Minimum Wage Laws Restrict Freedom — VOICES for REASONVOICES for REASON

The perennial debate over whether the federally mandated minimum wage should be raised is back now that President Obama has called for raising it to $9 per hour in his 2013 State of the Union address. Some argue that minimum wage laws cause unemployment; others argue that a small raise will increase the incomes of low-wage workers. But few focus on the crucial fact that minimum wage laws restrict the freedom of those searching for entry-level service jobs.

In essence, a federally mandated minimum wage of $9 per hour bans any labor agreement where the pay is less than $9 per hour. This is especially an issue for anyone searching for entry-level service jobs—e.g., teenagers, immigrants escaping impoverished nations, people from low-income neighborhoods, etc. Such individuals may not be able to find an employer who is willing to offer them a position that pays at least the mandated minimum wage and therefore, because they do not have the freedom to work for less money, must remain unemployed. (For evidence that this is a reality, consider the high rates of teenage unemployment.) Many of these individuals would surely rather be employed at $6 per hour than unemployed in a country where the minimum wage is $9 per hour.

This deprivation of freedom is also obviously an issue for employers of basic service jobs—e.g., fast food restaurants, big box stores, mall shops, supermarkets, etc. A supermarket may be willing to staff 9 employees as cashiers and baggers at $6 per hour, but may only be able afford to staff 6 employees at $9 per hour. The higher the minimum wage, the fewer positions such businesses can afford to offer. Why should they be prevented from hiring individuals for wages they are willing to accept?

Minimum wage laws deprive both employers and employees alike of the freedom to accept certain mutually agreeable employment arrangements. Isn’t this a good reason to oppose such laws?