Minimum Wage

See other issues.

We would like to see the minimum wage abolished.

Our basic philosophical problem with the minimum wage is that it undermines our freedom of association. Within the context of regulating interstate commerce, the mandate of a minimum wage to be paid to employees in order to be granted the privilege of engaging in such commerce would seem to be legal, and this is how this scheme was finally rationalized. Despite the legality, the minimum wage is a key piece of the larger puzzle that enslaves us to corporate interests and the dollar. Were we not so enslaved, the minimum wage would be completely unnecessary, but even worse, the minimum wage practically functions to help ensure that such slavery will continue.

The federal minimum wage is required by the Fair Labor Standards Act of 1938 (FLSA). The FLSA is occasionally updated to change the minimum wage. An earlier attempt to establish a minimum wage was declared unconstitutional, but this revised version tied the minimum wage to interstate commerce by requiring any entity engaged in interstate or international commerce to pay a certain minimum wage (among other things).

One of the ironies of the labor movement, is that, while ostensibly fighting for the rights of the laborer, it has had the side-effect of placing responsibility for the support of the laborer into the hands of corporations and effectively denying the laborer's right to work for his own support outside of the context of "jobs", which are types of labor that depend upon corporations. A "living wage" requirement presumes that money is required for one's support, and this has not always been true, historically. Unfortunately the perspective of the modern American is such that we are largely blind to the fact that most means of making a living have been made illegal without paying the government for permission to engage in such labor. Legal costs, in many instances, are so large, that it becomes impractical to profitably engage in such labor without scaling up and organizing into corporate bodies.

Corporations have to offer people certain advantages in order to entice them to offer up their labor to a corporate interest, rather than work for their own support. This provides a certain natural competition that would almost guarantee a wage that would support the lifestyle a person was willing to work for. Unfortunately, with the requirement that people be licensed for everything from fixing cars to cutting hair, and with the risks associated with navigating growing government legislation and incompetence in all aspects of our lives, it has become prohibitively expensive to engage in a simple occupation and to take on responsibility for one's work. This tilts things decidedly in the favor of corporations, driving down the enticements needed to encourage people to offer up their labor. What once would have required force, and slavery, (making people work for less than a living wage) is now easily and commonly accomplished without any need to resort to violent means.

Long ago, it seems, the labor movement missed its opportunity to fix a core problem. Part of the problem is that, despite their apparent antipathy, unions depend on corporations for power. Unions derive their power from our dependence on corporations, and the great power of modern unions is a daunting measure of how greatly dependent we have become. Instead of simply deconstructing the corporate/civic conspiracy that drove people further and further into effective slavery, unions placed themselves between corporations and the government. This had some ameliorating effect, but one thing it did not do, was cause government to grant the laborer equal protection under the law. Now the laborer is, in many cases, the slave of both a corporation, and a union, and denied more and more with each city hall meeting, or congressional assembly, the means to escape their effective slavery.

In what way, then, are we slaves? First, we are denied the right to provide for our own support. Our very lives are thereby put in the hands of corporations. Second, since we work for corporations, and must be subject to their rules, people are forced, daily, to violate their consciences, effectively deteriorating our liberty.

What then, does this have to do with the minimum wage? First, and most obviously, the minimum wage is a symptom of the problem. Were I allowed to simply labor for my own support without having to navigate nigh impossible bureaucracies, I could work, more or less, to the extent that I was willing, and have nobody to blame for my wages other than God and myself. McDonald's would have that to compete with when trying to entice me to flip burgers for them, rather than put up a shingle offering to fix computers, or bake wedding cakes.

Even further, though, recent research has shown that the minimum wage actually hurts social mobility. Meaning that it keeps the poor relatively poor, and it keeps the rich relatively rich. Around the same time as this study, another study in the nascent field of cliodynamics involved the creation of a model intended to be predictive of social instability. It was interesting to see that although the author suggests raising the minimum wage to help the poor, his model very clearly requires that the minimum wage correlates negatively with social mobility. In another decades-long study by UC Irvine professor, David Neumark, it was found that higher minimum wages led to increased poverty.

It is not surprising that, when facing problems of low income, the obvious first-order solution to the problem would be to raise the minimum wage. Unfortunately, economies are not simple entities. They are chaotic, and second-order effects can often produce results that are completely unexpected. As is common with any debate that is political in nature, the science and statistics are often abused by all side, and the motives of the players must be second-guessed just as much, if not more than, the apparently promising solutions they propose.

Minimum Wage and Interstate Commerce

The minimum wage being legalized under the guise of regulating interstate commerce begs an interesting question; Can the federal government regulate interstate commerce in any way they like, or might there be types of interstate commerce regulation that are unconstitutional?

To take an extreme example, what if the federal government was to say that only Evangelicals were allowed to engage in trade across the border between Utah and Nevada. This would seem unconstitutional on its face, because congress is not allowed to pass a law regarding an establishment of religion.

Well, what if it was atheists instead that were not allowed to engage in trade across the border, or employees of Fox News. Clearly, such a law would be seen as a violation of the equal protection clause.

So, how does the minimum wage fare? I would argued that the minimum wage is a violation of the first amendment, inasmuch as the freedom of speech includes the freedom of association. Similar reasoning sunk limits on financial contributions to campaigns for federal office. The current law says that we can only engage in interstate commerce if we choose to associate in a way that the government approves of.

Some Other Resources

• James Barrett, "BUSTED: Seattle Mayor Caught Colluding To Squash Damaging Minimum Wage Report", Daily Wire, 2 Aug 2017
• Ryan McMaken, "Restaurants to Eliminate More Waiters in Response to Minimum Wage Hike", Ron Paul Liberty Report, 3 Jan 2017
• Kate Taylor, "Wendy's CEO just revealed a terrifying reality in fast food", MSN.com, 18 May 2016
• http://www.washingtonmonthly.com/ten-miles-square/2013/02/the_social_mobility_fairytale042960.php
• http://www.becker-posner-blog.com/2014/02/social-mobility-and-income-inequalityposner.html
• http://www.nationalreview.com/corner/364671/how-minimum-wage-hurts-poor-people-mario-loyola
• http://www.nationalreview.com/corner/394310/minimum-wage-hikes-really-do-hurt-low-skilled-workers-and-reduce-mobility-reihan-salam

• http://econbrowser.com/archives/2014/12/new-estimates-of-the-effects-of-the-minimum-wage

• http://www.econlib.org/library/Enc/MinimumWages.html