Monday, July 11, 2005

Minimum Wage vs Living Wage

Having worked at close to minimum wage a few times in my life, I'm not sure if I agree with this posting over at QandO. Like most free market guys, McQ opposes the minimum wage and any other wage standards. I don't think I can go that far.

Minimum wage is generally paid to people performing essentially unskilled labor. I spent several summers after high school working as a retail cashier at a department store. Training for the job took about ten hours. It paid about $5.50 an hour and minimum wage is currently $5.15 in most areas. I lived at home and had no bills to speak of. Yet between buying lunch, department store grade professional attire, getting to work on public transportation, and my voracious reading habit, I was unable to save much money at all.

To shorten my ramble, I think that ideally the minimum wage is slightly above the break point between employment and exploitation. Employment below minimum wage is often costing you more than to stay home. Will the market fix this? No, because there are always a lot of poor dumb bastards out there that won't do the math until it is too late. The employment pool is huge compared to the actual number of these jobs. As such the minimum wage serves as a price floor for the job market that many employers can easily index from. I don't think that this is an especially bad thing.

Currently, the wage is so low that I don't think you can consider it a detriment to the workplace meritocracy. Nobody that actually has regular expenses (i.e. not the elderly or teenagers) and any sense works for the minimum wage. It doesn't happen because you can't feed yourself and provide yourself with housing.

That said I don't like the concept of "the living wage". In a living wage, you would presumably earn enough to pay all your expenses with some money left over. But who's expenses? Mine? The two parent family down the street with four kids and big house? The single parent family next to them with two kids? If it is a national standard how the hell do you account for the wide variance in the housing market across the country? If they have different standards then aren't you paying unequal salaries for the same level of work? It is a regulatory nightmare and essentially Communist. From each according to his ability to each according to his needs? No thanks Comrade.

Now if someone wanted to compile a non-binding value for the local living wage of a two parent, two and a half child family, I wouldn't complain. It would give employees and employers another number to index off of for bargaining purposes. But a mandatory living wage, no thanks.

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