It's not surprising to read that a fan of unfettered capitalism like George Will thinks labor is a commodity, and that markets alone should set labor's price.

It's also not surprising that people like Kevin Drum might call for the gov't to keep "a yellow hanky on the ground," setting a minimum price for labor between an employer and a low-income worker. A low-wage labor market is not exactly a place where "consenting adults [are] interacting voluntarily." These workers don't have a helluva lot of bargaining power. The uniform minimum wage was established precisely to prevent the exploitation of "labor as a commodity.

One issue to be considered in the analysis is the fact that when a worker is selling his labor, he's selling a piece of his life. Morally, this is a little different than selling a widget.

Also, the market price for labor is potentially unacceptable because of the fact that often times we're not talking about an arm's length transaction. The laborer in many cases can't opt simply not to sell his labor. If he takes this option, he starves and dies. So, he's a motivated seller.

Doug, where did the widget come from? Someone must have made it, and that required labour. Imagine a craftsman who mixes his labour, what you define as a piece of life, with some capital. When he in turn sells that widget, is he not also selling some portion of his life?

As for the low-skilled labour market, I acknowledge in the post that there are exceptions where a seller will be at a disadvantage, but I remain skeptical that this is such a widespread problem that it requires a blunt instrument like the min wage. That skepticism is based not on mere prejudice but evidence that many low-skilled workers are teenagers, not heads of households.

And the fact that many minimum-wage earners are dependents adds to my comment on your previous post that raising the minimum wage will increase the prices of goods and thereby hurt some low-income families. The student working at minimum wage may see his income increase more than prices increase, but the single mother of two elementary school children who earns 130% of minimum wage gets no pay increase.

...Unless she's in a union, perhaps. One rarely-noted aspect of the minimum wage is that some labor unions use it as leverage to set wages, or so I've been told. If there's a $1 hike in the minimum wage, those unions will ask for a hike in their members' wages.

Zach

Here are some stats on the family incomes of low-wage workers from the Economic Policy Institute:

In March 2003, about 13% of the workforce were low-wage workers (earning between $5.15 and $7.99 an hour).

38% of low-wage workers in March 2003 had low incomes in the previous calendar year . (Low income is defined here as income below twice the poverty line, a commonly used measure for the level at which the costs of basic needs start to be provided for. For a family of 3 this is less than $29,000 per year.) For these low-wage, low-income workers in 2002:

* On average, their earnings contributed 68% of their total family income.

* 47% were married or had children.

* 87% were 20 years of age or older.

The remainder of low-wage workers lived above the low-income line.

* 45% of the low-wage workers living above the low-income line were married or had children. These workers' earnings contributed 37% of their families' incomes. 35% of these workers would have been in families with incomes below the low-income line without their earnings.

* 30% of low-wage workers living above the low-income line are un-married adults without children living with their families or relatives. They are predominantly young adults living at home. In some cases the income of these workers was important to their families. 16% of them would have had family incomes below the low-income line if it weren't for their earnings, and, on average, they provided about 1 of every 6 dollars of their family's income. 42% of these workers were enrolled in college.

* Fourteen percent of those with low wages and incomes of more than twice-poverty were adults living alone. These adults had average annual earnings in 2002 of just over $26,000. About a third of these workers did not have health insurance.

* 11% of those with low wages and incomes of more than twice-poverty were children.

JohnS-

From a link I provide in a later post:

Economists Richard Burkhauser (Cornell University) and Joseph Sabia (University of Georgia) report:

a beneficiary from a proposed federal minimum wage hike to $7.25 an hour is far more likely to be in a family earning more than three times the poverty line than in a poor family. In total, only 12.7 percent of the benefits from a federal minimum wage increase to $7.25 an hour would go to poor families. In contrast, 63 percent of benefits would go to families earning more than twice the poverty line and 42 percent would go to families earning more than three times the poverty line.

Zach

I'm no statistician, but the stats at the Economic Policy Institute seem to contradict Burkhauser and Sabia's findings:

"Evidence from an analysis of the 1996-97 minimum wage increase shows that the average minimum wage worker brings home more than half (54%) of his or her family's weekly earnings."

and

"Adults make up the largest share of workers who would benefit from a minimum wage increase: 80% of workers whose wages would be raised by a minimum wage increase to $7.25 by 2008 are adults (age 20 or older)."

Burkhauser and Sabia seem to prefer the Earned Income Tax Credit (solely) because it is directly targeted at low income families, but wouldn't the Earned Income Tax Credit lose effectiveness if the cost of living goes up but low income wages/minimum wage don't rise also?