Minimum wage: Let people be paid according to their worth
As usually happens when money issues are brought into politics, the recent discourse on the minimum wage was rich in sympathy for the poor, but lean in economic substance.
What started it was a bill introduced in the North Carolina House of Representatives, which would have increased the minimum wage by a dollar an hour to $6.15. The House killed it.
It was offered by Democrat Alma Adams of Greensboro. Her concern for the poor may be admirable, but it could be enhanced by a deeper understanding of our system of free commerce, which is more complex than she may realize.
It is corrupted by laws that require one person to pay another person a minimum amount for a given service or product. That is particularly true if the service or product being purchased is worth less than the mandated price.
This includes wages as well as other services and products. Employers cannot pay a worker more than the value of the worker’s work. If they are required to do so, they must hire fewer people.
So, among other problems with the minimum-wage law, it can discriminate against people whose work is worth less than the minimum wage.
People who support minimum-wage laws often accuse opponents of being hardhearted, and some may be. But those who claim sympathy for the poor should be looking beyond simplistic solutions. They should look at the reasons why the work that some people can offer employers lacks value, and they should consider what might be done about that. Is it lack of education, lack of skills, lack of initiative?
Proponents of a higher minimum wage like to say that the current one, $5.15 an hour, is too low for a person who is supporting a family, which is true. But less than a fifth of the people who earn it are the sole breadwinners in families with children.
As Rep. Stephen LaRoque said during the House debate on Ms. Adams’ bill, the minimum is a “training wage.” Many of those who earn it are workers living with their parents or other relatives. Some are students from families that are far from poor.
Whether they are from poor families or rich, raising the minimum wage makes it less likely that they can find jobs.
And by discouraging entrepreneurship, it could have the same effect on others.
At the same time, of course, it would tend to raise prices for all of us.
It might be politically advantageous to a politician to say to his poor constituents: “I am going to make a law that will force your boss to pay you more than you are worth. So don’t worry about improving yourself to make yourself worth more.”
But that is not a concept that government should embrace. It undermines our system of free enterprise.
Published in Editorials on June 9, 2005 11:17 AM