The Morality of Minimum Wage

The moral case against a $15 minimum wage

By 2022, California will raise its hourly minimum wage to $15, more than twice the federal requirement. As far as methods to reduce poverty go, there may not be a less moral way to try to “help” the least well-off.

Those pushing for higher minimum wages have praise-worthy goals: to reduce poverty and lift wages. But there are a number of ways to accomplish this. Those advocating a minimum wage hike are simply saying, “Employers should pay more to fix poverty, but don’t expect me to contribute anything.”

The cost of a minimum wage hike doesn’t come out of thin air; it can hurt real people. Primarily, minimum wage hikes force employers to pay their low-skilled employees more. This isn’t always feasible, especially for small businesses with tight margins. For those able to stay in business, it usually means higher prices for their customers.

Consider three methods of reducing poverty: giving to charity, increasing taxes for welfare programs and hiking the minimum wage. Of the three, the minimum wage hike is the only one that primarily involves effectively making someone else pay more.

If you want to help those in poverty, it’s hard to find a more moral way to do so than donating to charity. Welfare spending reaches more people, but it also requires forcing others to pay more and often hurts those it is supposed to help.

As Tim Worstall, a senior fellow at the Adam Smith Institute, wrote on the minimum wage in 2014: “Demanding that everyone gets to eat but also demanding that that guy over there has to pay for it and don’t touch my wallet isn’t a particularly moral action.”

Minimum wage laws also intrude on our right to enter into agreements with whomever we please. At their most base level, minimum wage laws ban two consenting adults from entering into a contract. Desperate for work, and happy to take a job offering $5 an hour so you can help feed your family? Too bad. Even if a potential employer would be happy to pay you $5 an hour, it’s illegal.

There are few relationships between consenting adults that government feels a need to interrupt. We can be friends with whomever we want and invite whomever we want into our homes. Of course, when money starts to exchange between sides, things get more complicated. Government must collect taxes, after all.

But rarely does the government ban a certain type of person from being hired for a job. This happens on occasion: justifiably, for example, when sex offenders are prohibited from working with children. But it is unconscionable to think that the government would ban an employer from hiring low-skilled workers.

Make no mistake, that is what minimum wage laws do: Employers in California will be banned from hiring job applicants without the skills or experience to justify a $15 an hour wage.

Although not explicitly, California’s minimum wage hike will disproportionately keep employers from hiring racial minorities, young people and those without a higher education — those groups are least likely to have what it takes to get a job. They are already too vulnerable in this economy, and an extreme minimum wage hike will only make it worse. They could have used low wage jobs at $5 or $10 an hour to build their way up to $15 an hour and higher. But instead, they will likely get caught in a cycle of poverty.

As Jason Willick wrote on the minimum wage for The American Interest in October 2015, “Creating a permanent underclass of people who can never get the skills for a meaningful career is not moral; it is cruel.”

The moral case liberals make for the minimum wage is that no one that works should have to live in poverty. Demos Action’s Sean McElwee wrote in 2013, “We must ask ourselves whether we want to live in a society when the poorest working people cannot afford to purchase basic necessities.”

But the number of Americans who work full time yet live in poverty is miniscule. For those who do, a minimum wage job often serves as one stop on the path to a better career, not a permanent career. The minimum wage has too many negative consequences to be worth its questionable benefits.

Employers of low-wage workers do more than anyone else to help the least well-off. They should be encouraged, not demonized or punished with exorbitant costs. If minimum wage activists want to help put money in the pockets of poor Americans, they should give to charity. Activists shouldn’t call on employers to do as the activists say, not as they do.

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