Minimum Wage Part 1: Ethics

“Minimum wage puts a burden on job-creators. Running a business is costly. By artificially increasing the cost of running the business (by requiring a minimum wage), you could put some companies out of business. Then they are employing nobody; how does that help anyone?”

Let’s call this Standard Argument #1 against Minimum Wages. (I talk about Standard Argument #2 in a later post.)

In response to Standard Argument #1, I would like you to consider the following things that are also burdens on job-creators:

  • Laws requiring that auto manufacturers include seatbelts.
  • Laws requiring that toy manufacturers not use toxic materials in toys.
  • Laws requiring that food products include ingredients labels on them.
  • Laws requiring that office buildings have plumbing
  • Laws requiring that office buildings pass structural integrity standards (i.e. the buildings aren’t about to collapse)

All of these things are burdens on job-creators.  All of these things artificially increase the cost of doing business. In a purely free-market capitalist system, every single one of the above items are things that a company could look to as a way to cut expenses and increase profits.  In a purely free-market capitalist system, every single one of these would be an option to consider, when looking for ways to reduce expenses.

But in our culture, in this country, we have said: no.  These are all places where the government has said, “I’m sorry, but when you are looking to cut down on your operating expenses, you cannot cut them from here.”

There might be people out there, young entrepreneurs, who have looked at their capital and looked at their resources, and they say to themselves: “I would be able to start my new business, and employ a bunch of people, if only I didn’t need to pay for the building where people worked to be plumbed and heated! Good buildings are expensive. If only my employees could work in a warehouse, or a barn, then I know my expenses would be low enough that my operation could be successful!”

Are you persuaded by this argument? Do you think to yourself: “He’s right! Dang that government regulation, getting in the way of his job-creating efforts!”

Probably not. You probably think to yourself: “If you don’t have enough capital or revenue prospects to pay for a building for your employees to work in, then your business model is not viable. End of story. You need a better business model.”

In all of these cases, our government is making an inherently ethical statement about what cost-cutting measures are acceptable, and what cost-cutting measures are not acceptable, when running a business. These are not purely “economic” parameters on the system: they are cultural. These are the limits where we, as a people, come together and through our government put boundaries on the economic process. This is where the people come together and say: “This is what is acceptable, and this is what is not acceptable.”

Slavery cuts employee-related expenses. Our government–our culture–says slavery is not acceptable. That is one of the correct and proper roles of government: to set the boundaries of our economic system based on what we, as a society, believe to be morally and ethically reasonable.

To me, the question of minimum wage falls in the same category as seat belts, non-toxic toys, and plumbing for office buildings. Is it a burden on employers? OF COURSE IT IS.  But we, as a society, have said: “If you can’t afford to pay your employees this minimum amount, then you simply are not viable as a business. You must come up with a better business model.”

If you think society should not have that ethical standard, then you can argue that. But your arguments need to be couched in those terms: it is an ethical question. Do you think cutting employee wages to arbitrarily low levels should be an acceptable option for businesses? (A moral question.)  Or do you think that paying people pennies for their work should be considered unacceptable by our society at large, in the same way that toxic toy parts and seatbelt-less cars are considered unacceptable?

That is where the real debate lies.

Minimum Wage



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  1. So, if your country did allow slavery, you actually could use the same argument?
    Cool!!!



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  1. […] call this Standard Argument #2 against Minimum Wages. (I have talked about Standard Argument #1 in an earlier […]


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