Maine's minimum wage

The restaurateur in this article has not “given thoughtful consideration” to Maine’s minimum wage ballot question. He simply sees the rising prices of goods and concludes that people “should” be paid more. He has not given thought as to why prices go up. He has not given thought to the logical consequences of a legal price floor for labor. He has not given thought as to how real wages (in terms of purchasing power) rise. If he had, he would probably oppose a minimum wage. He should read this.

A minimum wage is a legal price floor. It forbids voluntary work under a legally, politically determined, minimum. If a minimum wage is higher that the market price for labor, it logically creates a surplus of labor, i.e., involuntary unemployment.

General prices are rising because of the Federal Reserve’s inflationary monetary policy. The artificial expansion of money and credit is the printing press of the counterfeiter writ large. The people who benefit (the politically connected) receive and spend the money first. The people who suffer are those (like wage earners and fixed-income people) who see the money only after prices have risen.

Wages always tend toward a person’s marginal value product, i.e., how much value a person contributes to the final good. That’s it. If this is $5/hr, then any higher wage would make the business lose money and, if left unchecked, go out of business. The way to raise productivity is to improve capital goods. A janitor is more productive with a broom than without.

And, what is the appropriate minimum wage? $15? $75? There is no objective criterion. There is no objective “fair wage.” Everyone wants as much as possible. This is human nature. Besides, if this restaurateur really supported the minimum wage law, I’d be curious to know if he is paying it voluntarily already. If not, why must a law be enacted to force him to do so?