The minimum wage and offering value for your work

The minimum wage debate is back in the spotlight (yet again). CNN has even dedicated an entire special on their website entitled “The minimum wage fight,” in which it highlights several articles that profile minimum wage workers, an analysis on the minimum wage and how certain companies are fighting against the proposed $10.10.

Soon, the federal government will try to raise the federal minimum wage to $10.10 per hour, while many state and municipal governments will attempt to increase their minimum wage. Most of the hourly wages posed are arbitrary numbers, wages not based on any economic theory or model. Instead, it’s just a number thrown by labor unions, supposed anti-poverty organizations and governments that want to hurt the poor, the uneducated, the unskilled and others.

In the case of labor unions, they just want to protect their own jobs from outside competition.

One element that is often omitted from the minimum wage is the concept of providing value for work. The left and right usually discuss how workers have the right to a job and have to be paid a certain amount per hour, regardless if they can produce that kind of value or not. Karl Marx also opined that individuals must be given a job and paid well, whether or not they have earned it.

First, no one is entitled or has the right to a job. A person has the right to their life, liberty and pursuit of happiness, but not a right to a job, money, housing, education or healthcare.

Second, in order to attain employment and earn a market wage, a person must have the education, skills and/or ability to perform the job in the first place and exceed the norm to be successful.

A simple example of this can be found in a fast-food restaurant:

There are three workers named John, Bill and Bob: John is a fantastic worker as he produces 100 burgers an hour for an hourly wage of $10, Bill is mediocre as he cooks 50 burgers an hour and Bob can barely do his job as he only fries up 10 burgers an hour.

Obviously, John is offering the company value by exceeding expectations, while Bill is just being complacent and doing the bare minimum that is worth the $10. Bob, meanwhile, would likely lose his job if the minimum wage increases because he is not performing well.

In the event of a minimum wage increase, John, who would have likely gotten a raise anyway, would keep his job and perhaps even get a promotion. Bill would keep his job but told to do a little bit better. Bob would be out of work and wouldn’t be able to garner a position until he had marketable skills and provided an employer with value for the offered wage.

The problem with those who do not understand the negative consequences of minimum wage laws and who despise capitalism and free market is that they think people should be given a job just because. A business wasn’t established just because. The proprietor wanted to give consumers a good or service and wants to make a profit for it. Businesses aren’t charities and offering a job isn’t philanthropic.

Those of us who have jobs create some sort of value to the employer and not because everyone has a right to employment.

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Comments

  1. Is it good for the government to enact policy that causes one person to be fired so twenty-nine can get a small raise?

    Is it good for government to harm struggling businesses that are not able to afford to pay a higher wage?

    Should government increase the wages of all workers and create full employment by replacing the 15.3% payroll tax revenue with a 4% VAT?

    No. No. Yes.

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