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Economist and blogger Steven Landsburg presents an interesting argument against the minimum wage – it’s unfair to burden a relatively small segment of the population with the higher costs of the minimum wage – small business owners who employ low-skilled workers and the customers who patronize those small businesses. Here’s an edited version of Professor Landsburg’s main fairness argument against the minimum wage:
Minimum wages are still bad policy, for another reason. Namely: If we’re going to transfer income to low-wage workers, it’s both fundamentally unfair and politically unwise to put the entire burden of that transfer on a relatively small segment of the population (namely the owners and customers of businesses that employ a lot of low-wage workers). The right thing, given that we’re going to make this transfer, is to fund it as broadly as possible — say through an increase in the Earned Income Tax Credit, which comes out of general tax revenues.
When we collectively want to raise the wages of unskilled workers, should we put the entire burden of that desire on those who happen to employ unskilled workers? Or is it fairer for those who have collectively made this decision to share the burden?
Here’s, to me, the main point: The owner of your local McDonald’s employs, say, 6 low-skilled workers, who are (at least slightly) better off because he’s there to employ them. What have you done for low-skilled workers lately? Let’s suppose your best answer is “nothing.” Then, if we’re going to try to do something additional for low-wage workers, shouldn’t it be your turn, rather than the McDonald guy’s turn, to make a contribution?
Fairness tells me that the cost of a widely-supported program should not be dumped on a small segment of society, and moreover that it especially should not be dumped on that small segment of society that has already helped to alleviate the perceived problem (i.e. those who have already been providing jobs for unskilled workers. Political wisdom tells me the same thing. It’s very easy to support programs that other people will have to pay for. But voters, like everyone else, should bear the costs of their own decisions. Letting people vote for expensive programs that “somebody else” will finance is a good recipe for getting people to vote irresponsibly.
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