In a recent debate for a U.S. Senate seat, Rep. Barbara Lee of California, defended her previous support for raising the minimum wage to $50 an hour. She cited a report that claims an individual needs an income of $104,000 a year to live in the Bay Area. Even this, she said, is “barely enough to get by.” So, why stop at $50? Why not raise the minimum wage to $125,000 an hour and make everyone a millionaire in one day?
Anyone with an ounce of economic sense, which apparently excludes Lee, understands that raising the minimum wage to $125,000 would be economically destructive. Businesses would cut jobs and prices would soar. The principle doesn’t change if the minimum wage is $50, $15, or any other figure.
Prosperity cannot be created with the stroke of a pen. Prosperity is the result of production, of creating values. One’s income is determined by the values that one produces. The more values that one produces, the greater one’s income. Production is the cause; prosperity is the effect.
Minimum wage laws evade this economic and moral truth. Such laws are an attempt to obtain an effect while ignoring its cause.
When income is based on production, the trade between employer and employee is voluntary. When income is based on the arbitrary dictates of politicians, the employer is forced to act differently than he would voluntarily choose. Trade between consenting individuals is moral. “Trade” that is founded on coercion is not trade. It is robbery.
Lee argues that the cost of living is too high in California. Rather than identify why that is the case—stifling business regulations and crippling taxation—she proposes more controls and regulations on businesses. Rather than restore freedom to Californians, she wants the government to assume more control over their lives.