Opponents to minimum wage use illogical assumptions and imaginary anecdotes as their arguments

I have rarely received as negative a reaction as when I lambasted Professor Thomas Sowell the other day for, among other things, his opposition to the minimum wage—any minimum wage. The number of negative comments rivaled what I received when I said that no comic book could be a mature work of art, as a novel or poem can.

In the case of the supporters of Marvel: The Avengers, who called me on my overly general statement about comic books, I admitted I went too far in a retraction a few days later.

But all I have to offer anyone who is opposed to a minimum wage is scorn and contempt.

Their arguments are self-serving and typically built on imaginary anecdotes, as imaginary as Reagan’s welfare queens driving Cadillacs or Santorum’s poor people emotionally crippled by the worst kind of addiction, food stamp dependency.

Let’s start with the imaginary business owner who can’t afford to hire someone to sweep the floors at $7.25 an hour, so he does it himself or the floors stay dirty. For years, whenever anyone proposed raising the minimum wage, critics have painted a grim future of thousands of business owners sweeping floors or living with filth. The floor-sweeping business owner has taken its place as one of the classic figures of right-wing economic mythology.  The first time I heard this metaphor used as the primary argument to oppose the minimum wage was when I was in college making a minimum wage of $1.25 an hour from a part-time job on a Sear’s shipping dock.

My question, then and ever since, is how valuable is the time of the owner if he can afford to sweep the floors him/herself instead of looking at the books, coaching employees, visiting clients or supervising the sales floor, developing growth plans, negotiating with suppliers, serving on boards where he can spread good will about the company in the community, or any of the other high level jobs entailed in running any successful business?   In many businesses such as mine, when a highly ranked employee works an hour, he or she can create dozens and sometimes hundreds of hours of work for other employees. What owner would be foolish enough to waste time sweeping floors instead of creating this additional work?  And aren’t there usually other employees who could sweep those floors, freeing the boss to perform tasks more central to making money?

As to the case of a potential business that depends on a lot of employees but can only make a profit if these employees are paid $4 or $5 an hour—maybe the owner has to take less profit or raise prices; in other words: change the business model.

The idea behind the imaginary owner-sweeper is silly. No well-run business hires additional employees if it hasn’t first figured out how to make money off of them, unless it’s a relative or a friend and the company is doing very well.

There are many factors that determine the current market for every position, including marketplace conditions, the presence of a union at the company or in the industry and the imputed value of the skill base and experience of the employee (which means that in this society, companies are willing to pay more for senior sales executives than for entry-level welders). All the minimum wage does is to put a floor on the minimum value of all jobs, as a protection of individual workers.

Which brings us to the other imaginary anecdote, another classic: the young kid struggling to get out of poverty who just needs a chance, but can’t get it because the minimum wage prevents anyone from hiring him. There is no doubt that there are any number of desperate people who would work for less than the current minimum wage, including lots of illegal aliens and teenagers. And when a recession hits, their numbers proliferate.

Yes, out of desperation, these people will work for anything. But that doesn’t make it right. The minimum wage is society’s way of saying that every person is entitled to a minimum amount of compensation (and dignity) when they exchange their work for money.

Which brings us to the underlying economic theory behind opponents of the minimum wage, including Professor Sowell, a premise so abstract that the right-wing has yet to create an imaginary person to embody its meaning: the minimum wage distorts the marketplace.

Damn right it does, and that’s a good thing. It’s supposed to distort the market place. Here are some other distortions of the marketplace:

  • Using standard weights and measures
  • Laws concerning the enforcement of contracts
  • Regulations to ensure the safety of food products
  • State certifications before people can practice medicine or law or teach children

In fact, every rule or custom of society distorts the absolute free market. Some distortions are good, such as the use of standard weights and measures. Some are obviously bad, such as prohibition of alcohol in the first part of the 20th century.

Those who oppose something just because it distorts the marketplace don’t really oppose marketplace distortions, just the ones that hurt their interests or the interests of those who pay their salaries. The minimum wage raises the wages not just of minimum-wage employees but of all others, and so distorts by redistributing wealth from business owners to their employees. When I look at economic realities—for example, the fact that most of the wealthy and near wealthy run, own or manage businesses and the fact that we have seen a widening split between what the wealthy make and own and what everyone else makes and owns—when I see these facts, I’m not so worried about the marketplace distortion that occurs because of the minimum wage. Even though I own a business, I would be delighted to see the marketplace distortion that would result if the minimum wage were raised to $10 or even $15.

That distortion, by the way, is called economic equity.

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