November 2, 2006
By Lin Zinser
While most economists agree that minimum wage laws cause unemployment and other economic ills, most ignore the more fundamental question: is a government-mandated minimum wage moral? Minimum wage laws are immoral because they violate the rights of both employers and employees to contract freely, and so can make criminals of decent, honest workers and employers.
For example, consider a just-married 18-year-old high school graduate with no office skills. After working as a part-time waitress in high school, she held a job at a factory, where she was laid off before developing any real skills. She meets a businessman (“Mr. B”), who employs two workers, one of whom is quitting. Mr. B needs to hire somebody, but he can’t afford to pay an unskilled worker the legal minimum wage.
The young woman wants to learn office skills because she does not want to work in factories or as a waitress. She and Mr. B discuss the situation and agree that he will pay two-thirds of the minimum wage, and then renegotiate if she learns the necessary skills. Both understand that what they are doing is illegal, and that he is the one most at risk.
Immediately, the young woman realizes she is not worth even the reduced wage to her employer. At first she spends all day to complete a task she later learns to do in a couple of hours. On many days, she fills more than one trash container with her mistakes.
She’s grateful that he offered her a chance to learn while getting paid. It never crosses her mind that Mr. B is somehow taking advantage of her; sometimes she thinks she’s taking advantage of him. She certainly never thinks of Mr. B as a criminal. She would never dream of turning him over to the authorities, thereby subjecting him to legal penalties.
Over time, as she gains skills, Mr. B pays her more money. When she quits three years later to attend college, her wages are more than double the legal minimum, and she has learned valuable office skills. Mr. B hired her because he saw potential, but he could not afford to pay the legal minimum wage for that potential. Had she not been eager and willing to take less, he would have hired someone else with skills that could produce value immediately for the legal wage. The young woman was able to successfully compete with higher-skilled workers only by accepting a lower wage.
This is not just some fairy tale — I was that 18 year-old unskilled newlywed. After that job, I worked in other offices and eventually completed college and law school. Taking that job for less than minimum wage was a critical point in my life. After I began working as a lawyer, I wrote to Mr. B to thank him for that first opportunity. He was willing to give me a chance to prove my worth. I earned that money. I was conspirator to his crime.
Had I been able to work for nothing, there would have been no crime. I would have been an intern — working to learn a skill — or a volunteer donating time in return for non-financial benefit. Employers are allowed to take on employees if they pay them nothing. But because I needed income and was willing to take less than the arbitrary amount set by law, Mr. B and I engaged in an illegal act. Had somebody turned him in for allegedly “exploiting” me, Mr. B would have paid dearly, all for his willingness to pay someone to learn a skill.
A minimum wage is arbitrary. Today, Colorado’s minimum wage, as under federal law, is $5.15 for most occupations. If Amendment 42 passes, the legal minimum wage becomes $6.85 on January 1, 2007, an increase of 33 percent, with annual increases. And this becomes part of the state’s Constitution.
This Amendment allows voters to forcibly interfere in the employer-employee agreement, which violates the rights to contract. Wages that are legal today will be illegal on January 1.
Providing income to someone willing to work to learn a skill or trade is a decent, moral act. A minimum wage can make that mutually-beneficial act illegal. Such wage controls override the free agreements between employer and employee with arbitrary political force.
Lin Zinser (email@example.com) is Executive Director of Ideas Matter! – a forum for discussion of ethical and political ideas.