California has approved a new law hiking the minimum wage to $15 per hour by 2022. Governor Jerry Brown calls the plan “economic justice.” In fact, it is gross injustice.
The minimum wage is unjust to workers, who aren’t allowed to work for less even if that’s the only work they can find.
The minimum wage is unjust to low-skilled youths, who can’t produce $15 per hour of output yet. Now, in California, they’ll never get a chance to learn the workplace habits—coming in on time, knowing and doing what best serves customers—that will prepare them for higher-paying jobs in the future. Look for the labor force participation rate, the broad measure of how many people are working, to fall and fall in California in coming years. Look for despair and resentment to grow.
The minimum wage is unjust to business owners, who won’t be allowed to choose the most efficient mix of labor and machines. Those who can mechanize will do so, keeping fewer, better workers, and raising the output of those who remain. Those who can’t mechanize, won’t, and they will shut down. That’s exactly what happened to Borderlands Books in San Francisco last year, when that supposedly Progressive city was the first to adopt the $15 per hour rate.
The minimum wage is unfair to consumers, who will pay more for everything it touches. They deserve the chance to buy the best values they can find, to make the most of their own lives.
It’s not justice to keep workers from jobs they want and to keep employers from paying workers what they deserve.
Objective economic justice
And what do people deserve? They deserve what they have earned through their actions and abilities. Economic justice is justice with respect to production and pay. In a firm, it is justice to pay someone based on the value of their productive work.
“[O]ne must never seek to grant the unearned in matter or in spirit” – Ayn Rand
Leftist politicians like Jerry Brown have accepted a different use of the word “justice,” one that strips it of all meaning. (This is the view of New York Governor Andrew Cuomo, too, who is also pushing for a 15 per hour minimum wage hike.) Their view is egalitarianism: the idea that every person should receive the same benefits and earnings. How? In any way they can! To egalitarians, any earnings that are higher than someone else’s are suspect. Wealth just is unjust. Any move to “increase equality” in the economy is a good one, they believe.
Egalitarian social justice cuts off objective justice at the root. Objective justice is based in a standard for judging individuals based on their merits. Egalitarianism substitutes a snap judgment based on people’s conditions, without asking how or why those conditions exist.
Justice and economic freedom
A free economy demands justice at every moment. An entrepreneur who doesn’t treat his staff as they deserve, ends up with bad work, done by bad workers, and a busted firm.
Workers who accept lower pay than their productive ability is worth had better know why they are doing it: they shouldn’t just accept underpayment as fact of their lives.
Customers stand to benefit if they use their funds most wisely, paying only for the goods and services that are worth the cost. In all that, there is justice of the best kind: justice that treats individuals with dignity, justice that helps each of us make the most of our lives whether we are at the top or the bottom of the economic pyramid.
There’s no justice in raising the minimum wage.