A recent article in the Bozeman Chronicle noted that a person came to Bozeman advocating an increase of the state minimum wage to $6.15 an hour. I decided to survey local businesses. I found that none of them pay their employees so little. Every one of them starts their employees at a higher rate. Apparently, this person wants to solve a problem that doesn’t exist.
She is quoted as saying, “Nobody working should be poor.” Yet a local representative for the Gallatin Valley Human Rights Task Force asked, “Will this end poverty?” and amazingly, she said, “No it won’t. But it’s the right thing to do.”
She went on to say that increasing the minimum wage “will lay the groundwork to get us a living wage.” So what does this really mean? Please bear with me as I explain.
Generally speaking, an employer-employee relationship is a voluntary arrangement. The employer values the skills and productivity of the employee more than the wage the employer pays. The employee values the employer’s money more than the time and effort the employee spends doing the tasks the employer values.
The employer and employee enter a mutually agreeable arrangement to exchange what they value less for what they value more. If the employee believes that the money being offered is not sufficient for the time and labor being provided, then the employee can either negotiate or move on to another employer that values the employee’s skills more.
Likewise, if the employer thinks that what the employee is not providing enough value for the wage being paid, the employer may also rethink the arrangement. The key element here is that there are two willing parties agreeing on the comparative value of what each is offering the other. This is a voluntary, private, completely legal arrangement.
The marketplace establishes the environment by which these transactions happen. Some skills are valued more than others. A surgeon can command more compensation for her skills than can a waitress. Part of the reason is because the supply of surgeons is smaller than the supply of waitresses. Fewer people possess the exacting skills needed to be a surgeon, while many people possess the skills to be a waitress.
The ability to produce also makes employees more valuable to an employer. For example, if you see some people digging with shovels, and you also see others operating backhoes, who would you expect to be earning a higher wage? The backhoe operators, of course. They are more highly skilled and more productive. A more productive employer is a more valuable one.
Enter the minimum wage/living wage. Now we are no longer talking about the value an employee brings to an employer. It is no longer about productivity. Skills are no longer relevant. Indeed, the private arrangement between two parties is no longer valid. The employer becomes an implementer of government's social agenda, coerced to implement its vision.
Regardless of the skill level, experience, or productivity of an employee, the employer must pay a government mandated wage. Without regard for local economic conditions, the labor pool, or the type of work being performed, the employee now commands an arbitrary income set by law.
But more to the point, what makes a living wage a living wage? If $10 per hour is a living wage, would $11 be better? Or $20? Indeed, if we accept the concept that the government should set wages, why not have everyone make $100 per hour? By the same token, why should Bill Gates earn so much? He could get by on $100 per hour, couldn’t he? Why not have government decide these issues as well?
The real issue is, government has no constitutional authority to involve itself in the private, consensual, legal arrangements made between two private parties.
There is a name for the type of government that dictates economic factors, that involves itself in the private affairs of people, that tells people how they must spend their money, that attempts homogenize people.
It is called Socialism.
There is a name for the type of government that dictates economic factors, that involves itself in the private affairs of people, that tells people how they must spend their money, that attempts homogenize people.
It is called Socialism.
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