Raising minimum wage restricts worker, employer rights

Gov. Arnold Schwarzenegger’s recent proposal to raise
minimum wage has garnered support from the left and right,
unskilled laborers and businessmen. This surprising turn of events
signifies a business world that, despite its respectable grasp of
economics, has no concept of principles.

In the past, minimum wage increases have been opposed by the
right and by businesses on economic grounds. It is an economic fact
that minimum wage causes unemployment when it is above the market
level. That is, if employers are forced to pay a wage that is
higher than the natural market rate, they will demand fewer workers
than are willing to work. Economics dictates that an increase in
this price floor will result in additional unemployment.

A recent study suggests that increases in minimum wage have not
raised the level of unemployment as much as expected. Because its
previous opponents do not oppose minimum wage as such on principle,
they have now become supporters.

This dramatic shift in support demonstrates that the right and
the business world, although previously of the correct opinion,
completely missed the point. Whether or not increasing minimum wage
fuels unemployment is an interesting point of discussion for
economists, but is irrelevant to the true issue at hand. Minimum
wage law is morally unsound, no matter what the level of this
minimum. Not surprisingly, this immoral policy leads to undesirable
economic consequences ““ but that is only of secondary
concern.

Minimum wage law violates the rights not only of employers, but
of employees as well. In its attempt to outlaw poverty, the law
actually outlaws certain voluntary agreements between people.
Individuals no longer have the right to agree upon certain terms of
trade.

People always act in their perceived self-interest. Even if a
worker sells his labor for pennies a day, he does so because he
believes it is to his greatest benefit, considering all his
options. Preventing this transaction forbids individuals from
acting on their own judgment. The fact that a worker’s
options might be “better” under minimum wage does not
justify theft.

While supporters of minimum wage seem happy to infringe upon the
rights of businessmen (who needs rights when you have all that
money?), they are completely oblivious to what the rights of
workers truly are.

A contract is a two-way street: Forbidding employers from
offering a wage below the minimum also prevents potential employees
from accepting the wage. If their labor is not worth the minimum,
they are effectively forbidden from finding work in the
marketplace. A worker is always free to reject a contract that is
not to his liking ““ the absence of minimum wage does not
force him to work at a low wage.

Proponents of minimum wage law, however, take offense to the
suggestion that any labor could be worth less than minimum wage. In
a twisted misunderstanding of the source of value, supporters
believe that anyone who wants to work should be paid enough to live
on. That is, the value of a person’s services for a year are
equal to the cost of living for that year.

This is an egregious error. Nothing has intrinsic value: goods,
including labor, only have value to someone. As such, the same good
will be valued differently by different people.

There is no guarantee that a person’s labor will be worth
minimum wage to anyone, including that person. Only the employer
and employee can know how much they value their resources ““
forcing them to agree to terms not of their own choosing is a
violation of both their rights.

Similarly, the idea that employers owe a “living
wage” to anyone they choose to employ is based on a
misunderstanding of the source of obligations. Individuals take on
obligations to other individuals only by agreement. A person does
not have any intrinsic obligations and does not acquire obligations
simply because others want the person to.

As such, an employer’s only obligation to his employee is
to fulfill the terms of their labor agreement ““ terms which
are chosen and agreed to only by the parties involved. Neither the
legislature nor the voters have any business telling individuals
what they may agree to.

When approaching the issue of minimum wage, we must see the law
for what it is. Minimum wage law ““ and any law which
substitutes by force the judgment of one man for another ““
violates individual rights. It must be opposed in every case, not
merely on the basis of particular economic ramifications, but on
the principle of every individual’s right to his own life and
property.

Triplett is the director of product development for
L.O.G.I.C.