The State of California has increased its legal minimum wage, and now there is pending legislation to increase the legal federal minimum wage for the USA. It is illegal to pay workers less than the legal minimum. As any student of economics knows, prices are associated with quantities, and when there is change in a price such as a wage, there is also a change in the quantity supplied and the quantity demanded. The law of demand in economics tells us that with higher prices, people buy less quantity and hire fewer inputs, including labor. The quantity supplied, those who want to work at the higher wage, increases, creating an unemployed surplus of labor. Some employers don’t hire few workers, but rather cut back on benefits, or they pass on the extra cost to consumers and create a loss for them.
Nevertheless, partisan democrats, welfare-state liberals, pseudo-progressives, union tyrants, and others who think government can create reality are pushing hard for a minimum wage. But they are too narrow in their thinking. The minimum wage covers only employees. It leaves out the self-employed. Some owners of small shops work long hours and barely have enough revenues to cover expenses, leaving them with low earnings. Why should a person whose business yields the owner less than the minium wage be discriminated against? How progressive is that?
Some Congress-personae realize this and are pushing to include self-employed small business owners in the minimum wage, for the first time. Those who hire the self-employed are the customers. So the forthcoming legislation will require residents who live near a business that earns its owner less than the minimum wage to make minimum purchases each month from the store.
There are also low-income landlords who rent out run-down dwellings in bad neighborhoods at a low rental, or who have vacancies or high repair costs, who also get less than the minimum wage. The legislation will require tenants to pay a minimum rental so that the landlord too will be covered by the minimum wage. After all, it’s unfair to let some low-income folks have a minium income and not others.
Economists have recognized that Americans have a low savings rate, and Congress will deal with that also. Once people enjoy higher minimum wages, they will be able to afford minimum savings, so the minimum wage legislation will include a minimum-savings requirement. But the economy also depends on consumer spending, so to make sure the economy keeps running on full steam, there will be a minimum spending requirement also. Minimum spending and minimum savings will ensure full employment and adequate national investment. Congress personae are slapping their foreheads and wondering why they didn’t think of this solution previously!
People who save money should be rewarded, so the banks will have a minimum interest payment requirement, even for checking accounts. Corporations will be required to make minimum dividend payments to shareholders instead of selfishly keeping the profits as retained earnings.
To prevent the higher minimum wage from creating more unemployment, the legislation will include a minimum labor requirement. Economists who claim that higher minimum wages result in unemployment forget that government can create employment! Adults below the age of 63 will be required to work a minimum of 30 hours per week, unless they have a note from their doctor documenting that they are ill. But leisure is also a need, so the law raises the minimum vacation time to three weeks per year.
Many Americans are not adequately nourished, as they eat fatty, starchy, sugary, salty junk food with little nutritional value. There is little value in minimum incomes if people don’t use the income to maintain their health. So Congress will also legislate a minimum vitamin law, requiring all Americans to take a minimum vitamin pill every day.
To maintain political support for these minimum standards, we need to consistently think in terms of minima. Congress will facilitate this with a minimum-number law. The minimum number will be one-half. All statistical figures will have to be equal to or greater than the minimum number.
What is more important to humanity than marriage? Yet many people are unhappy in marriage because the spouse is not fulfilling her or his minimum marital requirements. To make the legal minima comprehensive, Congress will mandate minimum marital relations. Perhaps this will also be progressively extended to partner-mates who are legally unable to marry.
If the minimum wage is beneficial, logic tells us that minima will benefit us in all these other areas also. Why have a legal minimum in just one aspect of life? The philosophy behind the minimum wage is that legislation can create reality. If that is the case, then we should create better reality in all aspects of life, not just wages. It’s silly to deprive us of minimal benefits when all we have to do is pass a law!
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FRED E. FOLDVARY, Ph.D., (May 11, 1946 — June 5, 2021) was an economist who wrote weekly editorials for Progress.org since 1997. Foldvary’s commentaries are well respected for their currency, sound logic, wit, and consistent devotion to human freedom. He received his B.A. in economics from the University of California at Berkeley, and his M.A. and Ph.D. in economics from George Mason University. He taught economics at Virginia Tech, John F. Kennedy University, Santa Clara University, and San Jose State University.
Foldvary is the author of The Soul of Liberty, Public Goods and Private Communities, and Dictionary of Free Market Economics. He edited and contributed to Beyond Neoclassical Economics and, with Dan Klein, The Half-Life of Policy Rationales. Foldvary’s areas of research included public finance, governance, ethical philosophy, and land economics.
Foldvary is notably known for going on record in the American Journal of Economics and Sociology in 1997 to predict the exact timing of the 2008 economic depression—eleven years before the event occurred. He was able to do so due to his extensive knowledge of the real-estate cycle.