1. It requires specialized skills/attributes
One way high wage earners justify their pay is by saying that not everybody could do their job. So since their skill is so rare then they deserve to be paid more. This point of view overlooks the fact that not everybody can do hard labor If you took the CEO of a big restaurant chain and made them work in one of their restaurants’ kitchens for three months they’d all fail. Even out of the general public, there’s a significant percentage of people who don’t have the strength or patience to do the jobs minimum wage earners do.
Go ask any kitchen staff, road crew, farm crew, or retail worker about people they’ve seen work at their job for a week and then burn out from exhaustion or didn’t have the mental fortitude to do their jobs. Those who pass the test will always be able to look each other in the eye and know they had the metal to make it while so many others didn’t. But even though minimum wage earners have attributes and skills just as rare any upper middle class job. Their pay checks don’t reflect this.
2. Compensation for pace
Think of an office romance drama series like Mad Men or a series about lawyers like Suits or just the show The Office. Imagine if the characters ran as fast as they could everywhere they went, and where ever they went they were always very busy with their hands, and they were always racing the clock while pacing themselves so they could last the day. And somebody was always yelling at them and threatening them. It would be funny if it wasn’t true.
The longer and faster you have to work, the more you have to commit your total life’s attention on what you’re doing. Some people have slow paced jobs where they can day dream all day, call their friends and family and take long lunches while getting paid very, very well. A lawyer would charge you more for his services if he had to devote his total attention to your case and work as hard as he could none stop for three months straight. But field hands, cooks at chain restaurants and warehouse staff don’t get paid any extra for how totally they have to devote themselves to their jobs.
3. Compensation for inevitable injuries
If you do anything as fast as you can for nine hours a day for a lifetime you’re going to hurt yourself. Just lifting files or typing will give you crippling hand aches in old age. Lifting heavy bags and boxes will take its toll immediately. When you do minimum wage it’s not a matter of if you’ll develop some kind of health problem, it’s a matter of which one you’ll get. And since millions of minimum wage jobs involve handling poisonous material, a lot of people are guaranteed to die from work related illnesses.
It’s bad enough that people are dying from work related injuries, but they’re suffering here and now in very real, very graphic ways. Any fry cook can tell you a few stories about burns and cuts they’ve seen kitchen staff get. There are millions of people in the world who have stitch marks on their bodies from on the job injuries they got while working for minimum wage, but they don’t get any compensation. Their employers don’t even offer them health care. If you asked the employer why, they would probably tell you that the accident was the employee’s fault. Even if that were true, these injuries are statistical inevitabilities. If you put 90 million human beings in kitchens around the world working as fast as they can all day for three months cooking over hot stoves, slinging boiling liquids and chopping things with sharp knives, you’re going to end up with millions of injuries. You can repeat the experiment as many times as you want, there will always be injuries. So going to work is like playing the lottery. You might be one of the unlucky ones who fate has doomed. And when that inevitable day comes for some man, woman or child, their employer will probably find some valid excuse for why they don’t have help the person who won the doom lottery inherent in minimum wage work.
4. Compensation for degradation of off duty time
A lawyer would charge you a premium if he had to work all day every day as fast as he can for three months. A lawyer would probably raise that fee after a week after he realizes that working that hard and that long doesn’t leave you any energy to enjoy your free time after work, and in fact, he was probably spending all his evenings just trying to recuperate from the day’s work while prepping himself for another day of marathon work tomorrow. I’m sure a lawyer could write a fantastic explanation of why they should be compensated extra if their professional work degrades the quality of their personal time. So far no lawyer has done minimum wage workers the favor of writing an explanation of why they deserve extra compensation for not being able to fully enjoy their free time.
If a lawyer worked as fast as possible for three months he could pamper himself all along the way with good meals, healthy snacks, massages and a big vacation at the end. Minimum wage earners can’t afford any of that. They don’t get to stop at cafes on the way to work. They have a hard time getting sick days, let alone vacation days. And for them, it’s not just three months. It’s their fate in life. That’s why poor people drink and smoke so much. Their life is fucked. There’s no hope for them. In hopeless times humans tend to turn to religion or hedonism for relief. If minimum wage earners got paid more I predict you would see a decrease in religion and hedonism. Think about that. Minimum wage jobs are so miserable they force people to turn to God or slow, euphoric suicide to cope. That’s morally fucked up. That’s an atrocity. That’s the kind of thing that generations from now, our descendants will look back on us and say, “Damn, that generation was stupid and backwards. I’m sure glad we’re not that shamefully stupid and cruel now.” So how about we not be that stupid and cruel now? How about we compensate minimum wage earners for losing their personal lives. Better yet, let’s not take away their personal lives to begin with.
5. Compensation for humiliation
Some lawyers get to pick and choose their clients and their price. If a prospective client insults the lawyer or is obviously going to be a pain in the ass to deal with, the lawyer could charge the client extra to make it worth his time. Minimum wage earners get yelled at constantly by bosses and customers. Everyone is allowed to tear them down and use them as punching bags, and the minimum wage earner has to just stand there, wearing a demeaning company uniform and endure emotional and sometimes physical abuse from the people they have to spend almost every day of their life with.
There’s been a lot of research done on the topic of classical conditioning and bullying. If you insult someone and humiliate them every day, they’re going suffer. It’s immoral to do that to somebody. It’s downright sadistic to do that to somebody and then tell them that they have to come back every day for the foreseeable future and endure the same emotional abuse while smiling and pretending like it’s the happiest day of their life, and if they can’t maintain constant perfect bearing they’ll be thrown out into the streets to starve and die in the rain. That’s as messed up as the plot to The Human Centipede 2. If you’re going to have to spend your life eating other people’s shit you should get some kind of compensation for that. Better yet, maybe we should stop sewing retail employee’s mouths to the customer’s asses or giving bosses god-like authority to bully employees.
** 6. Compensation for investment of labor**
You can’t build a company with capital. Investors who provide employers with start up capital expect a return on their investment, and everyone agrees that this is entirely reasonable. However, you can’t build a company without labor either, and the workers who invest the irreplaceable seconds of their lives at work don’t get dividends. They just get the lowest pay check legally allowable and a kick in the ass the day they quit, get fired, their contract ends, the company goes bankrupt or gets bought out.
If you invest a few thousand dollars in a company at the right time you can get millions of dollars in return. You can invest a few thousand hours of your life in a company, and you won’t even get a thank you card. You have to be a complete sociopath to think that’s okay.
7. It’s the decent thing to do
Why should we pay minimum wage workers more? Because it’s the decent thing to do. That’s why. That’s all that should have to be said. Everybody knows it would make minimum wage workers’ lives better if they worked shorter hours and were paid a higher percentage of company profits. It would make people happier, and we would live in a happier society. That’s what the world is supposed to be like. Are we not good people? At least, don’t we want to be good people? Well… let’s be good to the people holding up the pillars of our economy.
Even if you’re a complete sociopath who doesn’t care about anybody else but yourself and you look at the world through a cold, calculating perspective, you should still want to raise the minimum wage, because the empirical cost/benefit analysis of economic oppression didn’t add up.
Minimum-wage laws make it illegal to hire a low-skilled labor for their market value. This makes it more difficult for the less-skilled to acquire skills and get on the low rung of the economic ladder. Minimum-wage laws also inhibit the division of labor, which inhibits capital formation and hurts society as a whole.
And the one thing that no one seems to point out but that bothers me is this: how are price floors (such as minimum-wage laws) violative of the first amendment to the constitution? How is that not a violation of free-speech rights? Prices convey information--speech. But you are not allowed to convey certain information--wage price below the minimum-wage rate--and if you do anyway eventually the state will throw you in jail. That violates the first amendment, plain and simple.
I do not agree with this. Wage is a price as any other and have to be decided on the market. The main problem with minimum wage is surplus (unemployment). Firms will demand less labor, and higher wages may encourage more workers to supply their labor.
Second, wage have to be considered as cost for firms. If we assume competitive market for final products, increase in costs will to be passed on to consumers.
Third, if minimum wage increases, the black market also increases because firms try to avoid paying the legal minimum.
From a cold market perspective, I would agree with you. But normative economic models must account for social issues in addition to market dynamics. I think it may be very justifiable for governments to impose regulations on certain prices as a means to improve social and economical equity among a society. This is not restricted to minimum wages, but also other variables like weekly work hours and contractual obligations between employers and employees.
I don't think it that the conclusion of decreased labor demand from firms is an immediate conclusion from a rise in the minimum wage. This is an oversimplified look at the complex dynamics of markets at a global scale. As long as there is marginal costs stay below marginal gains, no big shift in demand should occur.
Firms may try to reflect the increase of production costs in the final price of their products, but if these products are no subject to market price regulations, the equilibrium doesn't depend only on the firm's part but also on the buyers' part, who might not be willing to buy at those higher prices. Furthermore, since wages also rise, it might be that purchasing power may increase even if prices rise. Careful models have to be employed to make these calculations. Finally, the rise in labor costs could be supported by cutting some of the profit, which I think is the main point. This would require a great legislative effort to make such regulations fair and effective, but I think it can be done.
Finally, the point about the black market is a mute one, I think. Firms should be audited and punished if illegal activities are detected, whichever the minimum wage is.
Wages are set by how much contribution that person or position is able to bring to the bottom line of the company. Where profit margin is low, wages will also be low. Where the knowledge is minimal to do the work, wages will also be low. Where the service is not in demand wages will also be low. it is the bottom line that counts, why would anyone set up a busy if his intention is not to make a profit, any business contrary to this is called a charity. If a business does not make money to cover its cost then good-bye jobs. However I would agree that CEOs at the top are making an obscene amount of money which is tantamount to theft. Sometimes they are justified and most of the times not.
After all I think of it this way, there are two primary legal entities in the labour market, businesses and people; only one of those entities feels hunger, pain and dis-appointment. I think then extracting which should have ethical priority is not a difficult decision. Businesses have an ethical duty to the society within which they operate, they exist only to benefit people; the concept that businesses occupy a state of having more rights than people is wrong, and they do not exist purely to create profit.
Your answer presumes that supply and demand agents in the labour market have equal bargaining power, which clearly is not the case, when one party to a deal has excess power they will effect the outcome of the deal to their advantage.
Imagine for a moment you have come from a background of wealth, you can hold out indefinately for a high paid job. You may not have personal wealth, but family members will support you until you can go through the maximum levels of education that are acheivable, and get that dream job.
If you come from a poor background, you have practically no bargaining power, you take any job at any wage that can allow you to subsist (survive), as soon as practical, often before even basic education is completed.
So you can now see why supply/demand do not effect prices in a vacuum. Now you also understand why economists arent very good at describing the real economy, many of them never experienced it.
Exactly. It's precisely due to the positional imbalance between economical actors that the government should intervene in order to level the power relations among different parts. A capitalistic system without any regulation and redistribution mechanisms quickly degrades into an oligarchy of a few offensively wealthy people.
The fact there there is a surplus of work force with respect to labor demand is actually a strong reason for the government to intervene in labor prices. If the labor market is left unregulated, and with technology quickly replacing lots of work posts, wages will tend to drop overtime because employers hold the higher hand and, as you said yourself, there will be plenty of people accepting poorer and poorer work conditions in order to just survive.
I think it's a shame that many unions have become left wing political organisations, they should be using collective bargaining to protect workers but that seems to have become lost in attempts to have excessive political power.
Nice job not mentioning immigration's effect on wage not even one time in the article. How "progressive" and "tolerant" of you. At least no one can call you a racist now... (sarcasm)
Interesting arguments that you raised in this article. Although it would be great to pay everyone $15/hr min wage, I don't believe the business model where most of these positions are located (fast food, clothing stores, big box stores), are designed to pay their min wage employees much more than the current levels. The savings are passed on to the consumer. Why would I start buying a $20 burger combo meal when I am comfortable at a $5 burger combo meal. If the price of that meal went higher, I would grill my own burger and potato, and their would probably be less customers over time.
I could say that the feeling of inequity could also be expressed by workers with a college degree working 40 hrs/week. This group earned some type of a degree and are providing some type of service to their company. Their company can charge their clients at a higher rate than a burger meal, so the "salaried" worker earns higher pay. It's the going rate for an accountant, a nurse, a software developer, or newspaper editor. So, in regards to that feeling of inequity for these workers - like min wage workers...Doesn't anyone feel that there is an extreme pay differential between the (min wage/salaried) worker vs. let's say an NFL QB or an NBA forward? Or a Hollywood movie actor? They are providing their fans with entertainment, but they're not saving a life like a first responder or developing a new IT system to facilitate traffic in an urban area. So, these athletes and actors make exorbitant amounts of money, because the market supports them. The regular people who handle the customers, or sit in an office each day, pay their multi-million dollar salaries with each event ticket, jersey, or cap that they purchase. I think that is inequitable as well.
However, back to minimum wage. The most important thing for those earning $12.50/hr is to know that it should be considered a stepping stone to the 40hr/week office career job. Most people in the $25-$50/hr jobs did start out making min wage.