negligible91Just a few points I’d stress. I read through it quickly because I’m short on time, but I’m confident in these points nevertheless:
1) Competition (not perfect competition, but real competition). If workers are being paid less than their productivity, then this creates an opportunity for profitable competition. If there isn’t any competition, the first place we should look to find out why is government regulation. Retail isn’t some industry like telecommunications either, where there are network effects, huge economies of scale, etc. Also, industries other than retail could also be involved to bid these workers away.
2) Anytime he points to the economy being bad, that is the fault of institutional reasons: the Federal Reserve and fractional reserve banking causing the business cycle, etc.
3) “The strict Austrian school/libertarian argument at this point is obvious: don’t have public assistance. That way people will not take below-survival paying jobs, which will force employers to pay more in order to attract employees. ”
I’ve never heard this argument from Austrians before, but I’ll let someone else confirm whether it’s a true argument or not. Is he really saying minimum wage workers would be literally dying on the streets without public assistance? I am skeptical.
4) The minimum wage causes unemployment. It hurts the very workers it’s supposed to help. Is it easier to live off of $7.25/hr or $0.00/hr? Employers will not necessarily hire workers if they must pay them higher wages. They certainly will not if it is not profitable. They can use labor-saving technology instead.
If there is no public assistance, no minimum wage, no government causes of the business cycle, and no government restriction of competition, it is clear that worker’s wages will tend toward their productivity, and real wages will rise over time as the economy grows.