Is the Minimum Wage a “Livable Wage”?

Minimum Wage

Many people saw the gaffe made by Karen Handel in the recent debate between her and Jon Ossoff. “I do not support a livable wage” was the statement she made. She was clearly using the same terminology that Democrats use to describe the minimum wage in her gaffe. That leads to an interesting question, though. Is it really fair to use the two terms interchangeably? Is the minimum wage, in fact, a livable wage? The answer is a resounding no.

The Minimum Wage is and Always Will be Zero

The economics of a minimum wage sounds easy enough. If you move it from ten dollars an hour to fifteen dollars an hour, everyone making ten dollars an hour is instantly five dollars an hour richer, right? Wrong. It will mean that for some folks, but for others it will cease to make as much business sense to employ an employee at fifteen dollars an hour. Employers will, instead, automate, outsource, or just plain eliminate those positions. So that’s what I mean when I say the minimum wage is and always will be zero. If the choice is five dollars an hour while you work towards something else or are unemployed, many would prefer to take the five an hour.

“Unfortunately, the real minimum wage is always zero, regardless of the laws, and that is the wage that many workers receive in the wake of the creation or escalation of a government-mandated minimum wage, because they lose their jobs or fail to find jobs when they enter the labor force. Making it illegal to pay less than a given amount does not make a worker’s productivity worth that amount—and, if it is not, that worker is unlikely to be employed.” – Thomas Sowell

The Racist History of the Minimum Wage

So if some employees will lose their jobs when the minimum wage is increased, who are the first to go? Low skilled workers are the first to be pushed out of their job. And, when minimum wages were first being considered, the low skill workers were predominantly black people. They knew that creating a minimum wage would push blacks out of the work force.

From Eugenics and Economics in the Progressive by Thomas C. Leonard:

“Progressive economists, like their neoclassical critics, believed that binding minimum wages would cause job losses. However, the progressive economists also believed that the job loss induced by minimum wages was a social benefit, as it performed the eugenic service ridding the labor force of the “unemployable.” Sidney and Beatrice Webb (1897 [1920], p. 785) put it plainly: “With regard to certain sections of the population [the “unemployable”], this unemployment is not a mark of social disease, but actually of social health.” “[O]f all ways of dealing with these unfortunate parasites,” Sidney Webb (1912, p. 992) opined in the Journal of Political Economy, “the most ruinous to the community is to allow them to unrestrainedly compete as wage earners.” A minimum wage was seen to operate eugenically through two channels: by deterring prospective immigrants (Henderson, 1900) and also by removing from employment the “unemployable,” who, thus identified, could be, for example, segregated in rural communities or sterilized.”

Freedom

Regardless of all of these negative outcomes, we have to talk about the morality of telling someone they are unable to work for anyone at any price. If John wants to pick blueberries for five dollars an hour, and he thinks that is an effective use of his time, who am I or anyone else to say that he shouldn’t be allowed to do that? The truth is, in a free nation, employees and employers are able to make the determination of each others worth on their own. An employee should be allowed to enter into whatever mutually beneficial deal they think is fair to them. If it’s not, they shouldn’t enter into it.

Conclusion

Now, I’m not claiming to know if Karen Handel truly meant she doesn’t support a livable wage, or if she conflated the term with minimum wage as Ossoff did. What I do know, is that the two terms do not mean the same thing. A minimum wage is not synonymous with a livable wage as poor, low skilled workers are hit the hardest by the unintended outcomes of reducing the number of available jobs. Zero dollars an hour is not a livable wage.

Photo Credit: Denis Bocquet under CC 2.0.

Also published on Medium.