With the possible exception of the war on drugs and public (i.e., government) schools, it would be difficult to find a government program that is more damaging to inner-city poor people, especially blacks, than the minimum wage. Yet, liberals, who have longed claimed to love the poor, needy, and disadvantaged, especially racial minorities, continue to steadfastly support this vicious and racist government program.
The first thing one notices whenever liberals advocate the minimum wage is their stinginess, for they always limit their calls for a minimum wage to no more than $10 an hour. Despite their supposed love for the poor, you never see liberals calling for a minimum wage of, say, $100 an hour. They always keep it down to the $10-an-hour area.
Let’s examine why it’s a good thing, at least for the poor, that liberals don’t call for a $100-an-hour minimum wage. It will help us to see how liberals attack the poor, and especially the poor who are black, with their $10 or lower minimum wage.
In every economic trade, people are giving up something they value less for something they value more. That’s why they trade. They aim to improve their economic well-being through the trade.
For example, suppose A has five apples and B has five oranges. Let’s say they enter into a trade in which A gives B four apples in return for one orange. Is B the winner and A the loser in this exchange? No. They’re both winners because they both have gained from the exchange. Each of them has given up something he values less for something he values more.
It’s no different in a labor exchange. In any consensual labor relationship, each side gives up something he values less for something he values more.
Suppose, for example, an employer hires a worker at a monthly pay of $1,000. Both sides have gained; otherwise they wouldn’t have entered into the exchange. The employer values the money less than he values the work provided by the employee. The employee values the money more than the other things he could do with his time.
What’s important to keep in mind, however, is that all these valuations are entirely subjective. That is, they are in the eyes of the beholder. A person’s subjective valuation of something, including an employee, will inevitably turn on an infinite array of factors, including the amount of wealth he happens to possess and how he prefers to allocate it.
An employer, for example, will place a subjective valuation on a prospective employee. He will subjectively determine how much in additional revenue that person is likely to bring to the firm, especially compared to how much the firm is paying him. How much to offer him will be based on such factors as availability of capital and how much other firms are offering.
Suppose one day in June, a company’s employment office encounters 10 teenagers who have just graduated from high school, all of whom are seeking a job. The company and the teenagers reach a deal in which the company agrees to pay each of them $15 an hour. All of them are hired.
What that means is that the company has made a subjective valuation of their work potential, one that makes it worthwhile for the company to pay them $15 an hour. It also means that the teenagers are happy with the deal, again from an entirely subjective standpoint.
The teenagers begin work. One week later, the liberals enact a minimum-wage law requiring companies to pay their workers $100 an hour.
Do you see the problem?