Viewpoint: The minimum wage as political ploy

The news that California and New York have enacted the $15 minimum wage didn’t surprise much, and for the same reason that other acts of political stupidity these days don’t — there’s simply too many to keep track of.

It is easy to point out the problems with such an increase — that it will cost jobs, lead to cutbacks in hours for many who manage to keep their jobs and to increased prices for those who can least afford them. That it will accelerate the move toward automation on the part of employers is undeniable (the kinds of low-skill jobs that pay the minimum are, of course, the jobs most easily replaceable by machines).

It is also remarkable that those who complain most loudly about the “outsourcing” of jobs to other countries by companies in search of lower-cost labor are essentially the same people who support what California and New York have done. In their obliviousness they don’t realize that they have made hiring workers at home more expensive and workers abroad cheaper.

Those who claim that increases in the minimum wage produce few negative effects overlook an inescapable law of economics — that when you make something more expensive (in this case low-skilled, entry-level labor), people buy less of it.

We could also, for full effect, conclude the brief by throwing in arguments about how the minimum wage was never intended to provide a “family wage” in the first place, as well as all those stats on the percentage of minimum-wage workers who are actually part-timers and high school/college students working after-school jobs.

In the end, one suspects, however, that those demanding the $15 minimum wage really aren’t as oblivious to the costs as they pretend to be; rather, they are simply elevating political logic over economic logic. They know that what they are doing will likely hurt more than help but don’t care so long as it advances their political prospects — it is easy to buy votes with other people’s money (in this case that of employers and consumers) so long as you can disguise the nature of the transaction.

With the politics of altruism, it doesn’t matter if you do more harm than good so long as the perception of altruism remains and the harm is sufficiently obscured.

Still, all of that aside, the intriguing thing about our recurring debate over increases in the minimum wage is that so few ask the most obvious question — why is government in the business of setting wage rates between consenting adults in the first place? More precisely, why not let people offer their labor and skills at whatever wage someone else is willing to purchase it?

The real problem isn’t where the minimum wage is set; it is that it exists at all.

In a world without the minimum wage everyone would be paid in a manner roughly commensurate with what they had to offer employers, thus producing an undeniably wide array of wage rates and income levels (reflecting the equally wide array of skills, ambition and effort on the part of job-seekers).

Within such a purely “market-set” wage scale, workers would therefore receive, contrary to what is happening in California and New York, what they “deserve,” which is the essential requirement of any reasonable conception of “justice.” Those at the bottom end of that scale would also have, again, contrary to present circumstances, every incentive to improve their lot in life, to enhance their skills, to work harder and to make their labor more valuable to their employers (resulting in higher pay and promotions).

The term “perverse incentives” nicely describes a situation wherein government mandates that everyone earning “X” gets a raise at employer expense to “X plus,” regardless of their skills, effort, or value in the workplace. It is difficult to identify where the “justice” that social-justice warriors claim to care so much about fits in such schemes.

But the broader point is that getting and holding a job, any job, is more important to a person’s long-term success than what that initial job pays per hour. And politicians can’t make a person more productive or worth more to an employer than the market suggests they are.

Raises that are given by employers as a reward for performance are real; those given by government that are unrelated to performance never can be, and can have only pernicious effects.

A world in which those with minimal skills are encouraged to acquire more through market incentives, both positive and negative, is a vastly preferable, more progressive, and ultimately wealthier world than one in which pandering politicians can wave a magic wand and arbitrarily increase some people’s wages at other people’s expense.

The minimum wage is the most cynical of all political ploys because it is perpetrated under the guise of compassion by self-serving elites upon the most vulnerable among us. But the costs will be paid by the alleged beneficiaries long after their benefactors have moved on to bigger and better things, patting themselves on the back for their moral superiority as they go.

And then there remains that last, nagging question: If we’re doling out other people’s money, why be so stingy about it? Why not $20 per hour? Or even $50?

Freelance columnist Bradley R. Gitz, who lives and teaches in Batesville, received his Ph.D. in political science from the University of Illinois.