The Minimum Wage, and the Theory of Value

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I wish this were a reasoned and knowledgeable analysis of the problem, but it isn't.  Someone smarter than me has to do it.

Conservative economists have claimed that the true value of a thing is the price someone is willing to pay for it.  Applying that principle to the wages in the US (which are admittedly higher than those in many other countries), we must conclude that US labor, in occupations that actually involve work, is not worth much.  Since employers set the price of labor, in the eyes of employers, the labor of people earning the lowest wages is not worth much at all.

But the hue and cry against raising the minimum wage is centered on the claim that certain businesses cannot sustain the higher wages called for: the restaurant industry, unskilled labor, student workers, certain categories of nurses' aides, farm workers and migrant agricultural workers, highway construction workers.  Does US business have an answer to the statement that US unskilled workers are worth so little?  How is it that this labor is so critical for so many businesses?  It seems to me that critical labor has to be worth more.

Over the decades, all US businesses have become accustomed to higher and higher profit margins.  Unless the profits are enormous, these businesses aren't content to stay in business.  They would rather go into bankruptcy than continue to provide the service they have provided thus far, and to deny payment to their suppliers.  (If that sounds familiar, it probably is.)  This sort of greed, though deplored by the ignorant population, is endorsed by the culture within the business community.

It appears that the rule is: if you want to live a life of service for your brother man, go into a profession.  If you want to exercise your greed, go into business.  Some members of certain professions, too, realize after a while that the satisfaction they get out of their service is not enough, and greed raises its ugly head.  There are certain businesses that offer to help out, to make a business out of the service:  these are available to those in the medical profession, in law, dentistry, etc., etc.  There is a range of occupations that have been "commercialized".  Once the members of these professions begin earning enough to have to pay higher taxes, they become hostile to taxes of any kind, and become conservatives or libertarians!

Consider the restaurant industry.  Admittedly, a successful restaurant is likely to be located in a high-rent part of town, which means that a large proportion of its income goes to enrich some landlord.  The success of a restaurant also depends on low prices, which almost forces the wages they pay their staff to be low.  If every waiter has to be paid $15 an hour, we're all going to have to pay more for eating out.  On top of that, if the opportunistic landlords raise their rent, they're going to put many restaurants out of business.  This means that some commercial real estate is going to be vacant, the landlord will offer the space at a promotional low rent for a new hopeful restaurant owner, who may or may not offer quality meals.  But at the end of the promotional low-rent period, there's another opportunity for this restaurant, too, to go out of business.

The theory of economics indicates that the landlords must learn to balance their ambition with their experience of the disadvantage of having vacant rental spaces.  But landlords have ever been more greedy and less wise.

Perhaps it is true that, over the long run, if nothing changes, everyone, businesses and workers, will learn the true value of everything --because, obviously, the true value has to be arrived at after many oscillations about some mean value-- and landlords will learn not to raise rents too much, and entrepreneurs will learn not to flock to the restaurant business as an easy one to get into, and customers will learn to pay more for eating out.  But that situation will not come about until a lot of people are deeply unhappy about everything, and the blame will fall squarely on the higher minimum wage.  Just be prepared.

A similar situation, with some significant differences, happens in law enforcement.  Because of the escalating violence in encounters between law enforcement and minorities, the distrust escalates, the lives of police are in increasing danger, and soon municipalities will have to offer higher wages for their police officers.  When police work becomes a high-stakes occupation, high-wage and high-risk, it will begin to attract men and women who are attracted to danger.  This will increase the danger, and the distrust, and the nature of the police profession.  In at least one way, this is good: police deserve good pay.  We need a higher caliber of individual in the police.  But police are an easy target for anti-social youth, so eventually police will have to be issued body armor, and soon begin to look like storm troopers from Star Wars, and appear strongly dehumanized.  This will be the beginning of horror.  Only nihilists can welcome such a terrible transformation of our society.

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