Minimum Wage, Living Wage and other Great Misconceptions

I work for minimum wage.

Surprised?  You shouldn’t be.  In fact, I submit that pretty much everybody who receives a paycheck from an employer is working for minimum wage… everybody…, including me, and all of you.  Most employers generally pay employees the minimum amount of money they need to pay in order to get the desired work out of the employee.  For a school teacher that might be $60,000 per year (according to the NEA, in 2012 the average for a Michigan public school teacher was $61,560).  For a heart surgeon it might be $600,000.  For a high school senior working part time in fast food it might be $10/hr.

If someone will successfully perform their job for $10/hr, there’s no reason to pay them $11/hr.  It’s no different than a trip to the grocery store.  The price tag shows a price, which is the minimum amount the store will take for that item.  We don’t step up to the cash register and pay more than the marked price do we?  No, we pay the minimum.  With labor, the employee has a minimum price for their time and effort, and thus the employer pays that price in the form of a wage – a minimum wage.   If the employee’s minimum price is not met, one of two things happens; either the employer raises their minimum offer, or the two go their separate ways.

Minimum Wage Law

Most people do not realize that the concept of mandated Minimum Wage has been around for at least 600 years, probably more.  European serfs generally worked without pay in exchange for a place to live and a field in which to grow food.  A common concern was should they also be given a single coin each day.  Is it really a surprise that someone came up with an idea in the 1400’s and we’ve been arguing about it ever since?  Six hundred years later it remains an issue of HUGE contention within our Society, with countless reasons being argued by both sides of the issue.  Sadly, it seems that most arguments for either raising OR lowering the mandated Minimum Wage usually have everything to do with politics, and absolutely NOTHING to do with appropriate exchange of value.  This too, is of no surprise.

Here in the US, mandated Minimum Wage is such a contentious issue because it’s a Socialist premise trying to fit into a free market Capitalist system.  Minimum Wage is set by a combination of Local, State and Federal laws, in that order of hierarchy.  Per the Fair Labor Standards Act of 1938 (really, 1938!), the current Federally-mandated Minimum Wage (set in 2009) is $7.25 per hour.  In my opinion, this is $7.25 too high.  The REAL minimum wage in a free market Capitalist system is $0.00, just as the allowable (maximum) wage is limitless.  All societies must make a choice:  Do the citizens want complete protection or unlimited opportunity?  With respect to earnings you can’t have both, at least not for very long.  And by the way, it seems unlikely that any in-depth review of Socialist societies during the past century would conclude that above all else, all the citizens were “protected.”  The most protected classes of people in virtually every Socialist society are either members of the Government, or those that really do not want to work, but I repeat myself.

On the surface, the notion of a Federally-mandated Minimum Wage might seem sensible, even noble.  However, in reality it is patently absurd, for the US is far too large and economically diverse for this to make any sense at all.  How can one say a Minimum Wage is valid when it’s the same for Mancelona and Manhattan, Bellaire and Bel Air, Atlanta MI and Atlanta GA?  The difference in the cost of living between even just these pairings should be clear indication that a Federal Minimum Wage is completely economically irrational.

In addition, the fact that Minimum Wage is a premise based upon what an employee is ENTITLED TO from their employer, while completely ignoring the work the employee is RESPONSIBLE to perform for the employer creates all kinds of problems related to fairness, motivation, and even morality.  How can a standard of specific tangible reward regardless of contribution be justified, especially when the reward comes at expense of someone else?   Simply put, it cannot.

Living Wage

Regardless of how many times these two phrases are spoken in the same sentence, or viewed together on the same protest sign, Minimum Wage and Living Wage are two entirely different and separate things.  The premise of Living Wage is determined by a myriad of factors, none of which can, much less should be solved by mandated Minimum Wage.

Living Wage is also a very contentious issue because beyond subsistence, living wage is ENTIRELY determined by CHOICES made by the individual, such as where one chooses to live, how many children one chooses to have and when one chooses to have them, what kind of car one chooses to drive, how much education one chooses to get, which smart phone and plasma TV one chooses to buy, etc.  The concept of what constitutes one’s basic needs is entirely, individually fluid, and is therefore the responsibility of the individual to meet, and NOT the responsibility of the taxpayer or employer to subsidize.

For example, I happen to think that my earnings are MY problem to solve.  That’s sort of the nature of the beast isn’t it?  Which of any individual’s given problems should be solved by whom?  At numerous points throughout my life I earned less than what was needed to “live” the life I desired.  So I took it upon myself to increase my relative value in the market.  I did things like accepting a lesser wage in order to work to gain experience, and returning to school to increase my knowledge through additional education.  I thought it inappropriate to ask my fellow citizens (taxpayers) to increase my earnings by passing a law that mandated I be paid more, regardless of the value of my work.

Many advocates of raising the Federally-mandated Minimum Wage insist that it’s needed in order to increase Minimum Wage earners’ purchasing power.  Further, these advocates often insist that employers will easily afford the additional payroll expense by simply raising prices of the goods and services they provide, thus taking in more revenue.  This idea fails to recognize even the most fundamental principles of Basic Economics.  “Just raise prices!” actually punishes the very people that mandated Minimum Wage professes to help.  If all companies raise their prices to fund higher wages, the Minimum Wage earner now needs even more money in order to buy that which used to cost less, thus negating the value of the wage increase.

Wrap It Up David, My Brain is Starting To Hurt

Private employers need to compete in the open market for quality employees, and thus pay the going market-driven wages.  Employees need to take responsibility for providing value for their employer that is congruent to the wages they demand.  Private employers need the freedom to hire whomever they wish, and employees need the freedom to work wherever they are qualified to work.  Each of those “freedoms” typically comes with a broad range of costs, and everyone involved must accept those costs.  Many of our societal issues are the result of an unwillingness to bear the inherent costs of our numerous freedoms.  Minimum Wage is no different.

The entire notion of mandated Minimum Wage is incredibly complex, as is the determination of Living Wage.  Economics, societal mores, individual responsibility, political platform, Constitutional law, and acceptable behavior are only a short list of the things that play a crucial role in these issues.  Therefore, it is of no surprise that this cannot be effectively addressed by simply deciding that even though Minimum Wage today is X, going forward it will be Y.  It’s just not that simple, or that easy.

So once again, I work for “minimum” wage, and I always have.  However, I also took responsibility for enhancing my knowledge, skills and willingness to work in such a way that the value that I provide my employer both motivates and enables my employer to pay me considerably more than what the Government mandates that I be paid.  Given the individual economic and lifestyle choices I’ve made, and continue to make on a daily basis, the wage I earn constitutes a “living” wage for me.  I do not need, much less desire, the government to be anymore involved in this financial relationship than they already are, in the form of Withholding Taxes.  Taxes that are used for, among other things, the giving of money to people who staunchly REFUSE to make responsible economic, lifestyle and employment decisions.

And we wonder why the number of people receiving taxpayer-funded financial subsidies and entitlements continues to grow…

Advertisements

Author: David Wilson

Born and raised in Flint, David Wilson now lives in Traverse City. He is a very proud husband (Shari), father (Kyle & Danielle), rider of Gitane and Specialized bicycles, Flint Northern Viking, and double-alumnus Michigan State University Spartan.