In my last post, I mentioned that a libertarian, if asked to estimate the “worth” of an hour of unskilled labor, would likely answer “We can’t know, but probably less than $7.50.” To me, the logic behind this seems pretty clear, but I figured I’d elaborate a bit and explain it anyway.
The existence of a minimum wage law clearly implies that, in the absence of said law, people would be making lower wages than what the law stipulates – otherwise, the law wouldn’t be necessary at all. Given that there is a wage floor, but no wage ceiling, we can safely assume that some workers are getting paid more than they are truly worth, but as a rule, nobody is getting paid less. Anyone who is making less money than they are truly worth should be able to quit their job and find an employer happy to pay them the true value of their services.
Price floors and ceilings both heavily distort the market (this is covered in the first few weeks of any Economics 101 course). It is only when the market is distorted that the cost of any particular item (including labor) can become detached from what the item is worth (as judged by the preferences of various individuals engaging in voluntary trade). Therefore, we can safely assume that there are some people making the minimum wage whose labor is actually worth much less. These people are essentially receiving forced charity from their employers, mandated by the government.