Minimum Wage

[LoganBice]

The economy must serve people, not the other way around. Work is more than a way to make a living; it is a form of continuing participation in Gods creation. If the dignity of work is to be protected, then the basic rights of workers must be respected–the right to productive work, to decent and fair wages, to the organization and joining of unions, to private property, and to economic initiative.

(via www.usccb.org)

As far as Catholic social teaching goes is the minimum wage increase in Seattle a good thing in your opinion? If so please justify your reasoning with not only social theory but also with an explanation of how it would help our overall economy. If you do not think it is good please do the same.

Interested in seeing opinions because I know they will be different depending on political views.

God Bless

 

[lmelahn]

As far as Catholic social teaching goes is the minimum wage increase in Seattle a good thing in your opinion? If so please justify your reasoning with not only social theory but also with an explanation of how it would help our overall economy. If you do not think it is good please do the same.

I am not in favor of an increase in the minimum wage, but largely for economic, not doctrinal, reasons. (Frankly, I am not in favor of a minimum wage at all, for the reasons I will expose below.)

I fully support the Catholic social teaching, which says, among other things, that the economy must serve people.

So, the question is, “Does a minimum wage serve people?” In my opinion, the answer is “no.”

The purpose of the minimum wage is to prevent employers from abusively demanding work from their employees without just compensation. The goal is a good one, naturally, but the means used to obtain it do not work.

We have to keep in mind that, although there are certainly cases of exploitation, employers in general do not offer the wages they do in order to take advantage of their employees. Employers, in addition to their social obligations, have a vested interest in keeping their employees satisfied. (To put it simply, in the long run, it pays to treat your employees well.)

Thus, the wages they offer generally represent what they can afford to pay for the work they require. (Remember that if they offer much less than they can afford, then they will have a hard time recruiting employees: the prospects will generally end up going to their competitors.)

What does a minimum do? In general, there are two possibilities. Sometimes the minimum wage is well below the wages offered by the market, and in that case it is simply inefficacious. It doesn’t really cause any harm, but neither does it really cause any good.

If the minimum wage is high enough, however, it becomes efficacious. In that case, it forces employers (those offering low-paying jobs) to offer wages that are higher than they can really afford. What is the result? The employers will be forced to hire fewer employees, and may even be forced to lay people off. It will also result in higher prices for whatever goods or services that employer produces, because it will be operating at a less-than-ideal capacity.

So what is the effect of an efficacious minimum wage? Basically, unemployment and higher prices. It is true that those lucky enough to retain their jobs will have higher wages, but, it seems to me, that is hardly fair or just.

Such a policy is particularly unfair to part-time workers (for example high-school and college students) who would be glad to have a low-paying job to bolster their skills and add an entry to their resume.

So no, I don’t think that a minimum wage is a good idea, much less raising it further. Of course, this is an issue in which many opinions are possible.

 

[LoganBice]

I am not in favor of an increase in the minimum wage, but largely for economic, not doctrinal, reasons. (Frankly, I am not in favor of a minimum wage at all, for the reasons I will expose below.)

I fully support the Catholic social teaching, which says, among other things, that the economy must serve people.

So, the question is, “Does a minimum wage serve people?” In my opinion, the answer is “no.”

The purpose of the minimum wage is to prevent employers from abusively demanding work from their employees without just compensation. The goal is a good one, naturally, but the means used to obtain it do not work.

We have to keep in mind that, although there are certainly cases of exploitation, employers in general do not offer the wages they do in order to take advantage of their employees. Employers, in addition to their social obligations, have a vested interest in keeping their employees satisfied. (To put it simply, in the long run, it pays to treat your employees well.)

Thus, the wages they offer generally represent what they can afford to pay for the work they require. (Remember that if they offer much less than they can afford, then they will have a hard time recruiting employees: the prospects will generally end up going to their competitors.)

What does a minimum do? In general, there are two possibilities. Sometimes the minimum wage is well below the wages offered by the market, and in that case it is simply inefficacious. It doesn’t really cause any harm, but neither does it really cause any good.

If the minimum wage is high enough, however, it becomes efficacious. In that case, it forces employers (those offering low-paying jobs) to offer wages that are higher than they can really afford. What is the result? The employers will be forced to hire fewer employees, and may even be forced to lay people off. It will also result in higher prices for whatever goods or services that employer produces, because it will be operating at a less-than-ideal capacity.

So what is the effect of an efficacious minimum wage? Basically, unemployment and higher prices. It is true that those lucky enough to retain their jobs will have higher wages, but, it seems to me, that is hardly fair or just.

Such a policy is particularly unfair to part-time workers (for example high-school and college students) who would be glad to have a low-paying job to bolster their skills and add an entry to their resume.

So no, I don’t think that a minimum wage is a good idea, much less raising it further. Of course, this is an issue in which many opinions are possible.

Very well put. I will have to agree with your analysis. Another thing I see is if the minimum wage is raised very high it will cause business to raise prices to they don’t lose money. So in the long term this will just shift the economic scale to where that $15 dollars is still very low living wage if prices increase it will just reset itself and everyone is back in the same place. I am no economist though, Im a political science student so I could be wrong. I feel like its not as simple as that but you never know.

 

[Isca]

In the UK, the minimum wage for adults 21 or over is £6.50/hour. That equates to $10.46, at current exchange rates. It’s less for younger adults.

I’m in favour of a minimum wage, as everyone has to buy food and pay their rent and utility bills. I know that some businesses might find it tough, but in my view offering a lower wage is taking advantage of people’s need to work. In the UK, food prices are more expensive than in the USA, and you all know how much we pay for gas/diesel/petrol! So to me, £6.50 an hour is not very much at all. It would cost nearly £9 to buy two ordinary Big Mac meals in the UK.

 

[LeafByNiggle]

I fully support the Catholic social teaching, which says, among other things, that the economy must serve people.

So, the question is, “Does a minimum wage serve people?” In my opinion, the answer is “no.”

It is interesting that from the quoted Catholic social teaching you chose to take as your guide the somewhat ambiguous “economy serving the people” part, instead of the part that more directly addresses the question of this thread, namely the “decent and fair wages” part. Why not attempt to show how “decent and fair wages” is compatible with your interpretation of “economy serving the people”?

We have to keep in mind that, although there are certainly cases of exploitation, employers in general do not offer the wages they do in order to take advantage of their employees. Employers, in addition to their social obligations, have a vested interest in keeping their employees satisfied. (To put it simply, in the long run, it pays to treat your employees well.)

…only in a market with a shortage of labor. When you are a business owner in a market saturated with people out of work, there is no need to “keep your employees satisfied”. They will be grateful for any crumbs you toss their way, regardless if those crumbs constitute a “decent and fair wage”. In such a market, it pays to compensate your employees as little as possible. Anything more and you are just throwing your money away.

Thus, the wages they offer generally represent what they can afford to pay for the work they require.

“Afford” is a relative term, not an absolute. What a business can afford depends on what it decides to pay its stockholders, what it decides to charge for its product, etc.

(Remember that if they offer much less than they can afford, then they will have a hard time recruiting employees: the prospects will generally end up going to their competitors.)

Again, that is only true in a labor shortage market. In a labor surplus market, your competitors are likely to be paying the same ultra-low wage as you, and both businesses are pocketing the profit. There is no incentive for such businesses to compete on wages.

In that case, it forces employers (those offering low-paying jobs) to offer wages that are higher than they can really afford. What is the result? The employers will be forced to hire fewer employees, and may even be forced to lay people off.

That is one possibility. Another possibility is that they will pay a lower dividend to their stockholders, or charge more for their product (as you went on to say). But that may be justified if the lower price product can only be maintained by slave labor.

Such a policy is particularly unfair to part-time workers (for example high-school and college students) who would be glad to have a low-paying job to bolster their skills and add an entry to their resume.

Exceptions can be written into the law to provide for these cases.

I must admit, though, that despite all that I have written here, I am personally undecided about the practicality of minimum wage laws.

 

[LoganBice]

It is interesting that from the quoted Catholic social teaching you chose to take as your guide the somewhat ambiguous “economy serving the people” part, instead of the part that more directly addresses the question of this thread, namely the “decent and fair wages” part. Why not attempt to show how “decent and fair wages” is compatible with your interpretation of “economy serving the people”?
…only in a market with a shortage of labor. When you are a business owner in a market saturated with people out of work, there is no need to “keep your employees satisfied”. They will be grateful for any crumbs you toss their way, regardless if those crumbs constitute a “decent and fair wage”. In such a market, it pays to compensate your employees as little as possible. Anything more and you are just throwing your money away.
“Afford” is a relative term, not an absolute. What a business can afford depends on what it decides to pay its stockholders, what it decides to charge for its product, etc.
Again, that is only true in a labor shortage market. In a labor surplus market, your competitors are likely to be paying the same ultra-low wage as you, and both businesses are pocketing the profit. There is no incentive for such businesses to compete on wages.

That is one possibility. Another possibility is that they will pay a lower dividend to their stockholders, or charge more for their product (as you went on to say). But that may be justified if the lower price product can only be maintained by slave labor.

Exceptions can be written into the law to provide for these cases.

I must admit, though, that despite all that I have written here, I am personally undecided about the practicality of minimum wage laws.

Interesting post thank you for your contribution. Thats my issue as well, Im on the fence. I understand that people need living wages but I don’t have enough knowledge on economics to know how it all works.

 

[MomaMary8]

It is interesting that from the quoted Catholic social teaching you chose to take as your guide the somewhat ambiguous “economy serving the people” part, instead of the part that more directly addresses the question of this thread, namely the “decent and fair wages” part. Why not attempt to show how “decent and fair wages” is compatible with your interpretation of “economy serving the people”?
…only in a market with a shortage of labor. When you are a business owner in a market saturated with people out of work, there is no need to “keep your employees satisfied”. They will be grateful for any crumbs you toss their way, regardless if those crumbs constitute a “decent and fair wage”. In such a market, it pays to compensate your employees as little as possible. Anything more and you are just throwing your money away.
“Afford” is a relative term, not an absolute. What a business can afford depends on what it decides to pay its stockholders, what it decides to charge for its product, etc.
Again, that is only true in a labor shortage market. In a labor surplus market, your competitors are likely to be paying the same ultra-low wage as you, and both businesses are pocketing the profit. There is no incentive for such businesses to compete on wages.

That is one possibility. Another possibility is that they will pay a lower dividend to their stockholders, or charge more for their product (as you went on to say). But that may be justified if the lower price product can only be maintained by slave labor.

Exceptions can be written into the law to provide for these cases.

I must admit, though, that despite all that I have written here, I am personally undecided about the practicality of minimum wage laws.

I am not well versed in the academic/philosophical side of economy, I only know what I see as a wife to a business owner. There are no stock holders but the hungry kids at home and the mortgage holding bank. It is a balancing act as to how much he can pay his employees, invest in equipment, pay for repairs of old equipment, pay taxes on each employee, pay income taxes on what the government determines is his profit (never close to the amount that we may use as personal income) and the list goes on. Employees are the largest expense of any company and they are the second one paid, the first being the government! Having the wage arbitrarily determined by an outside entity is foolhardy! Even in a high unemployment economy my husband must pay a wage to compensate workers for their time and effort. A business does not want a good worker to leave! It goes against logic. A business that has a high turnover rate of employees is in trouble and won’t last long.

Find ways to improve the economy and wages will increase. Our local McDonald’s had an offering wage of $14/hour when costs were low and unemployment was low. Wages didn’t drop until the economy did. the wage did not create the good economy, but was a reflection of a good economy.

JMHO

 

[RedFox0456]

I said that I didn’t know. While paying $15/hr is certainly in line with social teaching, but it’s hard to say if it will actually cause a better economy. Aside from the rocky start for small businesses, the cost of goods may simply go up as a result of producers knowing that people have more money to spend, which would defeat the entire purpose of the wage increase.

 

[Cricket2]

The increase in the minimum wage is a good thing. I think that it is very unfair for anyone to be required to work for such low wages that they cannot make ends meet or land up living in perpetual poverty. All work is a necessary part of a societies make up and ability to function, therefore it is all valuable and meaningful. It is a great error to take the attitude that some jobs are less important than others, or that those who can only perform what are viewed as “low skill” jobs are somehow less worthy of a living wage.

We live in a society that has put some very erroneous values on work based on level of education or skill level. As Christians we should remember that God has given us all different gifts and talents and that He values all of us equally. We are all expected to do our best with the gifts and talents God has given us, to respect all based simply on the fact that they are our brother/sister in Christ, and to recognize that all work is of significance in the eyes of God. Anything else is sinful.

 

[Randy_Carson]

I own a maid service, and yes, I did build that.

I have 20 employees. Our starting salary is $9.00/hour, and raises are given every six months. Senior employees are earning $12-15 per hour. These figures are above the minimum wage as well as above the local standard for our industry.

That said, raising the minimum wage to $10.10 or higher will bankrupt my company.

Why? Well, if I have to pay my employees more than I currently do, two things will happen. First, I will lose my competitive advantage. People want to work for me instead of standing at a cash register at the grocery store even though cleaning houses is hard work. Because I pay better than my competitors and better than the big box stores, I get better employees who do better work.

Second, I can’t simply raise my prices because my clients are NOT going to say, “Oh, we support the idea of a higher minimum wage, so we don’t mind paying more for the same service.” Life is not like that. Instead, they will find a cheaper service or simply discontinue service altogether and clean their own homes. Either way, I have fewer clients. As a result, I need fewer employees. Below a certain point, I won’t be able to pay rent for our office space or for our company vehicles or business insurance, etc. I won’t be able to pay myself, either. At that point, I might as well close the business, lay everyone off, and go get a cushy desk job working for the government so I don’t have to bust my backside every day trying to build a small business in a socialist economy.

Any questions?

 

[Cricket2]

Interesting post thank you for your contribution. Thats my issue as well, Im on the fence. I understand that people need living wages but I don’t have enough knowledge on economics to know how it all works.

One of the reasons we have such terrible wage practices is the notion that a trickle down system of economics works. It does not. It serves only those with lots of money at the expense of the masses.

A fair “living wage” is what we should have and support. When you have 2% or less of the population making 250K or more a year something is very wrong and unfair. The average wage in the US is 40K. That is viewed as poverty. Why would we accept an idea that leaves the average person in this country poor and underpaid?

In a fair and healthy economic system one would not see so few making so much at the expense of the many. In a true Christian society no one would do without and all work would be deemed as equally valuable and meaningful. In fact, the weak, sick, widowed and poor would not be viewed as leaches or unworthy of a living income.

 

[Randy_Carson]

The increase in the minimum wage is a good thing. I think that it is very unfair for anyone to be required to work for such low wages that they cannot make ends meet or land up living in perpetual poverty.

No one is required to work for minimum wage. Anyone who wants to do so may get education or training that enables them to earn more.

All work is a necessary part of a societies make up and ability to function, therefore it is all valuable and meaningful. It is a great error to take the attitude that some jobs are less important than others, or that those who can only perform what are viewed as “low skill” jobs are somehow less worthy of a living wage.

If I can take someone off the street and teach them how to make a cheeseburger in 15 minutes, that is a low-skill job. Naturally, the surgeon who takes out your appendix will earn more. The surgeon has earned the higher wage by learning a skill that is in high demand and low supply. The person who chooses (and it is a choice) to work at a burger joint is in a low demand, high supply job. Artificially raising wages simply creates inflation that PUNISHES everyone - the minimum wage worker, also, because inflation hurts lower income people MORE than it does those who have higher earnings.

We live in a society that has put some very erroneous values on work based on level of education or skill level. As Christians we should remember that God has given us all different gifts and talents and that He values all of us equally. We are all expected to do our best with the gifts and talents God has given us, to respect all based simply on the fact that they are our brother/sister in Christ, and to recognize that all work is of significance in the eyes of God. Anything else is sinful.

All good. We should respect and value everyone equally, and everyone should have equal opportunity. That does not mean that everyone should have equal RESULTS.

Artificially inflating wages does nothing to address the fact that some people will simply not attain the skillset necessary to command higher wages.

 

[Randy_Carson]

The grocer is artificially forced to pay his employees more. So, he raises grocery prices.
Now, the lawyer has to pay more for his groceries, so he raises his legal fees.
Then, the accountant has to pay more for the legal services he needs, so he raises his fees.
Finally, the grocer has to pay more for bookkeeping services from the accountant, so he raises his prices.

This, folks, is how inflation works.

Oh, and those grocery store employees who got the raise required by the government?

Yeah, they are paying higher prices for their food, too.

 

[GEddie]

You always get what you pay for.

ICXC NIKA

 

[LeafByNiggle]

I own a maid service, and yes, I did build that.

I have 20 employees. Our starting salary is $9.00/hour, and raises are given every six months. Senior employees are earning $12-15 per hour. These figures are above the minimum wage as well as above the local standard for our industry.

That said, raising the minimum wage to $10.10 or higher will bankrupt my company.

Why? Well, if I have to pay my employees more than I currently do, two things will happen. First, I will lose my competitive advantage. People want to work for me instead of standing at a cash register at the grocery store even though cleaning houses is hard work. Because I pay better than my competitors and better than the big box stores, I get better employees who do better work.

Second, I can’t simply raise my prices because my clients are NOT going to say, “Oh, we support the idea of a higher minimum wage, so we don’t mind paying more for the same service.” Life is not like that. Instead, they will find a cheaper service or simply discontinue service altogether and clean their own homes. Either way, I have fewer clients. As a result, I need fewer employees. Below a certain point, I won’t be able to pay rent for our office space or for our company vehicles or business insurance, etc. I won’t be able to pay myself, either. At that point, I might as well close the business, lay everyone off, and go get a cushy desk job working for the government so I don’t have to bust my backside every day trying to build a small business in a socialist economy.

Any questions?

Yes, here’s a question. How can your customers find a cheaper maid service if all maid services are required to pay at least the minimum wage?

And if customers find it more cost-effective to clean their own homes, how it that the fault of minimum wage? If I wanted to go into business now growing cotton and having it picked by hand instead of by machine, I might argue, much as you did, that I cannot afford to pay human pickers more than $1/hr else else I won’t be able to compete with cotton growers that use machines. Therefore I should be allowed to pay pickers $1/hr (provided I can find people that desperate). Obviously the answer to that question is I should either start using machines to pick my cotton, or go out of business. If you are offering a cost-effective service, your customers will continue to buy from you, even if your prices reflect a higher minimum wage.

 

[Randy_Carson]

Yes, here’s a question. How can your customers find a cheaper maid service if all maid services are required to pay at least the minimum wage?

Simple. They don’t all pay taxes, report all their income, do background checks on employees or have insurance, etc. Think of the individual who may not be in this country legally. See the problem?

And if customers find it more cost-effective to clean their own homes, how it that the fault of minimum wage?

I didn’t say it wasn’t more “cost-effective”. I said they may have to forego cleaning services and do the work themselves. This creates a hardship for the elderly and handicapped who rely on maid services to maintain their homes.

If I wanted to go into business now growing cotton and having it picked by hand instead of by machine, I might argue, much as you did, that I cannot afford to pay human pickers more than $1/hr else else I won’t be able to compete with cotton growers that use machines. Therefore I should be allowed to pay pickers $1/hr (provided I can find people that desperate). Obviously the answer to that question is I should either start using machines to pick my cotton, or go out of business. If you are offering a cost-effective service, your customers will continue to buy from you, even if your prices reflect a higher minimum wage.

Again, you assume that all cleaning services play by the same rules. They don’t. Some prefer to be paid in cash and do not report all earnings to the IRS. Or they do not have adequate insurance to cover workers’ compensation. They don’t need it if they can’t report an accident on the job which might result in deportation. So, it’s not so simple, is it?

But this does not really address the bigger problem of creating a spiral of rising prices since businesses will adjust what they charge for goods and services to maintain their desired level of return on investment.

And here is another question: Suppose the government mandates that every employer must pay a minimum of $15 per hour for every worker. So, all the entry-level employees just got a raise. Woohoo! A victory for the working class.

But now the first-line supervisors are pissed. They earned a promotion but now they are only making slightly more than the entry-level people. And they have way more experience. Dammit, they want raises, too, because they’ve been here longer. So, now the owner has to give his supervisors a raise.

But hold on, middle managers, want a salary adjustment, also. After all, they run the company…why should they be making only a little more than the supervisors.

And on and on and on…

Think this won’t happen? Wait until the unions get involved.

 

[tafan]

I said that I didn’t know. While paying $15/hr is certainly in line with social teaching, but it’s hard to say if it will actually cause a better economy. Aside from the rocky start for small businesses, the cost of goods may simply go up as a result of producers knowing that people have more money to spend, which would defeat the entire purpose of the wage increase.

Why is $15/hr inline with the Church’s social teaching? I do not understand that point at all, and judging by the poll responses, it appears that 1/2 the voters agree with you.

I thought the church’s social teaching was clear: all workers should be paid a living wage. That means that the needs of the individual worker must be taken into account. There are a lot of people, based on family situation and where they live, that $15/hour is not a living wage. Conversely, I have both a teenage and college age sons where $15/hour is much higher than their need for living (since I support most of their needs, as they are still my dependents).

I am not saying I oppose minimum wages from a practical point of view, or that I would even oppose a $15/hour minimum wage. But I do not understand how anyone can say it is inline with the Church’s social justice teaching.

 

[LeafByNiggle]

Simple. They don’t all pay taxes, report all their income, do background checks on employees or have insurance, etc. Think of the individual who may not be in this country legally. See the problem?

Yes, the problem is maid services that don’t follow the law. The solution to that problem is to enforce the law, not to even the score by denying employees of companies that do follow the law a fair wage.

I didn’t say it wasn’t more “cost-effective”. I said they may have to forego cleaning services and do the work themselves. This creates a hardship for the elderly and handicapped who rely on maid services to maintain their homes.

Again we have another social problem whose solution is not to require that employees do not get a living wage. There is no denying these are problems, but why single out zapping the minimum wage as the solution? If charity is needed toward the elderly and the handicapped, then the cost of that charity should be born by all - not just employees in low-wage jobs.

Again, you assume that all cleaning services play by the same rules. They don’t. Some prefer to be paid in cash and do not report all earnings to the IRS. Or they do not have adequate insurance to cover workers’ compensation. They don’t need it if they can’t report an accident on the job which might result in deportation. So, it’s not so simple, is it?

As with all the other problems you mentioned, these are problems whose solution need not be the denial of a minimum wage to those who do not themselves cause these problems.

And here is another question: Suppose the government mandates that every employer must pay a minimum of $15 per hour for every worker. So, all the entry-level employees just got a raise. Woohoo! A victory for the working class.

But now the first-line supervisors are pissed. They earned a promotion but now they are only making slightly more than the entry-level people. And they have way more experience. Dammit, they want raises, too, because they’ve been here longer. So, now the owner has to give his supervisors a raise.

But hold on, middle managers, want a salary adjustment, also. After all, they run the company…why should they be making only a little more than the supervisors.

And on and on and on…

Of course everyone is going to try to get as much as they can. They always have and always will. Denying workers a minimum wage will not stop it.

 

[Randy_Carson]

Yes, the problem is maid services that don’t follow the law. The solution to that problem is to enforce the law, not to even the score by denying employees of companies that do follow the law a fair wage.

Like these same liberals are enforcing our immigration laws?

Again we have another social problem whose solution is not to require that employees do not get a living wage. There is no denying these are problems, but why single out zapping the minimum wage as the solution? If charity is needed toward the elderly and the handicapped, then the cost of that charity should be born by all - not just employees in low-wage jobs.

As with all the other problems you mentioned, these are problems whose solution need not be the denial of a minimum wage to those who do not themselves cause these problems.

Of course everyone is going to try to get as much as they can. They always have and always will. Denying workers a minimum wage will not stop it.

I’m not denying anyone a minimum wage, the government is *enforcing *it.

Turn this around for a moment…

What if someone comes to me and says, “I really need a job, and I’ll do anything you need done. I’ll work for only $5.00 an hour.” I have to say, “Sorry.”

“But if I don’t work, I’ll go hungry…how about $4.00?”

“No, you don’t understand. Although the laws of supply and demand should enable you to work for whatever price you choose in a free market economy, I have to obey the law of the land. And since I’m paying all these other people more than they are actually worth relative to the revenue they produce, I can’t afford to hire another person.”

“3.00?”

 

[lmelahn]

Let me preface my answer by saying that this is my formed opinion, not, of course, Catholic teaching as such (which I accept in its entirety).

It is interesting that from the quoted Catholic social teaching you chose to take as your guide the somewhat ambiguous “economy serving the people” part, instead of the part that more directly addresses the question of this thread, namely the “decent and fair wages” part. Why not attempt to show how “decent and fair wages” is compatible with your interpretation of “economy serving the people”?

Good point. I accept that part of Church teaching, too. My point was that I don’t think a minimum wage accomplishes it. Instead of assuring fair wages, it causes unemployment.

…only in a market with a shortage of labor. When you are a business owner in a market saturated with people out of work, there is no need to “keep your employees satisfied”. They will be grateful for any crumbs you toss their way, regardless if those crumbs constitute a “decent and fair wage”. In such a market, it pays to compensate your employees as little as possible. Anything more and you are just throwing your money away.

But labor surpluses practically only occur during recessions. That means that business are under even more pressure to keep their costs down. Any artificial wage increases will only exacerbate the unemployment problem.

“Afford” is a relative term, not an absolute.

Granted.

What a business can afford depends on what it decides to pay its stockholders, what it decides to charge for its product, etc.

Those things do not occur in isolation. Business have an obligation to pay their stockholders; otherwise, the stockholders may very well decide to sell their shares. Moreover, businesses are not really at liberty to charge any prices they like. As any store owner can tell you, you can’t make more profit simply by jacking up the prices, because people will stop buying. Anyway, if the prices tend to increase, that defeats the purpose of raising the wages.

Again, that is only true in a labor shortage market. In a labor surplus market, your competitors are likely to be paying the same ultra-low wage as you, and both businesses are pocketing the profit. There is no incentive for such businesses to compete on wages.

I think you may be reversing the cause and the effect here. Labor surpluses occur when businesses can no longer afford to hire people (for example, in a recession). Hence they are not really “pocketing” much profit. They are trying to stay afloat.

Also, perhaps a multinational corporation has a large enough cushion that it need not lay anyone off. But that is not true of a small business. In an economic crises, a small business has to do what it can just to stay in business. (If it goes bankrupt, there will be no wages paid out to anyone!)

That is one possibility. Another possibility is that they will pay a lower dividend to their stockholders, or charge more for their product (as you went on to say). But that may be justified if the lower price product can only be maintained by slave labor.

True. However, none of these factors occur in isolation. In real life, business do all of these things at once.

Exceptions can be written into the law to provide for these cases.

I think such regulations would produce further injustices: in general, all things being equal, there should be equal pay for equal work.

Having said that, I do think that we need to work to ensure that people have decent and fair wages. In fact, I support (as I hope all of us do) a living wage, for those who need to support themselves and a family. An artificial minimum wage does not, unfortunately, contribute to a living wage. Instead, we need to take steps that assure a real increase in wages. For example:

1. 
   *]Providing opportunities for people to learn skills (and in general for education).
   *]Ensuring that there is an environment favorable to entrepreneurship and, therefore, job creating (e.g., no monopolies, no morass of regulation, no excessive taxation, etc.).
   *]Intervening to correct abuses, but only when there are, in fact, abuses (an application of the principle of subsidiarity).