation confirmed one of the basic criticisms that conservatives, and our faithful sidekick, logic, make about raising the minimum wage:

    “We are not yet certain how this will work out long term, but for the fall we are anticipating hiring ten interns rather than twelve.”

    So you raised the wages of your employees, and had to hire fewer people because of it?

    No one saw that coming.


    http://www.ijreview.com/2013/08/72077-liberal-mag-inadvertantly-proves-conservatives-right-on-minimum-wage-while-attacking-walmart/

    • WTP said, on August 17, 2013 at 2:46 pm

      So TJ, ask Mike what FAMU pays its graduate assistants.

      • T. J. Babson said, on August 19, 2013 at 7:30 am

        Where do these facts fit in?

        In the Empire State, a family receiving Temporary Assistance for Needy Families, Medicaid, food stamps, WIC, public housing, utility assistance and free commodities (like milk and cheese) would have a package of benefits worth $38,004, the seventh-highest in the nation.

        While that might not sound overly generous, remember that welfare benefits aren’t taxed, while wages are. So someone in New York would have to earn more than $21 per hour to be better off than they would be on welfare.That’s more than the average statewide entry-level salary for a teacher.

        Plus, going to work means added costs such as paying for child care, transportation and clothing.Not to mention that, even if it’s not a money-loser, a person moving from welfare to work will see some form of loss — namely, less time for leisure as opposed to work.

        Is it any wonder, then, that, despite the work requirements included in the 1996 welfare reform, only 27.6 percent of adult welfare recipients in New York are working in unsubsidized jobs?(Another 13 percent are involved in the more broadly defined “work participation,” which includes job search, training and other things.)

        Welfare is slightly more generous in Connecticut, where benefits are worth $38,761; a person leaving welfare for work would have to earn $21.33 per hour to be better off.And in New Jersey, a worker would have to make $20.89 to beat welfare.

        Nationwide, our study found that the wage-equivalent value of benefits for a mother and two children ranged from a high of $60,590 in Hawaii to a low of $11,150 in Idaho. In 33 states and the District of Columbia, welfare pays more than an $8-an-hour job. In 12 states and DC, the welfare package is more generous than a $15-an-hour job.

        Of course, not everyone on welfare gets all seven of the benefits in our study. But, for many recipients — particularly the “long-term” dependents — welfare clearly pays substantially more than an entry-level job.

        To be clear: There is no evidence that people on welfare are lazy. Indeed, surveys of them consistently show their desire for a job. But they’re also not stupid. If you pay them more not to work than they can earn by working, many will choose not to work.

        http://www.nypost.com/p/news/opinion/opedcolumnists/when_welfare_pays_better_than_work_GGZfz3wTztSW3BoMxn2VrI

        • WTP said, on August 19, 2013 at 8:49 am

          To be clear: There is no evidence that people on welfare are lazy. Indeed, surveys of them consistently show their desire for a job. But they’re also not stupid.

          So working at an honest job supporting one’s self would be stupid? There’s your problem. And I suspect this is something that people in Idaho understand. As for the “surveys” that “consistently” show their “desire” for a job, many of these people only find employment for the minimum time necessary to renew their unemployment benefits. When they do get jobs, they are the least productive and burdensome employees. Also, their “jobs” are subsidized by the state in many instances. Many states implemented policies of subsidizing employers to take job candidates who have been on unemployment for a long time. My wife worked in a call center where such was common practice.

      • T. J. Babson said, on August 19, 2013 at 7:31 am

        Typically about $10/hr I would say.


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