Skip to main content

The Lie of the "Living Wage"

Those who protest in favor of the so-called "living wage" have no perspective on the economic situation or the natural state of affairs on planet earth. 

In their haste to complain, they haven’t remotely appreciated just how arduous a task it would be to sustain oneself, let alone one’s family, of his own might with the resources he personally possesses outside of the advantages of the market. 

The common protester confuses the luxury of the market as an entitlement, ignoring the fact that the market purely facilitates mutual advantage between producers with interests in lower- and higher-order goods and services that sustain and improve their standards of living; despite appearances, the market does not exist for any ends beyond the mutual satisfaction of wants between producers offering desirable goods and services.

While these goods and services may at times appear to align with those which are popularly identified as needs, the exchange of those "needs" demonstrates not the objective of the market, but the tools employed in realizing the various wants of the myriad producers, bidders and sellers alike, whose innumerable objectives actively determine the direction of the market over time, whose tools only constitute its conspicuous complexion in the interim.

When producers agree to terms for any given exchange, they are tacitly involved in assigning values to the assets being traded; they are not assessing the "need" of each producer, and it plainly bears no influence over the bid price, which merely expresses how the bidder values the seller's asset relative to his own.  

Nor is every marginal good or service sufficiently valuable to fetch a bid commensurate with that which might be classified a "living bid." 

Of course, the very same is true for wages, which are purely the accepted bids for, or prices of, labor.

Interestingly, the average protester would never support a minimum price for any good or service, as he commonly denounces the high prices he faces at the store, but he will happily embrace a minimum price for labor, which is one in the same; in the end, they are all costs ultimately borne by people, only taking different forms. 

Speaking of definitions, the protesters on this front appear to never actually articulate what they intend by a "living wage."

What is a "living wage" anyway? 

What is worth a "living wage"? 

What kind of good or service must one produce to merit a "living wage"? How regularly, or in what quantity, must one produce it?

Who decides these parameters?

Are they permitted to change?

Ultimately, it's a completely arbitrary standard serving political interests under the guise of moral purpose and sound economics, which serves to reorganize society around the whimsical priorities of the state and the political machine, away from the organic purposes and tested values which presently comprise it; it's another bid for votes in the costly game of party politics, and in this game only the political kings can win, and the pawns stand no chance.

Oddly, one needn't understand economics to appreciate the incoherence of the "living wage" protest.

One can appreciate its incoherence even by evaluating the basic features of our world and the decisions we have routinely made to survive in it.

The survival of mankind has been predicated not on work, but on instinct, purpose and resourcefulness.

In this sense, not just any form of work can sustain life or enable it to thrive.

Imagine a primitive society where men must hunt and forage for food in order to survive, while others gather wood, and still others collect water.

With varying levels of intensity, duration and meticulousness required of each group's work, they are all left to convene at the end of each day to trade amongst themselves to acquire what they want from each other. 

Regardless of the character of their work, their "market" value is limited to what they can fetch in return for the product of their labor. 

This means that some may have to work harder, longer or more meticulously than the others in order to fetch their desired form of compensation, or even to survive. 

These factors are prevalent across the world, where comparative advantage through geography, climate, terrain, vegetation, etc. has produced dramatic differences in productivity between people in regions distinguished immutably by those inherent obstacles to survival; of course, given those hard and fast differences, it is easy to appreciate how survival in that environment might differ from the idealistic circumstances conjured up by the imaginative band of protesters who fail to make any allowances between people and differences in preference.  

Meanwhile, in that primitive society, imagine a man who spends his day organizing the group's incoming wood: for any number of reasons, he's decided that he doesn't like collecting wood, so he accepts a given quantity of wood in return for organizing their supplies each day. 

In this particular case, while employed, the man doesn't considerably improve the economic conditions of the group, so his given wage is equivalent to some quantity of food and water that leaves him unsatisfied.

In this case, the man is inspired to either hunt and forage on his own to supplement his wages or, otherwise, explore ways to increase his salary so he can afford to trade for more food and water. 

Through this example, it is obvious that the man can depend on the "market" for only so many of his demands. 

Even if the man were to continue organizing the group's incoming wood while picking up extra work as their chef, he could still count on the "market" for only a limited quantity and quality of resources, and he could never be absolutely sure that they would return with enough (or any) wood to sustain his lifestyle. 

As soon as the man's group were to fail to produce any wood for trade, they might not be able to feed themselves, let alone the worker who depends upon them.

In this example, the small-scale "market" serves merely as a luxury for the group who can specialize in producing lumber and the man who can specialize in organizing it and preparing the food they acquire.  

The protester altogether fails to acknowledge the limits of the market, the inherent difficulties of survival; that the market economy merely layers on top of those difficulties as a separate, albeit efficient and plentiful, apparatus whose output serves to ease the stresses of survival by coordinating land, labor and capital toward their optimal applications. 

While the market may perform efficiently for extended periods of time, it serves concomitantly to suspend people from the sobering toils required to sustain life absent those market advantages. 

While it convincingly produces the illusion of unlimited abundance, the apparent ease with which these resources are produced in no way entitles any other to their enjoyment. 

Just as every individual is entitled exclusively to his own private property, that which he has acquired or produced through his own application or negotiation, so too is the individual entitled to negotiate the terms whereby his capital, his private property, may be employed. 

What’s more, the so-called "living wage" is an unsophisticated myth that appeals to greedy entry-level wage-earners or, otherwise, bleeding hearts who are desperate to elevate themselves above others by appearing sensitive to contemporary issues, pretending to care about matters they don’t fully understand in order to comply with the ever-changing rules of social acceptability. 

For many, it’s much easier to just acquiesce than to analyze, far more rewarding to pacify than to reason. 

Many of them may even strongly believe in the protests for a lack of knowledge on the subject, favoring emotion over logic, while those who dare to question the veracity of their claims risk appearing uncultured, uncivilized and insensitive to the struggles of those less fortunate; under the latter, the critical thinker risks one of the most reprehensible modern transgressions by exposing his "privilege" and his foolish ignorance in questioning the holy gospel of untenable, quasi-scientific research that supports those cherished beliefs, which are to remain unquestioned, impervious to doubt, and the creed of all who wish to earn their place on the “right side of history.” 

What is truly meant by the "living wage" is that which is required by the individual to sustain life. 

Of course, this can hardly be sufficed by the wages (generated by the productivity) of all forms of employment, which naturally produce varying degrees of value. 

Furthermore, this singular wage, which is believed to miraculously satisfy the "needs" of every American across more than three million square miles, can hardly be expressed in any fixed quantity or quality of goods and services, as each person has his own unique demands for surviving the day, which can vary widely depending on geographic location, genetic composition, medical condition, and a great many idiosyncratic factors that couldn’t be exhaustively covered in a solitary article. 

The question then becomes, who is responsible for securing these goods and services for survival, and how would this responsibility ultimately be enforced? 

In a free civilization, only the individual can assume this responsibility. 

Otherwise, that civilization regresses into a system of slavery whereby some are assumed responsible for the demands of others, at the risk of life, liberty and property for any failure to comply. 

The true "living wage" is that which one can freely fetch to sustain himself across each day, whether through negotiation, innovation, foraging or some combination thereof. 

Just as no one is entitled to his next breath, no one is entitled to any wage. 

Man must toil, innovate, negotiate, or else perish; that is the naked state of affairs on this planet. 

One of the obscure misconceptions surrounding the subject of the "living wage" is found in the very nature of wages. 

What are wages? 

In the scope of employment, wages serve as the form of compensation negotiated between employee and employer, whereby the employee agrees to accept a given form of compensation, normally expressed as a rate, for the expected productivity gains enjoyed by both employer and employee in the utilization of the employer’s capital. 

The employer risks his capital for the perceived advantage of the marginal productivity of the additional employee, whereas the employee offers his time and labor ostensibly for an improved standard of living and, incidentally, enhanced productivity through access to capital, training and scalability. 

Assuming a calculated risk, the employer invests his capital and hires employees in search of profits. 

The profit motive is the only factor that influences human beings to interact with others whom they don’t know and have no natural reason to serve. 

Thus, in search of profit and wages, both employer and employee voluntarily intertwine in a mutually-auspicious relationship that serves both of their interests, all without the introduction of force or coercion in the name of "progress" or political correctness. 

Additionally, compensation takes various forms, and the wage-earner automatically benefits from several forms of non-pecuniary benefits just by accepting that wage, however meager or generous. 

First, the wage-earner enjoys stability in the form of fixed schedules for both work and remuneration. 

Second, he benefits from needing only to master one special set of skills to enjoy the benefits of that wage. 

Third, he faces no real loss or financial risk, as his wages are positively guaranteed, whereas the employer assumes all the downside risk and makes money only if there's any left over.

Above all, not every employee accepts work for the sole purpose of sustaining life, nor is every form of work inherently productive enough to accomplish that end. 

There are many employees who are interested in on-the-job training, gaining skills, working part-time, or earning supplemental income, and there are many trifling jobs that are simply not very productive, which incidentally suit those ends. 

From the perspective of economics, any initiative which aims to broadly legislate a price floor for labor that is consistent with some arbitrary "living wage" will invariably produce the unintended consequence of unemployment, as many of those jobs simply would not exist absent affordable wages; the price floor, wherever it is placed, will produce an artificial surplus of workers willing to work where there is an artificial shortage of jobs available at or above that threshold

This means that, where the fight for the "living wage" is successful in driving legislation, the law will displace the many employees who were previously satisfied with the terms of their employment, and still others who identified with the protest but failed to understand how its success would impact their employability. 

This also means that future jobs, which would have otherwise been available at those lower levels, will no longer be available to those with lower wage expectations or fewer skills, disproportionately displacing those with less experience, lower aptitude and diminished productivity: this ultimately displaces younger workers who naturally have less experience, older workers who are less energetic, and lower-skilled individuals who are less productive. 

Those who comprise these ranks are disproportionately poor to begin with, which means that the introduction of a minimum wage law to forcibly implement a "living wage" renders unemployable the very people whom the initiative purportedly aims to help, aiding only in the insidious creation of a vicious vortex palatably promoting poverty.  

Despite the best intentions of those impassioned protestors who believe they can imagine a world without poverty, price floors have proven only to promote scarcity and degrade quality: in this case, a price floor for labor effectively means that each wage-earner and each job will first need to demonstrate the productivity required to meet the "living wage" in order to qualify as a lawful form of employment. 

This is where one finds the critical error in judgment among those who promote the "living wage": while government can, with some modest success, impose and enforce a minimum wage, it cannot force employers to hire or keep employees at that wage. 

Instead of evaluating the efficacy of the proposal through its likely influence upon employers in a dynamic market, the protesters tend to evaluate it in a static theoretical system whereby hiring and employment rates will continue unaffected. 

While this makes for simpler analysis, which conveniently supports compelling propaganda, it dishonestly omits the effects of incentives on human behavior and, similarly, blames the wage, which is popularly deemed too low, instead of lamenting productivity or budgeting as the source of the individual’s incapacity to "live" off the given compensation. 

After all, the efficacy of any monetary sum is limited by the productivity of its possessor in putting it to use. 

In this sense, wages theoretically needn’t budge at all in order for purchasing power to appreciate, which is ostensibly the ultimate goal of the protest in the first place. 

As such, especially considering the predictable externalities of such ill-guided policymaking and the draconian measures required for enforcement, the protesters ought to be encouraging higher levels of productivity from the wage-earners, not higher barriers to entry for those who haven’t even accepted their first jobs.


Popular posts from this blog

Into the Wild: An Economics Lesson

The Keynesian mantra, in its implications, has its roots in destruction rather than truth: “In the long run, we’re all dead.” If this is your guiding principle, we are destined to differ on matters of principle and timeline. While it is true that our fates intersect in death, that does not mean that we ought to condemn our heirs to that view: the view that our work on this planet ought only to serve ourselves, and that we ought only to bear in mind the consequences within our own lifetimes.  The Keynesians, of course, prefer their outlook, as it serves their interests; it has the further benefit of appealing to other selfish people who have little interest in the future to which they'll ultimately condemn their heirs. After all, they'll be long gone by then. So, in the Keynesian view, the longterm prospects for the common currency, social stability, and personal liberty are not just irrelevant but inconvenient. In their view, regardless of the consequences, those in charge tod

Death by Socialism

This title is available for purchase on Amazon ,  Lulu ,  Barnes & Noble , and Walmart .

There's Always Another Tax: The Tragedy of the Public Park

In the San Francisco Bay Area, many residents work tirelessly throughout the year to pay tens of thousands of dollars in annual property taxes. In addition to this, they are charged an extra 10 percent on all expenses through local sales taxes. It doesn't stop there. In addition to their massive federal tax bill, the busy state of California capitalizes on the opportunity to seize another 10 percent through their own sizable state income taxes. But guess what! It doesn't stop there. No, no, no, no.  In California, there's always another tax. After all of these taxes, which have all the while been reported to cover every nook and cranny of the utopian vision, the Bay Area resident is left to face yet an additional tax at the grocery store, this time on soda. The visionaries within government, and those who champion its warmhearted intentions, label this one the "soda tax," which unbelievably includes Gatorade, the preferred beverage of athletes