Government programs and policies may help some low-income individuals survive, but they do not and cannot lift anyone from poverty. Only the protection of property rights enables individuals to improve their economic status, and this is particularly true of those who have little or no property.
The right to property means the freedom to create, use, keep, and trade material values. If means the freedom to produce a widget and sell it to willing buyers. It means the freedom to purchase a widget and use it as one chooses. The right to property protects the freedom of individuals to engage in economic activities that they believe will improve their lives.
Many government policies interfere with this freedom. Such policies prohibit individuals from creating and trading material values, and low-income individuals are often the victims of these policies.
Minimum wage laws are one example. Such laws make it illegal to offer or accept a wage below the prescribed minimum. An individual with few job skills may not be worth the minimum wage to an employer, and so, he is effectively barred from the job market even if he is willing to accept a lower wage.
When California raised the minimum wage to $13 an hour in 2020, the owner of Opa!Opa! in Sacramento announced that he was closing his restaurant after fourteen years in business. The Orange County Registerreported that his prices had increased more than 50 percent because of government mandates during that time. Fourteen employees—the intended beneficiaries of the minimum wage hike—lost their jobs.
Paul Fraga, the owner of another restaurant, announced that he would close his diner after fifty years in business, saying that he couldn’t raise his prices fast enough to compensate for the increased labor costs. He added, “If they could sign a waiver, 99 percent of my servers would be against a minimum wage increase…” But Fraga and his employees weren’t given a choice.
In both of these examples, government prohibited individuals from trading values on terms that each found beneficial. Minimum wage laws prevent both employers and employees from exercising their right to property. As a result, everyone suffered, and particularly the low-income individuals.
Occupational licensing is another example. Occupational licensing prohibits individuals from entering certain professions without first obtaining government permission to do so. Obtaining that permission can often involve years of schooling and thousands of dollars—a price that few low-income individuals can afford. Jestina Clayton is an example.
A native of Sierra Leone, Clayton had learned the art of hair braiding while growing up. After graduating college, she was dissatisfied with her pay in an entry-level job. She decided to open a hair braiding business and began advertising on a local website. NPR reported that she soon received an email from a stranger, who wrote, “It is illegal in the state of Utah to do any form of extensions without a valid cosmetology license. Please delete your ad, or you will be reported.” Clayton could not afford the two years of training and $16,000 required to get a cosmetology license in Utah, and she closed her business.
Clayton wanted to offer a value to willing buyers, but the state of Utah prohibited her from doing so. They prevented her from improving her financial situation by exercising the right to property.
In these example, and countless others, low-income individuals suffer significant harm because their right to create and trade values is violated. If we truly want to help such individuals, then we must defend and protect their right to property.