Who Sets the Minimum Wage?

Debate in the political media about whether the Minimum Wage ought to be $15.00 per hour is silly. I italicized “minimum wage” above because we don’t know what that means, and we all believe we do. It has become “a Thing” instead of a price.

The wages of labor are paid by employers who have work to do and need someone to do it. Sometimes the employers need workers who are smarter than their managers and other times they need workers who are not smarter. They reward the workers accordingly.

Nobody can find anything wrong with that model of correct and moral behavior in the employer-employee relationship. Pay for work performed. Pay promptly. Pay in good “legal tender,” whatever that means.

The idea that a government should create a law telling employers, or potential employers, they are forbidden to pay anyone less than a certain floor price for labor will find itself creating an artificial surplus of labor at the lower supply-curve range. Elementary price theory, long known to be valid.

But what is “magical” about a Federal law? What is more logical about a local law? And what is most logical would be to let each employer decide for his own establishment what the starting or minimum (disliked) wage should be, as workers would want to increase it by demonstrating more quality and effort.


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