Should There Be a Minimum Wage?
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Wages should be set by workers’ needs, not by market bargaining. Left to the market, wages come out of an unequal contest between employers and workers, so there’s no reason to expect them to be fair. Instead, a fair wage can be worked out from what a worker needs to live decently, then fixed by law.
Justice H. B. Higgins made this argument in the 1907 Harvester judgment, which laid the groundwork for Australia’s basic wage. He rejected leaving pay to the unequal contest of the market and based a fair wage instead on “the normal needs of the average employee, regarded as a human being living in a civilised community.”
unequal contest between employers and workers
This is a mistaken socialist talking point. The idea is that employers have ‘power’ over prospective employees (not ‘workers’) because the latter ‘need’ a job.
But the reality is that employers also need employees. There can be swings from a buyer’s to a seller’s market, yes, but once again (see #6125) regulators should take a look in the mirror to see if they caused any of the conditions that made it harder for people to find jobs that pay well.
Ironically, the minimum wage is itself one such regulation. And it affects industries that are already heavily regulated, such as grocery stores. Existing regulation makes it harder for new competitors to enter the market – who would otherwise have competed not just for customers but also for employees.