Jeff Nadel | Minimum wage malarkey
Give Me Liberty | It’s hypocritical for those who advocate for a higher minimum wage to also support unpaid internships
October 27, 2013, 6:33 pm · Updated October 27, 2013, 11:14 pm·
Give Me Liberty
If you think the minimum wage should be raised, you’re advocating a policy that will lead to further marginalization of the economy’s least-skilled workers. If you also believe in unpaid internships, you’re being a hypocrite.
Recently, there have been protests across the country by fast food and other service industry workers who would like a minimum-wage increase. Granting their demands would, in fact, be among the least compassionate and least helpful courses of action we could take.
To borrow an example from Duquesne University economics professor Antony Davies, let’s say there are three workers at a burger restaurant: Al, Sally and Carl. Their employer makes $0.10 per burger. Al can flip 100 burgers an hour, generating $10 in revenue. Sally can do even better, flipping 120 burgers an hour, bringing in $12 each hour. But Carl can only make 90 burgers every hour, bringing in $9.
Let’s say members of Congress, always ready to bestow upon us common people gifts of sagacious insight from on high, think it prudent to raise the minimum wage from the current $7.25 per hour to $9.50. Al and Sally fare perfectly well, and they keep flipping burgers. But what happens to Carl?
At the sight of the government decree, does his employer begin paying Carl the newly mandated $9.50 per hour? Nope. Carl gets fired, and his pay drops to a grand total of nothing — which, it’s worth noting, is less than the $7.25 he was making.
David Neumark and William Wascher found in a review of over 100 studies for the nonpartisan National Bureau of Economic Research, “almost all [credible studies] point to negative employment effects [as a result of minimum-wage increases].”
As economist Henry Hazlitt once said, “You cannot make a man worth a given amount by making it illegal for anyone to offer him less.” What you can do is deprive him of the right to freely offer his services and accept for them what they are worth.
Indeed, if government can raise people’s wages by decree, why stop at $9.50 or $15? Can’t we agree, as Roger Koopman aptly noted in The Freeman, that “$500 per hour [is] more compassionate than $50?”
If you believe that higher wages are better and that government can effectively mandate them, what is the logical reason to draw an upper bound? Does a “living wage” include just shelter and food, or might some believe it to include medical care, college education and a car?
What’s even more interesting is how our conception of internships is so ironically different from how we understand the idea of a minimum wage. Many would consider it a travesty of justice to pay someone $5.00 per hour, but it’s fine for Penn students to work 12-hour days at an internship for $0.00 an hour. We justify the latter because interns are gaining valuable work experience, which will be useful going forward.
Low-paying jobs offer work experience to those who don’t have sufficient education or skills to land a prestigious internship. These prospective employees may well need that experience more than well-credentialed Penn graduates. If Penn students, coming from the cozy sanctimony of the ivory tower, can work for free, shouldn’t less-privileged workers be able to work for less than the minimum wage?
Moreover, in many cases, as distinguished economist Walter Williams highlights, workers are “pay[ing] for job training in the form of a lower beginning wage.”
People are paid in proportion to the value they provide. If they can’t offer minimum wage-level value, raising the minimum wage will do nothing but hurt them. As professor Davies says, “It doesn’t help the worker at the expense of the owner — it helps the more productive workers at the expense of the less productive workers.” And the more productive workers will advance with or without a minimum wage.
The sad irony is that this policy brings harm to those who most need our help. Next time a do-gooder launches a crusade for the supposed well-being of the least-advantaged among us, it would behoove us to let facts reign over emotion and to examine the substance below the gloss of good intentions.
Jeff Nadel is a College junior from Boca Raton, Fla. His email address is email@example.com. Follow him @theseends. “Give Me Liberty” appears every other Monday.