A recent article by Thomas Sowell, Socialism for the Uninformed got me thinking…
A kid in college wants pepperoni pizza for dinner. That pizza has a certain value for those that make it. The value of a pepperoni pizza hasn’t changed – at least not in the 33 years I’ve been in the workforce. The number of dollars I have to spend to get that pizza may have changed, but the worth of that pepperoni goodness has not. The same is true for that grocery bagger in the market down the road. Regardless the dollars he is paid, the value of his work has not – assuming, of course, it is the same work. Now, I’m keeping this simple for the example and not taking into account things like government regulations, etc. that unnaturally increase the value of the good.
Increasing the minimum wage does not change the value of the product or the labor. In the course of time the imbalance caused by increasing minimum wages will level out – whether by labor changes or price (i.e. number of dollar) changes or both. However the intrinsic value of the labor or the product remain in balance. Eventually, the kid in college will still have to work the same hours at Kroger to have that pizza for dinner. In the meantime the only people actually harmed are the poor and the middle class. Prices go up, the job market suffers and artificial ceilings on advancement are imposed until equilibrium has been restored.
Yes, there are other factors that affect the value of goods. Some are tangible, such as availability of resources. Some are not, such as perceived value by either the seller or buyer. The fundamental concept, though, is solid.
The most disgusting aspect of this is that after a few years of pain and equilibrium is restored, the same politicians will be able to trot out the same arguments and repeat the cycle. Since this targets entry level jobs, there’s always new people to fall for the lie. Most older people who have moved on also have jobs that have greater inherent worth than minimum wage, so there is a bias to their perception that makes them easier to fool.
These are essential truths of a free society. I have yet to see a counter proposal the extends beyond, “But that’s not fair.” I’m sorry to disagree, but it is intrinsically fair. Socialism is never about fairness. It is about control.