Some fast food workers walked out of their job last week, demanding that their pay be increased to $15 per hour. Currently, the minimum wage is $7.25.
I would like to ask these people why they settled on $15 per hour. Why not $14? Why not $16? What is so special about $15 per hour? I suppose they will say it represents a "living wage".
As a libertarian, I abhor the idea of a minimum wage. It is immoral, as it interferes between two voluntary parties - the employer and the employee. The minimum wage outlaws jobs. If an employer is willing to pay $6 per hour for a particular job and someone is willing to work at that price, then the government is telling both consenting parties that they are not allowed to make such a transaction. The government is making this job illegal, even if that is the only employment opportunity that someone has.
I have seen a few different polls on this subject of fast workers. They were not statistically valid, but the results were interesting anyway. It is a very small percentage who actually think these fast food workers should be paid $15 per hour. Unfortunately, a majority believe that there should be some kind of a minimum wage. The good news is that it is not considered such a radical position to oppose any minimum wage requirement (not that I am against radical positions), at least as much as in the past. The libertarian position is becoming more common, even if it is still far from a majority.
It is funny (in an interesting way) that most people sense that these workers should not be paid $15 per hour or anywhere close to it. (By the way, if the market determines such a wage, then certainly an employer can pay $15 per hour for a highly productive fast food worker if that is their choice.) Most people understand just how ridiculous such a wage is for this type of work, particularly in this economy. Yet most of these same people still favor some form of a minimum wage. They cannot bring their initial logic to its proper conclusion.
The minimum wage issue is a great example of where you can use a reductio ad absurdum. You can make an absurd statement that the minimum wage should be $50 per hour. Most people understand that this would be bad policy. They understand that there would be unintended consequences. Most people can even figure out that mass unemployment would be the major consequence. (Some people wrongly think that this would cause higher inflation. While it might make things more expensive due to far less productivity, true inflation is a monetary phenomenon.)
Yet many of the same people who realize that a $50 per hour minimum wage is ridiculous cannot understand that a $7.25 minimum wage is a bad idea, even if less harmful. They cannot think on the margin. They cannot draw the proper conclusion from their quick analysis. They cannot think through the fact that any minimum wage will lead to some kind of unemployment, unless it is below all market wages so as to be irrelevant anyway. They cannot understand that the minimum wage laws distort the market.
In conclusion, I am mildly optimistic that more people are taking the position that there should be no minimum wage laws. With that said, there is a lot more work to do on this. There are some seriously economic illiterate people out there and I often wonder how they can get through life. I guess their illiteracy must be confined mostly to economics.