People don't get paid what they deserve. Nobody does. People get paid an amount of money equal to or less than the value they create for other people. If that value is less than the minimum wage, then that person is not legally employable. I know that you want to raise the minimum wage, but how many livelihoods do you want to destroy at the same time?
As a mental exercise, let's raise the minimum wage to $100/hour. What about all the people who cannot supply that much value? They will either 1) starve, 2) go on public assistance, or 3) work illegally. Starving is obviously a problem. Working illegally is also a problem because a worker has no recourse under the law for anything. Let's wipe out all the gains produced by workman's compensation, workplace discrimination, health and safety laws. So they'll go on public assistance, but who is paying the taxes? Those very few people who are allowed under the law to be productive.
Now, let's go the other way and get rid of those pernicious effects. In order to get rid of all of them, we have to reduce the minimum wage below the value producible by any person. That is probably zero.
The effect of the minimum wage law is to destroy some people's jobs, and take their pay and distribute it to the remaining workers. Don't kid yourself into thinking that workers deserve a minimum wage. Nobody deserves to have their job destroyed.
posted at: 00:33 | path: /economics | permanent link to this entry