6-22-16 – Why a $15 Minimum Wage Is Unjust

by Rob Roper

Vermont Gubernatorial candidate Peter Galbraith outlined his plan on Common Sense Radio (EAI’s radio program on WDEV, 11-noon weekdays) for a $15 minimum wage. His argument is one we’ve heard before: that anybody who works 40 hours a week year long should earn enough money to live on. Period. Regardless of how much value that person’s labor produces. It’s an appealing sentiment at first blush, but not after some common sense analysis.

If such a concept became law, employers would have to pay employees at least $15 an hour even if that employee did not generate $15 an hour in value to the enterprise. It’s an unsustainable model. So what, say the advocates. That’s the employer’s problem. Well, what about the self employed? Should they be entitled to the equivalent of $15 an hour, regardless of what their business generates courtesy of, say, the taxpayer?

Here’s an example: I love to paint. What if I decided to go into the art business full time and started Rob’s Studio, Inc. I would work at least 40 hours a week creating paintings, at least one a day. In order to generate enough income to cover overhead for materials, space etc., I’d have to sell a painting a day for about $150 dollars. Problem is, with my skill level at this activity, my paintings (with perhaps a few lucky exceptions) probably aren’t worth that much, and I seriously doubt there is a market big enough for me to sell 365 of them a year. My mom only has so much wall space.

Should the you, the taxpayer, therefore, be forced to guarantee me whatever the difference is between what I can generate in revenue and the $15 an hour I should be entitled to for working hard 40 hours a week? For example, if I only sold one painting a week for $50 – despite working really hard – should I get some sort of taxpayer funded payment for the other $700 per week I’d need to pocket $15 an hour? Would that be fair? According to Mr. Galbraith’s logic, yes it would. Thanks, taxpayer!

But, obviously, this is a stupid waste of money. I’m not getting paid for the value of my labor. It’s a form of welfare.

Politicians who advocate for this plan say raising the minimum wage will take more people off the welfare rolls. No, it will not. It will only shift the cost of welfare from the state treasury and onto the backs of employers, whether they can afford the cost or not. And this is unjust. It is also, like any of these similar government mandates, a move away from transparency.

If I, owner and operator of Rob’s Art, Inc, generating $50 in revenue each week, hired a receptionist in order to help sell more paintings in my studio, I would have to pay that person $15 an hour. With what?

If you don’t think it’s fair that you should be forced to subsidize my painting labor with your tax dollars, then you shouldn’t think it’s fair to force an employer to subsidize any worker beyond the value of what that laborer generates. And society determines what labor is worth based on its willingness to voluntarily pay for that labor.

Lawmakers who think they can change this basic law of economics might just as well pass legislation repealing the law of gravity. Sounds nice. Won’t work. And, in the end, is unjust.

Rob Roper is president of the Ethan Allen Institute.

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The Ethan Allen Institute is Vermont’s free-market public policy research and education organization. Founded in 1993, we are one of fifty-plus similar but independent state-level, public policy organizations around the country which exchange ideas and information through the State Policy Network.
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