Minimum Wage for Thee, but Not for Me

It has been reported that the president of the L.A. Federation of Labor, Rusty Hicks, made a last minute plea to the Los Angeles City Council, to allow any company that unionizes to be exempt from the city's new minimum wage law that mandates an increase to $15/hr. by 2020. This is the very minimum wage law they helped to pass. It seems that union leaders recognize economic law after all. I explain the economics of the minimum wage in my book, Foundations of Economics: A Christian View. My summary of the effects of the minimum wage are as follows:

At best it benefits some workers at the expense of other workers. Some lower-skilled workers will get paid more, while the lowest-skilled workers are left unemployed. Even higher-skilled workers can benefit from effective minimum wages, however. Unionized forklift operators, for example, benefit when stock boys are kept out of work because of above-market minimum wages. Those who are kept out of a job earn lower incomes over time because it takes them longer to develop job skills. Society in general is worse off because they have fewer goods available for which they must pay higher prices. Once again, the result of government intervention is exactly the opposite of what proponents of such intervention say they intend. An effective minimum wage does not reduce poverty. Rather, it places obstacles in the path of lower skilled workers in their quest to improve their lot in life.

I also argue that minimum wage laws violate Christian ethics:

Minimum wage laws prohibit some workers and entrepreneurs from making mutually beneficial work agreements. Some workers, who are not productive enough to warrant employment at the artificially high wage, are prohibited from exchanging their labor as they see fit. Some workers benefit at the expense of the least productive. Because price controls violate the Christian ethic of private property, they must be rejected as a means of achieving a better society.

The Christian property ethic does not allow for using the power of the state to keep people from entering into voluntary contracts. Christians are called to be charitable to those who need it and to be merciful to the poor and to see that widows and orphans are not oppressed. Justice demands, however, that people use their own resources to help those in need and to convince others voluntarily to do so. Lobbying for government price controls violates the right to property and therefore violates the Christian ethic.

This is not the first time an organization lobbying for the minimum wage requested to be exempt from it. In 1995 ACORN sued sued the state of California for exemption from paying the minimum wage to its own employees. ACORN argued before the court that "The more that ACORN must pay each individual outreach worker—either because of minimum wage or overtime requirements—the fewer outreach workers it will be able to hire."