Socrates and the Minimum Wage
Congressman: Look, a minimum wage of $7.25 per hour isn’t much.
Socrates: I’d like to know how you arrived at that figure. Was it some sophisticated equation, divine revelation or toss of the dice? Why didn’t you choose $20.00, which is not only a nice round number but also a lot more generous?
Congressman: Well, $20 would be too high, for sure. Too much of a jump at once.
Socrates: It sounds like you think the cost of labor might indeed affect the demand for it. Good! That’s progress. You’re not as oblivious about market forces as I thought. What I want to know is why you apparently don’t think higher labor costs matter when you raise the minimum wage from $5.15 to $7.25. Do you think everyone, regardless of skill level or experience, is automatically worth what Congress decrees?
Congressman: Now hold on a minute. I’m for the worker here.
Socrates: Then why on earth would you favor a law that says if a worker can’t find a job that pays at least $7.25 per hour, he’s not allowed to work?
Congressman: I’m not saying he can’t work! I’m saying he can’t be paid less than $7.25!
Socrates: I thought we were making progress, but perhaps not. Can you tell me, if your scheme becomes law, what happens to a worker who is worth only $6.00 because of his low skills, lack of education, scant experience or a low demand for the work itself? Will employers happily employ him anyway and take a $1.25 loss for every hour he’s on the job?
Congressman: Businesses need workers and $1.25 isn’t much, so common sense and decency would suggest that of course they would.
Socrates: So employers who employ people are too greedy to pay $7.25 unless they’re ordered to, but then when Congress acts, they suddenly become generous enough to hire people at a loss. Who was your logic instructor?
Congressman: Can we hurry this up? I’ve got other plans for other people I have to think about.
Socrates: I give up. You congressmen are incorrigible. You’re the only people on whom my teaching method has no discernible impact.