The ‘living wage’ concept is simply the discredited Marxian dogma that social justice requires equal distribution of wealth and income on the basis of labor hours worked, without regard to productivity or individual merit. And it’s a disguised way to turn red states into blue ones.
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Liberal Democrats and Republicans are champions of the ‘living wage’ concept. The Democratic Party believes that it will be a winning issue in the 2006 and 2008 elections.
Recently, advocates of the ‘living wage’ induced the Santa Fe city council to mandate a $9.50 per hour living wage, almost double the $5.15 Federal minimum wage. In prior years similar ordinances were enacted in Baltimore, San Francisco, and elsewhere.
The aim now is to establish the concept at the Federal level in order to impose a one-size-fits-all mandate for the entire nation. More than periodic Congressional adjustments to the ill-advised minimum wage, the living wage would permit large and continuous percentage increases in wages by bureaucrats in Washington.
The case for the ‘living wage’ is presented in the January, 15, 2006, edition of the New York Times Magazine by Jon Gertner, in an article titled What is a Living Wage?
The Times’ answer: A) A grass-roots campaign to increase the pay of workers? B) A point of debate among economists? C) A new moral-values issue for Democrats? Answer: All of the above
In giving lip service to moral values, liberal secular-materialists are again speaking out of both sides of their mouths. Side one declares that the ‘morality’ of social justice requires arbitrary minimum wages determined by Marxian economists. Simultaneously, the other side of the liberal mouth insists on purely secular education, prominently featuring the evolutionary hypothesis that there is no God and thus no moral truth.
True morality applies to individuals and to individual businesses, all of whom should strive to treat their employees in accordance with the Golden Rule. Given the vastness and infinite variety of the labor market, no regulatory bureau ever will possess sufficient wisdom and knowledge to determine a ‘moral’ wage level.
It doesn’t take rocket science to perceive the motivation behind this movement: a redistribution of political power paralleling socialistic income redistribution. Voters see higher wages, but don’t connect that to resulting higher prices and fewer jobs over ensuing years.
The red-state populations are growing much faster than those of the blue-state Northeast and upper Midwest, ensnared by their welfare hand-outs and high labor union wages and benefits. Why should low-living-cost states have to pay the same wages as high-living-cost states? Taking away their economic advantages would over time neuter the red states politically.
As Cafe Hayek expressed it, if the New York Times is so keen on raising the living standards of entry-level workers, why doesn’t it donate its profits to charitable groups for that purpose? Why doesn’t the Times pay its entry-level workers $60,000 a year, a living wage for a family with children in high-cost NYC?
Philosophically, the ‘living wage’ assumes the socialistic proposition that there is no such thing as human nature and therefore that there is no rational order to the free market. Life is an inherently meaningless Darwinian struggle for survival that must be subjected to social justice by the material force of bureaucratic regulation (they’re smart; you aren’t). Bureaucrats theoretically will bring perfection, peace, and harmony to political society.
More than two hundred years’ political experimentation belies this hypothesis. Entitlement to wages without regard to productivity, as we saw in the Soviet Union and still see in countries like Sweden, results in cumulative declines in national wealth and lower individual standards of living.
Some other problems:
-- It discriminates against the rapidly growing elderly population who seek low-level work to supplement their retirement and Social Security income, but lack the physical stamina and technical training of younger workers.
-- It causes job losses, either because businesses hire fewer entry-level workers, or because they lay off entry-levelers. Capital doesn’t remain invested in businesses that lose money or produce marginal rates of return.
-- It intensifies pressure to outsource jobs to low-wage countries.
-- It leads to substituting automation for live workers as a way to reduce labor costs.
-- It makes starting mom-and-pop businesses harder, because they have limited latitude for price increases without established customer bases, and because they have limited financial resources to withstand diminished profit margins.
-- It’s unfair to those who are better workers, who lose part of what they might get as merit pay.
-- It ignores the fact that the wage rate is only part of the total compensation package for most workers, who get varying levels of health insurance and other indirect compensation.
-- It’s is a disguised tax on consumers; businesses have to offset higher wage costs, to some degree, with higher prices.
-- It’s an indirect way for bureaucrats to pick winners and losers arbitrarily, to preserve businesses by fiat that can’t compete economically with low-labor-cost, low-price businesses like Wal-Mart.
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