Minimum Wage? Why Not Maximum Wage? Or Just The Wage?

As you insist on higher wage for lower skilled workers, you contribute to eliminating their jobs. It’s a necessary implication of some simple observations presented in Economics 101. As the price of a thing increases, demand decreases. At some point there, automation becomes more economical, and the employer stops employing persons as labor and substitutes machinery. We’ve already seen that repeatedly.

Most advocates of increases in the Minimum Wage are actually talking about what should more properly be called The Theoretical Minimum Wage, or Preferred Minimum Wage. We should probably go along with them and let them  set the Theoretical Minimum Wage wherever they please. They won’t affect the actual minimum wage, which never changes. It is zero. At that moment when you price the labor above what the owner can justify, automation replaces the worker and the worker’s wage becomes zero.

A better solution is to aim for a robust economy, so that you have significant growth again and labor demand increases. With a constant source, and increasing demand, wages go up automatically, as has happened throughout history. Unfortunately, you also have to be conscious of the source count. If you insist on letting folks into the country illegally, which many Minimum Wage increase advocates inexplicably do, you sabotage that wage pressure by increasing the supply of labor.

So, you have to be willing both to do economically sound things with your policies, and also control immigration. I am willing to bet that neither of those elements is acceptable to our most vocal supporters of Minimum Wage (actually Theoretical Minimum Wage) hikes. Am I wrong?

What I don’t understand is why we don’t address the top side of wages in these discussions. If we have a right to decide how much is too little, then don’t we have a right to decide how much is too much? Shouldn’t we be setting a Maximum Wage as well? Something on the order of $200,000 per year. No one could need more than $200,000 per year, surely. Actually, probably much less. They might want more, or be able to figure out how to spend more, but surely they don’t actually need more.

And it shouldn’t stop there. I don’t see how you avoid asking why some should be able to live better than others. If you ask that question, surely you come to say that since we’re all equal we should all live equally well, which would mean we don’t need a minimum wage and a maximum wage. We just need The Wage. Once we decided what is the proper wage for all of us, then shouldn’t we just set that as The Wage and eliminate the differences in the name of fairness?

Either the State has a right to decide what we make, or it doesn’t. Why should it only get to decide how little?

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