Let us accept the premise that having a minimum wage is “good” on whatever grounds you want to wish this. When I am in Congress I will introduce legislation that requires two things:
The problem is “society” determining what is “just”. Who is society — the U.S. Congress, the same people who banned the sale of incandescent light bulbs? Or the EPA, the Department of Labor, which would rule on non-farm hourly wages, or the USDA, which would rule on farm wages? This is a Hayekian problem.
Solyndra is a recent example, where even after huge financing, and I assume paying their employees well, they were unable to produce solar panels that delivered power below $200 per megawatt hour.
Wouldn’t all wages paid by the employer (where the market price was below minumum wage) now be $0? This may be arguing the economics of it, but what incentive is there for a firm to just not hire someone as all the costs would be born on the taxpayer? The only way I see them not doing it, is if they realize that if every other firm does this, our country would in shambles.
Sorry to redirect this back toward the economic question, but since Wintercow is now representing us, please fix the following disfuntion while you are at it there in DC 🙂 :
Why is there a FEDERAL minimum wage at all? Assuming a minimum wage in principal somehow does some good, why should we assume that the labor market in, say, Caribou Maine is the same as that in Los Angeles? Wouldn’t one expect a lower wage in Maine? Granted Californian’s are apparently free to set their own state minimum wage as long as it EXCEEDS the federal rate (the one in Mass exceeds the federal minimum wage I am pretty sure), but shouldn’t we expect that the singel federal minimum wage to distort the picture worse versus a state only minimum wage?
I guess you could extend that argument to exclude the states from setting a minimum wage also, and instead let local governments do it. But why not go further and extend it only to firms and individuals … hey, wait a minute….!!!!
When I owned the newspaper, I never paid the minimum wage, as it was necessary to pay more than that to get the help I needed. I paid my advertising salesmen the most, and the rest I paid as much as I could afford. I paid myself the least. Contrast this with your average characterization of the evil capitalist exploiting his workers.
On our farm, I violated minimum wage laws regularly when it came to kids working on the farm. I would pay them a dollar an hour to start, and then when they could do anything — anything — without having me to tell them every move to make, I’d give them a raise to three dollars an hour, which at the time was well above the minimum wage. Only one time did I pay a kid for more than a day at a buck an hour, and that was because he was unable to figure out that one quart was the same as 3/3 quart. (He was feeding milksaver to our baby calves and needed to measure milksaver powder with water.)
BTW, in the news today, Roseanne Barr said there should be a maximum wage of $100 million. I guess that would apply mostly to Hollywood celebrities.