[From Adam Matic (2011.06.29 1915 gmt+1)]
Bill Powers (2011.06.29.0719 MDT)
BP: The heartless cruelty of this reasoning is matched only by its
inventiveness. The employee wants to work for a low pay? Why of course. The
person could easily find a job with higher pay, but is simply too lazy to
look for it or train for it. Isn't that how the story goes?
AM:
No, actually, that's not at all how the story goes.
I would appreciate if you would not call me cruel or heartless for no reason.
I don't know why an exact someone would want to take a low payed job.
There could be a lot of reasons. They might be very poor and any pay
is better than none for them, so they agree to work for a low pay. I'm
happy to work for 4$ per hour as a bartender and with that money I can
buy a lot of things that I need. It would be a disaster if someone
would punish my employer for giving me a "low wage". It's quite high
for me. It would also be a disaster if someone would set a minimum
wage above that level because then I would have to work on the black
market.
BP: If that story
were the truth, we could all relax -- those low-paid workers are just
getting what they asked for, and certainly what they deserve. They have a
free choice -- they could choose not to take a job with such low pay. It's
their own fault that they are poor in this great land of opportunity. Let
them suffer the consequences; that's the only way some people can learn. If
they starve to death, that will be a valuable lesson for others of their
kind. Look at the suffering they cause for their own children! When other
parents see that, they will think twice about insisting on a right to live
in luxury. Of course if we step in and rescue the parents or the children
that will weaken the point, so we mustn't do that. Behavior must have real
consequences.
AM:
Well, I certainly don't think like that.
I'm saying that setting a law that fixes a price of unskilled work
does not help the poor and that they should be helped in some other
way.
If the minimum wage did help the poor, then it should be set at 100$
for sure. Or why not make it 500$. Then everyone will have enough to
live.
But it doesn't work that way.
AM: The employer still needs cheap labor to keep the company working, the
company can't afford to pay everyone more.
BP: Suppose the employer happens to think it's immoral to take 10, 20, or 50
times as much of the profits for himself as he pays to his employees. Will
he still "need" such cheap labor? To say "need" is to imply that there is
some external imperative forcing the employer against his more charitable
impulses to pay the lowest possible wages. Poor chap. Apparently, the
employer has no choice (though his employees do).
AM:
I don't think it's fair, good, or moral for an employer to have 50
times as much as an employee for himself. I just think that setting a
minimum wage is the wrong way of preventing that.
BP: "Oct 19, 2006 � The average small business owner or chief executive brings
home an annual salary of $233600, according to Salary.com." (Google on small
business owner income).
AM:
So, apparently, the minimum wage laws didn't help with that inequality.
BP: The Federal minimum wage is $7.25 per hour, or for a 2000-hour work-year (50
weeks at 40 hr/wk), $14,500. That is 1/16th of the average annual salary of
a small business owner or CEO. The federal poverty line for a family of 4 is
$1800 per month, which is $21,600 annually. For a single person it is $903
per month or $10,836 per year and for two people it is $1215 or $14580. So
the best thing is for poor people not to get married, or if married not to
have any children. Of course nobody forces anyone to abstain from marriage
or children, do they? It's their free choice. Isn't it?
AM:
Simply saying "you have to pay someone more than 7$ per hour or
else.." will not necessarily lead to people actually paying workers
more than that.
AM:� If the law is not strictly enforced, the worker will probably work
illegally. If the laws are more strict, then the already
poor people who got low wages get unemployed and can't even get
working experience. Some companies, perhaps, actually redistribute
more money from owners to workers.
BP: That's a real hardship, not being able to get working experience. No
wonder people are willing to take low-paying jobs -- with no job at all, a
person will never get the working experience needed to get better pay if a
better-paying job is available. Well, at least an ambitious unemployed
person can rest up to go out job-hunting the next day fortified by a nice
hot meal, dressed up in his best clothes, exact change ready for the bus
when it comes and visions of high-paying jobs dancing in his head like
sugar-plums.
But wait a minute -- an unemployed person doesn't have a job, does he? And
that means he isn't earning any money, doesn't it? So he can't pay the rent
and his furniture is out on the sidewalk, and his best clothes are just like
his worst clothes, and he not only doesn't have exact change for the bus, he
doesn't have any change at all. He probably doesn't have much education (and
would have none if his parents had had to pay for it), and he probably looks
pretty shabby and hasn't had a haircut for a long time. He's probably been
turned down for most jobs he's tried to get, so now he has to accept
anything at all just to say alive, even if it leaves him exactly where he is
now.
AM:
Right. And he comes to some, dirty smelly warehouse and begs to work
for as much as they will give them and they say - "Sorry. Can't hire
you. The federal government says I'd have to pay you double what you
ask for and I just don't have the money." And the person goes on to
sell drugs.
BP: That leaves the employer in a very satisfactory position. About all he has
to offer such workers is enough money to barely make it from one day to the
next so they can show up for work again.
AM:
There is competition between employers. One day, a company opens next
door and say "we pay more than this guy". And people go working for
him.
That's exactly how wages rise in a free market. Not because someone
says - "hey, you're too greedy, pay your workers more".
BP: Those bleeding hearts who keep
telling him he ought to pay them more just don't get it. If he paid them
more, they'd be full of energy and hope and would be out looking for better
pay, and where would that leave the employer? He's be cutting his own
throat. The trick is to pay just enough so they can keep working, but not so
much that they can get all independent and think they deserve more. You have
to teach them to be grateful for what they get and not rock the boat --
after all, complainers can easily be replaced. That's just good business
strategy.
AM:
At the same time, the employer has to offer his product to the market
for a price as low as he can manage.
BP: The employer points out, "A wage is agreed upon between an employee and an
employer. Both have to be satisfied to come to agreement. So by what right
does the employee then complain that he or she isn't making enough money?
The worker can always go look for higher pay elsewhere; there is always
someone who will be more than happy to take the abandoned job. That's why
some minimum level of unemployment is essential; we have to make sure that
the replacement worker is always available. That keeps the employed workers
in line."
AM:
That's not what I'm saying. The employee has every right to ask for
more money. On the other hand, he does not have the right to force the
employer to give him more money. If the business is profitable, he
could try opening one on his own. There are people willing to invest
in things like that.
BP: So there is the other side of the free-market argument. The free market
turns out to be a subtle and well-managed form of coercion. If you have
money and power, you are free to set up a system under which you can offer
people choices that aren't really reasonable choices; it's like the choice
offered by the highwayman: your money or your life. There are some choices
that a person in his right mind will make in a totally predictable way, with
only the occasional exception. To make the other choice is effectively to
commit suicide or to choose misery and slavery just to stay alive.
AM:
There is also the "road to hell is paved with good intentions".
Minimum wage laws simply don't produce what they are meant to produce.
BP: The free market isn't really about freedom of choice. It's about power and
control. It's about some people stacking the deck so they know what hand the
other people are playing and they can force their opponents to make choices
that aren't choices at all. "If you don't want to do this job for this wage,
I can always find someone who does want to do it."
AM:
There is a catch - not always can you find a person who wants to work
for as low wage as you set. In fact, that's rarely the case. I could
go yelling that I'll pay a dollar an hour to anyone who will work for.
No one would want that.
In short, if you don't want to do this work for this wage, I can make you
want to do it. Go ahead and test me. It's your free choice.
Some choice.
AM:
In short, minimum wage laws don't work because they are price fixing.
Drop the price of bread by law and soon, there will be a chaos in the
bread market. Just like there is chaos in unskilled labor market.
Why wouldn't you simply be forced to pay your taxi driver 50$ per
hour? He's doing work for you and he's poor. You're his employer. I
think it's not fair that you two should agree on some arbitrary price.
You'd end up exploiting him by paying him as low as he would accept.
Best
Adam