“I’ve always believed that if you put in the work, the results will come” – Michael Jordan
What do you think when you hear “equal work means equal pay”? It’s a common refrain amongst progressives and feminists. When they say it, what they mean is “women and men should get paid the same thing for doing the same amount of work (and there should be laws to enforce it!)”. Now, I obviously don’t really cotton to government interventionism in the free market, but I think the statement has merit. Equal work should mean equal pay. Or, more to the point, if the market is working efficiently, then equal productivity will result in equal means of exchange. (This, of course, is all we mean by “pay”. We produce goods and services, convert them into money, and exchange them for other goods and services later. This way, we don’t have to rely on barter – which can be rather inefficient as a means of exchange.)
If you produce 3 tables, 17 widgets, and remove snow from 12 driveways today, you should be able to exchange those goods and services for the same amount of money as I can if I produce the same. This, by the way, is one of the beauties of the free market – it is coldly dispassionate. Pay (or trade) is based on produce, not the backstory of the producer. Now, you are also free to pay more to buy goods or services from someone you like for any reason you choose – but what you’ve really done is pay them the market price and give them the rest (which you are free to do … or you should be).
So, when I think if “equal work means equal pay” I think of more than just men and women. It should always be the case that two people doing the same amount of work receive the same amount of pay. In fact, it should be the case that people are paid in accordance with their productivity (“twice the work means twice the pay” … maybe that’s not as catchy).
In Tuesday night’s State of the Union address, president Obama floated the idea of increasing the minimum wage to $9 an hour. The president, and most liberals, see this as “something for nothing” – just a way to force those oppressive employers to pay a “living wage” so people can pay their bills and feed their family. But the minimum wage is nothing of the sort. It does not tell employers that they must pay people $9 an hour. It tells employers that if they choose to hire a person, they must pay him $9 an hour. The conditional is very important – we do not yet live in a state-run economy a la the Soviet Union (or, more recently, North Korea).
The minimum wage then doesn’t set a lowest amount that someone can be paid on the job, but rather the minimum amount that they must produce to legally hold employment. If you can’t produce $9 per hour worth of goods and services, then you just don’t get to work and produce and exchange with the rest of us.
But why? Why should the we the people tell those of us who are less capable that they’re not allowed to work for themselves, they’re not allowed to produce and exchange with the rest of us?
And who benefits? Certainly not the less capable, who now cannot find legal employment. They are forced to work outside the confines of legal protections. Certainly not businesses, who can easily find low-skilled work to be done by low-wage workers. So who? Perhaps the skilled worker who now doesn’t have to worry about the boss hiring two people at half-price each to take his place. Perhaps union workers, who face less competition from low-wage workers in right-to-work states. Perhaps it’s all just a giveaway to preferred political classes.
I think we should oppose barriers to market entry … barriers to freedom. The minimum wage is obviously not the only barrier. We’ve noted before that most regulations are built to keep small providers out of the market, which is a giveaway to large corporate entities. These too should be brought down.
So what happens if the $9 minimum wage goes through? Well, some $7.50 or $8.00 an hour workers will get a raise and their employers will try to make it work out. But I suspect a lot of $6.00 an hour workers will get laid off. McDonald’s will struggle, perhaps trying to pass on the cost with higher prices (or save by using robots … don’t laugh). Higher unemployment, less economic activity, less freedom … yeah, that’s a good idea.