Thursday, May 15, 2014

Rainy Days and Bad Economics Always Get Me Down

It is reported that dozens of fast-food workers in Pittsburgh endured the rain this morning to join a demonstration by other similarly-employed workers around the world "demanding hourly pay of $15 and the right to unionize." While it is entirely possible that the word "demand" was used by the reporter and not by any of the protesters, the fact remains that such language misconstrues the fundamental nature of exchange. In a market economy, even one as hampered as ours, the labor contract is voluntary on both sides. No business can force people to work for it. That would be slavery. On the other hand, no one can force a firm to hire someone (at least not yet).

This means, of course, that to get hired to begin with, workers must make it worth their potential employers' while. If the marginal worker does not contribute more than $15 an hour in revenue for the entrepreneur, he will not be hired and paid that wage. To do so would be economic suicide. If fast-food restaurants would capitulate to such demands, some workers would benefit to be sure, but at the expense of others who would face a reduction in hours, be let go,  or would not be hired in the first place.

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