Minimum Wage III: Theft & Value
Imagine Sam has pulled up to the drive through window at Big Burger and rather than pay the full price for his order, he tosses a handful of change into the window, grabs the bag from the distracted Burger minion and zips away on his moped. This would, of course, be regarded as theft and the police would arrest Sam for his hamburgerlary. The prevention and punishment of theft is generally regarded as a legitimate function of the state and few people regard this as a form of oppression or an overreach by Big Brother. If Sam protested that as an agent of the invisible hand he had paid what he regarded as the fair market value of the burger, then it would seem likely that this would have no effect. After all, he is supposed to pay the full value of the burger.
Now, imagine that Big Burger makes part of its profits by paying its workers rather less than the value they contribute to the raw materials. Big Burger would seem to be stealing from its employees in roughly the same manner as Sam. That is, Big Burger is paying them less than the full value of their labor.
The Burger Boss would naturally reply that the situation is different: Sam is robbing Big Burger because there is no agreement between him and Big Burger for Sam to pay less than the value of the burger. However, the employees of Big Burger agree to accept less than the value of their work and thus it is not theft.
The Burger Boss might then bemoan the fact that there is a limit to how low he can pay his Burger minions, namely the minimum wage. Surely, he might say between tears, he is being cruelly oppressed by the state by this imposition on his free choice.
Someone with socialist leanings might respond by saying that the minimum wage would seem to be aimed at preventing employers from stealing (too much) from employees. The idea is that they are forced to pay at least a minimum for work done. This, it might be claimed, is similar to what the law does for Big Burger: just as Sam cannot pay less than the price of the burger without being a thief, Big Burger cannot pay less than a minimum wage without being a thief (or a bigger thief).
Burger Boss could weep that this is unfair, that his workers should be paid less because they produce less value than the minimum wage. This, it must be admitted, is potentially a fair point. After all, if it is accepted that a person should be paid based on the value he contributes (which is so often claimed when defending the top salaries of the “top talent”), then a person who actually did produce less value in his work than the minimum wage would be effectively robbing his employer.
However, if the principle of paying a person what he is worth holds true for paying a person less, then the same principle would need to hold when it entails that a person should be paid more. Interestingly, the “top talent” and their ardent supporters seem to fully embrace this principle when it comes to generous compensation for the top people, such as CEOs. However, their grasp of this principle seems to fail when they examine the pay at the opposite end of the hierarchy. But, to be fair, it can be rather hard to see things that are so far away from a person’s own location. In any case, it seems to be capitalism when the people at the top are paid what they are (allegedly) worth, but socialism when the people at the bottom ask to be paid closer to what they are worth.
Getting back to the minimum wage, it seems that people who are paid the minimum wage generally contribute more value than they are paid. To use a specific example, McDonald’s enjoyed billions in profits last year. This would seem to indicate that even if the CEO is truly magic with money, the workers are creating considerably more value than they are being paid. If this was not the case, then the corporation would not have this sort of profit. Unless, of course, it can be shown that the bulk of the profit was created by other means—which seems unlikely. As such, it would seem that in many cases the minimum wage is actually considerably lower than the value generated by the workers.
As noted above, theft from businesses is illegal and the state uses its coercive power to prevent or punish such thefts. This is seen as a legitimate function of the state. What a minimum wage does is a similar thing—workers can only be legally robbed so much. That is, they have to be paid at least a minimum wage, even if that wage is significantly lower than the value of what the worker contributes.
This seems problematic. After all, it would be like allowing people to only steal so much. Imagine of people were allowed to steal from businesses, but could only steal so much. This would be a “maximum theft” rule, which would be somewhat analogous to a minimum wage. That is, both rules would set something of a limit on how much could be taken without compensation.
While the state does not allow a maximum theft rule, just as the state needs to protect employers from what is regarded as theft, so the state has to protect workers from what would also be theft.
Burger Boss might argue that employment exists in a special realm, distinct from that of all other human relations. So, while stealing from someone (especially a corporation) would be wrong, it is fine in the case of stealing value from an employ.
The usual argument is that employers do not owe the workers a job and they can thus pay as they wish within the working of the free market. On the one hand, this could be seen as true: Big Burger does not owe Sally a job and it could be said that Big Burger does not owe Sally a fair wage that is proportional to the value she contributes.
However, this would seem to suggest that Sally does not owe Big Burger and presumably does not owe Big Burger a fair price—so if Big Burger can work a way to pay Sally less than her work is worth, Sally would seem to have the same right to get a Big Burger for less than its value. While Burger Boss would regard Sally as a thief, Sally would certainly think the same of Big Burger.
This could be seen as the free market: every party is trying to get one over on everyone else. However, when this takes place in a more general setting, it is seen as approaching the state of war rather than being what is expected of civil society. As such, it would seem that if it would be wrong for Sally to steal from Big Burger it is wrong for Big Burger to steal from Sally.
The stock counter is that Sally chooses to work for Big Burger and thus consents to hand over her value for less than it is worth. Now, if this were a free and un-coerced choice, then that would be fine. However, this is clearly not the case: Big Burger tends to have the coercive edge over those who work for it.