Imagine you hire someone to perform yardwork, at a mutually agreed upon price.
He performs the work, you are happy with the work, and you pay the worker who is satisfied with the pay. Both parties are pleased with this voluntary exchange.
Now imagine that a neighbor approaches you, insisting that if that person is to continue providing this service, you have to pay a higher wage – a wage that the neighbor determines, even though he’s not involved in the transaction.
Further, he threatens to punish you if you don’t. First, he’ll levy a fine, making you pay him a fee for not paying the wage he insists you pay. And if you don’t pay him the fine, he will lock you in a cage in his basement. You know your neighbor is well armed and can carry through with his threat.
Clearly, your neighbor’s threatening behavior would be viewed as monstrous, and your neighbor considered a menace. You’d likely call the police and have him arrested for his threatening behavior.
But if such actions are considered barbaric and unjust when a citizen does it, why does it become virtuous when the government does it?
This anecdote came to mind in light of Joe Biden calling for a higher minimum wage in his State of the Union address earlier this week.
What gives government the right to threaten employers engaging in a mutually voluntary exchange with workers, just because the pay is less than an arbitrary figure conjured up by politicians?
If government derives its authority from the “consent of the governed,” how can the governed consent powers to government that they – the governed – themselves don’t have?
It would be considered a crime for a citizen to threaten his neighbor for not paying a level of wages determined by that citizen. So why is it considered just when the government does it?
Of course, there are also the economic arguments against minimum wage laws. Mainly, that it prices out low-skilled people from the workforce, especially young Blacks. For this reason, the late economist Walter Williams called the minimum wage “one of the most effective tools in the arsenal of racists everywhere in the world.”
First and foremost, however, minimum wage laws are problematic because it involves an illegitimate intrusion of the government into the peaceful and voluntary agreements between worker and employer that would be considered criminal if a citizen did it.
